The Fox Trilogy. Chantell Ilbury
the market is operating smoothly. Woe betide the fund manager who doesn’t adjust his strategies accordingly. All this suggests that a decision which is correct today may be wrong tomorrow, should the rules change. And you have to be prepared to do things differently when the rules do alter. How many businesses have been turned into non-businesses by a change in the rules without the owner even being aware of it? By contrast, how many entrepreneurs have made fortunes because they were the first to spot that the rules had changed?
The general public now have a record proportion of their assets invested in the stock market, either directly in shares or through unit trusts and mutual/retirement funds. In view of this, they are going to have to become accustomed to the uncertainties associated with the left-hand side of our matrix as their wealth waxes and wanes in line with movements in the market. Equally, broader share ownership has interesting implications for the economy, because there is now a much stronger linkage between the stock market and the real economy via the so called “wealth effect”: when people feel richer they spend more, and when they feel poorer they spend less. Back in the last century, shares could rise and fall and it would only affect the spending habits of the rich. Now, market volatility could influence the way the middle and lower income groups dispose of their income as well.
In preparing business scenarios, an important rule of the game to examine is the changing demography of the world as a whole, of the country in which you are based and of the market that you serve. You need a feel for this rule over the next twenty years; and, sadly nowadays, you have to include the likely impact of the HIV/AIDS epidemic and other diseases on your customer base. Probable advances in technology also feature as a prime rule of the game. They may enable your business to expand into new areas or they may threaten some of your products. Illustrating the last point is the famous story about Western Union being handed the telephone on a plate by Alexander Graham Bell. They turned him down because they thought the future still rested on telegrams and the morse code. An up-to-date example is the way CDs wiped out LPs. It would not have been smart to open an LP factory in the late 1980s! Now, despite Napster’s legal woes, the Internet combined with MP3s is transforming the music industry once again. If nothing else, we are going to have virtual jukeboxes where you can listen to your favourite songs and jive the night away – using your personal computer as a record player.
A company’s future competitive position vis-à-vis its rivals in the same market is very much a rule of the game. Here we can quote South African Breweries and how they saw things before the new millennium started. SAB visualised the beer market of the 21st century evolving into three leagues. The first was the premier league in which world-class companies like Anheuser Busch and Heineken were currently located with worldwide premium brands. The second league was that of national champions in which SAB, sundry British brewers and Carlsberg were represented. The third league was the niche/boutique one where specialist beers produced by European monasteries resided. Given this rule, SAB foresaw a danger for themselves in remaining in the middle league. For another rule of the game was that the middle league is vulnerable to intrusion from world-class players in the top one. The latter could – through economies of scale and selecting best practice from around the world – gradually eat up the markets of the national champions. SAB therefore had the choice to ascend into the world-class category or descend into niche businesses. They opted for ascension: this entailed a move of their head office from Johannesburg to London as the most appropriate base from which to launch their campaign for premier league status.
The “G” word
However, nothing illustrates the point of looking forwards rather than backwards better than globalisation. Before it arrived, many businesses were comfortably protected from the chilly winds of international competition by tariffs and quotas imposed on imports. Now it’s open sesame: you either set standards equivalent to best practice in the rest of the world or your business dies. Globalisation is like playing golf without handicaps. The scratch player will always win. So unless you start emulating Tiger, you don’t stand a chance. Thus, the globalisation rule has necessitated extremely painful adjustments to companies and societies alike – protagonists would say for the better; antagonists, who include the demonstrators that have thronged the offices of the World Bank and International Monetary Fund, would say for the worse. One thing is for sure: the nature of work and jobs is undergoing a metamorphosis which is not going to reverse itself. The two great engines of job creation for most of the last century – the public sector and big business – have shut down. In fact, globalisation has converted both of them into net job destroyers as they seek to be leaner and meaner than their next-door neighbours. That leaves medium-sized, small and micro enterprise as the area of most potential for future employment. It suggests another rule of the game for parents: their kids are going to have to be taught to be entrepreneurs during their school years if they want to find work. The accent will need to be on creativity and problem-solving rather than learning by rote. If parents really want to turn their offspring into foxes, there is no better way to do it than divide their pocket money in half and put one half into a savings account that can only be used to set up a business. The other half constitutes normal disposable income. One foxy child said to his parents that this arrangement was fine, provided they doubled the pocket money first!
Globalisation is also transforming the agricultural industry in the world today. If you’re a commodity farmer in maize, wheat, cotton, cattle or sheep, the new rule of the game is that you have to achieve economies of scale on a par with world-class agri-businesses in Western countries. In order to do this, size becomes critical. Farms are therefore merging or are being bought out, with the consequence that land ownership is becoming more concentrated. Now is this a good thing, when another rule of the game is that land is a very emotive issue? We seem to have conflicting rules. On the other hand, dividing up large farms into smaller ones to satisfy land hunger isn’t going to work either. Anybody banking on commodity prices in real terms rising to assist such a process is in for disappointment, because the world has a permanent surplus of commodities – that is another rule of the game. The alternative is to focus on speciality products or move out of conventional farming altogether by going into bed-and-breakfasts, game farming and trophy hunting, breeding disease-free animals, etc. One farmer near Mafikeng is now the largest parrot exporter in Africa! However, there is an answer to the thorny issue of world-class efficiency versus wider land ownership. It involves lateral thinking, which lies at the heart of our matrix. We’ll explain it after we have covered “win-win” outcomes in the next section.
For now, though, a final word on globalisation, having just dealt with the moral rules of the game. It is in the nature of competition that the gap between the winners and the losers widens. Remember the maxim: “To the victor go the spoils.” Globalisation at the moment could be renamed Americanisation because America sucks in the brains from the rest of the world. Indeed, America can cherry-pick talented Third World doctors, teachers, engineers and computer programmers at will, unintentionally doing more harm to the countries exporting these precious skills than by declaring war on them. The end result is that everybody regards America as the winner. This belief feeds on itself and makes America even more powerful in the global economic game and the rest less powerful. As an aside, the same “halo effect” applies to Murdoch’s former acquisition target – Manchester United. As the richest and most successful soccer club in England’s Premier League, it automatically attracts the best and the brightest football stars. So guess what – it is the odds-on favourite to win the league yet again. How boring for the fans who support other clubs!
However, if the gap between the haves and the have-nots widens to a totally unreasonable extent, then another rule of the game kicks in, which is injustice. Nothing could be more expressive of this rule than the words of a young Brazilian woman at a recent conference held in Porto Alegre in Brazil: “Can we not imagine a better world than this? Where the air will be free from the poison of fear of insecurity? Where the TV set is not the most important member of the family? Where food and communication will not be commodities because the right to eat and talk to each other are human rights? Where justice and liberty, Siamese twins condemned to live apart, shall again be conjoined back-to-back?” When the majority of people in any situation feel that injustice has gone too far like this young woman, they start a rebellion. This would not be in America’s interest. So America has to optimise between two rules of the game – the globalisation one and the injustice