Zim business must dump culture of excuses

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The Zimbabwean business experience over the last 15 years has been haunted by perennial underperformance.

By Kevin Msipha

However, tonnes of literature have been written in defense of our business community and its leadership, essentially exonerating them as the underlying cause of the dearth of business success stories in our midst.

This effort has invariably amounted to one excuse after the other. The dysfunctional political environment that has permeated the various classes of Zimbabwean society has been the most notable excuse. Then there was the dire foreign currency shortages that hit the economy from the mid 1990s, followed by hyperinflation years, which are being blamed for all manner of loss of value. Ironically, dollarisation which ostensibly ushered in stability, has been the most recent scapegoat as it somehow came with “liquidity challenges” which have caused untold suffering across the business landscape.

Although reasons advanced for stunted business performance are arguably sound, one can’t help but borrow an analogy from nature.

A female wild salmon fish will lay about 2 500 eggs, and yet only two of these eggs will survive, grow into fish, and eventually return to spawn. The salmon fish succeeds because they constantly explore their environment, exploit their opportunities, fight off competition and escape their predators.

Entrepreneurs and businesses they lead generally face the similarly daunting odds of success. They must innovate, improvise, and grow without losing focus on their ultimate purpose.

This has been the key difference, however, between the typical Zimbabwean entrepreneur and his Asian, or Jewish counterpart; the ability to adapt to this environment.

Historically, on a global scale, the Jewish community suffered many years of deprivation and oppression but what has emerged of the Jewish class is that they are extremely astute and adaptable business people.  The Japanese, despite their current troubles, can teach us many things. The Japanese businessman is obsessed with product improvement. Japanese entrepreneurs have had great interest in technology since the Meiji times. Japanese mania for product superiority is spurred on by a very competitive home market.

The fatal consequence of this culture is that it has liberated the executive from responsibility with regard to the business he or she oversees or any further introspection as to why business is where it is. The causes of his business’ poor performance are outside his sphere of influence, he argues.

What other reasons can one look for when analysing local business performance?

Fortunately, discussions have begun to face up to the challenge of trying to understand the root causes of this sad state of affairs. Our education system has been cited as a pipeline that churns out managers as opposed to entrepreneurs.  Most school leavers are equipped with the skills to manage established businesses whereas the present requirement is to start and grow businesses.

We must therefore be extremely wary of the executive who confines himself to explaining his business in absolute terms and only benchmarks his business performance against historical performance. “This year, turnover is US$4million which is almost US$1million higher than last year. We are showing great growth.”

He or she conveniently fails to show how comparatively his/her industry peers performed or explain the basis of the increase.  This subtle refusal to benchmark against the best, whether in the industry or region or the globe, has also been cited as one of the reasons our businesses have lagged behind over the years.

In the case of many Zimbabwean businesses, long-term ranges from one year to three years, a hopelessly inadequate timeframe by which to build an enduring business. Attend briefings of companies like Econet, OK, Delta,  Innscor and SeedCo and despite their own idiosyncratic flaws, one can deduce long-term thinking and business philosophy that underlies their approach to business. For example, Econet’s move into banking and mobile payment solutions is a realisation of the threat posed to their business model by competitive forces in the form of Skype, Whatsapp and Viber.

Resource constraints have characterised the fortunes of business throughout history since the formation of the limited company around the 15th century. The skillful executive differentiates himself through superior asset allocation decisions as opposed to just ensuring adequate resource availability. Poor asset allocation decisions making has been more responsible for poor enterprise performance than has been admitted in the past.

A lone stick is easily broken, but a collection of sticks tied together are not easily broken. There exists an isolationist tendency among businesses in Zimbabwe. Business groupings and institutions are often weak and still reek of a colonial era hang-over and relevance. They have struggled to become relevant in this era of globalisation as evidenced by the recycling of the same faces over and over.  The Zimbabwe Stock Exchange, one of the first exchanges established in Africa, is in a state of atrophy. There is much work for the new chief executive to do.

In a recent survey conducted by Industrial Psychology Consultants, employees cite the harsh economic conditions as the major cause of poor performance in Zimbabwe. However, executive and senior managerial employees sight the harsh economic environment as the major cause of poor performance in their organisations while non-managerial employees sight poor leadership as a cause of the poor performance. According to a UK-based management survey done by McKinsey & Company (2005), differences in management practices account for a significant proportion: 10-20% of the differences in productivity between firms and between countries.
These findings present a challenge for those trying to find a common solution to the current poor performance of companies in Zimbabwe.

An economy that suffers from a dysfunctional political system, but enjoys a resilient entrepreneurship culture will prosper despite poor infrastructural development. It can still nurture great businesses. Taking India as a poignant example; poor infrastructure, but great businesses like Reliance, Tata and Cipla. Local businesses face a far more daunting challenge in the form of foreign businesses itching to tap into the opportunity that historical underdevelopment has created. They are better financed, better skilled, in many cases have better product offerings at a cheaper price.

However, as elections loom on July 31, I cannot but shudder to think that the average Zimbabwean executive’s bag of excuses will run out, leading to business running to government to save them from the consequences of years of slumber.

Kevin Msipha is an independent investment analyst. He is a recent finalist of the Chartered Financial Analyst (CFA) Programme. He can be contacted on msiphak@gmail.com

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