The Globe Post 2008 Crash

What is happening one might ask around the current economic climate, and what are our elected leaders doing about it?

 

Well firstly the economic recession is still weighing heavily around our necks and does not look like receding some time soon. As the world needs to recover before we in little SA can recover and follow suit, we need the global all time low confidence to be lifted either by an event of colossal proportions failing which a cataclysmic event/s needs to occur from within which opportunities are identified.

 

To create some context; we have recently seen elections held in Russia - result - unstable environment. We are experiencing terrible strife in Syria which the world leaders are avoiding decisions on, the Euro zone remains in serious crisis with many countries in dire straits. We have a new French President who needs to get up to speed with his German counterpart and the rest of the Euro leadership. The after effects of the Arab spring uprising will take many years to stabilise and to commence restructuring and development.There are many more serious problems around the globe in addition to the many innuendos and subterfuge playing themselves out, the last and one of the most important of which is the pending USA Presidential elections in November this year.

 

Given all this, where will any event of positive colossal proportion come from to resuscitate the global economy? Well...it simply will not surely, at least not in 2012 (with due respect to the Mayans). So where does this leave us except for a cataclysmic event to occur? It does not take significant intellect to deduce that the likely source of such an event could come from the slowly festering sore that is Iran and its nuclear capability issues. Israel has stated in a recent Time magazine article that it requires the US and UN to draw "red lines" around Iran's reluctance to co-operate with International Nuclear inspectors, failing which it will settle the issue with a pre-emptive strike on the so-called nuclear locations, and this before the US elections should Iran not agree to cooperate. This places the US in an embarrassing and stressful position as they will not take any such decision pending the outcome of their imminent elections.

BUT....a war with Iran will solve many problems, the least of which it will likely place that regime under some form of control by the West, notwithstanding the uproar this will cause with many nations pretending outrage, yet silently thanking the war action. After all Iran holds one of the Worlds largest strategic oil stockpiles, pirates booty so to speak. We have seen many economic cycles boosted by massive war machine costs and this time around there will be enough oil to settle the debts.

 

Talk about strategy and implementation - all being quietly constructed and planned - it is the intent that seriously concerns me from a Leadership point of view.

 

Go figure what our world leaders will do?

 

Personal Strategy vs Business Strategy........."Don't Plan to fail"

If I am assisting a business owner/s, or directors design and formulate a strategy for the future sustainability of that business, I am often asked how important it is that their people are aligned to their strategy. Well the easy answer is that this is of primary importance, as there must be some form of correlation in order to obtain that proverbial buy-in.

That correlation is so vital that your people must arrive at work every day knowing that their performance that day is vital to the business achieving its strategy targets and this performance contributes DIRECTLY to their own life-time/family aspirations/plans etc. Now whilst this is not an easy task it is obtainable with the correct strategy implementation activity.

Let me take business strategy down to family strategy.

We all need a plan, this is not debatable, it is just plain common sense. So we get married, move in together and here we start planning "together" for the first time.

Hot Air Ballooning over Cappadochia

We soon realise that if we are both working we need to share chores, this is about appointing the right people to do the right tasks at scheduled times. We might have to "train" ourselves, as we have to learn these new tasks in our personal life. Our Careers now take precedence, as does our on-going education, next we need to plan for children, this involves additional costs, so we need to make sure we can cover these costs through either one or both ensuring that their career pays off. Now we consider some holiday such as a Hot Air Balloon trip over Cappadochia - where will those costs come from?

Cape Epic 2012 Winners

Him, Her or both decide that they wish to participate in the Cape Epic Mountain Bike race, well this requires an extensive financial planning commitment PLUS extreme planning around personal lives, careers, versus the 9 months training program required to ensure that you are able to participate and complete the gruelling event.

Throughout all this maybe the kid/s arrive followed by schooling, higher education etc. The house purchase takes place, again planning around affordability, risks of earnings etc.Then we need to mitigate our earnings vs costs risk, so we take out contingency cover such as life and accident insurance, further along we are also planning for retirement, so its savings, annuities, pension funds etc.

Ocean Restaurant in Zanzibar

Life has started overtaking us by this time and we need a holiday as we have not had one for many years after having kids - what about that lazy ten days in Zanzibar our friends told us about? Well more planning, financial commitment etc.

This entire process involves planning, budgeting, forecasting, borrowing, so as we can see there is a complete correlation with business strategy planning. AND.....most importantly, in the absence of this personal planning process our lives will resemble continuous scenes of chaos - no different from business planning.

The trick now is to gear our people's plans with those of the business and as we know communication is one of the vital components that support strategy implementation, but how often do we fail in this vital area? - we establish wonderful scientific and academically accredited Balance Scorecards that in most instances dictate behaviour rather than direct strategy correlation. Then we are puzzled as to why the strategy implementation fails. BSC's are after all another form of communication and unless this is completely effective and relevant, our people will not relate to same. Get this area of measurement and correlation right and half the job is done.

Easy? of course not but not as elusive as the Boson particle - it just requires intuitive thinking and candid conversation with our people.

SA Business Confidence on the Rise.............(Stats and more stats).......

Well now...the latest RMB/BER reflects a positive growth across all sectors from a consumer and business confidence measure. Strange though - recent media reports stated Manufacturing stats to be below expectations yet confidence in this sector is on the increase? Now if the reality is reflecting a negative trend on what basis would business confidence show an upward sentiment?

SACCI correctly stated that although business confidence was up; "the tempo was still lagging the long term trend of the economy" Now that makes more sense does it not?

General consensus, including that of the Central Bank, indicates an expected GDP growth of under 3%, with the construction industry's (the largest potential employer of "the unemployed") confidence still remaining well below 50% - this is after all the engine that could get us out of the fragile economic conditions.

Now with annother round of anti-Labour Brokers strikes, this indicates that more negativity will prevail so it begs the question: "Who was surveyed to give these so-called positive sentiments around economic confidence?"

Further media reports state factory output unchanged for January (Huh??) what is the use of this information I ask? - factories are generally closed over December/January.

Then we had the "positivity" expressed from a consumer point of view over December - oh my goodness who measures anything worthwhile over December from a general stats point of view without taking into acccount this period's spending anomalies. So then why the suprise when January sales YOY are down "significantly" from 2011 - its staring at you in the face. 2012 is going to be a major struggle from a consumer point of view, so treat all GDP growth stats as suspect until such time that we can materially see a turnaround in the streets, i.e. when all these people walking around unemployed are off the streets and gainfully re-employed.

New Word in SA Context

Ineptocracy - (in-ept-toc-ra-cy) - "a system of government where the least capable to lead are elected by the least capable of achieving, and where the members of society least likely to succeed or even to sustain themselves, are abundantly rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers."


Now how appropriate do you think that is??

A recent "Money Talk" article by Matthew Lester stated some very pertinent facts about the so-called National Development Plan by Trevor Manuel.

1. By 2030 - all the current politicians will be in retirement - good one Manuel - again we cannot hold any of you accountable.
   

   

   All a load of Hot Air?

2. 11 million new jobs at a growth rate of 5% plus - we haven't seen those rates since the glory days pre 2007 and are unlikely to see them for at least the next 10 years. Our illustrious Finance Minister Gordhan says our growth rates will be determined by the world economy and as Lester points out - "that's in tatters."
3. 2 million of the new jobs must come from Public Works - double what is there at the moment!!
4. The NDP also calls for wage subsidies - whilst the Unions do not agree at this stage with that concept - the article confirms this will result in more delays in implementation of this plan. But more importantly how on earth will this tiny social country be able to finance these subsidies? We already have +- 30m people on social benefits from a tax base of some 5-6m tax payers - unemployment is rising out of this small base so the fairytale of the goose that layed the golden eggs is a lot more pertinent.
5. All of this points to tax rates that must rise - so beware gooses you might have to return to the wild to survive!!

This looks rather like another un-implementable pie-in-the-sky "dream" by the Government, and we will now waste another few million Rand's worth of taxpayers money debating and discussing this for a year or two.
Watch this become the govt's golden sceptre for the run-up to 2014 elections.