Connect with us

Business Landscape

Clem Sunter’s Take on the Entrepreneurial Economy

Lessons from the mind of a fox on staying competitive, looking to the future and putting your business’s best foot forward.

Nadine Todd

Published

on

Clem-Sunter_Business-landscape_Doing-business-in-SA

Ask Clem Sunter about what business should be doing to stay relevant and competitive, and he has a wealth of experiences to draw from, from his days as an executive of Anglo American Chairman’s Fund, to his current roles as entrepreneur and scenario planner.

Related: Adapt or Die: 3 Business Strategies for Thriving in a Recession

Here are his three top tips for staying ahead of the game (and the competition).

1. Use small business to grow your big business

When Anglo American launched Zimele in the 1990s, it was originally a CSI project. Today, it’s a strategic component of the group’s business model. Why? Because by setting up a venture capital arm that aimed to promote small business and do its bit for the economy, Anglo learnt two very important lessons: One, don’t do what’s not your core.

There will be a supplier who does it better than you, at a lower cost. And two, SMEs are flexible in a way that big business is not – and there are ways to use this to your advantage, even if you yourself have lost that small business agility you once had.

“We designed Zimele to assist SMEs in gearing up for our contracts,” Sunter explains.

“We invested money into these businesses, simplified our tendering procedures, gave them mentors and installed Anglo managers on their boards. The project has grown to such a degree that today there are 1 200 businesses employing 25 000 who operate under the Zimele banner.”

Despite the fact that this started out as a CSI initiative, Anglo soon learnt some interesting things.

“In many cases, these SMEs now supply the food at the mines we operate. We are not in the catering business, and so these small, agile, expert businesses do a better job, at a lower cost. It made us realise that in order to remain competitive in today’s market, you should focus on your core – what it is you actually do – and outsource the rest to experts in that category.

“It also means you can lower your labour force. It’s commercially sensible, and even though it’s still classified CSI, the reality is that it’s an important part of Anglo’s strategy.”

2. Cultivate the mind of a fox

Getting-foxy-with-Clem-Sunter

In 1982 Anglo created a scenario planning division headed up by Sunter. The idea was to create and evaluate the various scenarios the future of South Africa might hold, and adjust Anglo’s business plan accordingly. At the time, there was a high road, and a low road.

The low road did not include a democratic government in South Africa, and ultimately led to high levels of unrest and a failing economy in which Anglo realised it would no longer be able to operate.

The high road led to an inclusive, democratic government which the company knew was essential to future growth and sustainability.

While most businesses cannot impact the political environment, scenario planning remains an essential factor in real business growth.

“You need to become what we call a foxy leader,” affirms Sunter. “Foxes are always paying attention to their surroundings, they’re looking ahead, but also at what’s taking place around them. While it’s impossible to forecast exactly what the future holds, by paying attention to what’s happening outside of your business, you can determine a few likely scenarios, and begin preparing accordingly – and then have the speed and agility to react to what you see.”

For example, Sunter currently has two scenarios. One predicts that the global economy will remain flat. Two of the largest economic blocs (Japan and the EU) have ageing populations, and this does not correspond well with high economic growth. In this scenario, business owners need to evaluate what they can do to grow their businesses in a flat world.

“The emphasis must be on innovation and new products to create new markets. You need to live your brand in such a way that differentiates you from the crowd, because the economy isn’t growing, which means you need a larger slice of what’s already available.”

The second scenario is coined the ultra violet scenario. In this scenario, while the economies with ageing demographics go through the long U, younger, more vibrant economies are chasing the short V – they’ve hit the bottom and are aggressively pursuing economic growth.

Related: Connect With Your Customers Outside of Social Media

“This will take place in the emerging economies: India, Africa and South America,” says Sunter.“In this scenario, businesses must target these economies: Create products that work for them, create strategic alliances with businesses on the ground to grow your brand. Find ways to tap into these growing markets.”

Sunter offers flags to help business owners determine which scenario is more likely to develop. “One of these is China. If China experiences 8% to 10% growth, this will galvanise growth in the emerging economies, and we’ll be in the second scenario. But if China’s growth falls to 5% or less, then we’re in the flat economy scenario and it’s hard times for everyone.”

The takeaway lesson? Your business does not operate in a bubble – pay attention to what’s happening around you, on both a micro and macro scale.

3. Encourage an entrepreneurial economy

As your business grows bigger and more corporate, don’t forget about the value of smaller businesses to the economy.

The most vibrant economies enjoying the highest percentage of growth in Africa have strong entrepreneurial spirits. South Africa, while Africa’s largest economy, is by no stretch its most vivacious.

“I work with an entrepreneur who travels extensively. He quips that in other countries they roll out the red carpet, and in South Africa, they roll out the red tape.”

While he’s a firm proponent that government’s mantra shouldn’t be five million jobs by 2020, but one million businesses (and the rest will take care of itself), Sunter believes that much can be done if the corporate and big business mindset changes.

“A vibrant economy is good for everyone. If you want your business to grow, no matter its current size, you need to support small business. The economics of this work, we’ve already proven that, but it also starts with a mindset. Start with the question: How can I involve smaller businesses in what I do? And take it from there.”

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

Advertisement
Comments

Business Landscape

5 Thoughts To Give You The Courage To Make Change

The only constant is change. If you can’t learn to embrace it, you’ll be left behind.

Allon Raiz

Published

on

change

In my experience, change is harder for those who perceive themselves to be succeeding than those who perceive themselves to be failing. Failure produces an irresistible motivation to reflect and to seek changes that will eliminate the pain you are feeling. It is those who perceive themselves to be successful who are most likely to stick to the status quo in a sea of change.

Change always happens: Contexts change, markets change, competitors change and so on. So, reinforcing a strategy and recipe for success seems the logical thing to do, right? If it ain’t broke, don’t fix it, goes the mantra. Why on earth would you mess with a winning formula?

The problem is that these winds of change are numerous and subtle, moving slowly and in different directions, making them invisible to the ‘successful’ eye. Business books are filled with case studies like Kodak who, despite acknowledging the threat of digital, were so entrenched in their current thinking that they sailed their ship right off the end of their flat earth.

Related: Successful SA Entreps Share Their Most Valuable Business Advice Ever Received

Here are five thoughts to provoke you and guide you in finding the courage to change.

1. This too will pass

Live by the law of impermanence that says that nothing remains permanent; neither failure nor success. This should create a level of healthy paranoia in successful entrepreneurs that drives them to anticipate what will change and when it will change, and to constantly live in a start-up mindset. Being aware, self-reflective and conscious of your bias is the best remedy for the allure of a permanent reality mindset.

2. Use what you have

One of the most common reasons that we do not want to change is having to admit that the resources we have so painstakingly and expensively built and maintained are not as useful anymore. The now popular and commonly-used terms of ‘radical’ and ‘disruptive’ conjure up scenarios of throwing away everything we have.

In most instances where change is required, the most successful way to change is to use the resources currently available in your business in a reconfigured manner. My rule of thumb is that any new strategic direction should incorporate no more than 20% of new resources, know-how or processes. This approach might not be radical or disruptive, but it ensures that there is a higher appetite for change in the organisation and a higher probability of it succeeding.

Related: Raizcorp: Business ‘Think’ has to come before the Business ‘Plan’

3. Focus on the positive energy change creates

Change is terrifying for many, but it creates a positive energy in a business. We often spend too much time trying to pacify employees who are fearful of change. In my opinion, you should rather be weeding these people out of your business as it grows.

They slow down progress and redirect valuable time and energy from focusing on the future and building towards that. It is important to focus your energy on the positive energy that is being released when change happens, such as excitement, new possibilities, and new growth opportunities for people and the business.

4. Plan your change, but also expect the unplanned

Effective change is ideally planned. Thought-through, documented and communicated phases are always better than a chaotic laissez-faire approach. But as Mike Tyson once said,

“Everybody has a plan until they get punched in the face.”

Life happens, the unexpected is ever-present in our lives, and we need to plan for this. Allowing a 10% to 20% tolerance for the unknown is a wise thing to do to ensure your expectations are catered for. Accepting the potential of random change in your planning will make it easier to accept and manage.

5. Expect Magic

After the dust has settled following a recent change or upheaval, and nerves and emotions have normalised, there will inevitably be an unforeseen positive outcome from the change. When you expect to find this outcome and appreciate the chemistry of time, resources and random events that created it, you will see change as the unavoidable path to these magical events.

It makes going through the change so much more tolerable when you know that when this phase of change is completed, there will be an outcome that will make it worthwhile. This expectation has never failed to deliver for me.

Entrepreneurs do not have the luxury of remaining still and constant, even for a short while. Mighty corporates are also  susceptible to the devastation of the law of impermanence. But, there is a different lens on this that I prefer; every day and every moment brings the gift of change to us which is always a door to a better, more fulfilled future.

Continue Reading

Business Landscape

5 Steps To Cutting The Fraud Of A Cash-Driven Society In Africa

African consumers still prefer cash transactions – here’s how to stop this from impacting on your business bottom line.

Chris Ogden

Published

on

cash-business

There is an issue when it comes to transactions in Africa. That issue is cash. There are plenty of reports that point to the percentage of people who remain unbanked on the continent – it’s high. There are also reports that talk about how those who are banked use their accounts as little more than cash repositories – money in on payday, money out on payday. Why?

The African consumer doesn’t trust the system. They also face significant difficulties in rural areas that have limited card-based services and access to cashless transactions. And bank charges are hefty, eating into their pockets.

Pay attention: Cash is king

Your consumer isn’t banking savvy. They have a bank account because their employer wants to pay via EFT or because a sales rep got them enrolled, but didn’t explain exactly how the banking system could work to their benefit. They don’t trust banks, they don’t like the transaction fees and cash remains the currency of choice. In this world, cash is king. For the entrepreneur this cash-based society has both challenges and opportunities.

Related: Strong Company Culture Fattens The Bottom Line

The challenge: Cash is easy to lose

If the majority of your business transactions are carried out with cash, you run a big risk. Cash is easy to steal as transactions are rarely audited and accounted for. Unethical employees can put half in their pocket and half on the books, directly impacting on your income.  Paper money is hard to audit and track, it is expensive to bank, and often undeclared.

The challenges lie in the land where you are the entrepreneur receiving the cash, but the opportunities lie in helping other people to manage their cash.

The solution: find ways of tracking cash

The business has to be smart. Allow cash transactions to remain a part of the process, but use services that facilitate some of the collections and ease those headaches. Companies often use cash management companies, but their price tag makes handling of cash even more expensive.  Fraud is rife in the cash market. There are many ways to skin a cat, but handling cash in without technology to track it can be dangerous. Any mismatch of manual records and payments needs to be carefully analysed to pick up any discrepancies.

An alternative is to employ a service provider who can manage the cash transactions for you, but this will also be a cost to the business, Retail stores can collect on your behalf, but they want you to pay a service fee.  Understandable costs, but ultimately each one impacts on the bottom line.

The technology opportunity

One opportunity which has already started to edge into the mainstream is the use of eWallets and digital cryptocurrencies. Cash carrying individuals can swap these out for virtual monies that they can use to manage their payments. M-PESA in Kenya is a superb example, even if it never really got a foothold in South Africa.  For the entrepreneur that wants to engage with the cash empowered customer, these solutions could potentially help overcome the hurdles of trust and cost and ensure security on both sides of the fence.

Related: Your To-Do List Can Boost Your Bottom Line

The final countdown

What it boils down to is this – cash exists and cash-based transactions and attitudes are unlikely to change overnight so the entrepreneur needs to invest in solutions and systems that manage and audit transactions carefully. Ensure there are various control measures that can pick up anomalies, give people the opportunity to unpack these anomalies and then identify any issues.

Ultimately, if your business is to successfully avoid the multiple opportunities for fraud in the cash transaction society, then you have to invest in tools that will ensure your cash is properly managed and that you’ve chosen a well-known service provider to do so. Otherwise you’re just swapping cash fraud for technical fraud…

Continue Reading

Business Landscape

Are You Forgetting To Think About Your Business Strategy?

If you want to make money, save money and improve your efficiencies in 2018, you need to keep reviewing your strategy.

Ed Hatton

Published

on

business-strategy

It’s hard to keep upwith the pace of change. Economic uncertainty, disruptive technologies, fast-changing consumer needs and complex digital marketing means entrepreneurs have to move fast just to stand still. While managing constant change this is easy, but dangerous to forget about strategy. A couple of pertinent questions: What are your business and marketing strategies? Who owns them? How many people in your organisation understand them? When last did you review them to see if they are appropriate now, and likely to be appropriate in the next year or two?

Every organisation, from tiny businesses, clubs, NGOs and start-ups to much larger companies would benefit by taking time out to review key strategy issues. I suggest you examine whether your target markets are the right ones, and are still buying enough to meet your sales targets. You should ask if your sales channels, pricing policies, promotional messages and the media used are right for the times.

  • Do you really know what your target market needs and how those needs are changing?
  • Are your products and services providing solutions to those changing needs?
  • Does everyone in your organisation know what differentiates you from your competitors?
  • Do you have the right people?
  • Is your financial strategy still sound?
  • What about purchasing or manufacturing — is it still as cost-effective as it could be?
  • What are your competitors doing now?
  • What are they likely to be doing in future?

Related: Guru Ed Hatton on Marketing On A Tiny Budget

Get out of your comfort zone

These are tough questions, but if you ignore them, your organisation may drift along in its comfort zone in the hope that everything will work out. A company that continues to try to sell familiar products to anyone who will buy, and does not know what its competitors are doing is taking very high risks in a changing environment.

The risk increases if your prices reflect your efficiency or otherwise at product procurement rather than the value they deliver to customers. Risk rises to danger levels if few people actually know and understand the strategy, because they will usually keep their heads down and do the same old things.

Start the journey

Strategy development is like a journey. You know the starting point, you decide on your destination (your goals) and then you map out how to get there, which is your strategy. You have to consider the time it will take, the resources you will need, especially money and skills, and how you will know you are still on track (your milestones). Start at the beginning; ‘we know where we are’.

Do not assume everyone has the same idea of where you are, especially your management team; you may be surprised at the distance between perceptions of where you are now. Then set the goals and recognise that the future may not be what you envisage. You will have to be flexible to cater for change in a different economy.

Using questions like those in this article, map out the strategy of how to get there. An outside facilitator is a good idea for a strategy session but if you choose to run it yourself be careful that your management team does not only tell you what you want to hear.

Related: What Should You Cut First When Times Are Tough?

What great strategies are made of

Keys to good strategy in these turbulent times are to really understand your target market needs and provide solutions at a price that the customer regards as fair value. Two other ideals are to provide the products or services in a manner convenient to the customer rather than to you, and to inform the customer of the advantages of your solution in a manner and in media that the customer trusts. You may recognise the venerable 4Ps of marketing in a new guise; outwardly focused, concentrating on the customer.

Continue Reading

Trending

FREE E-BOOK: How to Build an Entrepreneurial Mindset

Sign up now for Entrepreneur's Daily Newsletters to Download​​