Clem Sunter’s Current Global, and South African, Scenarios.
Regenesys Business School February 2013
We attended a briefing by
Clem Sunter at the Regenesys School in which we heard his,
interesting, current thinking on global and South African
As he rightfully said, the future only happens once and
no-one can predict with certainty what will happen tomorrow.
According to Clem, more decisions are made about the future
based on emotions rather than fact. He believes that there
are only two paths that people and organisations can follow
when going through change: they can do something now, or
they can have a contingency plan for the future; doing
nothing is not an option.
Clem maintains that it is also important that visions - for
an organisation or an individual - and the future reality
have to be aligned. If you have a vision for your
organisation that is at odds with what is happening in the
environment your organisation is doomed. He, along with
Chantell Ilbury, uses the analogy of the fox and the
hedgehog in which a hedgehog buries itself in certainty and
believes that life revolves around one big idea. A fox is
always scanning its surroundings and is quick to respond to
threats and opportunities. Clem and Chantell believe that
everyone needs to become more fox-like. It is better to be
vaguely right than precisely wrong!
These days, businesses change dramatically every 5 years.
Think back 5 years to the big business innovations of that
time: Apple’s iPad (2010), Amazon’s Kindle (2007), and
Masterchef (2005). However, the more successful you are in
the game of business, the more oblivious you become to
change. One only has to think of Kodak who invented the
digital camera yet never leveraged this technology
themselves and is now bankrupt!
Businesses have two choices in these tough economic times:
Provide products or services that provide value at a
(e.g. Apple’s goods are not cheap, but provide incredible
value at the moment.)
Provide a cheaper alternative.
(Look at how Mr Price has grown in recent years, as more
and more people
are looking for quality at a lower price.)
Global Economy Current Assessment: HARD TIMES & UV SCENARIOS
- Hard Times
The world economies will remain flat where they are now
for the next 10 – 15 years When looking at Japan in
1988, they had two flags that they were interested in:
||Decline in golf club
||High increase in property prices to take property out of
the reach of much of the population
Japan’s crash happened in 1990 and it has never recovered. It has an aging population and with an aging population, innovation drops. Very little innovation is coming out of Japan to revitalise it.
Europe has worse demographics that Japan. For the last 8 years, Italy (a Catholic country) has had a declining population. The European market will remain flat. In Europe businesses will only grow if they are able to take over someone else’s market share! The USA is OK. It has a growing young population due to its effective immigration policies
Red flags on the global horizon:
Spain’s defaulting economy
USA not rectifying its economic faults
- Ultra Violet (UV)
There are two scenarios in this case: U and V. Both
scenarios have had a dip in growth followed by an expected
recovery. In the U scenario, the recovery takes longer -this
can sometimes turn into cases like Japan. The V scenario is
one where the recovery is quick and rapid.
Most international businesses are now betting on Africa and
India – countries with young demographics. In the latest
World Bank report, 7 out of the top 10 growing countries are
in Africa. The brand Kraft Foods has just reported that its
sale of cheese into Africa has grown 60% over the past five
years. Their top Africa salesman is from Angola.
These scenarios are based on China still growing; however
China has its own three red flags:
||The Aging Cliff - Workforce is increasing in age due to
their one child policy. The number of people over 60
China will double in half the time that this occurs in the
||Exports – the growth, and competition, of European
||Pressure on the banks – China has literally built cities
that are full of empty buildings.
South African Economy Current Assessment:
PREMIER LEAGUE, RELEGATION OR A FAILED STATE:
- Premier League (50% probability - down from 70% ,18
The world is a highly competitive place. In 2012, SA was
only rated 50 out of 59 competitive countries.
Flags to look out for:
- Relegation League (25% probability,- down from 30%, 18
||Decline peacefully to the second league where there will
be a decline in tax revenue and less access
- Failed State (25% probability, - increased from 0%, 18
||Anarchy in workforce and with unions
||Nationalisation flag is down but the National Health Insurance Flag is up
||Media tribunal has jumped the probability of violence up 10%
||Tendency for an “Arab Spring” to occur
||Abnormally high numbers of unemployed youth
||Active social network
||Growing alienation of youth and authority
Food for thought: Was Marikana South Africa’s “Arab Spring”?