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SA business leaders must rethink operations

Thu, 31 Jan 2013 11:55

It seems that there are challenges that we are unable to overcome, such as unemployment and poverty. South Africa’s business leaders need to understand their environment better and manage their businesses in this environment as it really is in order to sustain their competitive edge.

This is the view of Dr Steyn Heckroodt, a University of Stellenbosch Business School (USB) PhD and MBA alumnus, who recently spoke at the USB Leader’s Angle* talk series. According to Heckroodt, customers have become more and more demanding and businesses therefore need to change the lens through which they look at their industry’s environment, as well as the strategies originated from their own perceptions about their environment.

“Businesses need to understand that the key to staying relevant is to be innovative, flexible and ready for change. The trick is to be able to give the customer what they want all the time, not only now.”

Heckroodt refers to when Barack Obama ran for the US presidency for the first time and his campaign opponent, Sarah Palin, wore a pair of spectacles during a speech and by the following day, everyone in Japan wanted the same spectacles.

“Businesses were amazed that so many people in Japan would want the same spectacles as Sarah Palin and many didn’t forecast for the demand. However, a few days later several of the largest spectacle productions in Japan produced these spectacles and in doing so made a considerable profit.

“Companies such as these don’t spend their money trying to predict the future, instead they devise a structure that is flexible. As in the Sarah Palin example, the companies were able to give customers what they wanted because they allowed for their production facilities to produce square lenses in addition to round ones, just in case the market changed. They were flexible, as they realised it is impossible to know what the customer would demand tomorrow.”

Heckroodt says when business leaders scan the environment they need to look at it through other people’s lenses. “Different people have different perceptions because of these different lenses. By understanding their environment better, businesses will have a higher chance of sustaining their competitive edge.

“The recent strikes in the winelands, for example, demonstrated that farmers and workers look at the world through different lenses, which is why they don’t understand each other’s views. While a farmer provides additional services to a worker such as housing and schooling, the worker’s primary concern is survival. The farmer find it difficult to understand the unhappiness of the worker.

According to Heckroodt, if a company is looking to change its business strategy, the starting point is to scan the environments (e.g. the internal business, the market environment and the outer environment, the latter being out of his control). The second step is to gather information with the objective to sustain the business. Different scenarios will present itself, on the basis of which a strategy is selected. For a business to keep its doors open, it has to be able to continually adapt and change.

*Leader’s Angle is an event series hosted by the USB that features CEOs of leading companies in South Africa and abroad, opinion leaders from various industries, academics and other specialists who speak on a variety of business topics. To find out how you can attend the USB Leader’s Angle talk series throughout the year, please call +27 (0)21 918 4242, or visit http://www.usb.ac .za/NewsAndEvents/LeadersAngle.aspx for more information.