Johannesburg - The individual wealth of the citizens of a country is more important than the overall size of that country’s economy, according to University of Maryland professor of strategy Anil Gupta.
Gupta, speaking on the Candid Business show on Cliffcentral.com on Monday, was responding to questions in Cape Town put to him by Ellis Mnyandu, Business Report’s editor and the show’s executive producer, about the size of South Africa’s economy being surpassed by Nigeria’s, as measured by rebased gross domestic product (GDP).
“It’s true that Nigeria is now a bigger economy than South Africa. In some contexts that matters, at the end of the day what is far more important is Nigeria’s per capita income compared with South Africa’s per capita income – how well off Nigerians are versus South Africans,” Gupta said.
Another important aspect was the rate at which the people of a country were getting richer, he added. South Africa’s current per capita GDP of $7 352 is about three times that of Nigeria, meaning that on this basis South Africa’s economy is still far ahead.
Turning to the topic of strategy, Gupta said this was about making key choices in two areas. “Number one – what game do you want to play? What products and services do you want to serve, to which customers, in which geographic markets, to take care of which customer needs?”
“The second part of strategy is how you play the game. Execution is about action.”
Good strategy needed to be backed up by good execution, Gupta said.
When asked about innovation, Gupta said this was the creation of something that was new. It could be a new idea, a pioneering technology, a novel business model or a new product.
Gupta, who is the Michael Dingman Chair in Global Strategy & Entrepreneurship at the Smith School of Business at The University of Maryland, said a company need not be highly innovative if it had excellent execution.
“Innovation doesn’t necessarily lead to success. You need to be strong at innovation and commercialising the innovation. You need to be one step ahead of the competition.”
Gupta said entrepreneurship was fundamental to economic growth.
On the whole, Gupta said, entrepreneurs were motivated to improve society and make money for themselves.
“The vast majority of entrepreneurs are the lifestyle entrepreneurs, where for them it is basically a job.”
On the other hand, a small group of entrepreneurs wanted to change the world and build big corporations.
One of the reasons the US was one of the most dynamic economies was that it had a strong entrepreneurial culture backed by a robust venture capital sector.
“Banks are not in the business of giving high-risk money. The typical investor is not going to take high risk. The pension fund is not going to take high risk. If there is high-risk capital in a country then that is one of the important elements to then build an ecosystem where you have small-scale entrepreneurs but also entrepreneurs whose ambition is to become big.”
Turning to leadership, Gupta said that a good leader needs to see the light at the end of the tunnel a bit better than other people. “The leader needs to be authentic.”
* Candid Business is broadcast on Mondays from 1pm-2pm. on CliffCentral.com