Willie Thabe is the chief executive of Integritas Capital. Photo: LinkedIn
Willie Thabe is the chief executive of Integritas Capital. Photo: LinkedIn

Decisive leadership is contingent on capacity to innovate

By Edward West Time of article published Jan 11, 2022

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By Willie Thabe

Albert Einstein was absolutely right when he said, “We cannot solve our problems with the same thinking we used when we created them”.

Whereas the context is right: in an era of multiple-stakeholder capitalism where every stakeholder’s contribution is being taken into consideration including inert land and the environment, South Africa still needs to embrace the evolving concept of new corporations and economic institutions.

As a relatively new democracy we seem to have moved from total exclusion to unintentional controlled inclusion for purposes that are inimical to the emancipation of marginalised and disadvantaged communities.

The concept of “shared value” defines a new way of achieving and measuring economic success, it is the bedrock of what companies and economic institutions do – not elementary social investment or sustainability.

Thus, the boldest move that the SA government could undertake would be to simplify and ease the conditions of doing business in South Africa, and assume the role of a catalyst for enabling effective enterprises, by releasing a number of the State Owned Enterprises (SOEs) into private hands in a systematic and economically sound manner.

The current Chief Executive Officer (CEO) of Anglo demonstrated this kind of boldness when he released the platinum assets not because they were bad, but because they were better in the hands of someone else with a strategic thrust that would optimise their value.

Continuing ownership of assets with progressively diminishing value which would do with innovation and better alignment in the hands of focused entrepreneurs, is a strategic error.

It is tactics without strategy which according to Sun Tsu, is the “noise before defeat”.

The government as a steward of “strategic and national assets” has opened up most of these assets to possible extinction.

For many of them if you remove the incessant bailouts, they are long bankrupt and their business models are unsustainable in the current economic climate.

An enabling legislative environment and an honest and open dialogue with the private sector, would release both local and international entrepreneurs into the different sectors with innovative ideas, that would bring the country back a growth trajectory with the ability to create employment opportunities.

We need a cross-section of entrepreneurs : “innovative entrepreneurs who bring new products and processes to market and introduce new services, marketing techniques , or business structures”.

Replicative entrepreneurs, “who enter existing markets with unique selling propositions”.

The creation of Discovery in the last three decades or so is a superb example of what a combination of the above entrepreneurial attributes can accomplish in building relevant and adaptive market leading enterprises.

According to research the other types of entrepreneurs are opportunity and necessity entrepreneurs, the former engaging in entrepreneurial activity to be more independent or increase their incomes, and the latter doing so to maintain their income when there are no other work options.

It is necessary to note that opportunity entrepreneurs are more likely to operate at the higher end of the spectrum, as Peter Drucker put it, “they always search for change, respond to it, and exploit it as an opportunity”.

There are incredible opportunities precipitated by both positive and negative changes in the general economic environment such as climate change: how do you adapt the existing behemoths without creating an unnecessary chaotic, costly and unsustainable environment in responding to this urgent call?

The entrepreneurs at this level would only require an enabling environment in terms of legislation that removes red tape, and makes market entry attractive and fiscally sustainable.

Perhaps the most entrepreneurial sector in need of far more direct legislative intervention for enablement, are necessity entrepreneurs who are precipitated by the contraction of large corporates and the structural anomaly of the South African economy: it has an abnormally higher service component as opposed to manufacturing capacity given the country’s stage of development.

Practical and enabling mechanisms such as the one that was previously provided by Anglo via the Zimele scheme opens up opportunities for budding entrepreneurs in the value chain of large conglomerates, which would ordinarily not be available.

Entrepreneurship is the lifeblood of a dynamic economy as it creates employment opportunities, influences a country’s economic performance by improving its competitive capacity and productivity.

It is necessary for a country like South Africa to create an entrepreneur- friendly environment that protects intellectual property rights, improves the business climate, and reduces regulatory burdens.

The protection of property rights is an important cornerstone in shaping the country’s innovativeness, and nsuring that any wealth creation remains with the entrepreneur by safeguarding intellectual property rights.

The 1934 description of entrepreneurs by world-renowned economist Joseph Schumpeter that entrepreneurs are innovators, who drive the “creative–destructive process of capitalism, their primary function being to reform or revolutionise patterns of production” is apt for South Africa, as it re-imagines its economic system and capacity to deliver.

South Africa’s ability to tackle unemployment and the concomitant social ills are contingent on a legislative environment that enables entrepreneurs to innovate in response to the prevailing economic dynamics.

Willie Thabe is the chief executive of Integritas Capital.

*The views expressed here are not necessarily those of IOL or of title sites.

BUSINESS REPORT ONLINE

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