MBA and chartered accountant led corporate South Africa has failed to innovate products and thus failed to create jobs

We were grooving at Thibo Cafe in Mamelodi. A beautiful and bald-headed lady approached us. She said this to my friend Tshiamo: “The way you dance makes me horny. And you are nicely dressed, Sir.”

She went back to her table.

The topic as hand here is something I’ve been wondering about. It seems to me corporate South Africa has a group think and their groupthink is status per these mentioned qualifications.

The outcome is that since democratic South Africa they have failed to produce globally consumed innovations.

This is inspite of South Africa being the biggest economy in Africa for many years until Nigeria took over.

We do not have a Tesla. We do not have any proprietary lead in manufacturing like China, Turkey or Vietnam. We’ve been falling off.

There is no economic growth because we are not producing anything interesting and useful that the world wants.

Let me rant.

The Edcon group is in financial disaster and has entered into business rescue. They own clothing department stores like Edgars and Jet. On their table is the option of selling off some of their assets or stores.

Edgars was a hot clothing store to shop at in my high school days (the years 2000 to 2004). It made nice clothes and aggregated all the hot brands too, e.g. Guess, Levis, Nike, Puma, Adidas, etc.

Their other big attraction was that our parents had credit accounts with them.

By the time I was in my second year of university, Edgars had deteriorated in being the hot shop. We rarely shopped there.

So Edgar’s competitive advantage was:

  • It designed/made/created nice clothes.
  • It aggregated the hottest international brands.
  • It offered credit.

Today it no longer makes nice clothes and also a lot of competitors who sell the same internationally sourced brands have emerged.

In the world of making nice clothes, new entrants have emerged and they are one of the best. There is Zara, H&M, Fabiani, Sportscene, etc.

It is no wonder the academic and mainstream corporate explanation for Edcon’s troubles is ‘loss of market share.’

The real reason Edgars is in trouble is that they don’t have nice clothes and thus it isn’t cool to shop at Edgars. Consumers are buying elsewhere. Topman and Topshop had nice clothes (they had stores within Edgars stores). What happened to them?

This is something an MBA and accounting qualification cannot calculate. It is the world of aesthetics, emotions and innovation.

And these are the people who lead much of corporate South Africa. It has been so since our new democracy. MBA and CA (SA) accountants are favoured to lead corporate South Africa.

The same troubles Edgars is facing is the trouble most corporations will face – here in South Africa and the world – because corporate at some stage runs on status and not actual product innovation.

Corporate South Africa does not innovate. And I am not talking about HR and marketing strategies.

I am talking about products.

Corporate South Africa does not create products. They buy readymade products in China and elsewhere in the world to sell to South Africa.

Don’t tell me you went to a whole MBA school to just import readymade products from China. Come on sister.

Corporate South Africa is not creating the next 6G or 10G. They are waiting for someone else in the world to invest money in creating them. They will surely line up to import them. They are happy with 5G. To them, it is the 5th Industrial Revolution.

Corporate South Africa has scared money. They are suckers.

I will give them this: they surely know the business of alcohol, property and banking.

Just like the South African government’s obsession with foreign investment, corporate South Africa does not believe in them creating the future.

They are such cry babies. Every time they blame the government for not laying an investment certain environment and yet they never pinch themselves when they have to pay themselves tenths of millions in salaries and bonuses. You are private enterprises. You are supposed to create what people need and not wait for perfect environments from the government.

To create products that the world buys means first you have to put effort in creating them. It takes time, money and failure. Corporate South Africa is not interested in any of that. And they have the money.

We live in the world of manmade innovations, i.e. physical and virtual innovations.

Anything we see in this Fourth Industrial Revolution was not there before and someone created it.

To be the innovator whose products are sought after globally, you have to play around with creating and innovating them.

There are so many problems that need solving through products. So many novel products can be innovated/created.

Cancer needs cures. Smart dolls need further innovation. Clothes that reduce high blood pressure are needed. I am just saying.

Someone please create a pill that defuses the armpit stench caused by archar.

I like Kanye West’s Twitter timeline. He always shows ideas of the future products he wants to create. And it seems he creates them. Well, he does.

I don’t think the Edcon CEO plays like that. Not even the Gap CEO. But Gap has gone into a partnership with Kanye West so that he is that someone fiddles with creating products for them.

You can take a break and view some of these amazing and recent innovations out of South Africa: 8 Incredible South African Innovations of 2019 https://buff.ly/314yY19

Consumer behaviour and innovation

In the time that Edgars was hot to now, consumer behaviour has not changed.

As human beings we’ve been gifted this beautiful mind that innovates things. Since our time here on earth, we’ve been innovating. We’ve created the wheel, cars, aeroplanes, internet and today we are even messing with hacking genes.

What I mean by this is humans can create novel things – that didn’t exist before. And we never stop improving existing innovations and creating novel ones. From a feature phone, we create a smartphone. From spears, we move to guns. From guns, we move to missiles and then move to atomic bombs. And now we are fiddling with war robots.

What I am saying is we keep innovating and beating existing innovations. We create novel innovations

Another gift or curse is we discriminate based on and between beautiful and ugly. We have aesthetic selection. We discern aesthetics. We also have emotional selection. Good aesthetics give us good emotions.

Our human race is about 300 thousand years old and our aesthetic selection has been growing ever since.

Even in fashion (for Edgars’ example) we keep creating newer fashion.

That we have a mind that keeps innovating, and our ever-hungry aesthetic selection and appetite, it means we also keep innovating beautiful things and thus greedily yearning to consume them.

Today we have this kind of fashion, and tomorrow someone invents or evolves the fashion to something else.

This is what I mean with that consumer behaviour since Edgars was hot property to now has not changed. What has changed is Edgars is not an innovator anymore and the environment has changed to their disfavour.

What Edgars has is not what aesthetically or emotionally is hot to people right now.

Here is an article I wrote about how human greed and innovation collaborate: Man must innovate in his own image like God created him in His own image – The Human Greed Pyramid https://buff.ly/2TiyW1k

Economics is simple.

You make and sell and someone buys. Another person makes what is better than yours and people stop buying from you. Then you then try to make something better so that they could come buy from you again.

Corporate South Africa has not been creating but buying outside to sell to South Africa. Hence we are not the best in the world in most things.

Status symbol

The leadership of corporate South Africa is dominated by accountants and MBA holders.

To me, it seems this category of people is not interested with the foundation of economics which is innovating products.

The more products we innovate and which serve utility, the more the world will buy from South Africa and that creates jobs and grows the economy.

If you think I am talking smack, show me the novel products corporate South Africa has made in the last 10 years even. I am not talking about startups and small businesses.

So maybe these qualifications – an MBA more so – are the required status to get top jobs in corporate South Africa and then be the exec of selling products from China.

An MBA is a quintessential qualification to be part of executive corporate South Africa.

What then does an MBA and CA (SA) degree serve in the context of fundamentally creating products that the globe wants and thus grow our economy and create jobs?

Economic growth needs products and money

The real champs of the future of the South African economy are the entrepreneurs – obviously small business and startups – who risk their little money in innovating and creating future products.

This process needs money and they are putting their own money into it.

They are trying to grow their businesses. Slowly surely their international sales will grow.

Corporate South Africa does not believe in investing in these people.

I think it’s because they are so sold on the status and not putting their money on creating the future.

The kind of people who innovate products

Even engineers – actually everyone from the STEM fields – want an MBA. And it is good to study it.

To innovate you actually need to have exposure to various trades because innovation is fusion. It is mixing internet and video to have video streaming. It is fusing electronics into health to have biotechnology, e.g. cardiac pacemaker.

To create a product you have to physically fiddle with things. Carpenters do it. Engineers. Programmers. Clothing designers.

It is not pure theory. You have to get your hands in the mix of things, literally. It is artisanry. You have to put money on it also.

So we need the engineers – and the rest of the STEM, creatives and anyone else to make products.

Most of the MBA entrepreneurs I across like consulting sort of businesses. They must also put their own money into ventures and stop playing around.

Inclusion

Corporate South Africa shareholders are happy with their companies making 20 percent profit annually. They have already 1000X’d. Startups are the once who have the potential to 1000X.

Concepts like inclusion are not possible in normal corporate 20 profit terms.

Why? No one is moving anywhere. There is no space to include anyone new.

Paradoxically, maximising profits radically needs innovation of new products.

Above I said innovation is mixing different things, e.g. mixing internet and video gave us video streaming.

Another part of innovating is therefore mixing of diverse talents and ideas. Diverse talent and ideas do not rest in one race or qualification group. They are spread.

So inclusion is imperative for innovation and trying to radically go above 20 percent profits.

A CEO who cares about maximizing profits should care about creating products and thus he/she will value inclusion, i.e. hunting a diverse set of people with creative skills.

Also not saying it will change

In no way am I deluding myself that this is a revolutionary post. Nothing will change. Corporations suffer the same fate.

One day when I have made it, my corporations might suffer the same fate.

Why? Corporations don’t have the vision for the long term, they see quarterly results.

A chartered accountant friend said quarterly result thinking does not allow them to envision a future of creating things that don’t exist as yet.’

The startups small businesses are the ones who envision such a future and are trying to create it. However they have themselves. Good luck to us.

Corporate SA won’t invest in them.

Shout out to the angel investors and venture capitalists investing money in startups small businesses.

In the words of Sibusiso Ngwenya of Skinny Sbu Socks, startups need money and not advice as per much of corporate SA and enterprise development thinks is key.

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My friend Tshiamo was not wearing any clothes from Edgars.

We need novel products to grow the economy. Spreadsheets don’t make products.

GOOD NIGHT!