Crucial that worlds of public policy and business strategy are aligned
The new cabinet to be appointed after the elections has an opportunity to align our national interests for the first time since the dawn of our democracy
In a mixed economy such as ours, we rarely talk of national strategy. Instead, we talk in government circles of policy, and of strategy in business circles. This represents both a systemic strength and a national weakness. It is a strength in that agile businesses get to decide where and when to invest their resources on the basis of their strategic options, within the ambit of the law and regulations that arise from the policy process. Government bureaucrats on the other hand get to make the rules, via the legislature, on the basis of the political and policy platform on which they were elected.
However, the arrangement also constitutes a weakness, in that very often a misalignment arises between the strategic interests of business and the political interests of politicians.
A perfect example, and perfect storm, has been the case of the Mining Charter over the past few years. The misalignment between business interests, worker interests and party-political interests have bogged down the mining industry in an unproductive turf war. This undermines not only business performance, but stalls job creation and undermines our national interests. It places the entire transformation project of the sector in peril. Over time, it erodes the confidence of stakeholders in both the institutions and leaders responsible for aligning these respective interests.
The new cabinet to be appointed after the elections has an opportunity to align our national interests for the first time since the dawn of our democracy.
Whoever takes the helm of the country, and appoints a team of ministers, will have the chance to bring cohesion, instead of contestation, between the worlds of public policy and of business strategy. But this will require a higher order of thinking than what we have grown accustomed to at the national level.
To align our national strategy, cabinet, with their counterparts in Business Unity SA, Business Leadership SA, the Black Business Council and the newly formed Public-Private Growth Initiative, will need to answer four strategic questions on behalf of the country, as depicted above:
- Our socio-economic structure and political economy
First, the features of our socio-economic structure and political economy need to be reconsidered in the sense that there is a gross misalignment between the building blocks of our economic structure, and that of our social strata. There is a lack of alignment between the economic sectors we already have and the types of skilled labour we continue to produce. Our human capital does not speak to our human capital requirements in the economy. This is a systemic issue and will require a long-term strategic intervention akin to when our 10 major agricultural colleges were established in the 1960s. Except today, the future lies in the digital economy, and not in the soil. In the absence of this alignment, we will continue to produce newly minted but unemployable graduates.
Business of course has a significant role to play in creating the demand-side conditions for this alignment to become a feature of a new emergent political economy – at it’s heart, creating a new class of technically capable black professionals.
- Our strategic positioning and competitiveness
Second, and related to the first, is the question of our strategic positioning and competitiveness. Our national infrastructure, financial market development, innovation and business sophistication might not match that of Hong Kong, Frankfurt or the San Francisco of today, but it certainly gives Ankara, São Paulo and Kuala Lumpur a run for their share of global money flows – for now. We should take seriously harnessing this competitive positioning as an emerging market pocket-rocket and align our efforts behind businesses that harness these capacities. It is much more difficult, and costly, to create new forms of competitiveness, especially under time constraints when unemployment is high and the social contract is under strain.
We should shoulder the competitive features we have onwards to higher growth and think about how to expand them aggressively.
- Our strategic capabilities in both the private and public sectors
Third, we need to re-evaluate our strategic capabilities in the private and public sectors and align our focus and resources where we think the niches of our future advancement will be. For instance, SA became world-class in bulk energy transmission and bulk water transfer a half-century ago when coal was cool and water was scarce. Today, through renewable technologies and smart grids, circular economies in energy and water are increasingly in vogue. Some of our capabilities are outdated, and some remain relevant for the future. With strategic alignment between our sectoral capabilities, we can begin to decide whether we want the likes of a stainless steel industry at all, and if we do and rally behind it, what will we manufacture for export and domestic use?
The alternative, produced by the current misalignment, is that the likes of companies such as Columbus run at a fraction of their capacity and bleed jobs in the process. It amounts to a mismanagement of the assets we have while dreaming with envy of the capabilities of our competitor nations.
- The economic and development opportunities available to us
Finally, we need to align ourselves with the economic and development opportunities we see before us. In essence, strategy is about a new conception arising between intent and opportunity. There are many examples of grand strategy gone wrong, such as when the 105-story Ryugyong Hotel was built in North Korea, said to be the biggest white elephant in history. Shaped to resemble a space rocket, the hotel, stretching 330m into the air and totalling 3,000 rooms, was built in 1987 and has never opened. It turns out, grandiose leadership that doesn’t align intent with opportunity is capable of extreme wastage, not to mention embarrassment.
Part of aligning ourselves with opportunities entails thinking carefully about who our friends are in the international system, which of them are for trade, which for aid and which are going to be our partners in forging a shared future of mutual prosperity. These decisions should be based on our comparative strategic capabilities and needs.
In the end, SA’s democracy depends on whether the economic system, the lifeblood of the body politic, can synergise with the political system, the nervous system of the body politic, to create an increasingly more just social system – the aspirations of the body politic. This will require strategic alignment unlike we have known to date. It will require a commitment to SA Inc through a relinquishment of narrow interest, in all spheres.
I’m reminded of the insightful critique of power by St Augustine who mused, “Remove justice, and what are kingdoms but gangs of criminals on a large scale? … in which plunder is divided according to agreed convention. If this villainy acquires territory, establishes a base, captures cities and subdues people, it then openly arrogates to itself the title of kingdom.”
The key, if our democracy is to continue to function as such and not fray into disrepair, is ultimately to align the strategic interests and capabilities of our nation in such a way as to favour those who are were not at the table dividing the spoils in previous eras. Failure to do so would make our other efforts futile, since in the end, the legitimacy of our entire enterprise of national reconstruction depends on it.
• Oosthuizen is a member of faculty and a scenario planner at the Gordon Institute of Business Science