The Nimble Dinosaur

Originally published in the Informanté newspaper on Thursday, 23 February, 2017. 

It is well known that in today’s market, you cannot afford to be slow. The pace of technological change is rapid, and if you fail to make the changes required to your business, a newer, young competitor will pull the rug from under you and take over your market. You cannot let your company be locked into a single way of doing things, lest you sign its death warrant. Why is it then, that big companies are often the ones that fail? That get out-innovated by their smaller rivals into insignificance? Do they not recognize that they need that speed to survive?

After all, the economic benefits of a fast-moving enterprise are many. Being first to the market has obvious economic value – you get the media attention, build customer loyalty and often earn bigger margins. This also means that firms will quickly identify and move on opportunities, ensure that no opportunity is one missed. They can reduce the impact of potential problems, because any solutions will be out the door quicker, mitigating the damages. And, of course, it allows them to quickly respond to changes in market conditions.

Often, the charge is laid that big companies are bureaucratic, more interested in their pet projects than innovation and reinvention. But the lessons of the market are clear, and big companies have recognized the folly of allowing bureaucracy to doom them. After all, they too were once young start-ups that fought their way through entrenched businesses to get to the top. 

No, companies usually rise to the top due to a new competitive formula they’ve discovered, one that allows them to outmanoeuvre the competition. A combination of business strategies, efficient processes, well-handled relationships and strong corporate values build them into a strong behemoth – one that competitors are too happy to ape. 

But success reinforces the belief that the company has found the ‘one true way.’ This starts to blind the strategic thinkers, and new strategies are hamstrung by being forced to fit into the ‘one true way.’ Information gets ignored as it does not fit into the strategic vision, and the way is lost. These strategies, of course resulted in efficient processes, and those get locked in. Instead of processes, they become something far worse – routines. Instead of continually searching to improve processes, no newer efficient methods are tried because that’s not the ‘one true way.’

Even customer relationships become shackles – the need to maintain existing customers keep them from trying new innovations, for fear or losing them. And even a company’s values, as you’d expect from finding the ‘one true way’ can turn into dogmas. Values turn into rules and regulations, within which innovation dies. 

 But it doesn’t have to. Back in 1989, Dave Cutler was a legend in the software industry. He’d programmed the VMS operating system for Digital Equipment Corporation and was spearheading a new team on the west coast of the USA, developing a new operating system for their PRISM computer. Then DEC cancelled the project. Microsoft heard about this, and Steve Ballmer, their Sales Manager and later CEO, contacted Cutler and offered him a job developing a new version of their current operating system, initially called NT OS/2. 

Microsoft had identified nascent threats from two sources: the potential of new chips replacing the Intel chips their software was based on, and the danger of the Unix operating system from mainframes coming to personal computers and destroying their MS-DOS based hegemony of the PC market. Dave Cutler, with a few colleagues who joined from DEC, was tasked with building a ‘Unix-killer’ that would operate on any chip.

By the end of 1989, Cutler and his team has a working prototype, and was ready to show it to the world. But something else happened – Windows 3.0 was released, and it sold 16 million copies in 6 months. Microsoft decided that it would not do to have this NT New Technology based on OS/2, which it had developed with long-time partner IBM, and Cutler was tasked with turning it into Windows NT.

It took him another 3 years to reach that goal – his team having expanded to 150 people from the initial 6, and the project ultimately costing Microsoft US$ 150 million, at the time the most expensive computer program ever. But it reached it goals. It became the core of the Windows operating system we continue to use until today, and Windows 10 is the latest descendant of Windows NT. Because it could be ported to any chip, when 64-bit chips made their debut, Windows was ready. Due to Dave Cutler and Windows NT, Microsoft became the company that it is today.

Many companies had tried similar projects before, and had failed. Cutler’s move to Microsoft was the result of one of those failures at DEC. What was different? First, Cutler was given the resources to do what he must – US$ 150 million is no small sum. Furthermore, Gates had ceded authority to Cutler and Paul Maritz, who kept an eye on the market, and made sure Cutler stayed informed. 

Then there was the teamwork – but not the usual kind. Teams are generally homogenous – quite antithetical to creative work. Cutler’s team were full of very opinionated people. They broke old rules and made new ones when the old no longer made sense. They didn’t ask permission before taking important decisions that they believed would improve NT. And they ignored any prohibitions that seemed nonsensical.  And finally, when they had to make a choice, Microsoft broke from the shackles of their IBM alliance to chart its own course. 

Microsoft was already an established giant when the NT project launched, and the 150 people that it blossomed into is far larger than a start-up. Yet they still managed to bring about that innovation that saved the company from ruin, and gave it life for another 15 years. They changed the world. No start-up would have had the resources for a project such as this. Perhaps the lesson to be learned here is that all big companies can turn into dinosaurs, too big to move. But if you want to survive, you have to learn to be nimble.

To Think Is To Solve

Originally published in the Informanté newspaper on Thursday, 16 February, 2017. 
 

How often have you seen the following in job ads? “Someone keen to take responsibility and with the confidence to challenge established practices and come up with new ways of working…” “An enquiring mind and the ability to understand and solve complex challenges are necessary…” “We are looking for innovative minds and creative spirits ...”

What do these have in common? They all ask essentially the same two things: The ability to use your own initiative, to think for yourself, to be creative and pro-active, and the ability to resolve problems, to think logically and/or laterally, to use ingenuity to overcome difficulties and to research and implement solutions.

In other words, analytical and problem solving skills. Now one would assume that these skills are vital to surviving in the modern world, yet study after study has shown that these skills are lacking in a significant percentage of the population. The American 2012 Critical Skills Survey, which polled 768 managers and executives, found that employers rated most of their employees as either average or below average in communication skills (62%), creativity (61%), collaboration (52%), and critical thinking (49%).

And yet, these skills are essential for every business. Any business will have challenges or obstacles which need to be overcome.  If they employ people who are adept at solving problems at all levels, it reduces the need for complex chains of command or lessens demand on managers' time. In short, it will help save time and therefore money. Analytical skills are becoming quite important - we are all bombarded with huge amounts of information every day! Being able to quickly yet comprehensively identify and evaluate the most important or relevant information for the business and your job will be an increasingly essential skill.

Even here at Trustco, it is how Dr Quinton van Rooyen evaluates employees: “We’ve identified 5 basic types of employees. 

The Blind Employee - These employees can’t see a problem even if it is staring them right in the face. They work like robots, following a set procedure, and never notice if there’s something wrong, or something that is impeding efficiency. You don’t need these employees – they can be replaced by automation.

The Averse Employee - These can see a problem, but they try to avoid it as they are afraid doing something about it might make them responsible for it. These employees are actively trying to avoid adding value to your business. Replace them.

The Identifying Employee - These employees can see a problem, but they can’t take the initiative to solve it, and simply report it up their reporting line. These are the minimum acceptable employees, your basic employees. They should form the backbone of your company.

The Transformative Employee - These employees can identify a problem, and once handed a problem that’s been identified, solve it. These employees should be your supervisors and line managers. They’re the employees who are making your business great. 

The Revolutionary Employee - These problem-solving employees are not only great thinkers and innovators, but they also have the ability to get employee buy-in. They can thus solve social/people problems, and involve others in the problem solving process. These employees can change the world, and should be your senior and top management. “

So if these skills are truly so indispensable, why do so many people lack them? The answer can be found in our model of education. For too long, education has been at the whim of the memorization model of education, where students are taught simply to receive, memorize and repeat information. Teachers simply drop the information on students, with little in the way of discussion and they are expected to sit down, shut up, and remember. This might have been appropriate for an age in which student were to be merely compliant, obedient factory workers – but those jobs are increasingly being replaced by machines, and the mind is the one area where machines have yet to supplant us.

Then there’s the problem-solving model of education – where students and teachers work together in communicating and learning information. Teachers ask questions, and engage students to think critically and evaluate the material – they create critical questions and answers that not only better help students understand the material, but also enable them to remember it better.

Teachers, naturally, are a bit resistant to these methods. After all, this is not how things are done! Students shouldn’t talk back to teachers! Well, yes – if what you want is obedient drones, instead of productive members of society. That model is quite authoritarian, and has no place in a democratic society. The other concern, of course, is that teachers worry that students will come up with ideas that the teachers won’t understand. Well, if a child can outthink you, you’ve either got a very clever child, or…

The fact of the matter is that they should be able to explain their methods, and thus teachers should be able to follow their reasoning. And even if they did not know, there’s no shame in stating that, and assuring them you’ll find out. After all, teachers are expected to stay up to date on their field – and by finding out the answers to their students’ questions, they too will learn something new. 

With the importance of analytical and problem solving skills only increasing year-on-year, it becomes essential that we all possess these skills. After all, if you had to choose an employee or a co-worker, would you rather have one that was analytical, insightful and problem-solving, or would you prefer one that could rattle off a bunch of fact, but was dumb-founded when asked something they didn’t memorize?

 

The Prevalence of Poverty

Originally published in the Informanté newspaper on Thursday, 9 February, 2017. 

Oxfam, a confederation of charitable organizations focused on the alleviation of global poverty, recently released a report with a rather disturbing statistic. In ‘An economy for the 99 percent,’ they revealed that just 8 men owned as much as the poorest 3.6 billion people on the planet. These eight, the report claims, are a symptom of growing income inequality in the world, and an obstacle to poverty alleviation. In order of wealth, they are: Bill Gates, Microsoft founder; Amancio Ortega, founder of fashion house Inditex; Warren Buffett, financier; Carlos Slim Helu, Mexican business magnate; Jeff Bezos, Amazon boss; Mark Zuckerberg, Facebook creator; Larry Ellison, Oracle founder; and Michael Bloomberg, former mayor of New York.

And yet… global poverty continues to decline despite these individuals’ massive wealth. In the last 25 years, the share of the world population that lives in extreme poverty (defined as less than US$ 1.90 per day) has declined from 35% in 1990 to just 10.7% today. Even sub-Saharan Africa has its share decline from a peak of 58.4% in 1993 to 41% today. Globally, the number of people living in extreme poverty has decreased from 1.85 billion in 1990, to just 766 million today – in 25 years, over 1 billion people have been lifted out of extreme poverty. 

 

The numbers show that a large number of those are, however, still in Africa. Those is extreme poverty are 383 Million in Africa, 327 Million in Asia, 19 Million in South America, 13 Million in North America, 2.5 Million in Oceania and 0.7 Million in Europe. But how many of these are in Namibia? Luckily, the Namibia Statistics Agency is on the case, and conducted a Namibia Household Income and Expenditure Survey in 2015/20-16, to update their 2009/2010 one. And they have released their preliminary Key Poverty Indicators.

In order to measure poverty, they established three different poverty lines. The food poverty line is defined as those persons unable to purchase enough food to sustain themselves, i.e. unable to buy 2100 calories worth of food each day. This was calculated to cost N$ 293.10 per month. In 2003, this meant 9% of the population, or 163 000 people in Namibia, lived below this line. Since then, this number has reduced to 5.8% of the population, or 31 000 people less. 

Then there’s the extreme poverty line, i.e. those living on less than N$ 389.30 per month. This measure by nature includes the food poverty line. In 2003, this amounted to 21.9% of the population, or 398 000 people in Namibia. By now, that has been reduced to 11% of the population, or about 147 000 people no longer living in extreme poverty!

Finally, we come to the standard poverty line – those people defined as being simply poor. This is defined as living on less than N$ 520.80 per month. In 2003, this amounted to a staggering 37.7% of the population – 685 000 people. Now, however, this has been reduced to a mere 18% of the population – a reduction of almost 275 000 people no longer living in poverty! 

Clearly, the Namibian government has done an outstanding job in reducing poverty here at home. Still, that 18% is quite a sizable 410 000 people in our country. We still have some ways to go, hence the Harambee Prosperity Plan. But what about that income inequality? Well, last time it was measured in 2009/2010, our Gini Coefficient had been reduced to 59.7 – we were no longer the country with the most unequal distribution of income in the world, and moved down to sixth place. There was much room for improvement, and improve we did. The latest figures show our Gini Coefficient down further, to 57.2. This means we’re now tenth in the world! We’ve moved up to better than Zambia! 

Well, with so much improvement, why then the alarmist nature of the Oxfam report? Perhaps it is because while the world certainly has improved for those living in developing countries, income inequality has increased among the developed nations of the world, and they are feeling the squeeze on the middle class there. In fact, while there were significant real income gains over the past 15 years for those from the bottom of the income distribution to the 80^th percentile, those from the 80^th percentile to the 95^th received no gains at all – and that’s where the Developed middle class find themselves.

It is also a fact that humans are wired to pay way more attention to negative news than positive news – hence why I’ve seen little about the Key Poverty Indicators of Namibia over the past month. Media tends to focus on the negative news in order to attract eyeballs – and that’s not a balanced view of the world. On every day in the last 25 years there could have been a newspaper headline saying “The number of people in extreme poverty fell by 137,000 since yesterday”.

For example, Oxfam failed to mention that five of those eight richest people have signed The Giving Pledge, Bill Gates (co-founder), Warren Buffett (co-founder), Mark Zuckerberg, Larry Ellison, and Michael Bloomberg. That pledges them to commit more than half of their wealth to philanthropy. The total commitments under the pledge is already US$ 732 billion.

Two-thirds of the poverty reduction over the past two decades have come from economic growth. As Mr Buffet said, “In my entire lifetime, everything that I’ve spent will be quite a bit less than 1 percent of everything I make. The other 99 percent plus will go to others because it has no utility to me. So it’s silly for me to not transfer that utility to people who can use it.” It is time we harness the knowledge and experience of those who know how to create wealth if we want to create the growth required to do it. They seem to stand ready to help the world do just that.