Changing world demands that corporates innovate and execute
• Faster online environment and global societal issues mean business can no longer be as usual
Aseries of events has sent shock waves through the corporate world recently. While it may not quite feel this way at the moment, we live in a wealthier world where human endeavour has catapulted societies to higher standards of living than before. However, we face new issues: pollution, an increasing disease burden that is weighing on public health services and antisocial behaviour driven by an increasingly online society.
Some entrepreneurs are coming up with solutions. Tesla recently reported promising second-quarter numbers and the share was promptly up 7% on the premise of good prospects for its new, cheaper electric car, the Model 3.
Never mind the $1bn cash burn — the most populated cities globally are concerned about car pollution, with electric vehicles seen as the solution. Goodbye internal combustion engine, hello electric vehicle!
A decade ago, MTN’s results presentation had on its cover a diaspora of customers on their cellphones. At the recent results, the picture was of two women reading off a tablet.
In SA, data and digital revenues have outstripped voice revenues. Still reeling from a fine linked to unregistered SIM cards in Nigeria, MTN is having to reinvent itself.
In China, news that young children spend so much time paying games online has led to a Communist Party mouthpiece labelling a popular game a “poison” and a “drug”, and the government issuing limitations on the amount of playtime allowed online for younger children. This triggered an overnight sell-off for Naspers’s associate Tencent.
In Europe, the European Commission is looking to make Google and other online providers pay for extracting news items from publishers and making them available online to try to save the last few remaining broadsheets.
But the trend towards fast and free online information appears unstoppable — what the customer wants, the customers gets, and without paying for it.
But sometimes what we want is not always good for us.
In the US, the regulator is considering capping the amount of nicotine allowed in cigarettes — overnight, $30bn was wiped off the value of tobacco companies worldwide.
The availability of cheaper food and a lack of physical activity has led to an obesity pandemic increasing the burden on public health services. Cue regulation such as the sugar tax in SA, or attempts in the UK to categorise the nutritional information of packaged foods with a “traffic light” system.
If we will still not behave and make the right choices, perhaps being incentivised will work. Discovery launched Vitality to promote healthy lifestyles.
But consumers can’t help themselves when they see a deal. Maybe that’s why Pick n Pay’s Smart Shopper is one of SA’s largest affinity programmes with 12-million users – buy more food, get more discount. To be fair, Vitality offers discounts for healthy foods.
But if you thought private hospital companies would benefit from our modern lifestyles, you would be wrong. Witness what happened to Mediclinic when the state medical cover for those using private healthcare in Abu Dhabi was reduced.
Despite the Dow and the JSE reaching new highs, I think it would be naïve to think that corporate behemoths have it easy these days. Even “monopoly capital” – as some spin doctors would like to call them – are being disrupted; be it by a consumer willing to jump overnight onto a new thing or by policy makers who have to find a response to societal issues. This also opens the door for entrepreneurs to disrupt the status quo – whether it’s in the car industry in the US or in the financial sector in SA.
Corporate behemoths are being forced to adapt or die at an increasingly fast pace. Business can’t simply be profitable — it also has to be sustainable.
For investors, this makes forecasting perilous, but for consumers at least we can expect more for less … which is only a good thing as long as we make judicious choices.