Survival of fittest as unproductive die out
Survival of the fittest. A brutal hypothesis, maybe — but it’s so real, so relevant to the weird and difficult time we find ourselves in. Migrating wildebeest know the risk, the threat, the cost, but they cross the river anyway. They have to. So do we.
In the business world survival of the fittest is going to be the rule of play, whether you like it or not. We have to come to terms with it. We are all involved in any number of businesses, coping as they may or may not be to varying degrees in the struggle for survival — dependent primarily on the extent of outside force and the internal ability and willingness to adapt.
For some, particularly those in the travel and hospitality sectors, that external force may prove too powerful and overwhelm them. Some will succumb. Some will survive. We have to eat (and drink, and smoke, and dance) after Covid19 has passed.
The extent of restructuring required to survive this plague is beyond what any strategic think-tank would have contemplated, let alone proposed, from the calm waters and sterile rooms in which these things are formulated.
There is nothing much you can do about turnover for now. It’s all about costs, all about selfsurgery, all about no stones unturned, all about the death of holy cows, all about life at (almost) any cost.
For now, cash really is king — keep your creditors at bay, encourage your debtors to pay, and cuddle up to your bankers, as they’d better cuddle up to you. It’s time for capital partnerships now, not covenants and ratios.
As distant and difficult as this may seem now, this clearing out of the less productive will result in a better, stronger business environment when the skies finally clear. We’ll emerge fitter, more competitive (locally and internationally), and well positioned for growth, expansion and employing. It’ll be turnover’s turn as we look to bigger markets and enabling market shares. There is no other way to address poverty, inequality and unemployment — we need to jettison weight to reach escape velocity.
But the choices we have to make to get there are borderline unacceptable, if not unbearable; twitter: @mark_barnes56
difficult to capture in words. People costs are always a big number in the income statement. At first there will be human economic casualties beyond what our already untenable situation of 30%-plus unemployment can cope with.
But somehow, between the state and the private sector we will have to deal with survival at that level too. We must rescue people somehow, but we cannot afford to rescue a business that cannot demonstrate a sustainable future on its own, that’s based on no more than a continuation of its failing past. This is as true for the private sector as it is for state-owned entities.
In the private sector the decision to allocate scarce capital is made by the market
— which has no allegiance, no fear, no favour, no soul perhaps — but it is efficient; it always discovers the truth.
In the public sector, commercial sustainability and social mandates can mix to make a mess. Only a fool (or a different agenda) would spend good money on a failed business model. Bail-outs are not a business strategy, they perpetuate dependence.
Allowing the best of the breed to fill their rightful places in commerce will deliver the low cost producers that can afford to employ more resources, efficiently. We won’t get this right in strategic thinktanks and advisory committees, no matter how many slides, structure diagrams, colours and orators are in the room.
We will have to be led, through the rain and the mud and muck that is the swamp of mistrust into which we are now sinking, by foresight, bravery and honesty, until that rainbow we all voted for appears on the horizon. And with it, the prospect of economic dignity for all.
Barnes, a former SA Post Office CEO, has had more than 30 years of experience in various capacities in the financial sector