22 JULY 2015 – 08:03

Like Kodak which was unable to adapt to a changing operating environment, the ANC’s misalignment with changing economic realities has been steering the economy into a cul-de-sac. Picture: REUTERS/CARLO ALLEGRI

Misaligned party heading for fate like film maker’s, writes Shawn Hagedorn

DIGITAL photography did not displace film unexpectedly. Consumers abandoned their old cameras slowly at first with Kodak continuing to market rolls of film while rolling in cash. As it eventually became clear that film could not compete, the company’s earlier options slipped from reach, inducing an executive paralysis.

The company’s image was built around “Kodak moments”. Their marketing celebrated memories and relationships.

Had the company truly “lived” its image, Kodak would have been ideally positioned to launch Instagram.

The African National Congress (ANC) transformed itself from a struggle movement to a political party. Yet its DNA remains dominated by the fairness focus that undergirded its liberation credentials. The governing challenges it was awarded in 1994 was equivalent to a new CEO failing to acknowledge that the leadership values that had been core to his or her success were now a liability.

The ANC has long needed to more fully transform itself for SA to contend with global economic demands and regional politics. Postponing this task is compounding the difficulties.

As with Kodak, it would have been far better for the ANC to constructively confront its beliefs before a profound deterioration in SA’s economic fundamentals.

People born 70 years ago have lived through the world population tripling and the global economy expanding by more than 15 times its size. The most important shift by far was lifting people from poverty.

As the world became vastly fairer in recent decades, it is tempting to presume that this is a product of policies aimed at achieving this. But as social scientists say, “correlation is not causation”….

REDUCING global injustice was an outcome of an extremely successful set of policies designed to advance peace and prosperity. Those policies are the cause; more abundant fairness is a by-product. Until the ANC updates its beliefs to accept this reality, the economy will sputter.

Given the ANC’s history, it is understandable that its senior decision-makers see the world through fairness-focused prisms that conflate causes and effects. Likewise, Kodak’s executives might also be forgiven for having believed film was necessary to capture a baby’s first steps. Yet, after contradicting evidence becomes overwhelming, views and decisions must be updated.

ANC stalwarts and their rank-and-file members have long been united by brave and noble efforts to overcome the injustices that blocked life possibilities for most South Africans. But removing those injustices did not assure a bright future for the country.

Despite their clever marketing, Kodak’s executives failed to appreciate their loyal customers had never been “buying film”, rather they were deepening relationships through preserving and sharing memories.

The ANC’s values and efforts prevailed. Immoral legislation was eradicated. But the organisation’s economic policies, through acts of omission and commission, have provoked the creation, or retention, of unnecessary hindrances.

The number of people facing dreadful employment prospects is set to be higher a generation after the country’s transition. That many former freedom fighters, including politicians, live extravagantly, further undermines the ANC brand.

The basic commercial principles that enabled the surge in global prosperity — and thus fairness — over recent decades have been meaningfully integrating within the global economy while achieving global competitiveness through specialisation by aggressively investing in companies and people. The ANC’s struggle-induced values and alignments have steadfastly resisted such integration paths.

The world economy has embarked on broad transformation and the growing pressures on SA’s policy makers resemble those faced by Kodak’s failed leaders. The rise of Asia alongside the growing influence of the information age means SA’s industrial options have long been contracting….

NOW, climate change concerns coupled with technological solutions point to the value of SA’s commodities being permanently diminished as reflected in lower commodity prices — particularly for energy sources such as coal. Own goals regarding electricity and investor relations have made a deteriorating situation more perilous still.

East Asian governments have worked with local and western businesses over the past few decades to swiftly grasp the last of the industrial era’s grand opportunities. While the global business community cools on the nation’s economic prospects, SA’s policy makers continue to make grand pronouncements about creating manufacturing jobs and black industrialists.

Global news organisations now frequently speak of “secular stagnation”, “deflation” and “stranded assets”, while Greece demonstrates the folly of seeking economic success through political ploys.

Kodak’s former executives can no doubt recall how their wishful thinking blocked objective analysis thus precluding effective decision making.

Corporate executives face mini-elections daily as customers compare their products to alternatives. A well-designed brand is intended to displace such comparisons with the odd satisfaction that follows from being a loyal customer. Competitors, however, are quick to target organisations with brand images intended to camouflage competitiveness shortcomings.

WHILE Kodak’s former executives were never going to invent Instagram, their board should have at least recognised that the organisation had lost sight of its relevance to its loyal supporters.

The ANC is no less captured by its past yet its challenges are far more demanding. Its economic strategies are less helpful to the nation’s needs than black-and-white film was to Kodak when it needed to avoid fading into a symbol from an earlier era.

Published by Business Day