Nostalgia has its comforts. But looking ahead rather than behind may be the better way to live our lives. This is especially true for those with the responsibility of directing a business enterprise. They should move on from the mistakes they have made, in business or life, and not throw good money after bad. Rather do that than sell off the best divisions in order to sustain the underperformers with capital that could be better deployed elsewhere. 

Do as Woolworths did with David Jones – but do it faster. And when you have a seriously erring CEO, change the CEO (and the board members who supported them), sooner rather than later. Furthermore, don’t encumber your stronger operating managers with having to service the capital that was once wasted overpaying for acquisitions. The poor deals and the waste of shareholders’ capital were not their mistakes.

Your stronger managers may do well operating the plant and equipment entrusted to them and therefore need the requisite recognition and encouragement.  To do this, the firm should accurately estimate the current market value of the plant and equipment they are held responsible for and reward them when they achieve returns on this capital that exceed the required returns (calculated as the opportunity cost of the capital employed). The investors who value the business will, as managers should, look forward and estimate expected returns based on current market values – and add or subtract based on expected performance.

The technology for dramatically improving the productivity of capital is available to the firm and its competitors.

The future is for every business and every individual to prepare for. The outcomes will be knowledge and technology-driven. The technology for dramatically improving the productivity of capital is available to the firm and its competitors. The future will belong to those who succeed best or at least better than their rivals in doing so and pass the test of the market.

Frustrated South African customers of the state-owned enterprises are only too aware that they operate to serve other stakeholders, not their customers.  Other key performance indicators seem to be more important, most obviously to serve the interests of their employees or suppliers without regard for the bottom line. What will the future bring for this operating model that so clearly fails to deliver to customers? The obvious solution is to introduce incentives for them, based on the same return on capital criteria that make private businesses so customer-friendly. Is this politically possible?

The accelerating pace of technology

The pace of technology may well be accelerating and its outcomes becoming more uncertain. This pace of change has become a source of ever greater anxiety to bosses and their teams as well as to parents and their children. Ours seems a less happy era and maybe technology is to blame. Yet there is also a business imperative to apply technology¹ to improve resilience and reduce the dissonance of the workforce, in that way enhancing productivity and competitiveness.

¹ I should disclose an interest. I am an investor in a South African start up, Neurozone, that applies neuroscience to improve the well-being of their team members and so the performance of the business.

The evidence from working from home, made possible by improved technology, suggests a great deal about what the future of work may hold. It suggests that the future will be one of fewer hours worked, including fewer (unproductive) hours getting to and from the workplace. Fewer hours worked because improved technology enables more output produced and therefore more income per (fewer) hours worked required to satisfy the necessities of life, and more time for other important pursuits such as exercise or bringing up children.

Those who prefer to work from home but turn out to be less productive doing so, may be willing to accept lower rewards to work from home.

If collaboration in the workplace is valued – when firms believe it leads to more innovation and competitiveness in serving customers – the firm may therefore have to pay more, as well as give more time off, to get key workers to come to the office. Those who prefer to work from home but turn out to be less productive doing so, may be willing to accept lower rewards to work from home. If working from home makes them more productive however, they could seek enhanced rewards from firms competing for their valuable services. After all, a free life is about choices and trade-offs and the freedom to make them.  And an inescapable responsibility of any business is to evaluate the contribution made by all of its workforce, wherever they are.

The larger challenge for all will be to find meaning in life. A strong sense of vocation, of finding purpose and satisfaction in work for its own sake, as well as for what it may buy – including more time off – will remain as helpful and important as ever for true well-being.

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