Business News of 2014-08-22

15 notable ideas from Dr. Otabil’s Festival of Ideas 2014

The 8th edition of the annual Festival of Ideas came off recently on the theme: "Strategic Repositioning."

The one-day gathering of influential business leaders and CEOs sought to generate ideas on the chosen theme to provide direction for leaders and organisations in the pursuit of their strategic plans.

Speakers on various topics on the conference theme were Dr Vikram Mansharamani and Prof. Ian Shapiro, both of the Yale University, Dr Mensa Otabil of the International Central Gospel Church, Ghanaian venture capitalist Mr Sangu Delle, Mr Charles Mensah of Trust Consult and Prof. Robert Hinson of the University of Ghana.

a. Microeconomic Lens. This uses prices and demand as indicators. When prices keep going up and instead of going down, demand continues to grow you can tell that the demand is not sustainable.

b. Macroeconomic Lens. Continuously rising debts are not sustainable. When you persist in borrowing, you keep transferring resources from the future into the present. Borrowing is not right or wrong in itself. A related indicator would be the extent to which the borrowed resources are deployed in the most impactful areas, which also have the potential for generating future income.

c. Overconfidence or Hubris (Psychological Lens). When you notice signs of overconfidence that are not backed by the fundamentals of an organisation or economy, it is not sustainable. Sometimes, when natural resources are discovered, it leads to overconfidence that everything will change. The bubble created does not often last. Another indicator of hubris is the initiation of ambitious skyscrapers and speculative real estate bubbles that are not financially justifiable. These projects are often followed by a period of economic decline.

d. Political Lens (Economic Distortions). A nation’s leadership sometimes takes decisions that fly in the face of the facts on the ground. While these choices may be politically convenient, they sometimes do not work for the long-term benefit of the collective. When a government continually distorts prices and demand through subsidies, price ceilings and price floors, it is unsustainable in the long term.

e. Herd Behaviour (Epidemiological Lens). This fifth approach borrows from disease infection behaviors. When the pool of people who have not as yet been “infected” by hype is large, there is more room to convert new followers and sustain the bubble. Like the “Ponzi” schemes, beyond some point, there is no one else left to convert and the bubble naturally bursts.

Dr Vikram Mansharamani (Spotting bubbles before they burst).

6. "In moments like these, you need the alignment of your key partners with your ideas and perspectives. If you find yourself continually saddled with a mismatch with your bankers, suppliers or other stakeholders, you need to make changes or see your ideas die." – Dr Vikram Mansharamani (Spotting bubbles before they burst).

7. "Until we rationalise the market for the acquisition of farm lands, the prospects for large scale commercial agriculture by private sector practitioners in response to rising global food demand will remain unrealised." - Prof. Ian Shapiro (Changing Patterns in State-Private Partnerships).

8. "Our continued dependence on export of primary products coupled with the so-called oil curse has led to a winner-takes-all economics as well as an acrimonious loser-takes-nothing politics. In the medium-term, Ghana should aim at a radical overhaul of its economic structure to add more value to its exports." - Prof. Ian Shapiro (Changing Patterns in State-Private Partnerships).

9. "Options available to companies in the turbulent Ghanaian market include recapitalisation, strategic equity investment and Pan-African diversification, among others. Ownership of 100 per cent of a company worth GH¢10,000 is still GHc10,000 while owning 30 per cent of a company worth GH¢100,000 is GH¢30,000. Mark Zuckerberg owns only 22 per cent of Facebook but is worth $33billion. Selling equity or shares in your business spreads the risks and shares the rewards. Your best bet would be to craft agreements that do not totally wipe out your control." - Sangu Delle (Financial Optimisation - Repositioning for Growth).

10. "We need a financial and structural overhaul of the economy. Ghana needs, among other things, a cut in taxes and an expansion of the tax net. Egypt took a bold step, against the advice of the IMF, to reduce taxes to 10 per cent and 20 per cent and tax revenue rose by 50 per cent" - Sangu Delle (Financial Optimisation - Repositioning for Growth).

11. Ghanaian business leaders must go on the offensive and seek for new opportunities rather than retreat and remain on the defensive.” - Sangu Delle (Financial Optimisation - Repositioning for Growth).

12. "Disruptions and uncertainty are often a source of new opportunities. Macroeconomic volatility, currency devaluation, falling confidence and other prevailing characteristics are perfect for businesses to venture into hitherto unchartered territories. It will require a planning process that systematically models various scenarios, both best and worst cases, and prepares to act accordingly. Business leaders must ask themselves what they would do if the value of a dollar rises to GH¢10 or even if it falls to GH¢1 in future." - Vikram Mansharamani (The Generalist Advantage).

13. A careful analysis of the trend of growth of the middle class in a number of countries shows that within the next decade, a number of emerging economies contributing about half of the world population would have per capita incomes above $5,000.

This would significantly change their consumption patterns and create demand and opportunity in five areas, namely; Agriculture and Aquaculture (Entire Value Chain), Energy & Power (Source to Delivery), Infrastructure (Airports, Water, Roads etc), Medical Facilities and high quality Education (from Pre-Kindergarten to university level). These five areas are strong potential growth points to consider for business and investment.” – Dr Vikram Mansharamani (The Generalist Advantage).

14. Based on the story of the Titanic and the three ships involved, there are three types of leadership responses in every crisis situation:

a. The first kind of leader is the captain of the Titanic. He is the one at the centre of the crisis but is so confident that he takes the basic precautionary measures for granted, dismisses the crisis when it first hits, responds haphazardly and ends up with a major loss of lives and property.

b. The second kind of leader is the captain of the Californian. He is very near to the disaster and sees the Titanic in danger. However, he fails to read the signals properly. He has so much bought into the idea of the unsinkable and impregnable Titanic that he sees the SOS flares as celebratory or party signals and ignores them.

c. The third kind of leader captains the Carpathia. He spots the signals rightly from afar off and races through the night to the scene. He puts in place the right mechanisms on the way and acts decisively to bring help to the situation. Even though, he arrived four hours after the ship sank, he was able to save over 700 lives. That kind of decisive leadership is needed at a time like this.

Dr Mensa Otabil (Leadership Mindset for Uncertain Times).

15. While the economic challenges facing us are enormous, we cannot afford to be perplexed and so overwhelmed by what we see that we end up frozen into inaction. We have to act decisively, methodically and urgently to avert any possible disaster. – Dr Mensa Otabil (Leadership Mindset for Uncertain Times).

By: Rev. Albert Ocran

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