economic wave
Local businesses could find themselves at a disadvantage internationally as they fail to recognise global trends, writes Reg Rumney after an interview with bestselling author Alvin Toffler
After becoming a household name three decades ago, futurist and best-selling author Alvin Toffler still keeps up with events in the global marketplace.
But an interview with him in Johannesburg two weeks ago suggests that not keeping up with global business trends may be the Achilles heel of South African business.
Local businesses, preoccupied with issues such as empowerment, labour law and threats to home markets from outside competition, could fail to surf to success on the “third wave” Toffler and his wife Heidi have described.
The Tofflers’ thesis is that there are three waves of economic development. The first is agricultural, the second industrial and the third wave the “knowledge economy”, where knowledge is the key factor for dominance.
Toffler stressed that the change is more far-reaching than the summary suggests. “Yes, I think that’s true but there’s more to it, in the sense that when you see an advanced economy shifting from essentially physical, repetitive, factory style labour, to knowledge work, everything changes. What changes is family structure, culture, values, politics, everything else.”
Toffler and his wife have argued that the world is going through a change now that is at least as radical as the Industrial Revolution.
“When you went from being a peasant to being an urban, industrial factory worker, everything changed, not only your location. The same thing is happening now, where a new way of life is beginning to emerge built around this new kind of economy.
“I would say that the Asians were the first to adopt these new methods. We developed them but we were so fat and happy, we didn’t even apply them as quickly as the Japanese did, and then around the world I would say that the Europeans have been very slow. In fact, in Europe, which has so-called advanced economies, it’s still basically a smokestack economy.
“And if you look at Europe, after 50 years of computers, they don’t have a single world-class computer company. In fact, Bull, which is French, is kaput. Nixdorf, which is German, is dead. Olivetti is out of the business. International Computers in London belongs to Fujitsu.
“Europe has simply never understood the implications of all of this and so it’s behind the United States in this respect.”
A pointer for South Africa is how South America is approaching technology, says Toffler.
“The South Americans, who have also been late in understanding the implications of this, are now scrambling on board. Internet usage, for example, in Brazil increased 130% last year.”
However, he says, there is no quick answer as to how Africa, which seems to be stuck in the first wave of development, agriculture, can ride the third wave.
“I believe that the hardest problem is to get from a peasant economy to anywhere else. It is easier to go from the middle class to affluence, than to go from poverty to the middle class. But the hardest of all is to go from being a peasant in a society that is industrialising, or even more advanced than that. And the key to that, I believe, is education.”
There is no industry that is not going to be rocked by what is happening, he says. It’s not only that new companies are forming, like those using e-commerce for a wide range of products. Companies are facing competition from businesses they never dreamed would be competitors. For example, electric utilities in the US are now taking on telecommunications companies.
What South African business may not have taken note of fully is the main impact of the trends Toffler has observed on management. “It changes the nature of management, it changes the way people work, it changes lifestyles, it changes how you organise a company.”
So what should management do? “The first thing it has to understand is that it’s not dealing with incremental change, just cutting costs, laying people off. That’s not the solution to your problems because that will simply keep you going a little bit while someone else comes and takes the field away.
“You have to reconceptualise. What’s your business, what do you really want to be doing? You have to take parts of your business and outsource them to others who may be able to do a particular function better.”
It also changes the way workers are treated. “This month Akio Morita died, the founder of Sony. I remember a conversation we had with him and he said, “I can go into the factory at 7am and say to people working on the assembly line, ‘I want you to be productive at 7am.’ But can I tell knowledge workers to have a good idea at 7am?
“It doesn’t work that way. And if you want innovation, if you want to come with new and improved services or products, if you want to create new value, you need to create an atmosphere which is less authoritarian, less hierarchical, an atmosphere in which it’s okay to come up with a crazy idea, because you don’t get good ideas unless you listen to a dozen bad ideas.”
Looking in detail at what has happened to the South African business scene in the short space of time since the 1990 unbanning of the African National Congress, the force of Heidi and Alvin Toffler’s theory on acceleration sinks in.
Business in South Africa is more fluid than ever, with once-proud conglomerates such as Premier now liquidated, and new companies like Dimension Data profiting from the technological innovations that Toffler and his wife saw as the engine of change in the past three decades.
Toffler eschews the word “prediction”, because that implies a certainty he and his co-author do not have. But as Future Shock appeared in 1970, Toffler says he can lay claim to anticipating many things we now take, or almost take, for granted, such as cloning, the VCR, cable-TV, and, to neutralise the notion that his ideas are all Utopian, the break-up of the nuclear family.
He volunteered what the book had missed, explaining, “We were young, naive and we believed economists.”
At the time of writing Future Shock, Toffler says US and European economists were certain the straight line economic growth the West had seen since World War II would continue, with the US boom unceasing. “The economists said, we understand this so well that we’ll never have another recession, because all we need to do, and this was the word they used, is “fine tune” the machine.
“Well, you know, Future Shock was regarded as a book of radical ideas at the time. But we weren’t radical enough because we accepted that conventional wisdom, a mistake we will not make again.”