Should auld acquaintance be forgot,
and auld lang syne?

Nostalgia has its comforts. But looking ahead rather than behind
may be the better New Year resolution. Especially for those with
the responsibility for directing a business enterprise. It is best for
them to move on from the inevitable mistakes they have made in
business or in life. To not throw good money after bad to avoid
embarrassment. Not to not sell off the best divisions to sustain the
underperformers with capital they should better be starved of.
Do as Woolworths did with David Jones – but do it much faster.
And change the seriously erring CEO and the Board members
who supported them sooner rather than later. Furthermore, do not
encumber the strong operating managers with the capital that was
once wasted overpaying for acquisitions. The poor deals and the
waste of shareholders capital were not their mistakes.
Yet they may be doing very well operating the plant and
equipment handed to them and need recognition and
encouragement accordingly. Therefore, 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 exceeds required returns,
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
will add or subtract based on expected not past performance.
The future is for every business and every individual to prepare
for. The technology for dramatically improving the productivity of

capital is available for you and your competitors. If only you or
they knew better how to serve your key stakeholder, the
customer, they will attempt to do so expecting to add market
value for their owners. The future will be theirs that succeed.
Frustrated South African customers of the state-owned
enterprises know that they operate to serve other stakeholders,
not their customers. Other KPI’s are much more important. Most
obviously to serve the interest 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 makes private business so
customer friendly. Is this politically possible?
The pace of technology may well be accelerating and its
outcomes ever more uncertain. And a source of ever greater
anxiety to the bosses and their teams. Ours seems a less happy
era. Maybe technology is to blame. Yet there is also a business
imperative to apply technology, 1 to improve the resilience and
reduce the dissonance of the workforce, so enhancing
productivity and competitiveness.
The evidence from working from home, made possible by
improved technology, is very suggestive about what the future of
work may hold. It suggests that the future will be one of fewer
hours worked, including fewer (highly 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 to play or bring up the
children. If collaboration at the work-place is valuable – because it

makes the firm more innovative and competitive – the
representative firm may therefore have to pay more, as well as
give more time off, to get key workers to come to the office. And
for those who much prefer to work from home and are therefore
less productive, may well accept lower hourly rewards to do so.
The 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 time-off will remain
as helpful as ever.