Kudzai Mubaiwa
The past few weeks have been rather tense and filled with uncertainty in Zimbabwe due to the harmonised elections and as the process winds down, no one can clearly tell the polls outcome’s impact on the ordinary small business person.
As the results of the harmonized elections are coming in, interested parties are probably already thinking what their next steps will be and this is an important exercise that must rather be done consciously and carefully because it may impact the business model and profitability going forward.
In Africa we are privileged to have one of the foremost experts in this exercise, one Clem Sunter. He speaks on three important angles when coming up with scenarios for any given market or industry – namely consideration of flags, which he highlights as having the purpose of flags removing the tint from the glasses we all wear when we look at the future.
The tint may be caused by emotional make-up of being a natural optimist or pessimist, or by simple bias. The fact is that as the flags rise, they cannot be ignored. Some flags bring in a tipping point (such as the change of the “rate” used to exchange hard cash and transfer money; and yet others signal that already there has been a change in the scenario, such as an increase in population of a specific demography.
He also makes use of what he terms subjective probabilities – based on the flags and their upwards or downwards movements, one would assign a quantitative element by way of a percentage — informed entirely by one’s intuition and interpretation based on the flags. For example, one may say there is a 50 percent chance that the Central Business District will become a small business centre in the next five years, this due to physical judgement of the number of small businesses observed in town compared to big business and the historical trend would somewhat inform the future.
Finally, he suggests the use of a scenarios game-board that forces one to think on the impact of the interplay between the two most important factors in the industry under consideration. Narrowing down to these two in the first place is no small task, it requires a rigorous and honest exercise of listing any factors that affect the scenarios, then trading them off to end up the two single most important ones.
A matrix can then be created with the two extremes of each scenario played against each other. It works best when using internal factors for internal business scenario planning though, rather than external macro-planning.
A combination of flags, probabilities and the game board do well in assisting a business to consider a range of paths and possibilities, which makes you more prepared for what actually happens.
As the legendary scenario planner Pierre Wack once said: “It is better to be vaguely right than precisely wrong!” It is important to appreciate that the most important work of scenario planning is assisting decision making. Every serious business person must make time to do this before proceeding post the election season.
The purpose of scenarios is not to identify the most likely future — which is good because humans are bad at predicting the future. The purpose is to create a series of potential alternative futures that capture a range of possibilities including good, bad, likely and unlikely events.
The very act of developing and discussing future scenarios is meant to stretch our thinking and alert us to various threats and opportunities the future may hold. They are also useful in prompting discussion and debate about the future forces that may impact industries and companies. I suggest that the following four are some important flags to look out for in considering the future of small business once a new government comes in.
Political risk is the obvious leader as a flag. The year has been extremely unproductive in many enterprises as people got into election mode, coupled with a waiting mode. At the time of writing some will be awaiting results, then wait to see the composition of the cabinet and thereafter consider the 100 day plans and so on. Political appointments do have an impact on capital behaviour, registration issues, attitudes to and support for small business.
Manifestos that we previously explored will possibly kick in depending on who is leading parliament and council as well as the presidency. These are key flags that do impact business and can easily be assigned subjective probabilities as they involve actual numbers.
Demography is a key flag because numbers matter. Our population has notably increased since the last census and the spread has indicated clearly that youth make up a majority. These numbers will directly speak to employment levels in the economy and the socio-economic impacts thereof.
Disposable income is an important guide and flag. People can only consume that which is in their hand, and while there is no conclusive median income for the average Zimbabwean, it is clear that we have a very wide gap between the rich and poor and a small middle class that is neither poor nor rich.
Consumption patterns of these are a very simplistic explanation of why the second hand clothes industry has thrived — it’s all some can afford, whilst on the other end of the spectrum, more luxury car dealers have popped up in the more affluent sections of the city. Tied to the above would be the cash situation.
This flag matters because it affects the rate of money circulation and general pricing for the small business owner. It is crucial to take account of the multiple pricing systems including cash, swipe, bank transfer and mobile money transfer.
Your decisions on how to model or remodel your business will take account of these flags, assign them likehoods of occurring and finally select the two most important things that will affect you going forward.
I am certain that in the final matrix, the political situation will make it to the two axis! You may not need to engage a professional futurist, but with the internet once can always pick up free tools and use them. Make good use of this short remaining “wait and see” period by developing your business specific scenario plans.
Feedback: Twitter @kumub, Email kudzi@investorsaint.co.zw