Change is a constant theme in life. Times, seasons, and people change in an endless process of becoming. But while we understand the concept of biological change, understanding social and business change is more complex. Business models change, and corporations must adapt to the changing external environment or perish. While there is a presumption that businesses always have money, that is a fallacy. Businesses must also plan and change their investment horizon and direction. That’s why they do strategic planning. A country’s leadership must also plan, make decisions, and act to realise those plans.
The future is unknown. The best we can do is envision the future that we wish to create and work to make that vision a reality. There are many examples of companies inventing a future but failing to change their business models to embrace the future that they had created. Eastman Kodax invented the digital camera as early as the 1970s but ignored its potential and stubbornly held on to its legacy paper business. It ran into financial difficulties and filed for bankruptcy in 2012.
Sharp was a household name in home appliances and electronic equipment. It invented the liquid crystal display technology (LCD) and was the first to introduce a calculator with LCDs in the 70s. It applied the technology in other innovative ways to computers and household appliances. However, it did not react to the development of a new technology, light-emitting diode semiconductors (LED), which are used in many diverse applications. After many years of losses, the company was eventually bought in 2016 by Foxconn, Apple’s largest manufacturer.
Similarly, the Swiss invented the digital watch, but Japanese companies seized the opportunity. There are also many successful companies today that survived and did well despite their failures. These failures led to success in other areas. In the technology arena, they are called technology’s most successful failed products.
Apple’s Newton and Amazon’s Fire phone are examples. However, both companies have thrived because they have mastered their business models in other areas. Indeed, before Steve Jobs rejoined Apple and reinvented its product lines and its retail business model, Apple was on the cusp of failure.
The lesson from the foregoing is simple. If firms do not adapt to a changing external environment, the market solution is that they go out of business through bankruptcy or are acquired by a more progressive company and repurposed. Successful firms understand the importance of prioritising objectives. Governments are not business models. Their existence and transition are constitutionally determined, and that model has shorter time limits. Politicians are therefore elected for a period and may be given another term depending on their performance and the constitutional limits of office.
The difficulty is that the term limits are short relative to the implementation of policy initiatives to address the economic and social problems that a country faces. Political change invariably means a change of policy or the way policy is implemented. This does not often lead to consistent economic growth or development, as making change requires a longer time frame than allowed by the constitutional term limits. A political party may pay a price for weak policy by being voted out of office, but a country pays even more in the long run to rectify the underlying economic problem.
The T&T business model has been based on taxing energy sector profits, first oil, then natural gas and its petrochemical derivatives, and redistributing the proceeds through subsidies and social programmes. This led to a concentration of effort in one sector. Like oil, natural gas production is in secular decline. We are euphemistically called a “mature” hydrocarbon producer. The country is therefore in a period of transition, an attempt at a “soft landing”, another euphemism. It is becoming increasingly clear that this model is not functional and requires a new approach by all market actors.
While Government does not control the private sector, it can influence the private sector through its policy changes, which must be clear, robust, and functional. These policies must be reviewed in light of the evidence and adjusted as appropriate. Small developing countries do not have the luxury of making mistakes, and any mistakes must be corrected quickly.
These changes are difficult, and it is even more difficult to communicate when citizens may have to accept a decline in living standards. The most important point is that policy changes are made by people to positively influence the direction of change, and that requires leadership.
In his address at the Chamber of Commerce meeting on March 14, Ron Harford emphasised the importance of leadership and appealed to citizens to become masters of their fate by demanding accountability from the political directorate. Rather than listening to the call to action and accepting responsibility, Minister Young heard a challenge to his “authority” and reacted, demeaning the person who was performing the highest civic duty.
Perhaps the minister was speaking for himself, though he included everyone in Parliament. He was not speaking for the country. The redistributive business model is no growth engine. A different model is required. Regular visits to Venezuela are activities with 20 years of history behind them. What matters are results. Planning, mature leadership, decision-making, and focused actions are the critical drivers of economic transformation.