Civ 001 Creating wealth in the new South Africa - an engineering approach Created by James on 6/18/2013 5:33:25 AM
In considering the question of how to create wealth in a country, engineering training immediately directs us to seek precedents from which we can learn.
Consideration of those countries in the world where there are high standards of living and limited or no poverty immediately shows that there is a single common thread, namely effective and efficient use of productive technology to gear the capabilities of the people of the country. Switzerland, Germany and Japan are examples that spring to mind. It is very evident from visits to these countries that their technology is well designed, well implemented, well maintained and well operated. Things “just work”.
So, one finds that the effective application of technology is the cornerstone of creating wealth in ANY country – it is the only proven recipe.
Random social experiments that jeopardise the reliability and sustainability of technology are fundamentally at odds with any prospect of a vibrant economy, particularly when those policies involve diverting the money that should be going to infrastructure development and maintenance to rewarding people on the basis of criteria that cannot be linked in any way to wealth creation.
Reflection on this principle immediately indicates that South Africa is going in the wrong direction as far as technology is concerned. It does not matter what technology or methodology one considers, be it roads, sewerage, water supply, electricity supply, electricity distribution, health care, education, justice, etc., in all cases once-reliable and sustainable infrastructure and capability is progressively degrading as a consequence of failed experiments such as outcomes-based education, the abolition of the death penalty, lack of maintenance as in the case of roads, water supply, electricity distribution, etc.
Irrespective of where the money and manpower have gone that have resulted in this widespread degradation of technical capability and assets, it has been inappropriately applied.
If South Africa truly aspires to create sustainable wealth, we need to cease redirecting funds from infrastructure, whether it be hard infrastructure such as roads or soft infrastructure such as health care professionals, teachers, engineers, etc. More critically, we urgently need to stop driving experienced personnel at all levels of economic activity out of the country on the basis of their skin colour. Reverse apartheid coupled with a lack of recognition of the vital role of knowledge and experience in creating wealth is rapidly crippling the capacity of South Africa to create sustainable wealth.
We stand at a watershed – can government refocus to retain and grow technical capability and infrastructure or will it persist with a policy of endowment at the expense of sustainable wealth creation? Redistribution does NOT create wealth, it redistributes wealth away from those with the proven ability to create wealth. If remuneration does not relate directly to productive input that creates more value than it consumes, then the economy will progressively degenerate. Arguably, there was indeed a need to level the playing field, but the problem now is that the playing field is no longer level: it is tipping in the opposite direction, towards national impoverishment.
Spending money on elaborate infrastructure, such as prestigious soccer stadiums, does NOT create wealth. Instead it simply creates an illusion of wealth but does not sustain productive activities which create material value that significantly exceeds the cost of inputs.
ENGINEER AGAINST FAILURE
In the light of what I have written above and what follows, I would like to position myself. I am first and foremost an engineer – my passion is engineering and solutions that work. I first started designing and making things when I was about six years old and I have been doing this ever since.
When I was three my father was erecting a trellis. A steel pole slipped from his hand and split my skull, leaving me with a deep-seated abhorrence of failure and a love of solutions that are elegant and work reliably and dependably. This grounding has been pivotal in shaping my career.
Having graduated at Wits in 1976 as a civil engineer, I went on to do a PhD in construction materials and then found myself having to learn how to use computers in order to process my laboratory test results.
I soon discovered an aptitude for the strategic value-adding application of computers in business and in 1989 set out on my own to bring the “disciplines of engineering” to the information technology industry.
I rapidly became aware that I placed strong emphasis on preventing failure, but it took me about ten years to realise that as engineers we are not trained to design bridges to stand up, we are trained to design bridges not to fall down. This is a fundamental difference in approach that I have applied to all aspects of my work as a management consultant and strategist.
“Engineer systems and solutions NOT to fail” has become the cornerstone of my approach and is as fundamental to the design of business strategies and national policies as it is to businesses.
Until we formulate strategic business plans and national policies not to fail, we will continue to find that failure is rampant as is evident in many areas of South African wealth-producing and maintaining economic activity today.
This worldview leads me to the conclusions presented above – as a nation we are going in the wrong direction – we are doing things that are destroying the sustainability of wealth creation wholesale, instead of doing all that is required to preserve and grow our capacity to create wealth.
As a nation, we are not talking about failure and how to prevent it, and so it is rampant, whether in the form of a blowout after hitting a pothole, a rundown hospital with doubtful hygiene, children who leave school ill equipped to compete on the global playing field or electrical transformers silently decaying as a consequence of an invisible lack of maintenance. Just below the surface of our apparent prosperity lies a mountain of technical neglect that is destined to dramatically damage our economy in the near future.
I am passionate about success through implementing exceptionally high-value strategic concepts cost-effectively and timeously to achieve success by preventing failure. This is missing from the current South African economic and technology arena.
What is strategy? Strategy is the essence of why an organisation (or nation) exists and how it thrives – the right things as determined by the customers (or voters). Tactics is doing things right.
Our focus should be on determining the right things to do, using technology and methodology to support exceptionally high-value outcomes and then doing them right. We must prevent failure at all costs – failure is always more costly than doing it right first time, provided that there is a valid and valuable value proposition to start with. Spending millions on number plates with microchips consumes value.
If we do the right things well, the organisation or nation will thrive, if we do them not so well we will survive, but if we do the wrong things, the organisation will die and it is only a matter of how quickly. If we do the wrong things well, our organisation or nation will die fast, or else it will die slowly.
South Africa is approaching a tipping point where our failure to maintain core infrastructure and invest in core technologies and methodologies is almost certainly going to slip into the die-fast quadrant – we are getting very good at spending money in ways that do not create sustainable value, and even better at driving out experienced people and making those who remain feel unwelcome.
The implementation of strategy has a time dimension. A strategic plan is not a forecast or a goal, it is a trajectory of change, the path to success or failure. It always follows an exponential curve; this is directly comparable to the trajectory of change of direction of a motor vehicle, aircraft, ship, etc. It starts out tangential to the current direction and slowly changes direction IF the hands on the steering wheel are constant. Inconsistent steering leading to constant changes in direction will prevent change from occurring, and change that takes place too rapidly will become unstable. The car will roll, the ship capsize or the aeroplane stall.
South Africa is in a situation where it is seeking to change too much too fast and instability is now rapidly approaching. Instability in policy in various areas is also crippling the capacity to plan effectively and to execute plans that deliver lasting sustainable value and wealth creation.
In my journey of discovery into the factors that cause failure in information technology investment, concentrating particularly on the implementation of large business information systems (enterprise resource planning –ERP – systems), I have come to understand the critical factors.
More recently I have come to understand that the same factors cause failure of all technology investments, including electricity supply failure, failure of road maintenance, etc. and that these factors are in fact an indication of failure in strategic capability – the ability to visualise a future state and achieve it.
These factors are (percentages indicate relative contribution to failed projects):
- Technology mythology (30%). We do not need to resurface the roads, they will just keep working; we can set any policy we like and it will work, etc. There is lack of understanding, inadequate knowledge and experience, etc.
- Lack of executive custody and inappropriate policies (20%). “This is MY project and I accept full responsibility for the outcome” = “I have abolished the death penalty and you can hold me accountable if your loved one is murdered.”
- Lack of strategic alignment (15%). This means lack of a clear definition of the essence of why the organisation exists and how it thrives.
- Lack of an engineering approach (12%). This means lack of a systematic, thorough approach designed to prevent failure and thereby achieve success.
- Poor information management (10%). “We do not really know how to measure the results of what we are doing and even if we have the measurements, we do not know what to do with them.”
- People/soft issues (8%). Here we are dealing with human adaptability versus wisdom and competence, which equates to the synthesis between relevant knowledge and relevant experience. Each person is a complex composite of knowledge and experience.
There is an exponential trajectory of value-creating knowledge and experience. It takes about 40 to 50 years from birth to form an engineer or other high-level professional who can conceptualise and execute projects that create high-value sustainable wealth and even then very few are able to do this. It will take more than 80 years of appropriate activity to achieve demographic parity with regard to high-level engineers, medical specialists, educators, etc. in this country IF we plan and execute to prevent failure. This is not happening; we are driving out the very people who are the only ones who know how to do this.
There are three worldviews according to Marco Blankenburgh:
i. Guilt and innocence – the North American and European culture
ii. Honour and shame – Asia, the Middle East, some of South America
iii. Power and fear – some of Africa, Asia, some of South America
Understanding the differences and tensions between these worldviews is vital to understanding South African politics and thereby to understanding how to prevent failure within the South African context.
- Technology and methodology issues (5%). Outcomes-based education (OBE) is a technology or methodology. It has failed to deliver because of the huge human-change impact associated with transforming an entire education system. It will probably take another 20 to 50 years for outcomes-based education to deliver on expectations, simply because of the magnitude of the human-change impact.
However, the worst thing South Africa could do now would be to scrap outcomes-based education and start another social experiment. We are committed to OBE, now we must MAKE IT WORK!
In order to achieve success we must first prevent failure, then we must manage towards success. The critical factors for success are:
- Executive custody and policy (25%). Leaders at all levels MUST be held accountable. If the leaders of major US banks had faced 20 years on a chain gang for their actions, they would have conducted themselves differently.
- Strategic architecture (18%). There must be a clear description of the desired future state of the organisation that is practical and achievable and is designed not to fail.
- Strategic alignment (16%). A clear and detailed specification of the journey is needed.
- Business integration and optimisation (14%). This is the aspect of how human beings integrate with the technology and methodology to create sustainable value, i.e. the management of the change process.
- Classic project management (12%)
- Information management (10%)
- Technology/methodology (5%). The technology or methodology is almost irrelevant until all the other issues have been dealt with. Yes, there must be reliable technology or methodology, but that in and of itself does not create value. People using technology create value.
When one reaches a point where technology is starting to become a visible issue, such as potholes in roads, power supply failures and other technical manifestations of problems, then it is time to realise that the first six factors are NOT being adequately addressed.
The ‘load shedding’ of 2007–2008 was first and foremost a failure of executive custody and no national executive even offered to resign as a consequence of inappropriate policy decisions. The blackouts were also a failure in terms of strategic architecture, failure to have a clear view of the future state of the country and also a failure of strategic alignment: there was no clear plan of the journey towards the future state.
On the basis of this analysis, the fact that technology and methodology failure has reached epidemic proportions in every sector of the South African economy indicates that dramatic collapse is imminent.
Drastic measures are needed to alert government and business to these harsh realities and to mobilise initiatives which need to be every bit as bold as those that tore down the walls of apartheid in the years preceding the elections in 1994.
The application of these principles within a context that places appropriately high value on knowledge and experience, irrespective of skin colour, is vital if South Africa is to avoid slipping catastrophically into the abyss of technology and methodology failure that looms large before us.
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