The past has great bearing on the future

2008-03-25 00:00

These past weeks, I have been touring South Africa conducting business workshops. One of these was devoted to the subject of forecasting, a practice we don’t seem to be too clever at in our country.

Part of the work makes the point that, particularly from the perspective of establishing trends, the past has great bearing on the nature and structure of the future.

Biblical scriptures refer to this thinking in a very particular way, of course, saying: “You reap what you sow”. If you sow bad seeds, you won’t get good growth.

It never ceases to amaze me how people confront the reality of a situation as if they had no part whatsoever in the bringing about of that outcome.

An example of what I mean would be DStv, which is going to lose a lot of its established subscribers because they perceive that its service is no longer worth the money, when it offers little more than sport and repeat after repeat of its other programmes, for increasing subscription costs.

That is what DStv’s service strategy is delivering today, yet only once it finds its customers hard to hold on to will it start to question what went wrong.

Over the last few weeks, the point I have been making is that times are going to be tough.

My concern in this regard is that many companies will find the objective of making lower levels of turnover sufficiently profitable an impossible one to achieve. It’s as if the future has crept up on them and hit them on the back of the head with a big thump.

Unfortunately, if you manage looking backwards, this tends to be the case.

It is no good asking: “Where did that come from?” It has been coming for a long while — you have just failed to see it approaching.

Another interpretation of the theme of this column is: “You have made your bed and now you must lie on it”. This is a well-worn proverb meaning that you will have to pay a price for your inadequacies.

The very essence of a sound forecasting technique is to see the future much earlier.

The problem for many businesses is that they do not have a system that enables them to see the results of their strategy and make a prognosis of where it is taking them until it is far too late to do anything about it.

They do not have the control or knowledge of what is happening so that they can put right that which is wrong and capitalise on that which is right.

Most probably, DStv believes it is doing a fantastic job. When DStv loses subscribers, it will, more than likely, put this down to the economic downturn. It will fail to appreciate that it is not the downturn itself that will lose the subscribers, but those policies and strategies that have been adopted in order to maintain profit levels that will be at the root of lost customers and ultimately lost profits.

I am talking about cause and effect. If you deliver bad product or poor service, you don’t blame the economy, you blame your own actions, your strategy: you reap what you sow.

South African businesses need to design companies in such a way that economic volatility, when it presents itself, doesn’t have a fatal outcome on profits.

This means fantastic product/service offering; a totally committed workforce and, perhaps above all else, an understanding that continuous improvement of profitability has everything to do with healthy gross margins and the lowest fixed and interest cost structure possible.

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