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\nby Lionesses of Africa Operations Department<\/p>\n<\/blockquote>\n
We have often warned in the past of cold winds rushing across from the West towards Africa. With one foot in the UK\/EU and one foot firmly in Africa we have been lucky enough to see early the impact of various events in both regions and have been able to react quickly to warn our membership. Just in the last few years we have had articles at the early stages of Covid when we saw the tragic events unfolding first in China and then in Italy; and then when businesses rushed to go online, when home deliveries became the only answer, when the supply chains started to clog up, when the US yield curve inverted, when the war started in Ukraine and when inflation started to rear its ugly head. How we respond to such events define our lives and our businesses for many years, but (and this is why we send out these warnings) to respond early or to plan for such events gives us a massive advantage. <\/strong><\/h3>\n
If we are able to respond in a nimble fashion, early and with a plan, usually (usually – as there are no guarantees in life), we not only survive, but move ahead of the competition and out into the sunlight earlier. We have previously used the analogy of those cyclists who pull away from the pack as the climb up the mountainous road becomes steep, allowing them to free wheel with a clear road ahead when they move over the summit and back down the other side, thereby increasing their lead further – tough times are no different. Opportunity for some; pain, sorrow and horror for others.<\/p>\n
Amongst the many issues hitting the globe currently, the world is fast moving away from a \u2018free cash\u2019 environment into a high interest rate world (at least for the foreseeable future). The knock on from this we are already seeing across Africa as the US$ becomes stronger, increasing dramatically the price of all imported goods (and of course petrol and diesel) whilst tightening the noose around our African countries\u2019 borrowing and foreign reserves. This is also impacting investment into Africa as the lake of cheap US$ dries up. One could argue that interest rates in most countries of Africa have always been high, so what is new? One could argue that currency reserves have always been tight! One could also argue that as a block, Lionesses have never had to worry about interest rates on loans when so little lending has reached our \u2018bootstrapping\u2019 world (little wonder if as the World Bank confirm the average<\/span> collateral for loans in Africa sits at a huge >200%) although, these all will still impact our lives dramatically. One could also argue that this offers fabulous opportunities for investors as Lionesses are not weighed down by huge and now expensive debt or massively overinflated valuations – more on that in a future article!<\/p>\n
Sequoia Capital, a Venture Capital firm with assets under management of around US$85 billion (plus loose change) recently produced a presentation to all the founders of the companies into which they had invested, entitled \u2018Adapting to Endure\u2019 (here<\/span><\/a>) where they announced this for the globe was a \u2018Crucible Moment\u2019. They opened this presentation thus: <\/p>\n
\u201cWe believe the current market environment is a Crucible Moment that will provide challenges but also opportunities for all of you. Many legendary companies are forged during challenging environments as competition thins, real businesses get built and the <\/em><\/strong>opportunity for innovation is seized by those who see it.<\/em><\/strong><\/span>\u201d<\/strong><\/p>\n
So how do we ensure that we are the \u2018some\u2019 who grab the opportunity, not the \u2018others\u2019 who get lost in the \u2018pain, sorrow and horror\u2019? That we are the ones in the words of Sequoia, \u2018who see it\u2019?<\/p>\n
First – planning is everything! <\/p>\n
In the paper \u2018Plans Are Worthless but Planning Is Everything: A Theoretical Explanation of Eisenhower\u2019s Observation\u2019 by Contreras, Ceberio, and Kreinovich (here<\/span><\/a>) they point out that: \u201cUS President Dwight D. Eisenhower emphasized that his experience as the Supreme Commander of the Allied Expeditionary Forces in Europe during the Second World War taught him that \u201cplans are worthless, but planning is everything\u201d<\/em>\u201d.<\/p>\n
How can that be? <\/p>\n
As they say: \u201cAt first glance, the Eisenhower\u2019s observation sounds paradoxical: if plans are worthless, why bother with planning at all?<\/em>\u201d \u2026and who are we to disagree, yet his point is valid. By making a plan you have to first recognize the problem (\u2018I am constantly being beaten by my competition\u2019\u00a0 or \u2018if electricity load-shedding continues I shall go out of business\u2019) or potential problem (\u2018my business relies on a supply chain that relies on a railway system that is rife with bribery and corruption\u2019) or even global problems (\u2018my factory is in Lagos and the sea level just keeps on rising\u2026\u2019 (having seen the floods first hand, this is a serious issue)). By recognizing the problem this in itself is a massive step towards becoming nimble, being able to respond quicker when the problem actually hits, but to make a plan for such an eventuality moves you to a whole new level of preparedness. Will the plan be perfect? Of course not, there are so many variables – <\/p>\n
The floods arrived, wiped out our warehouse but also the warehouse we had as a potential backup\u2026and we have a 40 foot container heading our way from Apapa Quays\u2026Panic? No. We now know we need a warehouse of these dimensions (having considered many alternatives), with access to the motorway, able to take a 40 foot container and have the team already here with us at the appointed place\u2026and\u2026and\u2026 (meanwhile our competition 3 blocks down are just reaching for their gumboots\u2026). This is why, the people who built the plan are the best people to have around when things change, when the \u2018fog of war\u2019 descends, or \u2018events\u2019 in and around your business starts to take over any and all concentration. This is the moment when your plans change, but you will know where you are on the map and where you want to be, it is just the solution that needs to be fine tuned.<\/p>\n
Secondly, we have to get our people behind us. We wrote recently (here<\/span><\/a>) about truly involving your Team to \u201c\u2026voice hunches, concerns, doubts, or intuitions that would otherwise remain dormant<\/em>\u201d, you can then work with your management team to remove the chaff from the grain, to take seriously that which you believe to be a potential threat. <\/p>\n
Will this make your team or even your company as a whole pessimistic and downhearted as they start to see threats and problems behind every bush? This is where your leadership takes on a whole new level and another paradox appears. <\/p>\n
The Stockdale Paradox: <\/p>\n
\u201cYou must never confuse faith that you will prevail in the end\u2014which you can never afford to lose\u2014with the discipline to confront the most brutal facts of your current reality, whatever they might be.<\/em>\u201d <\/strong><\/p>\n
Admiral James Stockdale, who said these words, certainly lived that belief whilst a prisoner of war in Vietnam for seven-and-a-half years during which time amongst his fellow prisoners the realists survived (he being one), whilst the optimists who truly believed they would be released soon, perhaps by Easter, perhaps by Christmas\u2026, slowly died of broken hearts and lost hope as yet another year passed. <\/p>\n
This pinning of hopes on an event or rescue that may or may not come is so dangerous.<\/p>\n