"South Africa is at a critical second crossroad, an economic crossroad, and we have work to do," author and scenario planner Clem Sunter told a recent Forum at the Gordon Institute of Business Science (GIBS).
Discussing his latest book, Flag Watching, How a fox decodes the future, in which he explores potential game-changing local and global flags or megatrends to look out for in 2016, Sunter said much of the future is out of our control. However, whether we respond to external factors with resilience or by becoming increasingly vulnerable is firmly within our power.
Sunter outlined the unique flags that would likely shape South Africa's future:
Corruption is becoming endemic and if not rooted out would harm business competitiveness.
- Quality of infrastructure
Quality infrastructure is essential for growing the economy. However, while this refers to physical infrastructure such as roads and ports, healthcare and education were equally important.
"We need leadership to bring the country together, as the last thing we want is to create more division. We have to work together as a team if global economic conditions deteriorate," he said. Especially important is the rise of charismatic young leaders.
- Pockets of excellence
South Africa has pockets of excellence in some of its educational institutions and in fields such as corporate governance, these must be used to uplift weaker areas.
Entrepreneurship is vital to job creation in South Africa and that the country needed to create one million small businesses and network them in a different employment model to reach urban and rural areas.
Sunter explained that one likely future scenario facing South Africa is a failure by the global economy to achieve a significant recovery. In this case, he said the country faced "a steep climb" and would have to implement its pockets of excellence in an effort to restructure the economy.
However, he said the outlook for the country wasn't completely dire: "There seems to be an awakening to the current situation in government. Not everything that is going on is negative and there are a number of green flags."
Sunter explained that scenario planning was as a useful tool to change people's minds and improve the quality of decision-making in organisations. "By becoming aware of the flags changing the game, it is possible to consider the tactical options to steer an organisation or a country towards opportunities and away from threats," he said. Once a flag had been identified, it is necessary to devise a credible plan to deal with its possible implications.
Flags transforming the global game include climate change, religious extremism, national debt and the aging of the population in the developed world.
Aging populations will have "extraordinary consequences for the global economy," Sunter said. While Europe and Japan have rapidly aging populations, the rapid aging of the Chinese population due to that nation's one-child policy is the most alarming trend. The resultant economic slowdown in China meant turning to India or Africa for significant growth from consumption, as their populations are more youthful. However, this would only be likely to yield results in 20 years.
- Anti-establishment feeling
In many countries, the rise of anti-establishment sentiment was starting to dramatically change the political landscape, especially in the United States.
- Climate change
Increasing temperatures, rising sea levels and increased frequency of extreme weather events are considered the second biggest security risk to the United States after terrorism, Sunter said. However, he explained that the heightened awareness of the threat meant some of the biggest opportunities now lie in smart and solar energy.
- Porous borders
"We haven't seen the levels of migration Europe is currently experiencing since the Middle Ages," Sunter said. He said people will continue to walk away from wars and difficult living conditions, and that Europe "is in total chaos over migration."
The current situation is an excellent example of why flags have to be identified early and dealt with tactically, before they become full-blown threats, he explained.
"The flags paint a disturbing picture of the world, and in many cases fear overtakes hope," Sunter said.
He concluded that it is necessary to consider the interdependencies of trends and how they interact in order to assess their impact and probability of developing into wider scenarios: "Blind spots, or the inability to spot flags or trends is caused by thinking that you are more in control than you actually are; or unfamiliarity with factors that are outside of your comfort zone."
Top Five Points
- While much of the future is out of our control, whether we respond to external factors with resilience or by becoming increasingly vulnerable is firmly within our power.
- Scenario planning is as a useful tool to change people's minds and improve the quality of decision-making in organisations.
- South Africa is at a critical second crossroads. However, there seems to be an awakening to the current situation in government. Not everything that is going on is negative Sunter said.
- Trends likely to change the global landscape during 2016 include greying populations, climate change and porous borders and mass migration.
- Mega trends or flags have to be identified early and dealt with tactically, before they become full-blown threats.