Firms need to think outside the box

Our ordeal started around 1500 hours when we heard a desperate cry for help. Our attention was drawn to a fishmonger whose canoe had capsized.
He was about 500 metres away from us and was just holding on to the tip of his canoe.
We were also struggling to sail ashore. The area towards the launching pad is infested with nets because of its easy accessibility.

We struggled to navigate through these nets given that the engine capacity of our boat was only 50 horse- power, which makes its propeller very vulnerable to nets and weeds. Our ability to navigate was further complicated by a marauding wave that was sweeping across the dam.
We were literally between a rock and a hard place. We were torn between whether to save ourselves or to save both the fishmonger and ourselves.

We decided to risk our lives and opted to save the fishmonger’s life as well. By the time we arrived at the scene of accident the fishmonger was almost on the verge of giving up.
We threw a rope to him but he no longer had the energy to hold on to it. One of our crew members stepped up and dived into this dangerous wave.

He carried the fishmonger on his back and swam back to the boat. Halfway towards the boat the fishmonger slipped from his back.
He managed to get hold of his leg and he tied it to the rope. He swam to the boat and instructed us to pull the rope fast.
By the time we pulled the fishmonger to the boat his stomach appeared to have ballooned from gulping too much water.

Chris quickly mixed salt and fresh milk we had and forced it into his mouth and thereafter he started vomiting.
The rescue operation had taken a toll on our petrol, which restricted our options.
We surrendered our destiny to fate and drifted until we were thrown to the edge of an island where we immediately became dinner for mosquitoes. We were moving from one chaotic situation to the other.

This mirrors the situation most companies are finding themselves in. They have to put out fires at virtually every turn with no tangible solution in sight.
Chaotic scenario in Zimbabwean industries
Zimbabwean companies are threatened by liquidity challenges which can be simplified as follows, Company B owes Company A US$50 000 and Company B is in turn owed the similar amount by Company C.

Company B fails to pay Company A because Company C has failed to pay Company B.
Company C fails to pay because Company D has failed to receive its US$50 000 from Company E.
Imagine if all companies have 15 percent Value Added Tax payments which has to be remitted on or before 25 days of issuing the invoice and on the 30th these companies have to pay NSSA contributions and PAYE based on US$50 000 which by 150 days period is still trapped in Company B.

I have no doubt most of these companies will not escape having their bank accounts garnished by Zimra and NSSA.
Technically speaking, some of these companies will have to borrow to meet the statutory requirements.
Should the situation prevail, they become bad debtors to the lenders who will in turn charge additional 10 percent penalty rate (over and above their punitive interest rate of 20 to 30 percent).

In this scenario, the lender, a regulatory authority and the creditor can contribute to any of these companies being declared insolvent.
This then brings us to question whether the VAT payments directive is aligned to industrial realities of today.
Are all other statutory garnishes in line with the business realities of today? Is Zimbabwe still a cash economy? I wonder.

Managing in the chaotic environment

Regardless of the chaotic situation most companies find themselves in today, it is imperative for them to survive.
A lot of studies were carried out on how companies elsewhere survived should they encounter a chaotic environment such as the one prevailing in our country during this multi-currency era.

Draker (1995) argues that during a situation such as prevailing in Zimbabwe big companies must behave like small companies.
They must be entrepreneurial oriented and driven. The big companies need to be broken down into small units. This entails doing away with bureaucracy and head office structures.

For big companies it might be time to scale down by doing away with the head office structures and all other unnecessary cost structures.
Mckinsey & Company (1999) examined 20 companies that had experienced organic growth as opposed to growth by acquisitions.
Their success was based on a number of factors that included them having the best practices of business management and their ability to find new ways of doing business through innovation.

They were also successful because they underwent extensive re-organisation of their business, the entrepreneurial spirit kept on burning and they delegated control and maintained the flexibility of a small company.
David Storey (1991) carried out a study of 700 successful firms that he called the “10 percenters”’.

The findings were that they had a unique style of management, practised niche marketing, identified groups and moved quickly to close them.
They went against textbook management and depended on heuristics, exploited an opportunity, milk it and diversify if no longer profitable.
The systems of the company were transparent and information was shared throughout the company. There were no silos of information.

McKinsey, Draker and Storey all concurred that in times such as those obtaining in Zimbabwe at the moment; most companies need to break down into smaller and flexible units, which can quickly make decisions.

The number two burden to most companies in Zimbabwe is the head office cost.
The head office slows down decision-making process and makes most of the strategic and operational decisions. It is difficult for most human beings to make decisions that disadvantage them but this unpopular decision has to be made. For most big companies it is now or never.
Given the liquidity challenges facing the country, funding the retrenchment packages is a real stumbling block but creative ways of doing away with the head office costs and structures has to be found.

In any case most subsidiaries are better off being turned into flexible family businesses for their long-term survival than to remain a subsidiary of a holding company.

For some companies it is now time to think outside the box. Some business models of most companies have now outlived their usefulness and it is now time to do away with the past source of glory by starting afresh.
This at first might prove chaotic but managing in a chaotic environment requires chaotic management.