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I was asked a fascinating question: How do giant companies come to suddenly collapse and die? My answer: It is never sudden. It's a progressive deterioration as a result of ignoring warning red flags to change purpose and business model to suit current times.
Example: Eskom increased labour costs substantially in past ten yrs. Yet they sold less and less power in same period. But debt almost doubled and interest cost increased. Gross revenue cant cover up costs. This is a classical utility death spiral.
Amazingly unions and the president say NO retrenchments. No selling off of non-core assets. Brilliant. President promised a restructuring plan in Feb 2018. Remember that?🤔🤔 Well. Where is it? Tax base is decreasing!!! Bailouts?? You figure 🙇♂️🙇♂️😴😴😴
So back to the initial question: In the private sector you sell and hopefully new owners restructure fast and relaunch. In SOEs you recycle ministers, boards and CEOs and hope for a miracle. Knowledgeable CEOs are uncomfortable and not welcome. 🤦♂️🤦♂️🤦♂️🙆♂️🙆♂️🙆♂️
Here is the conundrum. We need a capable state system (including SOEs and munics) to deal with the enormous inequities and socio-economic challenges that confront us. But a capable system needs experienced and capable leaders at all levels for success.
