How to handle chaos or new order in tomorrow’s world?

Dear reader

a few weeks ago 52 students graduated from our business school: an important step in the personal and professional development of all graduates!

My faculty fellow Bill Holstein held a terrific speech I would like to share with you.

Download Graduation Remarks – March 30, 2012
by William K. Holstein, Professor of Strategy and IT, Lorange Institute of Business Zurich

He compared the current economic situation with the weather forecast and concluded that we’ve entered an area of unpredictability, which has a lot to do with the increased speed of communication.

I quickly summarize a few of his statements:

“In 2005 there were 134 million mobile phone users in Africa. In 2011, only six years later, there were 660 million – an average growth rate of more than 30 percent per year. (…) Such explosive growth in such a chaotic area of the works spells opportunity for those who can spell correctly.”

Bill Holsteins Graduation Speech (Graduation Remarks – March 30, 2012 William K. Holstein, Professor of Strategy and IT, Lorange Institute of Business Zurich) at our Business School“Sales on eBay conducted over mobile phones amounted to $600 million in 2009 and over $5 Billion in 2011. More than an 8 times increase in two years! And eBay expects the percentage of sales over mobile phones to grow 100 percent more in the next few years. (…) This changes the business model for a traditional retailer dramatically. Many will not be able to respond fast enough to survive.”

“U.S. workers tenure in their current job is 4.4 years. The average number of jobs in a lifetime: 11.4 for men, 10.7 for women, not three as for me.”

Bill summarized his speech in one word: chaos. Chaos is the opposite of the idea of order.  Or as Bill put it: “when conditions are chaotic, you must apply different techniques. “ This is the true challenge.

Yours,
Peter Lorange

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Africa – An Economic Giant? Part IV

Dear reader,

a few weeks ago  I published an article, reflecting in brief statements which haven been made by popstar and Africa-activist Bob Geldof. Some of you might have read the article via our newsletter (subscribe here).

During the month of August I present you a few more in-depth thoughts on the topic “Africa – an economic giant?”, reflecting another three statements. Today I continue with the fourth of a total of five statements.

Statement 4

Investments lead to economic growth and to a better infrastructure. Africa does not primarily need help. It needs investments. China, however, is not tolerating unions. Europe’s biggest mistake is that they see Africa as a “case”, not as an opportunity.

Where, do you think, are the biggest opportunities for African countries in trading goods with Europe?

And here is my answer:

Raw materials represent perhaps the biggest opportunity – oil, minerals and agricultural products.

With the population explosion in our world, and with a strong economic growth in developing countries such as China, India and Brazil, the raw materials shortage is becoming more and more acute, also for Europe and the US. Rapidly increasing prices is the result. This leads to great opportunities for Africa!

Africa – An Economic Giant? Part III

Dear reader

a few weeks ago  I published an article, reflecting in brief statements which haven been made by popstar and Africa-activist Bob Geldof. Some of you might have read the article via our newsletter (subscribe here).

I have returned from my summer vacation and present you a few more in-depth thoughts on the topic “Africa – an economic giant?”, reflecting another three statements. Today I continue with the third of a total of five statements.

3. Statement

Europe and the US are hypocrites. They are investing money in China and in the Middle East – Regions far away from being democratic. At the same time, they worry about investments in Africa for the continent is not democratic.

What is wrong with European and American investors?

Here is my answer:

There are plenty of individual European and American investors that are active in Africa. But, we should acknowledge that the time horizon might be longer than what we typically find in well established markets –

hence, family dominated firms may be particularly attracted to African investments, when there might be less of a quarterly earnings pressure.

I have always mentioned A.P.  Moller of Copenhagen (the owner of Maersk Line / Safmarine).

Kind regards,
Peter Lorange

From Wembley Stadium to Africa: Bob Geldof

He made history when he united all major international artists on the stage of the Wembley Stadium in 1985. The event was called “Live Aid” and became legend.

Today he is still making music and only recently released his new album. At the same time he never stopped giving Africa, the mistakenly forgotten continent, a voice. Including provocative statements as at the Alpensymposium in Interlaken a few weeks ago.

Mr. Geldof says, Europe and the US are considering Africa to be a case for continuous help and support; media are establishing the image of an infantile foster child who needs help. Why is Europe not noticing the economic opportunities?

Bob Geldof

Europa is noticing Africa. More than that. The trade volume is extremely high but the terms of trade are not at the favors of Africa.

Now, China is setting footprints in Africa, exploiting and controlling commodities from copper to diamonds. Africa could have and should have the opportunity to do it by itself or – at least – with the support of democracies such as European countries or the US, says Geldof. An he is right. But we should not forget that nowhere is the corruption rate as high as in Africa, scaring off potential investors.

That is leading to the inconvenient question whether the continent is capable of doing so. Personally I think they lack the know-how and the capital basis. This is not particularly their mistake. The society was devastated after decades or centuries of colonization, often followed by decades of devastating civil wars – under the eyes of Europe and America, the self-styled gate keepers of democracy.

Provocative add of a development aid organization

That is what Bob Geldof is mainly accusing the European and American hypocrites of: that they are investing money in China and in the Middle East. Regions far away from being democratic. At the same time, they worry about investments in Africa for the continent is not democratic, say corrupt.

What is wrong with European and American investors? Investments lead to economic growth and to a better infrastructure. Africa does not primarily need help. Says Bob Geldof and I think he’s right. Africa needs investments. But especially from my point of view as a business academic, Africa needs also education. According to Bob Geldof, the African elites are not only graduating from international universities, they have also the highest scores in math and science in the world. I realize that the world is ignoring these facts, leaving Africa as a victim instead of looking at it as an economic giant.

Unfortunately, I have to conclude that it takes more than high volumes of traded goods, enormous natural resources and the highest final scores at universities to overcome that long-standing depression of great parts of the African economies. Especially the criticized European countries with their well structured civil societies are not only an example, they are a model for a possible future of the continent.

Yours,
Peter Lorange

Vom Wembley Stadion nach Afrika: Bob Geldof

Go to english article

Als er im Jahr 1986 alle wichtigen internationalen Künstlern auf der Bühne des Wembley-Stadions vereinte, schrieb er Geschichte. Die Veranstaltung “Live Aid”, ein Monsterkonzert für Afrika auf zwei Kontinenten, wurde zur Legende.

Noch immer macht Bob Geldof Musik. Erst vor kurzem erschien sein neues Album. Gleichzeitig hat er nie aufgehört, Afrika, den fälschlicherweise vergessenen Kontinent, eine Stimme zu geben. Inklusive seiner provokativen Aussagen wie am Alpensymposium in Interlaken vor ein paar Wochen.

Bob Geldof sagt, Europa und die USA machten Afrika zu einem Fall für die Entwicklungshilfe und die Medien transportieren unüberlegt das Bild eines infantilen Pflegekindes, das Hilfe braucht und er fragt, warum Europa ausgerechnet bei Afrika die wirtschaftlichen Chancen nicht erkennt, die sich ihm bieten?

Bob Geldof

Europa bemerkt Afrika sehr wohl. Mehr als das. Das Handelsvolumen ist sehr hoch, aber die realen Austauschverhältnisse sind zu Ungunsten von Afrika.

Nun beginnt China in Afrika Spuren zu Hinterlassen, zum Beispiel bei der Ausbeutung von Rohstoffen. Afrika sollte im Grunde alle Möglichkeiten haben, die Rohstoffe selber zu nutzen – oder zumindest mit der Unterstützung von Demokratien wie den europäischen Ländern oder den USA, sagt Geldof. Da hat er recht. Aber wir sollten nicht vergessen, dass nirgendwo die Korruption so hoch ist wie in Afrika. Das schreckt potenzielle Investoren ab.

Die unbequeme Frage lautet, ob der Kontinent alleine in der Lage wäre, die Bodenschätze auf nachhaltige Weise auszubeuten. Ich persönlich denke, dass es an Know-how und an Kapital fehlt. Das ist nicht zuletzt auch unser Fehler. Die Gesellschaften auf dem Kontinent lagen nach Jahrzehnten oder Jahrhunderten der Kolonialisierung oft am Boden, und wurden schliesslich durch Jahrzehnte der verheerenden Bürgerkriege zerstört – notabene unter den Augen und mit Waffen von Europa und Amerika, den selbsternannten Hütern der Demokratie.

Provokativ und nachdenklich: Plakat des Schweizerischen Fastenopfers

Bob Geldof wirft denn auch den europäischen und amerikanischen Staaten Heuchelei vor und dass sie Geld in China und im Nahen Osten investieren. Regionen, die weit davon entfernt sind, demokratisch zu sein. Gleichzeitig sorgen Sie sich um Investitionen in Afrika, weil der Kontinent nicht demokratisch sei.

Was ist los mit den europäischen und amerikanischen Investoren? Investitionen führen zu Wirtschaftswachstum und besseren Infrastrukturen. Afrika benötigt also nicht in erster Linie Hilfe, sagt Bob Geldof, und ich denke, er hat recht. Afrika braucht Investitionen. Aber aus meiner Sicht als Wirtschaftswissenschafter braucht Afrika vor allem auch Bildung. Laut Bob Geldof sind die afrikanischen Eliten nicht nur Absolventen internationaler Universitäten, sie schlössen ihre Studien auch mit den höchsten Punktzahlen in Mathematik und Naturwissenschaften ab – weltweit. Mir ist klar, dass die Welt solche Fakten ignoriert und dass es offenbar immer noch einfacher ist, Afrika als Opfer statt als wirtschaftlichen Riesen zu betrachten.

Leider komme ich zum Schluss, dass es mehr als hohe Handelsvolumen, enorme natürliche Ressourcen und die besten Abschlüsse an Universitäten braucht, um die langjährige Depression grosser Teile der afrikanischen Wirtschaft zu überwinden. Gerade die gescholtenen europäischen Länder sind mit ihrer funktionierenden und integrierenden Zivilgesellschaft Beispiel und Vorbild zugleich.

Ihr,
Peter Lorange