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False Expectations of 'Bigness'
JAMES MOSS-SOLOMON
Sunday, November 01, 2009
This week, in trying to promote the values of science and technology to various industries through the media, I have encountered what I think are some basic errors and common misunderstandings. There is an error of perception as to what big business is, what it does in investing its own money, and the underlying purpose of being in business. It is also confused by the common misuse of the words 'private sector'.
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| JAMES MOSS-SOLOMON |
Every fourth-form student who has enrolled in Principles of Business at the CXC level knows that the purpose of being in business is to make a profit. This simple statement does not qualify itself as to the size of the business or its level of profitability, but that simple truth seems to confuse many of my learned colleagues in media, particularly those who possibly make personal gains by perpetuating poverty. This fundamental misunderstanding pervades politics as practised in Jamaica. Without the poor, what would they have to talk about? Their platforms could not excite the general population who love sensationalism and scandals.
Pertaining to size, sports organisations, political parties and charitable organisations seem to feel that they are free to dictate how the "private sector" should spend their money. The concept of some marketing or value to be gained from spending your shareholders' money seems to be overlooked by these bodies, as is the fact that shareholders hold management accountable for making a profit. Therefore, the "private sector" is expected to support all sporting activities - even those that have little potential to deliver a return - all efforts to improve hospital care, all educational, rural and agricultural development projects, and just about everything else. This is not unusual in countries that find it difficult or impossible to have a balanced support mechanism from the combination of government sources, private sector funds, and contributions from the users/spectators of the respective services/sports.
On the matter of 'bigness', this is the common mistake that is made in most discussions. We think that this only applies to a few well-known companies on the stock exchange, and never realise that these companies started as very small businesses, and by their sacrifices have grown to their current stage in Jamaica, but are still SMEs at the international level.
By any measurement standard the Lascelles Group, Red Stripe, Seprod and GraceKennedy are very small international players when compared to Unilever, Proctor and Gamble, Bacardi or Diageo. So the public expectation of their ability to do everything, from "dancehall to blue drawers", is very unrealistic.
Without an unlimited source of capital, each company needs to find its area of expertise, referred to as specialisation. This concept embodies the prudent and most profitable use of its resources, both human and capital. I see no immediate plans for anybody to attempt to build any Jamaican rocket to put one of us in space, even though the very thought of it excites me.
Thus businesses are constrained to become efficient in certain segments of an industry by the prudent use of the division of labour. In a market with limited resources of both labour and capital, it seems unlikely that J Wray and Nephew will take over any of the closed bauxite operations; neither will GraceKennedy see every single prospect of agricultural production and processing to be within its competence. Therefore, due to the costs of backward and forward integration even within a single industry, it seems that "big business" will leave a significant breathing space for smaller entities. This is the really great news for Jamaica. It holds out the hope that those who are currently small, by pooling their resources and talents can also grow to be big. This was the original promise of Walkerswood, "the people's champion", who through non-cooperation and poor management will probably not be located in that rural location again. But the brand will live on.
So as we celebrate November as Science and Technology month, there are several opportunities to produce really great products and services through the application of appropriate measures. Our mean-spirited "secrecy" continues to derail that process. We would rather be petty kings in small kingdoms than shareholders in a large business. One man of 60-plus years with one acre of land cannot be expected to be the engine of growth. But perhaps 100 people with one acre of land technology could provide a platform for sustainable "bigness". Thus far cooperative production has failed to deliver. Perhaps the time is now.
Persons interested in agriculture have an unprecedented chance to establish themselves in appropriate places along the value chain. Agriculture for food security, export and value-added processing can make great sense as an alternative to government paper, especially as those rates are going to come down dramatically. This starts at the propagation stage of planting material, the hardening of plants, the planting and reaping of crops, the processing of those items into consumer-related products, and finally, enhancing the value through branding; there are real opportunities. Similarly, 'inedibles' for bio-fuel production present other opportunities. Thirdly, investment in alternative renewable energy sources such as hydro, wind, solar, and thermal exchange are real projects which could attract partnering with international investors, or the private sector arm of the World Bank, OPIC. There is a tremendous amount of work to be done in waste management and treatment.
The old misguided Jamaican socialism, coupled with the need to perpetuate our "crab-in-the-barrel" syndrome, is not a platform for improving our wealth and continues to be a recipe for poverty. We must find a way to embrace appropriate science and technology not as theories, but as practical efforts to pull ourselves out of our current sad state. In such circumstances not even our misguided thoughts on bigness provide protection. How many of poor readers even remember the name Bryden and Evelyn Ltd? Once big, now gone, and possibly totally forgotten.
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