The year 2003 started for Sally and me with a visit to South Africa for the hundredth anniversary celebration of the Rhodes Scholarship. It was a particularly memorable celebration because it highlighted a new collaboration of the Rhodes and Nelson Mandela Trusts to help build schools in South Africa. The week in Capetown ended with a lovely dinner at a wine estate with Mr. Mandela as guest of honor. He put aside his prepared text and spoke from the heart about his and his people's long journey to freedom. It was inspiring. Although in his mid-eighties and less steady on his feet, he has lost none of the grace, humanity, and determination that mark him as one of the twentieth century's great leaders. In retirement, Mandela still provides much of the moral force for a multi-racial society in South Africa. Many feel that his presence remains essential to the success of the modern South Africa.
The challenge for the South African economy is daunting. The economy must grow in the 6-8 percent range annually to generate the number of jobs needed to begin to reduce unemployment levels now in the forty percent range. The country has an exceptional infrastructure and a good University system, both the strongest on the Continent. Will it be enough? Most believe that will depend on the quality of leadership that follows the current President, Thabo Mbeki.
Back in the U.S., the economy is showing signs of significant recovery. Business investment is finally beginning to increase, taking some pressure off the consumer, and the latest productivity statistics are most impressive. This Administration is doing all it can to ensure that no one can say of Bush the younger that he has neglected the economy. Yet I fear for us all in the longer term. The lack of fiscal discipline in this Administration is appalling. What this brings to mind for me is the hyper-inflation of Johnson's " Great Society" years. We can fight a war and greatly increase social benefits. The difference is that this is a Republican Administration so we will add significant tax cuts to the mix. This is truly voodoo economics, but few seem to be looking beyond 2004. As for me, I'm investing in inflation-linked bonds.
On a more practical business note, several articles this past year have corroborated the importance of strong execution as a key determinant in a company's success and the fact that successful growth comes most often from expansion closely related to one's core business. See, for example, " What Really Works" by Nitin Nohria, et al, HBS, July 2003. The most difficult part of this advice is figuring out just what to do to achieve strong execution and building on that execution to extend current business lines. It is akin to the legendary Boston Celtics under Red Auerbach. Red used to say: " Take our playbook, we will still beat you on execution." (note: having Bill Russell, Bob Cousy and John Havlicek also helped).
Some of you have suggested I was too hard on CEO compensation last year. I don't agree. A CEO's compensation needs to be able to pass the straight face test: can one explain it to Aunt Edna from Des Moines (or Uncle Warren from Omaha)? I recommend adopting GE's approach which blends greater transparency with reasonable incentives.
In education nationally this has been the year of first corroboration of the scale of unintended (and unhelpful) consequences of the Federal No Child Left Behind Legislation. It will get worse. In Maine we have not seen as much progress in student results as one had hoped, in part because of the effort to figure out how best to comply with NCLB. A bright spot is our laptop program for Junior High students. The program continues to exceed expectations. We are intent on extending this program into the High Schools next year, making Maine the first state in the country to fully integrate technology and learning in grades 7-12!
Management tip for 2004: Train your business leaders to run good meetings. We all spend enormous time in meetings, often with enormous and costly talent assembled. You owe it to yourself to use this time wisely. The principles of running a good meeting are well known. Make this course mandatory.
All the best for the New Year.