Business

Why Corporate Kenya needs The Party Pooper

We all know that one person who is always the bearer of bad news. How you ask? We avoid them by all means we can. They often wear the skin of a conscious colleague who will constantly worry of the minute details of every happening from the calories in the wine, bad economic times, to labor cutting exercises yet to strike the company during an end of year office party! We see them through an overly concerned parent who takes up the mantle of letting the children know that amounting to nothing is just a bad decision away during prize giving day or even during a graduation ceremony, or through the overly obnoxious Aunt who will carefully select an opportune embarrassingly moment to ask when you are getting married during a relatives Ruracio. We know them by trait and speech. Truth be told, the party pooper probes our mind into knowing that tomorrow is not promised and that’s the message reluctant CEO’s and Management Boards need to have in mind.  In that regards, it’s a question whether you prefer the guy who says that you either shape up or get shipped out, the pessimist, or the guy who tells you, without any evidence that its gona be alright, the optimists. Whom do you prefer?

 

Despite the record of things getting better for most people most of the time, which should push people to have a more optimistic outlook of things, pessimism isn’t just more common than optimism, it also sounds smarter. Pessimists are intellectually captivating, garnering far more attention than the optimist. The pessimist narrative has been used enormously in the bible with incredible success, from Old Testament to new testaments; the most successful prophets including Jesus somehow rather preached doom. According to Matt Ridley, “If you say the world has been getting better you may get away with being called naïve and insensitive. If you say the world is going to go on getting better, you are considered embarrassingly mad. If, on the other hand, you say catastrophe is imminent, you may expect a McArthur genius award or even the Nobel Peace Prize”.

 

However, on observation, business leaders world over, and notoriously Kenyan corporate world, don’t seem to see value in the pessimism view even after lessons from the West tells us so. I understand that since even one of the most brilliant minds, Robert Green in his book, 48 laws of power says, “never be the bearer of bad news”, you become unpopular and loose keys to the power. But don’t we have enough lessons to tell us that its better to be a pessimist than an optimist.  Global financial crisis hit the world due to the optimistic strong-willed approach and big ego of the business leaders. The crisis took longer to resolve in Spain, Italy, Portugal, and Greece since these European countries had even a more optimistic approach that the crisis will go. In fact there is a joke that for the former , his approach was like this crisis was like a mosquito inside a mosquito net so Spain only needed just to continue sleeping and the fly will find its way out of the net at some point.

 

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This takes us to the point why I urge corporate leaders to embrace more of the pessimistic outlook towards their business. Kenya’s Retail giant, Uchumi supermarket has been in the reds now for over two years, KQ has had enough turbulent times, recording huge losses, Mumias sugar company has also taken too long in reds and inspite of no sign of recovery, we remain optimistic. In these cases, new CEOs have been put in place with clear mandate, turn the companies around.  But all this time all these CEOs and their boards continue to sell to Kenyans the optimistic view, that all shall be well. They sight examples like, if we managed to get every Kenyan belted into a Matatu, this will also work. But they don’t cite some serious corporate failures like now Cadbury Kenya plans to shut down its manufacturing plant in Nairobi as part of a global transformation strategy to reinvent its value chain. This is the second firm in as many days to cease local manufacturing after Eveready announced the closure of its dry-cell making plant in Nakuru. Aritel is exitng Africa after bleeding for too long. In that regard, corporate Kenya should start evaluating these corporate performances with not only the optimistic view but also with the Pessimist view.

 

According to Tom Gardner, Optimism appears oblivious to risks, so by default pessimism looks more intelligent. Well but to understand why Pessimist approach is better, you realize Most optimists will tell you things will get ugly, that we will have recessions, bear markets, wars, panics, and pandemics. But they remain optimistic because they know that, like the universe, healthy markets grow. To the pessimist a bad event is the end of the story. To the optimist it’s a slow chapter in an otherwise excellent book. That means that Pessimist are more geared toward doing something about the bad outlook than Optimists who remain positive even in the face of adversity.  In that regard, Pessimism requires action, whereas optimism means staying the course. Pessimism is “SELL, GET OUT, RUN,” which grabs your attention because it’s an action you need to take right now. Optimism is mostly, “Don’t worry, stay the course, we’ll be alright,” which is easy to ignore since it doesn’t require doing anything.

 

How then should Kenyan corporate incorporate Pessimist approach into their corporate deliberations? This is by going into corporate discussions with concrete options that takes both the Optimist view and pessimist view. Many a times you see discussions on how can we continue, turnaround, less about how can we count and losses and move on. For instance, we always approach this Kenyan corporate failure with “how can we turn it around”. Call it KQ, Uchumi, Mumias, Pan Paper, its always, how can we turn it around. If anyone would say in the board room “why don’t we count and losses and move on, that guy would be very unpopular.

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In conclusion, Should you ever listen to pessimists? Of course. According to Elon Musk and Tesla, they’re the best indication of what’s unsustainable, and thus the catalyst for what must change. They lay down the breadcrumbs on pathways for entrepreneurs to run their innovative minds. For long-term investors, though, an optimistic view that humanity will profitably solve the world’s greatest problems is the right frame of mind. So do you take a cocktail of juices or you only enjoy passion!

Written by: Dr. Fredrick Ogola, Senior lecturer at Strathmore Business School

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