Ideas & Opinions | January 2018 © Grand Polytechnic Institute (Pty) Ltd

Why Leadership for Quality and Innovation Matters for South Africa
B. Dikela Majuqwana
Director of Projects, Grand Polytechnic Institute (Pty) Ltd
Cnr Fox & Harrison Street, Johannesburg 2000
Email: majuqwana.b.d@gmail.com

Introduction employ workers(black and white) while paying

An economy is founded on the basis of the values
or purposes of a given society – slavery, serfdom,
apartheid, etc. Such a society sets for itself goals
or defines conditions to be attained that reflect
these purposes or values, and then selects the
means to attain its strategic goals. It is the means
or methods that define the nature of the economy –
e.g. migrant labour under apartheid. In this respect
we recognise at least four of those means which
we call 1) Innovation -this concerns finding new
means of expanding an economy – typically 4th
Industrial Revolution projects today; 2)
Productivity - this concerns finding the means to
do more with less, to save time or materials or
labour effort - computers, automation or most
infrastructure projects; 3) Quality – this concerns
the removal of unproductive and repetitive work
and error in processes or products – national
standards bodies such as SABS; and 4)
Sustainability – this concerns finding the means to
minimise impact on nature, especially to conserve
non-renewable resources and to use renewables
more often. The emerging Circular Economy is an
aspect of the sustainability economy. In this article
we take a look at two of these four economic
means or economies: innovation and quality. Our
focus is the need for leadership as opposed to
management, understanding leadership to mean
the articulation of values or purposes and related
strategic goals as well as a clarification of the
criteria for selecting the best means.
Before 1994, the purposes or essential
values of apartheid governments in South Africa
were to help white business people exploit blacks
to enrich themselves and all whites exclusively.
The purposes of post-apartheid South Africa today
are to help all business people (black and white) to
decent wages and at the same time enriching
themselves by making a profit. This is called
capitalism – very much a global religion. The
alternative, socialism, has a different value system.
It focuses on the well being of the workers,
individually and collectively. The ideal of a
socialist society is to help workers organise
enterprise to serve human needs directly, not via
individual profits. Well being of workers is the
equivalent of profit under socialism, the basis of
its accounting system. A typical socialist enterprise
is the worker cooperative, such as the Mondragon
Cooperative Cooperation (MCC) in Spain, or state
controlled companies, the national health service,
public education, educational scientific research
facilities, etc. South Africa operates according
capitalism, for individual profit, in the hope of a
trickle down to serve human needs – so far a pipe
dream.
Many of our current economic problems
have their roots in the apartheid system that began
in 1948 and ended in 1994, a little more than 24
years ago. Some are a result of the present state of
the global economy and how our business leaders
have handled things. And still some are uniquely a
result of incompetent political leadership such as
the unrelenting mess at Eskom and many of our
state owned companies. Their combined result is a
stagnant economy with a steadily declining GDP
since 2011, according to Statistics SA. We have
today a population that has grown by a staggering
64% from about 38 - 40 million in 1994 to about
55 million in 2016. But GDP per capita, which is
believed to reflect the material wealth of South
Africans and their productive potential, has not
grown much over the same period. It rose from
$3850 to $6050 (exchange rate) during the same
period, from 1994. To cap it all we are ranked

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 Ideas & Opinions | January 2018
economically at position number 108 out of 228
countries in world terms, based on 2014 per capita
incomes (CIA World Factbook), and are slipping
further down the ranks. Other indicators,
especially those reflecting inequality and poverty,
also paint a similarly grim picture.
In this article I show that we need to move
in at least two directions to achieve a breakthrough
in growing our economy, to raise incomes per
capita to unprecedented but sustainable levels and
to do so at rates that make economic sense within
the limits of the present system. One of these
directions is to pay attention to Quality and its
improvement. Another is to target innovation. In
this article Quality is but one of four sectors of the
economy in its own right, as already recounted,
albeit a hidden one - a point of view that was first
taken by the late Dr Joseph M. Juran. All four
economies – innovation, productivity, quality,
sustainability - are systematically neglected in our
country at least from the point of view of
leadership, else we should get regular reports, with
suitably compiled indicators showing how we're
doing. But none exist yet.
National Development Plan 2030
Essentially, there are three questions that South
Africa needs to resolve: 1) what is the most
appropriate GDP per capita to aim for? 2) what is
the most appropriate annual GDP growth rate to
aim for to attain this target GDP per capita and
why? Is this rate feasible? 3) by what net capital
inflows annually and in which sub-sectors can we
hope to achieve this rate? It is then possible to
answer the question of the role of innovation,
quality, productivity, and sustainability in the
economy.
South Africa's economic thinking has been
guided by the National Development Plan (NDP)
since 2014. The NDP aims for a GDP growth rate
of 6-8 % annually up to 2030. In 2017 we are no
where close to that dream but are stuck at rates
hovering around 2% or less. A 6 – 8 % annual
GDP per capita growth rate implies accelerated
break neck economic expansion to double the
current GDP per capita within 10 years. To do that
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there must be investment in productive sectors.
For example, Operation Phakisa(OP) is a suite of
NDP projects that the government believes will
deliver these rates but so far there is no sign it is
having the desired impact.
Operation Phakisa has its origins in
Malaysia's Big Fast Results (BFR) programme.
The selection of projects forming part of OP is all
that we have so far to get the growth we want.
This may be a good starting point but clearly these
projects and perhaps the approach used to select
them needs revisiting. What I see as the greatest
error is the lack of any private sector capital
mobilisation, including international capital, to
come to the show. Above all, it is not clear what
rates of capital investment we are aiming at with
respect to Operation Phakisa. The result is that the
whole exercise serves to underline our dire
economic situation along with inability to
comprehend its scale. Some economists propose
that sustained rates of 6-8% output growth require
productive capital investment at rates of 25% of
GDP annually, or more. If they are correct, are we
anywhere close to this figure? If we are, how come
we are in a stagnant economy?
The education system is expected to
provide the human capital to achieve NDP goals.
However, the 'Fees Must Fall' student movement
that first broke out in 2015 disrupted effective
learning in many if not all university campuses
during 2016. 'Fees Must Fall' may be interpreted
as a signal that the NDP is in trouble, unless some
extra-ordinary measures are taken to rescue the
situation. Even if 'Fees Must Fall' did not occur, it
is well known that our education system performs
poorly in key areas related to innovation: science,
technology, engineering, and mathematics (STEM)
and related fields. High drop out or failure rates in
these disciplines are the norm in South African
universities, something that was well entrenched
under apartheid as well. These failures are also a
sign of the high cost of poor quality in education.
Post-apartheid South Africa seems to have failed
to resolve some of the causes of economic
stagnation under apartheid. Education represents
an Achilles' heel for post-apartheid South Africa.
SA education standards are ranking poorly in the
 Ideas & Opinions | January 2018
world. This is despite high levels of public
expenditure to improve results. South Africa
spends about 8% of GDP on education, among the
highest in the world.
The challenge for the education system is
to prepare South Africans for the future beyond
the lifetime of the NDP, to be able to deal with
problems of 1)population growth, 2)rapid
urbanisation and climate change, 3) global
economic sustainability, 4) creating a healthier and
happier citizenry, 5) raising life expectancy, to
name just a few. At present unemployment levels
remain very high, officially estimated at just more
than 25% and unofficially at more than 40%.
These figures have not changed much over many
decades. The statistics are grim. It is estimated that
50% of working age citizens in South Africa have
not passed Grade 12. Of those who have, hardly
5% can demonstrate adequate competence in
maths and science at Grade 12. SA spends some
8% of GDP annually on education and has done so
for many years but we see no significant
improvement in the results so far. Who is
accountable?
The Quality Economy
I believe that education suffers heavily from what
I called earlier the cost of poor quality, from pre-
school to tertiary levels. That means small
improvements in the quality of education will
unleash hidden resources including financial
resources, so that no additional spending may be
needed. The same applies in the health sector, and
in many others where the public sector is the main
agent of change. But so far not one has attempted
an estimate of the cost of poor quality and its
sources. Therefore, hopes for economic
improvement remain a pipe dream. Without
tackling the quality conundrum in education and
healthcare, it may prove extremely risky and
unnecessarily costly to go for innovations such as
the use of electronic gadgets and internet access to
improve educational performance. Improving
quality inevitably leads to innovation i.e. it will
make it possible to select and make use of gadgets
more effectively at the right time.
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Quality remains an untapped sector of the
economy because economic thinkers appear
ignorant of it. South Africa is in economic dire
straits because of its very high cost of poor quality.
By reducing this cost of poor quality, real
economic gains can be realised. Quality is free –
as another American quality guru, Philip B.
Crosby, once said. If it is free, that means we can
embark on quality improvement efforts with
existing resources. Poor quality results in wasted
resources. If quality improves in society, the
benefits are as if mining a gold mine that lies
within the boundaries of each and every
organisation that serves society. If we are to use
available capital resources wisely, we should
devote them to the improvement of quality.
Ideally, each sector of the economy should have an
idea of the sectoral contribution to the national
cost of poor quality that prevents it from being
more competitive or on par with global trading
partners. The same applies to each organisation.
The Innovation Economy
Innovation is not free, unlike quality. It is a risky
business and requires extreme care. Innovation
concerns the creation of new opportunities by
doing things differently and in better or more
effective ways. For innovation to happen there
must be a steady flow of capital investment to
move from an idea to a market tested product that
makes life a lot better. Basically, innovation is
largely about ideas that lead to productive
investments. These range from infrastructure
projects right through to creating institutions of the
future, improved goods and services, and new
technology. Innovation is more expensive in an
environment characterised by a high cost of poor
quality. We have in South Africa a so-called
National Innovation System(NIS), that is
relatively well funded but has so far had little
impact in helping us achieve an economic
breakthrough. Former apartheid homelands and
townships still have no facilities to provide for
innovation.
Call for National Leadership
To be able to respond to the quality and innovation
 Ideas & Opinions | January 2018
challenges we face, we need leaders. Leading for
quality is different than leading for innovation. In
the former case focus is to make quality a new
economic sector that is no longer hidden to reduce
the cost of poor quality in the economy. This cost
can be as high as 30% of GDP, possibly
representing more that R1 trillion annually in
today's prices. It shows up in diverse situations,
for example as poor education results (where a
huge chunk of public funds are wasted each year,
at least 30% effective failure rate annually), poor
health care services, corruption in public
administration (municipalities, provinces, and
national government), extortion in commerce,
waste in industry, and traumatised communities as
a result of fatalities from road accidents and crime
– the scale is reminiscent of a war zone. The cost
of poor quality also shows up as losses caused by
bad leadership in many State Owned
Companies(SOCs) and bad political leadership.
For example, Eskom plunged the country into
darkness over many months from November 2014
and during 2015. Power failures triggered a
collapse in national productivity levels when
business operations were interrupted. Many
investors shunned South Africa as a result. We
may ask how many domestic and foreign investors
were deterred by the power outages of 2014/15 or
others before? What was the loss to our economy?
To deal with the high cost of poor quality
requires acknowledgement of the problem at the
highest level of national authority – i.e. leadership.
National leadership needs to declare a mission to
pursue unprecedented improvements in quality
and innovation. A small but demonstrable step in
this direction is to join the world community in
observing World Quality Month. Each year during
November there should be regular national events
featuring leading personalities to raise public
awareness and commitment led by the country's
leadership. South Africa can learn a lot from other
nations in this respect. For example, in the US
they have the Malcolm Balridge National Quality
Award(MBNQA). In the European Union they
have the European Foundation for Quality
Management(EFQM). In Ethiopia their
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government recently launched a national Kaizen
Institute with the backing of Japan, to overcome
the cost of poor quality and to reduce waste in
their economy. It is a very smart move by the
Ethiopians to hitch a ride on Japan because that
nation is an acknowledged world leader in quality.
In South Africa efforts to mobilise for quality in
business and the economy have so far failed to
bear fruit. The SA Business Excellence Model
became stillborn for lack of a shared national
mission. The SA Quality Institute(SAQI) is an
active professional body that does a good deal of
work but it too has so far failed to forge a national
consensus at the highest level behind quality.
Summing Up
To sum up, national leadership should be seen to
be leading South Africa to raise awareness of
quality and innovation as untapped sectors of the
economy every year. Innovation should be seen as
a strategic national effort to draw large
investments into productive activity. The extent of
this visibility should match or improve upon that
shown with respect to Operation Pakisa.
According to another American guru who became
famous for rescuing Japan after WWII, Dr W
Edwards Deming, said successful efforts to
improve quality will inevitably lead to
improvements in productivity and innovation
capacity. A programme such as Operation Pakisa is
a reasonable start but its success will be more
sustainable if it is accompanied bya national
campaign of leadership for quality and innovation.
Ultimately, a national programme of leadership for
quality and innovation may be the only means we
have to get South Africa out of the present
economic crisis. Quality is about tapping into
existing resources and involves avoidance of
rework by getting the right things done right the
first time. It leads to improvements in productivity,
to do more with less. Innovation is about building
new productive capacity, to expand the economy.
Innovation and Quality are two sides of the same
economic coin. One without the other will not
work.