STEVEN ZWANE | What entrepreneurs can learn from political coalitions

The recent South African elections have ushered in a new era of coalition politics. With no party achieving an outright majority, coalition-building has become imperative. This political scenario offers valuable lessons for entrepreneurs navigating a similarly competitive and fragmented market landscape.

SA’s political landscape, marked by coalition-building, offers rich insights for entrepreneurs. By embracing collaboration, honing negotiation skills, building resilience, leveraging diversity and enhancing communication, entrepreneurs can navigate the economic challenges of high unemployment, stagnant growth and high interest rates. Lessons from global political coalitions underscore the importance of unity, flexibility and innovation in achieving sustainable business success.

Coalition governments thrive on identifying common goals and creating a shared vision. Entrepreneurs can learn from this by focusing on collaboration over competition. In a stagnant economy with high unemployment and interest rates, businesses must find innovative ways to pool resources, share expertise and co-create value.

For instance, MTN, a leading telecommunications company in Africa, partnered with Ecobank to expand mobile financial services across the continent. This collaboration has facilitated greater financial inclusion, allowing millions of unbanked individuals to access banking services through their mobile phones. This strategic alliance showcases how collaboration can lead to innovative solutions that address shared goals and create significant value.

Coalitions are born out of complex negotiations. Entrepreneurs can refine their negotiation skills by observing political processes. Effective negotiation involves balancing firm stances with necessary compromises, crucial for securing business deals, partnerships and investments.

Spotify’s success hinged on negotiating licensing deals with major record labels. These negotiations were intricate, requiring Spotify to balance the interests of the labels with its own business model. The resulting agreements allowed Spotify to become a global leader in music streaming.

Coalitions are inherently unstable, requiring constant adjustments. This mirrors the entrepreneurial journey, fraught with uncertainties and the need for agility. By studying coalition dynamics, entrepreneurs can build resilience and flexibility into their business models, enabling them to pivot quickly in response to market changes.

The Dutch coalition government, known for its multi-party system, exemplifies adaptability. Frequent changes in alliances require political players to remain agile and responsive.

Naspers demonstrated resilience by creating Prosus, a global consumer internet group. This strategic move allowed Naspers to unlock value and navigate the complexities of international markets.

Coalitions bring together diverse parties with unique strengths and perspectives, fostering innovation and comprehensive solutions. Entrepreneurs should embrace diversity within their teams and partnerships, recognising that varied viewpoints lead to more robust problem-solving.

The Finnish coalition government often includes multiple parties from across the political spectrum. This diversity helps create comprehensive and balanced policies, leveraging the unique strengths of each party.

Tesla’s partnership with Panasonic to produce batteries for electric vehicles illustrates how leveraging diverse strengths can lead to innovation. Panasonic’s expertise in battery technology, combined with Tesla’s automotive prowess, resulted in groundbreaking advancements in electric vehicles.

Effective communication is the cornerstone of any successful coalition. Clear, transparent and consistent communication helps manage expectations, build trust and maintain unity. Entrepreneurs can learn from coalition leaders the importance of transparency and effective communication in building strong relationships with stakeholders, customers and employees.

Scandinavian countries, known for their coalition governments, also rank high in transparency and effective communication, fostering public trust and policy support.

Woolworths, has successfully communicated its sustainability initiatives, building trust and loyalty among customers. By transparently sharing progress and challenges, Woolworths fostered a strong connection with its consumer base, similar to how political coalitions maintain public trust.

SA is experiencing coalition governance at the national level for the first time, highlighting potential instability. This serves as a cautionary tale for entrepreneurs, requiring vigilance and adaptability.

There are three stages entrepreneurs must go through for successful partnerships:

Short-Term:

• Focus on cash flow management: In uncertain times, maintaining a healthy cash flow is crucial. Entrepreneurs should prioritise liquidity and ensure they have sufficient reserves to weather potential disruptions.
• Strengthen local networks: Building robust local networks can provide support and resources in times of instability. Engaging with local chambers of commerce and industry associations can be beneficial.

Medium-Term:

• Diversify revenue streams: Reducing dependence on a single market or product line can mitigate risks. Entrepreneurs should explore new markets, products or services to create multiple revenue streams.
• Invest in technology and innovation: Leveraging technology can enhance efficiency and open up new opportunities. Investing in innovation helps businesses stay competitive and resilient.

Long-Term:

• Build a strong organisational culture: A resilient organisational culture can withstand external shocks. Entrepreneurs should focus on building a culture of adaptability, collaboration and continuous improvement.
• Engage in scenario planning: Long-term success requires foresight. Entrepreneurs should engage in scenario planning to anticipate potential future developments and prepare strategic responses.

As SA embarks on this new political journey, entrepreneurs too can chart a path of growth and resilience by learning from the art of coalition politics.

• Dr Zwane is managing executive: group corporate citizenship at Absa. He writes in his personal capacity