A firm that can bottle critical thinking has a real future
Genesis Analytics was founded in February 1998, a few years after South Africa’s democratic elections and a few months after the emerging markets crash of 1997. How did these events shape the vision and early strategy of the company?
Practical optimism is a hallmark of our firm. That’s not so unusual, but what is unusual is that we are optimistic about sparking progress by tackling big, historically rooted challenges – and to do so at scale. That optimism comes directly from my experience of growing up in South Africa in the high-apartheid 1970s, becoming a politically active adult in the 1980s and returning to the country in the 1990s. This is both our curse and our blessing as a people: our optimism in the face of history, in the face of gathering clouds – and once in a while, we pull off the impossible.
The emerging markets crash was the first big international issue that Genesis tackled. We analysed the causes and implications of the crash for the International Organisation of Securities Commissions (IOSC). The IOSC report on the crash was an amalgam of our work with that of the Malaysian capital markets authority. The crash changed my perspective of the world: I realised that emerging markets were no longer on the periphery but at the centre of global action. At Genesis, that realisation continues to influence all our work today, a quarter of a century later. We focus on the Young World, the predominantly southern group of countries where 75% of the world’s young people live. The global centre of gravity shifted in 1997, again with the financial crisis in 2009, and is again shifting once more for demographic reasons.
In 2008, while writing about the financial crisis for the Five Million Jobs initiative, you drew a parallel between that global financial crisis and South Africa’s 1985 debt crisis. How important is a good working knowledge of history in the consulting industry?
The consulting industry rivals the tech and financial sectors in its pervasive ignorance of history. At least we are not like politicians who seem to feed off the wrong kinds of history. But the lack of historical perspective is devastating for all three of those industries. In finance, we forget the causes of financial crises only to repeat them. In consulting, it makes our advice narrow and infertile. But it is in tech that the absence of a historic understanding of power, people and risk will cost society the most dearly.?
Economics has a lot to answer for in this regard. Orthodox economics ?with its fixation on short-term equilibrium, and its modelling of human agents shorn of most human attributes. This emboldens decision makers to ignore the messy reality of life and the weight of what went before.
This is a direct consequence of theoretical economics taking inspiration from physics, the dominant science when neoclassical economics was being formulated. This point may seem a bit abstruse, but economics would have been wiser and more useful if it had modelled itself on biology. Biology is a profoundly historical science due to the process of evolution. It has had to wrestle with issues such as contingency and chance, continuity and disruption, path dependency and innovation, as well as interdependence and power, in a far more profound way than economics has ever done.
The laudable exception to this is economic history. Economic history may be the most useful academic discipline to which leaders of all kinds can be exposed.
A few years ago, the Competition Commission blocked the sale of Burger King on public interest grounds, even though there was no clear threat to market competition. This decision highlights the growing tension between market efficiency and social objectives in South Africa’s competition law. How should the Competition Commission balance economic empowerment with the need to maintain a competitive market?
I was deeply involved in the formulation of South Africa’s competition policy and statute in the late 1990s. I remain convinced that all sophisticated societies require some policing of large companies and mergers to promote competition. It is technically tricky and expensive, but we have a half-century of practice and learning from the world’s largest economies on how to do this well – and by now 25 years of South African experience. One cannot promote capitalism without accepting that competition should be actively promoted. The competitive process is at the heart of all claims about why capitalism works for the people, as opposed to just some people.
However, I don’t think that the public interest component of our competition system has been a success. Initially, it was limited to employment considerations in mergers. This was understandable, although labour legislation would have been a better tool. The broadening of public interest in our competition law has, to my mind, been ineffective in achieving its goals and counterproductive in its side effects. Most worrying, it has led to the direct politicisation of the process by giving the minister of trade and industry an opportunity to bargain for concessions, and if no deal is reached, to act as a spoiler. It is telling that in the recent attempt by BHP to acquire Anglo American, the South African competition process was effectively wielded by Anglo as a kind of poison pill – even though there were few evident competition issues. This approach is deeply unhelpful to an economy for which growth and investment are imperatives.
The root cause of all this is a kind of instrument myopia on the part of our competition policy makers and regulators. In short, they act as if competition regulation is the only thing going on. But our government has many policy instruments to protect workers, to bring about economic empowerment and shape industrial policy – and it is not shy to deploy them. Those instruments can be, and often are, more considered, comprehensive and more cogent than the partial and frankly paint-by-numbers interventions of competition bodies in policy areas in which they are not versed.
How has Covid-19 shaped the way Genesis operates? What are you looking for in recruits that is different from before?
Covid changed us. On Day 1 of the pandemic, we were 120 people in four countries. Today, we are just shy of 400 people in 25 countries. This is a direct consequence of the pandemic. The pandemic taught us two things. First, that we can work effectively with distributed teams using tech. We leaned into this from the start. For many positions at Genesis we hire from anywhere in the world. It is entirely normal for a Genesis team working on a project to have members based in four widely disparate geographies. This has allowed us to access talent and build networks and partnerships across the world. It has made our work better. It has made us a far more interesting place. And it has enabled us to do work in 115 countries and counting.
To pull this off one needs a strong culture, and even more importantly, shared habits of work. We are explicit about this, to the point of having our own language for how we work with each other and what we owe each other as colleagues. This spills over into how we work with clients and partners.
The second thing we learnt was that it is better to be at the coalface of impact than to deliver clever insights. During the pandemic we worked on behaviour change, vaccine distribution and on how to re-open the economy as quickly as possible. In all these endeavours what really mattered were clear goals, strong partnerships, and proximity to resources and power. That marked the beginning of our journey from a consulting company to an impact firm. We are still on this journey, and we know that it will change our shape as firm.
It also changes whom we hire. Previously we prioritised analytical types. These days we still want thinkers, but we have a broader understanding of what effective thinking means for getting difficult things done. We really want thinker-doers: people who understand, but can also pivot to action, work with others, and know how to get things done in complex situations.
Global donor agencies, while well-intentioned, sometimes influence policy in ways that may not always align with local contexts. How does Genesis navigate the ethical challenges that can arise from these partnerships, particularly when there is a potential misalignment of interests?
?Here, too, our roots in South Africa and Africa explain a lot about us.
We think of development work as working from the inside out, starting with the people, talent and power brokers within the country. We are somewhat bemused by even very smart people who think of development first in terms of where an international agency should put its money. That’s an add-on, sometimes super-useful, but not the heart of the matter.
I often tell people who join Genesis: development isn’t something we do to other people; it’s something we do for ourselves. We are so proud that 80% of our staff are from, and live in, our impact countries in Africa and elsewhere. That fundamentally changes what we do and how we do it. At the same time, we work hard not to be parochial. From China to Chile, learning from other countries has been at the heart of the great development success stories of the last half-century. So we also greatly value our team members in the global north who plug us into valuable networks and share our context-first approach.
In our domains there is often some misalignment between the plan of an international player and local perspectives. But again, it is the quality of the conversation that matters: the international donor may well have seen some things that we haven’t, or, conversely, may have some blind spots. Figuring all that out is much more likely when the relationship is that of partnership rather than service provider. That gives you a shot at co-creation and allows us to bring in-country dynamism and realism to the process. ?
?Today, Genesis focuses on the Young World, a region of growing markets and young, productive populations. This seems like a demographic bet. How important is it to take ‘the long view’ in consulting when clients demand immediate solutions and partners demand immediate returns?
I deeply believe in the adage that long shots pay over the odds. The Young World perspective that we at Genesis espouse tells us something important about the future. It is a profoundly optimistic view of the world that mobilises novel combinations of allies who have a real shot at achieving big things in these young societies.
But to make this happen we must be different from traditional consultancies. The big difference is our proactivity. We start by identifying the big opportunities and then work to draw in funders, designers, tech providers, implementers and those who can create the political space. Traditional funders don’t pay for all that upfront work, but we are finding ways to get it done. ?
How will the consulting industry change in the coming decade? Specifically, will AI such as ChatGPT be an opportunity or a threat?
In the future, all professional services will amount to a big bet on the power of human complementarity. In other words, adding human capabilities to tech will create value. We believe this to be true in two ways.
First, critical thinking. Today’s generative AI is really nothing other than conventional wisdom on tap. This bias is hardwired, given that the core decision rule for creating output is ‘what is the most likely word to follow the previous word?’ Current generative AI, useful as it is, is at its heart tech-enabled group think. The antidote for that is something deeply human: critical thinking that embodies such idiosyncratic traits such as constructive scepticism and optimistic creativity. This is why applying what psychologists call active open-mindedness is one of our four habits of work in Genesis. A firm that can bottle critical thinking has a real – and fascinating – future.
The second point is that AI does not do people. Think about it: everything of any consequence that gets done in the world, gets done through other people. And people are gloriously messy: they have passions, interests, blind spots, innate wisdom, deep flaws and much more. AI is clueless about all this. AI does not bridge the gap between people, bring their gifts to the surface or build coalitions for change. People do that. The best ‘consultancies will do that. This is why the word ‘consultancy’ will soon no longer be the right word for what we do. ???
You host a dinner and can invite anyone, past or present. Who are the first three guests on your list?
For more interviews on Our Long Walk by Johan Fourie and to access this interview A firm that can bottle critical thinking has a real future
?
?
?