The Rules

As long as clear rules exist around ownership, trade and the economic environment in general, a well-run company will be able to find its way – and possibly to thrive – under just about any regime.

But a company that can’t predict what will happen tomorrow can’t plan effectively. And a company that can’t plan finds itself scrambling from one day to the next. It finds that it can’t commit – neither to its customers nor to its staff. When this uncertainty becomes generalised, with nobody willing or able to say what tomorrow holds, the business climate worsens all round.

[Originally published in the Vanuatu Daily Post’s Weekender Edition.]

There is only one thing worse than a badly played football match: a badly refereed match.

What makes a bad referee? Players the world over agree that it’s not strictness or laxity; what makes a referee really bad is when he’s inconsistent and unpredictable. The ref consistently calls offsides in favour of the defence? Not great for the strikers, but a team can adjust and try different approaches to the net. The ref calls them consistently in favour of the offence? Drop the zone defence and mark your man carefully.

But when neither team knows how the play will be called, it creates uncertainty, which leads to sloppy play and sometimes a little opportunistic cheating, hoping that this time the ref won’t call a questionable play.

This principle applies everywhere. In numerous business surveys, company leaders consistently report that continuity and predictability in economic management and government affairs matter more to them than the economic structures themselves.

Read more “The Rules”