Last week, Nvidia became the first company in history to achieve a $5-trillion market cap. It’s impossible to actually understand the concept of that number, as it is so far removed from any rational quantity in our lives. Here’s a different way to frame it: Nvidia’s market cap is roughly equivalent to Berkshire Hathaway, Tesla and Amazon combined. Yes, Warren Buffett’s entire legacy, Elon Musk’s disruptive technology play and Jeff Bezos’s cloud and e-commerce giant would have to merge to match Nvidia’s market cap. It’s staggering.
I’m reading Dune Messiah, the sequel to Frank Herbert’s Dune that will form the basis of the third movie in the series due for release at the end of 2026. “Fear is the mind-killer” is one of the most iconic quotes from the books, referring to the unwelcome ability of fear to put an end to any degree of rationality. And yet, the more I listen to David Sendra’s Founders podcast series, the more I learn that the greatest business minds in the world seem to operate with a constant dose of fear of failure and disruption.
This fear prevents them from falling into the trap Nvidia’s Jensen Huang is most afraid of: complacency. With the world obsessing over Nvidia and trying to learn as much as possible from its founder and business culture, this puts the spotlight on complacency, the real mind-killer (sorry, Frank). Huang’s “no rear-view mirror” policy focuses on constantly looking to the future rather than resting on the laurels of past successes.
You don’t have to think too hard to come up with examples of businesses that have created extinction events for themselves by sitting back rather than leaning forward. As I reflected on some of the recent updates in the retail sector, I couldn’t help but apply this thinking to what has happened in the South African market.
Boxer was the plaster that hid the wound from view, making it harder for the outside world to see the infection that had developed in the group
Shoprite launched Checkers Sixty60 in November 2019. With hindsight, it seems like the most obvious thing to have done, yet this was before anyone knew anything about Covid and how it would change the world. Having taken the fight to Woolworths Food by targeting higher-income consumers with a more sophisticated product range, Shoprite would now make it even more convenient for busy people to get their hands on the products. Sure, the onset of Covid and the resultant lockdowns did absolute wonders for Shoprite and sent the group into the stratosphere, but it had to put itself in the position to get lucky. It wasn’t complacent.
Today, Pick n Pay is struggling with the hangover of many years of poor performance in the core Pick n Pay supermarket business. Boxer was the plaster that hid the wound from view, making it harder for the outside world to see the infection that had developed in the group. Instead of promoting from within and developing a culture of operational excellence, the group brought in international executives and hoped the traditional brand strength and Raymond Ackerman’s impressive legacy would carry it through. The bubble burst in an ugly way, with the Pick n Pay brand generating huge losses that look set to continue for the foreseeable future. Pick n Pay was complacent. It didn’t fear what was happening over in Brackenfell, where the Shoprite juggernaut was gaining momentum.
Woolworths was also caught napping across its business, having lost its way in the fashion, beauty and home business while being distracted by disastrous acquisitions. As Checkers encroached on its turf in the Woolworths Food business, its leaders had to sharpen their pencils and offer better value to consumers. The difference is that Woolworths caught the slide in time, giving it a chance to improve its execution and respond to the threat.
Listed company executives earning many millions a year should be operating in a constant state of fear. We are in a highly disruptive environment, where technology enables big changes to be made to large organisations on an accelerated timeline. There’s no place for complacency.
I suggest keeping an eye on Dis-Chem, a retailer going from strength to strength. Its X, bigly labs part of the business might have the most ridiculous name of all time, but it is investing heavily in an innovation hub tapping into technology such as AI and data science to enhance its rewards programme and other value-added offerings.
Do you know which other retailer has spent recent years making a song and dance about building data science capacity? That’s right: Shoprite. Watch this space.
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