I have heard people saying that Zimbabwe’s economy is dying, but I believe much of it is already dead. I was recently told an interesting statistic in conversation which claimed that 30 businesses close down each month in the country. It’s unclear what percentage of total businesses that figure represents, but the implication was that the figure is unusually high. Although I deeply regret the loss of livelihoods that is accompanied by the collapse of any business, I’ll be honest in saying that I don’t mourn the closures themselves. The uncomfortable truth is that these businesses were zombies.

The Zimbabwean economy is infested with the walking dead. These are businesses that have managed to maintain operations through sheer momentum, but in fact, lack the crucial component that makes a business truly alive. In such cases, it’s only a matter of time before appearances catch up with the reality that a business that cannot deliver value is dead. Value is the soul of business. It’s the vital force which gives meaning to all aspects of a company. Without it, there is nothing.

At its essence, a business is an engine that converts and multiplies value. It receives value of a particular kind on one end, and then delivers value of another kind on the other. Within this process, value gain is achieved when the value delivered exceeds the value received.

It’s a simple equation: Value Gain = Value Delivered — Value Received

If a business is unable to deliver value, it cannot achieve value gain, and if it cannot achieve value gain, sooner or later it will die.

There are many possible reasons for a business to close, but the two that are most commonly cited are a lack of revenue and a lack of capital, and both of these are symptoms of negative value gain. Negative value gain occurs when, for any reason, the value received exceeds the value delivered, and loosely translated, value received refers to capital while value delivered refers to revenue. Therefore, according to these definitions, value gain translates somewhat to return on investment or ROI. But the difference isn't merely semantic. A value centric approach to business can have a significant impact on a company’s chances of long-term success. While it’s true that ROI is a financial term that describes value gain, a focus on financial health without an appreciation of the mechanisms that lead to positive financial results will often see a business struggle without understanding why or how to turn its fortunes around. And yet the answer is straight forward: deliver more value than you receive.

Although, from the business’s perspective, value received is measured in terms of revenue, a more accurate definition would take the customer’s perspective. In the value equation, it’s the customer’s perception of value delivered that truly matters. If customers feel that a business is delivering value to them, they will continue to buy. Alternatively, if they feel that they are not getting the value they have been promised, they will simply take their money somewhere else. Unfortunately, this truth has been neglected in Zimbabwe because of artificial barriers to customer mobility. A lack of market choice and market information has led to customers being unable to shift from one business to another. However, these customers are becoming more discerning in their spending and less willing to part with their money for little or no value. In fact, in many cases, customers now expect a high level of value delivery in order to justify spending of any kind. The result is that businesses have to work harder to generate revenue than they did in the past, and those businesses that fail to deliver value will die.

Similarly, value received can also be more accurately defined from the investor’s perspective. Under capitalization is a problem that is plaguing Zimbabwean industry. On some level, the belief is that if Zimbabwean industry could somehow get the capital it needs, then a large portion of the problems would be solved. But again, looking at this from a value centric approach, the problem is not a lack of capital, it’s a lack of perceived value from the perspective of potential investors which inevitably leads to low investment. In exchange for value received or investment, investors want to see high value gain. Likewise, a quicker value conversion rate (value gain over time) and a higher value multiplication factor (value delivered over value received) will naturally lead to increased capital availability. By looking at the problem through the lens of the value equation, it becomes clear that the major issues faced by Zimbabwean businesses are just symptoms that can be addressed through the effective conversion and multiplication of value.

As I said in the beginning, much of the Zimbabwean economy is already dead due to an ability to deliver value to both customers and investors. I believe that many of the companies that are closing down are simply zombies that have long since failed to offer the level of value required to remain in business. I say let them die. I hope that as the zombies clear away, new fledgling companies will rise up that are able to quickly convert and multiply value for the sake of their customers and investors. And I foresee a large portion of this new wave of businesses making use of the value efficiencies offered by digital technology. But that’s a conversation for another day.