Author Archive | Jane Notten

#2 Summer 2014

The rise of the academic activist

Academics have a privileged place in society and, as such, can play a powerful role in shaping its direction for the better.

Academia is often criticised of being too naïve about the realities of life beyond the ivory tower – far removed from the needs of society. The Economist magazine once described America’s Ivy League universities as “not so much ‘palaces of learning’ as bastions of privilege and hypocrisy”. But more and more academics are rolling up their sleeves to get involved in the mission of finding practical solutions to some of the pressing challenges in society.

In 1970, the late Norman Borlaug was awarded the Nobel Prize for his contribution to the world food supply. The American biologist was instrumental in setting in motion the socalled ‘green revolution’ by creating highyield, disease-resistant crops that helped millions escape starvation.

Despite subsequent criticism of his work, mostly from environmentalists, many academics today look at Borlaug’s work as an archetypal example of how scholars can make an impact on society. He showed on a grand scale that academics do have a role to play in shifting the direction of society.

“As an academic, I think there is a sense of responsibility to interact and communicate not only with fellow scholars, but with a broader community,” says UCT GSB professor Ralph Hamann. Hamann is one of many academics and staff members at the institution who has embraced the idea of pursuing scholarly work in tandem with activism.

Academics pursuing activism with the aim of bringing about social change are influential in many ways and their significance goes beyond the lecture room, where they provide academic guidance and more to many students. They are perhaps a key element in a modern society. Their views and involvement in societal issues can carry enormous weight and in many instances help to positively shape the future – either by challenging the status quo or by finding ingenious solutions to societal and business needs.

“There is a spectrum of work that academics are engaged in that will have practical relevance,” Hamann says.

“There are sometimes these clichés of ivory towers … I think it is possible for some researchers to be quite aloof or separated from practical issues or policy issues. Even so, if they develop good theory, then that can have a significant practical impact.”

The work of the Massachusetts Institute of Technology (MIT) Media Lab is a case in point. Situated in the heart of MIT’s campus, in Massachusetts, the Media Lab is one of the world’s leaders of invention – promoting a unique, anti-disciplinary culture to develop disruptive technologies that could have everyday uses for millions of people. Some of the Media Labs’ successes include the development of the Aspen Movie Map, which was the precursor to the ideas in Google Street View, and Netra, a $2 add-on smartphone device that automatically tests for an eyeglass prescription.

The key to the MIT Media Lab experiment lies in their stated aim “to look beyond the obvious” and to ask the “not yet asked questions whose answers could radically improve the way people live, learn, express themselves, work and play”. Whether working in the technology space, as MIT does, or by innovating policy, processes and business models as the UCT GSB does, looking beyond the obvious and asking the unasked questions is central to the academic activist mindset.

Professor Hamann himself has been asking just such questions aimed at making a difference to business in South Africa as academic director of the Network for Business Sustainability (NBS). The organisation, which is affiliated to the Canadian NBS established in 2005, was set up with the aim of connecting researchers and professionals across the globe who are interested in corporate social responsibility. It essentially aims to address business sustainability issues within the South African context by better using and building the considerable business and academic resources in the region. Companies involved in the NBS Leadership Council include Santam, Transnet and Woolworths, and Hamann says that although the South African NBS has only been operating for just over a year, he believes it has already started to make a difference.

“We have many stories of impact, where people tell us how they have used some of our material. Companies have told us that NBS has influenced the way they think about strategy,” says Hamann.

Very few people would argue that the challenges faced by companies nowadays are varied and indeed intricate. From considering the environmental and societal impact to health, safety and labour relations, the risk implications for businesses operating in the modern world have never been so perceptible. Business needs top notch and relevant advice to help get through the multifaceted socioeconomic milieu in which it operates.

“NBS is an example of an organisation that tries to close the gap between research and practice,” Hamann points out. He emphasises that the relationship between business and academic researchers is at times difficult, adding that some practitioners had actually written off academics, as they did not “understand their language”. The NBS is working to bridge the divide between practitioners and researchers to offer practical solutions for businesses.

While Hamann acknowledges that time constraints and career incentives can make it difficult for an academic to pursue activism or related activities, he believes that academics still can find effective and smart ways of making a positive impact on society.

“The trick is to find those activist activities that contribute to the scholarly theoretical work and vice versa.” He adds that it is interesting to think of the UCT GSB as a collection of activist scholars because there is a stereotype, especially amongst academics and activists, that business schools are essentially handmaidens to business, capital, bosses and management. However, such stereotypes are partly diminishing, Hamann notes.

He says that on the contrary, the UCT GSB offers an environment that fosters activism among staff, faculty and students alike. The school actively encourages its academics to “challenge taken for granted assumptions” and to go beyond case studies and grapple with real problems. The most tangible manifestation of this has been the launch of the Solution Space at the beginning of 2014. Partly modelled on the interdisciplinarity of the MIT Media Lab concept, the space offers a physical home for the school’s innovation programmes and initiatives and seeks to connect people in the innovation ecosystem (academics, practitioners, policymakers, entrepreneurs, investors and so on), allowing them to work together to invent and test new business models, products and services, and incubate businesses aligned to African markets.

But can it work? In a 2013 research article on academia and activism, Michael Flood, Brian Martin and Tanja Dreher of the University of Wollongong, Australia, suggest that academia and activism are simply different things. Every activity has a bottom line. In politics, it’s votes. In business, it’s money. In religion, it’s souls. Activism is about promoting social change, which is a different bottom line to that of academia, which is knowledge generation. However, the three writers argue that many academics engaged in social change work experience powerful personal and professional benefits. Activist academics can find meaning and comfort in the sense that their work contributes to the greater good, nourishing a sense of personal and collective purpose. UCT GSB lecturer, Dr Nosakhere Griffin-EL, is one such academic.

“In my life, I have always combined dreaming and acting, what I call dreamocratic action,” says Dr Griffin-EL. “I see this as a calling and believe I was placed on this earth to live a purpose-driven life. Honouring that purpose means I had to find out what I love doing and understand how it can assist in the development of a better world. My purpose in life is to assist individuals in articulating their dreams, while providing them with the support to pursue those dreams within a real-world context.”

Dr Griffin-EL teaches and mentors students through the Solution Space, and conducts research to understand how to make the world more inclusive through what he calls “the pedagogy of dreaming”.

“The Solution Space is a place where dreams meet courageous action,” he says. Experienced and aspiring entrepreneurs enter the space with innovative ideas and transform those ideas into inclusive businesses that create economic and social value. But it is not about creating businesses for the sake of creating businesses. For real value to emerge, Griffin-EL cautions that entrepreneurs must innovate with members of the socially and economically oppressed, not for them. Solutions must be embedded within a context.

“Disembedded innovations have the aspiration of meeting people’s unmet needs, but without a grounding in a specific social reality, the innovation will never have the intended impact,” he says. To achieve real impact, entrepreneurs must engage in dialogue with community members, and develop innovations grounded within that experience.

“The Solution Space experiment is too young to judge its impact. However, five years from now, our success will be judged on whether we have managed to create inclusive businesses that are both profitable and socially relevant,” he says.

Whether it works or not, he believes that, as an academic, the important thing is to try. “The work of academics has to go beyond publishing, it has to create the possibility for a better future.” For Griffin-EL, that future is “an Africa free of the contradictions that prevent its citizens from reimagining themselves and their societies as transformable through their concrete action”, but the field is wide open. The needs are great, the invitation to get involved is broad and the possibilities, in theory, endless.

#2 Summer 2014

Towards a social compact for South Africa

South Africa urgently needs to find a way to develop a more inclusive social order that brings labour, government and business into agreement.

For anyone who hoped that the gruelling five-month Association of Mineworkers and Construction Union (Amcu) strike would have taught South Africa something, the hard truth is that social unrest is here to stay. Ongoing labour disputes are symptomatic of a larger, more systemic fault line within the political economy and are likely to continue sporadically until key structural issues are addressed.

There is growing frustration that the rate of improvement in people’s lives does not measure up to their expectation of what the postapartheid scenario would deliver. And business is going to find itself increasingly dealing with the often unrealistic demands of its workers, which may reflect something much larger than their immediate work circumstances. This cannot be dealt with purely at the labour relations level, but needs to be understood in the national context of a broader social consensus.

Journalist Martin Creamer quoted Nhlanhla Nene, Minister of Finance, as saying: “We must find a balance between meeting the earnings expectations of shareholders, the realisation of the vision of economic transformation required by the electorate and occupying our rightful place as global corporate citizens.”

This notion of a social compact between government, business and civil society as a basis for long-term economic development and growth underpins economic models in many industrialised countries. The East Asian authoritarian historical experience saw political legitimacy arise from high economic growth rates. Social protection and political participation were suppressed. The state had to keep delivering the high economic rents and, in return, labour focused on productive activities and long hours of work.

In Europe, a very different social compact emerged that saw a more collaborative, corporatist framework, which focused not only on production, but also on the general wellbeing of the populace. Despite these differences, what ties them together is the implicit or explicit compact that exists between business, government and labour as to the future direction of the sociopolitical economy. This political equilibrium can change over time and indeed has done so in various East Asian countries. As per capita income levels rose, so the populace demands transformed and required political liberalisation and growing social protection from the state.

In Africa, we have generally seen a lack of imagination on the part of both the state and society about a long-term social compact. Historically, Africa has not had a well-developed formal social net and the state has suffered from a lack of legitimacy and has had to find other nontransparent ways to govern. The recent transition to democracy in many African countries, from the mid-1990s onwards, accompanied by higher economic growth, raises the question of how to consolidate this process within a modern state, which is accountable to its citizenry. South Africa is an interesting case because it has developed a very comprehensive approach to social security, given its level of development. Currently there are around 10.3 million beneficiaries of child support grants, and 1.2 million of disability grants. The overall cost of these social grants amounts to 3.5% of South African GDP. There have been calls for higher taxes to finance social demands, but this is only a viable option if there is confidence in the government’s ability to deliver social progress and that it will not be used to further the system of patronage for a small elite.

Furthermore, social security does not address the root causes of unemployment and inequality in South Africa; instead it is putting an increasingly unsustainable pressure on the fiscus to support an ever-growing number of welfare recipients with a static and limited taxpayer base. This issue has become increasingly politicised, thus reinforcing the importance of social compacts.

The South African post-apartheid dispensation was a negotiated settlement between elite groups that left the majority of the population without ‘voice’. The search for a new social order that accommodates this frustration is pressing. Finding ways to bring about more inclusive development and ways to compensate those who are not making the transition successfully to a new economy is critical.

The ideal outcome is a long-term social compact, which brings business, government and labour together in an attempt to address the structural deficiencies in South Africa’s political economy. This will not be easy, given the country’s past and the antagonistic relations between these stakeholders. But the alternative is rising instability and continued policy vacillations leading us down a path that nobody wants.

#2 Summer 2014

Think like a designer to solve complex organisational and social challenges

The application of design thinking can not only solve complex problems within organisations and in the workplace – but can also help to improve living conditions and uplift communities, as the citizens of Cape Town found out during their city’s year as the World Design Capital 2014.

As the City of Cape Town lowers the bynow familiar yellow and black World Design Capital (WDC) flag at the end of this year, the inevitable question as to whether hosting the initiative has made any appreciable difference to the people in the city has to be asked.

Cape Town set out to try something quite ambitious during its year-long tenure as World Design Capital. It went beyond just leveraging design as a tool to improve the social, cultural and economic life of the city (the stated objective of the WDC initiative), to actively employing ‘design thinking’ to resolve some of the city’s most entrenched problems, such as segregation and unemployment.

Over the past few months, the city has identified a sample of 76 design-led projects and programmes aimed at uplifting and improving conditions for citizens of Cape Town. Some of these have included upgrades to healthcare clinics, new parks for urban areas, youth skills development programmes and improvements to traffic and transport dilemmas.

Richard Perez, programme director for the WDC at the City of Cape Town, believes that design thinking provides an effective framework and process structure, which ensures greater success and better implementation as there is more engagement with end users. He says design-led thinking should be seen as a tool or a technique to help people “think like designers” around the challenges they are facing – whether in the private or public sector, within budgets or existing systems.

While the idea of budgets and design may seem like polar opposites, design thinking in the world of business (and now service delivery) is gaining ground around the world. Some of the world’s most successful and fastest growing companies are design led and design thinking is being employed to find solutions for a host of different kinds of problems.

In their book, Solving Problems with Design Thinking: Ten Stories of What Works, Jeanne Liedtka, Andrew King and Kevin Bennet provide detailed examples of the design thinking techniques used at top companies like Toyota, IBM and 3M. These techniques include visualisation, journey mapping, brainstorming, prototyping and assumption testing.

In some cases, design thinking led to greater efficiency and cost cutting, in others to successful mergers and company culture building. It is clear from their book that design thinking can be used for a wide range of business challenges. In fact, it can be used to resolve just about any situation one can imagine – from factory floor issues to product launches, all the way up to the boardroom.

For instance, computer giant IBM wanted to rethink their trade shows. They made use of design thinking to do market research, interviewing more than 100 experts in 20 fields – some not specifically related to their industry at all, like educators and psychologists – to gain an idea of how people behave and what makes them feel comfortable at a trade show, for instance. This led to them redesigning the way their trade show structures were set up. The design thinking tool of mindmapping was used to sift through large amounts of data and spot patterns, to develop new insights. Then they built prototypes of new physical spaces and tested these at a smaller show. The result? Double digit increases in client engagement leads – an increase of 78% year-on-year.

A completely different business challenge was faced by Suncorp in Australia. The country’s banking giant was merging with an insurance leader, Promina, and the companies were organisationally very different. They needed to find a common strategy to smooth the merger process. Visualisation and metaphor brainstorming, as well as rapid prototyping were used to engage participants and help them think more creatively about the future of the company. And after 18 months of strategic conversations, rolled out at 10 business units, 94% of employees said they understood the company’s new vision and how they fitted in.

Liedtka, King and Bennet concluded that the big lesson to be learnt from the Suncorp example was that you should meet people where they are, not where you want them to be. The power of reframing is another valuable contribution of design thinking they say. Impatience is often the biggest obstacle to innovation as many people want to rush towards solutions instead of taking time to properly examine the situation. “In a wonderful paradox, that same ambiguity that makes us so uncomfortable, it turns out, also has the potential to unleash a level of energy we rarely experience when presented with a fait accompli. Leaving space for stakeholders to be part of the discovery of new ideas, to be part of the emergence of innovation, gives meaning to their efforts and has tremendous power.”

In most organisations, the highest payoff is not in innovating the solution but in innovating how people work together to implement the new possibilities they see amid organisational inertia, bureaucracy and risk aversion, say Liedtka, King and Bennet.

It is an intensely practical process adds Richard Perez, who shared the City of Cape Town’s experiences with design thinking at the Business of Social and Environmental Innovation (BSEI) conference at the UCT GSB this October, which had an exclusive focus on design thinking. And it is especially valuable in situations, like in the city, where the stakeholders are divergent. Because design thinking involves opening up traditional ways of thinking, it can help to break down communication barriers, especially within set structures, to encourage the flow of ideas and the development of solutions.

Design thinking drives us to really question the fundamental assumptions ingrained in institutional processes that drive delivery to improve social and economic conditions. It also provides us with a robust framework within which to think about how we can change these conditions and start to address the complex problems facing our society and our continent like hunger, poverty, poor health and so on –through business and research.

Richard Perez says it is probably too early to tell if the Cape Town WDC has yielded any tangible results for citizens of the city, but he hopes that design thinking will drip feed through and change the way the city approaches issues in the future. By sharing these experiences with an audience of business students and leaders at the UCT GSB conference, the ideas can also gain wider credibility and give more organisations fresh ideas to implement innovation at structural levels.

The enduring value of design thinking lies in its ability to change mindsets and behaviour – no easy task. As Liedtka, King and Bennet point out in their book, if one shifts people’s mindsets, one can put into motion a series of behavioural changes in the conversations they have – with co-workers, customers and management – as well as with clients and suppliers. It can change how people see the world and ultimately, in the hard outcomes they – and their organisations – create.

#2 Summer 2014

Friend or foe? What does the BRICS New Development Bank mean for South Africa?

PHOTO Marcelo Camargo / Agência Brasil.
With the bedding down of plans to establish a development bank for the BRICS countries – an initiative that will cost the South African taxpayer a significant amount – experts ask: are South African interests being taken care of?

With its core function being the financing of infrastructure in emerging markets, the fledgling New Development Bank (NDB), brainchild of BRICS (Brazil, Russia, India, China, and South Africa), is designed to serve its five member countries and those regions of special interest to them.

The NDB, however, signifies a lot more than the potential for infrastructure development, something sorely needed if African countries are to foster industrialisation and bolster intra-regional trade. It also seeks to ease the Western grip on global finances and offer a potential counterweight to the World Bank and International Monetary Fund (IMF).

It also has geo-political implications as South Africa beds down with potentially self-serving giants such as China (the NBD will be headquartered in Shanghai and China has insisted upon representation at the African regional centre of the bank to be located in South Africa) and Russia. Experts raise the questions: what is in it for South Africa? Can we guard against the bank it simply serving the interests of South Asia? What do we have in common culturally or values wise with the other four member countries? And will it make access to finance easier or will it inevitably mimic the conditionalities of the IMF and World Bank anyway?

“The NDB is a fait accompli,” says Mills Soko, associate professor of international political economy at the UCT Graduate School of Business. “We have to make it work. It is clear that there is a lot of thinking to be done to come to a consolidated, coherent strategy. The question we need to keep asking is: what is in it for South Africa?”

“It offers growth,” says Andile Kuzwayo, director, BRICS at the National Treasury. “This is an African story and who will benefit most from improved infrastructure in Africa? South Africa. With GDP shrinking by 0.6% in the first quarter of 2014 we are looking for growth and investing in the fastest growing region globally is the right thing to do.”

Speaking at a roundtable discussion at the UCT GSB, Kuzwayo said: “We don’t have the funds to finance our own infrastructure needs, let alone the $96 billion needed per annum for infrastructure development in sub-Saharan Africa.” He said a regional bank meant local knowledge, which could ensure wise and strategic investment choices, to benefit not only South Africa but the continent.

But if South African taxpayers’ money is partly used to finance a road in Liberia, what is in it for South Africa? Martyn Davies, chief executive officer of Frontier Advisory, said it was questionable if the long-term benefits would, in fact, flow into South African coffers.

South Africa will engage as both a shareholder and a borrower in the NDB, according to Kuzwayo. With the South African contribution financed by the taxpayer, the NDB will have $50 billion as seed capital, with South Africa, and the other four members, contributing $10 billion over a seven-year period.

With more questions than answers as yet around the NDB, Davies cautions whether enough has been done to tie this money into the interests of South African companies. He also questions if the idea of a state-owned bank is several decades out of date.

But Michele Ruiters, Africa integration specialist at the Development Bank of Southern Africa, one of five reference banks working alongside the Fortaleza BRICS summit in Brazil in July, from which the NDB announcement was made, said the new bank will be positive. “We welcome a new institution bringing investment for infrastructure. It’s a good thing. But as an African institution we would want to know how the NDB will complement us, and how do we make sure that funding comes our way?”

Ruiters queried whether NDB would lend finance in local currency to hedge currency risk, which might make it a more viable alternative to the likes of the World Bank for emerging markets.

She cited World Bank figures that identify a funding shortfall for African infrastructure of $100 billion a year and the greatest infrastructure need as power, without which there will be no growth and no industrialisation, as well as the need to provide bulk water, power and sanitation to households. Rail also needs substantial boosting. “Infrastructure is a priority,” she concluded. It is a prerequisite for boosting intraregional trade among SADC countries, which is currently at a low 16%, despite the fact that the region has the most developed infrastructure in sub-Saharan Africa.

Others, however, query if the NDB will be more democratic than the established international financial institutions in financing this much needed infrastructure development. Peter Draper, senior research fellow at the South African Institute of International Affairs and director of Tutwa Consulting, says that a major bug-bear with these banks is the prohibitive conditionalities around loans. “I wouldn’t be surprised if NDB conditionalities don’t end up looking different to those of the World Bank. It remains to be seen given the membership. China is not about democracy, is Russia?”

He also pointed out that BRICS is a geopolitical instrument, with the BRICS dynamic centred on strategic competition within the Eurasian core, Russia, India and China, which are orienting themselves against the West, while not really trusting each other, and sabre rattling in the Ukraine and along the China/ India border respectively.

The risks may, however, be outweighed by the positives. The NDB will also offer a US$100 billion dollar Contingent Reserve Arrangement to protect against global liquidity pressures and impacts upon national currencies by global financial pressures.

Associate Professor Soko, who moderated the roundtable discussion, says that it is important to have these conversations to reach a greater understanding so that South Africa’s national interests are represented. “The NDB has enormous potential, but it is clear that much thinking needs to go into making certain this happens to our benefit,” he says. “To date it has been justifiable for South Africa to place the interest of its neighbours ahead of its own, given the country’s past, but it is time to balance that with South Africa’s domestic interests. While the jury is out on whether the NDB will play out in favour of South Africa and the continent, only time will tell and we need to remain informed and keep our interests front of mind.”

#2 Summer 2014

A rising tide lifts all boats

China has displaced the US as Africa’s biggest trading partner and has gained much political and economic influence on the continent, but as the US economy rebounds, South Africa has had to work to repair its increasingly antagonistic relationship with this important but undervalued trading partner.

“BREAK the kettles and sink the boats” is an ancient Chinese saying attributed to Xiang Yu, a prominent warlord of the late Qin Dynasty. He is reputed to have issued this order at the Battle of Julu in 207 BC after he and his men had forded a raging river in pursuit of the enemy. The intention, of course, was that by destroying all means of retreat, his army would have no choice but to commit to a struggle to the bitter end, and therefore be more likely to achieve victory.

The English equivalent is to ‘burn one’s bridges’, which also has military origins. However, the Chinese version is more relevant to this article, which concerns another form of warfare, albeit a low grade variety – international trade.

In the case of the Battle of Julu, sinking the boats worked out well for Xiang Yu, who triumphed over rival commander Zhang Han. But it was a high-risk strategy that could have gone badly wrong. That is presumably why in English the expression to ‘burn one’s bridges’ is invariably preceded by the words ‘should not’: it makes sense in most circumstances to keep your options open.

This is a lesson the South African government will hopefully have learned after coming perilously close to sinking its boats in pursuit of a policy favouring China and emerging markets – the BRIC bloc in particular – over traditional trading partners such as the EU and US.

There was some logic to favouring China a few years ago, when the US was in the depths of a depression brought about by the subprime crisis and Europe was sinking under the weight of excessive debt. China was the new engine of global growth and seemed primed to eclipse the US as the world’s dominant economy, so it made sense to hedge our bets by diversifying trading partners.

What did not make sense, and still doesn’t, was an urge to sink boats after crossing the river to engage with China. South Africa’s diplomatic relationship with the US became increasingly antagonistic, soured by an erratic voting record at the United Nations, a perplexing approach to human rights abuses in Zimbabwe and a penchant for rash anti-Western rhetoric on the part of the governing African National Congress and its allies.

However, several years and trillions of dollars in quantitative easing later and it is the US economy that is rebounding and China that is starting to look flat. While trade with China has mushroomed over the past decade, the terms of that trade have not favoured South Africa’s long-term economic development, being focused on commodity exports and imports of low-cost manufactured goods that have contributed significantly to its gradual deindustrialisation.

With Europe still in the doldrums, the lifeline that has kept us from being stranded on the wrong side of the river is the US Africa Growth and Opportunity Act (Agoa), which will be renewed in September next year, following an agreement struck at the US-Africa Leaders Summit in August – subject to ratification by the US Congress and the various African governments.

Agoa is credited with boosting US-Africa trade by more than half since 2003, and the US remains the biggest investor in Africa, despite China’s rapid advance and centuries of European colonial history. African trade with the US totalled $39 billion last year, although less than $5 billion of that (excluding SA) was nonoil products. SA is the largest non-oil African exporter to the US by far at $8.5 billion last year, actually enjoying a trade surplus of $1.2 billion.

Prior to the implementation of Agoa, South Africa’s exports to the US comprised primarily minerals and metals; now about two thirds of that trade is in value-added manufactured products. Yet we have taken advantage of only about a third of the 6 000-odd tariff codes that Agoa has made available to African countries tariff-free in terms of the agreement.

Panellists who participated in a roundtable discussion organised jointly by the UCT GSB and South African Institute of International Affairs ahead of the US-Africa Leaders Summit agreed that the biggest challenges under the renewed Agoa agreement will be ensuring the continent diversifies its product offering from extractive, resource-based exports towards trade in higher value-added goods and services. The continent’s ability to exploit the opportunities offered by Agoa is also limited by infrastructure shortcomings, investor insecurity over the longevity of the agreement, obstacles to intra-African trade and difficulties getting to grips with the US’s sometimes complex import requirements.

“It’s crazy,” said panellist and US Consul General Erica J Barks-Ruggles. “This is the only continent in the world not trading with its neighbours.” She also pointed out that despite the decimation of the SA clothing manufacturing sector due to low-cost Asian imports, manufacturers have not taken advantage of the zero duty on uniform imports to the US under Agoa, which is ordinarily 20%. The same applies to baby clothes.

South Africa is not the only one at fault in its neglect of the relationship with the US. The US itself, possibly distracted by its response to the September 11, 2001 terror attacks, was slow to recognise the implications of China’s economic rise and increased engagement with Africa.

As a result, China has displaced the US as Africa’s biggest trading partner and has gained much political and economic influence on the continent. With Africa widely expected to be the fastest growing continent for the foreseeable future, the US has a lot of catching up to do.

US President Barack Obama’s announcement at the leaders’ summit of $33 billion in trade and investment commitments to help spur development is a good start, especially as some of that covers projects such as electricity generation and infrastructure that should encourage intra-African trade. It also included about $14 billion in private sector deals, among them General Electric’s investment in the production of locomotives in South Africa.

UCT GSB Associate Professor Mills Soko, who chaired the roundtable discussion, says while Agoa has undoubtedly been mutually beneficial, it is clear the relationship between the US and Africa needs to be refined, and the two sides’ priorities could be better aligned. Specific issues that need to be addressed include access to finance, particularly to upgrade infrastructure; the provision of incentives for US firms to invest in key African sectors; support for agriculture; and a dedicated effort to expand trade in services. It is also imperative that US domestic agricultural subsidies be reviewed as they prevent African goods from being competitive, even with the benefit of Agoa, he says.

Concern has been expressed by some commentators over the fact that the Agoa renewal announcement did not come in the form of a joint communiqué, just a statement by President Obama, which might mean some of the African delegations have reservations about how the agreement will be received back home. And the summit studiously avoided any mention of the most issues that have caused most tension between African countries and the US in the past, specifically disagreements over security matters and the effect corruption and poor governance have on foreign companies’ ability to do business on the continent.

There are a number of reasons to be hopeful that the summit – and especially the extension of Agoa for a further five years – will continue to produce concrete benefits for both the US and Africa. As Xiang Yu might have acknowledged, a rising tide lifts all boats – as long as they have not been scuttled.

#2 Summer 2014

Make sure you get your ticket to the game

The impending implementation of the new BBBEE Codes of Good Practice may have many a business cowering in the corner, but there is opportunity as well as risk embedded in the legislation.

Broad Based Black Economic Empowerment (BBBEE) is back at the top of the business agenda as the new BBBEE codes get set for implementation in May next year.

Like it or not, a satisfactory BBBEE rating is perceived by procurement divisions in the public and private sector as an ‘entry ticket’, after which companies are expected to compete on capability, competency, price and the like. And the new BBBEE codes are going to make it that much more difficult for small, medium and large companies alike to get in on the game.

Businesses are already preparing themselves for a big drop in their BBBEE rating. The changes in the points necessary to reach the much sought-after level four rating; the need for especially qualifying small enterprises (QSEs) to bring about change in their ownership and management control; and the reduced points allocation for the likes of enterprise development and socioeconomic contributions leave a bitter taste in the mouths of especially SME business owners. The recently published amendments to the codes for QSEs, appear to offer little relief.

It is not all doom and gloom however. The new codes do offer some positive outcomes not only for SMEs, but for the economy and society in general.

The importance of SMEs (particularly blackowned ones) has been a key topic of the legislative and policy landscape in South Africa. With SMEs making up the greatest part of the South African business landscape, the enforcement of the ownership element on QSEs, which was discretionary in the past, will likely see a real and genuine move toward empowering previously disadvantaged communities, whether by way of direct equity, or the likes of employee empowerment trusts. If done right, enfranchising employees will also bring fresh energy to many SMEs. According to the book Equity: Why Employee Ownership is Good for Business published by Harvard Business Press Books, giving employees a financial stake in the business enables firms to grow faster and more profitably than conventionally run competitors.

Another real positive for SMEs is the increase in the targeted percentage procurement spend from 15% to 30%, and points allocation associated therewith, for companies who procure from value adding suppliers in their businesses that are deemed exempt micro enterprises (EMEs) (turnovers of up to R10 million) and QSEs (turnovers of greater than R10 million up to R50 million). Over and above this, procurement targets from 50% black-owned value adding suppliers has increased significantly from 12% to 40%, with a points allocation of nine points (as opposed to only three in the old codes). This, along with the increase of the turnover permitted to qualify as an EME to R10 million, creates real opportunities of sustainable growth for the plethora of companies falling within the expansive SME sector in South Africa.

In addition, the thoughtful inclusion of the need to advance suppliers through supplier enterprise development, rather than merely contributing to enterprise development alone, has the intended effect of enabling blackowned suppliers to the private and public sector to develop themselves beyond their own means and create sustainable enterprises that have a clearly defined growth path and potential.

The greatest benefit to be derived from the new codes will lie in the element of skills development. Though one might view the new codes as a passing of the education buck by government to the private sector, business should rather view this as an opportunity to make a real investment in its people. If strategised correctly, this element offers a relatively easy manner in which to obtain up to 25 points toward a competitive BBBEE rating, while gaining an advantage in the form of the training and education undertaken by employees.

The benefits a business will obtain will come down to the effort they put into sourcing training and education alternatives that bring about either an improvement in their core competencies and capabilities, or a rectification of the day-to-day frustrations and inefficiencies they face. Rather than waiting for the codes to hit them, there is much that business can do to step forward and meet them proactively, with a view to growing their businesses and contributing to the development of the South African economy.

#2 Summer 2014

Business schools unusual

Business schools in Africa need to rethink business education so that more holistic and creative responses to the continent’s economic and social challenges can emerge.

Africa may be in growth mode, but it is by no means certain that growth alone is going to transform the continent into a place where people aspire to live and work.

While the African economy has grown at an average of 5% a year over the last few years and growth is predicted to reach 7% by 2016, according to the World Bank, a recent report by the Africa Progress Panel (APP) reports that over 48% of people living in sub-Saharan Africa still live below the poverty line. Economic prosperity has not made a measurable impact on the lives of the 413 million Africans surviving on $1.25 per day.

The continent urgently needs to find ways for more people to benefit from the fruits of economic growth – not just stakeholders and international investors, but ordinary people – and one of the obvious vehicles through which to achieve this is business. But not just any business, it must be inclusive business.

Inclusivity is not a new concept in business, but is emerging as a key theme of current economic thinking, particularly in terms of the way forward for the African continent. It argues for the inclusion of lowincome communities in the value chain – both as producers and consumers – not at the cost of profitability, but for the gain of society and the environment. It is a call for business where ethics and values play a bigger role in day-to-day operations.

African business schools have the power to effect this shift. They have the knowledge and expertise needed to put new theories on how to do business more inclusively into practice, and of course to train the next generation of graduates to understand and enact these new ways of doing business. Business schools have the opportunity, not only to shape and polish the intellectual resources of the continent by preparing future business leaders, public works officials and budding entrepreneurs to be truly successful in business, but also to create leaders who are committed to sustainable enterprises that are inclusive and help to improve the lives of others.

In experimenting with ways to increase their impact, African business schools have perhaps more opportunity than most. The sheer scale of the challenges on their doorsteps invites academics and students alike to role up their sleeves and get to work experimenting with how business and the power of business thinking can be used to change people’s lives for the better.

It is no longer enough to put people in classrooms and tell them what they need to know – or bombard them with case studies, as is the triedand-tested method of many of the best business schools around the world. African business schools have the opportunity to spearhead emerging economy business thinking, from close proximity to emerging economy issues and to redefine business models that don’t work so well in emerging markets to create ones that focus on developing the base of the pyramid and creating shared value. They can push the agenda on social innovation and the role this can play in business. In essence, they can break the mould in traditional education in order for more holistic responses to the challenges the continent faces to emerge.

At the UCT Graduate School of Business, this imperative has spawned numerous initiatives including the Solution Space, which has been called a living manifestation of the business school of the future. Programmes and initiatives like the MPhil in Inclusive Innovation and the Social Innovation Lab, a stream on the MBA that allows students to essentially immerse themselves in the imperatives of social innovation, were started because the UCT GSB realised that the continent needs people in the trenches who have the training and mindset to implement real-world change by applying practical innovations.

Changing the continent one business at a time

If the African business school of the future is to look something like the UCT GSB: creative, interactive, challenging and entrepreneurial; then how is this going to change the continent?

One such outcome is quite simply the impact on development of local business; changing the continent one business at a time. For example, the UCT GSB, through the Bertha Centre for Social Innovation and Entrepreneurship and the Solution Space, is working in partnership with one of Cape Town’s poorest areas – Philippi – to boost business development in the area. Philippi is one of the larger townships situated outside of Cape Town. It is part of the Cape Flats with a population of around 700,000 people. Philippi, like many other townships, is an under-developed and under-serviced area with high unemployment rates.

Philippi Village is a new development that aims to shift that by creating a space in the centre of Philippi that will nurture entrepreneurs, support skills development and harness job creation. The development aims to invigorate this area with job opportunities and recreational activities.

Philippi Village will be an entrepreneurial development with a social impact. It will be a multi-use, multifaceted environment that will house local businesses and entrepreneurs, an event and entertainment centre, sports and conferencing facilities, and an education space.

These efforts are increasingly being given global recognition. In 2012, the Social Innovation Lab at the UCT GSB was included as a case study in the Inspirational Guide for the Implementation of Principles for Responsible Management Education, an initiative of the United Nations Global Compact, which highlights 64 schools around the world leading the way in this regard. The UCT GSB’s neighbour – the University of Stellenbosch Business School, was also featured in the guide, for its sustainability research in an African context.

By being more in tune with their context and its challenges, students emerging from these schools (and others that follow their lead) are more likely to take what they have learned and apply it to creating a sustainable business that addresses people’s actual needs.

Complex problems need fresh thinking

Research is showing that interest in socially innovative business is growing – not only from an investment point of view, but also at the coal face – as a result of student demand. Data from The Bridgespan Group shows that across some of the top MBA programmes, there has been soaring interest in social enterprise in recent years, and schools have grown their offerings with socially beneficial content to meet the demand. Between 2003 and 2009, the average increase of this content in the schools polled was 110%. The Yale School of Management showed the highest increase in 2009, with 95% of their course offerings now incorporating social benefit content.

A 2012 study from the Association of MBAs (AMBA) shows that one in five MBA graduates now believes that sustainable or responsible management is the most important MBA topic. The research was conducted among 1 000 graduates from AMBA-accredited business schools in 75 countries and heralds an important shift in the way students and business schools alike are thinking about the MBA.

The UCT GSB, itself an AMBA-accredited school, has seen this trend reflected in its own student body. More than 60% of the MBA students polled at the school in 2013 said that they chose to study at the UCT GSB because of the business school’s work in social innovation and sustainable business management.

So while many investors are eyeing Africa as a high-growth option in troubled times, the opportunities for social innovators are far greater. Social innovation has great potential for investors because of the great demand for it across emerging markets, and because it improves the overall environment in which to do further business in the future. Improved health, education, infrastructure and job creation all lead to better business.

The gold is not in traditional business approaches. It is not about selling more stuff to people that they don’t need and cannot afford. It is in the more elusive approach of creating shared value and innovating in a way that improves the lives of the consumers. Underlying this notion is the idea that if you deal with the need, the demand will emerge and the consumer will support you – basic business sense.

Combine this with cultivating a mindset for innovation and this is how we help to prepare the future leaders on the African continent to be successful – not only in terms of profitable companies – but also in achieving more sustainable, inclusive and socially innovative business solutions that truly add value to the lives of stakeholders and shareholders.

In this way, the economic boom on the continent can be successfully translated into social and environmental capital on the ground – helping to transform Africa into a place where people choose to work and live.

#2 Summer 2014

Breaking the deadlock: Tackling the South African labour market crisis

With South Africa reeling from the effects of its worst labour strike in history, the country needs its leaders to move beyond blame and pessimism towards lobbying for real change in the South African labour market in order to generate the jobs needed to tackle poverty and inequality in the country.

Dealing effectively with South Africa’s massive unemployment problem and the harmful effects of frequent strikes on productivity and economic growth will require major structural reforms to the labour market and its institutions. Unless these are undertaken, it is unlikely that the South African economy will be able to generate the number of new jobs – especially unskilled jobs – required to address the unemployment problem and tackle poverty and inequality in the country.

South Africa’s unemployment problem is well documented. A major contributory factor to the unemployment challenge in South Africa is the current state of the country’s labour market institutions and regulatory environment. In this regard, a rigid labour market, the ongoing crisis in collective bargaining, the widespread prevalence of the controversial practice of labour broking, problems with the determination and implementation of minimum wages, and policies that actually hamper – rather than aid – efforts to achieve higher rates of job creation, are all to blame.

At the same time, the growing prevalence of strikes in key sectors of the economy, notably mining, threatens to stifle economic growth and much-needed investment. In the period between 2007 and 2012, 41.9 million ‘man days’ were lost to strike action, more than four and a half times the equivalent number of days that were lost between 2001 and 2006. The Department of Labour’s annual industrial action report for 2012 states that workers lost R6.6 billion in wages as a result of strikes (up from R1.1 billion in 2011). As of the end of March 2014, the wage strike in the platinum mining sector had, single-handedly, cost workers some R4.4 billion in lost wages and employers some R10 billion in lost production. This cycle of value destruction is a fundamental obstacle to tackling poverty, inequality and joblessness in South Africa.

Current labour market challenges

The efficiency of the South African labour market is currently undermined by a number of issues. One fundamental problem stems from the economy’s low capacity to absorb labour –the current employment to population ratio is just 41.9%. This modest labour absorption rate is primarily a product of the mismatch between the skills of the workforce and those demanded by industry. Owing to a lack of training and skills development, a large share of the country’s workers do not possess the skills required to fill the hundreds of thousands of job openings requiring highly skilled workers across South Africa. This problem has been exacerbated by changes in the sectoral composition of employment in the country, where a shift towards a more capital- and skill-intensive economy has meant that fewer and fewer new low-skilled jobs are becoming available. Inadequate vocational skills training and a poor quality education system have only worsened the skills deficit.

Access to higher education, in particular, remains a problem. In its August 2013 proposal for undergraduate curriculum reform in South Africa, the Council on Higher Education reported that despite significant improvement in access to higher education across all population groups, the growth is not sufficient to meet South Africa’s human resource needs. The National Plan for Higher Education has set a 20% target participation rate (the total enrolment across all ages expressed as a percentage of the 20- to 24-year old age group in the population) in higher education. The steady growth in the participation rate in South Africa – from 15% in 2000 to 18% in 2010 – suggests that the 20% target is likely to be met by 2015/16. In line with this, the Department of Higher Education and Training’s green paper published in 2012 revised the target participation rate to 23% by 2030, but this is still described as ‘modest’ compared to average participation rates in Latin America (34%) and Central Asia (31%), and well below the rates of between 40% and 50% that are common in developed nations.

A range of other factors are hampering job creation efforts in South Africa. Certain aspects of labour legislation are highly restrictive by global standards. Rigidities associated with arbitration processes and in policies and legislation governing the hiring and firing of workers serve as obstacles to hiring new workers. The growing incidence of abuse of the Commission for Conciliation, Mediation and Arbitration processes relating to dismissal, which has slowed down the arbitration and dispute resolution system, further discourage businesses from hiring new workers in South Africa.

A number of other impediments – both real and perceived – discourage businesses from taking on new employees. These include the lack of a clear probation period for new employees and limited rights of recourse to dismiss employees who do not meet expectations during the probationary period; as well as unduly onerous dismissal protection, particularly for executives and high earning employees. These factors have encouraged many employers in South Africa to opt for alternative, atypical forms of employment, such as employing workers through labour brokers.

To be sure, the practice of labour broking is widespread in South Africa, and has been the source of considerable controversy. While labour broking is an effective mechanism to assist workers to gain entry into the labour market, it also makes those employed in this way vulnerable to arbitrary or summary action, and undermines their ability to contest unfair labour practices or unfair dismissal. The national government’s response to address these issues – which includes the introduction of the notion of ‘deemed employment’ after a three month period – is likely to add further cost and complexity to the system and invite legal contestation. That, in turn, is likely to adversely affect the number of jobs available, and to increase unemployment.

Apart from these issues, one of the most visible problems in the South African labour market is the crisis in collective bargaining. The dominance of centralised bargaining in South Africa – at odds with the move towards decentralised bargaining arrangements internationally –favours large employers, institutionalises the power of trade unions and results in greater incidence of fixed wages across sectors. The main problem with centralised bargaining is that it does not adequately recognise differences across enterprises and stifles labour management relationships at the enterprise level. There is a body of empirical evidence to suggest that centralised bargaining also restrains wage levels in certain sectors – with financially stronger employers only required to pay the modest wage increases that can be afforded by smaller or weaker enterprises, while the weakest enterprises face the prospect of being squeezed out because they cannot afford the increases in wages that the majority of enterprises in the sector are prepared to pay.

In addition, the practice of extending collective bargaining agreements across entire industries places small businesses and entrepreneurs at a disadvantage. The push by trade unions for industry bargaining has also resulted, as a quid pro quo insisted on by employers, in the practice of setting actual wage increases rather than minima at the industry level, which has meant that employers are accommodated at the lowest levels of affordability.

Furthermore, industry bargaining precludes the option of linking wages to productivity. A productivity-linked wage system could address the problem of a combination of rising unit labour costs and falling productivity, which threatens job creation and undermines the competitiveness of the South African economy.

What and who is to blame for these problems? Major trade unions must accept responsibility for their failure to achieve real gains for workers through effective collective bargaining over the past decade. The Congress of South African Trade Unions (Cosatu) has strongly promoted industry bargaining. For their part, business organisations and employers have, until recently at least, also been content to leave bargaining to industry representatives, while paying little attention to workplace relations. This has come at the expense of meaningful engagement at the enterprise level. Consequently, industrial strikes and deadlock have become the norm rather than the exception. A key cause of instability in the labour market over the past few years has been the growing distance between trade union representatives and workers, as well as the absence of a meaningful social wage. Well-grounded concerns that employers have pursued high levels of profit for owners, shared with top managers, at the expense of lower paid workers, have also been a source of much consternation for trade unions and workers alike.

Moreover, there has been poor leadership from government. The government’s decisionmaking and labour market policies remain heavily influenced by the views of trade unions –particularly Cosatu – and those of big business; to the detriment of medium-sized and small businesses. The South African minister of labour has floundered and the African National Congress has said different things to different stakeholders, attempting to please all but doing little in practice to chart a way forward out of the crisis. The government has publicly committed to implementing the National Development Plan (which means, among other things, improving the social wage and growing jobs by cutting the cost and complexity of doing business) but has pushed through labour law amendments that will – according to its own policy impact assessment – have the opposite effect.

There is a way out

Amid this chaos, there is a clear need for change. First, there is an urgent need to tackle the abuse of temporary workers, including through labour broking arrangements. Even so, although the protection of vulnerable workers is non-negotiable, this must occur without unnecessarily increasing the cost and complexity of doing business or destroying jobs. One way to balance these competing interests would have been for the law to hold the clients of labour brokers jointly and severally liable, together with the labour brokers, for dismissal. It is difficult to see how the highly complex notion of deemed employment, recently introduced in the Labour Relations Amendment Act, will provide more accessible protection to workers.

Second, there is a need to remove the obstacles to taking on employees that are currently encountered by businesses. The removal of these obstacles will require reining in the highly inflexible and expensive system for protection against unfair dismissal. The current system is a significant barrier to job creation, and carries enormous cost internally (for businesses and government) and externally (in administering the dispute resolution system). A sensible policy response would be to introduce a qualifying period for dismissal protection that would not affect those already in employment. For lower paid workers, this might, for example, be six months. For higher earning employees a qualifying period of 12 or 24 months would be more appropriate. Additionally, there should be no protection (other than against discrimination and similar serious violations of employment standards) for top executives and high income earners, provided that a prescribed notice payment is made. Changes of this kind would significantly increase flexibility in employment, encourage job creation and free up much-needed resources which can be invested in the collective bargaining system.

Third, the collective bargaining system needs a radical overhaul. What is required is a move away from the preoccupation with industry level bargaining in favour of re introducing two-tier bargaining at both the industry and plant level. The most effective way of restoring meaningful plant level bargaining would be to reintroduce a duty on employer and representative trade unions to bargain in good faith in appropriate bargaining units. Interest arbitration, in which a properly trained arbitrator or panel of arbitrators (typically with an independent arbitrator assisted by one assessor nominated by the employer and trade union, respectively) decides on the final outcome of collective bargaining, should be strongly promoted as a means of resolving disputes at deadlock without loss of wages through strike action or the corresponding harm caused to the employer’s enterprise.

The reintroduction of bargaining at the enterprise level has the potential to restore much-needed rationality and credibility to the collective bargaining system. It also gives workers a far better opportunity to gain an equitable share of the value generated by the businesses in which they work. Moreover, a move towards two-tier bargaining, in which only minimum wage levels or a basic framework are set at industry level, and actual wage levels at plant level, would facilitate wage settlements that far better reflect the current economic realities in South Africa.

Finally, skills shortages within the labour force – which represent a binding constraint to economic growth and development in South Africa – should be addressed as a matter of priority. This will require a rethink of the country’s existing vocational training system. As a first step in this process, the largely ineffective Sector Education and Training Authorities should be replaced by industry colleges focused on training artisans and other similar vocations, while greater emphasis needs to be placed on improving the link between existing vocational training programmes and actual opportunities in the workplace.

It is clear that the South African labour market is in the midst of a prolonged and worsening crisis. This is most evident within the existing collective bargaining system. That said, casting blame for the crisis – as both trade unions and business are wont to do – does little to identify a way out of it. The South African labour market requires leadership, and it needs real change.

Dealing effectively with South Africa’s massive unemployment problem and the harmful effects of frequent strikes on productivity and economic growth will require major structural reforms to the labour market and its institutions. Unless these are undertaken, it is unlikely that the South African economy will be able to generate the number of new jobs – especially unskilled jobs –required to address the unemployment problem and tackle poverty and inequality in the country.


The authors are grateful to Chris Todd, labour lawyer and director at Bowman Gilfillan, for sharing some of the insights and thoughts contained in this article.

#2 Summer 2014

Finding the healthcare solutions that are in plain sight

In the South African public healthcare arena, opportunities for innovation abound for those who dare to look past the problems and reimagine new ways of doing things.

Public healthcare in the developing world is not generally considered an inspirational topic. Daily reports of tragedies, failures, frustrations and resource constraints eclipse the efforts of many who work tirelessly to deliver basic care to millions of patients who need and deserve better.

Mired in this reality of treat and triage, the quest to innovate, to find new ways to eliminate obstacles, overcome constraints, reduce inefficiencies and make healthcare, public and private, better for the people it serves, seems like a luxury that the system cannot afford. And yet, if you look for them, there are dozens of stories of inspiration and hope – where healthcare workers in seemingly impossible situations have found creative ways to address their challenges.

These front-liners are ideally placed to drive innovation. No-one understands the challenges and the gaps in service delivery better than those who have to deal with the bitter reality of these gaps.

Like Clare Roberts, a doctor at Red Cross Children’s Hospital who, distressed at the chaotic and system of index cards and textbooks that served as the engine of knowledge about poisons, compiled AfriTox, an online database of toxins and toxic substances, which now provides easy, potentially lifesaving access to relevant and appropriate knowledge in emergencies. Or Dr Ashraf Grimwood who, in his quest for an AIDS-free generation, founded not-for-profit organisation Keth’Impilo that provides specialised training and mentoring for community healthcare workers to help HIV/AIDS patients and their families live more positive lives.

These ideas, two of many showcased in the inaugural edition of the Health Innovator’s Review, published by the Bertha Centre for Social Innovation and Entrepreneurship in January, show us that innovation is not just for scientists and techno buffs. We don’t all need to be Steve Jobs or Mark Shuttleworth to change things for the better.

The modern world has mythologised innovation, painting it as an act of alchemy that is born in thin air, ignited by the fusion of imagination and opportunity. But the truth is, innovation is born out of need. It grows from real problems in the real world, and from looking and re-looking at those problems in a way that can reveal a solution hidden in plain sight. It begins with a shift in mindset, a fresh way of looking at a problem, and seeing it, instead, as a possibility. The corrective mindset focuses on what’s broken, and tries to fix it. The transformative mindset says: “It’s broken? Let’s change it.” In that way, it’s not so much a mindset, as a setting free of the mind.

Often the answer to the most pressing medical problems are not high-tech gadgets or expensive new drugs, it can be as low tech or ‘no-tech’ as compensating for a lack of incubators by promoting skin-to-skin contact between mothers and newborn babies. Twenty years of research has proven that the latter boosts infant health in ways that technology cannot match, with clear evidence showing a 50% drop in deaths in premature newborns in developing countries. But despite isolated examples, many of these potentially lifesaving innovations are never recognised or, more importantly, scaled up to benefit wider numbers of people.

To allow these ideas to find their way into the mainstream, people in the system need to be given the opportunity to speak up and the confidence to push proposals and suggestions through the right channels. Frances Westley, the Canadian author, consultant and innovation activist says that: “Social innovation is an initiative, product, process or programme that profoundly changes the basic routines, resource and authority flows or beliefs of any social system.” What is called for then is a transformation of the whole system – from the bottom up and the inside out.

As with most bureaucracies, the health system is more used to a top-down approach. It is rules-bound and evidence based. How then do you create a climate and culture of social innovation and allow these bright ideas from the front line – no matter how small – to take root and grow?

The Inclusive Healthcare Innovation Initiative is an unprecedented collaboration involving the UCT GSB, and the UCT Faculty of Health, driven by the Bertha Centre for Social Innovation and Entrepreneurship, which seeks to do just this. Its aim: to rise to the challenge of re-imagining healthcare in Africa. The initiative champions a bottom-up ideology and seeks to transcend current challenges in the system to improve health outcomes for patients, but also to change the routines, responsibility and values of the healthworkers responsible for delivering the care. Its latest project has seen the launch of a first-of-its-kind Innovation Programme at Groote Schuur Hospital to help public sector health workers to become the innovators themselves. The programme will build innovation capacity in the hospital and create a network of frontline innovators and link these with policymakers in the Department of Health.

This kind of change does not come easily – or indeed quickly – but it is imperative. By seeing all people as potential innovators, we unlock boundless opportunities to pioneer solutions and business models that may allow for healthcare solutions that benefit millions more people.

The ancient art of healthcare has always been governed by the impulse to find new and better ways of promoting wellness, preventing and treating illness, and helping people live longer, healthier, happier lives. It is time to look past the daily bad news and create a new culture of reimagination and innovation in healthcare that benefits all South Africans and the economy as a whole.

#2 Summer 2014

Investing for impact gains ground in Africa

Savvy investment firms would do well to heed the growing voice of socially conscious investors calling for more ethical investments that earn profit with principle.

As hundreds of thousands of people around the world took to the streets this September to protest against climate change ahead of the UN climate summit in New York, news also broke that the Rockefeller Brothers Fund, an $860-million philanthropic organisation, has joined the divestment movement and is pulling its investments out of the fossil fuel industry because of concerns around climate change.

The irony that the Rockefellers amassed their fortune on the back of oil is not lost on the fossil fuel divestment movement, which began a few years ago on US college campuses and was partly inspired by the success of the antiapartheid campaign. The movement quite simply urges investors to use their money to send a message to an industry widely believed to be behind the climate crisis by getting rid of stocks, bonds, or investment funds in fossil fuels.

Around the world a slew of institutions, cities, foundations, organisations and wealthy individuals have heeded the call and have made divestment commitments. Arabella Advisors, a firm that consults with philanthropists and investors to use their resources to achieve social goals, reports that groups have pledged to divest assets worth more than $50 billion from portfolios, and the individuals more than $1 billion.

These commitments demonstrate vividly what research is validating; that investing for impact (IFI) – defined as the allocation of capital into investments that combine financial returns and positive impact on society and the environment – is gaining ground worldwide.

According to a recent PwC survey of US asset managers with a significant portion of investments in markets across the globe, four out of five international investors have considered IFI in one or more investment contexts in the past year. About 85% said they expected to consider them three years from now.

Research from the UCT Graduate School of Business backs this up. The African Investing for Impact Barometer 2014, released by the Bertha Centre for Social Innovation and Entrepreneurship in September, shows that IFI is on the rise in Africa’s two biggest economies. The largest study of its kind, the Barometer surveyed more than 1 200 funds managed by investors in South Africa and Nigeria and found that almost half of them do speak about IFI.

In the surveyed sample, South African IFI constitutes 41% of the funds (representing R717 billion, approximately US$ 67 billion). In Nigeria, IFI constitutes approximately 34% of funds overall (representing US $ 2.3 billion in the sample).

In both South Africa and Nigeria, the private equity (PE) space is leading the IFI industry with the larger proportion of IFI strategies found among private equity players. In South Africa, 62% of IFI funds are in private equity, almost double the 36% in asset management (AM). In Nigeria, the difference is even more pronounced with 39% of IFI in PE and 5% in AM.

These numbers herald a shift in the investment industry, although it has not yet reached its tipping point. The UCT research, which is the first study to try to measure and understand this burgeoning investment trend in Africa, points to a lack of clear and broad communication from investors as one of the factors possibly holding things back.

The majority of South African investors – 82% of private equity firms and 60% of asset managers – have a dedicated section on their website for their IFI activities. Barometer researchers found, however, that more details could and should be given on the practical implementation of their IFI policies. The same situation was also observed among Nigerian investors. Most of the financial institutions surveyed do not display much – if any – detail on how they include impact criteria in their investment strategies.

Investors’ commitment to local and international disclosure and reporting codes and principles are also useful for getting a better understanding of the IFI industry. The UN-supported Principles for Responsible Investment (PRI) is the leading association for IFI players in South Africa, followed by the local CRISA (Code for Responsible Investment in South Africa). PRI and CRISA signatories commit to disclose and report on their IFI practices. However, the Barometer reveals that the level of disclosure and reporting varies widely from one investor to another.

The PwC report found similarly that a lack of options and poor corporate reporting about sustainability are preventing individual investors from acting on their beliefs. As a result, the market for IFI investment products remains under-developed.

Without more genuine dialogue between investors and their financial planners, investors are hampered in their choices. Part of the problem is that the modern structure of retirement fund plans makes it difficult for even the most socially-minded investor to direct the make-up of their portfolio.

But as more and more investors start to demand a more ethical world, there is an opportunity for savvy investment outfits to meet their customers where they are and give them more opportunities to align their investments with their ethics.

There is much positive difference that this can make. While divestment of fossil fuel and climate change is becoming the flagship of a new generation of activists, James Gifford, senior fellow at the Initiative for Responsible Investment at the Harvard Kennedy School says that there are also many other challenges that responsible investors can engage with investee companies on, including human rights and labour standards in supply chains, gender diversity, anti-corruption, biodiversity loss, excessive executive remuneration and conflict minerals, for example.

With Africa’s biggest institutional investment market, South Africa has a total of R4 trillion assets under management, of which retirement funds represent about half. This is a substantial sum with which to send a message of change.

The IFI market is big enough now to prove that there is money to be made from sustainable and responsible investments, but the only way to accelerate that is through demand. Whether that means engaging with employers on their practices, or taking the reins on their personal portfolio, individual investors are the ones who can move IFI into the spotlight and from niche to mainstream investing.

#2 Summer 2014

Lessons from Ethiopia

Most public finance management reforms in developing countries are doomed to failure, but South Africa’s finance minister, who is facing the daunting task of crafting a reform programme for a country on the brink of recession, can draw inspiration from the success of Ethiopia’s reform path.

The past year has not been a rosy one for South Africa’s financial outlook. In June, the International Monetary Fund (IMF) cut South Africa’s economic growth forecast for the third time in less than a year, hard on the heels of the sovereign credit downgrading of the country by rating agency Standard & Poor’s, and Fitch’s revised outlook on the South African economy from ‘stable’ to ‘negative’.

High current account deficits, rising general government debt and potential volatility, Eskom’s limited electricity supply and the cost of external financing are some of the reasons cited for these decisions, which must be causing the country’s new finance minister, Nhlanhla Nene, some headaches.

In combating these trends, one of the elements that requires Nene’s urgent attention is improving public financial management. Efficient public finance management is a pillar of economic growth and integral to a country’s political health.

While there are measures in the public finance management field for assessing how well a financial system is performing, there is much confusion about ways to reform a system. Where can a finance minister look for guidance or models?

Most public finance management reforms in developing countries have failed, have had little effect or have even caused damage.

Richard Allen, a long-term observer of public finance management and a retired official of the IMF, recently concluded: “The old consensus … has proved largely unsuccessful.” This ‘old’ consensus is actually a more recent one: the view that effective public finance management requires sophisticated financial techniques.

Ironically, this state of affairs has occurred because of a failure to follow two earlier principles: public finance management reforms are contextual, and countries must have the basics in place and must function smoothly before they introduce advanced financial techniques.

Standing out in this generally dreary picture of the world’s public finance management terrain is the 12-year reform of Ethiopia’s public finances (1996–2008), judged by the World Bank to be one of the most successful. Nene might consider the broad lessons of this reform in crafting a reform programme for SA.

Of course, public finance management reforms are contextual and South Africa’s path will be different from Ethiopia’s, but these two countries’ contexts have three features in common – a large population, deeply decentralised administrations, and independence from foreign aid – that should guide policymakers’ thinking as they shape a programme.

The Ethiopian reform gave rise to a new analytical framework for public finance management reform that the minister may find useful: COPS (context, ownership, purpose, strategy). The key to successful public reform, in the financial sector or elsewhere, is coherence. The COPS framework shows how to achieve coherence by ensuring that government policy (ownership, purpose and strategy) is appropriate to the context (culture, history and institutions).

Ownership by government of the design, implementation and operation of a reform is essential if the reform is to be fit for context and thus sustainable.

The management of public money is a core state function. A government can use funds from foreigners to support the design and implementation of a reform, but should never let foreign aid drive the process. And it should not rely on inherently unreliable foreign aid to sustain its financial systems.

The purpose of specific reform can be located on a continuum from basic to sophisticated. ‘Basic’ means establishing external control, which is public financial administration. At the other extreme is ‘sophistication’ –establishing internal control, which is public finance management.

The distinction between public finance administration and public finance management goes to the heart of how governments allocate and monitor public money – how they control their finances. Financial control is embedded in a country’s political and state arrangements; it is not freestanding. Public finance administration is defined by external control based on political and state arrangements that focus on compliance, which limits discretion.

Management is fundamentally about discretion – making choices about objectives, taking the risk of deploying resources to achieve those objectives, being held accountable for decisions and having incentives to perform. Thus, the continuum of financial control from external to internal control is a crucial sequence: to promote coherence in a reform of South Africa’s financial systems, the finance minister needs to assess whether the country’s public finance administration is robust and ready for public finance management, or whether public finance administration needs toning up.

In any event, history has shown that public finance management is not a precondition for economic development: robust public finance administration is sufficient.

There are four possible strategies of reform: recognise what exists; improve what exists; change what exists; and sustain the improvements and changes introduced.

Too often, reform is viewed myopically as involving only change, which usually entails importing advanced techniques from other contexts. Yet, in most cases, reform should include more than one of these strategies, for example, a combination of ‘recognise’ and ‘improve’, with some change.

One strategy that is seriously underused is ‘recognise’. Understanding and respecting what exists should always be the first order of business of a reform, yet it is often ignored.

Governments in developing countries frequently do not understand the strengths of their own systems and are quick to change them, often on the advice of outsiders.

Another indispensable aspect of reform is sustaining it, yet for many reformers this is an afterthought, if they do not overlook it altogether. An initial recognise-improve-sustain approach to reform is faster, cheaper and far less risky than one of change, which has been shown to fail or to have no effect.

The former approach is also more likely to work in South Africa because, under decentralisation, financial reform should address the weakest levels first.

The secret to successful reform is learning, which requires effective training. In Ethiopia, more than 85% of the funding for the reform of its budget, accounts and financial information systems was allocated to the training of more than 72 000 officials.

Training ensured government ownership and sustainability of the reformed systems. It also created a setting in which senior officials could learn from one another – what has and has not worked in their quest to build effective financial systems. Nene may feel that the task is a challenging one – but he should take heart that he does not have to walk the path alone.

#2 Summer 2014

Getting it right for SA

Ruli Diseko

Ruli Diseko, MBA graduate and up-and-coming executive talent at Lonmin plc, believes it is time for all South Africans to roll up their sleeves and help change the country for the better.

Deputy president Cyril Ramaphosa recently told the Marikana Commission that as a nation, South Africans all failed the miners and their families, and that they share collective responsibility.

Ruli Diseko, for one, is not shirking this responsibility. In fact, he relishes the opportunity to contribute to helping repair the tarnished image of South Africa’s mining industry. The 31-year-old up and coming Lonmin executive, who was recently listed by the Mail & Guardian as one of the country’s top 200 young South Africans, says if the mining industry can get it right, it would provide a blueprint for how to make things right for many more challenges plaguing the country.

Diseko made the M&G’s annual list in part for his work as head of the office of the chief executive officer of Lonmin, Ben Magara. He directs the CEO’s strategic work streams, and works with the executive team on strategy development and value optimisation. This has given him an inside view on how important execution is, and how vital it is to make things happen. “I need to ensure that we all pull together as a team to get results. This is important work that we have to get right,” he says.

Diseko says he realises that when people hear Lonmin, they immediately think of the tragic events that occurred in August of 2012 during the strike by miners in the platinum belt. “Marikana was a week that changed all of our lives. It happened to all of South Africa. We all went through something heartbreaking that day,” he says.

There has been much positive change at Lonmin since Marikana and while Diseko believes the mining industry in South Africa should continue to improve, he also thinks it is transforming and that the good work of improving the lives of employees and communities should be accelerated.

The pivotal nature of the mining sector means it remains exciting, despite the inherent challenges of transformation. “I see it as an opportunity. The mining industry gets a lot of bad press but when the lights are on, it is time to perform. We need to get it right for our industry to continue to create jobs and opportunities for future generations. “All of us, not only those at Lonmin, will be judged by how we respond to the wellbeing and living conditions of people. The question is, what are we doing as young people to ensure that there is real change?”

Diseko has experienced change in his lifetime, which gives him the optimism to believe in his future and that of South Africa. The third of four children, raised by a single mother in Orlando East near Johannesburg, he dreamed of owning spaza shops. “My real interest, even as young boy, was people and commerce. In the township, the most accessible representation of that was the spaza shop,” he says.

A strong believer in the power of education, Diseko obtained a BComm degree at UCT after high school and 10 years later, completed his MBA at the UCT GSB. “Going to UCT was the best thing that could’ve happened to me,” says Diseko. “I was forced to challenge my own thinking and my own mental models. It was a fantastic environment and it was my springboard. My UCT degrees opened many doors.”

He believes it is easy to have strong opinions about what needs to be done or how things need to change, but that it is more valuable to get involved and be a part of the change you want to see. “If you are in South Africa, you understand the history and legacy of this country. So the next question is, ‘Do you have people who have the right agenda and the right energy to address these things?’

“Actually, I think more than anything, we have opportunities. We don’t need time, we need the right mindset and focus and people who will put up their hand and say ‘yes, we have tangible plans in place to create a better future’.”

#2 Summer 2014

Q&A Inside the mind of the social innovator

Francois Petousis

MPhil student Francois Petousis, founder of Lumkani, is one of a new guard of social innovators who are inspired to use their energy and ingenuity to create social value.

BR: In 2013, Lumkani (previously Khusela) won the People’s Choice Award at the Global Social Venture Competition (GSVC), held each year at the University of California, Berkeley. More recently you came second in two separate categories at South Africa’s innovation summit, and received an award to go on a South African trade delegation to Japan. You’ve also reached the finals of the Seedstars World competition taking place in Switzerland early next year, and the finals of the Global Innovation through Science and Technology (GIST) competition. Tell us a bit more about Lumkani and why it is turning heads around the world.

FP: Lumkani is a proactive, early-warning, fire detection system designed for shack-dwellers worldwide. It is a network of individual lowcost fire detectors within communities, which, when triggered, alert whole communities to the event of a fire, so that they can take swift action to either stop the fire or escape with families and possessions intact. It is practical and scalable and we have a strong plan to do so. The social impact scales as the business does, so there is a significant market that we have great opportunity to serve. When you consider how many people there are in the world who live in slums (over 1 billion) where fire risk is a daily anxiety – you get a sense of the potential of this device. The impact of shack fires has an adverse effect on economies and is a development challenge that needs to be addressed.

BR: Do you think that social innovation is gaining momentum in the world as a way to solve wicked problems?

FP: There is no doubt that the scale and complexity of the problems we face in the world today demand more and more from us. Social innovation, which by its nature is collaborative and creative and looks at challenges with fresh eyes, is definitely born out of this. At the GSVC event there was definitely a sense in the room of a shift in the world – that all these people were devoting their lives to discovering how we can create a world where you get paid to do ‘good’, where business can function to support that which really matters and makes a difference to humans. It was inspiring to know that this was the focus of people from across the globe. The room was far from what traditionally is the mood of a competition. The ethos was of support and collaboration, because at the core, everyone was there to serve a bigger purpose than their own.

BR: Where did the idea come from?

FP: Lumkani, which means ‘be cautious’, was initially the topic of my engineering thesis at UCT to develop a low-cost fire detector that I developed with Samuel Ginsberg, who today is the main designer of our technology. The project grew further when social change agent, Emily Vining joined the team. During my MPhil at the UCT GSB I realised that the idea had the potential to be a social venture that generated profits to sustain itself, not an NGO that would be dependent on funding and that that was in fact the way to really grow the organisation to reach meaningful numbers of people. We started working with an exciting mix of people to build a strong base for our social business including economist, David Gluckman, product developer, Max Basler, and engineer and strategic thinker, Paul Mesarcik. None of what we’ve developed so far would have arisen without this fantastic team of committed people. When we came together was when everything really started to expand. Our best ideas came through conversation.

BR: What advice do you have to give to aspiring social entrepreneurs?

FP: You’ve got to get out into the world and play. Try things out. Engage with the people and the world you want to impact. You’ll learn the most and it’ll give you the personal connection you need to be inspired in your work. With that connection will come the deep care and values that need to be clear in any growing social enterprise. The other big one for me has been to share what you’re up to with the world, with all the people around you. Everything and everyone that we need to make something come to life, is out there. We just need to ask. When the right people are on board, things grow fast and with such depth… and of course it’s far more enjoyable working together. Oh, and dream big.

#1 Winter 2014

Centre for values-based leadership

The Allan Gray Centre for Values-based Leadership at the UCT Graduate School of Business is now fully operational and ready to take on the challenge of defining a new order of business – one that is geared towards adding more value to society.

In January it was announced that Walter Baets, Director of the UCT Graduate School of Business (GSB), will fill the Allan Gray Chair in Valuesbased Leadership. He will work with a small team including senior lecturer Dr Nceku Nyathi, who joined the centre last year, Associate Professor Kosheek Sewchurran, Professor Kurt April, Dr Shadrick Mazaza, and newest recruit Dr Timothy London, to set the agenda of the centre.

Funded by Allan Gray and his wife Gill, the centre is the first of its kind in South Africa and will explore new ways of doing business, based on purpose and sustainability, that create dignity and belonging. Allan Gray is the founder of Allan Gray Limited and co-founder of the Allan Gray Orbis Foundation.

According to Gray, values-based leadership involves a fundamental questioning of the principles by which the world has been doing business – more specifically exploring whether profit and shareholder value should continue to be the exclusive drivers of business or if values, purpose and meaning might be more effective drivers for the 21st century. The centre will investigate what is required for the generation of new business and economic practices in line with this ideal.

“There is a lot of great thinking taking place in universities around values and leadership – but it needs to be translated into business and society. The centre will be adept at doing this – Walter Baets breathes and sleeps the need for values-based thinking, and having the centre based at Africa’s top business school means it is perfectly positioned for maximum effect,” said Gray.

Baets’ responsibilities will include giving academic leadership and establishing a research agenda for the centre. In addition to its faculty complement, the centre will host two PhD bursary students, who will help build research in this field.

“The right questions need to be asked,” said Baets. “For example, what does it mean for a company to embrace values-based leadership, what are the tools and the mindsets needed? The centre will explore these questions and develop the appropriate responses.”

Dr Nceku Nyathi, who is responsible for the smooth running of the centre, says that it will have three main streams: events, teaching, and research – and that work in all three streams is well under way. This year saw the launch of a new module on the MBA – Complexity, Organisation and Values, which will form the core of the teaching thrust of the centre and there are plans to roll out executive education short courses around values-based leadership in the near future. In April, a new leadership series – the Leadership Salon – was launched in collaboration with the Association of Allan Gray Fellows. These small-scale regional events will reunite Allan-Gray Fellows around South Africa to enable them to explore facets of entrepreneurial leadership through experiential mediums such as facilitated dialogue, audiovisual media and art.

On the research front, PhD students are already engaged in research projects. Nyathi said that the students will be exploring such questions as: what kind of role can values play in building a country and driving growth and development in a different way with the ultimate aim of developing case studies on values-based leadership that speak to a South Africa context. “A lot of the work we will do is about context,” said Nyathi. “We have to situate our leadership teaching and understanding in a context. But at the moment not much is actually known or understood about how values play out in African organisations.”

Nyathi believes that South Africa’s corporate culture must be developed further to be responsive to local demands, while still keeping in step with the international commercial tune. “It is not just about drilling Western practices into managers. I hope to engage and challenge students to adapt these well-established business practices to the local, national and commercial African climate,” he said.

With world economies still experiencing the negative consequences of intensely profitdriven leadership, Nyathi believes that certain South African and African values can be moulded to form a new professionalism and corporate ethic that will better serve African businesses and the communities they work in. “Western concepts of management have served us well, but it is time to make them accessible and workable in an African context. There are local, home-grown values such as communitarian dialogue and decisionmaking, which could be used to pollinate wellestablished international practices. It is these kinds of intercultural perspectives I would like to introduce to the GSB curriculum,” he said.

He added that research at the centre will also emphasise the organisation over the individual. “Values-based leadership is not just about one person but about empowering and disseminating values to a broader group. With leadership studies, there is often a danger of being obsessed with the single person, but the centre will strive to keep a broader focus.”

According to Nyathi, there will be active collaboration between the Centre and the Allan Gray Orbis Foundation and to some extent with Allan Gray Limited in setting the research agenda. At the same time, the foundation will benefit from the fresh research and input to improve its endeavours.

Baets added that the centre is a bold step for business education on the continent, even the world. “Not many business schools have a values-based leadership faculty, and collaborating with Allan Gray, an organisation that has always held values as integral to its mission, our symbiotic relationship will ensure that we shape leaders who can develop new solutions to intractable challenges,” he said.

“Coming, as it does, at the time of the death of Nelson Mandela, the awarding of the Chair will give new impetus to the work of living out his legacy in the world of business.”

#1 Winter 2014

News Round-up

African innovation set to happen here


Solution focused: The newly established Solution Space on the GSB campus will foster research and collaboration to tackle African challenges.

The UCT Graduate School of Business (GSB) has created an innovative space at the heart of its campus, to break the mould of a traditional business education and allow more holistic and creative responses to African challenges to emerge.

The Solution Space is dedicated to inventing and testing new business models, products and services, and incubating businesses aligned to African markets. It will act as a collaborative living lab for students, social innovators, entrepreneurs, foundations, government and industry players, who are interested in finding new and creative ways to address complex problems on the continent. Solution Space Manager Sarah-Anne Arnold says that the space is a manifestation of the business school of the future. “Business schools need to shift to meet the needs of an unpredictable and unequal world. This means we need to move away from just training MBAs towards getting involved in creating new business solutions for the world. We need to be more hands-on by turning out real solutions to real problems.”

The multi-million rand initiative, which forms part of the Workshop 17 project (a joint initiative of the V&A Waterfront and UCT GSB) has received funding from the UCT Vice-Chancellor’s Strategic Fund and The Bertha Centre for Social Innovation and Entrepreneurship. The SAB Foundation has also partnered with UCT GSB with a funding commitment of R1-million as seed capital for promising social entrepreneurs. The space will be attractive both to start-up companies in search of hot-desk space at a nominal fee and also to entrepreneurs in need of advice and funding.

GSB celebrates record 10 years in global ranking

The UCT Graduate School of Business has risen to 59th place in the prestigious annual Financial Times (FT) MBA ranking, the premier ranking for business schools worldwide.

The GSB remains the only business school in Africa ranked in the FT MBA Top 100 for its full-time programme, and this is the 10th consecutive year that it has been listed.

Director of the GSB, Walter Baets, said that the ranking denotes the GSB’s commitment to providing a world-class business education. “We are very proud that our hard work and vision have been acknowledged in this way – the GSB is continually striving to ensure that we remain rooted in relevance while acting as pioneers of innovative business education, and the FT rankings stand as a testament to this.”

The FT rankings are regarded as the authoritative rankings of business schools, partly because of the manner in which they are compiled. For the MBA ranking, the FT incorporates 20 different sets of criteria, including survey responses from alumni who graduated three years prior to the ranking, and a range of information from the business schools. Salary and employment statistics are also weighted heavily.

The GSB has seen a significant rise in international students, who come to the school because it is internationally benchmarked and also has a reputation for exploring business model innovation in a developing economy context.

Four of the best

Four of South Africa’s top business schools have been listed in the prestigious 2014 Financial Times global ranking for Executive Education Customised Programmes, a significant achievement given the highly selective nature of the rankings.

The UCT Graduate School of Business, the Gordon Institute of Business Science, Stellenbosch Business School and Wits Business School have each secured a spot in this annual ranking, which tracks the top business schools in this category and presents a global benchmark for providers of executive education. The customised ranking is calculated using data from two sets of online surveys – one for schools another for clients. Business schools are asked for details of a number of top clients, who are then invited to complete an online survey about the school that nominated them.

Tackling service delivery crisis

Professor Norman Faull has been appointed as an advisor to the Department of Performance Monitoring and Evaluation (DPME) within the Presidency to help roll out an Operations Management Support Programme to boost service delivery in SA.

Faull, founder of the Lean Institute Africa at the UCT GSB, says that an effective solution to South Africa’s service delivery challenges lies in proper and effective operations management, specifically the implementation of lean management principles in government service organisations.“We can bring about huge transformation in the way an organisation functions by implementing sound operations management practices and lean principles,” he said.

Conference to foster strong and competitive organisations in Africa

The Lean Institute Africa (LIA) will host its biennial Lean Summit Africa this September focusing on ways to improve service delivery, cost-effectiveness and staff morale in the public and private sectors and highlighting techniques to eliminate waste in products and services in African organisations.

Under the theme Relentless Leadership, the summit has secured a line-up of top international speakers, including: Michael Ballé, associate researcher at Telecom ParisTech; Ian Glenday, senior fellow of the Lean Enterprise Academy in the UK; Denise Bennet, lean programme manager at the City of Melbourne; and Johan van Zyl, president and CEO of Toyota South Africa.

The Lean Institute Africa is part of the Lean Global Network and the only organisation of its kind in Africa. It is a non-profit organisation that seeks to promulgate lean management practices across the continent.

This is the 7th Lean Summit Africa and it will take place from 17–19 September at the Vineyard Hotel Conference Centre in Cape Town. For more information on the summit contact Annie Matubatuba on 021 406 1226 or email

Call for papers on organisational innovation

Ahead of its flagship annual Business of Social and Environmental Innovation (BSEI) conference, the UCT Graduate School of Business is calling for submissions from academics, researchers and practitioners who would like to participate in the event.

This is the 4th annual BSEI conference and it is set to take place from 23–24 October 2014. The theme for this year is: design thinking to balance stability in organisational innovation.

Conference chairs, Professor Kosheek Sewchurran and Dr Verena Bitzer, say they are looking for papers that contribute to the overarching objective of the BSEI conference series, which is to create a better understanding of the role of business and organisational thinking in resolving societal issues, especially from an African perspective.

“We are looking for stories, narratives, case studies and conceptual contributions that recount organisational efforts to drive social innovation and distil practices, concepts and principles,” says Professor Sewchurran. “The conference is not only about sharing theoretical knowledge, but about discussing practical solutions and challenges as well.”

Academics and researchers interested in submitting a paper, or who would like more information can email by 31 July 2014. Online registrations open on 15 July

GSB joins prestigious BRICS programme

The UCT Graduate School of Business has joined a unique collaboration between top business schools in BRIC countries to help business and investors find out how to make the most of emerging markets in Africa.

The school has joined the BRICs on BRICs programme, following an expression of interest by participants about the business environment on the African continent. BRICs on BRICs is a partnership between four of the best business schools in Brazil, Russia, India and China: the Fundação Dom Cabral (FDC) from Brazil, the Moscow School of Management SKOLKOVO from Russia, the Indian Institute of Management Ahmedabad (IIMA) from India and the Cheung Kong Graduate School of Business (CKGSB) from China.

According to John Luiz, the academic director of the South African programme, the importance of including Africa becomes clear considering that countries like Ethiopia, Mozambique, Niger, Sierra Leone and Rwanda have of the fastest growing economies in the world. The World Bank also raised the medium-term economic outlook for sub-Saharan Africa to 5.5%, up from 5.2%, which was predicted six months ago.

#1 Winter 2014


Saskia Falken-Hickey


Radio personality and TV presenter Saskia Falken-Hickey has joined the UCT Graduate School of Business (GSB) as the new head of marketing.

South Africans have come to know Saskia Falken as a radio personality, television presenter and public relations specialist. She brings all of this and more to her new role as Marketing Intelligence and Strategy Manager at the UCT GSB. Not many people know that this versatile media expert – who now goes by her married name of Hickey – also has a keen business brain coupled with a deep social conscience. “The GSB is such an exciting brand to work with,” says Falken-Hickey, explaining that she will be reviewing the brand and helping to take it forward in line with the vision of the school. “We will be reviewing where we are as a brand and then begin to formulate a strategy that is in keeping with our passion for values-based leadership and social innovation.” The GSB is recognised as Africa’s top business school and has recently risen to a prestigious 59th place on the Financial Times global ranking for full-time MBAs. But Falken-Hickey says there’s still lots of work ahead. “I think we need to tell more of our stories. While we’ve done incredibly well in the rankings; that is just one story to tell about the GSB. Another would be that the GSB offers not only the best business education on the continent, but also the space where the leaders of tomorrow’s emerging market environments are shaped.” Falken-Hickey recently completed her MBA at the school and says doing the degree changed her life. With her background in media (she worked at the SABC, Heart 104.9 FM and ENCA), she brings a wealth of experience and contacts in the PR and marketing world. She credits her years of experience in the industry with knowing how to build good relationships and really listening to people, as well as understanding markets and how to communicate important messages.

Walter Baets


Director of the University of Cape Town Graduate School of Business (GSB), Walter Baets, has been elected as the chairperson of the Association of African Business Schools (AABS).

AABS is a network of African business schools, formally established in October 2005 and registered as a non-profit organisation in September 2007. Through capacity building, collaboration, and quality improvement programmes for deans or directors and faculty from African Business Schools, it aims to help build effective business schools in order to improve management education in Africa and thus enhance the relevance and contribution of business schools to African development. “It’s good for the GSB to be able to play a more active role in this fine association. Traditionally, the GSB has had more collaborations with US and UK business schools, so the AABS allows us to build more relationships with other African schools – something which I believe, in the spirit of creating African management for Africa, is very important,” said Baets, who took up the position on 1 January 2014. Baets believes that African business schools need to develop their own identity if they are to respond appropriately to Africa-specific business and management challenges, something which, in his position as chairperson, he hopes to have the opportunity to investigate. “In order for business leadership on the continent to move forward, business schools cannot merely adopt prescribed ways of doing things. Through AABS, African schools are able to encourage better co-operation in the African context, enrich discussions, see what has worked for other schools, and generally improve the quality of business schools in Africa.”

John Lutz


In a role that will help shape policy-making in South Africa, UCT GSB professor and emerging market economics expert John Luiz has been named a national member of the Council of Statistics South Africa.

Responsible for all social and economic statistics in the country – ranging from censuses to monthly and quarterly reports on the Consumer Price Index and official unemployment rates – Statistics South Africa is a key organisation in ensuring that decisionand policy-making in the country is informed by accurate statistics. The Council consists of 25 members appointed by government. Luiz, who is a member of various professional bodies including the national councils of the Economic Society of South Africa (currently president-elect) and the Economic History Society of South Africa, said that he is honoured by the appointment, and is glad that economists will be represented in Statistics South Africa, a body that he described as “an important asset which helps shape the future of South Africa.” Luiz said that in an emerging market such as South Africa, productive debate and policy decisions require trustworthy, comparable, and understandable statistical information, a responsibility that Statistics South Africa takes seriously. “As an economist – a field that relies heavily on data, I feel the appointment is especially relevant. Having a centralised, reliable and high-quality information source to inform the governmental, scientific and commercial sectors is vital, and having leadership in South Africa that is willing and capable of using a knowledge base for evidence-based decision-making is equally important. I’m excited to be a part of the system that will ensure the data is both appropriate and legitimate,” said Luiz.

#1 Winter 2014

Nelson Mandela Beyond the idolatry

As we mourn and celebrate the life of Nelson Mandela, we need to move beyond merely idolising a great man towards understanding how we can learn from him and continue the work he began.

The most striking fact about the late Nelson Mandela is that one type of person went to prison and 27 years later, a completely different individual emerged. A terrorist and freedom fighter – to some – entered prison determined to fight, to the bitter end, his oppressors, and a gentle unifying figure with no shred of resentment or bitterness emerged.

How did such a miraculous transformation come about? I teach consciousness and personal transformation at the UCT Graduate School of Business (GSB) and I have often used Nelson Mandela as an example of true personal transformation. Mandela went through a dramatic transformation while in prison and it is this we need to reflect on to be able to understand the man himself, but also what we need to do to continue the work he began for us.

The Nelson Mandela who walked out of prison was not a politician; he was a wise old man. He was not a Winston Churchill or Martin Luther King or even Mahatma Ghandi – he was way above all of them. I want to argue that Nelson Mandela was a spiritual being. The freedom fighter had transformed into a Dalai Lama.

To understand Nelson Mandela we need to turn to the scriptures and spiritual traditions. We need to look at figures like Shantananda Saraswati, Nisargadatta Maharaj, the Buddha, Jesus, Allah, and modern spiritual philosophers like Ken Wilber. We need to turn to the wisdom traditions of East and West and study among others the Bhagavad-Gita and the Upanishads. All of these are probably best summarised as “perennial wisdom” that has a core theme of the notion that there dwells inside every sentient being a transcendent being, a true self or a universal self, the self of all. Put another way, there are two selves in each of us – a personal self and a spiritual self. All these traditions speak of a path or a process that one may follow. If followed to its conclusion, the result is a rebirth or enlightenment, exposure of spirit within and supreme liberation.

In the spiritual traditions, these two aspects of us are described in various ways such as immanent and transcendent; physical and spiritual; local and non-local; mortal and immortal. The very wise, enlightened old Mandela who came out of prison displayed identification with this “higher self” the spiritual traditions speak of. Mandela was a master of his destiny – a master of the creation and a companion of his true self, as some other wise man put it. He had deep knowledge and understanding of the rules governing the Universe and that the same rules also govern the behaviour of human beings. As a companion of one’s true self, he had an understanding of the two selves that exist in each human being and that wisdom is born out of knowing, understanding and identifying with this enlightened or “angelic” self.

Almost any individual who has ever been described as “enlightened” came from some spiritual tradition, they joined a spiritual path and transformed as a result into a compassionate and serene individual. I cannot think of one who became a politician at the end of that process. Mandela is truly unique in that he never joined any spiritual tradition and as a wise old man, became a politician and president of a country.

So, how did Nelson Mandela evolve into this magnificent human being? He himself said he was never a member of any organised religion. We can only assume then, that he spent his time in his prison cell in some form of meditation and contemplation on the profound questions: Who am I? Where did I come from? Where am I going? What is this Universe and what is my place in it? These are the fundamental questions ancient wisdom traditions profess that contemplation of is the only way to attaining wisdom. Mandela’s behaviour and what he and others have written and said about him, suggests that he engaged in deep exploration of these fundamental questions.

Mandela showed evidence of having read widely across spiritual traditions and made references to some of these readings in his speeches and publications. He cited one poem he claimed to have sustained him and helped him to endure the agony of prison life. The poem Invictus written in 1875 by William Ernest Henley was said to have been recited by Mandela to other prisoners and he said he was empowered by its message of self-mastery. Henley was a victim of tuberculosis and had a below-knee amputation, incapacitated and facing death, but his poem expresses a transcendence of these constraints.

Mandela’s behaviour when he walked out of prison showed that not only did he understand and cherish the message in this poem, but he lived it. His personal mastery is best exemplified by his unquestioning forgiveness of those who tortured him and took 27 years of his life.

Masters acquire a deep knowledge of who they are and live according to their highest values. According to John Demartini, living by our highest values enables us to live a life of meaning and purpose and be inspired from within to stay focussed on our path, our mission. We are then able to accept friend and foe, support and challenge, pleasure and pain, equally.

Mandela had an Afrikaans woman as his aide and had lunch with the wife of the architect of the system that robbed him of his life. Mandela himself said that as he walked through the gates of prison, he looked back and decided to leave bitterness, hatred and feelings of revenge behind the prison walls because if he did not, he would remain a prisoner of his own mind.

Self-observation, reflective practice, contemplation and mindfulness are some of the tools one needs to develop self-knowledge and personal mastery. In an excerpt from Mandela: the Authorised Biography by Anthony Sampson, Nelson Mandela gives some evidence of his engagement with this process while in prison:

“You may find that the cell is an ideal place to learn to know yourself, to search realistically and regularly the process of your own mind and feelings. In judging our progress as individuals we tend to concentrate on external factors such as one’s social position, influence and popularity, wealth and standard of education … But internal factors may be even more crucial in assessing one’s development as a human being: honesty, sincerity, simplicity, humility, purity, generosity, absence of vanity, readiness to serve your fellow men – qualities within reach of every soul – are the foundation of one’s spiritual life … at least, if for nothing else, the cell gives you the opportunity to look daily into the entire conduct to overcome the bad and develop whatever is good in you. Regular meditation, say of about 15 minutes a day before you turn in, can be fruitful in this regard. You may find it difficult at first to pinpoint the negative factors in your life, but the tenth attempt may reap rich rewards. Never forget that a saint is a sinner that keeps on trying.”

The UCT GSB has established personal development as the capstone for all its academic programmes. This is as a result of a worldwide debate in schools of business management on the need for educational institutions to produce more rounded business leaders and not just business administrators. Producing wise leaders with a raised level of understanding of themselves and their world requires not just an increase in the level of knowledge but also a rise in their “level of being” through self-knowledge. Personal transformation is also to be an integral component of the Allan Gray Centre for Values-based leadership at the GSB, which seeks to integrate values, meaning, purpose, creativity and innovation.

South Africa and the world need to move beyond idolising Mandela and begin a process of looking inward and going on our own journeys of personal mastery. There is a Mandela in each one of us, waiting to be discovered and when enough people achieve this and begin to behave more like him, the transformation the country needs will begin to manifest. Be the change you saw in Madiba.

#1 Winter 2014

Taking notes on leadership from Thuli Madonsela


Human rights activist and advocate Thuli Madonsela has more to offer South Africans than her hardline stance on government corruption – she embodies a leadership quality that others would do well to emulate.

“Thuli Madonsela is very centred. Her leadership style is non-reactive and very clearly on point. She signals her intention and she holds her presence. This gives her enormous integrity and adds credibility and moral authority to her professional presence,” says Liz de Wet, course convenor of the Women in Leadership programme at the UCT Graduate School of Business.

De Wet says that when Madonsela published the report on Nkandla, she maintained her composure while under severe pressure and won respect from all quarters.

“By being steadfast and not allowing herself to be drawn into derogatory comments about herself, she strengthens her message, instead of weakening it as her detractors may have intended,” notes de Wet.

Madonsela’s strong leadership presence has contributed to her success, professional standing and the impact she has on the political sphere. Helping other women to develop their own signature presence is a cornerstone of the Women in Leadership programme at the UCT GSB.

De Wet says that despite the fact that many studies have shown that greater gender diversity is good for businesses, improving all aspects of company culture and ultimately translating into profits and greater productivity, women are still under-represented at the top tier of business and government.

Each year, for the past seven years, the annual McKinsey Women Matter study has shown that companies with women in senior executive positions perform better than those with no women at the top. Yet in South Africa, Women24 article earlier this year stated that at the top 10 biggest SA companies, only 19% of board members are women, and 30% of senior management are female.

There is a philosophy that diversity gives a more accurate view of reality. The more diverse boards are, the more accurate the perception is of what is going on, the more agile the company is, which, in return, leads to better results,” says de Wet.

She adds that while more women are entering senior leadership, many challenges remain. Women continue to struggle to balance responsibilities at home with the demands of a high-pressure job. But companies are coming to realise that appointing women to senior positions – and being flexible about their working conditions to help them stay there – not only looks good on paper, but is actually good for the company as well.

According to Samantha Crous, Regional Director of the Top Employers Institute: Africa and Benelux, research shows that top employers are increasingly spending more on education and training as well as on employee benefits (such as more child care or crèche facilities and flexible work hours). Of all the companies that took part in the certification programme in 2012, 89% said they offered leadership development programmes, signalling that companies are increasingly becoming aware of the benefits of diversity and upskilling leaders, says Crous.

“There is growing pressure on organisations to be much more innovative, collaborative and responsive,” says Professor Walter Baets, Director of the UCT GSB. He says a lack of inspired leadership and a fear of innovation can have disastrous effects on companies.

De Wet says the broad challenge in the business world is to change the narrow views of leadership that are prevalent. We need to create a much broader spectrum for different kinds of leadership. “The only leverage a leader really has is themself. This is something that Thuli Madonsela demonstrates very strongly. So this is what we are looking at – transforming the self to amplify impact for an individual and an organisation.”

#1 Winter 2014

Would we miss you when you are gone?

Leaders, both political and in business need to ask themselves the question, what value are they adding to the world around them?

On a rainy Wednesday morning last December, US president Barak Obama told the world that Nelson Mandela had set us a high bar.

In this, an election year, it is irresistible to ask – how are we going to measure up? How will the legacy left to us by the late, great, Madiba play out in the country – not just in terms of political leadership – but in business and civil society? Every aspect of society needs to ponder how far or near they are in relation to that bar.

All too often the answer is – quite a distance. In business, since the financial crisis, we have become more attuned to the need for more ethical business and perhaps more outspoken about those (Enron, Lehman Brothers, Libor) who fall way below the bar.

The corporation, seen in past decades as the cornerstone of our economic system – stable, trustworthy, providing growth and employment for the advancement of society – has a tarnished reputation. Although corporations have contributed to increased wealth in certain parts of society, they have had a negative effect in other parts of the world and on its people, and it is time to remedy that.

Influencing this shift towards more ethical business is ever increasing organisational and market complexity and uncertainty fuelled by more empowered customers, flatter organisational structures, and greater levels of communication through technological advances.

What most of these scandals show us is that, as long as profits and shareholder value are put at the centre of business decision-making, we limit the potential of business to make a more positive impact on the world.

We are not suggesting that business must do away with profit, but that it should seek first to add value and then to make profits. A fundamental shift from the Friedman-style profit as the single motive for business to finding innovative ways to bring people and the environment to the centre is needed. Innovation not exploitation should drive policy in business.

Harish Manwani, COO of Unilever puts it well: “Companies cannot afford to be just innocent bystanders in what’s happening around them. They have to begin to play their role in terms of serving the communities that actually sustain them,” he said, in a recent TED talk. “We have to move to an and/and model. Which is, how do we make money AND do good? How do we make sure that we have a great business but we also have a great environment about us?”

Manwani, correctly, thinks that leadership, more specifically values-based leadership, will play a key role in bringing about this shift. “Values and purpose are going to be the two drivers that are going create the companies of tomorrow,” he said.

Companies and societies are in great need of leaders who are able to refocus their organisations on the task of creating wealth, while also adding value to society through meaningful, purposeful and inclusive business. This means, among other things, finding ways to contribute to the development of the economy and society in which they are operating, whether rich or poor, mature or emerging.

This is when business will show its real power for good. And there are plenty of examples of this from multinationals, like Unilever, which simultaneously sells soap and runs the world’s largest hygiene and health programme, to small social entrepreneurs like SavvyLoo, a South African start-up and one of the finalists in the 2013 Innovation Prize for Africa, which has developed a waterless toilet to improve environmental impact and decrease the potential for disease in rural areas.

The most commonly held view about Nelson Mandela is that he was a leader who embodied values. Whether you agreed with him or not, he refused to budge on his deepest beliefs of unity, freedom and justice, and this is largely why he has earned the respect of such a divergent group of people from all corners of the planet.

Of course, we can’t all be Mandela – and nor should we want to be. Imitating him is not enough, as scholar of values-based leadership Harry M. Jansen Kraemer Jr says: “becoming the best kind of leader isn’t about emulating a role model or a historic figure. Rather, your leadership must be rooted in who you are and what matters most to you.”

Values-based leadership is intensely personal. It is about self reflection, courage, honesty and humility. It is about understanding the balance between your needs and those of others. In business, as in government and other sectors, it should be about creating organisations and institutions that people can’t do without.

In trying to assess if we are measuring up to the bar that Mandela has set us we should ask ourselves the question: If your business went bankrupt or your organisation closed down tomorrow, what would be missing from society; and if the answer is nothing, then you probably are not adding the value that you could and should be.

#1 Winter 2014

Purpose before profit

Allan Gray, the founder of Allan Gray Proprietary Limited and co-founder of the Allan Gray Orbis Foundation, and the man behind the establishment of the Allan Gray Centre for Values-based Leadership at the UCT Graduate School of Business, talks about what has driven him in his career and why business – and society – need to find a new moral compass.

NATIONAL elections invariably train the spotlight on governance. Equally predictable is that opposition parties will disapprove of what is revealed about the incumbent governing party.

It is therefore no surprise that the buildup to South Africa’s Election 2014 saw a focus on corruption, maladministration, the wastage of public resources and financial scandals, most notably the allegation that President Jacob Zuma benefited personally to the tune of more than R200m from irregular “security upgrades” to his home at Nkandla.

While at least some of this can be written off to electioneering, there is a widely held public perception that moral standards have been slipping in South Africa, not only in government but across society, including business. Far from having been suppressed by the 2008 global financial crisis and subsequent recession, the straitened times appear to have increased the amount of fraud and general unethical behaviour taking place in society. The lament that is frequently heard is that the country has lost its moral compass; that South Africans no longer share a common set of ethical values.

In the case of business, this is seen to be reflected in the widening pay differential between company executives and the average worker, and conflict between trade unions and the corporate sector over retrenchments and what should be considered an acceptable return on investment.

Violent confrontations such as the 2012 Marikana massacre, when 34 striking platinum miners were killed and 78 wounded by police gunfire, point to a complete breakdown in the relationship between some companies and their employees, despite their adherence to basic employment regulations, the existence of liberal labour laws that grant trade unions free access to the workplace, and the widespread application of corporate social investment programmes in surrounding communities.

The government’s response to such incidents has been to pass legislation covering, among others, black economic empowerment, minimum wages, employment equity and increased regulation of the extractive industries.

These ostensibly benefit employees, local communities, and the state through royalties and free carry arrangements, but tend also to make it more difficult to do business in the country. There are indications that South Africa is no longer a preferred destination for foreign capital seeking investments in emerging markets, for instance, with the mining sector in particular experiencing damaging disinvestment.

It is clear that to avoid a downward spiral of disgruntled employees, a pressurised government attempting to legislate the nation to prosperity, and capital flight, a social compact is required to achieve consensus on a way forward that benefits society as a whole. Key to this is the reestablishment of a value system that is accepted by all, and it is in the long-term interests of business that it take the lead in this endeavour.

It is for this reason that the establishment of the Allan Gray Centre for Values-based Leadership at the Graduate School of Business is such an important development. The centre, which has been funded by Allan Gray, founder of Allan Gray Proprietary Limited and co-founder of the Allan Gray Orbis Foundation, and his wife Gill, will explore new ways of doing business based on purpose and sustainability, with the intention of creating dignity and belonging in the workplace.

To Gray, values-based leadership involves a fundamental questioning of the principles by which many firms have been doing business, and the chair will explore what is required for the generation of new business and economic practices that are geared towards adding more value to society. While this corporate philosophy of first trying to make a positive difference to others may seem inconsistent with running a profitable and successful firm, Gray says that nothing could be further than the truth.

“Acting in society’s interests can be and is good business. Over 40 years ago Allan Gray was founded with this conviction and ethos, yet has managed to prosper in South Africa’s intensely competitive field of asset management,” he says.

The Grays’ involvement with the GSB started about three decades ago, when they endowed a Chair for Strategic Management, and Allan Gray Proprietary Limited contributed by managing these endowed funds.

Then Walter Baets, Director of the GSB, and his wife, Erna, published their book Rethinking Growth: Social Intrapreneurship for Sustainable Performance, and Gray says he was “astounded to find an academic echoing my colleagues and my own thoughts on the matter as practised by Allan Gray Proprietary Limited ever since its formation 40 years ago. That was largely how the centre came about – a meeting of mutual minds.”

However, the search for someone to fill the chair took several years, with a selection committee “scouring the world” to find the right person. Gray even approached Harvard Business School for advice, and was warned that filling this sort of post was particularly difficult “because you cannot know that the person will fulfill the vision”, and that it was best to appoint someone the school knew. “That was the conclusion the selection committee eventually came to themselves. I was delighted when they suggested Walter … It was the perfect solution.”

Gray says his own philosophy of doing business started “more as a way of thinking” when he started Allan Gray Proprietary Limited in Cape Town in 1973 with just him and a secretary, rather than as a formal vision. “I believed in leading by example and not in writing down a lot of guidelines and telling people how to operate. Anyway, it wasn’t necessary then because we were small enough to all be in one office and the ethos could permeate the organisation almost by osmosis.”

However, this changed in 1989 when Allan Gray and his son William, along with Alan Gilbertson and Andrew Veglio, founded Orbis, the global asset management business, and launched the Orbis Mutual Funds in 1990. “We then realised that with our opening up offices in other countries the ethos was not as easily perpetuated and we had to write it down, so we formalised it for both Orbis and Allan Gray Group Proprietary Limited, which now have what I suppose are their founding principles. In the case of Orbis, the focus is on a core values document; which is what we are trying to achieve.”

Gray says these core values coincide with the GSB’s values-based leadership approach “in a narrow sense”, as “we try to stick to our knitting, which is excelling on behalf of our clients in professional asset management, whereas Walter’s philosophy has a much broader approach”.

Values-based investing entails finding companies that are managed by people whose driving motivation is to “really make a positive difference”, Gray says, not only for their shareholders but to society overall. “I am very much attracted to that type of company, as a great, sustainable investment.”

However, he believes the values applied to stock-picking are more tertiary than the core values required for successful and sustainable management. “When I decided to start my own business I sat back and asked myself: what’s important; what do you want to accomplish? Having worked in asset management with some great firms, we were competing against other firms to excel in investment management, but I never met a client in eight years. I felt we were missing something, because our driving motivation was just to beat the market.

“The global financial crisis really showed the weaknesses of the blatant capitalist philosophy that was expounded in the business schools of the US for decades – that if the president of a company sought to maximise shareholder value everything else would fall into place, and that this would promote the well-being of society. As if it was automatic.

“The obsession with profit was what led to the excessive remuneration of executives and the culture of stock options, and of course, the increasing gap between the haves and have-nots. The market crash was a very important shift, because it brought out the awareness of what was going on in society at large.

“At Allan Gray we set out to create wealth for clients and give them a sense of financial security, not only to provide the best returns but to meet their needs. The stock market is driven by greed and fear, and we wanted to meet real needs, not wants.

“What investors need is the feeling of security that comes with a good rate of return without too much risk. That became our rationale, the sense of purpose for the business. We set out to win the trust and confidence of our clients by excelling on their behalf and being very client-centric.

“We are able to grow assets under management, which of course determines the fee, simply by getting a good alpha; if we outperform the market by five percentage points per annum our assets under management grow by five percent per annum more than the market, which is rather nice for expanding your revenue base.

“There should never be a conflict between the asset manager and clients. If the firm succeeds for the client, it will be successful. If we do something the clients don’t like, I would rather know about it so we can correct it.”

Gray says making a profit has never been an end in itself, but a consequence of pursuing a sense of purpose; to really want to make a difference, not only for clients but all other stakeholders, from employees to the community, the taxman and society at large. “It is only if the client is satisfied that the firm is enabled to help more and more clients. Maximising shareholder value is a crazy philosophy because it’s short term; it’s not sustainable.”

He says he was always intrigued with Japanese philosophy, which recognises the importance of a range of stakeholders, the ecology and society as a whole. “I think in many ways they are closer to the solution than the Western extreme. But the Japanese philosophy has not proved sustainable either. Perhaps the Chinese will get it right – they have seen the benefits of capitalism, the free market economy and the greater productivity that comes with entrepreneurship. To their credit they have adapted their system to embrace the best of the Western philosophy without ditching their own. It has been quite a good combination so far, but it remains to be seen whether they can hold it together.”

He believes values-based management has broader connotations than just business. “The greatest values-based leader in Africa’s history must be Nelson Mandela. If the Allan Gray Centre for Values-based Leadership helps to help spread Madiba’s philosophy through the wider society, that would be great.”

#1 Winter 2014

The excellence leap

Compelling new evidence is emerging of a link between consciousness and a healthy organisation, which opens the door to new ways of managing and leading effectively in complex and challenging times.Around the world there are organisations that function in similar environments, utilise similar resources and engage in similar activities and management practices, yet produce different results: One will flourish and create value for customers, stakeholders and the wider society, the other may flounder. Understanding this enigma is one of the central preoccupations of management and business literature and research.More than a decade of work has shown that well-being at work and the presence of values such as integrity, respect, honesty, liability, etc. in the workplace can play a role in boosting the performance of organisations. Accordingly, HR departments have experimented with gyms, yoga courses, flexible working hours, workplace spirituality and values statements to enhance performance. Yet Fon a managerial level, it is still difficult to pinpoint exactly what is required to create a functional or “healthy” organisation. Superficially, we can identify organisations and leaders who perform well and demonstrate value, but when we compare them to those who perform poorly, and that we consider to be dysfunctional, we are unable to accurately elucidate ultimate cause and effect.

New evidence is now emerging that the driver of a healthy organisation – an organisation that performs well and where people like to work – might be the degree to which that organisation is conscious. An unprecedented convergence of disparate disciplines and ideas in the world today is giving us an interesting understanding of the role that consciousness can play in boosting individual and organisational performance.

For example, Buddhist monks are sitting down with Harvard scientists to talk about the neuroscience of mindfulness. Indigenous healers are working side by side with physicians to treat patients in major hospitals. Quantum physicists and living-systems biologists are confirming traditionally held spiritual views of consciousness. As we look at the universe in greater and greater detail, down to its most fundamental level, we find that its basic constituent is a fabric of interwoven space and time, of which all forms and elements are comprised. This state essentially describes what is thought by many to constitute a unified field, and it is presumed that it is this unified field that constitutes consciousness in its pure and native form.

This engagement of different ways of understanding what’s real and true is leading to the discovery of new tools for living in the midst of complexity. As ancient spiritual wisdom converges with the latest scientific understandings of the world and our place in it, we are finding new answers to the ageold questions of ‘who am I?’ and ‘what am I capable of becoming?’

These discoveries, variously described as holism, constructivism and emergence, are fundamental to a new understanding of individuals as well as organisations – and are extremely relevant and applicable to managerial theory and practice.

A workplace beyond Newton

While the science behind much of this boundary-pushing work has broken free of limiting Newtonian principles of fixed time and space, in the economic and managerial sciences, this revolution seems to have been sidelined. Our economic thinking is still Marshallian, the economic thinking of the nineteenth century.

Is it not possible that transcending these boundaries of traditional thought in business could offer us similar leaps forward in the way we think about and manage organisations? What can quantum mechanics, philosophy and interpretation offer us to clarify the organising principles of management, markets and companies?

These questions are particularly relevant when considering the people who make up these systems. One of the principal preoccupations of business is how people deal with each other, both inside organisations and between organisations. People’s dealings are based on all kinds of activities: talking; thinking; feeling; and communicating; which do not take place on a molecular level and are not stable the way objects are. This means that we cannot easily touch and measure them. This locates them, as parapsychology researcher Dean Radin suggests, on a quantum level, which would make them subject to quantum law, where consciousness is the primary organising principle.

And if we suspect that consciousness is key for individual and organisational health and ultimately more sustainable business, the question naturally arises – how can we cultivate a working understanding of consciousness in an organisation, along with a way to measure and manage this important resource?

Consciousness is a slippery concept, much debated in the sciences, and measuring it poses some challenges. Because we are unable to conceptualise consciousness from our classical Newtonian ontology, it is not surprising that we are unable to quantify it using conventional tools, metrics or thirdperson research methodologies.

Measuring the unmeasurable

Previous research attempts to measure consciousness in numerous fields of study including psychology and neuroscience have been highly criticised, difficult to interpret, and of dubious significance. First-person research in this area has involved the use of introspection and then the verbal reporting of subjective experience. These techniques have obvious limitations and as a result have not been integrated into contemporary science.

In approaching the quantification of consciousness, we need to take another route it seems: to use a proxy that is measurable using existing research tools. The obvious proxy in this instance is “coherence”. Coherence, which is the quality of being logically integrated, consistent and intelligible, is a phenomenon that is readily observable in nature and has the advantage of being described in the academic literature. In addition, coherence has been successfully used as a proxy for consciousness on an individual physiological level, in previous studies.

Most of the existing scientific research on consciousness and conscious states of mind, link consciousness with coherence (on a brain and/or body level). For example, research on long-term meditators has found that while the practitioners generated a state of “unconditional lovingkindness and compassion”, increases in gamma band oscillation and long-distance phase synchrony were observed.

Coherence on a body level is therefore understood to mean an optimal psychophysiological state: a dynamic systems view of the interrelations between psychological, cognitive and emotional systems and neural communication networks in the human organism. This is the definition of coherence that HeartMath has used to build its theoretical framework and research tool: the Heart Coherence Monitor, which visualises coherence inside the human brain/body system by examining natural fluctuations in heart rate, known as heart rate variability (HRV).

This is consistent with a wider systems thinking approach. Complex living systems, such as human beings, are composed of numerous interconnected, dynamic networks of biological structures and processes. The recent application of systems thinking in the life sciences has given rise to the understanding that the function of the human organism as an integrated whole is determined by the multi-level interactions of all the elements of the psychophysiological system. The elements influence one another as a network, rather than through hierarchical or cause-and-effect relationships. Abundant evidence indicates that proper coordination and synchronisation (coherence) among the different networks of any biological activity is critical for the emergence of higher-order functions.

Applying these findings to organisations is a logical step. Organisations are similarly made of many elements that are networked and interdependent. And if the level of coherence can be shown to affect the functionality and performance of an organisation in the same way it does an individual or other living system, there are major implications for how we should be managing organisations.

Measuring coherence in organisations

Consciousness, and its proxy coherence, are a systemic concept and need a systemic approach when seeking to measure them. Our conceptual model is therefore based on an operationalised version of Wilber’s holistic research tool. In his theory of holon philosophy, Ken Wilber visualises something that could be called different dimensions of the image of the holistic world.

The well-known model is developed around two dichotomies: externalinternal and individual-networked (collective). A holistic image is obtained, according to Wilber, if all the quadrants receive equal attention and that to collapse them together or dismiss one or the other is a serious mistake. He labels these quadrants the ‘I’ quadrant, the ‘We’ quadrant, the ‘It’ quadrant, and the ‘Its’ quadrant.

To start to develop a truer understanding of the whole person, what they think and feel and why they do things, requires that attention is paid to all four quadrants. This is as true for organisations as it is for individuals. It is through a holistic interpretation that we can quantify the level of coherence, which we will take as a proxy for consciousness. It is then possible to test the hypothesis that this influences organisational functionality and performance.

To measure coherence in organisations, we use the Cassandra tool – a simple questionnaire that pertains to each of the quadrants of Wilber’s holistic model. Cassandra comprises multiple items that constitute each quadrant and aims to probe the organisation on the basis of these. The values quadrant (We) is subdivided into a diversity section, in which the questions are based on the work of De Anca and Vazquez (2004) and Kofman (2006), and a complexity section, in which the questions are based on the work of Baets (2006). The personal development quadrant (I) is subdivided into a personal well-being section, based on the work of Chopra (1994), and a leadership and teamwork section, based on the work of Nierenberg (1999). Likewise, the innovation quadrant (It) is based on the work of Stone (2003), which constitutes the financial performance subdivision, and the work of Advanced Practical Thinking Inc. (2001), which constitutes the innovative potential subdivision.

Finally, the sustainability (Its) quadrant is subdivided into a sustainable development and social responsibility section, based on the work of Stacy (2000), and a knowledge and learning subsection, which is based on the work of Baets and van der Linden (2000).

The hypothesis is that the results of the Cassandra questionnaire, which measures coherence at an organisational level (i.e. how well the workforce is aligned on certain key questions), combined with the outcome of the HeartMath test, which measures coherence on an individual level, would provide a compelling snapshot of the overall coherence (consciousness) of the workforce and the organisation. This would give leaders and managers penetrating insight into where things are running smoothly and, on the flip side, into pockets of the organisation that may not be functioning as well as they should be. As a result, the tool may help us to manage more effectively and to make more accurate predictions about future performance. The methodology is summarised in the figure above.

Bringing it all together: testing the conceptual model

A preliminary study to test part of this conceptual model took place at a major public hospital in Cape Town, South Africa. The study set out to clarify the links between coherence and organisational functionality by comparing the functioning and performance of the organisation using conventional indicators with data obtained from the Cassandra tool.

From available, conventional management data, it was apparent that although the hospital appears to deliver good results in terms of operational efficiency, it operates in a demanding environment with stretched resources, shows significant staff turnover and leave utilisation, and that there are some critical areas of dissatisfaction among the staff, namely internal communication, staff cohesion, and feeling under-valued by the organisation. The question was – would this same level of dissatisfaction show up in the analysis of the Cassandra data?

To find out, questionnaires were distributed opportunistically to hospital staff, directed mainly at clinical departments and the data captured was analysed using artificial neural networks – computational methodologies that can perform multifactorial analysis and interpretation of data.

From the results of the analysis, it was possible to broadly correlate the level of coherence in the organisation measured by Cassandra with functionality and performance measured by conventional indicators. The responses to most of the questions in the questionnaire suggested overall de-coherence within the organisation, with coherence in certain specific, discrete areas. For example, Cassandra showed a high level of coherence in the ‘diversity’, ‘complexity’, and ‘knowledge and sharing’ axes, which makes sense because the organisation functions as an academic and research institution where highly diverse skill-sets are required, and multidisciplinary, collaborative, activities must be undertaken by the workforce as part of their normal functioning.

But on most other axes, such as the ‘personal well-being’ and ‘leadership and teamwork’ axes, the results showed strong de-coherence, suggesting poor functioning and performance in those areas. The personnel statistics and the results of the staff satisfaction survey back this up showing that internal communication, staff cohesion and personal satisfaction may all be areas of weakness within this organisation.

Although in this study it was not possible to use the HeartMath tool to correlate these organisational results with individual coherence, the results do suggest a correlation between the coherence/consciousness of the workforce and the functionality and performance of the organisation.

The model seems able to pick up the same trends in organisational performance that conventional data hint at. But where the conventional data might flag a problem, this model is able to diagnose it with unprecedented accuracy by showing where in the organisation the misalignment is occurring thus making it possible to address the problems with greater precision – and speed.

01. Use the Cassandra tool to question management and analyse with neural networks. This will point to problem areas and areas of strength within the organisation.
02. Use HeartMath on individuals in the team. This would initiate a personal development plan for each person.
03. Organise a focus group, validating the outcomes of steps 2 and 3, and develop a change strategy for the organisation.
04. Manage the change process on an organisational level (based on the outcome of steps 1 and 3) and on an individual level, working with the outcomes of step 2.

REPEAT this process every six months by using the same four steps.

Towards an understanding of consciousness in organisations

On the widest scale, the link between consciousness and functionality, evident in this research, suggests that a high level of organisational consciousness may indeed be pivotal in building healthy organisations that produce sustainable, long-term value. It would then follow that understanding and influencing the consciousness of organisations should constitute a major part of managerial efforts.

Conventional management practices are largely focused on increasing shareholder wealth, and as such are mainly geared towards financial performance, through reliance on conventional business and financial indicators. However, many organisations managed in this way are seen to be unsustainable, and many do not succeed in creating overall value for society. It is therefore becoming more important to question and explore the driving force behind managerial decisions that so profoundly influence the functioning of organisations and the development of society.

Sustainability, through the long-term creation of value, should be the goal of businesses in our society, because it is through this that humanity as a whole can prosper.

This research suggests that, by taking a holistic view of management, which accepts and understands the role of consciousness in organisations, we can work towards building healthy organisations, which would contribute towards creating a more sustainable society for generations to come. Values are at the core of this vision. In many successful organisations today where values are an explicit part of what they do, values are not the driver of success but an essential part of the whole, an integration of all elements. Values are everywhere – or nowhere.

Thus, conscious organisations are valuesbased organisations. But whether we call it consciousness or values (or fourth sector or mission driven), could this be the mystery ingredient that makes some organisations thrive while others fail? This research holds out the promise that we have found a way to glimpse this mysterious currency, to measure it even with reliable third-party tools, so that we can start to understand it, manage it, and use it to improve more organisations.

If you want to build healthy organisations in today’s complex and uncertain climate, we believe you have to pay attention to consciousness. Too much time is lost focusing on improving the bottom line instead of getting the organisation ready for generating value. By focusing on consciousness – and values – you are getting your organisation fit for the future.

#1 Winter 2014

The hard work of soft power

Modern business demands leaders who are inclusive and able to guide teams along the road of success.

In the face of globalisation, growth in emerging markets, and increasingly multi-ethnic workplaces, the top-down management approach of decades past no longer serves all organisational environments. Instead, many companies find themselves needing to develop high-performance teams, under the guidance of inclusive leaders who focus on both personal and professional success.

“Inclusive leadership starts with an intention of wanting the best for the world, not necessarily the best in the world. It is a form of leadership that looks deeply into the role of the leader as a custodian of values, character and resources,” says Kurt April, Professor of Leadership, Diversity and Inclusion at the UCT Graduate School of Business and Associate Fellow of Said Business School (University of Oxford).

April, whose research over 15 years spans a wide range of leadership issues, says that inclusive leadership seeks to encourage the input of key stakeholders, valuing their opinions and welcoming the diversity of perspectives and experiences they contribute. A far cry from the pervasive hierarchical styles of leadership of old.

However, April says, “Even when this type of comprehensive change in management strategy is employed, the success of change is influenced by the resilience of individuals to cope with the stress of being at the receiving end of the change, and being comfortable in the uncertainty that naturally accompanies any change.”

For this reason, he says, enhancing the resilience of staff at work should be a key strategy of the inclusive leader.

Redefining workplace values can cause disruption, upset the status quo, and be seen as uncomfortable and threatening. It requires a shift in staff’s personal identity, requiring that they are open and adaptable in the face of change, and being willing to continuously unlearn and relearn. “When such fundamental individual changes occur, one needs ‘pillars’ on which to hold,” he says.

In the corporate environment, that pillar should come from top business brass. “The leadership should be visible in driving and supporting change to build common belief and commitment, and ensure that everyone is on ‘the same page’, even if everyone initially does not agree with the bold vision,” says April.

Becoming this role model begins with abandoning the hard power perspective, often characteristic of corporate leaders. Described as coercive, controlling and dominating, these leaders use their power and position to drive their own growth and selfish ends, rather than universal success. “It is a human trait to put ourselves at the centre of the world and attract willing followership by eliminating our concern for the smaller self, the selfish self, the material self,” says April. He argues that modern leaders should use soft power, in which they get others to strive for the same things that the leaders are, responsibly.

“This power is characterised by generosity, attraction and influence, the appeal of cultural, social and moral messages, a respect for others’ traditions, and an approach of deep care,” he says, noting Nelson Mandela and Martin Luther King Jr as examples of leaders who used soft power.

The four components of an inclusive leader

According to April, the modern leader must not only embrace soft power, but also embody four characteristic components of inclusivity. The first of these involves nurturing and building communities.

“This involves hearing the minority voice and widening the conversation. Helping others cope with uncertainty and avoiding the traps of absolutes, while teaching compassion and being comfortable within the grey areas of organisational life,” he explains.

In this way, actionable empathy is practised and an inclusive workplace environment is nurtured. It ensures that emotions, particularly defensiveness, do not get in the way of creative and flexible responses to change.

Secondly, inclusive leaders must be agents of healing. Faced with change, individuals can react with resistance, criticism and resort to old stereotypes. They can reject the new system altogether, even purposefully sabotage it, or become stuck in a workplace rut and psychologically withdraw.

“Leaders must help people work through resentment and become connected, restoring their sense of belonging and reconciling conflicting images of the past with a compelling vision for the future,” says April. Essentially, this means providing support by “actively taking stances against and opposing despair, and embodying hope in one’s words, actions and deeds,” he adds.

Hope closely relates to the third component of leaders as visionaries. By helping others see the potential and possibilities of change, they give a positive picture of why the chosen path is the way forward. “These leaders must move beyond just telling it ‘how it is’, and practise telling ‘how it could be’,” says April.

Finally, inclusive leaders must encourage staff to invest in personal renewal. Described by April as taking time out for serenity, selfreflection and gratitude for others, “it involves investing in those people and practices that make them mindful and resilient, living out a purpose and saying ‘no’ to all that is not in that purpose.”

Whether such self-care is experienced as chatting with friends or loved ones, taking spa breaks, going to the gym or simply enjoying a good meal, the time spent effectively charges people’s batteries so they can approach workplace challenges with renewed energy and vigour.

This component applies to leaders as well, particularly with respect to reaching out for help and guidance. According to April, “The more senior a person is in an organisation, the greater the apparent difficulty in admitting to a problem and asking for help.” Interestingly, his research shows that women leaders find it more difficult to ask for, or take help, than men – they therefore suffer greater burnout and depression when compared to male leaders.

Those in powerful positions may feel that admitting to a problem or asking for assistance is weakness. However, a good leader understands that their role is not only to boost the resilience of others, but to reinforce their own ability to thrive as well.

Modern workplace

The role of inclusive leadership in the modern workplace is gaining momentum. Indeed, data published by Ernst and Young in November 2013 revealed an overwhelming majority of business executives reported inclusive leadership, or the ability to encourage teams to voice diverse perspectives and dissent, is an effective means of improving performance.

Furthermore, those who rated their organisations as ‘excellent’ at building such teams were more likely to have achieved earnings before interest, taxes, depreciation and amortisation growth of greater than 10% over the past year.

However, despite the obvious benefits of this business model, half of the organisations surveyed said they lacked leaders with the ability to manage and motivate such teams.

“In today’s business environment, leaders need to be inclusive in order to integrate diverse perspectives to create highperforming, global teams that drive growth for their organisations,” explains Mike Cullen, global talent leader at Ernst and Young.

“Organisations are realising that they must develop the relevant leadership skills in their people to help transform the diversity of their global organisations into a competitive advantage.”

That development requires organisations to turn against the hard power, top-down methods of the past. They must instead grow a new generation of soft power leaders who will support the personal and professional resilience organisations need for the modern, teamwork-driven workplace – while still achieving the necessary results.

“This requires continuous active stances against the evidence to change the deadly tides, which could lead to despair. It is not just about being optimistic or merely speaking about what could be, but actively getting involved and taking purposeful steps to help bring those possibilities to fruition,” says April.

By embodying the inclusive leadership components he outlines, modern business leaders can ensure this fundamental shift in practice is carried out smoothly. With the necessary humility they can help staff see that change in itself is not inherently bad, but can facilitate learning, renewed motivation, personal growth and development, adaptability, and hope.

In doing so, they establish the long-term, sustainable success of corporate goals. Says April, “inclusive leadership is the basic call for all of humankind to become more than we currently are. But you can only be more if through purposeful action, you help others and allow them to be more than you. You cannot be more if you don’t know how to be less.”

#1 Winter 2014

Telling it like they see it

On the eve of South Africa’s 20th anniversary of democracy, two leadership stalwarts, Archbishop Emeritus Desmond Tutu and Alex Boraine, ref lected on where the country may have lost its way.

Values-based leadership within the ANCled government came under critical scrutiny during a recent public dialogue between Archbishop Emeritus Desmond Tutu and author Alex Boraine.

Boraine launched his third book, What’s Gone Wrong? On the brink of a failing state, in mid- March at the UCT Graduate School of Business in Cape Town. The launch was part of the school’s Distinguished Speakers Programme.

At the event, Tutu quizzed his deputy chair of the historical Truth and Reconciliation Commission, a public exorcism that ran during the mid-1990s, intended to heal a nation scarred by years of apartheid rule.

The venue was packed and the conversation was brutally frank, evidencing the long friendship between the two respected figures in their fields.

Boraine unpacked the leadership faults within the ANC, as he sees them, claiming that the ruling party was leading South Africa down a failure-filled path.

“Many millions of South Africans are deeply troubled about the situation we find ourselves in. The question I pose, what’s gone wrong, is being asked by many people around the country,” said Boraine.

“If you look at the executive, the head of the country, you don’t quite know who is running the country. It’s more Luthuli House; the party (ANC) rather than the state. The ANC wants its members (in Parliament) to adhere to the ANC constitution and not the country’s constitution.”

He added: “That spirit of democracy, with consensus and opinion, that is no longer happening. If you are a relative, friend or linked to the ANC, you get a job, despite your credentials.”

Boraine said while researching his new book, he walked the corridors of Parliament and interviewed political figures, among them a leading ANC official.

“He said to me that he finds it difficult to speak in Parliament because on the one hand he has to listen to his conscience but on the other he has to listen to his party,” recalled Boraine.

“He said, ‘My party is now sending the worst of the group, the most mediocre, to Parliament because there’s no money to be made there’. He is admitting that people in his party go to where the money is, and not where the service is.”

Tutu meanwhile challenged Boraine with a common misperception that might be thrown back at him for assuming that there was a lack of values within the ANC’s leadership.

“The critique is that you are a white liberal and in a way unpatriotic. What will you say?” asked Tutu.

Boraine replied: “Patriotism is the last resort of scoundrels. There are going to be critics, particularly those who feel that I have painted too dark a picture. One has to tell the truth as you see it.

“You have told the truth for justice, at a great cost for yourself. The example that you have set should be followed by all of us. We need to be a bit risky. The country is in trouble. We have an election on May 7,” he added.

“Let’s say Jacob Zuma returns as president. It may be that the ANC might become so embarrassed by corrupt and inept leadership and then give him the boot. The critical question is: can the ANC be reformed from within? I’m not sure that the ANC can change its spots.”

Tutu reminded Boraine and the audience that the “sky remains firmly in place”.

“At high schools, you watch at breaks, and you see kids representing the whole spectrum. What has gone wrong when we have paradise within our grasp?” he asked.

Boraine replied with his book’s premise: the “promise that we had that has not been fulfilled”.

“I’ve written this book because I care about the country. But I am distressed to see the country going downhill instead of moving forward. The ANC when they first came into power said no political democracy would survive and flourish if the mass of our people remained in poverty. Attacking poverty and deprivation must be the first priority of the democratic nation,” he said.

He said there was “a big chunk” of “good people in the ANC” and they needed to join a “coalition of like-minded people who believe in justice and peace” to steer South Africa back on track.

“We need a new coalition of forces that include the many, many good people in the ANC. I know they must be constantly embarrassed when they see the mess their leadership is making of this country,” said Boraine.

He added: “There’s no room for despair. We can’t say, ‘these people are in power and they will do what they want’. We need to stand up.

“This book does not say all is lost. It says we are in trouble. Let’s try to fix it. We are not a failed state and nothing in this book suggests that we are. I am saying we are failing and if we continue to fail we will reap the consequences of it.

“There’s no use pretending. We have to tell it like it is. It is a troubled country but with incredible and talented people. We have to tap into that. We have to make it work.”

Tutu said when he had envisioned the future he had “imagined we would be cheering on our successors as we moved from one achievement to another”.

“It is a great ache because we have incredible people in this country, of all races, people who are committed to this land. I think of the professionals who could have left and been snapped up. We have people who could go anywhere in the world,” he said.

“It is up to us not to allow our country to go to the dogs. It is up to us to say it is total nonsense to say children have passed school with 30%. It is an insult to us, to those children, that we should say this when we know when many of them are given opportunities, they soar,” said Tutu. “We hold back the incredible potential that there is in this beautiful land.”

#1 Winter 2014

Leaders are not born; they are made – by their followers

The key to a successful leadership style lies in the ability to put one’s skill at the service of others, believes business leader, author and leading academic, Dr Reuel Khoza.

The key to a successful leadership style lies in the ability to put one’s skill at the service of others, believes business leader, author and leading academic, Dr Reuel Khoza. What the world needs today – more than ever – is leaders who are not only intellectually smart but emotionally intelligent, insightful, compassionate, valuesbased and vision-beckoned, and guided by an ethic of service, believes Dr Reuel Khoza, chairman of the Nedbank group.

Speaking at the UCT Graduate School of Business recently, Khoza said that leaders who are attuned to their followers can use this as a springboard to provide leadership into an uncertain future. “The leader cannot stand alone, he or she must stand with their followers, interpret for them, strive to fulfil their hopes and be their champion in the struggles of life. Leadership is achieved, not given,” he said.

Dr Khoza’s talk centred on the key elements of his book Attuned Leadership, but also incorporated his view on African Humanism and Ubuntu, which he believes can be used as a moral compass to guide leaders, not only in South Africa, but universally as well.

“The recession of 2008/2009, from which we are trying to emerge, was caused by the selfserving, selfish kind of thinking that focuses on the me, myself and I. True leaders think beyond themselves. Particularly in the 21st century, we need leaders who are astute, knowledgeable and insightful; we need leaders who are able to deal with complexity.”

Dr Khoza believes in leading by example. In his 40-year career he has achieved remarkable successes in the South African business world. He is not only the chairman of the Nedbank Group, but of Aka Capital. He is the president and member of the Institute of Directors, deputy chairman of the King Committee on Corporate Governance, the chancellor of the University of Limpopo, a director of several large corporations and visiting professor of Rhodes University, amongst others roles. He also served on former President Thabo Mbeki’s Economic Advisory Panel.

Dr Khoza is known to advance the idea of inclusivity and Afrocentricity as well as the principles of Ubuntu not only in his academic work, but in practice as well. He defines Ubuntu as “I am because you are, you are because we are,” which is diametrically opposed to a more Western-style thinking centred on Descartes’s “I think therefore I am”. In Dr Khoza’s Ubuntu model, a person’s life has meaning – not in terms of his thoughts – but because of his social ties, common values and empathy with others.

Dr Khoza admits that he is sometimes criticised for his idealism but he says a more caring, values-based leadership translates into business success and profits as well. As an example, he mentions the oil spill in North America, in which a focus on gain at the expense of the common good saw BP lose a substantial chunk of its company value. He also mentions Nike’s huge losses which can be attributed to negative public reaction to its exploitation of child labour in the manufacturing business.

At Nedbank, he credits the bank’s current financial strength not only to its business principles but to a change in corporate culture. He says when he joined the group it was on the cusp of collapse, needing financial bailouts from the Reserve Bank, as well as from Old Mutual.

To illustrate this further, he points out that when he was appointed as chairman designate on 25 November 2005 the Nedbank share price was R91.47. When he was appointed chairman on 4 May 2006, the share price was R131.01 and as at 18 November 2013 it was R210.75.

“Many people leave the bank but 18 months later say they want to come back. When I ask them why, they say it is the culture, because of the values. This is the essence of what I am advocating. People will produce optimally if they are in an environment that is conducive to them producing optimally. My job is not about managing risk but ensuring that the work environment is conducive for them to flourish.

“Leaders who lead us successfully are coordinators rather than controllers, their moral stature arises from dedication to our cause, we admire them not because they are powerful, they are powerful because we made them so and they are admirable when they provide clear vision and positive direction.”

Dr Khoza says leaders are not just born to the role but are born – and then made, sometimes by their own actions, sometimes they are shaped by events. He quotes the example of former President Thabo Mbeki, a man he describes as “exceptionally brilliant” but not willing to take advice and as a result, losing touch with his followers. On the other hand, former President Nelson Mandela focused on the common good throughout his political career, putting his leadership skills at the service of his followers, the key to his success as a leader.

Dr Khoza said he was not against competition and innovation, or pursuing ambition, but that it could not be at the cost of followers. “Leadership can only succeed over the long term by sharing the values and aspirations of followers and this means being able to distinguish between what is expedient and populist versus what is serviceable and honest. It takes insight, empathy and discipline to achieve resonance with followers. This is what Ubuntu promotes.”

#1 Winter 2014

No children in the boardroom please

Many people respond to pressure by reverting to behaviour learnt as a child. But throwing your toys in a leadership role can have serious consequences for co-workers and productivity.

Many people respond to pressure by reverting to behaviour learnt as a child. But throwing your toys in a leadership role can have serious consequences for co-workers and productivity. Swiss executive Pierre Wauthier shocked the business world last year when he committed suicide and in the note he left behind, he blamed the company’s chairman for putting too much pressure on him. Only weeks before, Carsten Schloter, chief executive of a Swiss mobile phone company committed suicide shortly after he had said in an interview that he had trouble switching off at home and how he found himself unable to tune out of work mode.

The suicide rate among Wall Street traders is said to be uncommonly high. The Financial Post ran an article titled “Why High Finance Workers Commit Suicide”, which pointed out that having a stressful job was not the problem – it was the way in which individuals handled the stress that could lead to trouble.

Traders tend to be highly competitive alpha males with lofty career expectations to whom seeking help is a sign of weakness. This is a phenomenon seen worldwide – the top executive as the high achiever, confident, ambitious and driven to succeed, often admired for self-reliance to the point of appearing arrogant, even ruthless in the pursuit of success.

But South African leadership expert and motivational speaker Chris Breen says it is exactly this kind of high-achieving leader who is set up to lose in the modernday business world. He says research shows that high achievers are less likely to take the time to check in with others (especially if they are men) and are more likely to make poorer decisions than those who consult others. In addition, people are trained to put systems, structures and processes into place, trying to control and predict business scenarios and economic trends – but when things become unpredictable and uncertain, pressures increase and the usual practices and knowledge systems don’t apply. It is in this environment that executives easily fall victim to their emotions, either displaying immature or unhelpful behaviour such as verbal and physical outbursts, or feeling so overwhelmed by circumstances that they are rendered incapable of duty and may even contemplate suicide.

Training executives to properly deal with stress falls in the domain of executive education and business schools around the world offer a range of different courses aimed at improving both business and interpersonal skills. It is a multimillion dollar industry that only shows signs of growing as a lack of skills and ability is counterbalanced by the increased demands posed by technology, and the pace of the world economy.

In 2001, Business Week magazine estimated that executive education in the USA was worth about $800 million per year. Only 10 years later, in 2011, $67 billion was spent on corporate training in that country.

But while the money and the corporate will to educate is there, questions have been raised about the efficacy of these courses. In essence, they aim to change behaviour and personality patterns, which are complicated psychological processes that have been put in place through years of personal development.

What does it take to actually shift the behaviour of top business leaders? One of the most important factors is control of the emotional domain; the ability to respond and not react in situations of stress. Breen says the evidence from neuroscientific research shows that we draw heavily on our lived experience in our responses to stressful situations. The result is that we respond by automatically downloading and reacting in a set, unconscious way. He believes that working for change requires one to move into the unconscious or invisible areas and journey through a process where we have to open our minds, hearts and wills.

“What we think and do is limited by what we fail to notice. And because we fail to notice that we fail to notice, there is little we can do to change; until we are made aware of how failing to notice shapes our thoughts and deeds,” he says. Teaching people to have different responses is not easy and there are different ways to go about this. Some experts, like Breen, who teaches on the Executive MBA at the UCT Graduate School of Business and runs the school’s flagship Leading Executive Programme, take a more unconventional approach.

Instead of a traditional lecturer-student relationship, his courses are more like life coaching sessions in which people are taken on a journey of self-awareness and discovery. He addresses the ego-drive to succeed and examines how it operates in each individual. People are encouraged to find their own blind spots and to explore different ways of responding to situations. He incorporates teachings from various sources, such as Visa credit card founder Dee Hock, who said, “Success, while it may build confidence, teaches an insidious lesson: to have too high an opinion of self. It is from failure that amazing growth and grace so often come, provided that one can only recognise it, admit it, learn from it, rise above it, and try again. There is no reason to be discouraged by shortcomings.”

Breen believes in getting individuals to establish what pushes their buttons and “sets them off”. This is also what leadership expert Wendy Palmer talks about in her Leadership Embodiment programme. She shows people how to “interrupt” the “overwhelm” – so when you begin to feel the rush of emotion you know how to stop it, check it, and find the appropriate response.

That emotional rush was described as an “amygdala hijack” by Daniel Goleman in his book Emotional Intelligence: Why it can matter more than IQ. It describes how if the part of the brain called the amygdala perceives a threat, it triggers a response that overtakes and essentially hijacks the neocortex or rational brain. The amygdala can act faster than the neocortex – to enable us to fight, take flight or freeze – but it can also lead to irrational behaviour and dangerous decision-making.

Goleman said that self-control is crucial for situations when an amygdala hijack is occurring as it can lead to a counter amygdala response and a situation where emotions overrule rational thought processes. In the workplace, this may take the form of people shouting uncontrollably at each other, effectively behaving like children.

Such scenarios are hugely detrimental to office morale and personal feelings of wellbeing and can lead to dangerous mental health conditions as well as decreased productivity and stress in the workplace. Leadership programmes with a strong emphasis on self-awareness and emotional control do much more than help an individual cope with his or her emotions – they equip leaders with the emotional tools to navigate through troubled economic times and periods of personal stress, as well as the increased levels of stress that come with more senior positions of power.

#1 Winter 2014

Blind faith: tackling the root of poor leadership

Leaders are often hampered by their lack of skills and tools to do the job. We need to remove the handicap and make sure that managers, especially first-time managers, are properly prepared for their roles.

South Africans have become so used to hearing about mismanagement at senior levels of local and national government. While there may be many reasons for this, a lack of training plays a major role. In October 2013, The Star wrote that onethird of all municipal officers, chief financial officers and supply chain managers do not have the right skills for the job.

According to the Institute of Municipal Finance Officers president Louise Muller, this was quoted as one of the main reasons why municipalities were not achieving clean audits. She said up to 73% of the positions of municipal manager, chief financial officer and supply chain manager were not filled.

And a lack of clean audits is not the only negative outcome. The Institute for Security Studies recently said there are at least five protests a day in South Africa – most of these reflecting public frustration around poor service delivery, the lack of water, electricity outages, poor roads, the prevalence of pit latrines, unemployment and poverty.

The sad reality is that without skilled staff with the appropriate skills, no organisation, company, municipality nor any corporate or government institution can be expected to succeed. But pushing people into vacant positions is not the answer. People need to be appointed following proper screenings of qualifications and relevant job experience. And it is not just at senior levels that the work needs to happen. First-time managers also need to be prepared for their new positions.

All too often we find brilliant doctors and nurses appointed to management positions at hospitals where they suddenly face paper emergencies and fiscal traumas they were not trained to deal with. A skilled engineer is not necessarily a skilled manager and cannot be expected to run a municipality based on years of experience in industry, for instance. Without proper management skills no new manager can be expected to fulfil their duties properly.

This is not just an error that government makes – the private and non-profit sectors also neglect their managers. A Gallup poll surveying over one million Americans found that the biggest reason why people leave their jobs is due to a bad boss or direct supervisor. “People leave managers, not companies… In the end, turnover is mostly a manager issue,” Gallup stated. It also revealed that poorly managed work groups were about 50% less productive and 44% less profitable than wellmanaged groups. And Aol estimates that bad bosses cost the US economy around $360 million a year in lost productivity – saying their studies show 65% of people would take a new boss over a pay raise.

Managers need to be experts at managing relationships with various stakeholders and need to be able to be masters of communication. It is absolutely vital that they are able to operate confidently and securely, and are assured of their own competencies and abilities. An insecure manager is a bad manager, unable to delegate properly, control and motivate his team and ensure that the right work is done by the right people. Simply put – a good manager can mean the difference between your business/ municipality/organisation being a sinking ship or a dream boat.

First-time managers in particular need to have some kind of explanation of what is expected of them. Too often we find new managers absolutely overwhelmed by their new appointment, shocked into immobility by the perceived magnitude of the task ahead, daunted by the responsibility and accountability bestowed upon them.

One of the most important things a new manager must learn is how to act with confidence, to learn how to communicate and how to trust others to do the job well. This involves learning how to manage oneself and finding out how to communicate with others. This means a lot of reflection and introspection.

There are many management courses on offer and they provide valuable skills to managers at all levels. Some may dismiss these sorts of skills as “soft” and hardly vital to managing a successful working environment. But according to Fortune magazine the five key skills for success in the workplace are communication, time management, networking, perspective, and delegation.

These are skills that are not taught at school and are not even addressed at tertiary level unless you are specifically studying in communication, psychology or business fields. Only specific business courses teach students how to apply these skills in actual practical working conditions.

The time out of the office also gives participants time to think, to do important group work, and to talk to others in similar or related fields, which means sharing knowledge and expanding experiences. It is absolutely invaluable from a networking perspective and results in priceless group and peer learning.

Times are hard, economies are under pressure and politics puts an additional strain on all levels of business and governance, both at local and national and even international level. In times of added stress, equipping new managers with the necessary skills becomes more important than ever. There are very few companies, municipalities, businesses or organisations that can afford to have an unskilled manager at the helm. The cost of upskilling managers – starting at the lowest rung of the ladder – should be weighed against the enormous price that is paid when important departments, vital business sections and in some cases, even provincial governments, fall apart.

#1 Winter 2014

A leader who needs no pinstriped suit

When Zandile Nkhata found her own voice as a leader, she found Africa’s top business school was listening.

Zandile Nkhata, the Director of the Business Development Unit at the University of Cape Town Graduate School of Business, is helping shape the future, vision and direction of Africa’s top business school.

The UK-trained chartered accountant admits that despite her vast corporate and senior management experience, she found her appointment as business development manager at the GSB daunting at first.

“Initially, I was terrified by the prospect of being the head of business development in a globally recognised organisation of this magnitude. As a woman in a leadership position, particularly as a black woman, I come with baggage and having been trained in the accounting environment, which is very male, very white, I wasn’t sure what kind of a leader I could authentically be … I was afraid I had to be something I wasn’t, afraid of losing myself.”

As part of her acclimatisation to the school, Nkhata enrolled in the school’s flagship Women In Leadership programme, and that, she says, made all the difference. “It changed my life. The course helped guide and shape me – I didn’t need the pinstriped suits, I didn’t need to consume large doses of testosterone. I could be a leader with ME at the centre. What a relief!”

Nkhata describes her leadership style as quiet and marked by listening, contemplating and questioning. “I like to try and take time to think, to question, to experiment. I consult, I deliberate and the programme really helped give me the tools to do that.”

But her vision for the school is anything but quiet. She leads a team that has significantly increased business for the GSB, and is the founding director of a newly established business development unit team of 23.

Nkhata’s roots are in the UK, where she was born and trained, serving articles at PricewaterhouseCoopers (London), her first job, and then working at the BBC in Television Drama. But her heart was in Africa, where her parents, Zimbabwean activists, were born. She missed making a more meaningful impact and decided to join VSO (Volunteer Services Overseas), taking up a volunteer lecturing position at the University of Fort Hare.

Making the transition from London to the small, rural town of Alice in the Eastern Cape was not easy. “It’s a tiny town in the middle of nowhere – home of one of Africa’s greatest universities, one that has produced some of Africa’s finest leaders. That said, it was quite a shift from London life! It literally took me three months to acclimatise! Although the work was challenging, it was also deeply fulfilling.”Seeing the hunger for knowledge and the effect her teaching had, shaped much of her future outlook on business education. She went on to climb the corporate ladder in South Africa, working at KPMG and Executive Perspectives, among others. Her work increasingly took her towards leadership training and management knowledge sharing and these interests finally brought her to the Graduate School of Business.

Nkhata feels strongly about providing training to leaders in a specifically African context. “We are not in Europe or the US and we need to be developing African leaders and managers, helping them to ask, ‘How can I be a better leader in my context?’”

She believes the growth potential in Africa is huge and that the school has a responsibility to provide relevant and appropriate executive education – reading markets and creating the kind of courses that can help leaders make a difference to their communities. While the job is challenging – she has been through two restructuring exercises since she joined the business school – she is acutely aware of the responsibility that she has to develop people.

“As I get older I think a lot about where I come from and the fact that I am really only one generation away from extreme poverty. If I had been born to my father’s brother instead, I would have been raised in vastly different circumstances: a village with no access to electricity or running water. My father had the benefit of education; he went on to have tea with the queen! So the power of education is something I truly believe in.”

#1 Winter 2014

Ainslie lands top job at US business school

Some 25 years ago Andrew Ainslie was urged to pursue an academic career by UCT’s Graduate School of Business. He did … and in May he was named Dean of a top New York business school.

When the position of Dean of the Simon Business School at the University of Rochester opened up after a decade, the university launched an extensive nation-wide search across the campuses of the United States.

And the person they have appointed is Andrew Ainslie, a double alumnus of the University of Cape Town, who followed a BSc in Electrical Engineering and a decade-long stint in the South African corporate world with an MBA at the UCT Graduate School of Business. It was this postgraduate degree that he credits for sparking a passion for a datadriven approach to business and launching a 20-year academic career, which has culminated in the position of Dean of the Simon School.

“The Simon School has a great history. It was one of the founding schools to introduce the rigorous use of economics and statistics in business. It has an economic approach to business, which aligns exactly with my training and background,” said Ainslie.

Situated on the River Campus of Rochester, a top-tier research university in the northern reaches of New York State, the Simon School was recently rated among the top 10 in the world for finance and accounting by the Financial Times. Its MBA programme is ranked 29th in the US and 55th globally by the Financial Times.

One of Ainslie’s challenges is to bump up the school’s ranking. “Our first challenge is to re-engage the business community and to get recognition of the MBA programme’s value. We need to connect the school to the shift in business towards statistics and remind the community that the Simon School has always been about analytics.”

Ainslie will be leaving his post as associate dean on the full-time MBA programme at UCLA Anderson, a school that has increased its admissions by more than 60%, its placements by more than 20%, and re-engineered its MBA programme during a four-year tenure that Ainslie describes as “wonderful”.

Prior to that he had served a ten-year stint as assistant and then associate professor of marketing at UCLA, and four years as assistant professor of marketing at Cornell University’s Johnson Graduate School of Management, one of New York’s ivy league campuses. This followed a PhD in marketing and statistics from Chicago Booth in 1998. And it all began with a paper at the UCT GSB in 1990 on direct marketing, which looked at statistics around the retention of members of an insurance firm, and a faculty member by the name of Leyland Pitt (now professor of marketing at the Beedie School of Business in Vancouver), who urged Ainslie to pursue an academic career.

It’s an acknowledgement that Ainslie made in his acceptance speech. On holiday in Mexico when he heard of his appointment, Ainslie flew via Los Angeles on the west coast to collect a suit before jetting to the east coast to accept his position, which he did with vigorous nods to Pitt and the “role he has played as mentor up until this day.”

Ainslie describes his time at the school and the faculty of the GSB as “incredible,” and makes special mention, in addition to Pitt, of the late Kate Jowell and Mike Paige (now dean of the School of Business at Endiocott College, in Beverly Massachusetts). “If it weren’t for such personal relationships during and after my time at the GSB, I wouldn’t be here. The GSB is a place where students and faculty genuinely make friends. I studied my MBA part time, as I was at Hewlett Packard at the time, and I remember the strong messaging of business being entirely about leadership, and being able to apply what I’d learned in the evening by critiquing the leadership around me in the day.”

Ainslie says he looks forward to linking with the GSB and urges students to remember its global level and the international network it taps into.

#1 Winter 2014

Representing young leaders in Africa and beyond

GSB alumnus takes up key role as the new deputy CEO of the Botswana Stock Exchange and wants to contribute to developing the BSE to become one of the leading stock exchanges in Africa and beyond.

At just 38, the new deputy CEO of the Botswana Stock Exchange (BSE) is anything but wet behind the ears. A recent MBA graduate of the UCT Graduate School of Business, Thapelo Tsheole represents a new wave of younger leaders determined to make a difference on the African continent.

“I will not only work to improve my worth, but to prove that young people can meaningfully contribute to the development of the economy,” Tsheole says.

Tsheole, who took up his new role in February 2014, says he plans to contribute positively to the growth of the BSE and its positioning as one of the leading stock exchanges in Africa.

Working alongside current CEO, Hiran Mendis, he will focus on growing the size of the BSE and other strategic initiatives, which include influencing the competitive advantages offered by Botswana.

Tsheole says Botswana is a well managed country and should take advantage of the opportunities provided by its comparative advantages, including easy investment and being the country with the highest credit rating in Africa.

The spirit of innovation, entrepreneurship and a values-based approach – all elements emphasised by the GSB that he says he absorbed during his time at the school – will be infused into his new role.

Tsheole prides himself in his talents and the courage to express himself, as well as the ability to positively impact on his employees.

“The GSB taught me several key values: to be passionate, to have a spirit of innovation, entrepreneurship and personal growth, and to take pride in what I do,” he says.

Walter Baets, director of UCT GSB says the school is pleased by Tsheole’s appointment.

“It is always great when we hear of the achievements of our alumni. And this is a fantastic one,” he says.

Tsheole’s new appointment will give him the opportunity to strengthen the economic development of Botswana, Baets says.

Before joining the BSE, Tsheole worked as settlement supervisor and dealer in the Bank of Botswana’s Financial Market Department and researcher at the Directorate on Corruption and Economic Crime (DCEC).

Since joining the BSE in 2007, Tsheole has played a key role in developing Botswana’s capital market development policy initiatives, introducing three bond indices and listing the exchange trade fund on the BSE.

He hopes to build on this work going forward, adding that, as a result of his time at the GSB, he has become a far more passionate and inclusive individual, and will aim to create a passionate team in whatever he does.

“I have learnt to a large degree that the need to facilitate growth, innovation and different ideas must be accommodated,” he says.