Business and business thinking can get South Africa working

by Walter Baets: Director of the University of Cape Town Graduate School of Business

South Africa is a nation that has defied the odds many times. From its peaceful transition to democracy in 1994 to its hosting of a hugely successful world cup in 2010, the country has shown that it can shake off misfortune and deliver above expectation.

Which is just as well, as it is now facing one of its greatest challenges – rising unemployment in a global context that is uncertain at best. Richard Pike, CEO of Adcorp, advised during a recent presentation at the University of Cape Town Graduate School of Business that unemployment in South Africa is currently at 37% (up from 13% in 1994) and is the most pressing socioeconomic problem facing the country.

For many of South Africa’s youth, the promise of the new democracy has not delivered. Seventy-four percent of the potentially economically active population under 24 are not able to find employment and face a life of continued poverty and despair with all the associated social ills that this brings (crime, alcohol and drug abuse, and political instability).

Unfortunately, more often than not, the discourse in South Africa around this issue is about what is not there and who is not delivering. In short, the focus is on what is wrong and not what is right or even what could be.

Rather than being trapped in a paradigm of blame and entitlement, it is up to all who call South Africa home to shift the way we think about these issues and to tap into some of the magic of 1994 and 2010 to find a way out of this crisis.

As industrialist Henry Kaiser famously said: a problem is just an opportunity in work attire. Could it be that often things are seen too much as a problem rather than as an opportunity to explore new ways of doing things?

In reframing the way we think about unemployment and other social problems we should take a leaf out of social innovator, activist, and author, Michael Norton’s book. Norton, Director of the Centre for Innovation in Voluntary Action in the UK and author of the book 365 Ways to Change the World, declares that there are more opportunities in solving the world’s problems than there are in meeting existing consumer demands. And he has the research to back up this claim.

This means that far from being a corporate social responsibility investment, something that is done as an after-thought or a nice-to-have, taking on unemployment and social challenges could be a massive business opportunity. It’s called social entrepreneurship and it’s a concept that is gaining credibility around the world: entrepreneurship with a social purpose that adheres to the logic of business that it is based on the working capital cycle (i.e. some cash is put in, and via the production process, some more cash is made).

Norton has identified three specific stages that are necessary in successfully tackling seemingly insurmountable social problems:

  1. Social invention – generating innovative ideas in response to problems and needs;
  2. Social entrepreneurship – turning ideas into working solutions; and
  3. Social enterprise – creating enterprising solutions that enable the projects to grow and scale up.

First, one needs a good idea. A good idea addresses a need or solves a problem such as poverty, inequality, waste, pollution, the depletion of natural resources, clean water, global warming, housing, health, and education. And then it needs to be made sustainable and efficient; there needs to be action, a person to take it forward, resources, expertise, and support. And it has to have the potential to transform the way things are done.

“There’s never any use in running a business badly, specially a business with a social purpose,” says Norton, “in fact a social entrepreneur should always be thinking of up-scaling and replicating his ideas, trying for world domination.”

In his explorations and research Norton has come across amazing people and organisations in India and South Africa, who are proving this principle. For example, John Rendell, CEO of Peas (Promoting Equality in African Schools), is delivering equal access to affordable, quality secondary education across Africa; the Efafeni Project in Nyanga township creates both a haven for HIV-infected and vulnerable children and promotes skills development through the ‘fit for life, fit for work’ initiative; Vijaya Pastala and her Under the Mango Tree project aims to put 10 000 beehives on 10 000 farms in India; and Ashok Rathod of OSCAR, is developing an Indian football league that also promotes education and learning.

Norton’s research is supported by the findings of the 2009 Global Entrepreneurship Monitor (GEM) research, carried out annually by the UCT Centre for Innovation and Entrepreneurship at the GSB, which offered examples of how social entrepreneurship can, and frequently does, create better results than charity.

The research explored the example of Australian company Cool nrg – a profit-based business aimed at promoting the reduction of carbon emissions. The director of the company was formerly the CEO of a charity whose primary purpose was to create employment for the poor and disadvantaged, but who admits that, within two years of setting up a social enterprise, his efforts had created more jobs than five years of charity work had.

His conclusion is that there is value in someone “locating the interface between a social goal and building a consumer base for the service that delivers that goal” rather than relying on philanthropic donations or state interventions to do the job.

Clearly business schools have a key role to play in promoting and seeking out such interfaces. In a world where, as everyone knows, change is the only constant, this ability to think on your feet – using both your head and your heart – is crucial to success. There has never been a better time to put values and stakeholders at the centre of business. With a little bit of creativity and commitment we can use the phenomenal power of business and business thinking to get South Africa working.

Useful resources:
University of Cape Town Graduate School of Business
UCT GSB is internationally renowned as one of a few business schools in Africa with the prestigious triple-crown accreditation with endorsements from EQUIS, AACSB and AMBA.
University of Cape Town Graduate School of Business, Executive Education
Executive Education at the UCT Graduate School of Business is dedicated to growing the leadership backbone in organisations and individuals and inspiring a new generation of leaders to engage with the challenges of the African continent in a hyper-connected and globalised world.
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