Re-imagining Business

A contract that could change the game

Last year, Business Leadership South Africa signed a Contract with South Africa, aimed at outlining its members’ commitment to “creating a South Africa of increasing prosperity for all".1 Potentially, this contract presents an opportunity to fundamentally reshape South African business’ relationship with society - but what would that take?

A Contract with South Africa

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In the past year, South African business leaders have taken an increasingly active role in seeking to steer South Africa’s future. A recent manifestation of this is the Contract with South Africa signed by Business Leadership South Africa (BLSA) in August 2017. In this contract, BLSA inter alia committed to creating jobs by growing the economy, encouraging and empowering senior black leadership, investing in South Africans through training a highly-skilled workforce, investing in communities to ensure that they thrive and prosper and supporting small businesses. However, some have argued that the contract is long on words and short on concrete, measurable actions to take these commitments forward.


3 things required to turn commitment to practice

From Commitment to Practice

Turning these commitments into practice will require 3 things: Clarity of focus, planning from the outside-in and the development of new types of partnerships.

With regards to clarity of focus, in the 2015/16 financial year, South African business spent around R8.6bn2 on corporate social investment. Whilst education continued to get the largest slice at 48% of CSI expenditure, overall expenditure ranged over a wide variety of areas3. Therefore, achieving the developmental goals referred to in the contract will require a greater clarity of purpose regarding the sectors business prioritizes.

It will also require greater clarity regarding what programmes to prioritize within sectors. For example, whilst the movements were relatively marginal, 2016 did see a decrease in spending on early childhood development and basic education and an increase in spending on intermediate and higher education4. Whilst improving the relevance and quality of intermediate and higher education is very important, the major contributor to increasing levels of unemployment is the extremely high drop-out rates in grades 9 and 10 due to poor quality early childhood development and basic education. Hence, if business wants to significantly boost skills development and job creation, greater emphasis will need to put on developing innovative solutions to address upstream value chain constraints.

Studies also suggest that a number of businesses still approach CSI, enterprise and supplier development with a compliance mindset where the focus is on meeting regulatory investment thresholds rather than developmental outcomes. Thus, success is often measured in terms of inputs - e.g. money spent - rather than outcomes and impact. Hence, if business wants to increase its developmental reach and impact, it will need to move from a focus on compliance to a focus on planning from the outside-in.

Firstly, this involves gaining a deep understanding of the problem one is seeking to solve and its systemic drivers. Too often we focus on the symptoms of a problem rather than its underlying causes and we often look at problems from a narrow, single perspective. Inevitably, this leads to ‘solutions’ that have little or no impact due to the fact that they are designed around a poor understanding of the problem. Driving social impact means spending more time upfront understanding the problem system one aims to intervene in as well as actively seeking out a variety of perspectives, facilitating a wider understanding of the problem as well as better insight into the reasons for the behavior of different role-players within the problem system.

Second, planning from the outside in means identifying social impact based measures of success (rather than financial spend), working backwards along the impact-input continuum in the design of programmatic interventions and consistently measuring results across the input-impact value chain. Whilst many businesses claim to rigorously measure the impact of their interventions, experience suggests that this is not the case. Furthermore, many businesses only undertake monitoring and evaluation activities on certain parts of the value chain rather than the full continuum e.g. a recent study revealed that whilst 89% of respondents conducted M&E on programme inputs, only 62% conducted M&E on programme impacts5.

Lastly, planning from the outside in means a strategic shift from seeing CSI as being at the margins of the business to placing shared value and social impact objectives at the centre of business strategy. Whilst a number of South African businesses have already embarked on this path, this number is still relatively small. Placing social impact at the heart of business strategy will either lead to businesses repurposing some of their existing capabilities for social objectives - e.g. using distribution networks to deliver critical medicines to remote rural areas – or developing new products and services specifically designed to address the objectives of the contract. Ideally, this would also result in corporate South Africa using its power and reach to actively build social innovation markets - i.e. markets in which communities can access affordable, quality services without being solely dependent on the state.

Such an approach would involve working in partnership with social entrepreneurs, impact investors and intermediaries in key development sectors. To do this successfully, business would have to enhance its ability to build and maintain new types of partnerships.


Faith to invest when all are jumping ship

Since 1994, South Africa has developed a long tradition of multi-stakeholder partnerships. However, these partnerships have often not delivered the anticipated results. Part of the problem is that these partnerships have largely focused on interest-based negotiations, driving agreement around the lowest common denominator rather than bringing about real step changes. Another challenge is that these partnerships are often structured around people who should be in the room rather than people who genuinely want to be in the room.

If business wants to significantly boost its development impact, it needs to shift from a focus on interest-based engagements to building value-based partnerships. Such partnerships are centred around people who share the same values and broad objectives. This means moving away from coalitions of necessity to forming coalitions of the willing i.e. people who are willing to work together to develop and implement a common agenda to drive collective impact.

Driving collective impact involves fostering co-accountability for the achievement of common objectives based on agreement regarding how success will be measured and reported upon by all parties as well as agreement on the mutually reinforcing initiatives required to achieve agreed goals6. This also requires new styles of leadership – ones that are not based on position-power but the ability to influence and foster generative conversations amongst peers.

Going Against the Grain

Doing all of the above will require a significant amount of effort, investment and faith. Fulfilling its contract to South Africa will require business to go against the grain in terms of standard responses to political and economic uncertainty. It will have to stay the course when all others are jumping ship, it will have to increase its investment instead of shouting "hold!", and it will have to be the light rather than waiting for others to shine the way. This is the time for South African business to throw away old practices and paradigms and chart a new course towards our common prosperity. This is the time to truly believe.


SI Global is a collaborative intermediary organization dedicated to scaling up social innovation in Africa and other emerging markets.
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END NOTES

  1. BLSA (2017). Our Contract with South Africa. Retrieved from https://www.blsa.org.za/business-believes/our-contract-with-south-africa/. p1.
  2. Trialogue (2016). The Trialogue CSI Handbook. p30.
  3. Trialogue (2016). The Trialogue CSI Handbook. p73.
  4. Trialogue (2016). The Trialogue CSI Handbook. p74.
  5. Trialogue (2016). The Trialogue CSI Handbook. p44.
  6. John Kania & Mark Kramer (2011). Collective Impact. Stanford Social Innovation Review. Winter. pp39 - 40.