The world is changing and unless companies change their ‘purpose’ to something other than executive remuneration and stockholder returns, they will lose their licence to operate from the stakeholders that actually matter, writes JESSICA YELLIN, founder of It’s a Shovel.
South Africa is well behind the curve, but the good news (or bad, depending on where you sit on the issue!) is that the money is moving into ESG (Environmental, Social, Governance) and the recent Steinhoff disaster has proved to the local market that pesky governance and compliance issues are important!
So, like it or not, it’s time to get with the programme. Here are my top ten things every SA CEO needs to know this year:
1. Leaders with a sense of purpose are more successful
For your company to embrace #ReputationWithPurpose and reap the benefits, you need Purpose! And it’s not just good for the company, it’s good for you too.
New research has shown that actually having a sense of purpose, not a specific set of characteristics, is the key to successful leadership. However, according to a report in HBR, less than 20% of leaders know what their individual purpose is and even less can actually spell it out.
“The process of articulating your purpose and finding the courage to live it—what we call purpose to impact—is the single most important developmental task you can undertake as a leader.”
Finding your purpose and / or properly interrogating that your stated purpose is ‘real’ is a process, but before you rush off to your closest quack coach consider this: if you’re clever enough to be ‘at’ or ‘close to’ the top of the pile, you’re probably clever enough to figure it out yourself! It just needs time, brutally honest introspection, curiosity and an open mind.
2. Hurry up and find your purpose because the CEO Activism trend isn’t going away
South African CEOs have since 1994 become conspicuously silent beyond a couple lame attempts via Business Leadership SA. And as they say, silence implies consent so no wonder that memes like #whitemonopolycapital get as much traction as they do!
Internationally, the Activist CEOs are not only shaping policy but also driving revenues for their businesses because, surprise surprise, consumers respect leaders and by extension their organisations, for being brave, taking a stand and making change happen!
In his piece, The New Politics of Business, Doug Randall, CEO of The Protagonist, sums it up best: “The days of businesses operating in a silo are over. Consumers have grown to expect that the brands they interact with participate in conversations happening in the world at large. Brands are powerful, and they can significantly influence the narratives they engage with. Getting involved in controversial narratives makes brands, and the communities around them, stronger. It’s just imperative you understand how those narratives may impact your organization, for better or for worse and be prepared to answer for them.”
It’s time to find your voice and weigh in on the many, many, many issues that confront our country… but of course this implies that you have to be doing something too!
3. All of the above is the Millennials’ fault, but best you learn to love them because they going to make or break you!
So much has been written about the Millennials that I’m not going to bore you with the demographics or even the psychographics. Their impact is now in the numbers! According to The Reputation Institute, Millennials now represent 27% of global spending power (and increasing daily!), 15% of them define themselves as Activists (#ahem) and 85% of them use their phone more than 40x per day (although I bet your usage is similar!).
Even more relevant here is that reputation is more important to them than previous generations! Top reputation ranking companies score 2.5bps higher amongst Millennials.
Translate this into bottom line: 1 bps = 2.6% increase in market cap… you do the maths on your own business… Ka Ching, Ka Ching!
4. Sustainability is now an economic issue and not just a bunch of greenies
How much research do you need to see to prove the point that sustainable companies deliver better financial results? Well, my friends at Arabesque Asset Management have done the hard work for you and commissioned the University of Oxford to review 200 pieces of academic literature on the topic. Their report From Stockholder to Stakeholder makes for fascinating reading, but I know you don’t have the time, so here are the highlights:
a. Sustainability is one of the most significant trends in financial markets for decades.
b. 90% of the studies on the cost of capital show that sound sustainability standards lower the cost of capital of companies.
c. 88% of the research shows that solid ESG practices result in better operational performance of firms.
d. 80% of the studies show that stock price performance of companies is positively influenced by good sustainability practices.
e. Based on the economic impact, it is in the best interest of investors and corporate managers to incorporate sustainability considerations into their decision-making processes.
f. Active ownership allows investors to influence corporate behaviour and benefit from improvements in sustainable business practices.
g. The future of sustainable investing is likely to be active ownership by multiple stakeholder groups including investors and consumers.
Still not convinced? Well then I suggest you cash out those stock options and go far, far away!
5. A poster in the toilet cubicles is not going to turn your business into a sustainability-driven, purpose-led success story.
Once upon a time, internal communications consisted of your PA putting together a weekly company newsletter full of clip art and comic sans. Most companies have moved past this, but still the internal comms function is generally the “Cinderella” of the Communications Team with the sexier corporate communications and marketing sisters getting the glory and budgets.
But there is now too much at stake. Make sure your internal communications professionals fully understand your business and objectives; can pick up and respond to the nuances within the business; and can deliver sound, strategic and creative internal communications that is able to shape the culture you need to get ahead.
I suggest you point them to this fantastic resource: Disrupting the Function of IC
6. Sadly, however, great internal comms isn’t good enough either! You need HR and IC to work together to deliver Employee Engagement 2.0
Employee Engagement… the Holy Grail! How much kak have you read on the topic? How many surveys have you done? How many ‘ interventions’ have you wasted money on?
Everything you’ve seen or heard to date is a load of bull.
There’s a simple formula*: Employees must feel “in flow” in their jobs + they must have a deliberate career path + they must feel attached to at least one other person in the organisation + they must feel like a mentor / ambassador + you need to have active, functional social networks through which relevant, honest, timely communication must flow.
Only when you have personally fulfilled, connected employees can they function together to deliver the ‘employee engagement’ that you dream of. Because you really do need it, especially if you are going to be steering a new course!
* I developed this with a former colleague who is way cleverer than me and you’re welcome to chat to her if you need some help in this space.
7. Has anybody actually read King Code IV?
No, it’s not a new Dan Brown novel.
Yes, it applies to you too!
Nothing like a good corporate scandal to wake everyone up! We should actually be thanking Mr Jooste. Well, maybe I’ll consider it if my Pension Fund recovers.
Point is, there were blatant lapses in governance at Steinhoff for years and no one raised an eyebrow because they were all too busy counting the cash! Well, the chickens have now come home to roost and going forward, best you are able to recite King IV in your sleep. I can’t tell you how many listed companies’ websites still reference King III… hello!!! And as for unlisted companies… whatever!!!
I’m sure you have read it, but just in case you need a refresher, here you go: http://c.ymcdn.com/sites/www.iodsa.co.za/resource/resmgr/king_iv/King_IV_Report/IoDSA_King_IV_Report_-_WebVe.pdf
8. A big, fat corporate burp is sometimes exactly what is required
To my horror when I shared my #ReputationWithPurpose deck with someone recently he said it looks like “corporate indigestion”. Eventually I got over myself, but he makes a valid point. It is a lot to swallow… but consider it an Eno’s: fizzes in your nose going down but makes everything better by releasing a big, fat burp!
In fact, it’s nowhere near as bad as Eno’s. You don’t need to implement the whole lot at once, it’s designed as a process. Baby steps will get you there.
But it will probably result in the expulsion of hot air. Maybe that means you need to change some people in your organisation? More than likely you will need to change the culture. And you will certainly need to get rid of waste. All of these are good things. Don’t be scared!
9. You need to learn to manage your shareholders
I’ve read the most interesting articles recently on Agency Theory and the implications it has for corporate governance. Once again the Harvard Business Review explains it way better than I ever could so please take out half an hour to read the whole article.
The basic premise is that the traditional agency theory model is flawed. Shareholders do not ‘own’ the company and therefore shouldn’t direct what the company does. It argues for a company centric approach in which the executive team and Board are responsible for creating value for all stakeholders. The only problem with this view is that is depends on competent and ethical executives and we have seen clearly that this is not always in place.
I believe we are moving into a time of increased shareholder activism which sounds like a good thing but isn’t always. Fund managers are not always right and they also have bonus targets to meet.
So I guess the only adult thing to do is to engage actively with your shareholders, within the bounds of the applicable regulations, and if they don’t get your #ReputationWithPurpose vision then do as Howard Schultz of Starbucks recently did and tell you shareholders to invest elsewhere .
10. If it’s not fun anymore, quit
Sustainability and #ReputationWithPurpose refers to you too… your life needs to be sustainable and it must have purpose (as per point 1). If what you are doing isn’t delivering this, then either change it or leave. I did, and I’ve not looked back!
AppDate: DStv jumps on music bandwagon
In this week’s AppDate, SEAN BACHER highlights DStv’s JOOX, Cisco’s Security Connector, Diski Skills, Namola and Exhibid.
DStv is now offering JOOX, a music streaming service owned by China’s Tencent, to DStv Premium, Compact Plus and Compact customers.
In addition to streaming local and international artists, JOOX allows one to switch to karaoke mode and learn the lyrics as well as create and share playlists. Users can add up to four friends or family to the service free of charge.
DStv Family, Access and EasyView customers can also log in to the free JOOX service directly through JOOX App, but will be unable to add additional friends and won’t be able to listen to add-free music.
Platform: Access the JOOX service directly from the services menu on DStv or download the JOOX app for an iOS or Android phone.
Expect to pay: A free download.
Stockists: Visit the store linked to your device.
Cisco Security Connector
With all the malware, viruses and trojans doing the rounds, it is difficult for users and enterprises to ensure that they don’t become targets. Cisco, in collaboration with Apple, has brought out its Cisco Security Connector to protect users. The app is designed to give enterprises and users overall visibility and control over their network activity on iOS devices. It does this by ensuring compliance of mobile users and their enterprise-owned iOS devices during incident investigations, by identifying what happened, who it affected, and the risk of the exposure. It also protects iPhone and iPad users from accessing malicious sites on the Internet, whether on the corporate network, public Wi-Fi, or cellular networks. In turn, it prevents any viruses from entering a company’s network.
Platform: iPhones and iPads running iOS 11.3 or later
Expect to pay: A free download
Stockists: Visit the Apple App Store for downloading instructions.
The Goethe-Institut, in co-operation with augmented reality specialists Something Else Design Agency, has created a new card game which celebrates South African freestyle football culture, and brings it alive through augmented reality. Diski Skills is quick card game, set in a South African street football scenario, showing popular tricks such as the Shibobo, Tsamaya or Scara Turn. Each trick is rated in categories of attack, defence and swag – one wins the game by challenging an opponent strategically with the trick at hand. Through augmented reality, the cards come alive. Move a smartphone over a card and watch as the trick appears on the screen in a slow motion video. An educational value is added as players can study the tricks and learn more about the idea behind it.
The game will be launched on 27 October 2018 at the Goethe-Institut.
For more information visit: www.goethe.de
With recent news of kidnappings on the rise, a lot more thought is going into keeping children safe. Would your child know what to do in an emergency? Have you actually asked them?
Namola, supported by Dialdirect Insurance, is a free mobile safety app. Namola’s simple interface makes it an ideal way for children to learn how to get help in an emergency. All they need to do is activate the app and push a button to get help that they need, even when their parents are not around.
Parents need to install the app on their child’s phone, hold down the request assistance button, program emergency numbers that will automatically be dialled when the emergency button is pushed, and teach their children how and when to use the app.
Platform: Android and iOS
Expect to pay: A free download.
Stockists: Visit the store linked to your device.
Exhibid could be thought of as Tinder, but for for art lovers. The interface looks very similar to the popular mobile dating app, in that users swipe left for a painting that doesn’t appeal to them, or swipe right for something they like. Once an art piece is liked by swiping right, one can start bidding or make an offer on it. The bid is automatically sent to the artist. Should he or she accept the offer, the buyer makes a payment through the app’s secure payment gateway and the two are put in contact to make arrangements for delivery.
Platform: Android and iOS
Expect to pay: A free download.
Stockists: Visit the store linked to your device.
New kind of business school
At a recent meeting, ALLON RAIZ, founder and CEO of Raizcorp, realised that in order for today’s youth to become entrepreneurs, teachers, the curriculum and the parents need continually expose them to entrepreneurial thinking from a young age.
Several years ago, I found myself in a meeting with my business partner and two of my staff members. In front of us was a client who was sharing some of the frustrations in his business. At the end of the meeting, my partner and I were extremely excited about the prospect of two massive opportunities we had both independently identified while listening to the client. My two staff members, on the other hand, completely missed them. This led me to wonder what it was in my own and my partner’s backgrounds that allowed us to so easily spot opportunities while my two staff members remained oblivious … I realised that the difference was that my partner and I both had an early exposure to entrepreneurship while they didn’t.
Not long afterwards, I was delivering a lecture about how Raizcorp grows and develops small businesses at Oxford University’s Said Business School in my role as their Entrepreneur-in-Residence. I mentioned the above incident and spoke about my intention of going into children’s education with a view to providing an entrepreneurial perspective.
One of the professors in attendance asked me if I’d ever heard of a piece of research by Henrich R Greve called Who wants to be an entrepreneur? The deviant roots of entrepreneurship. It’s a pretty unfortunate title but a fascinating piece of research nonetheless. It highlights how certain contexts in childhood result in a much a higher probability of becoming an entrepreneur. For example, kids who participate in solo sports such as tennis or athletics are more likely to become entrepreneurs than children who play team sports like soccer and cricket. Conversely, your mother’s participation in the parent-teacher association has a negative correlation to you becoming an entrepreneur. I spent the rest of the afternoon in the professor’s office discussing other research papers that unequivocally proved that context during your childhood has a massive influence on whether or not you will follow the entrepreneurial route.
Another member of the lecture audience was a double-PhD from the USA who was completing her MBA at Oxford. After the lecture, she approached me and volunteered to help build a framework to incorporate entrepreneurship in the school curriculum without interfering with the formal requirements of the CAPS curriculum.
She spent nine months in South Africa working with me to build out a practical framework. The next phase of the plan was to find the right school at which to embark upon this journey. In December 2015, Raizcorp purchased Radley Private School and we began our entrepreneurial education adventure in earnest in 2016.
At the centre of the Radley philosophy is that the school (the physical building), the teachers, the curriculum and the parents are the “marinade” in which the kids need to soak in order to be continuously exposed to entrepreneurial thinking from a young age. The aim was that if, in future, the kids found themselves sitting in a boardroom with me and my partner, they too would be able to identify the opportunities that we did.
A big shift this year has been the launch of our Entrepreneurial Educator Guide (EEG) programme where we have been training our Radley teachers (whom we call guides) to understand entrepreneurship, business language, business concepts, financial documents and the like. (The EEG training makes use of Raizcorp’s internationally accredited entrepreneurial learning and guiding methodologies.) We have also employed a full-time staff member to ensure that these concepts are imbedded into all lesson plans and classroom activities.
Through my network at Raizcorp, I have been pleasantly surprised by the massive support we’re receiving from prominent entrepreneurs and businesses who want to participate in our Radley Exposure programme, where we take our kids of all ages on visits to different types of businesses so they can understand the difference between retail, wholesale, manufacturing, logistics and so on. Prominent businesspeople have put up their hands to come to the school and tell their stories of hard work, resilience and perseverance. This ties in beautifully with the 17 entrepreneurial concepts that we are instilling into our Radley learners (such as opposite eyes, lateral thinking and opposable mind), while never compromising on our quality academic offering.
As parents, we’ve all heard the terrible statistics about the probability of our kids finding jobs in the future. At Radley, we’re working hard to ensure that our kids have a legitimate and lucrative alternative to finding traditional employment and that is to become an entrepreneur. Radley is all about producing job creators and not job seekers!
To enrol your child or find out more about the school, please visit www.radley.co.za.