Around the world, there are increasing calls for purpose beyond profit.
In South Africa, these calls are especially loud – and they are related to the President’s idea of a social contract between business, government, and labour. But in the face of tough market pressures and relentless shareholder demands, how is it really achievable? How do companies go about crafting and implementing value-based strategies, embedding ethics and social impact into their core business models?
This was the topic of a recent GIBS Forum, the timing of which couldn’t have been more pertinent. The panel of speakers at the Forum included Andile Sangqu (Executive Head, Anglo American in South Africa), Sabine Dall’Omo (CEO, Siemens Africa), Barry Swartzberg (co-founder of Discovery and CEO of the Vitality Group), and Martin Kingston (Executive Chairman of Rothschild and CO SA, Vice President of BUSA (Business Unity South Africa), and a board member of SAA).
The panel debated whether an organisation can truly deliver financial performance and outcomes while also demonstrating tangible results on how they’ve contributed to society, reduced unemployment or impacted environmental challenges in a measurable and positive way. The underlying sentiment of all speakers was that organisations need to build inclusive business models that are more purpose driven, not just compliance tick box mentality; whereby a mind-set change of all employees, not just leadership, results in a cultural, natural order of a values-based strategy execution.
The Siemens panel member shared with the audience how, when Siemens was faced with alleged bribery claims and extensive charges, compliance and governance implementation became highly rules-based with strict controls being imposed and reviewed regularly. However, with time and employee buy-in, the organisation has evolved into a more value-based environment. Siemens executives have publicly noted: “Compliance is not a program, but the foundation of sustainable business.” It was acknowledged that this shift doesn’t happen overnight – it takes time, commitment and patience with all stakeholders.
Discovery’s co-founder and CEO of the Vitality Group noted that the notion of shared value is driven on the premise of Michael Porter’s principles; that organisations need to fundamentally rethink the way they “make money” and that profit and purpose can co-exist in an environment in which all stakeholders benefit. According to Discovery: “The vision was to create a different business that would be guided by a clear core purpose – that of making people healthier and enhancing and protecting their lives.” This is their Massive Transformative Purpose.
But how does an economy which is stagnant and struggling to attract foreign investment enable this? How can improved returns on economic, commercial, political and social levels be realised? The panel noted that economic inclusivity ultimately has to underpin social stability.
Innovation and solving complex societal and business problems can’t be halted during an economic downturn the likes of which South Africa is currently experiencing. Speakers encouraged embedding innovation into the culture of organisations, whilst managing a healthy balance of “digital everything” with being cautious not to dehumanise the operating model – constantly checking in that society and employees see the relevance of digital technologies and innovations.
Ensuring that a values-based strategy not only looks good on paper rests on an organisation’s vision being clear, understood and consistently communicated; that credibility and trust in the leadership team is established where tough decisions demonstrate this but still motivate the team; and that impacted stakeholders are clearly understood, with each impact documented, measured and monitored.
Ultimately a values-based strategy requires the entire ecosystem of an organisation – including leaders, employees, partners, suppliers, and innovators – to realise that each of us is a partner in society, and that as we prosper, we can uplift the entire ecosystem. The panel noted that we are massively underperforming relative to the potential and that there’s still much work to be done.