Entrepreneurs are inherently problem solvers. We identify unmet needs and try to solve them by creating businesses to meet these needs. This may be why as a third generation business owner in my family, creating shared value resonates so strongly with my entrepreneurial journey.
Having cut my business teeth as a teen in the southern Johannesburg township of Eldorado Park, spending weekends and school holidays working in my family’s businesses, I learnt quickly the trials and triumphs of business ownership, particularly in a resource-scarce environment.
The entrepreneurial journey is often fraught with the hurdles of changing market conditions, resource constraints, business growth and team building. As the custodians of the business vision, we are required to be resilient in the face of obstacles and shortcomings.
Purpose will keep you and your business going
One of the most important tools I’ve come to learn in meeting such challenges is that of purpose. For many in business this purpose is personal, a growing family, a generational legacy or even survival.
As citizens of a country with soaring unemployment, deepening poverty and inequality and poor access to basic services for much of society’s most vulnerable, it’s incumbent on businesses to ensure that we put at the centre of our commercial gain a sense of societal purpose.
CSR is out; Creating Shared Value is the future of business
For too long now, business has been seen as a major cause of social, environmental and economic problems, generating income at the expense of society. More and more, business’s relationship with broader society has become vital in determining its value.
What is required is a rethinking of how we do business, and shifting to the new model of profit with purpose. We must internalise and adjust our approach to value creation in order to stay ahead and thrive or be relegated to the business strategy history books.
The Corporate Social Responsibility Model (CSR) has been a means thus far for business to address these issues and has been important for reputation management, however as peripheral activities limited by budget these falter in generating revenue for business.
Make a profit while addressing social and environmental issues
An evolution of the CSR model is to be found in Creating Shared Value (CSV), a business strategy that provides a means for companies to make profit in a way that addresses social and environmental issues.
Business has moved from philanthropy, through responsibility, to driving growth by creating new products and markets through CSV. This vital shift in business thinking and its implementation is an essential strategy for entrepreneurs to future-proof business for long-term gain.
By leveraging resources, market access, scale and their capacity for innovation, businesses can advance and accelerate development while generating commercial returns.
Shared Value in practice
So, how can your business create Shared Value? It starts with an in-depth business analysis — and the commitment to a shift in strategic approach. Each business is different, and has the opportunity to engage with CSV in a different way.
Harvard Business School Professor Michael Porter, considered the father of Shared Value, shares practical insights on how businesses that intend to transition to Shared Value can do so.
1.Find a social or environmental cause
CSV is a business strategy that provides identifiable economic benefit to business while having a measurable impact on social or environmental issues. Identify a systemic social or environmental issue such as youth unemployment, access to healthcare or emissions reduction, which will serve at the core of your business strategy and inform all business activities.
A social entrepreneurship-based company can effectively utilise the UN Sustainable Development Goals as a basis from which to identify key areas of focus.
2. Innovate new products, services and markets
Create marketable new products and services that address this societal need. This can be done by gaining deeper insights through collaboration with stakeholders such as staff, customers and the communities in which your business operates. Open untapped markets by reimagining and, if necessary, redesigning existing products to cater to unmet needs.
As an entrepreneur I am inspired by stories of social innovators such as Sizwe Nzima, a 24-year-old from Khayelitsha, Western Cape and the founder of Iyeza Express Medicine on Wheels, a service that collects chronic medication from clinics and hospitals and delivers them to the sickly and elderly of the community. Sizwe is providing access to healthcare for users and simultaneously generating profit.
Another social ‘intrepreneurship’ story is that of Dr Gavin Armstrong of Lucky Iron Fish, who identified that nearly 3,5 billion people worldwide suffer from iron deficiency and innovated a solution in the form of a small iron fish that is placed inside a pot when cooking and has been shown to substantially reduce instances of iron deficiency and iron deficiency anemia. It’s a growing social enterprise working to improve the health of its users.
3. Redefine productivity in the value chain
Look inward and identify areas for improvement in internal operations and supplier relationships. The value chain includes everything from human resources to marketing to procurement and logistics. By reassessing the way your company does business, operations can be streamlined, suppliers can be empowered and costs saved.
4. Enable local cluster development
Create a conducive environment for optimal business operations to take place by addressing societal needs around the business. This also includes developing and empowering elements of the supply chain in order to encourage stability while benefitting the local community.
Nestlé, for example, has implemented a rural development strategy to support and empower the farmers on whom they rely for much of their raw material production. Having recognised that farmers earning a decent income and supported by a thriving community would produce more and better-quality produce, Nestlé has committed to working directly with farmers across the world, providing them with training and support and engaging with their communities.
This investment has resulted in higher yields of raw materials and a growing network of stable, productive suppliers.
The global shift towards Shared Value-driven companies operating in all fields and of all sizes is fast becoming a powerful movement. Business has the power to make positive change at scale, without compromising quality or revenue. CSV requires a commitment to making a core strategic shift to structuring operations around addressing societal and environmental needs, while maximising profitability. CSV is a new kind of capitalism, shifting the paradigm to profit with purpose. As entrepreneurs we must develop commercially competitive businesses that build our societies.
Less risk, more opportunity
Ryan Short, a partner at Genesis Analytics and a visiting lecturer at GIBS on its Creating Shared Value executive course, says Shared Value is a lens that companies should put over the whole business.
“Through Shared Value, companies are creating more products and accessing new markets that they haven’t thought of before. It’s changing the way we view and approach business.”
One key example of this philosophy and strategy in practice is Discovery’s Vitality programme. “Vitality is making people healthier and therefore serving a societal need, and it does it profitably,” says Short. “Discovery has found a way to twin social impact with profitable impact.”
Acclaimed business strategist Michael Porter makes his case for why businesses should be solving social needs: Because when business solves a problem, it makes a profit — which lets that solution grow.
FIND OUT MORE
If you’d like to understand more on Creating Shared Value and how it can work for your business, the 2017 Africa Shared Value Summit will be held at the Sandton Convention Centre on 25 and 26 May 2017.
Visit www.africasharedvaluesummit.com for more information
Taking Care Of Business
Do you want to grow your business in 2019? Bear these tips in mind.
SMEs are the lifeblood of the South African economy, accounting for approximately 29% of employment in the country and forming a critical pillar of the government’s 2030 National Development Plan. With funding scarce and the economy volatile, small businesses remain increasingly vulnerable to economic pressures, with many failing to last beyond the five-year mark.
Thanks to the abundance of new and affordable technology, bringing with it the potential for new industries and market gaps, there has never been a better time to conduct business without crippling costs. It is not all doom and gloom in the small business sector, despite findings in the 2018 SME Landscape Report that suggest that a meagre 6% of all start-ups have received government funding.
Do not be afraid to delegate
Many entrepreneurs are so passionate about their own undertakings that they are unable to simply let things go. Rather than empowering and enabling others to take responsibility, many Type A business leaders instead opt to do it all themselves – usually with disastrous consequences.
Learning to delegate is key to alleviating bottlenecking and freeing up capacity in your business, so make sure to utilise all your available resources if you want your enterprise to expand.
While billboards and TV ads are expensive, marketing a business can now be done quite cheaply, thanks to the abundance of relatively affordable digital channels. So while you might not be able to have your brand staring out at you from the pages of a glossy magazine just yet, digital channels like Facebook and Google now allow you to achieve the same audience reach for a fraction of the cost.
Offering the best service in town is one thing, but it is worth nothing if nobody knows about it. So make sure to pay close attention to your website and its search engine optimisation (SEO). By using the correct keywords and even putting a small investment into Google Adwords, you will ensure that people who are looking for what you offer are able to find you easily.
With over 50% of all web traffic in South Africa coming from mobile devices, businesses simply can’t afford not to take a mobile-first approach to business. If you are offering an online service, make sure it is optimised for a mobile experience and ensure that any communication touch-points – be they blogs, social media posts or online check-out pages – are designed with mobile in mind.
One of the key advantages SMEs have over their larger counterparts is their ability to be flexible. Without outdated systems and reams of red tape to wade through, small businesses are far better able to adapt to market conditions and revise their offerings based on consumer needs. So make sure to listen to your customers and be willing to accept that some of your great ideas simply are not feasible.
Your willingness to accept failures and move on, will ultimately be what gives you the edge over your competitors.
Plan your finances
Cashflow is king when it comes to entrepreneurship and many a micro enterprise has come undone thanks to their inability to manage it. As such, financial planning is a critical tool for any business, especially for those operating without significant investment capital. Understanding potential pitfalls and keeping tabs on your profit margins will help to ensure you keep your pricing realistic and enable you to avoid finding yourself in the red.
Operating in isolation can only get you so far, so it is important that you put yourself out there and make proactive attempts to connect with other like-minded businesses. By joining a business network or attending industry events, you will be able to arm yourself with useful contacts, handy insights and perhaps a few new clients in the process.
Remember that owning a business is like raising a child – it requires constant supervision, nurturing and care if it is to succeed to its utmost potential. So make sure to look after your business and one day it will end up looking after you.
MiWay is a licensed Short-term Insurer and Financial Services Provider (FSP. 33970).
How Taking Risks – And Failing – Can Lead To Business Success
Don’t let fear of failure stop you from taking the risks you need to, to carry your business forward. But as your business grows, you’ll have to re-evaluate what risks you can take.
Innovate, innovate, innovate. The war cry is so often repeated that it has become something of a bore. Yet, true innovation remains a rarity – and to our huge detriment. As South Africans, we seem to carry a deep shame associated with failure. Yet, facing the very real possibility of failure is the only arena in which a culture of innovation can take root.
The biggest business failure of my life was an investment into a software company that wrote a piece of software that was set to revolutionise the mobile landscape. It was going to be huge. It was going to take the world by storm. But unfortunately, we backed the wrong horse.
We developed the software for the Symbian platform because Nokia was way ahead of the pack. Nobody else even came close. But, given the fact that there’s a good chance you currently have an iPhone or Android device in your pocket right now, you know how that story ended. Nokia seemed untouchable, then almost collapsed. We lost a lot of money.
Get back up
But, we learnt valuable lessons from that. Of course, there’s the general lesson that everyone should take away from failure – to get up and try again. As General George Custer said, “It’s not how many times you get knocked down that count, it’s how many times you get back up.”
The other lesson was more specific to our business. In developing the software, we learnt a lot about different technology platforms and those lessons were invaluable as we took the next steps in Fedgroup. The same people who built that software helped in the initial stages of developing Azurite, which today is the backbone of our company’s entire operation.
Because we’d been involved so heavily in developing for mobility and the future, our minds were opened to what technology could do. It gave us the mindset to get where we are today.
Investing in education
It sounds like a terrible cliché, but there’s value in failure. Take the lessons you learn in failure – the genuine lessons – because even if you lose money, consider it school fees, and cheap at the price. Arguably, our failure was the “fees payable” that bought us our competitive edge.
In the United States, they are less afraid of failure. They wear their failures like a badge of honour. Elon Musk, for example, misses his targets, but he’s always pushing the boundaries. Recent (questionable) antics aside, Musk’s risk-taking drives innovation.
If people in an organisation are terrified of failure, they don’t try new things, they don’t innovate, they don’t move forward and they certainly don’t disrupt. Even though now, as the CEO of a large financial services company, I can’t afford to bet the whole business on a risky proposition, I still encourage risk-taking and a spirit of adventure – within reason.
Reckless vs reason
This is not to say that we can – or should – be reckless. There should be accountability, and the reasons for making the mistake should make sense. And, you shouldn’t make the same mistake twice. But if you take risks within those parameters, you’ve got a better chance of making a real difference in your organisation.
We have recently launched an app that is fairly disruptive, and as far as we can tell, the first of its kind in the world. Before we launched, we put our personal money behind the idea to test it. We had done our homework, but it was still a risk. If it hadn’t worked, we would have lost our personal money, but because we took that risk and proved it worked, we were able to launch it safely to the public one year later.
Parameters, limitations, and the ethics of risk
When you’re an entrepreneur, when you’re just starting out, you can bet the farm. You can take risks on new ventures and potentially build something out of nothing.
Once you’re an established organisation with staff and clients – and in our case, clients who have invested their pension with us – the scope of risk takes on a new set of parameters. When you are dealing with a client’s security, it is simply not acceptable to expose them to additional avoidable risk.
However, because risk taking is where the magic of innovation happens, encouraging a framework where creativity, experimentation, and risk is possible within your organisation, is critical. One of the ways to encourage this is to examine your attitude towards failure. Build an environment where failure is not taboo, but presents a strong learning opportunity, and ring fence those areas within the organisation which absolutely cannot be jeopardised. This is risk in a helmet – you might get a roasty, but you could win the race.
Proven Strategies To Grow Your Start-up On A Scale Following These Guidelines
The following strategies can help you make the start-up scalable and grow it to accommodate a larger demand.
Scalability and flexibility are important properties of any business. Let’s say you’ve managed to build a successful start-up. It’s profitable and promising, but you want it to become better. The scalability of a business involves its ability to adapt for bigger workloads without losing revenue.
Even if your business is currently small and doesn’t generate huge profits, scalability can help it turn into a large enterprise. The wrong approach to developing a start-up can deprive it of an opportunity to become better.
The following strategies can help you make the start-up scalable and grow it to accommodate a larger demand.
Scaling Vs Growth
Many companies make a mistake of thinking that scaling and growing a company is the same thing. In fact, growth involves increasing revenue or the size of the company (the number of employees, offices, clients).
Constant growth requires numerous resources and may not always lead to a proportional revenue increase. In many cases, the growing number of services or products needed to boost revenue involves high costs related to the growing number of employees and equipment.
On the other hand, scaling allows you to increase the revenue without the costs involved in growth. You can handle the extra load and boost your profits while keeping the costs to a minimum.
At some point, a successful start-up needs to make a choice between growing at a constant rate and switching to the scaling business model.
Even though a single clear method for scaling your business doesn’t exist, there are some guidelines you can follow.
1. Get Ready To Be Patient
Scaling is not a quick process so you have to be patient. The overnight success story is not about you. In fact, scaling too fast usually results in unfortunate failure.
Allow yourself to spend the time to understand who your ideal customers are and how you can solve their problems in a better manner. Make sure you understand how to be confident about the new volume of your work.
Do research to find out how you can find the right resources to achieve scaling rather than growth.
2. Choose The Right Software
The lack of time and team members is a common problem for a startup looking for scaling methods. That’s why they need to try and automate as many processes as possible. This can be done with the assistance of the right software.
- Trello – to simplify in-office and remote teamwork
- MailChimp – to improve marketing campaigns
- Brand24 – to get insights about your business
- Survicate – to collect customers’ feedback
- Voiptime – to increase connectivity.
3. Take Advantage of Outsourcing
Since you are hoping to limit the expenses while growing the revenue, you have to find ways to spend the revenue in the right manner. The biggest mistake made by business owners who think they are choosing scaling is hiring a big team. By doing so, they turn scaling into growing.
Your best bet to avoid hiring a large team and paying large salaries while achieving your plans is to outsource. Using your resources wisely involves finding freelancers and remote employees who are willing to work for a lower pay on a one-time (or several) contract bases.
For example, you don’t need a lawyer or a computer specialist sitting in the office all day long. Why should you pay them a monthly salary?
4. Don’t Do It Alone
Even though certain team minimisation is necessary to improve your scaling efforts, don’t try to handle everything on your own. It’s important to have at least one person you can rely on to manage the business-related problems.
Scaling your start-up is possible as soon as you understand what scaling is in detail. You need to be careful not to start growing your business instead of scaling it in the process. Once you have all the fundamentals figured, resources managed, and the right people in place, you are ready to start.
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