Looking back at South Africa…

MBA Diary – guest entry by Dream Team Asia: Misayo Matsumoto (Japan), Naoto Tsushima (Japan), Gerald Lo (Malaysia), Eugene Cha (Korea)

It has been 3 weeks since we left South Africa, but it feels like a few years had gone by. No doubt, time flies by quickly at IMD. It was an adventurous journey that has brought us new knowledge and new friends. We came to know South Africa as a country with many histories that continues to face many challenges, even after the apartheid ended. But her charms have remained through centuries.

We started our first day in South Africa meeting our client and host, Salome; a grandmother (we call her “Gogo”, meaning grandma) and a local entrepreneur, who owns a few guesthouses. She was warm, friendly, and passionate about what she is doing. However, the economic crisis has been affecting her business and she hoped that we could help to improve it. After visiting other competing guesthouses, we were convinced that her guesthouse has a lot of potential. So we recommended her a plan to attract tourists during weekends and public holidays.

To do that, we proposed to revamp their website and make videos of her guesthouse. However, spending this amount of money during the current economic crisis may simply not feasible. Therefore, we embarked on an ambitious plan to help her implement our recommendations. We formed a website and filmmaking team in which Misayo took on the role as the director, Naoto became our cameraman, Gerald as the graphics editor and Eugene was the script writer. Ben, our driver, became the presenter for our video. Together, we designed a new website and produced four videos. (Links to the website and videos can be found below)

We were pleasantly surprised to find out that our business skills and knowledge can be applied to small business in such a short period of time and make a difference. Till today, we still keep in touch and are glad to know that her business is doing well. On top of that, what started as a client relationship has developed into a life-long friendship.

You can find there website here and the Facebook page here.

Misayo, Eugene, Naoto and Gerald

(Any comments and feedback are welcome at Gerald.Lo@imd.ch)

Last day at the guesthouse with Naoto Tsushima (Japan), Eugene Cha (Korea), Salome Tshungu (owner), Cliff Tshungu (owner), Ben Ackermann (driver), Misayo Matsumoto (Japan) and Gerald Lo (Malaysia)

Day trip to a South African cultural village with Naoto Tsushima (Japan), Gerald Lo (Malaysia), Eugene Cha (Korea) and Misayo Matsumoto (Japan)

Naoto Tsushima (Japan) and Eugene Cha (Korea) filming at the guesthouse

Bye Bye Mandela

Old man, you did well.

The country that you have fought for is amazing and the direction in which you have sent it brings more than just hope - it brings firm belief – that a glorious future awaits South Africa.

Over the past two weeks we have visited the sites that tell the story of South Africa, the Apartheid Museum, the Hector Pieterson Museum for the Soweto uprising and your own house, which – whether you like it or not – has become yet another symbol of freedom and the fight that it took to get it. We have lived in fancy Sandton City with its shopping malls and posh hotels that few can afford. We have seen the unfortunate souls in townships and squatter camps and looked the HIV children of Cotlands in the eyes. Despite the sad sad circumstances, we saw nothing but big bright smiles. We were welcomed by thousands of singing, dancing and smiling souls in Soweto’s Grace Bible Church and we saw the roots of the country - its amazing nature and wildlife - in Pilanesburg National Park.

Not least, we have worked closely with the entrepreneurs of South Africa who produce anything and everything from diamonds and tractors to beds and hydraulic fittings. As much as soldiers and politicians are the heroes of the past, these passionate business men and women are the heroes of the future. They are the ones that will bring South Africa to the next level. We were told the huge success story of MTN, Africa’s first true multinational company, and we know that many more will follow.

When asked to define South African leadership my team quickly agreed on the three words: Forgiveness, inclusiveness and optimism. Forgiveness for the pain of the past, inclusiveness of all races, religions and colours in the prospects for the future and an incredible and forceful optimism that cannot be held back.

You will show them all of this in the FIFA world cup next year, where you have invited the whole world to your home. We know that you are preparing hard and we know that will do great. Just be yourself.

See you soon!

IMD MBA Class of 2009

Coming to the End of the Journey

Minli Zhao (China/Germany) describes the end of our South African adventures in today's guest entry.

The diary readers are by now aware of the awesome experience that the IMD 2009 MBA’s are having in South Africa. The project with the local SMEs have been stimulating and the evenings with the groups have been exhilarating. Tuesday was the culmination of the project phase of our work. Each of the 21 groups presented their recommendations to their clients. It is amazing how a group of 4 or 5 individuals can swoop down on a business, immerse themselves in it and add value to the business. It is very gratifying when the contributions are recognized by the clients.

Wednesday we visited MTN, the multinational mobile telephone operator based out of South Africa. It is an amazing story of a new age post apartheid South African company that has emerged to dominate the mobile telephony market in Africa and is rapidly spreading its wings in emerging markets of Asia like Iran and Yemen. One of its core values was the attitude of “can do“ that it embodied in its operations. It was clearly visible to us that this organization was bold and ventured out with courage to capture horizons that others would have balked before trying. It take courage to venture out without knowing all the answers, armed only with the extreme self belief that we will find anwsers on the way.

The “ work phase“ of the discovery expedition ended with a grand gala dinner at the IDC premises. IDC is one of the chief sponsors that have facilitated our project in South Africa. 250 odd audience comprising of current MBA students, the SME clients, sponsors from IDC and MTN and IMD alumni congregated to culminate a wonderful experience. It was a great event and a wonderful opportunity to network with the business leaders of South Africa.

For our last day in South Africa we move out of the hotel that has been our home for the last 9 days to a well deserved 2 days of fun and frolic in the game park of Pilanesburg. We do hope to come face to face with some African Lions and Lionessess ….well in the safety of our armoured vehicles.

Minli

No 'bed of roses', but a bright future...

Today's guest entry highlights John Callaghan's project work in South Africa...

Well, that just about wraps it up for our work with companies here in Johannesburg. Yet while the class moves on to an interesting and exciting few of days seeing other aspects of South Africa – today visiting telecom company MTN, tomorrow hopefully seeing some of SA’s ‘big five’ on safari – the challenges facing township companies still continue.

Over the last week and a half, José Luiz (Brazil) and I have been working with a small bed manufacturing and sales company in Soweto, led by local entrepreneur Joshua Ngesman. At 26, Joshua brings a lot of energy and dynamism to the company, which is reflected in its progress to date and the respect with which it is held by business associates and the IDC, a state-owned development bank which has provided a loan.

Joshua’s business is to manufacture and sell low cost, high quality beds to township markets in Joburg and beyond. It seems a good proposition – as yet, there are relatively few furniture stores in the suburbs, and while he has some competitors, their quality is highly variable (you can tell by lying on the beds!) and their prices often higher than is reasonably affordable, given wage levels. Selling locally is also important; Joshua estimates that in the areas he’s targeting, only one in five people have their own transport.

But at the moment, the company faces big challenges. Demand for beds is lower than expected due to the recession, and with some customers (existing retail stores) exceeding their credit terms by many months while materials suppliers demand prompt payments, cash is tight. Considering this, we initially wondered if the company could ask consumers to pay in advance of manufacturing and delivery, as is common in some other countries and exemplified by the way Dell sells PCs. But Joshua advised this probably wouldn’t work, since consumers wouldn’t trust the company with advance payments.

And reflecting on the overall exercise, this issue of trust seems paramount. While large companies in SA operate in similar if not identical ways to those in advanced economies, it seems that successful trading in townships still relies very much on personal relationships, making building a solid network very important. This can start (as in Joshua’s case) with family links, then build into the local community. Indeed, as well as being physically local, an important part of Joshua’s value proposition is being culturally local; the fact his company is black-owned carries significant weight with customers.

Despite the current difficulties, there are good reasons to believe that Joshua can turn things around and build a successful business. In fact, it’s not inconceivable he could follow in the footsteps of his uncle (who is backing the company) and become a serial entrepreneur! During an interview with a local newspaper on Monday, he positively sparkled when asked about his dream for the years ahead, which is to set up a substantial manufacturing operation and a network of stores. And while he needs to focus on his cash flow in the short term, our best advice to him is to continue to believe in this dream and persuade others to do the same. We wish him all the best for the future.

John

Delivery

Today was delivery day. Delivery of the projects we have been working on the past week. Judging from the many stories I have heard from my classmates South Africa have made an impact on us all and judging from the very same stories we made an impact on South Africa. Maybe not as a country, but for the entrepreneurs we have been working with. It is incredible how much you as a group can pick up, process and feed back in a week once you really set your mind to it.

The last two days we borrowed a room in the office of our host IDC, where we could digest and process the information we absorbed over the past week. For some reason, it did not feel much different than the dungeons back in Lausanne.

My concerns about us knowing absolutely nothing about hydraulic fittings evaporated already the first day and this week became an awesome demonstration of the power of a multi-skilled team. Eric – our financial genius – drew up a complete financial model from scratch and helped Peter sort some outstanding issues with his bank. Stone – our engineer – made a model that allows Peter to accurately calculate his production cost of each product, which ensures that the prices are set correctly. Stone also made suggestions to how Peter can make very significant improvements to the utilization of his machines. Shibu – our marketing wizard – draw up a plan for a more structured sales process than Peter has today. Myself, I got really good at getting coffee for everyone ☺ We wrapped it all up in a business plan that Peter can take to his bank to help him refinance his existing business and obtain new capital for his planned expansion. That was our deliverable and Peter seemed very happy with it.

Eric and Stone trying to get the financial and operational figures to match.

Delivery of the business plan took place at ‘The Mug & The Bean’ coffee shop. Here Shibu and Peter are discussing the marketing plan. Please note the huge cup of coffee in the front. This is on the menu as a so-called ‘Serious Cappuccino’ and consists of almost half a liter of warm milk and coffee. Not only in America!


What better way to end it all than with a team phoon in front of the Mandela statue on Mandela Square here in Sandton City. From left it is myself, our entrepreneur Peter, Stone, Eric, Shibu and our driver Sharl.





We had lunch at a Thai restaurant today. My teammates apparently thought I needed to relax and bought me a massage in the restaurant. For the equivalent of 5 dollars you get about 20 minutes of massage of neck, shoulders and arms before and after you eat. I could really get used to that. Although we were in a Thai restaurant the girl proved to be Chinese. As Stone and her started talking in their native tongue we learned that she was from a place in China not far from Stone’s and that she had migrated to South Africa a couple of years ago to work. Interesting, I thought, that someone would migrate to find work in a country with 25% unemployment. Stone explained that many Chinese go abroad these days, most of them to set up their own businesses, though.
We have also experienced the diversity of our group in a culinary way this week. Thursday Shibu treated us for Indian food, Friday Stone treated us for Chinese and today Eric took us out for Thai. There are unfortunately very few traditional Danish restaurants outside of Denmark, but I can always buy you a Carlsberg! ☺

South Africa is now seeing the rise of a new term: ‘White poverty’. This little exhibition was set up today across the street from our hotel.
The poster reads: ‘…poverty in South Africa no longer has an exclusively black face….. Poverty is becoming less of a racial issue and more of a South African problem…. Having been deprived of their previously ‘privileged’ position, the white poor are now seeking new ways to adapt or at least survive.’
In some bizarre way this is a good sign. Not that people get poor, but than when there is poverty, that it is evenly split among races. This is the precondition for eventually bringing South Africa out of the poverty!

Less than 50m from where the previous picture was taken we found this display of material wealth. Aston Martin, Lamborghini and Audi R8 in front of the posh Michelangelo Hotel reminds us that South Africa still is a country full of contrasts.

Thorsten

Energy through Empowerment

My team is working with IFAW Holdings, which is a holding company with the mission of empowering women across South Africa through investments in local companies. Our entrepreneur, Lorraine Mpahlele, partners with small businesses in the hopes of both making a profit and expanding employment, training, and funding opportunities for women throughout the business. The company’s mandate aligns closely with BBBEE legislation, which encourages black and female empowerment; the legislation requires diversity in equity and executive composition and encourages companies to partner with women owned and black owned companies.

In our learnings about South Africa, I have been very impressed in the country’s efforts to right the wrongs of apartheid. The Black Economic Empowerment Legislation explicitly tries to redistribute wealth across the population similarly to how political power was redistributed after the end of apartheid. There are mixed opinions about how successful this legislation has been, as there are millions of people still living in poverty that have not seen its benefits. However, the imbalance is being openly discussed and managed, which is very different than in many other countries where racial or social inequities are considered taboo.

The fact that the country has acknowledged the inequity and announced explicit goals for improvement has given the country a sense of energy and entrepreneurial spirit that is hard to describe. Lorraine is filled with a passion for business but wants to make sure that this economic growth is accompanies by social change. From what I’ve heard from other teams, this idea of giving back to the community is shared by many of the entrepreneurs we are working with. It has been very inspiration to be partnered with Lorraine, and as we work with her to solidify the company strategy we are looking forward to seeing all of her dreams turn to reality.

Kristin

Umoja – The spirit of togetherness

What a weekend it has been! Apartheid museum Saturday afternoon and the Mandoza musical in the evening. Up early today to spend the day in Soweto, first attending a church ceremony, then visiting the museum for the Soweto uprising, Mandela’s house, lunch at a Soweto restaurant and finishing with a visit to the Cotlands hospice and orphanage.


The apartheid museum gave an almost too real description of the rise and the fall of the apartheid regime, the principles behind and the cruel and unjust measures that were required to maintain it. Afterwards you can only ask yourself how it was possible to justify and build such an inhuman system.


A quote that shows how the apartheid politicians saw their role. In a TV interview one of the politicians even argued that the apartheid model had proven its worth and that it should be used in other places in the world. Let us be very happy that this never happened!

The beauty of the South African solution is that it starts and ends with reconciliation. The South Africans (at least the ones I have met, both black, coloured and white) truly believes in the ‘Rainbow Nation’ - where all colours live together as one – as the only way to a better future. I think they have gotten it so right! This picture shows the exit from the Apartheid Museum.

In the van on the way back from the Apartheid Museum.

Saturday night we attend the Mandoza musical. Also this story was build up around the freedom struggle and the liberation. It showed how the music and dance evolved with the historic events from tribal life to today’s rock stars and it described the important role music played to keep morals high when times were tough. It was an incredible display of energy and joy! We have nothing like this in Europe! The buckets on the head of these ladies says ‘Umoja loves you’. Umoja means ‘The spirit of togetherness’ in one of South Africa’s 11 languages. Don’t ask me which one.

This morning started with a ceremony in the Grace Bible Church in Soweto. The church must be able to seat at least a couple of thousand people. The ceremony almost felt like a continuation of the musical the night before; full of energy and happiness! The speeches were both spiritual and very down to earth including both the current economic crisis and yesterday’s rugby game where South Africa beat New Zealand.

We met these two guys on our way.

Our two guides for the day, Thomas (left) and Ben. Born and raised in Soweto. Ben showed us how you in Soweto tell the minivan taxis where you are going only by the use of hand signs.

Do you need a new set of tires? You can get everything done on the streets of Soweto.

What surprised me the most was how developed Soweto was. There are shopping malls, stadiums, schools, hospitals, good roads, water and electricity. Here is the local Nissan dealer. It is, after all, also a city with four million people.
By the way, did you know that the name Soweto comes from ‘South West Township’, which again stems from the fact that Soweto lies south west of Johannesburg.

This picture shows the absolutely worst part of Soweto. This was actually what I expected all of it to look like, but according to Ben it is only 10% of the people in Soweto that lives like this. This number is even decreasing as the South African government makes progress on its Residential Development Program that has build houses for several million people.

How about a couple of nuclear reactors in your back yard? They are not active anymore, but you can get a bungee jump from the top for fifty dollars.

Our guide Ben in front of the monument for Hector Pieterson at the museum for the Soweto uprising in 1976. The uprising was a protest against the government’s decision that education must be done in Afrikaans, a language that neither teachers nor students amongst the black population understood. The police opened fire on the crowd and 69 people (officially) were killed. Hector Pieterson was the first one to fall. He was thirteen years old.
‘I have also been throwing rocks at the police around here’ Ben said at one point. Another reminder of how recent all this has happened.

We paid a quick visit to Mandela’s house. There is not much too see there other than it is very small.

Lunch at a restaurant in Soweto. They apparently got our name wrong, so here are the three IMC ladies Valeria [Russia], Misayo [Japan] and Yadira [Colombia].

The last stop on the road was the Cotlands hospice and orphanage. The children at Cotlands are mostly from families where the parents are either sick with or dead from AIDS. Most of the kids themselves are also HIV positive. Although the circumstances are so sad Cotlands is a wonderful place to visit. As everywhere else where you have kids around there is lots of energy and desire to play. The older kids (3-5 years) were ready to play when they saw 70 daddies and 20 mamas walking in. For more than an hour we all played around and had some good old childish fun.

In their worst year Cotlands had 87 deaths. Last year they had one. The difference is the treatments that now are available. The children live longer, which creates new problems as they now must have support for a much longer period. A ‘winners curse’ as our Economics Professor Ralf Boscheck would call it. Although a positive problem, it is still a problem.

Cotlands had an IMD ICP team working with them last year. They mentioned several time that the team had had a major impact on them and that they still were implementing the recommendations that the team had made. We had already heard about the IMD/Cotlands project from the IMD side, but we took this opportunity to get some input from Cotlands as well. We got some good ideas and suggestions that we will bring with us to this year’s similar project with Koinonia in Kenya.

Thorsten