Could high impact entrepreneurship curb xenophobia?

Could high impact entrepreneurship curb xenophobia?

As part of its programme for Africa month, Skilled Foreign Nationals in South Africa (SFONSA) recently hosted a public lecture addressing the spate of xenophobic attacks against foreign nationals of African descent. The speakers were The Honourable Deputy Minister of Home Affairs, Fatima Chohan; Western Cape Premier The Honorable Helen Zille; Mr. Patrick Kawuma Male – The United Nations High Commissioner for Refugees (UNHCR); Ms. Janine Myburgh – President of The Cape Chamber of Commerce and Dr. Fanie Du Toit – the Executive Director at the Institute for Justice and Reconciliation.

xenophobic-attacAs expected, the attacks were condemned and the narrative centred around the political and moral repugnance of xenophobia, its economic consequences as well as the challenges of illegal migration and migration policy in post-apartheid South Africa. Celebrity campaigns against xenophobia were not highly-favoured as a means to put an end to xenophobia and very few, long-term suggestions were put forth as to how this could be done. It was refreshing when Mr. Male spoke about the extent of entrepreneurship within the communities that have been impacted by the xenophobic attacks.

UNHCR was involved in two independent research projects that examined the economic interdependencies between local and migrant community members as a result of survivalist entrepreneurship. I asked whether the research scope included an exploration of the extent of mechanisms in place to equip survivalist entrepreneurs to become high impact. Unfortunately, it didn’t.

In 2010, the South African Journal of Economic and Management Sciences published a paper addressing the question of whether African immigrant entrepreneurs in South Africa are job takers or job creators. The finding was that more than 80% of the respondents employed South Africans in their businesses and, further, that entrepreneurial skills were transferred from the immigrant entrepreneurs to their South African employees. Across our shores, research conducted in 2013 shows that 40% of the largest U.S companies were founded by immigrants or their children and that 25% of high tech companies founded between 1995 and 2005 had at least one immigrant founder.

The importance of developing African entrepreneurs is demonstrated by the Foundation’s own commitment as well comparable commitments made, for instance, by Tony Elumelu’s Entrepreneurship Programme  which exists to capacitate initially 1,000 young, compelling businesses that are run by capable teams, have strong market feasibility and clear financial models.

High impact entrepreneurs, by providing innovative products and services – usually through leveraging technology – and creating large-scale employment and other opportunities, have the potential to address the socio-economic ills that spawn xenophobia.

As we conclude #Africamonth this week, I wonder how much more resilient and inclusive communities would be if a high impact, entrepreneurial mindset were inculcated in community members? And, having inculcated such a mindset, what those high impact entrepreneurs themselves would do to curb xenophobia?

By Refiloe Seseane

Local is lekker and complex in the entrepreneurial ecosystem

Local is lekker and complex in the entrepreneurial ecosystem

If Christmas is “the season to be jolly” then Q1 2015 must have been the season for surveys on SA’s entrepreneurial ecosystem:

1.Seed Academy recently published the results from its first-ever survey of approximately 1,000 South African startup entrepreneurs with the hope that the results create impetus for industry and government to align efforts to create a more successful startup ecosystem

2.In March 2015, the South Africa chapter of the Aspen Network of Development Entrepreneurs (ANDE) released a comprehensive and interactive infographic that details the interdependencies between our government, corporate, non-profit funding and support organisations for resources available for entrepreneurs

A post-mortem is not needed as this is a classic case of death-by-survey you may say. But is it really? That each of the above surveys addressed different, yet interrelated components of our ecosystem, compels us to remain mindful of the complexities that are inherent to our ecosystem.

Seed Academy, for instance, found that despite women accounting for over 50% of the population in South Africa, female entrepreneurs are still in the minority in startup culture. The government’s response to this has been through initiatives like the DTI Women Economic Empowerment programme and IDC Women Entrepreneurial Fund.

As far as support structures within the ecosystem are concerned, ANDE mapped the ecosystem in its entirety and considered, inter alia, the role played by direct finance providers and capacity development providers at each stage of the business life cycle.

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So what are we to make of these varied results and which recommendations ought to be pursued?

Interesting findings from The Kaufmann Foundation may guide our response to these questions. They took the line of questioning even further, asking how entrepreneurial ecosystems are measured and how data about start up communities should be interpreted, when they released a paper on how to measure entrepreneurial ecosystems last month. While this research is from a US-context, it bears relevance to SA.

“In some places, the desired outcome is simply more: more entrepreneurs, more companies, and more jobs. Other communities design their ecosystem efforts around a particular type of company or type of job. Some regions, moreover, see the “entrepreneurial ecosystem” as a marketing effort, and focus on a particular type of individual they hope to attract to their area.”

“At the other end of the spectrum is the kitchen-sink approach—because every part of an entrepreneurial ecosystem is critically important, you must track everything. This approach has the admirable quality of avoiding Campbell’s Law* but provides no sense of prioritization or focus for those community leaders involved in the ecosystem. There must be some middle ground between trying to capture every dimension of an entrepreneurial ecosystem and overly focusing on only one or two indicators.”

In an effort to find the middle ground, the Kaufmann paper looks at two aspects of the entrepreneurial ecosystem, namely outcomes and vibrancy, and decomposes these aspects according to the indicators and corresponding measures given below. 

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Being self-explanatory and intuitively appealing, it’s clear that ongoing dialogue and research, of the kind we’ve seen recently, is key to deepening our appreciation of the symbiotic relationships within our ecosystem – not re-inventing the wheel in different contexts through surveying for the sake of surveying.

Campbell’s Law* states that the more any quantitative social indicator (or even some qualitative indicator) is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.

Are monopolies always evil – the creative search for Blue Ocean to drive progress?

Are monopolies always evil – the creative search for Blue Ocean to drive progress?

michael jordaan_2Monopolies are terrible. We have longstanding negativity towards monopolies dating back to the earliest memories of economics class. Monopolies are evil.  Right now in South Africa we need no reminding of the inefficiency of monopolies resulting from lack of competition when experiencing Eskom unravel into a seemingly endless cycle of load shedding.  This month we were also victim to the monopolistic tendencies and associated market power of the cell phone companies when they unilaterally increased the pricing of two year contracts mid-stream! We even have the Competition Commission acting as our steward to ensure that we are not at the wrong end of anti-competitive practice.  Surely monopolies are to be avoided?

Not so fast. Firstly the opposite of monopoly is perfect competition.  And while the notion of perfect competition has long been considered the ideal, the only challenge to this, as pointed out by Peter Thiel, co-founder of PayPal, in his book Zero to One, is that under these conditions in the long run no company makes a profit! So we need a bit of more nuance in our understanding

Secondly not all monopolies are created equal.  Certain types of monopolies must continue to be avoided and legislated against – those that secure their monopoly by means of illegal behaviour or government protection.  But there is another type of monopoly that creates its market power by being so good at what it does that no other firm can offer a close substitute. (think Google and search) These are known as creative monopolies and they are defined by Thiel as:  “giving customers more choices by adding entirely new categories to the world.” In these ways monopolies are far more central to entrepreneurial endeavor than we might have initially expected.

If we are struggling to get our heads around this paradigm of embracing monopolies, it is worth considering that the global system of patents essentially facilitates the establishment of creative monopolies. Further these monopolies are often the mechanism for achieving progress through the replacement of incumbents (think Whatsapp replacing SMS). Screen Shot 2015-05-12 at 7.28.39 AMInterestingly Thiel goes on to say that companies earn a monopoly by solving a unique problem, which serves to reinforce the argument that purpose driven businesses  are essential for significant and sustainable success.

So where do we discover these creative monopolies? The simple answer is in the blue ocean. Last year in listing the 10 books that had most influenced the Foundation’s journey, we referenced “Blue Ocean Strategy”, which describes a powerful framework for evaluating new opportunities. The purpose of Blue Ocean Strategy is not to out-perform the competition in an existing industry, but to create new market space or a “blue ocean” thereby making the competition irrelevant. Exactly fitting the description of a creative monopoly!

This pursuit of Blue Ocean is becoming increasingly important for our economic future. In a discussion with a respected, retired South African business professor, he expressed frustration as to how most of South African business was caught up in the fierce competition and increasing efficiencies of Red Ocean rather than looking for game changing opportunities in the open space of Blue Ocean.  It seems clear that the levels of growth required in the years to come will not come from the Red Ocean. We need to widen our horizon to that of the Blue Ocean. As Thiel observes: “Today our challenge is to both imagine and create the new and better ways of doing things that can make the 21st century more peaceful and prosperous than the 20th.” Not an outcome we can take for granted. A good start would be find new and better ways of producing reliable electricity, oh and of course Whatsapp mobile calls!

michael jordaanListen to Michael Jordaan’s radio interview about Peter Thiel’s book “Zero to One” here.

No Greatness without Goodness

No Greatness without Goodness

Dinika Govender“Nil magnum, nisi bonum” means “without goodness, there can be no greatness” in Latin. This is the motto of a young woman who is steadily making her way to becoming a high-impact entrepreneur. Dinika Govender – born in Kwazulu-Natal, raised in Johannesburg and now a resident in Cape Town – cites her upbringing as critical to her all-round achievement-mindset. At Jeppe High School for Girls she excelled in academics, sport, culture and proved herself a natural leader. One may say her trajectory was promising by the time she was 18, but she was driven by a nagging feeling about this country and her generation’s role in its development.

That nagging concern has to do with the persistence of systems that have entrenched inequality in South Africa. Migrant labour and spatial separation are two examples. Not easily daunted by the idea of contributing to transforming these two extremely complex systems, Dinika views her area of change as a function of moral obligation and a dose of future-orientated logic.

She argues from the position of a creative thinker, and explains that diversity is an oft-overlooked yet core ingredient for creativity and innovation. She observes that as the Rainbow Nation, we could be at the forefront of the design, technology and startup industries. But we aren’t. A lot of that has to do with the physical separation of races – and as a result – of cultures, beliefs and creative capital. “Our cities have been designed to keep different race-groups apart and although cities are becoming more diverse at a macro-level, we’re not becoming more integrated. Many South Africans still live, work and play within the insular spaces designed for them by apartheid and colonial regimes,” explains Dinika.

Upon befriending some Allan Gray Candidate Fellows and joining the Fellowship, Dinika was relieved to find herself among people who had the same nagging feelings about this country as she did.   The concept of high-impact entrepreneurship resonated with her and this philosophy is guiding not only her business ventures, but also her way of life.

“I’m currently in the research and prototyping phase of my entrepreneurial journey. I’m trying to read as much and as widely as I can around the philosophies that have built the world as we know it, and I’m always trying to connect to people younger and older than me, locally and abroad, who are taking risks and living up to their own high-impact ideals.”

Dinika has registered a holding company with the vision of housing a portfolio of companies geared towards tangible social transformation. The first brand in her portfolio is Bakewell, a bakery that brings her passion for healthy, local food to life. She’s spent the last few months market-testing the products in Cape Town and is now working on a plan to grow the business.

Dinika is a Trends Strategist for Lacuna Innovation – a consultancy focused on helping companies to innovate new products, services and business models.  She also co-organises New Media Mondays and consults to the TEDx UCT team. Dinika is also actively involved in community development through Thousand Network, trains for half-marathons and is building her writer’s muscle. Her efforts have culminated in her contributing to a book on Movement in South African Cities, to be published nationally later in 2015.

With so much on the go, how does she keep it all together? Dinika makes a point of setting aside time to read, exercise and introspect. She accepts that with her interpretation of ‘high-impact entrepreneurship’ being akin to social transformation, the changes she wishes to see might not actually manifest in her lifetime. However, she jokily adds that, “If Oprah ever were to invite a bunch of Fellows for a chat on high-impact entrepreneurship, I think we’ll know we’ve manifested it.” Carpe diem, Dinika!