Transformation strategy, a business case

1. Transformation strategy, a business case No of Employees 1700’s Time Your Customer “who is going to be your customer in the next 5 – 10 years”. Leading on from this, you need to answer “what action needs to be taken that will help you understand this future customer and what they value?”

2. Transformationstrategy,the process Hearts The roles in the guiding BEE team: • project manager • boundary spanner • gate keeper • sponsor • champion. • functional roles BEE Info BEE Strategy Minds BEE team Employee dialogue Strategic actions Scorecard 30 day review

3. 7Ps for business model analysis & design What beliefs guide us? PHILOSOPHIES What do we offer, what is our “difference,” and why does it matter? Who is our customer and how do we want to be perceived? PRODUCTS POSITIONING PURPOSE Why do we exist? Who do we employ and how do we manage them? PEOPLE PARTNERS PROCESSES Who will help us reach our goals, and how do we manage these relationships? What do we do and how do we do it? Your Business Given the purpose and nature of your business, “what actions can you conceive that will enable transformation?” “given who I am, how can I help transformation?” Source: Tony Manning

4. PHILOSOPHIES PRODUCTS POSITIONING PURPOSE PEOPLE PARTNERS PROCESSES Transformation strategy, the First Principles VALUE FOCUS COSTS COMPETITIVENESS Source: Tony Manning

5. Transformation strategy , an example…… “This is a very simple business. When we complicate it we really mess things up.” Roberto Goizueta, Chairman Coca-Cola Company 1981-1997 ACCEPTABILITY To be the drink of choice AVAILABILITY AFFORDABILITY Source: Tony Manning

6. GOALS 1. 2. 3. ACTIONS x3 x3 x3 PURPOSE GOALS 1. 2. 3. ACTIONS x3 x3 X3 GOALS 1. 2. 3. ACTIONS x3 x3 x3 Social Investment Weight 10% • Involving the full organisation • Strategic investment • Collaboration and Partnerships • Exposing your brand to future clients • Building future employees / suppliers Scorecard % EBIT, target 1% • Health, education, poverty alleviation, community development • Black beneficiaries --- Cost to company • Capture a paper trail

7. GOALS 1. 2. 3. ACTIONS x3 x3 x3 PURPOSE GOALS 1. 2. 3. ACTIONS x3 x3 X3 GOALS 1. 2. 3. ACTIONS x3 x3 x3 Enterprise Development: weight 10% • Supplier support - development • Strategic investment – related value • offerings • Retention strategy • Courtship? – joint venturing • Collaboration Scorecard: % EBIT target 1% • Both non-monetary and monetary investment • Capture a paper trail

8. Procurement Action Resulting category Discretionary / non-discretionary Build an explanatory table Group large suppliers, they are self regulating Size: Micro, S,M,L Key suppliers Apply different criterion for small and micro enterprises White – intent to change Obviously white Monitor & hold accountable Find alternative supply White – no intent to change BEE credentials Enterprise development targets? Support mechanisms Audit Collect ratings

9. GOALS 1. 2. 3. ACTIONS x3 x3 x3 PURPOSE GOALS 1. 2. 3. ACTIONS x3 x3 X3 GOALS 1. 2. 3. ACTIONS x3 x3 x3 Skills development & Learnerships - weight 20% • Strategic investment • Workplace skills plan • Mentoring • Building future owners? Scorecard % payroll – target 3% • Includes quantifiable on the job training • Black beneficiaries --- Cost to company • Capture a paper trail

10. GOALS 1. 2. 3. ACTIONS x3 x3 x3 PURPOSE GOALS 1. 2. 3. ACTIONS x3 x3 X3 GOALS 1. 2. 3. ACTIONS x3 x3 x3 Ownership options • Organic: • Employee share options • Employee owned trusts • Warehousing • Direct shareholding • Mixed: • Direct shareholding • Attracting talent • Merger / Acquisition:[74 % risks?] • BEE Group • Collectives

11. BEE Partner Selection

12. Context of BEE partner selection • Develop a clear Strategy • Generally looking for political connections • ex-MP, ex-Ministers, ex-DGs etc • Define specific role for Partner • Manage selection process in-house. [vs dating agency] • Sign contracts • Create break-up clause.

13. Issues in choosing BEE partner (1) • What is the track record of the BEE Partner? • Look at individuals – skills and available? • Look at team • Review previous transactions and understand reasons for success/failure • What specific skills are in the BEE Partner? • compatible with your needs? • Are the needs around lobbying or direct operational involvement? • Are there specialist skills - accessible? • What is the chemistry between BEE partner and yourself like?

14. Issues in choosing BEE partner (2) • What other businesses is BEE partner involved in • Are these businesses compatible with your own? • Do the businesses demonstrate sound business acumen? • Do these businesses require a great deal of attention? • Is BEE partnerlead player in its other businesses? • What is the relative value of other businesses compared to yours?

15. Cautionary tales • Interrogate BEE partner dominated by individual without proper succession planning or professional support • BEEG dependant on individual personalities show weak business model and unsustainable. • Treat aggressive targets for new business flows with caution • Someone in the organisation must accept responsibility for successful BEE transaction.

16. The Step by Step Toolkit

17. Step by Step Plan - BEE-TOOLKIT Planning & Strategic Phase: • Define your BEE objective. • Align your business strategy with your BEE strategy. 2. Reach consensus on: • Which companies / departments have to be included in the BEE-transaction? • Should employees or outside shareholders be involved with the transaction? 3. Develop and implement corporate governance principles to accommodate a BEE shareholder.

18. Step by Step - Toolkit 4. strategy to cover all the elements of the score card. 5. Do realistic valuations of the entities that form part of the BEE transaction. • consultation with employees in order to avoid perceptions. • Compile a business plan in order to arrange finance. • Lodge the BEE transaction with different financial institutions and assist the BEE partners with the application for finance.

19. Step By Step Plan - BEE-TOOLKIT Implementation Phase: 10.Draft appropriate shareholders agreements, employment contracts, trust deeds etc. • Start with the implementation of the transaction and the elements on the score card against a set of benchmarks. Appoint a BEE Project Leader. 12. Use the new BEE status in order to increase the market share by way of strategic and media announcements. Monitoring Phase: 13. Update the BEE strategy and score card on a continuous basis. 14. Subject your company to an independent rating?