IXP Course: South Africa; Innovating for Sustainability in an Emerging Market
Course Number 6007
Professor of Management Practice Robert Eccles
Assistant Professor Georgios Serafeim
Several on-campus meetings during the Fall and Winter Terms
(October 16, November 6, and December 11; all from 5:30 to 7:30 p.m.)
January Term travel, Sunday, January 6 through Wednesday, January 16, 2013
Program fee & travel costs (see details on financial aid eligibility)
3.0 credits applied toward Winter term requirements
Enrollment: Limited to 30 students
Career FocusThis course is intended for future business leaders who are interested in how companies can develop more sustainable strategies, especially in emerging markets. A sustainable strategy is one that enables a company to create value for its shareholders over the long term by contributing to a sustainable society. This requires minimizing negative and maximizing positive externalities along all material dimensions of environmental, social, and governance (ESG) performance. South Africa is a leading emerging market in terms of companies working to develop sustainable strategies. This is particularly important for certain sectors, such as mining, which are very important in this resource-rich country. South Africa's leadership in sustainability has been driven by three major codes of corporate governance: King I (1994), King II (2002), and King III (2009). King III mandates integrated reporting-the combination of financial and ESG data in a single document-of all companies listed on the Johannesburg Stock Exchange. This IXP will focus on what companies and the investment community are doing to create sustainable strategies and the resultant impact on the South African economy and society.
Educational ObjectivesThis IXP is designed to help students better understand the challenges and opportunities for companies developing sustainable strategies in an emerging market. Sustainable strategies require simultaneously improving both financial and ESG performance. Since trade-offs between financial and ESG performance, and even within the various dimensions of ESG performance, are inevitable, this requires major and minor innovations in processes, products, and business models. These innovations must be successfully implemented within the organization and their performance implications properly explained to the investment community. Inevitably, this requires sophisticated stakeholder engagement processes, a broad range of performance metrics, and greater transparency in the company's external reporting. All of these issues will be explored in depth during the IXP. Students will also explore the implications at the country level for widespread adoption of sustainable strategies by the South African business community.
Course Content and OrganizationThe course is based on the insights about sustainable strategies that Professors Eccles and Serafeim have developed in their EC course "Innovating for Sustainability" (Winter term) and related research program. Eccles and Serafeim have also partnered with researchers from the Albert Luthuli Centre for Responsible Leadership at the University of Pretoria to undertake a 20-year longitudinal review of corporate governance and its consequences in South Africa. Through this project they have developed an extensive network at the very highest levels of the corporate, investment, and NGO communities, as well as public sector officials. This IXP is based on three major phases:
1. Prior to the Trip: Students will be organized into four five-person teams to work with a Johannesburg-based company on a very specific project regarding innovating for sustainability. The focus may be on cost reduction, revenue growth, better risk management, enhancement to the company's brand, or some combination of these. The company will supply the necessary problem statement and background materials prior to the trip. Students will be assigned to teams based on interest, with adjustments as necessary to create balanced teams, and will meet with the professors to scope their project for the field portion of the IXP. There will also be several meetings of the entire section in order to exchange ideas.Team assignments will be made in the Fall term. Students will work with their company to agree upon the scope and focus of the project, will have one Skype call with the company, will meet with the faculty in November or early December to discuss their project, and will present their project to the entire section at the December 11 meeting. Suggested companies include:
- Standard Bank is a South African financial services provider that is fast expanding into African markets with a range of innovative product and service offerings. With the largest Chinese state-owned bank recently coming on board as a key shareholder, the bank is not only at the forefront of South Africa's financial services, but also experiencing the growing control of China in South Africa and across Africa.
- Sasol is South Africa's largest energy and chemical company with global reach that has undertaken dramatic shifts towards improved transparency and investing in the renewable energy sector.
- AngloGold Ashanti is a large international gold mining operation and representative of South Africa's strong resource economy. They are also recognized as having invested in innovative sustainability practices.
- Woolworths is a large up-market retail chain which is several years along in their Good Business Journey. They have been leading the way nationally (and often internationally) on sustainability best practice and are well positioned to take further steps towards true sustainability innovation for their sector.
- Massmart was recently purchased by Wal-Mart despite tremendous concerns raised by the active trade unions in South Africa. The firm aims to dominate the market currently served in part by the informal second economy and argue that they will bring more affordable products to the majority of the country in the low income sector. With Wal-Mart's international commitment to sustainable supply chains, it will be interesting to investigate Massmart's sustainability journey in South Africa.
- Vodacom is a large telecommunications firm that is also offering an increasing number of innovative services to the emerging economies of South Africa and the other African countries in which it operates. They have issued a progressive integrated report, but much work still needs to be done on realizing integrated sustainability in their operations.
2. Trip to South Johannesburg: After an evening orientation session, students will immediately go to work with their assigned companies on Monday morning, January 7. It is expected they will be on-site most of the day, returning in the evenings for team-specific debriefs with the faculty and a short general session with the entire group. Dinner will include a distinguished local speaker or panel to provide students more background on South Africa to help establish the context for their projects. Such speakers may include Prof Mervyn King (Chair of the International Integrated Reporting Council and the King Committee on Corporate Governance), Nicky Newton-King (CEO of the JSE) and CEOs of leading South African companies, as well as thought leaders from government and civil society. Students will present their recommendations to the company on the morning of Friday, January 11. That afternoon, the group will depart for a weekend visit to a rural mining town and game reserve.
3. Case and Accompanying Conceptual Note: Upon returning to campus, each student team, under the supervision of the faculty, will write an HBS-quality teaching case, along with an accompanying conceptual note (i.e., not a teaching note) that is relevant to the focus of the case. A model for this is shown on the "Intel: Exploring Market Opportunities in Water" case and the "A Note on Water" which will be posted on the Learning Hub. The case will be the problem statement of the project done by the team but will not include the recommendations and outcome. These will be written up as a short (B) case. It is anticipated that these cases will be used in a variety of educational programs at HBS, at business schools in South Africa, and in many other places.
PrerequisitesThere are no educational prerequisites for this course. It is especially appropriate for students interested in sustainability from a shareholder perspective that also takes into account the expectations of all other stakeholders. A strong background in strategy, organizational change, performance measurement and reporting, and capital market institutions will be helpful.
Course Credit and FeesStudents who successfully complete this IXP will earn 3.0 course credits, which will be posted in the Winter term. Grading will be based 50% on the field portion and 50% on the case and note, described above. HBS will provide in-country logistics for IXPs (including accommodations, select meals, and local travel) but students will need to contribute a fee of $2,600 towards defraying a part of these costs. In addition, students are responsible for their international round-trip air travel to South Africa. Students who have an existing financial aid application on file may submit for additional financial support to participate in this IXP. Please see the Financial Aid website for more information on financial support for IXP courses.
Please see the IXP website for information regarding student accommodations on IXP courses.