Calling Telkom's bluff on enterprise development - TechCentral

Calling Telkom’s bluff on enterprise development

marc-ashton-2-180Full credit has to go to Telkom communications head Jacqui O’Sullivan for coming out swinging to my recent criticism of its enterprise development (ED) initiatives. It is just a pity that her argument didn’t make sense.

As a quick rewind, I made the point that Telkom was making a mockery of ED by arguing that it can retread middle managers and people deemed surplus to requirements into entrepreneurs. Telkom –- through O’Sullivan -– argued that Telkom was throwing R100m at its FutureMakers initiative (launched in May) “but has already been supporting and creating businesses for a numbers of years”.

Fair enough, they made a big splash about it in May so maybe I had missed something and I could probably find out about this in the 2013 or 2014 annual reports and maybe through the Telkom Foundation get a better understanding of how much of a focus entrepreneurship and ED was for Telkom over the past few years. After all, an annual report is a perfect place to demonstrate how a business feeds the so-called “triple bottom line”.

Here are a couple of observations:

In the 2014 Telkom Foundation annual report, the word “entrepreneur” features once and is used in the context of: “Ntshalleng Le Bana Care Centre–Facilitates access to health and social services for OVC and provides homecare and aftercare to physically disabled children.”

Without taking anything away from the Foundation, phrases like “SME” and “Small Business” don’t feature.

The 2014 Telkom annual report features the word “entrepreneur” twice. In both cases it refers to directors of the company –- Jabu Mabuza and Clive Flynn -– in the professional biographies. ED spend dropped by 16% to R102m for the year.

The 2013 Telkom annual report is interesting largely because the word “entrepreneur” appears a few more times. The professional bios for Mabuza and Flynn are there and then there is a mention of R119m of ED money being spent by Telkom.

Importantly, there are two good case studies featuring entrepreneurs Sibongile Mphilo, who runs Sibongile Security Services, and then Stan Sibeko who runs Telecom Southern Networking. Both are great stories with Sibongile Security Services employing a thousand people. Except Telkom didn’t found either of these businesses and this is the point I’m trying to make.

Telecom Southern Networking was founded in 1997 and is certainly not through a new-fangled enterprise or supplier development initiative. Sibongile Security Services enjoyed a major contract from Telkom but it took a long time for it to get from a start-up in the early 2000s to providing services to Telkom. These businesses both took a long time to incubate and grow and it is one of the real weaknesses of ED programmes — they don’t have the ability to see through a cycle.

I had quite an interesting chat with Ian Russell, who heads up procurement and the ED initiatives for Telkom, and to his credit he has all the right credentials having worked globally and locally. He made the point that ED is a long-term game and has been very successfully deployed in the US in the manufacturing sector. He added that we could be as much as 20 years behind what they are rolling out in the US, but even though traditional big employers like the auto manufacturers have been applying ED initiatives, the unemployment rate has remained low — we can learn valuable lessons from the US in this regard, he says.

Russell adds that it is a priority for him to have some successful case studies to show off over the next 12 months. When asked about whether the FutureMakers would be contributing an additional R100m to the existing R100m in ED spend that Telkom spent in the previous years, he indicates that it will be higher, but there may be some instances of non-monetary “spend” — mentoring, infrastructure, etc, which would need to be taken into consideration.

While Russell points to the US as an example of where ED is working, the reality is that a number of those businesses have been founded on very entrepreneurial principles; Telkom isn’t. Although Telkom can’t be faulted for effort, the cynic in me worries that they won’t get it right in the short-term because entrepreneurship isn’t easy at the best of times.

3 Comments

  1. Dirk de Vos on

    Telkom should sell the cabinets in residential areas (and their pairs) to these newly created SME’s. Telkom looks to be losing customers to FTTH and this trend will accelerate. Having dedicated service providers with a direct interest in maintaining the customer relationship in the local loop would serve both Telkom as the wholesaler and the retenchees.

  2. William Stucke on

    Oh, boy. Telkom quoted large – and largely made up – numbers about how much it would “cost” them to unbundled the local loop. That was renting the copper and getting an economic return.
    They had more than a hissy fit at the thought of actually selling infrastructure. Even when shown photographs in public of disused exchanges that were being used as funeral parlours!