More than a dozen Kelley Evening MBA students are in South Africa to provide unpaid consulting services to small business owners in Johannesburg and the nearby Diepsloot Township.
“This will be a different business model and business environment for many of our students,” explained Marjorie Lyles, professor of international strategic management and instructor for the week-long study abroad course. “Some of the people in these townships don’t have electricity; others don’t have water. Most of their customers are what we call the working poor, making about $3 to $10 a day or sometimes in a week. My students will have to think about how you serve this particular kind of market. It is often called ‘the base of the pyramid.’”
The program is part of an existing collaboration between the Kelley School of Business and the Gordon Institute of Business Science (GIBS). Kelley Evening MBA students, who work full time while pursuing an MBA part time, spend about 10 days with GIBS and the small businesses identified by the institute. The main purpose is to provide an experiential learning opportunity for students, while providing free advice to the businesses.
The Evening MBA students are documenting their experiences as the week goes on. Read on to see the latest from South Africa.
Sunday March 12, 2017
Blog By: Olusola Afolabi, Trevor Bruner, Vipin Iyer, David Smith
We had quite an exciting start to this South Africa trip. We spent our day visiting The Cradle of Humankind and Sterkfontein caves just outside Johannesburg. This visit was followed by a visit to the Apartheid museum in Johannesburg. The Cradle of Humankind is the site of several fossil discoveries that have helped piece together the mystery of human evolution from human-like apes.
The key takeaway for me during this visit was the idea that concept, color and race are in our minds, and in reality there is no distinction between homo sapiens, because 99% of human DNA is identical.
At the Cradle of Humankind, we also saw a replica of the Taung Child’s skull, which was discovered in 1924. This discovery was heralded as one of the greatest archeological discoveries of the 20th century and represented the first of several fossils found in Africa that created a link between apes and human beings. For anyone traveling to South Africa, I would highly recommend visiting this location.
In the afternoon, we visited the Apartheid Museum, which is a relic of the apartheid era. The museum documents the movement, the struggle against it and the events leading to its downfall, followed by the transition into a democratically-elected government.
As part of the course, we read several books and articles and watched documentaries on the impact apartheid had on the lives of native South Africans, but it was extremely interesting to experience apartheid from the eyes of a South African.
Our knowledge about the era and what we saw in the museum were virtually identical, and it was nice to see this validation in an official museum in South Africa.
At the entry to the museum we were arbitrarily classified as “whites” and “non-whites” and were shown different exhibits from the apartheid era depending on where we were classified. This gave us a sense of what it might have been like to be a South African before 1993.
Another interesting fact of the post-apartheid government was the creation of a Truth and Reconciliation Commission to address violations of human rights abuses during apartheid.
Victims were interviewed and invited to recall their experiences, sometimes on live television, as sufferers of abuse. Perpetrators of this abuse were also afforded the opportunity to provide testimony and participate in a restorative process that could get them amnesty from prosecution. I thought this was a very innovative idea to begin the process of healing and forgiveness.
At the end of the day, our tour provider arranged a welcome dinner for the group at a marvelous Sandton restaurant called Marble.
Our group’s first official day was extremely informative and a lot of fun. We look forward to meeting our GIBS counterparts tomorrow.
Monday, March 13, 2017
Blog From: Olusola Afolabi, Trevor Bruner, Vipin Iyer, David Smith
Our day began at the Gordon Institute of Business at the University of Pretoria. We started with a tour of their beautiful campus, which was founded in 2001. Also on campus this week are students representing several other universities from the United States.
We first heard from Dr. Tashmia Ismail. She covered the topics of inclusive business and also discussed expectations of our consulting project.
We began the day by watching a video about an entrepreneur in the Phillipines who created a solar light for his community by cutting holes in their tin roofs and inserting a clear Pepsi bottle filled with water diluted with bleach.
Essentially, this entrepreneur was able to create a much needed vital need for the community using an item (the bottle) that would normally have been considered trash.
We also discussed the massive urbanization ongoing world-wide and its implications in creating a very dense population.
We talked about three key areas that are impacted by the global trend of a widening gap between the top wealthiest population and the bottom, poorest population. The three key areas involve disposable income, the fragility of income, and political/economic instability that can be caused by income inequality.
For our second lecture of the morning, we heard from Anthony Wilson-Prangley. We spent some time discussing the history of South Africa and the roots of apartheid.
We also discussed three key areas to focus on during our consultation in the Diepsloot. These are:
1) The observer effect and that our visit matters.
2) We can expect to learn as much from the client as we hope to impact them.
3) The need to ask powerful questions in order to help best the client.
During the afternoon, we visited the township of Alexandra.
Alexandra is a township outside of Sandton, which is about one square mile with a population of around one million people.
The businesses and housing within the area were extremely dense and in most cases businesses were being run from inside homes.
Even with the extreme poverty in the area, it was clear that the entrepreneurial spirit is alive and thriving. As we made our way through the township we took time to stop and get out of our vans to have a look around. There were clear divisions within the neighborhood between the less privileged and those that have managed to enjoy some economic success.
The dwellings ranged from those crafted from sheet metal and wood, to brick structures with walls and fencing. This difference between the very informal areas and the more formalized neighborhoods is important because it is within this range that the residents move along the economic ladder as they gain status and success.
The people were as warm and friendly as they were curious. The children wanted to dance and high-five while the adults had questions about our presence there. As soon as we described our plans of business consulting they were quick to tell us about their own ventures or local success stories.
One of the most entertaining exchanges occurred when a man yelled his description of our own Ryan Cutter as “Jean Claude Van Damm!” After some consideration, most of us agreed with this as accurate. What do you think?
March 14, 2017: Meeting the local businesses
By: Shanshan Zhang, Iris Wang Huixian, Holger Bayer, and Milan Patel
Our group of Kelley MBA students started today by driving through the township where each team’s consulting project microbusiness was located. Driving through the different parts of Johannesburg is always an interesting experience as Sandton (the area we were staying at) had luxurious hotels, shopping malls, large buildings and a vibrant culture whereas the townships were the exact opposite with poor infrastructure, minimal housing, high crime and low incomes. The amazing thing was how only a couple kilometers separated the nicest areas of Johannesburg from the poorest areas.
Diepsloot is a township in Johannesburg established in 1995, making it the only township established after the end of apartheid. It was originally established as a transit camp to account for overflow from existing townships like Alexandra. Unofficial statistics estimate that one million people share an area of one million square meters which implies a density of one person per square meter.
To say living conditions are tough would be a drastic understatement. Electrical supply outages are common and frustrating, and depending on the area within the township, up to 20 families share one port-a-potty.
The population of Diepsloot shares two government-run hospitals where one needs to be at the hospital as early as 4 AM to secure a spot in the line. While the conditions of Diepsloot are rough, there is, nevertheless, a big informal economy where microbusinesses seem to flourish.
Our Kelley MBA groups had the opportunity to work with a hair salon owner, a spaza (grocery) shop owner, laundry cleaner and a tuck (food) shop for each of our consulting projects.
Today, all the groups met with their respective entrepreneur to observe their local business and get to know the owner as well as understand their respective business models.
Our group was assigned TSK Hair Salon owned by a woman named Ficious. She is incredibly bright and passionate about her business and what she can accomplish. Today, it seemed there were peaceful protests in the area of her business forcing our group to meet with Ficious at a local restaurant.
As we asked her questions about her salon, we discovered her main burden seems to be her limited access to electricity.
She relies on a battery which she uses to warm water to wash customers’ hair, keep the light running in the evening hours, and powering hair blowers. However, using the battery requires her to recharge it every month which takes three days and the power is minimal, forcing Ficious to use her hair instruments sparingly.
Simply speaking with Ficious, seeing Diepsloot and understanding the living conditions was definitely an eye-opening experience for our group and class – and today was only the kick-off of our collaboration with her!
Prior to leaving Diepsloot, we had lunch with Ficious and the rest of our class. This was our first true experience with native South African food. We ate different meats and quasi-curries all of which had a rich taste and spice in them.
After lunch, we headed back to GIBS (Gordon Institute of Business) where we had a couple of class sessions with local faculty.
The first session was with Dr. Tashmia Ismail where we used a lego-building exercise to articulate what we experienced on our visit to Diepsloot. The session, at first, seemed slightly unconventional, but quickly led to a thoughtful discussion on the causes of the stark inequality of South Africa and the living conditions of the individuals in Diepsloot.
Our group, using legos, built two different models representing both the old and new townships. The model of the old township was filled with animals, spiders, armed police and chaotic buildings with no electricity. In contrast, the model of the new township was filled with trees, working men constructing new buildings powered by solar energy and colorful flowers all around the township. The construction of the models actually led our group to explore the topic much further than we would have otherwise.
The following session was with Dr. Adrian Saville who discussed the macroeconomic causes of the low growth of South Africa. His talk identified how important it was for emerging economies like South Africa to invest in their long-term growth.
The two sessions helped our class understand at a superficial level how South Africa’s economy has stagnated, leading to the inequality seen in the townships. By the end of the day, our group and class was exhausted. It had been a long day with an experience few of us will forget and a large amount of information thrown our way. We all turned in early to get ready for our first full-day with our microbusinesses!
March 15, 2017: Working with the local businesses
By: Shanshan Zhang, Iris Wang Huixian, Holger Bayer, and Milan Patel
Our group started out the day with a couple of lectures from GIBS faculty and a guest speaker.
The first speaker, Dr. Tashmia Ismail, described a case study that demonstrated how innovative business practices in emerging markets can service a need in the community.
In particular, this project involved an insurance company, meteorological company, cell phone banking company and a seed company. Rural Kenyan farmers could then buy crop coverage that would give payouts if there was a drought or extreme heat. The cooperation among these companies was unique and incredibly helpful to the rural farmers. As Dr. Ismail stated, “service the need” is beneficial to all parties.
The second speaker was an executive from the company MTN Simo Mkhize, a mobile banking company. He described how his company was able to work with emerging markets in Africa and how his company was profitable providing a service rural individuals needed.
Our class had many questions for him about what he believed hindered companies like his to grow and expand. As is a common sentiment we’ve heard from most South Africans, government regulations impede business, especially with all the rules imposed on banking.
After the lectures, we went back to Diepsloot to work with our businesses. Just like yesterday, we had an authentic South African lunch. A staple of the diet is a maze paste—called “papad.” With a vegetable curry, the papad was amazing. In addition, there was chicken, lamb, and beef with vegetables and curry.
Our time with Ficious (TSK—hair salon owner for our consulting project business) was much more productive than yesterday.
We were able to visit her salon and were able to understand exactly how her business runs. One aspect of her business that we discussed was the use of a transformer and battery that was unable to handle the voltage of a flattening iron. Because of this, Ficious believed that she was losing clientele.
With the help of our guide, Susan, we walked to a shop that sold other transformers and discovered that Ficious needed a transformer with a higher voltage. This type of transformer would cost ~200 Rand. Moreover, we determined that she needed a better records system and marketing options.
What was striking in our conversation was her passion for her family. Ficious was building her hair salon business so she could save enough money for a bedroom in her home that her mother could use.
Understanding her situation led to a greater appreciation of her hardships and the diligence she has for her work. As the rain started in the township, we had to leave Diepsloot to return to our hotel.
On a lighter note, our group also received Zulu (the language used in the townships) names:
Shanshan Zhang—Nolanga (sun)
Holger Bayer—Xolani (apology)
Iris Wang—Mbali (flower)
Milan Patel—Bongo (short for bongani, meaning thank you)
Our guides now only use our Zulu names when they speak with us, which leads to some hilarious moments.
Also, today was the birthday of Sujit Teland, who turned a generous “25.”
The Gordon Institute of Business (GIBS) was gracious enough to provide a cake which we complemented with an energized chorus of “Happy Birthday!”
Thursday, March 16, 2017
By: Praveen Srinivasan, Manuja Wimalasena, Sujit Telang, Uduak Offiong
The next day was our last day to meet our business owner and finalize our proposals to them. Prior to meeting our business owner Sophy Serake, a tuck shop owner (or small store selling food) in Diepsloot West Secondary School, our group had a lecture by Professor Tashmia Ishmail on ‘Business Models for the next Billion.’
We learned about innovative business models across many countries. Some of the innovative companies we were introduced to included: JuMo (South Africa), Selco Solar (India) and M-Kopa (Kenya).
We left for our final day at Diepsloot with Sophy to discuss improvement opportunities.
We decided to use Legos to discuss store layout improvements with Sophy.
One of our suggestions to her was to help her handle cash more efficiently during the busy lunch hour.
After our visit to Diepsloot, we returned to Gordon Institute of Business Science (GIBS), only after being snarled in rush hour Jo’burg traffic.
We reconvened with our teams on either side of dinner well into the night, preparing for our final presentation on Friday.
This brought team dynamics to the forefront as we were all racing toward a deadline.
Friday, March 17th, 2017
By: Praveen Srinivasan, Manuja Wimalasena, Sujit Telang, Uduak Offiong
The next morning, a couple members of our team went to the nearby grocery store to pick up a tray for Sophy to help manage her cash. We then went to GIBS after breakfast, and all four groups made their presentations.
Sophy unfortunately could not make it to the final presentation, but the two hours were very rich with presentations by all groups. We also heard from the different business owners themselves.
Following our presentations, we had a hearty lunch, following which the winners were announced.
Team 1 consisting of Vipin/ David/ Trevor and Olusola were awarded first place in the competition, due to their well thought-out short term and long term plans for their business owner, Mashudu.
At the conclusion of the announcement, the whole group of 16 with their business owners said their fond farewells and took many pictures to help remember this amazing experience.
Just when we thought the trip was coming to an end, we had a great dinner at Moyo’s Africa, which featured great food, face painting and a lot of dancing!
In the evening, a few of us went to the Mall of Africa, which very clearly highlighted the disparities that exist in South African society. The Mall of Africa is a very upscale mall that can hold its own even in the most developed of countries. At the same time, a large portion of society lives in townships like Diepsloot, which is very poor.
Starting Friday night, the group dispersed, with some members of the group flying back to the US and the rest over the weekend. About half the group went to Cape Town, one of the most beautiful cities in the world, to cherish this amazing country a little longer.
Overall, this was the most enriching trip, with a lot of learning, meeting new people and also a lot of sightseeing. Thanks to the IU Kelley School of Business for this opportunity.