News & Press: IoDSA in the Press

Behaviour is foundation of business success for entrepreneurs

Monday, 05 May 2014   (1 Comments)
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"Forget results, think behaviour - the best measure of future success as an entrepreneur is his or her behaviour,” says Siya Mapoko, author of Conversations of JSE AltX entrepreneurs. According to Mapoko, results are a good measure of past performance but are less effective about predicting future performance.

Speaking at the Institute of Directors in Southern Africa (IoDSA) recently, Mapoko argued that results come too late in the process. "You need to define what your goals are, and what behaviour will help you to achieve them—and then make it a habit,” he said.

Parmi Natesan, Senior Governance Specialist at the IoDSA, says that Mapoko has a point, particularly when it comes to compliance with King III and other corporate governance requirements. "As an entrepreneur gets his or her business off the ground, corporate governance can seem to be a compliance burden. But in fact once one understands that integrating the principles of corporate governance into the way one does business, it becomes part of the entrepreneur’s recipe for success.”

Natesan points out that corporate governance principles such as those identified in King III do not exist in a vacuum but were developed in response to challenges faced by business. In other words, they should be seen as guides for behaviour that promotes business success rather than something that needs to be complied with.

Just one example of the way in which operating a company in line with the spirit of corporate governance expressed in King III and similar codes, is the increasing requirement for transparency from a wide community of stakeholders. Driven by technology—think of the Arab Spring, Wikileaks and many other instances—the community at large has the tools to demand (or to find) research about any organisation, and to hold it accountable. This trend is affecting the way that elected leaders and governments operate, as well as the private sector. Citizens, employees and stakeholders are all increasingly empowered.

In parallel with this emerging viewpoint is the notion that a business does not exist solely for its own benefit, but affects the rest of society through what it does, and how it depletes our common capital of natural resources.

Says Natesan, "Following the guidelines of corporate guidance enshrined in King III would ensure that a young entrepreneur is well equipped to operate in today’s business environment which is characterised by high levels of accountability and transparency.”

Another example of how following best practice in corporate governance makes sound business sense even for young, entrepreneurial companies is the question of director selection.

"Often the most difficult time for an entrepreneural company is when it becomes big enough to have to comply with legislation and various codes, and attract institutional investors—often the necessary depth of process and expertise is lacking, creating a ‘growth crisis’,” observes Natesan. ”It’s worth doing everything one can to lay down strong foundations for future growth by ensuring that the board has a diverse range of skills, and is an effective enabler of growth.”

For example, Natesan advises that a mix of industry and functional skills and experience is desirable to give input into strategy. "It’s common for start-up companies to have the founder acting both as CEO and chairperson, and this acceptable at this stage. But even at this early stage, care should be taken to identify the kinds of skills and independence that will make the board an effective catalyst of profitable growth. In this, as in so many things, it’s good to begin as you mean to go on! Behaving like a successful company will help you to become one.”


Jolly Mokorosi says...
Posted Tuesday, 13 May 2014
Interesting perspective.