Leveraging B-BBEE Strategy as a Driver for Competitive Advantage - by Marlini Mansingh

“The responsibility of business is to use its will and resources to advance a cause greater than itself, protect the people and places in which it operates and generate more resources so that it can continue doing all those things for as long as possible” (Sinek, 2019).

In the field of Broad-Based Black Economic Empowerment (B-BBEE) in South Africa, many companies strive to make a real impact. Achieving compliance with B-BBEE regulations is not only a financial and legal imperative but also the right thing to do and currently the most significant driver of real change and long-term economic sustainability in our country. Organisations must look beyond compliance, strive for creative solutions, and seek strategies that deliver a sustainable competitive advantage in their industries. Crafting a truly effective BEE strategy requires considering an organisation's competitive environment and going beyond the obligatory ticking of regulatory boxes. By driving a culture of effective, ethical, and sustainable practices, it is possible to create real long-term value and contribute to broader economic empowerment and social transformation. At the business level, each organisation operates within a unique business environment, and a one-size-fits-all approach to B-BBEE compliance defeats the spirit of the BEE codes. Businesses should develop unique B-BBEE strategies that align with their specific organisational strategic goals and objectives (Lear, 2012).

“Strategy is the most important thing top leaders do. When C-suite executives do not focus on strategy they will fail to compete in the 21st century” (Lear, 2012).

Furthermore, an effective BEE strategy should strive to deliver a return on investment (ROI) for the organisation. By ensuring that the spend on BEE initiatives is impactful and meaningful, businesses can achieve both compliance and commercial value. This means designing BEE programs that not only meet regulatory requirements of the codes but also drive business growth, deliver a competitive advantage, and open up new market opportunities. Ultimately, a well-crafted BEE strategy can lead to measurable financial benefits, making the investment in BEE initiatives both strategic and beneficial for the organisation’s triple line reporting (King, 2016).

When embarking on the planning stage of a BEE strategy, some of the key questions leadership must consider are:

• What impact does BEE have on the direction our business is heading?
• How will our BEE strategy support us in getting our business there?
• What BEE strategy will supplement the growth of our organisation?

At the outset, deciding on an emergent or prescriptive strategic approach to BEE is critical. A prescriptive approach involves setting clear goals for each of the BEE elements, identifying necessary actions, and outlining the steps and resources needed to implement these actions effectively. An emergent strategy, on the other hand, allows for a more flexible and agile approach to decision-making that evolves over time in response to unexpected opportunities and challenges. Unlike a prescriptive strategy, it is not predetermined but develops organically as the organisation adapts to changing environments and learns from evolving experiences. In South Africa, considering the current political climate, perhaps a hybrid approach offers a more prudent way to manage the inherent uncertainty with which we live. This approach combines the clear structure and defined goals of a prescriptive strategy with the flexibility and adaptability of an emergent approach. By choosing a hybrid method, organisations can set firm objectives and action plans while remaining agile enough to respond to unexpected changes and opportunities. This dual strategy allows businesses to adjust their BEE journey to evolving circumstances, enabling sustainable growth and resilience (Ehlers & Lazenby, 2010).

Once the approach has been determined, the next step involves conducting a thorough analysis of the business environment in which the organisation operates. This can be performed using a PESTLE analysis, which is a helpful tool to scan the external business environment and is especially useful when designing the BEE strategy for Equity Ownership, Management Control, Skills Development, and Preferential Procurement elements. A SWOT analysis is also a useful strategic tool, providing an internal scan of the strengths and weaknesses of the organisation. This is also useful for planning initiatives for Enterprise and Supplier Development, Preferential Procurement, and Socio-Economic Development (Kaplan & Norton, 2004).

Since the inception of the codes in 2007, Enterprise Development (ED) and Supplier Development (SD) have demonstrated their strategic value in achieving meaningful BEE compliance and goals, especially in the area of procurement. By understanding and nurturing supplier ecosystems, organisations can drive the growth of Black-owned enterprises and integrate them into their supply chains. This strategic collaboration not only meets B-BBEE requirements but also contributes to the overall sustainability and competitiveness of the business ecosystem (Department of Trade and Industry, 2013).

Strategic partnerships play a vital role in driving meaningful change. Organisations should actively seek out partnerships with other entities committed to B-BBEE, as these alliances can amplify the impact of B-BBEE initiatives. Organisations should leverage the expertise of implementation partners, as guided by the codes in Code 400 paragraph 9.1.23, which recognises payments made to “suitably qualified third parties to perform enterprise and supplier development” as a part of the BEE scorecard. Such specialists provide tailored business development support to SMMEs in areas such as financial management, business growth strategy, business process improvement, and innovation. This collaborative effort, grounded in strong governance and ethical practices, ensures that B-BBEE compliance is not just about meeting regulatory requirements but about driving transformative impact that fosters growth, competitiveness, and ethical business conduct (Department of Trade and Industry, 2013).

The journey towards B-BBEE compliance and sustainable business practices is not just about meeting regulatory requirements; it is about driving transformative impact that enables growth, competitiveness, and ethical business conduct. By integrating compliance with sustainability and corporate governance, organisations can contribute to the broader goal of economic empowerment and social transformation in South Africa.

ABOUT: Marlini Mansingh

Marlini Mansingh is the Director of Strategic B-BBEE Advisory at LEAP, bringing over 13 years of specialised experience in the B-BBEE sector. She holds a BCOM(Accounting) with SAICA Articles and has completed the B-BBEE MDP, along with the CIA Board Exam in Internal Audit, and holds credentials in Forensic and Investigative Auditing. Marlini has extensive expertise in auditing complex group structures and multinational B-BBEE verifications. Currently, she is pursuing an MBA and enjoys leveraging her vast experience to drive strategic growth at LEAP.