By Thulani Dube, Head of Innovation and Advancement – Cornerstone Institute
At a press conference in 2013, as Nokia announced the sale of its mobile phone division to Microsoft, then CEO Stephen Elop reportedly said “we didn’t do anything wrong, but somehow, we lost.” These words, simple yet haunting, capture the paradox of organisations that execute what appears to be the right strategy, yet fail to achieve the results they need to survive. For Nokia, the lesson was that meeting yesterday’s standards does not guarantee tomorrow’s success. For South Africa’s corporate sector, the same warning applies to Enterprise Supplier Development (ESD).
On paper, many ESD programmes are operating as they should. Companies comply with the Broad-Based Black Economic Empowerment (B-BBEE) Act and the Codes of Good Practice by allocating three percent of net profit after tax to supplier and enterprise development. It estimates that in 2025, corporations will collectively spend approximately R30-billion on ESD initiatives and yet the results remain underwhelming. According to the B-BBEE Commission’s 2022 report, only 61 percent of the set ESD targets were achieved, with fewer than two thirds of companies having a defined strategy, and fewer than 40 percent offering structured mentorship to small suppliers.
The Gordon Institute of Business Science’s White Paper of 2024 echoes this concern, noting that while between R20-billion and R30-billion is invested in ESD annually, the long-term impact is still uncertain due to weak alignment with Small, Medium and Micro Enterprises (SMME) needs and inadequate monitoring. In other words, much like Nokia, organisations may not be “doing anything wrong” by compliance standards, but they risk still losing the battle for transformation, impact and sustainability if leadership does not elevate ESD beyond compliance.
The legislative framework of the B-BBEE codes mandates a percentage of net profit after tax be allocated for supplier development as well as enterprise development. The policy reflects a recognition that small and medium and micro enterprises are critical to economic growth and job creation but still face systemic barriers in accessing finance, markets, and skills. However, legislation sets only the minimum or rather a foundation. Studies show that when corporates treat ESD purely as an obligation, they disburse funds but fail to create resilient businesses or sustainable value chains. Compliance may keep organisations on the right side of regulation, but it does not guarantee success in building empowered suppliers or resilient economies.
This is where leadership becomes indispensable. Leadership determines whether ESD is a tick box exercise or a catalyst for transformation. When senior executives integrate ESD into the organisational mission and vision, they shift it from a marginal compliance item to a strategic pillar of competitiveness and innovation. In the current volatile global economy, where supply chains are increasingly vulnerable, such leadership foresight ensures that ESD strengthens resilience while also advancing inclusive economic growth.
Leadership also sets organisational culture. In situations where visible executive commitment is absent, procurement teams may view small suppliers as liabilities rather than assets. Alternatively, when leaders champion supplier diversity, they will cultivate a culture that values partnerships with smaller, agile businesses as sources of resilience and innovation. This commitment must extend beyond funding to include mentorship, technical support, as well as governance training. These are resources that the B-BBEE Commission has identified as frequently neglected, yet critical for long term success.
Accountability remains a pillar of effective leadership. The B-BBEE Commission’s research found that companies with clear strategies and measurable targets performed far better on ESD outcomes than those without. By tying supplier development to executive scorecards, leaders elevate it to the same level of priority as profitability and growth. What leaders measure, reward, and communicate tents to be achieved.
The rewards of leadership-driven ESD are immense. Corporates gain stronger, more innovative supply chains, less exposed to disruption and enriched by the creativity of small suppliers. Society benefits from job creation, skills development, and the transformation of value chains through the inclusion of black-owned businesses, women, and youth. Leaders themselves earn recognition as purpose-driven innovators, leaving a legacy that extends beyond profit to empowerment and national progress.
The risks of complacency, however, mirror Nokia’s cautionary tale. Too many companies believe that by spending the required percentages, they are doing everything right. Yet when these funds are not paired with strategic vision, mentorship, and accountability, they deliver little sustainable change. The GIBS White Paper describes this misalignment bluntly stating that billions are spent, but too often on initiatives that fail to match the real needs of small suppliers or to build long-term competitiveness. Leaders must recognise that compliance alone is not success. Strategy, foresight, and active involvement are what make sustainable difference or impact.
South Africa’s business landscape provides striking contrasts. For instance, Distell’s partnership with Stellar Agri transformed a small 23 hectare farm into a thriving 150 hectare enterprise, supplying major retailers and exporting abroad, thanks to leadership support in technical training, governance, and market access. Distell’s ESD strategy has shown alignment with the company’s focus on the United Nations Sustainable Development Goals (SDG), particularly SDG8 and SDG17 which focus on decent work and economic growth as well as global partnerships. This example shows what happens when leadership treats ESD as strategic.
By contrast, where leadership has been absent, programmes have collapsed into short-term financial handouts with little developmental impact. Like Nokia, such corporates may claim they did nothing wrong, but they will nonetheless lose and as such lose supplier resilience, losing innovation, and ultimately losing the opportunity to shape inclusive growth.
The path forward is therefore clear. Leaders must embed ESD into boardroom strategy. It becomes important to tie outcomes to executive accountability, and build ecosystems of support that connect SMEs to capital, markets, and mentorship. They must insist on capacity-building programmes that extend beyond funding, and they must communicate and celebrate success stories to inspire momentum across industries.
Enterprise Supplier Development is not simply a compliance requirement but it is a leadership responsibility and an opportunity to future proof organisations while uplifting communities. The statistics are sobering reflecting that billions are spent, but impact remains uneven. The warning from Stephen Elop resonates that doing nothing wrong is not the same as doing enough. For South Africa’s corporates, success will not come from compliance alone. It will come from visionary leadership that reimagines ESD as a strategic imperative for transformation, resilience,impact, sustainability as well as shared prosperity.
By rising to this challenge, today’s leaders can leave behind more than profitable companies. They can leave behind empowered suppliers, resilient supply chains, and a legacy of inclusive growth that future generations can inherit with pride.
Thulani Dube is the Head of Innovation & Advancement at the Cornerstone Institute
