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December : Those who grow alone, die alone: why transformation is strategic for the MTO Group

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14 December, 2017

Those who grow alone, die alone: why transformation is strategic for the MTO Group

Those who grow alone, die alone: why transformation is strategic for the MTO Group

At a time where other businesses are drawing down shutters and withdrawing where they can, the MTO Group is moving in a different direction. It has been expanding and increasing its spend on black owned businesses, and launched significant business resources and support to incubate current contractors. Why, when the going's getting tough, is MTO helping everyone around it to get going?

Forestry continues to be among South Africa's large and consistent contributors to GDP, not to mention fuel the development of both rural and urban economies. As it rebounded towards growth in 2017, the sector is an important cog to help drive more momentum into the South African economy as it faces some large fiscal bumps in the road, especially following the devastating fires in June this year.

It is this potential that excites MTO, which has been driving an ambitious project since 2014 to lift all the parts of its value chain through empowerment, education and transformation. But the initiative is not about scoring points on equality ratings. That is certainly an effect of the action, but to MTO and its CEO, Lawrence Polkinghorne, focusing on the scorecard alone is missing the point:

"Transformation is not a choice. There are sector codes specifically governing broad-based empowerment. But at MTO transformation is a way of work, we have it in our DNA so while we strive to improve our BBBEE rating, this is not what drives us, we see it as a strategic imperative to embrace holistic transformation, we do what we do and the score is a consequence, it has been rewarding to see the impact of the programs undertaken over the past 2 years"

To elaborate, MTO believes that forestry as a whole has a lot of potential to modernise, as well as drive wider-scale growth across society. Its vision - to be the leading pan-African forestry timber and product solutions provider - is both ambitious and attainable, particularly with the potential of new business paradigms such as machine learning, analytics and automation.

Normally such concepts are followed with murmurs of thinning workforces, but this is where the group's approach differs from traditional models.  One tree does not make a forest, no matter how big it is. Solitary trees die, but forests grow. If MTO aims to become the blueprint for 21st century forestry, it won't do so alone, said Polkinghorne:

"Transformation in modern forestry is an exciting journey. It speaks to the overarching theme of transforming holistically, it touches us everywhere, socially, economically, culturally and digitally, so we are completely subscribed to these dynamics. We love the change, becoming current and global. It fits with our culture of being inclusive, flexible, adaptable, urgent and energetic."

To this point, developing MTO's partners and communities is vital. Thus it has embarked on significantly improving the prospects of its contractors, in particular black-owned businesses. MTO's enterprise development unit has its own GM, as well as two business development managers and a compliance officer, all 100 percent focused on the beneficiation, improvement, development and increase of allocation towards black-owned businesses.

Their arsenal includes funding programmes, training in matters such as tax, finances, health & safety, and compliance, as well as small business toolkits and an incubator program. These initiatives are targeted and scrutinised right up to the board level - even a casual look at the reports show a clear dovetail between transformational development and MTO's strategy.

"The MTO Contractor Development Programme wouldn't work without the clear support of MTO's board and CEO, exco and local management," said Parmas Chetty, who assisted MTO in developing the programme. "It is intended to bring benefits for MTO as well as its contractors, so it impacts both parties and requires buy in from both."

The programme is not altruistic. As Polkinghorne explained, it is a strategic move that ultimately should benefit MTO. But this does not mean it aims to hem contractors into its supply chain. Quite the opposite:

"We've got to give our suppliers and contractors the wings to fly. That's the point. It may seem counter-intuitive, but not at all. Think about the risk mitigation, exposure and sustainability of their businesses to be able to spread their risks and have different income streams."

This is not merely a very effective approach to corporate social development. The entire process is crucial to MTO's ongoing strategy, and it views this as a developing blueprint that it would like others to consider. Other forestry companies have also embarked on similar programs, so it would be disingenuous to call MTO's plans unique. But for Polkinghorne this only means more opportunity to collaborate among MTO's peers and establish a sector-wide culture of development. As it diversifies into other industries, the MTO Group hopes to achieve similar successes elsewhere as well.

"As an industry, we recently presented our programs and plans to the parliamentary portfolio committee. All the major players are doing great work in the sector, which we will continue to do, notwithstanding a difficult space where politics and individual's agendas have somewhat skewed the positive impact. The accelerated transformation initiatives are obvious in the increased allocations and opportunities awarded to communities. Collectively there has been a massive improvement and real impact in changing people's lives. I am hopeful that once the dust settles we can get back to the table with government to enable a platform for measured and tangible change, and it is critical that we remain focused on aligning the transformation charter to include a broad base of stakeholders so that communities are able to celebrate beneficiation whether it be direct or indirect"

Transformation and the bottom line need not be adversaries. Well-established industries such as forestry can modernise while nurturing their ecosystems. So while some see opportunity in cutting back, MTO is feeding the growth. It's not because it doesn't have the luxury not to, but because it's a privilege to be able to broaden a scope that really does develop entrepreneurs, people and communities.

Source: MTO Group

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