5. Summary of case organisations
5.2. Research and Development
The review of the integrated reports of the organisation from 2011 to 2017 as well as the interviews which were carried out with the representatives from Research and Development Company revealed that there were two areas of focus for the organisation as illustrated in Figure 5.3 below:
Figure 5:3: Corporate’s strategy evolution between 2011 and 2017
Chapter 5: Summary of case organisations Organisation’s approach to executing strategy
The corporate strategy is developed based on Research and Development Company’s Mandate thus focusing on what is required. Consideration is given to what is happening in the Mining Sector and this will inform the strategic objectives of the organisation.
The corporate strategy is developed on what the business requires at the time i.e.
Vision 2020 focusing on R&D and Technology, Research and Development Company 4.0 focusing on repositioning the business and acquiring skills of the future. The corporate strategy is centred on research and development since this is the primary activity of the organisation and will be aligned to Research and Development Company’s mandate. The development of the strategy starts in November each year and the company works towards October of the following year. The corporate strategy was structured around four to five pillars (strategic thrusts) that pulls the strategy of the organisation together.
Vision 2030 provides the broad strategy of Research and Development Company. It takes into consideration what has happened historically. Management hold annual strategic sessions which are held generally in November and these occur on a 3 year term. This session would take into consideration the national priorities based on the macroeconomic policy of the country (i.e. NDP). The Department of Mining Resources (DMR) and the Department of Science and Technology (DST) would make presentations which speak about the national priorities, what their broad strategic objectives are and how Research and Development Company could fit and contribute to these areas of policy taking into account the macroeconomic factors. A Research and Development Company representative would deliver a presentation on the outcome of the market scan and assessment in order to contribute to the strategy development process. The plan focuses on the coming year and the output of these sessions is the Compact with the Shareholder (DMR). The Compact contains the scorecard targets, KPA and KPI which the company needs to achieve. The strategy is broken down into yearly KPA and KPIs that Research and Development Company needs to achieve. It covers priority areas, scorecard and targets for the year.
The management team conducts research and uses a formalised process to compile work packages (portfolios) for various divisions (research clusters). There are normally multiple projects that make up a work package. The research clusters are defined by the long term view of what is strategic for the organisation to research. There is a framework (funnel type) which is used to select research projects that will be funded.
In the initial rounds there are more projects proposals that are evaluated at cluster level by technical experts. The shortlisted ones will be passed on to the adjudication committee which is made up of General Managers who would assess the merit of the work package and balance the projects against the funding available, capacity of each division to execute, technical capabilities and corporate priorities (work package motivations).
Chapter 5: Summary of case organisations
There is a multi-dimensional matrix that is used to evaluate the proposals and work packages for various clusters, they are categorised based on a number of things such as the impact of the project, resources, job creation, process optimisation, level of technology, commodity, national priorities linked to the NDP. There is an ideal distribution of projects that is targeted and this will be used to evaluate the final portfolio of selected projects. At the beginning of the year work package leaders could apply for changes which may include changes of budgets. Once the portfolios are finalised then an Enterprise Resource Planning system workflow embedded in web-based collaboration platform would route the budget to Finance for consideration and approval based on the available budget. Funds that are left over or come from terminated projects would be made available to accommodate other proposals.
The process to evaluate the work packages is intense, includes motivations (narrative) by the cluster leaders and those who made proposals. The summary document on the approved projects would be made available at the beginning of the year (January/February). The initial strategy session, which highlights the broader and key issues would have been concluded before the project proposals are adjudicated thus enabling the GMs to approve the work packages in accordance with the corporate strategy for the year. This enables the alignment of the outcome of the adjudication of the work packages to be aligned to the corporate strategy.
In the research proposal the divisions would document the background of the project, specific objectives, outcomes (what will be delivered as impact), budget, resources including people. Objectives are what will be used to evaluate and prioritise the proposals. The budgets for the different work packages would be rolled up to make up the budget for the division. A summary is presented for each division based on the budget. There is a workflow incorporated in the SharePoint system that is used by Research and Development Company to manage their portfolio of projects.
The strategy planning session involves senior management, executives, half the Board, and the main stakeholders (DMR, DST). There is normally a facilitator that would guide the team and the process. Managers, Executives, Board of Directors, a facilitator of the strategy session and the New Business Development Unit would consolidate the draft corporate strategy document. There are usually presentations by market players to share insights on prevailing market conditions. The session would have an industry representatives who would make presentations but do not participate in the planning sessions.
After the strategy session the management team would have a consultation process to check the outcome of the long term strategy. The company has strict time frames to complete the process in that the strategy session is held in November and by January of the following year the company should have a draft Compact document and together with the budget must be submitted to the Minister for approval before the end of
Chapter 5: Summary of case organisations
February. The strategic plan is an internal plan, which is deemed as a working document, and is normally revised every three to four years. The business however report on both the Compact and the Strategic objectives which are reflected in their annual report.
Project Portfolio
The analysis of annual reports indicates that Research and Development Company focused on business improvement, R&D and industry support projects in 2011, which is in agreement with the observation of the evolution of the strategy of the organisation.
The focus shifted from 2012 to 2014 to capacity building, R&D and industry support projects. It was also noted that the focus for 2015 to 2017 was largely on R&D and industry support projects (Figure 5.3).
Table 5:3: Strategic project portfolios between 2011 and 2017
Strategic portfolios 2011 2012 2013 2014 2015 2016 2017 Business improvement
Capacity building projects
Research and development projects
Industry support projects
It is observed that the portfolio of projects that is reported on in the annual reports is strategic in nature and cover key areas in the business. It was however, noted that business improvement projects were largely reported on in 2011 which links to the evolution of the corporate strategy where the focused was on enhancing good business principles as a foundation for growing the organisation. While between 2012 and 2014 the organisation focused on capacity building projects to position it as a Research and Development organisation of note.
Key challenges and market factors experienced by the Research and Development Company
The review of the integrated reports shows that in 2011 Research and Development Company focused on enhancing good business principles as a foundation for growing the organisation. It was noted that between 2012 and 2017 the organisation pursued a strategy that was fit to build Research and Development Company’s positon as an R&D organisation of note.
Chapter 5: Summary of case organisations
The following market changes and internal factors were noted during the review of the organisation’s integrated reports in the quest to appreciate the dynamics that affected the performance and turn of events within Research and Development Company:
The global economic crisis that prevailed during 2011 had a negative effect on the profitability of the organisation (Research and Development Company SOC Limited, 2011). However, the organisation managed to achieve a 2% saving in costs, implemented the mining, mineral process and beneficiation objective of the New Growth Path (NGP) and considered the development of new technology aimed at handling issues such as Acid Mine Drainage (AMD) (Research and Development Company SOC Limited, 2011).
The global economic uncertainty persisted into 2012 however, the organisation was resilient delivering better than budget revenues, gained from cost saving initiatives and ended the financial year with a surplus cash of R43m (Research and Development Company SOC Limited, 2012). In the quest to remain afloat, the organisation explored growing its revenue pipeline by exploring commercial projects and bidding for work (Research and Development Company SOC Limited, 2012).
The year 2013 saw water and energy constraints which Research and Development Company sought to support the mining industry with through efficiency projects (Research and Development Company SOC Limited, 2013). Furthermore, Research and Development Company increased the volume of research work it conducted, entrenched a culture of cost savings to improve profitability and improved on its collection strategies in order to recover funds from customers (Research and Development Company SOC Limited, 2013).
The year 2014 proved to be an interesting one in that the global mining industry was positioned to enter a period of distinct structural change since the African continent became the new destination for exploration of untapped and largely unexplored resources (Research and Development Company SOC Limited, 2014).
The world economy in 2015 showed a decline in commodity demand and prices that led to a concomitant drop in projected income which was expected to prevail throughout the year (Research and Development Company SOC Limited, 2015).
However, the downward spiral in mining activity was expected to ease somewhat during the latter part of 2016 (Research and Development Company SOC Limited, 2016) which bode well for the organisation given its focus on R&D projects that sought to benefit the mining industry. In 2016 the resilience of the mining industry continued to get tested by low commodity prices thus leading to Research and Development Company’s commercial activities being placed under severe strain (Research and Development Company SOC Limited, 2017). However, the market sentiment was changing since industry analysts suggested that the downward spiral had bottomed
Chapter 5: Summary of case organisations
out and the outlook was upbeat from the beginning of 2017 (Research and Development Company SOC Limited, 2017).
The following top business and strategic risks facing the organisation in 2017 were noted (Research and Development Company SOC Limited, 2017):
1. “Loss of commercial revenue”.
2. “Operational incident causes injuries, destruction of building and equipment or loss of licence to operate scheduled processes”.
3. “Failure to attract and retain skilled personnel”.
4. “Changing Government policies and priorities”.
5. “Surge in operational costs”.
The review of Research and Development Company’s annual reports revealed that the organisation survived difficult external and market conditions over the period of review.
It is commendable that Research and Development Company was able to remain afloat while contributing to the mining industry and its clients during this time.
The journey of the Research and Development Company between 2010 and 2017 reflects that the organisation was focused and intentional in establishing its approach to execute the corporate strategy through project portfolios although in the absence of striving to achieve its strategic intent (reason for existence or mandate of the organisation). This largely illustrates how the Research and Development Company applied the conceptual model developed for the research although the link between business value and the strategic intent was inadequate.
It was emphasised by representatives during interviews that the CEO was extremely focused on developing systems, measuring success and reporting on the performance that was achieved across the organisation. The CEO started, in his early years, by streamlining how things are done. It was also shared that the CEO applied a leadership style that focused on compliance thus providing the necessary resources to achieve compliance and this resulted in the organisation achieving clean audits.
It was noted from the case study results that the Research and Development Company has a defined corporate strategy which it executes through the use of projects, the organisation does evaluate its performance against the strategic objectives and targets as well as link the achieved performance to its mandate as defined in the Compact.