strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: November 30, 2006

 
 

The Company That Anticipated History

To achieve that goal, the utility had to devise a completely new way to collect payment. There was no postal service, and most residents had no fixed address and did not hold regular jobs. Eskom came up with a revolutionary prepayment system that is still in use; an in-home metering system that changed the dynamics of the black political struggle — withholding payment was a frequent form of protest — and forever altered the business model of Eskom. The in-home system used fare cards purchased at the post office; customers inserted them into the meter to activate the electricity flow. Four lights in the meter box allowed residents to monitor how much electricity they had left. The system also helped residents and the company avoid a mishap that both hated: service disconnections for nonpayment. Township activists continued to play an advocacy role; for example, they pressed for the replacement of unreliable meters. Meanwhile, as Dr. McRae recalls, new stories of township entrepreneurialism emerged. A man who had baked his family’s bread over an open fire invested in two electric ovens, which he used to start a successful bakery business that grew to have seven employees. A skilled welder launched a business with two other men making fencing, security bars for windows, and small steel chairs. Successes like these were the clearest vindication of Eskom’s prescience.

Equalizing Opportunity
As the company worked to desegregate power delivery, its leaders attacked segregation inside Eskom. Dr. Maree recalls becoming committed to the idea when the company opened its Matimba power station, near the Botswana border, in 1987. “I’ll never forget one man who came up to me and said, ‘Dr. Maree, electricity has no color. Eskom should not have color.’ That really hit me.” To be a top-performing utility, he and Dr. McRae declared, Eskom had to fast-track development of the staff from all races. They also argued that Eskom would better serve black customers if black workers at Eskom held positions of authority.

Integration was painful, especially for middle managers. “I remember sending young engineers, one black and one white, to the power stations,” says Dr. Steve Lennon, who was then a middle manager and is now Eskom’s managing director of resources and strategy. “They were expected to work together, but they weren’t allowed to sleep in the same place. I had a fight with one station manager, and ended up transferring a black scientist to another project because of the segregation.” At the same time, it was Eskom’s social progressiveness and its growing reputation for technical excellence that attracted highly skilled individuals like Dr. Lennon in the first place.

And it also attracted those few black students who had beaten the odds to become engineers. When Ehud Matya graduated from engineering school in 1986, he committed to a four-year stint with Eskom. He had been the first black at his school to win an Eskom-sponsored scholarship, and Eskom had gone out on a limb to award it to him. Assigned to a team piloting a software system at Duvha Power Plant, the largest in the world, he broke the managerial color barrier. Yet lavatories and lunchrooms were still closed to him. Before the year was over, he left Eskom for a job at South African Breweries. “The race issues were more challenging than I had expected,” he says.

Dr. Maree concedes that desegregating Eskom was painful for everyone, as well as time-consuming. “It took us two years to get all our regulations changed, because apartheid was still the law.” To pave the way for blacks to assume executive positions, including seats on the Electricity Council, Dr. Maree worked his political connections right up to President Botha. At a meeting with the president in 1987, he says, “We agreed Eskom should take a step very few others had taken.”

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

Resources

  1. Anton Eberhard, “The Political Economy of Power Sector Reform in South Africa,” working paper no. 6, Program on Energy and Sustainable Development at the Center for Environmental Science and Politics, Stanford Institute for International Studies, April 2004: Context for Eskom’s challenges as the primary electricity supplier in South Africa. Click here.
  2. Linda A. Hill and Maria Farkas, “A Gentler Capitalism: Black Business Leadership in the New South Africa,” Harvard Business School working paper no. 06-057, 2006: An informative profile of another South African company’s effort to recruit and develop black managers. Click here.
  3. Charlayne Hunter-Gault, New News out of Africa: Uncovering Africa’s Renaissance (Oxford University Press, 2006): The respected American journalist provides fresh perspective on pre- and post-apartheid South Africa, and prospects for the continent.
  4. Reuel J. Khoza and Mohamed Adam, The Power of Governance: Enhancing the Performance of State-Owned Enterprises (Pan Macmillan, 2006): The former chairman of Eskom offers views on governance of state-owned enterprises and on the narrowing gap between public- and private-sector management.
  5. Ian McRae, The Test of Leadership: 50 Years in the Electricity Supply Industry in South Africa (EE Publishers, 2006): Eskom’s former chief executive tells his story. Click here.