- Entrepreneur: Howard Blake
- Company: Blake
- Established: 1990
- Visit: www.blake.co.za; howardblake.co.za
- Stay at the edge of innovation. Disrupt your own operation before someone else does it.
- Don’t treat risk as a dirty word. The key to growth often lies in embracing calculated risk.
- Diversify without losing focus. Create verticals that complement and feed off each other.
- Innovation and execution are not the same. They need different approaches.
Howard Blake started his business when he had nothing more than a typewriter and a scooter to his name. He would work from his kitchen and visit clients on his scooter. But those days are far behind him. Today, Blake owns a large international company that’s been in operation for more than 25 years and is worth around R350 million.
This is not a bad position to be in — who wouldn’t want to grow their business so successfully? But it does bring its own challenges.
Like an aircraft carrier or cruise ship, a large company has the size and heft to survive stormy waters, but it also turns very slowly. Change is not instantaneous, and in our modern business world, this is becoming increasingly problematic.
While large operations find themselves stuck in a whirlpool of corporate governance and risk management, small, agile operations are leapfrogging over them and disrupting established industries. One need only look to companies such as Uber and Airbnb for examples of this. Taxi operations and hotel chains all over the world are being threatened by companies that they failed to even identify as competitors.
How does one safeguard against this? For Howard Blake, the answer is simple: Never allow yourself to become complacent.
When Blake started his business, he did so by innovating and disrupting the way things were done.
“When I started in 1990, if you had a fax machine, you were at the leading edge of technological innovation. Most businesses weren’t utilising computers properly yet. I looked at the way people were processing legal documents, and I thought it should be automated. At the time, collecting debt was slow and laborious, so I developed a computer-based system that sped up the process,” recalls Blake.
Now, the rate of innovation is much faster, which makes it harder to stay on top of new technologies. And the fact that Blake is managing a large operation with thousands of employees can make it tricky to roll out new systems and technologies.
So, to bring about constant change and innovation, he forces his company to ‘disrupt itself’. “We take nothing for granted,” says Blake. “Every six months, we reassess the business. It’s like an airplane teardown. We take everything apart for inspection. We used to do it every 18 months, but the rate of change is now too rapid for that.”
The aim is to find ways in which things can be done in a more efficient and cost-effective manner. “We don’t mind disrupting our own services and product offerings. If there’s a better way to do something, we pursue it.
“You need to open your mind and put your prejudices behind you. It’s almost a philosophical thing — you need to fundamentally question what you’re doing. Don’t believe you’re doing things in the best way. Humility is important.”
Blake is also weary of processes that become routine. “Nowadays, as soon as something becomes routine, the profit line tends to take a dip. Your product or service won’t exist in its current form in five years’ time. If you’re not innovating, you’re dying.”
For Howard Blake, risk is not a bad thing. In fact, he believes embracing risk is an important component of long-term survival. Companies have become exceptionally risk averse, and this is impeding their ability to innovate and grow.
“Risk has become a dirty word in the business world, something we all take great pains to avoid. We hire risk management companies and take out risk insurance to help us minimise risk,” says Blake.
“The problem is that many enterprises take an extreme approach to minimising risk, pigeonholing themselves in the process. Over the course of my career, I’ve seen the benefits of constantly moving out of your comfort zone and taking calculated risks. Rejecting the status quo is one of the main reasons that Blake Holdings has grown from a one-man show to a R350-million business over the course of 26 years.”
He does not, however, suggest that companies adopt a laissez-faire approach to risk management.
“As the skeletons of many failed start-ups can attest to, it’s all about calculated risk. From the start, we employed a scientific approach to the collection business in order to create better default prediction models. This approach saw us secure important clients such as Foschini and Truworths.”
You want to avoid what Opsware founder and angel investor Andy Horowitz calls ‘stupid risk’. Good risk brings with it the potential for tremendous reward. Stupid risk offers little chance of corresponding reward.
Diversification is notoriously tricky. While embracing multiple verticals can certainly result in more revenue streams, it can also lead to a loss of focus and the relinquishing of a hard-won market position.
Once one of the stalwarts of the American business world, the RCA Corporation (originally the Radio Corporation of America) decided to diversify in the 1960s and 1970s. RCA wanted to become a conglomerate, and therefore decided to acquire companies that focused on industries as diverse as carpeting, frozen foods and car rentals. Things did not go well. These endeavours had a disastrous effect on the company’s bottom line.
Frustrated employees purportedly even started referring to RCA as Rugs, Chickens and Automobiles. This attempt at diversification was one in a long list of bad decisions – decisions that ultimately resulted in RCA being purchased and broken up by GE.
But there are countless examples of companies that managed to diversify very successfully: Disney was once just an animation studio, today it has its fingers in countless pies, including a list of theme parks. Once purely a maker of computers, the bulk of Apple’s revenue now comes from cellphones. One of Amazon’s biggest money makers, meanwhile, is its cloud-computing service, which boasts a long list of large companies as clients.
“Diversifying successfully requires a careful balancing act,” says Blake. “You don’t want to lose focus completely.”
It also helps if there is some cross-pollination between your various ventures.
In the case of RCA, the company was throwing the net too wide. Apple applied
its technology and flair for design to a related field.
“While Blake Holdings may have begun as a collections company, it utilises its technology — alongside its already-existing databases — to render services across the verticals of contact centres, customer service, customer analytics, WiFi, marketing and data analytics, to name a few,” says Blake.
“These specialties all build and feed off each other, making it easier to not only launch successful new ventures, but also to hone the innovation capabilities of the existing ventures. With the advent of the digital age, previously distinct verticals have now become converged business solutions.”
Think like a start-up
The Virtual Agent is a recent addition to the Blake family of companies and an excellent example of the organisation’s approach to diversification.
“The Virtual Agent is a realty solutions company that has emerged from our experience in database services. And, like many of the successful ventures we’ve undertaken over the last decades, it wouldn’t have come to be if not for a curiosity to seek out new ways of making things better and improving industries,” says Blake.
Getting The Virtual Agent off the ground wasn’t easy, though. The Blake organisation was sailing into unchartered waters, and not everyone was convinced it was a good idea.
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To push the project through, Blake adopted a lean start-up approach. With Debbie Leo-Smith (an ex-estate agent) heading up product development, creation of The Virtual Agent offering was kept small and cost-effective.
“We brought The Virtual Agent to market very quickly. It was an industry ripe for disruption, and we acted decisively. The venture broke even five months after we came up with the concept. That’s the speed at which you need to operate, even within a large organisation. There’s a hunger, a desire to innovate that tends to fade into the background the more resources a business has access to. If you want to be successful, you need to find a way of holding onto that hunger.”