- Player: Basil Reekie
- Company: Clientèle
- Position: MD
- Contact: +27 (0)11 320 3000
- Visit: clientele.co.za
Under Basil Reekie’s leadership, the Clientèle group has successfully navigated the global economic downturn, which saw many companies around the world post vast losses.
Bucking the trend, Clientèle’s embedded value since 2008 has grown from R1 billion to well over R4 billion, while paying out dividends of more than R1 billion in the same period.
Clientèle is the only company presently listed on the JSE that has increased profits every year for the last 17 years. In 2015, the company was placed 14th in the Financial Mail ‘Top Company Survey’, and in 2015 it was also certified as a Top Employer by The Top Employers Institute of South Africa. Entrepreneur spoke to Reekie about his winning strategies.
You strengthened the Clientèle senior management team across all business units. How did you do it?
We were in the fortunate position of experiencing rapid growth which meant we needed to increase the size of the management team. This allowed us to determine what our weaknesses were and which additional strengths were needed to build a strong multi-disciplinary leadership team.
I normally look for a good attitude and proven ability. Formal qualifications are the least important factor, except for specialist roles such as statutory actuary or finance director.
Clientèle grew its employee number from 400 to 1 300 in seven years. How did you ensure that decisions could still be made quickly? Growth of this level can result in exactly the opposite.
Our biggest challenge has been remaining nimble as we have grown rapidly in a constantly changing environment. However, we have been successful at this in most areas.
The secret is making sure that the Group Executive team is aware of what is going on in all areas of the business and encouraging them to make proactive decisions.
Something I also encourage is people being prepared to test ideas and not being afraid of failure. If something does not work, it is important that you quickly revert back to what you were doing previously, or try something different.
Clientèle retains its strategic focus: creating simple, affordable and reliable products available to all South Africans. How important has it been to retain the strategic focus and how is that achieved against a backdrop of market challenges?
One secret to our success has been the ability to keep things simple. Nonetheless, we have extended our product range significantly over the last eight or nine years, adding products like our various hospital plans, our legal plans and our premium products, which offer significantly higher sums assured than our regular products.
Each time we add a product we are extremely conscious of the need to ensure that the product itself is simple and easy to understand and that it will enhance our offering to our clients, existing and new.
We have tried to stay away from being reactionary in what we do and do not simply copy our competitors, rather we are always looking for something that is unique, yet simple.
A good example of this is a recently launched funeral policy that pays the normal funeral benefits on death as well as a return of all premiums paid on death. This, we believe, is both revolutionary and easy for our clients to understand.
Another area where we are strategically focused is the area of client service. We aim to treat every client well at every touch point of the business.
The group has a reputation for its dedication to corporate governance and responsible budgeting. What is your advice on ensuring excellent financial management?
Make sure that the right people — those who understand the numbers — remain involved in the detail. That will always result in good financial management.
Furthermore, keep authorisation limits relatively low and ensure that the executive team thinks about spending as if it was their own money. That helps to ensure that no-one spends frivolously, even when the business is growing.
How do you gain consensus?
My leadership style is relatively collaborative. I listen to the opinions and views of other executives without being afraid to make decisions when these are necessary.
All significant decisions are discussed in the relevant forums, particularly at Group Executive level.
As a business we are more than happy to test things and this makes it much easier to gain consensus than in another environment.
The key to consensus for us is that we set sensible targets before any tests are undertaken. We are rarely unwilling to test something provided that we have clear objectives beforehand to allow us to determine (unemotionally) whether it has been successful or not.
What does ‘big picture thinking’ mean to you?
Big picture thinking is innovative. It’s the way a person looks at problems, opportunities and situations. Idea generators often think of big changes, new projects and substantial opportunities to create new business.
To be a ‘big picture thinker’ you need to be able to step back and look at the business and set goals for the long-term future, at the same time as being able to drill down into the detail in order to make a success of any given venture.
To imagine possibilities beyond what is immediately obvious, while homing in on detail when necessary is absolutely critical for a really successful leader.
In the insurance space, you have to be able to look into the future, understand what is changing in the competitive landscape and still be able to look at the detail of what is happening at present to make sure that the big picture you envision is indeed the one you want to achieve at your organisation.
Are Your Scalable?
Here’s how you can assess if you’ll make it, or if you need to first make some fundamental adjustments before pursuing your growth goals.
Pete is a classic entrepreneur. He spent 15 years building his manufacturing firm to a R30 million outfit, before his big opportunity came to take on contracts worth R120 million, allowing him to scale to R150 million within five years. This was everything he’d worked towards. This was his retirement plan.
Five years later, instead of running a R150 million business, Pete is burnt out and broke. His company is closed and he’s lost everything. The crisis has even torn his family apart. How did this happen?
A common fate
Unfortunately, it’s a far more common story than most of us would like to admit. 70% of the top 1% of businesses (by growth potential) land up failing to scale. Sometimes, like Pete, they lose everything and close the doors. Other times, they land up bigger, but managing a chaotic hell of their own creation: A daily sprint to survive, a never-ending treadmill of frantic hustling to keep things together, with the horizon never coming closer.
The most common reasons? Either scaling something that fundamentally is not scalable, or scaling poorly; not making the right changes at the right time.
In this article, I’ll be focusing on the first reason: Attempting to scale a business that is fundamentally not scalable — because not every business can be scaled. If your ambitions are focused on high-level growth, step one is to determine if you have the right business model to do so. Because if you don’t, that’s the first change you need to make.
Some companies scale easier than others. And some don’t scale at all. Let me illustrate with two extreme examples:
Very scalable: Dropbox makes an extra $10 for every user they add, while adding $1 of cost, and zero operational capacity. That is very scalable.
Not easily scalable: A start-up ad agency is soon faced with a growth ceiling created by the limits of the founder’s time and energy. This normally occurs somewhere between ten and 20 people. An ad agency is not a scalable business model because growth requires top, senior creative talent. Such individuals are rare, have attractive options, and usually prefer to either work for big multinationals, or run their own businesses. It’s therefore tough for smaller agencies to attract and retain talent without offering large chunks of equity, which can be a zero-sum game. It sometimes even works out net-negative. Unless you find a way of breaking that constraint, this is not a scalable business model.
So, what makes me scalable?
Building a scalable business is a bit like picking a spouse. There are a number of criteria to consider, the absence of any one of which is a deal killer, even if all other criteria are amply present. A suitor may exceed your fantasies in every regard (looks, smarts, fun, caring, etc), but if they are also prone to parallel relationships, that’s enough to pull the plug and look elsewhere.
Just as in relationships, a number of things must come together to make your business scalable. Here are the ten most fundamental drivers of scalability grouped into three core areas: Scalable market, scalable business and scalable team.
- Size (Total Addressable Market, or TAM): The market must be big enough to achieve your ambitions. As a rule of thumb for ambitious entrepreneurs, TAM must be at least 4X your business size goal. If you want to build a R500 million business, you need a R2 billion market.
- Economics: It’s expensive to scale. You need to invest in great management and top talent, plus spend on infrastructure ahead of actually seeing growth. To make that sensible, it must be very profitable serving your market.
- Growth: The market must be growing, and preferably faster than the rate of new competition.
- Number one: Highly scalable businesses almost inevitably are number one, or will become number one in their market or niche. If you can’t lead the market, you must be able to lead a sizable niche.
- X-Factor: Every market has a bleak outlook: More competition, lower prices, lower margins. Unless you have some fundamental reason to continue to lead the market despite competitive intensity, such as proprietary tech. It must be good enough that you can be and stay number one in your market.
- Scalable channels to market: Some customers are just impossible to reach profitably. A scalable business has access to channels to effectively target, market to and sell to customers profitably.
- Scalable operating model: Scalable businesses have unconstrained access to all critical materials and talent, without breaking the economic model.
- Scalable economics: You can calculate the scalability of your economics with a simple formula: [Gross Profit per R10 million new revenue] / [new cost required to manage each R10 million new revenue (managers, systems, facilities, etc)]. Highly scalable businesses have a 2X or higher ratio. 1 to 1,2 is borderline and scaling will be like walking on glass. Most businesses have a ratio <1, which means they will lose money by scaling.
- Scalable founders: Statistically, most founders are not scalable. They lack the experience, skills and personality profile to make the required shifts as the business scales, and to develop the organisation through its various lifecycle stages. Scalable entrepreneurs are able to:
- Build a great culture for >100 people
- Attract and build an A-Team of truly impressive senior leaders, and delegate large parts of the business to them
- Be ‘builders’ and ‘managers’ — that is, graduate from ‘entrepreneur’
- Submit their interests to the best interests of the organisation, even when it’s painful — we see this when founders step down in favour of CEOs with corporate experience
- Lead the transition of the business to a professionally managed company, introducing systems, processes and policies in a way that does not break the company’s culture.
- Leadership team: Particularly in the most painful scale up stage — going from ten to 100 staff — the key driver of scaling well is the quality of the top team. That’s why quality of early hires is a great predictor of scalability. Leaders who can adapt and be effective in a business of ten, then 20, then 50, then 100 staff are truly remarkable, and therefore exceptional. Not many manage this transition. These leaders can be effective in three completely different ‘modes of organisation’: The hustle (at ten people); The build (from ten to 100 people); The operate and grow modes. By implication, they are — or can grow into — executives. They can hustle. But they can also shift from a tactical focus (immediate fires and opportunities, action focus), to a strategic focus (future focus and system focus). They are able to run operations while transcending operations, bridging the long-term strategy, the short-term strategy, operations, culture, team, and finances, and they can do that in a company of ten people, or 100 people. Of course, you can bring in new leaders and you can replace leaders that are not scalable, but this dramatically slows the scale-up journey and can even derail it.
The result of having founders and leaders who are capable of scaling with the organisation will be the automatic development of the other key ingredients for a scalable team: Great talent, a highly engaged team, a great culture, and an effective organisation.
The key to growth
If you’re following the path to scale, or investing in a scale-up, it’s important to be aware of the causality amongst the above ten factors. Typically, the main factor that drives the speed at which a business can scale is how quickly founders can delegate major areas of responsibility, so that the business can continue to make rapid progress at scale.
This in turn is driven by the ‘next level’ (non-founding) leaders, as well as the leadership abilities of the founders. The problem is that early-stage companies struggle to attract top talent, unless they find people who want to be a part of the equity-incentivised leadership team pursuing an exciting opportunity. This type of career opportunity can usually attract top talent, despite the various reasons these individuals gravitate towards well-paid corporate roles and their own ventures.
But that sort of opportunity does not typically happen by accident: It’s the function of the founders getting points 1 to 9 right. In a nutshell, the first thing you need is an amazing team of founders who work smart to nail points 1 to 9, find and pursue an amazing opportunity, and then harness that to attract amazing talent in order to delegate effectively, so that you can scale beyond the limits of the founders’ time and energy.
Leon Meyer GM At Westin Cape Town Shares 4 Experience-Driven Tips On How To Keep Your Team Productive
Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins.
Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins. But what’s the best way to ensure employees remain productive, and happy in their day job?
The answer is simple and highly effective and I choose to sum it up with three short phrases – respect, trust and teamwork.
In partnership with my management team, which consists of about eight staffers across various disciplines, we strive to tick these boxes.
In total we’re ultimately responsible for managing roughly 500 employees.
Five hundred employees across several departments is a mighty job. But with teamwork, good listening skills and the right attitude from the top to filter down, any business can run like a well-oiled machine.
I’d like share with you the essentials for building and maintaining a productive workforce, and these apply to all industries, not just the hospitality sector:
1. What’s your definition of a productive team and how do you achieve that?
We need to keep in mind that productivity is a result, one that CEOs and managing directors strive for with their teams. But what happens beforehand in order to achieve that result determines whether it will be achieved at all, and is equally important. I suggest the following to ensure a productive team:
Define roles and responsibilities: Direction is incredibly important; everyone needs to know exactly where they’re going and how they need to get there, so KPIs are essential.
Often when roles and responsibilities are unclear, things go pear-shaped. I am an advocate for setting clear KPIs, it’s a good way to steer us in the right direction, and in turn helps to grow the business and the individual in his/her role.
Be flexible: Rigid environments are the worst kind, allow your employees some flexibility and the opportunity to be themselves in the workplace. We spend so much of our time at work, we need to be ourselves there.
Celebrate the team: When there are achievements, celebrate them, single out individuals who are excelling and living the company values. This builds morale and is indicative of appreciation, which is fundamental when running and building a business.
2. What has and continues to be your philosophy since managing a large team?
Know your strengths and weaknesses, as well as your team’s and leverage off that. Be prepared to learn from others, no one can operate in isolation, regardless of the level on which you operate. Accept criticism and don’t bulldoze someone’s ideas, that’s how you build trust.
3. What in your view are the top characteristics the team look for in a leader?
- Be consistent – inconsistency screams bad leader
- Provide guidance – this is key, don’t turn a blind eye, give input and council
- Listen – always listen intently
- Be impartial – always be fair
- Give credit – it builds morale and shows you recognise good work
- Be patient – Rome wasn’t built in a day, and remember not everyone thinks the same as you do
4. What’s your view on an open door policy and how does it assist with managing a team and ensuring everyone remains productive?
I believe in an open door policy. It’s essential to build and develop trust. I’m the first to admit that it takes a while to build that trust, but once the team (on all levels in all departments) know your door is always open, and that they can trust you implicitly, half the battle has been won.
I host a GM’s roundtable every two months, just to establish how everyone is feeling and where everyone is at. It gives staff the opportunity to bring their challenges to the table, and I deal with them the best I can.
It’s 100 percent confidential and line managers are not allowed to attend. During this meeting we try reach common ground, and I commit to addressing and ultimately solving the problem(s).
Why Purpose Drives Profits
If you want to succeed, it’s time to start engaging where it matters.
Over the past two years, many clients have been extending brand positioning exercises into purpose-driven expressions.
When we look at it, it makes sense given the country’s demographics. With many of our fellow countrymen struggling to make ends meet, brands have stepped in to provide them with a picture of a future worth striving for.
Global customer-centricity study, Insights 2020, led by research firm Kantar Millward Brown, has attempted to understand how brands could drive customer-centric growth as well as the factors that really make a difference. The research surveyed 10 495 individuals in 60 countries, and there are some significant efforts worth investing in if brands want to engage where it matters most, in consumers’ hearts.
The research uncovered that for market-leading companies and brands, traditional value drivers such as quality, packaging, or distribution are necessary, but no longer provide a competitive advantage; most brands are capable of providing these drivers. What is important, are a few critical approaches.
1. Purpose-led brands
The study found that when companies or brands linked to a purpose, 80% of them outperformed the market. Only 32% of non-purpose led brands managed to perform better than the market.
Related: How To Calculate Gross Profit
2. On the ground
It’s important to engage with consumers in their space and on their terms. Through the use of memorable campaigns, experiential events and activations it is critical to engage with consumers on their turf.
3. Be truthful and authentic
Consumers can smell something inauthentic a mile away, especially when it’s coming from a brand. This forces brands to strive for authenticity in everything they do, especially when it comes to marketing. Building values and principle-based attributes into your brand as a guiding tool is essential.
4. Helping consumers commit
By allowing individuals to attach themselves to a brand with a purpose, it helps consumers personally commit to a cause that they consider important. When a consumer is personally invested, the link between the brand and product or service deepens.
5. Balancing heritage and modern relevance
There is a continuous tussle in balancing the traditional market, transitional market and the new consumers brands are trying to attract. Keeping the heritage and roots of the brand true to itself, while creating relevance for the new market, is a battle marketers are still fighting.
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