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Murray & Roberts: Brian Bruce

The inside story of how the clear strategy and decisive leadership of Brian Bruce saved Murray & Roberts from near collapse.

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Brian Bruce of Murray and Roberts

Murray & Roberts is a construction and engineering giant, its brand associated with key infrastructural landmarks developed over the past century. But, in the 1990’s the company lost its way and almost ceased to exist. A high rate of management turnover, project crises and financial losses were symptomatic of deeper underlying problems and by 1999 the Murray & Roberts share price had plunged from a high of R28,50 to a low of R1,99.

In 2000, Brian Bruce was appointed CE of Murray & Roberts. In seven years he has pulled off one of corporate South Africa’s most dramatic turnarounds. Today the share has breached the R100 mark and Murray & Roberts is now in the company of the world’s leading engineering contractors. Entrepreneur asked him how he managed it.

What went wrong with Murray & Roberts?

The company failed to respond to weaknesses in its environment. The early 1980s heralded a systematic two decade decline in the level of activity in the engineering and construction sector. This was a macro-economic adjustment brought about by shifts throughout the world, initiated by the 1970s oil crisis, and entrenched by South Africa’s growing isolation.

At that time the leadership of Murray & Roberts focused on internal matters such as its ownership structure. In 1984, Sanlam became its principle shareholder and a strategy to transform the company into an industrial conglomerate was implemented. This triggered an acquisition phase, including the purchase of businesses in diverse sectors outside the traditional focus of Murray & Roberts.

In the mid 1990s, a generation of leaders retired and Murray & Roberts, suddenly exposed to post-1994 dynamics of globalisation, was unable to compete effectively in markets it did not fully understand.

What were the actual problems the company faced at the time you were appointed CEO?

The period between 1996 and 2000 was a time of increasing crisis. There was a high rate of leadership turnover and limited strategic direction.

The company set growth targets that were not supported by strategy. Some operations started to report losses, major problems were encountered on an international project and historic property head leases became a challenge to our future growth potential. Morale in the organisation decreased as diversification increased and independent empires with no loyalty to the primary brand and the culture of Murray & Roberts flourished.

By December 1999, the Group was in cashflow distress in spite of the premium priced sale in 1998 of the Blue Circle assets. The share price was at an all-time low and net asset value had halved to R1,6 billion. The board embarked on a recruitment campaign for an international chief executive which I felt was inappropriate and I decided at that stage to apply for the job. I offered a clear strategy, decisive leadership and a future I believed was possible.

What analysis and research did you do to arrive at the point where you knew you had a clear strategy to take Murray & Roberts forward?

My strategy was to take Murray & Roberts back to its historic focus in the construction economy. The South African Government had stated its commitment to invest in infrastructure and based on my involvement with the Construction Industry Development Board since 1996, I believed that there was going to be a resurgence in fixed capital formation.

Before my appointment as CE I had headed strategy, marketing & communications for the Group. During this time I researched the 100 year history of Murray & Roberts and I knew from experience that the Group had built its early reputation on a set of solid values and integrity. Murray & Roberts had always been integral to the South African economy and society, and past leaders had played important socio-economic roles that contributed to the country’s development.

There was a strong engineering culture and an innovative approach to infrastructure challenges. People were highly valued. These values had been eroded and there was a repeat pattern of systemic value destruction, even in brief periods of sustained economic growth. We needed to revive the core values and the core capabilities that had built the group in the first 80 years of its existence. This required a tough approach to removing the negative values that had taken root.

What were the key aspects of rebuilding Murray & Roberts and why did you believe they would deliver the required results?

Rebuilding Murray & Roberts is a five-year intervention strategy to establish a new platform for future growth. At the heart of the strategy is a non-negotiable commitment to sustainable earnings growth and value creation.

I am a systems thinker and one of our early strategic mantras was: “The destination is our point of departure”. I started with a target to achieve the Group’s peak market rating of R28,50 per share and market capitalisation in excess of R10 billion. This required the reinstatement of bottom line profitability and a premium rating by the market.

One of our keybuilding blocks was the concept of  Unitary Murray & Roberts, where all operations would subscribe to the same core values. By removing hierarchical structures and ensuring an effective flow of corporate expertise and support to the operations, we unlocked considerable value and quickly restored the strength of the primary brand.

We defined what we meant by the construction economy, and by plotting the macro economic potential of gross domestic product and gross fixed capital formation, we could establish a progression for the construction industry and work out how each of the businesses in Murray & Roberts could access the different elements of the construction economy. This focus did not limit us to building and civil engineering but allowed us to invest in and service infrastructure, and to incorporate our construction materials businesses into a proper model that differentiated Murray & Roberts.

We were able to balance risk and reward through the access this approach provided to steady annuity-type income. Thereafter, we rapidly disposed of non-core and under-performing businesses. Central to this strategy was the disposal of Unitrans. Although a major contributor to Group performance in the early years, we recognised that Unitrans would limit future growth potential in our core markets. We disposed of the company in 2003 and deployed the proceeds in acquisitions which have added significant value to our core strategy.

Management teams: the importance of clearing deadwood – how did you do this?

It was clear that we needed to establish a cohesive, high level management team quickly. Those members of management who could not subscribe to unitary leadership under a singular CE implementing an agreed strategy promoted by the CE had no option but to go.

Attempts to curtail or derail what I had been mandated by my board to do with Murray & Roberts were engaged systematically. We let go of executives with many years of experience who had been successful in the past but could not adapt to the new strategy. The process was managed professionally, often through negotiation,and past contributions to the company were recognised.

What were the qualities you looked for when you hired?

I am a reader of philosophy and history. Paulo Coelho, the Brazilian author, writes about faith and belief. If you don’t have faith in something and you can’t believe in it, your ability to contributeis limited.

We needed people who believed that Murray & Roberts had the potential to be a leader, to be profitable and to take on some of the great projects we are now involved in. When people don’t have that belief, they have a negative influence on the attitude of those around them which can destroy the capacity of an organisation to achieve its objectives.

Faith is belief in something for which you have no certainty. This is a difficult concept to grasp in an essentially engineering and accounting business. We had to tap into people’s emotional capabilities, but it helped that we had some early business successes. To be a team player is another important quality.

I used football and Manchester United as benchmarks for teamwork. We drew parallels about executives being on public display, about the need for performance fitness and the importance of playing as a team. We have a great diversity of people in Murray & Roberts with very high levels of capability, intellect and skill – and some strong personalities.

But, when we are on the “field of play”, we must be there as a team. Highlight and unpack the role that themanagement team played in the execution of the strategy? Roger Rees (financial director), Sean Flanagan (executive director, mining contracting in Africa and Australia and major 2010 projects) and Keith Smith (executive director,domestic and regional construction) have been my core executive team.

They were with me at the beginning and have always supported our strategy and played crucial roles in implementing it. When Rebuilding Murray & Roberts was launched we targeted specific areas of concern through a number of  interventions. We reviewed our major challenges and took some tough early actions.

We motivated an impairment of underperforming assets and a provision to cover substantial liabilities that were obstacles to future performance. We closed our non-performing wheels business in Canada and established a task team to resolve the property headlease challenge. We quickly dismantled the organisational silos and restored the strength of our market image with a rebranding campaign. I demanded aspirational financial targets for the planned five years of Rebuilding Murray & Roberts, and provided a means to measure progress.

How tough was it to implement the strategic plan?

It was really tough and has required resilience. The gap between where Murray & Roberts was and where it neededto go was huge and this demanded explanation and massive commitment.

I took personal responsibility for all internal and external communications. My first task was to get the support of my board, then I had to ensure that the strategy was understood internally and externally, particularly in the market. We created mantras to express key strategic issues in simple, visual ways and repeated them over and over again.

What is the nature of a company in crisis – what does it feel like?

Leaderless and directionless, like a ship in a storm at the mercy of the elements. Anyone can stand up and offer a solution, but they can also lead you into rocks. Integrity stands out like a beacon in an environment like that, and people recognise it quickly.

I introduced communication concepts like “Ask Brian” on the Murray & Roberts interchange to allow people to voice their concerns and report behaviour that is inconsistent with our values. I get submissions every day and I respond to all of them as fast as I am able to.

How tough was it to implement Rebuilding Murray & Roberts relative to available cash?

What was the cash flow status and how was it managed? Cash flow is the lifeblood of any organisation. Murray & Roberts was in the bankers’ ICU in 1999 and 2000 – we had no credit rating and were considered a risky client.

The first thing we did, even before we starting thinking about how to generate cash, was to stop the haemorrhaging. The closure of AWI Canada, which had the potential to really damage Murray & Roberts,was a key element of this strategy and sent out a strong message about our commitment. Then, we centralised control of cash, and slowly but surely turned the situation around.

Being cash-strapped reinstated a high level of discipline in our financial management, but we never skimped on capital expenditure. From the start of Rebuilding Murray & Roberts we reinvested in the productive asset base of the business.

Give us an insight into your level of commitment?

My commitment is 100%. I work constantly at home and at the office, I travel to our domestic and international operations regularly and I ensure that there is always time for thinking and engaging with clients, the market and employees.

Having said that, I trust my leadership team and I allow them to pursue their strategies in terms of their own leadership styles.The impact on my life has been significant. There have been many personal sacrifices and I have felt very alone at times, especially in the early years when I was accused of not valuing long serving staff. I’m not a great believer in hierarchy – I wanted to teach Rebuilding Murray & Roberts, not instruct it, and I wanted to set an example for people to follow rather than be a remote executive who issued decrees.

Did you use consultants to assist in the turnaround process?

Yes, in the early stages. But we managed them very carefully and they generated value for us as a result. They were given clear mandates and each consultant had to go through a process with me to understand our strategy.

Ultimately, what they produced was summarised on a single page and incorporated into our strategic principles. We used consultants to advise us on specific issues, such as the drivers of the automotive industryand best practice in the global engineering and construction sector.

To what extent did Globalising Murray & Roberts contribute to the turnaround?

Globalising Murray & Roberts is a strategy that identifies what Murray & Roberts needs to become in order to gain recognition and be competitive in global markets. Murray & Roberts has established a number of benchmarks for best-in-class engineering and construction and is capable of competing for opportunities in its domestic and international markets.

We now apply global best practice in almost everything we do in South Africa. The infrastructure investment programme in our country is global – it has attracted the interest and participation of international companies and so we have to understand the dynamics of global competition to be competitive in our own market. With projects like Gautrain, we are demonstrating that we are able to claim our space in the global mega projects market.

Leadership,strategy and management:

What advice would you give to SMBs fighting for survival?

  • Face up to the difficult decisions.Murray & Stewart was formed by two entrepreneurs in 1902 in what was supposed to be a growing market after the Anglo-Boer War. By 1904, the business was not making enough money to maintain both families, so they spun a coin for it. John Murray won and James Stewart recovered his capital investment and left. By 1906, the company had started growing and would later merge with Roberts Construction to form Murray & Roberts.
  • Ensure owner-manager involvement. Paid employees are unlikely to have the same passion as owners. In construction, ifyou are not entrepreneurially driven, you are unlikely to succeed.
  • Control your destiny. Being in control of your destiny in spite of developments in your macro environment will ensure your ability to deliver sustainable performances for your stakeholders.
  • Your word is your bond. Maintain your integrity. Develop relationships based on trust and clients will continue to give you repeat business.
  • Develop resilience against sceptics. It will carry you through the tough times.
  • Keep learning. Discard previous lessons that are no longer relevant.
  • Find allies who believe in you and in your vision.
  •  Believe in yourself and in your vision,even if the future seems uncertain.

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Case Studies

Starbucks Coffee Is All About Culture… For A Reason

CEO Howard Schultz reveals how Starbucks does it.

GG van Rooyen

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Howard-Schultz

Vital Stats

  • Player: Howard Schultz
  • Company: Starbucks
  • Market cap: $85 bn
  • Established: 1971 (Schultz purchased the brand in 1987)
  • Website: starbucks.com

When Howard Schultz was raising money for his first coffee shop called Il Giornale (later to be renamed Starbucks) he was finding it hard to land investors. The reason was simple: Schultz was trying to create a coffee culture where none existed.

The idea that the man on the street would pay a premium price for a cup of Italian coffee with a name he couldn’t pronounce seemed nothing short of preposterous. But that wasn’t the only reason people weren’t willing to buy into his idea. Schultz, you see, refused to talk like a proper capitalist. He kept emphasising the fact that he wanted ‘to do good’.

Related: How tashas Built A Recession Proof Business

Schultz recounted the trouble he had finding investors during a recent visit to South Africa for the local launch of Starbucks. He spoke at a Q&A session hosted by the Wits Business School.

“My wife was eight months pregnant at the time,” says Schultz. “Her father actually sat me down and said: ‘My daughter is pregnant, and she’s working. You have a hobby. You need to get a job.”’

But, as is so typical of entrepreneurs, Schultz persevered and eventually got the funding he needed.

“The first time someone gave me $100 000, I couldn’t believe it,” he recalls.

Since those early days (the shop opened in the mid-1980s), Starbucks has grown rather prodigiously. Consider the following: By the late 1980s there were 11 Starbucks stores that employed about 100 people. A few years later, in 1992, the company went public with a market cap of $270 million. Today, it has around 24 000 stores in more than 70 countries. And its market cap? A cool $85 billion.

While growth is good, it has a tendency to birth a ravenous monster that is impossible to satiate.

“We have to add $2,5 billion in revenue every year for the next five years just to maintain our current growth rate and satisfy Wall Street,” says Schultz. “And to do this, we will need to add 80 000 employees over the next 12 months. Essentially, we’re launching a new massive company every year.”

Yet, despite this, Starbucks manages to maintain its unique culture. Just as when Starbucks was a far smaller operation, it is known for stores manned by high-energy individuals who have a clear love for the brand. How has the brand managed this? Schultz attributes it to the following seven core principles.

Starbucks-franchise-south-africa

1. Partners not employees

Howard Schultz’s father worked as a truck driver, delivering and picking up cloth diapers in the days before Pampers. When he slipped and seriously injured himself, he was summarily retrenched. Schultz wanted to create a very different company.

One of the reasons he didn’t adopt a franchise model was that he wanted to be able to offer each employee at least some stake in Starbucks.

When the company went public, each employee became entitled to a portion of their annual salary in the form of stock options. That is still the case today, which is why Starbucks employees are called ‘partners’.

“Success is best when it’s shared,” says Schultz. “At Starbucks, we always ask: What’s in it for our people? Starbucks is accused of being great at marketing, but it spends very little on marketing. It’s all about the experience we offer in the stores.

Managers and leaders must do everything to exceed the expectations of our people so that they can exceed the expectations of our customers.

Related: Howard Blake Stays Hungry With His Innovation Strategy

2. Regular interaction

The management of Starbucks does everything in its power to engage with employees regularly.

“We travel extensively, and the amount of face-time management has with employees across the globe is really unusual for a company of Starbucks’s size,” says Schultz.

Schultz himself, for instance, sat down with each and every new Starbucks employee in South Africa during his recent visit.

Starbucks also has what it calls ‘Town Hall Meetings’ all over the world, during which management interacts with employees in an open and informal manner.

“We tell employees that they are free to speak up during these meetings without fear of retribution. We want honest opinions,” says Schultz.

Starbucks-franchise-layout

3. Respecting (and cherishing) employees

Howard Schultz is a humanist at heart, and this is reflected in the culture of the company that he created.

“The universal language of Starbucks is a deep sense of humanity,” says Schultz. “Building a company is a lot like raising children. You are imprinting a company with a culture and a set of values. Now, if a child falls, what do you do? You pick it up and comfort it. You don’t scold it. You need to take the same approach in business.”

4. Protecting the culture

Being tolerant of failure, however, does not mean the same thing as indulging bad behaviour. In fact, Starbucks is fiercely protective of its culture, and it doesn’t tolerate bad behaviour.

“We teach employees that they have a voice, and that they should speak up when they see someone doing something wrong. You can’t enable bad behaviour because it will erode a company’s culture.”

Related: Don’t Let Expansion Ruin A Great Company Culture

5. Spending money on employees

According to Schultz, the management teams of most large companies would be horrified to discover the amount of time and money spent on Starbucks employees.

“We have been very innovative with technology, and we have created a massive digital eco-system. Interestingly, though, we spent as much time and money focusing on the things that were employee-facing as the ones that were customer-facing.”

Starbucks-storefront-layout

6. Rewarding the right things

Schultz famously stepped away from the role of Starbucks CEO for around five years, and during that time the culture of the company quickly deteriorated.

“The company lost its way. The people who were managing the company — who were all good people — were measuring and rewarding the wrong things. Things such as profit and stock price became the focus. In any business, you need to continuously ask: What is our core purpose for being? Otherwise you lose your way.”

Schultz believes that his big mistake was not selecting a successor from within the culture. When he eventually retires, he intends to choose someone from within the operation who is in touch with the culture of the brand.

7. Being human

The film Fight Club famously depicted Starbucks as the epitome of the faceless corporation taking over the globe, but the company is actually quite unique in its willingness to speak out and engage with people on a social (and even political) level.

“We are very outspoken as a company. We feel that we live in a time where the rules of engagement have changed. What I mean by this is that we need to do more for the communities that we serve. The question we ask ourselves is: What is the role of a for-profit public company? Looking at this question has resulted in us taking on social issues such as same-sex marriage, gay rights, gun control and racism.”

For example, Starbucks recently unveiled its first store in Ferguson, Missouri (which has been plagued by racial unrest) as part of a plan to support efforts to rebuild and revitalise communities.

Read next: 5 Inexpensive Ways to Create a Company Culture Like Google’s

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Case Studies

How Merchant Capital And Retroviral Were Built To Sell

Entrepreneur chats to Dov Girnun of Merchant Capital and Mike Sharman of Retroviral. We explore why their companies attracted funders, and how the relationship can be used to grow their businesses.

Nadine Todd

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The Tech Based Business

Know your business’s numbers inside out, and don’t try to bluff your way through any questions that relate to numbers.

Dov-Girnun

Vital Stats

  • Player: Dov Girnun
  • Company: Merchant Capital
  • What they do: Lending solutions for SMEs
  • Est: 2013
  • Investor: Rand Merchant Investment Holdings
  • Shareholding: 25%
  • Visit: merchantcapital.co.za

Less than two years into his business, Dov Girnun attracted the attention of Rand Merchant Investment Holdings (RMIH), a financial services investment company that includes the founders of FirstRand, Laurie Diepenaar, Paul Harris and GT Ferreira. These are no small industry players. On an investment level, they’re the funders who backed Adrian Gore when he launched Discovery and Willem Roos when he started OUTsurance.

How had Girnun found himself in the position to pitch to investors at this level? Months earlier, RMIH had launched a fintech incubator called Alpha Code. The idea was to find pre-revenue start-ups that would be the next game-changers. Their research brought them to Merchant Capital.

“We didn’t exactly fit their mandate because we were already operational and profitable,” says Girnun, “but they still really loved the business. They’d been researching the fintech space, and had recognised the potential in SME lending, which is our focus. They really wanted to invest, but at the time I was unsure if I wanted to dilute my shares further.”

Girnun already had an investor, the Capricorn Group, whose investments include Hollard, Nandos and Clientèle, and until this point he’d been careful to maintain his shareholding. His relationship with Capricorn was excellent, as the investment team added huge strategic value to the business over and above capital, and so he hadn’t been actively seeking additional funding.

And then a new opportunity presented itself. “We realised we have golden data on the SME space. How could we cross-sell to our base and monetise that data? We started chatting to RMIH, who were aligned to our thinking.

“Once I realised the value RMIH could add to our business, my whole perspective shifted. Here was an investor that could potentially help me to build a billion dollar business. I’d be diluting shares, but building a much bigger pie.”

Related: Funding Growth with Dov Girnun

The price of equity

Girnun is referring to the investment lesson that equity is cheap early on, and very expensive later, when a funder holds more shares of your business than you do. If you look for funding later, your valuation is higher, you’ve got a proven track record, and the same amount of money secures fewer shares. Sell too early, and the exact opposite happens.

This had always been Girnun’s view, but an understanding of how far the business could potentially go with RMIH’s backing was changing his mind.

There was just one challenge. While RMIH’s investment team loved Merchant Capital’s business model, investments need to be signed off by the board, which meant Girnun and his co-founder Daniel Moritz, needed to pitch to them in person, so that they could see their energy, passion and vision for Merchant Capital.

Serious, seasoned investors don’t make this easy. They need to see your passion, and how well you understand your business. They’re not there to make the experience easy.

“Even though I knew they were interested in my business, I still found the experience extremely daunting. There were very few introductions, handshakes or jokes. I was expected to launch into my pitch, and I knew that even though I had been given 20 minutes, the first two minutes would be the deciding factor. If I didn’t grab their attention in that time frame, they wouldn’t be investing in me and my business.”

Tapping into investor concerns

“I had just returned from the Endeavour international selection panel in San Francisco, and I think this played a major role in the success of my pitch,” says Girnun.

“One of my judges, a hugely successful venture capitalist from Sillicon Valley, really explained the significance of the elevator pitch to me. Imagine you’ve gotten into an elevator with the CEO of Goldman Sachs, he said. If you’re lucky, you’ve got seven floors to get them interested enough in your business to want your card, and maybe even a meeting. They can’t possibly learn everything about your business there and then — they just need enough for their interest to be piqued.

“Because you don’t know how much time you have, or who you’ll be talking to and what their area of expertise is, you can’t just learn a pitch off by heart, and you certainly shouldn’t have a power point deck that you rely on. Both are very bad ideas. Instead, you need to know your business so well, inside and out, that you can tailor your pitch to the person you’re talking to, based on what they care about.

“Because of this piece of advice, I was able to tailor the first two minutes of my pitch to the RMIH board and what they care about. If I grabbed their attention, I’d be able to hold it for the next 20 minutes, which actually ended up being close on two hours. If I hadn’t, we would have politely shaken hands after 20 minutes (if not earlier), and been on our way.”

It’s a simple, but incredibly important lesson: Know your business’s numbers inside out, and don’t try to bluff your way through any questions that relate to numbers.

“You have to know your unit economics — are you able to distill the essence of your business economics on the back of a napkin? You need to know the high level stuff and the minute details, and they all have to be at your fingertips. If they aren’t, you have no business trying to sell your company or attract investors.”

Related: Bootstrapping Is Much More Fun Than Investors

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Case Studies

How AutoTrader Anticipated Change

AutoTrader South Africa is an online behemoth, boasting more than three million visitors each month. Not that long ago, though, the brand faced the very real possibility of extinction.

GG van Rooyen

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Autotrader-George-Mienie

Vital Stats

  • Player: George Mienie
  • Company: AutoTrader South Africa
  • Established: 1992
  • Visit: www.autotrader.co.za

Key learnings

  • Trends are out there to be identified. Being caught unprepared is unacceptable.
  • Change needs to be tracked through the use of a measurable KPI.
  • Don’t be afraid to act pre-emptively.
  • Do research. Know your customer.
  • Create an unprecedented user experience.

By the mid-2000s, it was becoming clear that the world was changing. The internet was going mainstream, placing massive pressure on industries that only a few years earlier had seemed untouchable.

The print industry in particular was coming under threat, with readers moving to the internet for information. Things didn’t change overnight, though. The general decline in readership was steady but quite slow.

Like a frog sitting in a slowly-heated pot of water, it was all too easy to ignore the evidence. AutoTrader South Africa, however, was not willing to accept death by attrition.

Related: Fake It ‘Til You Make It: How These 10 Entrepreneurs Did Just That

Measuring change

Autotrader-technology

“When it comes to the digital realm, you can never complain that some development impacted you unexpectedly. The writing is always on the wall, provided you’re taking notice,” says AutoTrader CEO George Mienie.

Long before the global shift to digital mediums started to affect AutoTrader in a real way, the company began to prepare for the inevitable.

“We knew it was coming. The shift to digital was already starting in places such as the US and Europe,” says Mienie.

“We also knew that we needed to measure this shift in a reliable way. When it comes to managing difficult change, you need a KPI that you can reliably measure.”

Comparing unique users of a website to the circulation of the magazine wasn’t reliable enough, since it was impossible to truly know how many people had used any given copy as a reference when shopping for a vehicle. Some other KPI was needed.

“We settled on leads to dealers. We wanted to track how many people had actually contacted vehicle dealers thanks to the magazine, versus how many had contacted a dealer because of the website,” says Mienie.

Finding a KPI

Tracking website leads and comparing them to magazine leads sounds like a simple idea, until you actually start to think about it. If it’s hard to know how many people used a single copy of AutoTrader as a reference, how do you figure out how many leads the mag has generated? It was a conundrum.

Tracking leads on the website would be easier, provided you were willing to harm the user-friendliness of the site. AutoTrader wasn’t willing to do this.

“We could track website leads by forcing every user to fill in some kind of form before gaining access to a dealer’s details, but we weren’t willing to do this,” says Mienie.

“Today, the average user spends a phenomenal amount of time on our site. A typical visit lasts 12 minutes, and we believe this is because our site is easy to use. While KPIs are important, they shouldn’t come at the expense of the user. Everything should be done to make the experience for the client or user as pleasant as possible.

“With this in mind, we give our software engineers a lot of freedom. They don’t need to seek permission to improve the site. If they’ve been working on something that they think will improve the website, they can run with it. You never want bureaucracy to stand in the way of improvement.”

Related: 11 SA Entrepreneurs on What They’ve Learnt About Managing Staff

An innovative solution

Autotrader-team

In order to effectively measure leads from both AutoTrader magazine and the website, the company came up with a very elegant solution called Call Tracker.

The solution was so elegant and transparent that even regular consumers of AutoTrader probably wouldn’t have noticed its existence.

How does it work? The number that you find for any given dealer in the AutoTrader magazine or on the website was not the same as the regular number of that dealer, although, the number was dedicated to a dealer.

Instead, it is a technology that redirected the call through the company to the dealer. Thus, giving AutoTrader the ability to measure leads via phone to the dealer, which was the most-used way in which consumers got in touch with dealers in those years.

Importantly, the company regularly placed a different number for specific dealers on the website and in the magazine, meaning AutoTrader could track exactly which platform a lead was generated from, and give the dealers useful insights into his/her dealership’s response.

AutoTrader had in essence created a reliable but simple KPI, using sophisticated technology at the time, that could be used to track consumers’ migration from print to digital.

The watershed

As mentioned, the migration of users was fairly slow. AutoTrader had started monitoring the trend in 2007, but it wasn’t until 2013 that the website took over from the magazine as the core focus of the business.

In the mid-2000s, the company had printed around 230 000 magazines each month, and managed to sell 55% of those on a regular basis.

Today, it sells about 30 000 magazines a month. However, as magazine sales have declined, the number of visitors to the website has skyrocketed, with more than three million visitors to the website every month, opening more than 40 million pages.

Related: 5 Wrongheaded Attitudes Stunting Your Growth As An Entrepreneur

New competition

The migration of AutoTrader magazine advertisers (sellers) and consumers (buyers) to the website wasn’t guaranteed. Getting buyers and sellers of the magazine to embrace the AutoTrader website required hard work.

“As a magazine, we had a big advantage: Potential competitors were faced with very high barriers to entry. We had the capability to compile a 600-page magazine, print it and distribute it weekly. Any new competitor would have found it hard to match us,” says Mienie. “The internet, however, obliterated those barriers. Suddenly it was much easier to compete with AutoTrader.”

AutoTrader wasn’t afraid to pre-empt the digital shift. “You need to be willing to eat yourself. One of the things we did was to place the website prominently in the magazine, knowing that it would eat into sales. We had to take a short-term hit, but we knew that we would benefit from it in the long term.” The company also placed a huge emphasis on the user experience.

“You need to be the best,” says Mienie. “You need to lead the charge and be first to market with every new development. You also need to know and respect your consumer and dealer. We believe in creating a site that is easy to use and offers more content than you’ll find anywhere else. We also make it a priority to know the consumer’s car-buying journey and car sellers’ needs.

“But, the game is changing again, fewer and fewer consumers are using the phone, and to an even lesser degree email, to get in touch with dealers. Our research over the last year shows that more than 52% of car-buying consumers don’t phone or email a car dealer, but simply take the address and visit the dealer directly.

“When it comes to managing great change within a company, research is incredibly important. But just doing research isn’t enough you need to use it effectively. The temptation exists to hog research because you don’t want competitors to get hold of it. That doesn’t work. We know exactly how much time the average consumer spends studying vehicles before buying a new car. We also know how much of that time is spent online (15 hours), and how much is spent in the physical world visiting dealers (14 hours), and this trend is shifting rapidly toward less time in the physical world and more time searching online, which means the consumer has pretty much made his choice before he leaves his screen. We give that info to our salespeople, who in turn give it to our clients (car sellers). Information needs to be disseminated.”

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