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Boardmans: Tom Boardman

How can I learn about business? What does it take to be an effective business leader? How do i foster business acumen and insight? What are the key lessons that lead to success in business?

Greg Fisher

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Tom Boardman of Boardman's

These are important questions that any aspiring entrepreneuror business manager will ask themselves many times in their career. TomBoardman, the current chief executive officer of Nedbank and founder ofBoardman’s Retail Stores learnt his most important business lessons throughexperience, by being out there on the frontline, making important decisions andleading employees through good times and bad. He says: “A fundamentalphilosophy I have is that nothing you learn in life is ever wasted. Sooner orlater you will be called upon to use every bit of knowledge and experience andinformation that you have collected along the way. And that’s why when you areyoung you can be very smart and you can be well educated but actually only timeand experience can create wisdom.”

Tom Boardman started his career as financial manager forSouth Africa’s largest corporation, Anglo American. From there he went on tolaunch the country’s first ever chain of retail “home stores”, Boardman’s, andin so doing, paved the way for a whole new retail category in South Africa.After leaving Boardman’s in the hands of the Pick n Pay Group in 1986, he wenton to join BOE when it was still a private company. Boardman helped list BOE onthe Johannesburg Stock Exchange and was later named chief executive of thecompany. In 2002 BOE was acquired by Nedbank and a year later Boardman wasappointed chief executive of Nedbank with the task of turning the financialinstitution around after a few years of disappointing results and a consequent lossof market faith. He set ambitious goals for Nedbank in 2004 and achieved themin 2007, returning the bank to healthy profitability and ensuring that it wasstrong enough to weather the financial storm that lay ahead in 2008.

On the surface, it may seem as if Tom Boardman’s career hasbeen a smooth, successful journey as he has transitioned from one leadershipposition to another but when you delve into the details, you realise that hepaid a high price for some of the lessons learnt along the way. You alsorealise that he took both success and failure in his stride and learnt fromevery opportunity, and it is those lessons that have given him the wisdom,confidence and management insight to lead one of South Africa’s largestfinancial services companies through one of its most challenging times.

The first deal

Boardman obtained a Bachelor of Commerce Degree in Law atWits University and then served articles at Deloitte & Touche to qualify asa chartered accountant. After completing his articles he was offered a job infinance at Anglo American Properties where he concluded his first major deal, amerger: “On the Monday we had very broad range discussions on the merger. Weagreed to meet again on a Thursday with the company with whom we were doing thedeal. We did a little bit of work on the Tuesday and my boss played golf everyWednesday, so he went off to play golf. When we arrived at the office onThursday we had a couple of notes sketched out. At the meeting the managementof the other company had a complete blueprint of the merger. They were so muchbetter prepared at that meeting that we were on the back foot from then on. Itwas a great lesson in preparing for meetings. He who prepares best gets what hewants.”

Boardman described how this lesson has stuck with him since1973 and it is evident that he still lives by this philosophy today. Before mymeeting with him he asked for an outline of our discussion and arrived at themeeting prepared with printouts of slides, documents and a clear idea of the directionof our conversation. Having had to scramble for position in the merger talks backthen, Boardman’s team eventually consummated a deal. It was then that he wasexposed to the realities of a corporate merger. He had learned about thestructure and purpose of mergers in his accounting and law classes but no oneever warned him about this thing called culture. “One can potentially cutcosts, achieve economies of scale, share systems etc…. but when you try tomerge two very different cultures it’s a very difficult and complex thing,” hereflects. Ever since that first deal he has been much more aware of culture inorganisations. He always works on fostering the right kind of culture in hisorganisation and takes time to assess culture when considering a merger or apartner organisation.

Getting lucky

A few years into his tenure at Anglo American Properties,Boardman was relocated to Cape Town to be finance director of Sam Newman’s – abuilding supplies company in the HL&H Group, also part of Anglo American.“I went to Cape Town early in 1977. After the riots in 1976 South Africa was indeep trouble. Things were looking really, really bad and the building industrywas in a nosedive. Cape Town had some of the wettest winters ever so theresults of the building materials division were dreadful. Eighteen months afterI arrived there the chief executive left. The other execs looked around andsaid: “Tom, can you just hold the fort while we look for a new CE?” I was 28 atthe time and the company employed around 3 000 people. So I held the fort asacting MD and I learned another of life’s great lessons… that a huge amountin life depends on luck. Now obviously if it comes your way you had betterseize the opportunity. You may be absolutely brilliant and talented and you getno breaks. But when a break comes, you have to seize it.”

“In the first 12 months while they were still looking for anew CE, the economy improved. Massive housing projects were initiated on theCape Flats and we had the driest season in 25 years. Every month the numbersgot better and better. It was not genius; it was the way the things work. Theresult was that a year had gone by and they hadn’t found a new CE and they saidto me: “You are it, GO!” Boardman points out that business people must monitorevents in the external environment and respond with conviction to changes. Thatmay mean seizing opportunities when the environment works in your favour orputting contingency plans in place when it works against you.

Knowing the numbers

Not yet 30 and leading a company employing 3 000 people –many of them older and more experienced than him – Boardman had the advantageof being able to understand the numbers in the Sam Newman business. Numbersbring everything down to a common unit of analysis and enable a person to seethe big picture, he says. “What happens in any business is that you put moneyin. It either goes in as debt or equity. Then it fragments and it goes intoinventory, people, buildings and plant and equipment. Eventually it comes outthe other side as profit, which is reinvested or distributed as dividends.While it is fragmented, it is very difficult to interpret. A person whounderstands the numbers in a business can be like the only interpreter in thecity of Babel where nobody spoke the same language. So if there is one personwho can speak all the languages, imagine the power that person is sittingwith… as a 29 year old with one year in the business, the big picture that Igot from having all the financial pieces was very powerful.” Boardman suggeststhat all people who want to succeed in business should develop the skills tointerpret financial reports, “without that you will always be at the mercy ofthe person who can provide such an interpretation” he says.

One of the major developments that Boardman introduced atSam Newman’s was the transformation of the company’s struggling retail hardwarestores. The company had many wholesale yards and just two retail stores andBoardman realised that retailing hardware goods in a store is different towholesaling building supplies from a yard. He revamped the stores to make themmore appealing and brought in a Swiss store designer. By displaying items in amore logical, accessible way, turnover started to increase: “When things aregoing well you need to understand as much as you can about the reasons why.When business is going well people seldom ask why. But if it’s going badly theywant answers. Things were going well so I set out to find out why,” hereflects. “We did in-store surveys and discovered that more and more women werecoming into the hardware store. So we asked them why they were coming to thishardware store.

They said it was because they liked it. We found out that womenmake the majority of home décor decisions and hardware had traditionally beensold in an environment where women didn’t feel happy. We discovered that bycreating a hardware store with a pleasant environment we had hit on somethingbig.” The business took the next step to leverage this opportunityand a new Sam Newman’s store was built – “a whole new concept” which took off immediately because there was nothing like it in SouthAfrica at the time. It was a home store but it retained items such as paint andwallpaper. “We scaled down the range of technical fittings but we had a toolsection. With this new concept we took what Sam Newman’s was known for, butadapted it for women.”

Taking a leap

Even though the new Sam Newman’s retail stores were doingwell, the HL&H board questioned whether the concept fitted into theirportfolio. HL&H was an industrial group and the directors saw the retailstores as non-core. Boardman was tasked with finding a buyer. He looked aroundfor a few weeks and then started toying with the idea of buying the retail storeshimself. He approached the board and was told that if he could raise the moneyin 30 days, they would consider selling to him. He mortgaged everything, andborrowed as much money as he could to raise the capital for a 51% share in thenew business. The Swiss store designer and one of the other Sam Newman’smanagers put up the capital for the other 49%.

One of the real challenges of the acquisition wasnegotiating the price of the sale: “When you are buying, you want to get theprice as low as you can.…if I had been a total outsider, I would have arguedand haggled to knock down the value of the stock. But having been MD of thebusiness, it is very difficult to argue against what you have on the books. Iprobably paid too much for the business and, with hindsight, I would haveinterposed an independent person to act on my behalf.” After agreeing on aprice, Boardman and his partners developed a plan to turn the retail storesinto a sustainable, growing business.

They decided to call the business “Boardman’s Retail Stores”encapsulating the Boardman family name in the same way that quality departmentstores like Garlicks and Masons had, recalls Boardman.One of the benefits of working for a large successfulcompany early in your career, is that you may learn relevant managementpractices and pick up some useful strategic tools. At HL&L, Boardman wasexposed to a framework for understanding business that resonated with him andhe has applied it in every business he has run since. He found that certainbasic business principles apply equally whether you are running a start-upretail business with only two stores or a large listed financial servicesinstitution. The framework he uses, which came from HL&H, and is still usedin Nedbank today, is depicted on the left.

“It starts with vision” says Boardman. “At Boardman’s, ourvision was: ‘To develop the first national retail chain, mass marketing qualitycontemporary design, household goods at affordable prices’. Twenty five yearslater I can still recite it. So could every person in the business. And eachone of those words had a great deal of importance.” Values were not as high apriority for leaders in the early 1980s as they are today, says Boardman, butin launching Boardman’s, they did try to be explicit about what was importantto them as a company. Boardman relates how they crafted strategy and identifiedcritical success factors: “When you have your vision, you need to establishstrategy; within strategy, you need to decide what your critical successfactors are. Every business has critical success factors, three or four factorsthat determine the success of the business. You may have to go out and do someresearch and scenario planning to understand what is happening in the market. Look at the macro side, do your normal old SWOTanalysis to ascertain exactly what those success factors are.

At Boardman’s, our critical success factors were:

  1. To have unique and different merchandise. To be different
  2. To display items in a way that people can visualisethemselves in a room
  3. To achieve store efficiencies to minimise shrinkage

According to the Boardman adopted framework, you need todetermine the critical success activities attached to the critical successfactors: “This is about ascertaining what different people within the businessmust do to achieve the critical success factors. Linked to that you need toestablish an appropriate structure for the business so that people caneffectively carry out the critical success activities, and then you need tofind the right people for each role,” says Boardman. “Very often managersselect people and then look for a job for them. They should first identifytheir critical activities and then find the best people for those activities.

“With the right people in place you ensure that each personhas specific objectives stipulating exactly what you want them to achieve. Youmeasure people-performance based on those objectives and reward them for goodperformance,” says Boardman. “In thirty five years, the reward performanceblock is the most difficult block I have ever had to wrestle with. It is morecomplex than all the other things in managing a business and if you get itwrong it drives the wrong behaviour. Once you have got the reward system inplace you have to constantly ask whether the reward system is driving youtoward your vision. Is it rewarding the right value systems and driving yourstrategy?”

Making it work

Having mapped out his strategic plan, Boardman set about thehard work of building a business. He thought he had worked hard as a 29 yearold managing director of a building supplies business, but he worked evenharder when it was his own capital on the line and he was running a growingretail business with his family name in the brand. To be really effective as amanager he found that he had to be visible. “There is no substitute for’management by walk-about’; visible leadership is the first step in leadership.Initially it was easy because we had two stores. As the business grew it becamemore challenging but still essential. I also travelled with my buying teams tothe trade fairs in Milan. On my first visit to Milan, I asked: “Where does allthe wood come from?”

I knew from HL&H that moving timber around is veryexpensive and if I could find the source of the wood, the factories producingthe furniture would be nearby and I could buy directly from them. I discoveredthat the wood came from Yugoslavia and most of the manufacturing was in anortheastern corner of Italy. So we hired a car and drove up to visit smallmanufacturers in the area. We negotiated deals with them and in so doing cutout the middleman. None of the other retailers were doing that and it gave us acost advantage. Our willingness to get intimately involved in the operationsand work with the buyers allowed us to establish this advantage.”

Today, Boardman is still renowned for being highly visible.On my way into Nedbank, the ladies at the main reception told me how much theyenjoy it when the CE spends time talking to them and finding out how they are.

In search of growth

After eighteen months in business, the Boardman’s managementteam decided they were expanding too slowly. To help grow the business theyresolved that they needed a partner. After considering a number of retailorganisations in South Africa, they received a call from Pick n Pay. Boardmanliked the family values of Pick n Pay and after some rounds of negotiation theydecided to enter into an equal partnership in which Pick ‘n Pay would buy 50%of the equity from the original partners, allowing them to pay off their debtsand providing some capital for growth in the business. The partnership meantthat they shared the profits but also needed to fund additional capitalrequirements on the same basis. Boardman saw the upside of this relationship,but failed to pay enough attention to the potential downside.

When the deal wasconcluded, the plan was to open two new stores annually for the next threeyears, rolling out two additional stores in the Western Cape in 1985, another twoin the Western Cape in 1986 and then moving up to Gauteng in 1987. After signing the deal, the business began to grow accordingto plan. Two large new stores opened in the Western Cape in 1985, one inTygervalley and the other in Stellenbosch. Then, out of the blue, that sameyear, Boardman was offered a lease for a new store in Midrand. TheVerwoerdburgstad Mall was opening up and had 2 000 m2 of prime retail spaceavailable. Pick n Pay wanted to proceed even though it deviated from the plan.Boardman flew to Gauteng on Raymond Ackerman’s private jet, met with his oldbosses from Anglo American Properties, saw the development in the Midrand areaand decided it was too good an opportunity to pass up. He was confident thecompany would be able to accommodate the additional capital requirement if therand did not weaken any further. If it did weaken, he would be in trouble, buteconomists told him that the currency was undervalued and would probablystrengthen. Boardman relates: “A big lesson here, when you look at scenariosand see bad news don’t ignore it. You have to contemplate theuncontemplatable.”

He signed the lease for a Midrand store and a few weekslater a lease for a new store in Eastgate became available. Once again Pick nPay wanted to build an additional store, at odds with the original plan, andagain Boardman rationalised it and signed the lease. When he signed the two newleases in Gautengthe exchange rate was at about R1,25 to a dollar. Within five months, PW Bothamade the “Crossing the Rubicon” speech and the rand fell to R2,63 to a dollar.There was now no way that Boardman could find the money to fund the workingcapital requirements of the expanded business; he just did not have the cash.The only way out was to sell the company. Boardman realised that he had takensome risks and the environment had turned against him. There was nothing hecould do. He sold Boardman’s to Pick n Pay for R1. Even though Boardman did not remain involved in thebusiness, what he had started continued to be successful. A new category of“home store” retailing had emerged in South Africa as a result of thepioneering spirit of Tom Boardman and the retail stores bearing his name stilloperate successfully in most major shopping malls in South Africa today. Boardman’sis now part of the Edcon group but the Boardman’s retail format that youexperience today is not very different from what Tom Boardman originallycreated in Cape Town in the 1980s.

Although he was sad to have to leave the retail businessthat he had put so much effort into creating, Boardman realised that he hadlearned some valuable lessons in the process of building and then losingBoardman’s. Those lessons laid the foundation for a superb career thatfollowed. After selling Boardman’s, he joined BOE while it was still a private,relatively niche financial service institution and played an integralleadership role in listing the business. He went on to become the BOE chiefexecutive, in the process expanding the base of the business substantially. BOEwas acquired by Nedbank in 2002 and then in 2003, Nedbank was in trouble. Thebank had issued four profit warnings to the market in 12 months and the mediawas reporting that analysts had “given up all trust in its numbers”. In hisfirst four months as Nedbank CE, Boardman reportedly uncovered a myriad ofaccounting problems.

“That so many holes have been found is Boardman’sachievement” reported Finweek. Multiple media reports stated that Boardman hadsteadied the ship and regained Nedbank’s lost credibility. He was open andtransparent and put a plan in place to address the problems one at a time,based on a well thought out priority list. In 2004, he set significant goalsfor the organisation – to achieve a 20% return on equity and bring the efficiencyratio below 55% within three years. The 2007 results reflected that, under theleadership of Boardman, Nedbank had achieved these goals and was, once again, astable, credible, well regarded financial services institution, effectivelyserving customers and generating good returns for shareholders. Boardman’sbusiness acumen and leadership helped re-establish the company and set it on apath to sustained profits when it looked like it was on its way down a painfulspiral. These leadership skills and business insights were developedwhile he was engaged in a tough and challenging process of building anentrepreneurial business. Entrepreneurship has many benefits of which learningis one of the most significant.

What you can learnfrom the Boardman’s story

It has been shown that human beings are naturally morereactive to negative information. If we get feedback on something, we willtypically spend more energy focusing on the negative aspects of that feedbackthan on the positives. A degrading comment from someone we care about will staywith us for a lot longer than a compliment or word of encouragement. Inpsychology this is called negativity bias. The implications of this forbusiness are significant: Managers and business owners tend to over-react to negativesituations – sales dropping, a customer leaving, a late shipment – andunder-react to positive situations. When things are going well, we seldom tryto uncover why they are going well. This means that we often don’t understandour own success and therefore fail to replicate and capitalise on that success.

One of the things that Tom Boardman did when sales werepicking up in the Sam Newman’s stores was to understand the trend. He conductedin-store surveys to find out why people were coming into the shop and makingpurchases. By understanding the success of the business, he discovered a wholenew market – women shopping for hardware items. None of the other retailers hadprovided for this market, and his effort to display the hardware items moreeffectively, attracted them. By understanding who was shopping in his storesand why they were there, he was able to further extend that offering through awhole new concept and in the process create a massive new market.

So how can you understand your success?

1. Survey customers – ask them what they like, why theybought something and what attracted them to your product or service.

2. Keep a track record – try to maintain a clear record ofmarketing material, product designs, packaging and promotional materials. Whenyou have had a successful period, look for relationships between all theseitems and revenue. Try to understand what is giving you increased revenue.

3. Employee focus groups – after a successful year or a goodmonth, hold focus group discussions with employees asking them what wasdifferent? What worked well?  Why do theythink you achieved success?

4. Keep a personal business diary – on a more personallevel, keep a notebook in which you record the nuggets of wisdom that youdiscover along the way. These may be things that you hear from others or ideasyou read about. They may also be things that you discover for yourself inmanaging a business, things that work well or fail miserably. Both providevaluable lessons.

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

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Entrepreneur Profiles

7 Foundational Values Of Brand Cartel And How They Grew an Iconic Business From The Ground Up

Marco Ferreira, Renate Albrecht and Dillon Warren built Brand Cartel, a through-the-line agency, that delivers exactly what they wanted — and has grown exponentially as a result.

Nadine Todd

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brand-cartel

Vital Stats

  • Players: Marco Ferreira, Renate Albrecht and Dillon Warren
  • Company: Brand Cartel
  • Launched: 2013
  • Visit: brandcartel.co.za

“We’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do.”

When Dillon Warren, Renate Albrecht and Marco Ferreira launched Brand Cartel in 2013 they were in their early 20s with zero agency experience between them. The idea had started when Marco recognised that social media was taking off, but no agencies were playing in that space yet. It was a clear opportunity.

Printing flyers that said ‘Your social media is so last season’, Marco and Renate went from store to store in Sandton City, pitching their services. When Dillon joined them a few months later because they needed someone to handle the company’s finances, they had two laptops between them, R6 000, which Dillon had earned from a Ricoffy advert, and sheer will and tenacity.

“We shared a house to save on rent and split everything three ways,” says Renate. “At one point we hadn’t eaten in two days. My mom lent me R500 so I could buy Futurelife and a bag of apples for the three of us.”

The trio hired their first employee soon after launching Brand Cartel, and after prioritising salaries and bills, there wasn’t much leftover. “Dillon actually paid us R67 each one month,” laughs Marco. “That’s what was left — although I still can’t believe he actually sent it to us.” It was at this point that the young business owners realised they needed credit cards if they were going to make it through their start-up phase — not an easy feat when your bank balance is under R100.

Related: What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew

“Looking back, those days really taught us the value of money,” says Dillon

We spent a lot of time with very little, and we’re still careful with money today.” Through it all though, the partners kept their focus on building their business. “It almost didn’t work for a long time. We were young and naïve, but in a way, that was our strength. We didn’t have any responsibilities, and we’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do. All of our business has been referral business. It takes time, but we focused on being the best we could be and giving everything we had to our clients. Our differentiator was that we really cared, and were willing to offer any solutions as long as they aligned with our values.”

This is how Brand Cartel has grown from a social media agency into PR and Media Buying, SEO and PPC Strategy, Digital and Print Design, Web Development, Campaign Strategy and now an Influencer division. “It’s an incredibly competitive space with low barriers to entry, which meant it was easy to launch, but tougher to build a client base,” says Renate. “I’d sometimes cry in my car between sales pitches, and then walk in smiling. We had no idea if we’d make it.”

The perseverance has paid off though. Strong foundations have laid the groundwork for exponential growth over the past year, with turnover growing almost ten-fold in 2017 thanks to relationship-building, strong referrals and fostering an internal culture and set of values that has driven the business to new heights as a team.

Like many start-ups, Renate, Dillon and Marco have made their fair share of hiring mistakes, but as the business grew and matured, the young entrepreneurs began to realise that the success of their business lay in the quality of their team and the values they stood for.

This meant two things: Those values needed to be formalised so that they could permeate everything Brand Cartel does, and they needed a team that lived, breathed and believed in them.

“We’ve had some nasty experiences,” admits Dillon. “You should always hire slowly and fire fast, and for five years we did the opposite. We’ve hired incredible people, but we’ve also ended up with individuals who didn’t align with our values at all, and that can destroy your culture.

Dillon, Marco and Renate realised they needed to put their values on paper. “We did an exercise and actually plotted people based on a score grading them against our values, so we knew where our issues were. We knew what we wanted to stand for, and who was aligned with those values. We were right; within a few weeks resignations came in and we mutually parted ways.”

The team that stayed was different. They embraced Brand Cartel’s values, and more importantly, it gave the partners a hiring blueprint going forward.

“Values are intangibles that you somehow need to make real, so it’s important to think about the language you use, and how they can be used in a real-world work context,” says Marco.

The team has done this in a number of ways. First, they chose ‘value phrases’ that can be used in conversation, for example, ‘check it, don’t wreck it’, and ‘are you wagging your tail?’ Team members can gently remind each other of the value system and focus everyone on a task at hand simply by referring to the company’s values. “In addition, when someone is not behaving according to those values, you can call them out on the value, which is an external thing, rather than calling them out personally,” explains Dillon.

Related: How Matthew Piper And Karidas Tshintsholo Launched Their First Business From Their UCT Dorm Rooms

Second, all performance reviews are based on the values first. This means everyone in the organisation begins any interaction from a place of trust, knowing they are operating according to the same value system.

“When you’re in a production environment with jobs moving through a pipeline, there can be problems and delays,” explains Marco. “Instead of pointing fingers when something is over deadline or a mistake is made, our team can give each other the benefit of the doubt and work together. They trust each other, which creates cohesion. We all work as a team, which impacts the quality of our work and the service we offer our clients.”

The system is simple. Coaches will step in first if there is an issue before it escalates to the Head of Team Experience, Nicole Lambrou. If Nicole is called in, she will address the problem head on. “Inevitably it’s something fixable,” says Marco. “By addressing it immediately and in the context of our values it can be sorted out quickly. Ultimately, the overall quality of our team improves, and we are a more cohesive unit.”

The founders have seen this in action. “I recently arrived at a client event and three different people came up to me and complimented my team on the same things — all of which aligned with our values. Everyone at Brand Cartel lives them, internally and externally,” says Renate.

The value system has also shaped how the team hires new employees. “We used to meet people and hire for the position if they could do the job,” says Renate. “But then we started realising that anyone can hold up for an hour or two in an interview. You only learn who they really are three months and one day later.

“We need people who walk the talk, and we really only had a proper measurement of that once we articulated our values. Our interview style has changed, but so has what we look for.”

brand-cartel-south-african-agency

Here are the seven values that Dillon, Marco and Renate developed based on what they want their business to look like, how they want it to operate, and what they want to achieve, both internally, and in the market place.

1. Play with your work

Our goal is for everyone on our team to become so good at what they do that it’s no longer work. Once that happens you love your job because you’re killing it. It’s why sportsmen are called players, not workers, and it starts with the right mindset.

2. Wag your tail

The idea behind this value stems from Dale Carnegie, who said ‘have you ever met a Labrador you don’t like?’ In other words, we all respond well to people who are friendly. It needs to be genuine though, so again, it’s a mindset that you need to embrace.

We live these values whether we’re at the office or meeting clients. If you go into each and every situation with joy and excitement, from meeting someone new to a new brief coming in, you’ll be motivated and excited — and so will everyone around you.

3. Check it, don’t wreck it

The little things can make big differences. Previously it was too easy to pass the buck, which meant mistakes could — and did — happen. Once you instil a sense of ownership and create a space where people are comfortable admitting to a mistake however, two things happen. First, things get checked and caught before there’s a problem. Second, people will own up if something goes wrong. This can help avoid disasters, but it also leads to learnings, and the same thing not happening again.

4. What’s Plan B (aka make it happen)

We don’t want to hear about the problem; come to us with solutions, or better yet, already have solved the problem and made it happen. We reached a point where we had too many people coming to us with every small problem they encountered, or telling us that something wasn’t working so they just didn’t do it.

That wasn’t the way we operated, and it definitely wasn’t the way we wanted our company to operate. We also didn’t want to be spoon feeding our team. It’s normal for things to go wrong and problems to creep in — success lies in how those problems are handled.

Ignoring problems doesn’t make them go away, so we embrace them instead, encouraging everyone on our team to continuously look for solutions. For example, the PR department holds a ‘keep the paw-paw at Fruit & Veg City’ meeting every morning, where we deliberately look for where problems might arise so that we can handle them before they do. We start with what’s going wrong and then move to what’s going right. You need to give your team a safe and transparent space to air problems though. We don’t escalate. We need to know issues so that we can collectively fix them, not to find fault.

Related: The 5-Hour Rule Used By Bill Gates, Jack Ma And Elon Musk

5. Put your name to it

It’s about pride in work and making it your own. When someone has pride in what they’re doing, they’ll not only put in extra time and effort, but they’ll pull out all the stops to make their creative pop, or go the extra mile for a client.

We need to find the balance between great quality work and fast output though. One way we’ve achieved this is by everyone reviewing the client brief and then committing to how long their portion will take.

When someone gives an upfront commitment, they immediately take ownership of the job. It took time for us to find our groove with this, but today we can really see the difference. Our creative coaches also keep a close eye on time sheets and where everyone is in relation to the job as a whole to keep the entire brief on track. If someone is heading towards overtime we can immediately ask if something is wrong and if they need assistance.

We also celebrate everything that leaves our studio. Every morning we have a mandatory 15-minute catch up session where we check in on four core things: How am I feeling (which allows us to pick up on the mood in the room and the pressure levels of our teams); What’s the most important thing I did yesterday; What’s the most important thing I’m going to do today (both of which give intention and accountability); and ‘stucks’, issues that team members need help with. We then end off with our achievements so that we can celebrate them together.

6. Keep it real (aka check your ego at the door)

We believe in transparency. At the end of the day we’re all people trying to achieve the same thing, but it’s easy for ego to creep in — especially when things go wrong. You can’t be ego-driven and solutions-orientated. If clients or team members are having a bad day, you need to be able to focus on the solution. Take ego away and you can do just that. It’s how we deal with stucks as well. We can call each other out and say, ‘I’m waiting for you and can’t do my job until I receive what you owe me,’ and instead of getting a negative, ego-driven reaction, a colleague will say, ‘sorry, I’m on it.’

7. Walk the talk

For us, ‘walk the talk’ really pulls all our other values together. It’s about being realistic and communicating with each other. If you’ve made a mistake or run into a problem, tell your client. Don’t go silent while you try and fix it. Let them know what’s happening and fill them in on your plan of action.

Walk the talk also deals with the industry you’re in. For example, if you’re a publicist, you need to dress like a publicist, talk like a publicist, and live your craft. In everything we do, we keep this top of mind.

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Entrepreneur Profiles

John Holdsworth Founder Of Tautona AI Shares 4 Disruptive Strategies That Are Changing The Insurance Industry

What can we do now that we couldn’t do before, thanks to changes in technology?

Monique Verduyn

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john

“Disruption isn’t just doing things in a different way which doesn’t resonate or go any further — it’s about changing the game. Being disruptive means taking a look at an industry and finding a way to do it differently, giving you an advantage over the incumbents.”

Vital Stats

  • Player: John Holdsworth
  • Company: Tautona AI
  • Est: 2016
  • Visit: www.tautona.ai

Disruptive innovation is the catchphrase that defines the last 20 years. New technologies, business models and media have disrupted the way we do just about everything. Conventional wisdom has it that the new kids on the block are the ones who are going to own the market at the expense of industry stalwarts, but this innovative South African disruptor is showing them how it’s done.

1. It’s the experience economy, stupid

Regardless of how the world changes, organisations that consider their customers’ emotions and experience first, win. That’s exactly what Tautona did. They put themselves in the customers’ shoes and asked one key question: ‘What’s wrong?’ Few industries are as ripe for disruption as insurance. When John Holdsworth co-founded cognitive automation business Tautona AI in 2016, he knew that there had to be a better way for insurers to handle client claims.

Tautona AI emerged out of a consulting engagement John had with a large insurance company. With a background in IT, he is a highly experienced technology executive and entrepreneur who has started a number of successful companies. He says he loves the energy and adrenalin associated with start-ups. He pioneered the use of digital signatures in South Africa, founded mobile payments company PAYM8, and converged voice and data provider ECN, which he sold to Reunert for R172 million in 2011. The experience acquired over this time meant he was ready to take on a massive challenge.

Related: 5 Key Areas Pratley Are Using For Current And Future Growth

“When a policyholder submits an insurance claim, that action should trigger an instant decision, with the outcome immediately communicated back to the policyholder,” John says.

“Customers want swift claims handling, communication, and compensation. They want the same instant gratification that they get from online banking. So that’s what we set out do — to revolutionise the entire claims process. We have made traditional claims processing a thing of the past by pioneering a cognitive solution that is making the claims process faster, smarter and more efficient.”

2. Automating judgment tasks once reserved for humans

Tautona’s claims automation solution uses artificial intelligence to instantly approve or refer claims for further investigation. By using machine learning algorithms to identify patterns in the data, Tautona’s solution identifies fraudulent claims, enabling insurers to halve fraudulent claim losses.

Tautona also uses Robotic Process Automation to integrate to legacy systems, removing the need for traditional programming techniques. This means that Tautona’s claims automation solution can be implemented with minimal disruption to a business. By automating decision-making, communication, and compensation, Tautona enables insurance companies to take a major step towards becoming true digital insurers.

3. Ditch the legacy systems, start from scratch

Disruptive innovators invest in digital strategies so that they can find new ways of responding to their customers’ evolving needs. The founders of Tautona AI agree on several principles, but one that stands out specifically because it goes entirely against traditional thinking, is the importance of starting from scratch.

“You cannot take a non-digital business model and expect it to work online,” says John. “Instead of using old methods, you need to start from the beginning. Ditch the legacy systems, take a leader mentality and imagine the art of the possible.”

This iterative, modular approach typically begins with defining the strategy and programme plan upfront, delivering a core capability fast so it can provide benefits immediately, and then continuously improving with regular, incremental capability improvements to achieve the objectives of the strategy. It’s an approach that fosters closer collaboration between stakeholders, improved transparency, earlier delivery, greater allowance for change and more focus on the business outcomes.

Related: 8 Codes Of Success That Helped Priven Reddy of Kagiso Interactive Media Achieve A Networth Of Over R4 Billion

4. Shaking up an industry

How do you launch new solutions and educate customers who are used to doing things the way they have always been done? John says resistance to change is inevitable. That’s why you need more than good technology.

“When you introduce something ground-breaking to the market, you encounter many different types of personalities asking diverse questions. That demands an approach that is client-centric and entirely customer focused. It also means you have to spend time developing a sound business case to present to decision makers.”

A solid business case documents the justification for the undertaking of a project. It’s the way you prove to your client and other stakeholders that the product you’re pitching is a sound investment. You need to justify the project expenditure by identifying the business benefits the innovation will deliver and that your stakeholders will be most interested in reaping from the technology.

“Essentially, it’s about proving you can deliver,” says John. “When you have an entirely new proposition, the only way you can hope to get your foot in the door is with a value proposition so profound that clients are forced to take a look at it.”

Tautona has convinced a number of South Africa’s top insurers to implement their AI-powered claims automation solution. The results to date have been ground-breaking, with insurers dramatically reducing turnaround times and processing fees. As a result, Tautona’s sales pipeline is full to the end of the first quarter of 2019.

“But there’s no rest for disruptors. Nokia and BlackBerry crumbled because they were slow to react to market changes, and they underestimated the challenge from Apple and Samsung. The only way to retain leadership is with relentless innovation, that is, a constant flow of new versions and features. That applies in any industry today.”

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Entrepreneur Profiles

Tim Hogins Started Out As A Security Guard, Today His Has A Turnover Of R150 Million And Has Self-Funded Three Huge Lifestyle Parks

As a poor township kid, Tim Hogins watched kids pile into buses heading to Sun City every weekend, knowing he couldn’t afford to join them. He was a youngster, but he made a promise to himself. One day he would build parks that anyone could visit — especially underprivileged kids like himself.

Nadine Todd

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Vital Stats

  • Player: Tim Hogins
  • Company: GOG, formerly Green Outdoor Gyms
  • Est: 2012
  • Turnover: R110 million
  • Projected Turnover: R150 million (2018)
  • Visit: gog.co.za

“I’m a visionary, and I’m not scared to invest in my vision. I’ve lost millions, but I’ve made more because of that. Business is about making money, but I’ve grown beyond that – I want to employ people, develop them, push boundaries and see where we can take this.”

“Poverty can be a good thing, because growing up poor makes you creative, and that’s an incredible power if you know how to use it.”

Seven years ago, Tim Hogins drove out of an office park and pulled onto the side of the road because he was having a panic attack. His car was closing in on him, he couldn’t see and he couldn’t breathe. After months of hard work, it was all over. His dreams were shattered.

Tim isn’t the first entrepreneur to find himself here, and he won’t be the last. What separates him from countless other aspiring business owners is that despite a massive setback, he didn’t back down. He sat in his car, phoned his wife, and told her what had happened. Instead of telling him it was time to move on and find a job, she asked him how they were going to cobble together the money he needed to start again.

And that was the beginning of Green Outdoor Gyms, a vision Tim had been nurturing for almost two years. A business idea that had led to his retrenchment and was almost ripped away from him by his business partners and investors.

But he didn’t quit. He pushed on. And today his business has a projected turnover of R150 million and has self-funded three huge lifestyle parks that Tim hopes will impact the lives of thousands of underprivileged children while providing jobs for hundreds more.

Related: 8 Codes Of Success That Helped Priven Reddy of Kagiso Interactive Media Achieve A Networth Of Over R4 Billion

The in-built art of tenacity

green-outdoor-gyms

To understand Tim, you need to understand where he came from. As a township kid growing up in Randfontein on the West Rand of Johannesburg, Tim always helped his parents to sell stuff. They were traders. His dad had a small café selling burgers and chips, and his mom baked. While other kids in the area piled into buses for Sun City on the weekends, or visited a local bird park, Tim had to work or the family didn’t eat.

“I matriculated in 1996, and even though I had an exemption, tertiary education wasn’t on the cards for me,” he says. “We just couldn’t afford it.” But Tim had a plan. His cousin told him about a free four-week course to become a security guard, and Tim aced it, securing a position at one of the firm’s top industrial sites.

Here’s the first secret to Tim’s success. Instead of seeing a dead-end job, Tim saw an opportunity. If he did his job well, he would progress to a driver, and then a cash-in-transit guard. From there the plan was management. Becoming a security guard wasn’t his fate because he couldn’t get a degree — it was step one to the rest of his life.

“I was raised to be the best version of myself. Everything is what you make of it. In primary school I was head boy, and in high school the head of the SRC. There’s always a way to grow and improve yourself.”

Two years into his career as a security guard, Tim heard about another opportunity  — a free programming course teaching COBOL, a back-end system used by the financial services industry.

“I grew up 500 metres from Stafford Masie, who would go on to become the first head of Google South Africa and is one of our country’s greatest tech entrepreneurs,” says Tim. “I had zero programming experience — I’d never touched a computer — but I knew how valuable these skills were, and here was an opportunity being handed to me.”

It wasn’t quite as easy as Tim imagined. He failed the aptitude test and had to take it again. Once he was on the course, he failed that too — it was a programming course after all, and Tim needed a far more basic introduction to IT. He didn’t give up though. He’d quit his job and needed to make this work while he was still living with his father and didn’t have financial responsibilities, so he begged the course administrator to let him retake the programme. This time he passed, and found a job at a small IT firm.

Once there, Tim built up his IT acumen. Over the course of his IT career Tim worked for Dimension Data, EOH and SITA. In his final three years he applied for an account management position and moved into sales. His goal was to become a business owner, and so he diversified and learnt what he could about business.

He also paid attention to the world around him, looking for a business opportunity or problem he could solve. He dabbled with some ideas, but the one he kept coming back to was outdoor gyms.

“I saw kids in parks doing sit-ups, push-ups, pull-ups on trees, and kept thinking there must be a better way than this for them. I knew that a proper solution would be good for the whole community — giving kids and parents a safe and free environment to play in and focus on their health. I focused on poorer communities, where gym fees weren’t an option, and kids needed safe places to play and keep out of trouble.”

The more Tim unpacked the idea, the more he began to believe in it. And then his employers found out, and made it clear that they did not like Tim’s attention divided between his job and his business idea. Despite this, Tim continued to focus on his entrepreneurial play, and within a few months he’d been retrenched, ostensibly due to a restructuring of the business, yet Tim was the only person let go.

It was October 2010 and Tim had no job, two-months’ salary and he was about to get married. But it was the best thing that could have happened to him. “That retrenchment catapulted me into business. From then on, my full focus became outdoor gyms.”

Winning and losing

gog-water-park

Tim had approached Joburg City Parks who where interested in the idea. He had also met with an engineer and they had begun to design the equipment. There was just one small problem: Money.

“I knocked on doors, approaching anyone who would listen. One investor laughed at me. He said I’d gone from IT to playing with steel — what was wrong with me? A contact at SITA said flat out that she wouldn’t help me. Looking for funding can be incredibly demoralising. I had an idea and a letter of intent from Joburg City Parks, and it still wasn’t enough.”

And then Tim was introduced to a group of investors who wanted to instal kids play areas in municipal parks. Tim had the City Parks connection; they had the funding. They entered into a business partnership and built a prototype together. This was when Tim’s wheels fell off.

“I was invited to a meeting by my three business partners, and when I arrived there were five people in the room — my partners and their two lawyers. We’d entered into the agreement as 50/50 partners, and they wanted us to all be 25% shareholders. I couldn’t agree to that. This was my idea, my connection, my baby.”

By the time Tim left the meeting, he had no funding, no partners and no prototype and he knew City Parks was getting impatient. All he’d done was create competitors — and they had a demo model.

Tim had spent most of 2011 looking for funding and then building the prototype once he found his partners. He wasn’t just back to square one, he was behind where he’d started months ago. Hence the panic attack.

It was a pivotal moment. Give up or push on? Tim chose to push on. That night, Tim and his wife, Rona Hogins, sat down and came up with a plan. They would sell one car and Rona would apply for a bank loan. Together, they managed to come up with R200 000. Tim approached a friend who was interested in a side business and they launched LXI, an importer of screens for media companies. LXI brought in enough to pay the bills while Tim concentrated on getting Green Outdoor Gyms off the ground.

Then luck stepped in. “I drove past a warehouse and saw some play equipment. Instead of driving on, I pulled in and pitched my business idea to the owner.” The owner, Neta Indig, agreed to build Tim’s prototype at cost, in exchange for a long-term partnership. Tim agreed. His R200 000 would be enough to get the business back off the ground. Green Outdoor Gyms was officially launched in February 2012.

Here’s the thing about luck though. Unless you’re open to opportunities, paying attention and willing to step out of your comfort zone, luck alone will get you nowhere. By the time Tim drove into Neta’s parking lot, he’d spoken to countless investors, had doors shut in his face, lost a partnership and his prototype, and was still willing to look for any opportunity that might present itself. Through sheer will and tenacity, he found it.

Related: The 5-Hour Rule Used By Bill Gates, Jack Ma And Elon Musk

Seizing opportunities

gog-exercise

After the first outdoor gym was installed, two things happened. The competition Tim had feared from his old partners didn’t materialise. It was Tim’s first real lesson in the power of passion. He’d doggedly pursued his idea for over two years. His partners, who didn’t share that passion, did nothing with the prototype they’d acquired. Tim was still — at that stage — in blue ocean territory.

The second was how quickly an idea can take off once the foundations are in place. GOG’s turnover was R3 million in its first year, and orders were flooding in from municipalities throughout South Africa.

Tim was invited to present his solution in parliament, and it was included in the National Development Plan. “Everything escalated faster than I could have imagined,” he says.

“The reality is that we’re an obese nation. It’s a real problem. On top of that, 90% of the country can’t afford commercial gym fees. Under the National Development Plan, every community was earmarked for an outdoor gym. Government saw my vision and they bought into it.”

Tim had to tender for each new site, but he had a first-mover advantage. By the time other players entered his space he’d already built up a track record. His team’s turnover times are impressive and the business doesn’t only design and instal the equipment, but can also overhaul a derelict park. The quality of his products ensures that equipment lasts at least eight years with no maintenance, although once an outdoor park is installed, the community takes ownership of it, cleaning it regularly and maintaining the area.

In six short years, GOG has installed over 1 000 outdoor gyms for local municipalities around the country, and there’s still room for growth. There are currently between 5 000 and 10 000 sites available, and while Tim doesn’t believe they will get all of them, the business will continue to expand. “I believe we still have a ten-year run with government-funded outdoor gyms, but this is no longer our core business.”

In fact, GOG has grown and changed considerably since that first outdoor gym was installed in February 2012.

“I’m an opportunist. I pay attention to developments around me and am always on the lookout for where we can add value,” says Tim. As a result, GOG is now developing its own sites and supplying equipment to the industry — across private and public sectors.

“You need to know that competitors are coming,” says Tim. “When we started out we had a niche with outdoor gyms and government, but someone will always want to eat your lunch. If you know that someone’s paying attention to what you’re doing and that everyone needs to diversify, you can stay ahead of your competitors.

“Our business is centred around health, fitness and family, and  this understanding has allowed us to grow into lifestyle spaces that support our core focus.”

As a result, GOG has expanded to the installation of play areas and outdoor gyms for hotels, private and public schools, beach parks and lifestyle estates, including Steyn City.

“We also have a registered landscape company,” says Tim. “We can take vacant land and transform it into a park with grass, trees, water and pathways. We have a Geotech division that does soil testing and environmental studies.”

None of this happened overnight. It takes time to build a reputation, but if you’re focused on four key things, you can build a sustainable business. “You need to diversify your product range, diversify your customer base, nurture relationships and push outbound sales,” says Tim.

Tim has geared the business for scale, which is critical in a production and manufacturing context. “We have always outsourced our manufacturing, first with Neta, and later to a Chinese manufacturer who has become integral to our success.”

Tim’s relationship with Neta was critical in the start-up phase, but after two years the manufacturer decided to focus on his core. “We were too big — it wasn’t a side project anymore, and Neta wanted to remain in construction,” says Tim. “I needed to either find another manufacturing partner, or move into that space myself.”

Tim visited manufacturing facilities in China and sourced samples until he found a plant that could handle GOG’s volumes and quality. “Chinese manufacturers value loyalty and they’ll do whatever you want at the price point you ask. If you want a cheap product, you’ll get it — and the quality to match. Good quality costs more. I have an excellent relationship with our supplier — so good that he flew out to South Africa to see our operations, because he was impressed with the volumes he produces for us.”

It’s this relationship and the capacity available to Tim that has allowed him to take the next step towards his ultimate vision for GOG: Lifestyle parks.

Living the dream

gog-exercise-park

GOG’s first lifestyle park stemmed from Tim’s need for a showroom and his life-long dream to give underprivileged children access to entertainment parks that he couldn’t afford when he was a child.

“We were manufacturing outdoor parks and I started thinking about other ideas in this space that aligned with our vision and niche. I needed a showroom that could showcase everything we can do, from ziplines to climbing walls, swimming pools to spray pools and outdoor gyms. A lifestyle park was the natural answer to everything I wanted to achieve.”

GOG Lifestyle was opened in November 2016 and is situated off the N14 near Lanseria Airport. It’s close to a number of townships, including Diepsloot and Cosmo City. “The revenue model is corporate team building events, family days and launches, which allows us to run specials for kids, the elderly, and CSI projects for schools and churches.”

The next lifestyle park, GOG Gardens, was opened in Soweto in December 2017. Bigger than the first lifestyle park, GOG Gardens caters for picnics, outdoor events and concerts. It’s a multi-purpose venue with seven venues in one, and also focuses on corporates, the general public and events, with CSI projects that support children.

“We have launched some smaller projects, such as GOG Kids at Chameleon Village in Hartbeespoort and a play area in Vilakazi Street, but our next big project is Happy Island, a 36 hectare water park off Beyers Naude Drive in Muldersdrift.”

Happy Island is GOG’s first joint venture with an investment partner, Tim’s Chinese supplier. Unlike the other lifestyle parks, which GOG self-funded from cash reserves, Happy Island is a multi-hundred million rand project with large capex needs. “The idea came to life when the chairman of our manufacturing supplier visited our operations in South Africa. There are no water parks in South Africa similar to those I visited in China. We are doing something completely new and exciting, and we broke ground in April 2017.”

All of GOG’s lifestyle parks have required high capex investments and have not yet reached break-even, unlike the smaller projects that will reach break-even within a few months. “Our projection for the lifestyle parks is three years, and five years for Happy Island,” says Tim.

“My long-term goal is to have ten lifestyle parks across South Africa, one in each region, and that’s what I’m investing in. We want to make a difference, give kids access to these parks and employ people.

“I’m here today because of my childhood experiences, but before I could invest in this dream, I needed to start small and build up my reputation and cash reserves. To achieve my ultimate dream will take a lot of investment, so that’s the focus.

“I’m a visionary, and I’m not scared to invest in my vision. I’ve lost millions, but I’ve made more because of that. Business is about making money, but I’ve grown beyond that — I want to employ people, develop them, push boundaries and see where we can take this. When someone says something is impossible, I want to know why, and then try anyway. That’s how you achieve great things. That’s how you realise your dreams.”

Related: 6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up

Next level

In 2016, GOG launched its first lifestyle park, GOG Lifestyle. Since then, two more lifestyle parks have been added, GOG Gardens in Soweto, and GOG  Kids in Chameleon Village in Hartbeespoort. The company’s biggest venture, Happy Island will soon be open to the public as well.

Healthy Living

GOG’s genesis was outdoor gyms, and the company continues to grow from these original roots: Catering to a growing focus on healthier lifestyles, from public parks to beaches, corporates and residential estates.

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