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Famous Brands: Kevin Hedderwick

From shelf-packer to CEO of Famous Brands, Kevin Hedderwick took a successful but small family business on the growth ride of its life, turning it into a R4 billion industry and developing some of the country’s most loved food brands along the way.

Monique Verduyn

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Kevin Hedderwick

The Halamandres family (actually Halamandaris but the name was spelled incorrectly by an immigration official) came to South Africa from Greece in the 50s with just $50 between them, and the will to work hard and achieve something. It was one of the brothers, George, who decided that Johannesburg needed an American style steakhouse and so he opened the first Steers restaurant in the 60s. The rest, as they say, is history.

Steers was a huge success, and George was joined by his son John and his nephews, the Halamandaris brothers, Peter,  Theofanis, Perry and Babis in the 1970s. More restaurants were opened and the concept of franchising was introduced to the South African market. It expanded rapidly to become one of South Africa’s most well-known fast-food chains. In March 1994, the company listed under the name Steers Holdings (including Debonairs and FishAways) on the Johannesburg Stock Exchange. There were 162 Steers restaurants. On 1 January 1995 the company’s share price closed at 92c. But four years later, the family realised that the true value of the business had yet to be unlocked. In 1999 the share price was about 85c and the market cap R65 to R70 million. That meant that the family’s combined stake in the business was about R35 million to R40 million after all their hard work over a period of 37 years.

They were quite rightly very disappointed that they had worked hard at it for 37 years, and collectively were worth only R35 million to R40 million. You might be forgiven for thinking that’s hardly an achievement to sneeze at, but the family had grander plans. They complained that they had friends who owned Spar stores who had created far more wealth. It was as though the market was saying to them ‘you may as well delist and just remain a family business.’ Hard though it was to acknowledge, they needed to bring someone on board to change the company’s fortunes. Enter Kevin Hedderwick.

The man with a plan

Hedderwick is self-taught. Coming from a humble background in a small town, he has what he calls a “boere matriek”. There was no money for him to study further when he finished school so he went straight to work after completing his time in the army. One thing he knew was that he did not want to be poor. By the time the Steers founders met him, he had left the corporate world, but he had more than 20 years’ corporate experience behind him, and had also been the co-creator of the very successful Keg franchise which he’d helped launch and grow to 65 outlets. A highly effective leader and manager with a sharp mind for business, Hedderwick shared with the Halamandaris family humble beginnings, a need to learn as much as possible, and an almost insatiable drive to work hard and make it to the top. He was their man.

Craig McKenzie, creator of Debonairs, knew him well and brought him to the attention of the Halamandaris family who, McKenzie knew, were looking for a leader with the right set of business and people skills. That was how he found himself sitting in a boardroom with the family one day in 1999. He describes that first meeting as odd.

“I’d come out of a business where we wore jeans and takkies and I walked into a room with a bunch of guys in silk shirts and ties. I thought ‘Oh hell, back in corporate.’ But I soon got to know Theofanis really well. The chemistry between us was just great. Soon we were getting along really well and a relationship of trust developed. George and I both came from poor backgrounds and we spoke the same language. I didn’t walk in there waving qualifications around and claiming loudly that I would revolutionise the business. Instead, I listened to what they had to say and told them what I could do. After several more meetings, we agreed that we could work together and I joined what was then called Steers Holdings as MD.”

Working in a family business can present some tough challenges. But it was not like that for Hedderwick. “It’s been an amazing journey. I think that meeting the Halamandaris family and joining Steers was almost pre-ordained. I felt like I’d been practising for this all my life.”

He has huge admiration for the family. “They came here with nothing and built an amazing business. Then they were wise and smart enough to see that to take it to the next level, they would have to bring in an outsider. That’s quite a gamble.”

From vision to reality

Hedderwick, CEO of what is today known as Famous Brands, calls his story a fairytale. Having grown up in an environment where there was little money, he was determined that his family would not be deprived. He started his career at Distillers Corporation (known today as Distell) as a merchandiser, and through sheer hard work, determination and a focus on continuously improving himself, built himself into a man who was capable of taking what was essentially a family business and growing it into a South African franchising giant.

“My job at Distell was to make sure that our products were always within arm’s reach of the consumer. I was very blessed to get that job because the company invested heavily in its people.” It was at Distell that his raw enthusiasm and desire to learn caught the attention of Rauch van Reenen, the company’s Port Elizabeth sales manager. Van Reenen became his first mentor and an important influence in his life. In the young Hedderwick he found someone who was ready to learn what he had to teach. From him, Hedderwick learnt how to do presentations, how to manage other people and what business skills were critical. Like a sponge, he soaked it all up.

Ten years later, at the age of 30, Hedderwick’s hard work and commitment paid off and he was marketing director of the company, having played many different roles in the business. He had also become aware of how top-driven the company was. He’d learnt as much as he could and it was time for something new. In the mid-80s he made the move to South African Breweries, a time he recalls as one of the best in his life.
“I always say that SAB was where I did my MBA. Even though I don’t actually have the qualification, it’s a learning organisation like I have never come across in my life before. I spent 11 glorious years there working for some incredible leaders.”

At SAB he developed his knowledge further by moving from classic sales and marketing to doing lots of other tasks, like running depots. That’s how he built his skills in distribution, warehousing, and industrial relations, all of which he was to apply later in the franchising world.

A voracious reader, Hedderwick learnt much of what he knows from business books and biographies.

It was at SAB that he met marketing director Peter Savory, who was to become the next major influence on his career. Savory taught him to slow down, to take a deep breath before charging ahead into a situation and never to do anything impulsive. He says he was fortunate to find mentors as he believes the wisdom they have to impart is hugely beneficial for young people who want to grow. But luck played far less of a role in his achievements than his sheer drive and commitment to hard work. It was while at SAB that he moved to a much broader management position that included responsibility for human resources, warehousing, sales, industrial relations, finance and everything else in his district. His time there prepared him for the legendary turnaround that he was to effect at Famous Brands just a few years later.

At SAB, he got to know two of his customers who were starting the Keg franchise. They were great restaurateurs, but unlike Hedderwick, they were not great businessmen. Yet people were lining up to get into the Keg business so he decided to opt out of the corporate world and join them in 1994.

“By this stage, 20 years down the line, I was in my forties and ‘gatvol’ of corporate. I felt that I had learnt what there was to know about running a big operation and I thought it would be good to move to a smaller environment.”

It was a rash decision for someone who had thrived in the world of big business, but it opened the door to his future in franchising, or what he calls his ‘life’s work’.

He returned to his home town of East London and opened the Keg and Rose pub, a venture that taught him a lot about entrepreneurship. The former SAB hot shot served drinks and swept the floors, but he also turned the pub into a huge success. He was then persuaded to join the Keg team at head office where his management skills were sorely needed. He took over as MD and, in the second half of the 90s, grew the franchise into a very successful brand and was sad to see it sold to King Co when his partners decided to emigrate. He stayed on for three years, just long enough to see the company through its warranty period.

Believing in people

When Hedderwick joined Steers in 1999, McDonalds’s had set up shop in South Africa and there was a sense of panic in the air. But he focused on what he knew best: people, systems and processes. He applied everything he had learnt about the corporate world and running his own business to the franchising system.

“We sat in that same boardroom and decided that to unlock value for all the shareholders, we needed to take some risks and drive rapid business growth,” he recalls. “There certainly wasn’t investment in the right calibre of people.”

He stresses the importance of surrounding yourself with experts and not being intimidated by people who might be smarter than you. If you want to ramp up your game, he says, you have to make sure you have the right team. That’s really where he started.

“We brought in an HR consultant and installed a performance management system across the organisation. To this day, if you speak to the people in Famous Brands they’ll tell you that there is a high performance culture here and that’s the way it ought to be.”

On top of that, every four months Famous Brands does an executive officer review. It’s a well-known fact that Steve Jobs drives people around him so hard that if you fail to deliver you’re toast. That may well apply to Hedderwick too. Business unit heads present to him and his team. “We ask, ‘Are you on track, why aren’t you on track, what’s happening?’” he says. “So it’s not just a plan that you dust off once a year and pull out. It’s a living thing that’s been underpinned by scorecards. At the end of every fiscal year, everybody has an appraisal, so there are no surprises. Employees know how they’ve performed over the year. Everybody in this organisation, right down to the receptionist, has a scorecard that is part of the performance management system. We ensure that every scorecard is aligned with where we want to take the business in the long term.”

He says other people in the business will claim that he’s a workaholic and a micro manager. It’s not uncommon for a franchisee to call him late at night and complain that his bakery order has not arrived. He’s also straightforward and likes to tell people how it is. “With me, what you see is what you get. I love what I do. I’m a very lucky man. I get up every day of my life and I think I’m in such a great place. I’m surrounded by great people and wonderful franchise partners. I know them by name, I know their families, they know me, and they know my wife. So working long hours doesn’t faze me.”

He believes in management by walking around. Bureaucracy at Famous Brands is kept to a minimum, and he is often found visiting people at their desks. “I’m told that CEOs don’t usually walk around the building, but I always remind everyone that I’m just a burger salesman.”

Perfecting the systems

Hedderwick’s a stickler for formalities. Although he has achieved phenomenal successes, he has not rested on his laurels. Instead, he remains unassuming and refuses to ever be self-satisfied. His vision for Famous Brands to continue its growth trajectory requires unwavering focus. For him, constant reinvention is critical. Every year in October he and his team do a complete unpack of the business from a strategic planning point of view and robustly examine every area. Despite their significant size, they get right down to the detail and then put it all back together again. “That means that we have a strategy plan for the business going forward. We then share that with all the different business units and they make sure that they develop a plan that aligns with that macro strategy plan.”

It’s that drive to standardise the systems at the heart of the company that enabled him to turn a business that was already in franchising into the industry leader. He’s proved the obvious: the franchise business model is most successful when it’s ruled by systems.

“What was glaringly apparent when I joined is that there wasn’t a hell of a lot of attention being paid to process, which is typical in a family-run business. Decisions were written on the back of cigarette boxes.”

He can’t highlight enough the importance of processes. “That’s what was ingrained in us at SAB – if you can’t measure it, you can’t manage it. It’s as simple as that.

Underpinning all the systems and processes is a vision that was first articulated in 2000. “We set ourselves a four-year plan to take Steers Holdings and turn it into the leading quick service franchisor in Africa. Through luck, effort, hard work, and honest endeavour, come 2004 we ticked the box. Since then, every four years, we’ve articulated a new vision for the business and made sure that the planning process underpins that vision. If you wake any of our people up in the middle of the night and ask them what the vision is for Famous Brands right now, they’ll reply that it’s to double the size of the business by 2013.”

Growth through acquisition

Having put the right people and processes in place, Hedderwick took the business on an aggressive growth path. He refers to it as taking the lift rather than the stairs. “Right from the beginning we knew that in order to unlock value for ourselves and our shareholders, we needed to grow. We could play it safe, or we could take some risks. We decided to take the risks.” The Brazilian Coffee and House of Coffees franchises were bought in 2003. These small acquisitions were followed by a far more daring move – the buyout of that old family favourite, Wimpy. It was priced at R124 million, more than its own market cap. People in the industry and the company scoffed at Hedderwick. It was almost unthinkable that the deal would go through. “The family said to me, ‘Kevin you’re going to choke us on this thing.’ The big question for me was where the money was going to come from. We did not want to issue more shares as that would dilute the shareholding so we had to find a funder. We put a presentation together and pounded the streets. Five different financial institutions laughed us out the door, but then we met with Investec and they believed in what we wanted to do.” Hedderwick’s confidence in the Wimpy brand was soon vindicated. It proved to be a silver bullet. His persistence, self-belief and sheer ability to spot a good deal had paid off.

It became clear that a new name was needed for the group. “The Steers name was no longer representative of the business. What we were doing was buying brands and making them well-known. Hence, the new name, Famous Brands, was chosen in 2004. We chose it because it was in line with what we wanted to do – our philosophy has always been that we will acquire a business which is best in its class or that we can make best in its class.”

The 51% acquisition of boutique daytime café, Tasha’s in 2008 signalled a new direction for Famous Brands. “We had so many bases covered – pizza, burgers, fish, speciality coffee – all of which are mainstream businesses. It was time for us to look at something a little more upmarket for our portfolio. That’s when I met Natasha Sideris, who had two restaurants in Bedfordview and Athol. She has an energy that I would bottle if I could, so I said to her ‘let us buy into your business and we’ll help you realise your dream.’ People said there was no way we would be able to franchise Tasha’s, but we’ve done it and it’s been a great success. There are now eight shops and they are performing exceptionally well.”

Never one to be complacent, Hedderwick took another big bite at the franchising industry in 2009 with the purchase of Mugg & Bean for
R104 million, which significantly strengthened Famous Brands’ coffee offering. “I’d been talking to Mugg & Bean founder, Ben Filmalter for a long time and I loved the business,” he says. “Subsequently we’ve entered into joint ventures with an artisan bakery chain called Vovo Telo, and a township-based flame-grilled chicken business called
Giramundo.”

The group’s focus has now moved to leisure, a more encompassing concept than ‘quick service and casual dining’. Continuing to focus strongly on growth, Hedderwick says that being about leisure has opened up the market for Famous Brands more than ever before. “It just so happened that we were approached to buy the ailing Keg business, which came along with McGinty’s and O’Hagan’s, which we acquired for a relatively low cost. We did not acquire these businesses for the brands. Instead, we are launching a ground-breaking trading model, The Brewers Guild, for the pub and restaurant industry. It’s designed to reinvent what has become an ailing category and adds liquor to the portfolio.”

Taking care of brands

It’s worth noting that Hedderwick is also a great believer in bringing along good management teams when he acquires companies because they understand the culture and the business of their brand. Brand stewardship is a critical component of Famous Brands’ core strategy.

Under Hedderwick’s leadership, the group has always displayed a willingness to use the broadest array of tools and techniques to understand, develop and enhance the relationship between the consumer and the brand. Because the different brands have different requirements, it’s a strategy that underpins this business – one core corporate value buoyed by multiple individual brand values.

“Many people have asked me how we have managed to build a multi-branded portfolio when most other companies have failed because, they say, you can’t be all things to all people. But I learnt all about brand stewardship at SAB, and that’s the model we’ve applied here. No matter what brand we acquire or how big or small it may be, from the day we buy it that business has a champion who looks after it – they eat, drink and sleep that brand.”

He says that leads to healthy, if somewhat vocal, competition between brands at the group’s headquarters. “The other day the Steers guys launched a new range of burgers and wanted to get everyone to run a new screensaver for the product. The Wimpy people flatly refused. There’s good banter between everyone, and it creates a lot of brand loyalty within our team. That’s important because we always have to remember how different our brands are from each other. A Steers customer is very different from a Tasha’s customer, and the franchisees have to be people who can fit into those different environments.

“People ask me sometimes what keeps me awake at night. Right now I suppose the only thing that keeps me awake at night is the economy. If the economy works, we’re going to work. One of the things that I say we are fanatical about here is continuous improvement so we try and always keep up our game.”

Right now, Hedderwick heads up a franchising giant with 2 000 outlets, a market cap of R4 billion, and a share price of more than R40. Add to that his vision to double the size of the business by 2013 and you begin to understand the level of energy he has. At 58, his desire to continue to grow the business is relentless. As for the Halamandaris family, they still own 43% of the business. “They don’t spend much time here, but they know that I do and that I’m having a hell of a time.”

The Famous Brands Portfolio

  • Steers (520)
  • Wimpy, incl. UK (636)
  • Debonairs Pizza (334)
  • FishAways (115)
  • Mugg & Bean (115)
  • Tasha’s (8)
  • House of Coffees (16)
  • Brazilian/Brazilian Café (48)
  • Blacksteer (8)
  • Giramundo (6)
  • Keg (25)
  • McGinty’s (4)
  • Vovo Telo (3)
  • O’Hagan’s (19)
  • Milky Lane (90)
  • Juicy Lucy (16)

Acquisitions

2003

  • Acquisition of Pleasure Foods, comprising the Wimpy and Whistle Stop brands
  • Acquisition of the franchise agreements of House of Coffees and Brazilian brands

2004

  • The holding company changes its name from Steers Holdings Limited to Famous Brands Limited, to reflect more accurately the diversity of the group’s brand portfolio

2005

  • Acquisition of TruFruit, a manufacturer and distributor of fruit juices
  • Acquisition of Baltimore Foods, a manufacturer and distributor of ice-cream products

2006

  • Acquisition of Bimbo’s franchise agreements at selected Engen garage sites and successful conversion to Steers

2007

  • Acquisition of a 75% interest in Wimpy UK

2008

  • Acquisition of a 51% interest in the Tashas brand
  • Acquisition of Cape Franchising master licence and business

2009

  • Acquisition of the South African and African business of Mugg & Bean, the brand leader in the fast-casual coffee-themed category
  • Acquisition of a further 20% of Wimpy UK and settlement of foreign debt

2010

  • Acquisition of the trademarks and franchise agreements of Keg, McGinty’s, O’Hagan’s, Black Steer
  • Acquisition of a controlling stake in Giramundo, a flame-grilled peri-peri chicken offering and Vovo Telo, an artisan bakery and café business
  • Launch of black economic empowerment owner-driver initiative

2011

  • Acquisition of the trademarks and franchise agreements of Milky Lane, Juicy Lucy

Quote

“With me, what you see is what you get. I love what I do. I’m a very lucky man. I get up every day of my life and I think I’m in such a great place. I’m surrounded by great people and wonderful franchise partners.
I know them by name, I know their families, they know me, and they know my wife. So working long hours doesn’t faze me.”

Quote

“At the end of every fiscal year, everybody has an appraisal, so there are no surprises. Employees know how they’ve performed over the year. Everybody in this organisation, right down to the receptionist, has a scorecard that is part of the performance management system. We ensure that every scorecard is aligned with where we want to take the business in the long term.”

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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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tim-hogins

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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