- Players: Sam Paddock (chief executive officer) and Rob Paddock (chief of education)
- Launched: 2008
- Turnover: R128 million
- What they do: Online short-courses, focusing on business, finance, marketing, design, law, systems and technology, writing and teacher education, and working with top academic institutions.
- Philosophy: If our business is growing at 100% year-on-year, we have to be growing very fast in our personal capacity, otherwise we’ll be left behind.
- Visit: www.getsmarter.co.za
We communicate the same challenge to our leadership team.
Big hairy audacious goal: To improve one million lives through online education.
GetSmarter’s exponential growth is nothing short of remarkable, but brothers Sam and Rob Paddock are quick to point out that getting one business right doesn’t mean that everything they touch turns to gold.
“We’ve had some ideas that have completely tanked, even though we still can’t figure out why they didn’t work,” they laugh, chronicling some of their greatest ‘non’ hits. First, there were the steel frame houses that Rob had seen in Australia. “I was convinced they were the next big thing,” he recalls.
“We spent so much time and effort on an idea that just wouldn’t take off. It wasn’t for lack of trying, but people weren’t interested, and we couldn’t change that.”
Learning from mistakes
There was one plus side to the whole experience: “We really know what to look for when choosing office space now; we’ve got a great understanding of construction.”
Bad idea number two was Back-up Box, which seemed like an amazing idea during the 2008 period of load shedding. “Again, we still don’t really know why it didn’t take off,” says Sam. “Theoretically, there should have been a market banging down our door to get their hands on alternative power sources, but it was a complete flop.”
They were two important lessons for the young entrepreneurs to learn. “At the time, we were both working in our father’s law firm, Paddocks,” says Sam.
“We’d joined in 2006 as equity partners, bringing tech and marketing expertise to the firm, but we were involved in multiple areas, including conveyancing, consulting, property development (the seeds for the ill-fated steel frame houses idea) and education.
“We were in our early 20s, and the success of Paddocks gave us a lot of confidence. We started thinking we were ‘serial’ entrepreneurs who could do anything. I think it’s natural for success to lead to some arrogance, but while confidence can be channelled into taking calculated risks to build something great, hubris will often just make you fall flat on your face. In our experience, serial entrepreneurship is rubbish. If you want to really build something amazing, focus on what you know, and do that really, really well.”
The art of the pivot
“Once GetSmarter was off the ground and doing well, we started thinking about other products and ideas that we could potentially add to our stable,” says Sam. “One of those was Kwiksta. The ‘Kwik’ was an acronym for ‘know what I know’, and the idea was to give teachers a DIY tool and a platform to create and sell their own
“We thought this was a really great idea,” adds Rob. “Unlike some of our previous ideas, it wasn’t a massive departure from what was working for us, which was online education. We had the platform and the knowledge around how to design a course, and we reasoned that all teachers are always looking for a way to make some extra income. We thought they’d jump at the product.”
They didn’t. Despite the sound reasoning behind the idea and the solid business model, the brothers had made one key – and as it turned out, flawed – assumption, which was that it’s easy to create content. The reality is that it’s hard, and the majority of their target market didn’t want to do it.
Finding their customer
“What was really interesting about the product was that while it didn’t suit our original target market, the corporate sector loved it. They didn’t want a DIY tool though. They wanted us to guide them and help them to build their own internal courses. We had to pivot completely, and ended up creating a bespoke and complex product, but we finally got the traction we were looking for,” says Sam.
The product gave birth to GetSmarter Business Solutions, a separate business entity with its own MD, which was rebranded Hubble Studios in 2014.
A few setbacks aside though, GetSmarter isn’t just a highly successful business, it’s been instrumental in shaping the online education landscape in South Africa. Sam and Rob might not have made all of their ideas work over the years, but their really big idea has been masterful, both in conception, and execution. Here are their top lessons.
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Do what you know (and what works)
GetSmarter wasn’t launched in a vacuum. It was the perfect culmination of passion, skill and great partnerships, coupled with a lot of hard work and dedication.
“I love tech and marketing, Rob is passionate about education, and has a background teaching music, and Paddocks already had a great partnership with UCT’s Law Faculty,” says Sam, who had also been involved in designing a virtual campus while completing his degree in business science.
“It was my first introduction to online education opportunities, and the success of my dad’s online course with UCT just cemented this impression.”
Graham Paddock is one of South Africa’s top sectional title lawyers, and a collaboration with UCT allowed him to build an online course that could be accessed across the country, with only the final component involving a workshop.
“It was a very popular course, but it was also one of the most profitable activities that Paddocks was involved in,” says Sam.
“It was 2005 and there was some resistance to online learning, but the prestige of UCT as a partner made a difference. Between my dad’s industry reputation and UCT’s brand, people were willing to try it out.”
Finding the natural fit
One of the key reasons Sam and Rob had joined the business was to spearhead growth. “This meant we were constantly looking for growth opportunities,” says Rob, once more laughing about their brief foray into steel frame houses. Online courses on the other hand, were a natural fit.
“The short course had the fastest growth and the best margins, and we realised that we definitely had something worth pursuing,” says Sam. “We added a blended-learning property course in Johannesburg, which was an online short course with a workshop at the end.”
Again, the course did well, and the brothers started realising that the best opportunities are the ones closest to you.
“I had started an ecommerce wine site with a friend,” says Sam. “It was called Getwine, and it was enjoying nice, steady growth. I started thinking about how we could leverage that business and data-base, and came up with the idea of doing a short online course on wine evaluation. We approached a professor from the University of Stellenbosch, and he agreed to come on board.”
Step two was branding. It didn’t make sense to run a wine evaluation course under the Paddocks brand. “We set up in a small room in Paddocks and roped in the marketing manager to brainstorm some name ideas. We wanted to stick with the ‘get’ concept of Getwine, which led to the name GetBrains,” laughs Sam.
“My dad took about two seconds to veto it once he heard it. He convinced us it was a terrible, terrible name, and we settled on GetSmarter.”
The birth of GetSmarter
“There was a huge demand,” says Sam. “281 students signed up. It was the two of us and one sales person, who doubled up as the course co-ordinator. But we could see the potential, and we could incubate the business inside Paddocks. We did a cut and paste of the Paddocks shareholder agreement, and with four shareholders, us, our mom, Mandy Paddock, and our dad, we launched.”
They were right. The brothers soon exited from Paddocks to focus exclusively on GetSmarter, and today the business has 200 full-time employees and 60 contract teachers, many of whom are consultants with real-world practical experience.
When asked why this idea succeeded, the answer is simple: The passion for education, coupled with making a real difference, a laser focus on marketing and execution, as well as an existing relationship with UCT were all the ingredients this young, hungry and above-all bullish team needed to launch a business that would prove to be an industry game changer. “And we were doing something we understood from the ground up,” adds Sam.
Create amazing partnerships (and respect the hell out of them)
The brothers are quick to point out the integral role that working with top brands has played in the business’s success. “We’re a digital university without a brand or smart professors,” says Rob.
“The partnership with UCT has been crucial to our success, as it gave real credibility to the brand from start-up,” he adds. “We have earned the trust of the country’s leading university brands and this means a lot to working professionals who want credible validation of their skills.
“There are key individuals in academia who have actively supported us from the beginning, and it’s very important that we continue to deliver quality. What we deliver affects their reputation in their sectors as well.”
As in any partnership, it’s important to understand how each party benefits from the association, and to be able to work well with each other. “We were a lean, flexible start-up, but UCT is a 100-year-old brand. That comes with bureaucratic structures, and we knew that in order for the partnership to be a success, we needed to understand this and work with it, not against it,” says Rob.
“We’re working with their brand, and that’s so important for our own success. At the time, they didn’t want to be in this sector themselves. It worked because we weren’t competing with them; we were adding to their offering. It was the perfect model, an incredible brand and a hungry market, and we were the conduit between the two.”
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“The digital revolution has led to micro-sizing and economies of scale that enabled us to unbundle education into short courses that are ten weeks long,” adds Sam.
“This model doesn’t work for universities. They generally aren’t focused on short courses, so it’s the perfect synergy. We’re basically a plug-in for them that generates revenue but doesn’t add to their overheads. However, we’ve had to be very conscious of two key points: First, we have to value our partners’ brands as much if not more than we value our own; and second, professors already have large workloads. We needed to add as little as possible to those.”
“We’ve developed a system which allows the appointed faculty member to inject their immense intellectual capital into the design and delivery of the course, and have full academic control, without taking too much of their time away from their on-campus responsibilities,” says Rob.
“It’s taken us many years of working closely with faculty to get the balance right, with both the faculty and GetSmarter leveraging their core competencies to deliver this innovative educational experience to students throughout Africa.”
“Ultimately it’s a relationship game,” adds Sam. “We need to create a relationship with the faculties, and they need to trust us enough to give us a chance – and then we work day and night to deliver.”
Prepare for growth (and put systems in place before you need them)
Today, GetSmarter is a far cry from where it was in 2008, launching with three people operating from a small room in Paddocks. “This is a complex space for us,” says Rob. “We have 200 full-time employees who focus on course development and delivery, technology, marketing, sales, and support functions like HR and finance. There’s a lot going on in the background.”
“We made sure we put systems-thinking in place from the beginning,” says Sam. “A danger for many businesses is that you hit the market, there’s a large demand, and then chaos ensues as you try to meet that demand.”
“This quickly leads to operational failure. This wasn’t a possibility for us — we were working with a very established brand that had its own reputation to consider, and that partnership was at the heart of the business. In addition, we needed to go out into the market and deliver consistently. Word of mouth and repeat business were particularly important because we were operating in a new, largely untested and unknown space.”
The business’s systems and technology were initially driven by Sam, who taught himself a lot of the skills needed to ensure the company was keeping up with its own growth. “It’s a fine line,” he explains.
“Ordinarily, systems and technology add a heavy overhead to the business. We found that we reduced this a bit because I was so involved, and we made the decision to invest in anything I couldn’t do myself. We focused heavily on marketing and sales, and pumped the money we made back into creating a strong back-end and systems. From the beginning we’ve been in this for the long-term, and so investing in the company’s growth just made sense. Taking tiny salaries to help achieve this was an easy choice to make.”
You have no business without great people (so make sure they’re all on board)
“We’ve learnt two big lessons over the past few years,” says Sam. “The first is that if you want buy-in from your staff, you need to be communicating with them all the time. Everyone needs to understand and embrace the business’s strategy. The second is that performance management, particularly in a growing company, keeps everyone focused.”
“We come from a very nurturing household,” adds Rob. “Our mother always encouraged us to believe that we could achieve anything we set our minds to. While this is a great entrepreneurial attitude, it caused some problems when we were dealing with non-performing employees. We were captain guilty of fuzzing the edges. We had this idea that with the right encouragement the problem would go away. It took us a while to realise that some employees can’t be coached into better performing team members. You need to be honest and clear upfront. If you’re not clear on good performance or bad, how can you expect your team to know?”
And then the brothers received invaluable advice: They were told to read Mastering the Rockefeller Habits, by Verne Harnish, and to implement the learnings from the book.
“Implementing the Gazelles system was a complete game changer for us,” says Sam. “It gave structure to employee management and staff reviews, it rewards team members who are focused and achieve results, and it gives everyone a clear framework of what’s expected of them, which in turn makes employee management objective instead of subjective.
“We’re too nice,” adds Rob. “This helped us to follow a system where everyone else knows exactly what’s expected of them – no grey areas.”
Gazelles follows a clear and regulated path. “First, you need to clarify the performance expectations of each and every role in the company. It’s important to be clear, we’ve really learnt this. The performance criteria follows a 90-day cycle and includes five priorities,” says Sam.
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“These priorities are evaluated every three months and aligned to the company’s six core values. Because the priorities are in black and white and agreed on upfront, managers can have honest discussions with their team members and credible reviews. Each review is rated on competence and attitude.”
“We never, ever push the reviews out,” adds Rob. “They’re time consuming, but they’re non-negotiable. Take the time to complete them properly, it’s worth it. A top-performing team is the most valuable asset your business has.”
“Two years ago we had a massive spike in growth which has continued, year-on-year. We’ve built a team of people that’s 200-strong. This system keeps our priorities aligned across departments as well. Monthly inter-departmental meetings allow everyone to see which priorities affect whom, how we can support each other and where the bottlenecks lie,” says Sam.
“If you know your KPIs and everyone else’s you can get a heartbeat of the business. This is as important for us as it is for all of our managers and employees.
“We’re very good at execution. That’s at the heart of our success, and through our growth spikes, this methodology helps us solve more of the right problems. Instead of putting out fires, everyone knows where they stand; we will navigate the next few years of growth well because of this.”
“We’re two people, we can’t touch everyone,” agrees Rob. “The way our management and team think and behave affects our business, brand and the way we operate and are perceived in the market. This helps everyone know exactly what’s expected of them. However, culture lives, and that’s a core responsibility of ours. It comes from us and how we behave and engage.”
Without sales there’s no revenue (so make this a core focus)
“We’ve always been very focused on student recruitment and marketing,” says Sam. “Start-ups often ignore this element because they see it as a cost that the business can’t afford until revenue grows. We always looked at it as the only way to grow revenue, and kept everything else as lean as possible to make it work.”
This doesn’t mean the brothers splashed cash on marketing – they were careful and strategic in how they approached their sales strategy – they were still a bootstrapped start-up after all.
“Step one is paying attention to what’s happening around you. We were one of the first companies to start advertising on Facebook. We understood that great marketing led to student recruitment, and we re-invested everything into the business, drawing tiny salaries,” says Sam.
Another strategy was email marketing. “We’ve always been very high-touch. We work hard. We contact you. We keep in touch and we keep returning to our database. Sales don’t happen by accident. We keep adding courses so that students return and build on their own competencies and skills, but we’ve also become the go-to brand for short online courses in marketing, finance and business, and that’s because of strategic marketing campaigns – people know who we are. And then we keep getting in touch, reminding you who we are, and what’s on offer.” It’s clearly a strategy that’s working.
Gazelles in action
- Every team member has a PDS document that includes their promise agreement (title, job purpose, responsibilities, annual priorities, core competencies and strengths), with the company values and behaviours review (linked to the company’s six values and personal behaviour that aligns with these values), quarterly priorities and professional development details.
- The quarterly evaluation is conducted by line managers and is done according to a four-point colour scale. Super green is way ahead, green is on track, yellow is behind and red is badly behind.
- The quarterly review: Includes a review of the individual’s role (has it changed, expanded, shrunk), a review of their alignment with the company’s values and behaviours, a review of how they performed on their quarterly priorities (operational), and a review of their progress against their learning objectives. As part of the review, each person receives a review from their peers which is included in the quarterly meeting. The team member’s prior review is included to ensure continuity between reviews and to identify trends. Managers also ask reports how they can support them better, and do better in their roles. Because priorities can change based on changes in the business, teams are prompted to review their priorities half way through each quarter to ensure any changes are reflected in their PDS documents, which means they are set up for a high-quality review at the end of the quarter.
- Weekly meetings: Each person has a one hour meeting with their direct line manager. This follows a structured agenda in which priorities are reviewed according to the green to red colour scale. This ensures managers and team members know if anyone is falling behind, and course corrections can take place before the quarterly review.
- Daily stand-up meetings: These are a few minutes, and allow each team member to share their wins and ‘stucks’ from the previous day, and priorities for the day ahead.
- Management meetings take place quarterly (two-day strategy sessions) and monthly (five-hour leadership meetings to ensure priorities are aligned across departments).
Expert Advice From Property Point On Taking Your Start-Up To The Next Level
Through Property Point, Shawn Theunissen and Desigan Chetty have worked with more than 170 businesses to help them scale. Here’s what your start-up should be focusing on, based on what they’ve learnt.
- Players: Shawn Theunissen and Desigan Chetty
- Company: Property Point
- What they do: Property Point is an enterprise development initiative created by Growthpoint Properties, and is dedicated to unlocking opportunities for SMEs operating in South Africa’s property sector.
- Launched: 2008
- Visit: propertypoint.org.za
Through Property Point, Shawn Theunissen and his team have spent ten years learning what makes entrepreneurs tick and what small business owners need to implement to become medium and large business owners. In that time, over 170 businesses have moved through the programme.
While Property Point is an enterprise development (ED) initiative, the lessons are universal. If you want to take your start-up to the next level, this is a good place to start.
Risk, reputation and relationships
“We believe that everything in business comes down to the 3Rs: Risk, Reputation and Relationships. If you understand these three factors and how they influence your business and its growth, your chances of success will increase exponentially,” says Shawn Theunissen, Executive Corporate Social Responsibility at Growthpoint Properties and founder of Property Point.
So, how do the 3Rs work, and what should business owners be doing based on them?
Risk: We can all agree that there will always be risks in business. It’s how you approach and mitigate those risks that counts, which means you first need to recognise and accept them.
“We always straddle the line between hardcore business fundamentals and the relational elements and people components of doing business,” says Shawn. “For example, one of the risks that everyone faces in South Africa is that we all make decisions based on unconscious biases. As a business owner, we need to recognise how this affects potential customers, employees, stakeholders and even ourselves as entrepreneurs.”
Reputation: Because Property Point is an ED initiative, its 170 alumni are black business owners, and so this is an area of bias that they focus on, but the rule holds true for all biases. “In the context of South Africa, small black businesses are seen as higher risk. To overcome this, black-owned businesses should focus on the reputational component of their companies. What’s the track record of the business?”
A business owner who approaches deals in this way can focus on building the value proposition of the business, outlining the capacity and capabilities of the business and its core team to deliver how the business is run, and specific service offerings.
“From a business development perspective, if you can provide a good track record, it diminishes the customer’s unconscious bias,” says Shawn. “Now the entrepreneur isn’t just being judged through one lens, but rather based on what they have done and delivered.”
Relationship: “We believe that fundamentally people do business with people,” says Shawn. “There needs to be culture match and fluency in terms of relations to make the job easier. As a general rule, the ease of doing business increases if there is a culture match.”
This relates to understanding what your client needs, how they want to do business, their user experience and customer experience. “We like to call it sharpening the pencil,” says Desigan Chetty, Property Point’s Head of Operations.
“In terms of value proposition, does your service offering focus on solving the client’s needs? Is there a culture match between you and your client? And if you realise there isn’t, can you walk away, or do you continue to focus time and energy on the wrong type of service offering to the wrong client? This isn’t learnt over- night. It takes time and small but constant adjustments to the direction you’re taking.”
In fact, Desigan advises walking away from the wrong business so that you can focus on your core competencies. “If you reach a space where you work well with a client and you’ve stuck to your core competencies, business is just going to be easier. It becomes easier for you to deliver. Sometimes entrepreneurs stretch themselves to try to provide a service to a client that’s not serving either of their needs. This strategy will never lead to growth — at least not sustainable growth.”
Instead, Desigan recommends choosing an entry point through a specific offering based on an explicit need. “Too often we see entrepreneurs whose offerings are so broad that they don’t focus,” he says. “Instead, understand what your client’s need is and address that need, even if it means that it’s only one out of your five offerings. Your likelihood of success if you go where the need is, is much higher.
“Once you get in, prove yourself through service delivery. It’s a lot easier to on-sell and cross sell once you have a foot in the door. You’re now building a relationship, learning the internal culture, how things work, what processes are followed and so on — the client’s landscape is easier to navigate. The challenge is to get in. Once you’re in, you can entrench yourself.”
Desigan and Shawn agree that this is one of the reasons why suppliers to large corporates become so entrenched. “Once you’re in, you can capitalise from other needs that may have emanated from your entry point and unlock opportunities,” says Shawn.
Building a sustainable start-up
While all start-ups are different, there are challenges most entrepreneurs share and key areas they should focus on.
Shawn and Desigan share the top five areas you should focus on.
1. Align and partner with the right people
This includes your staff, stakeholders, partners, suppliers and clients. Partnerships are the best thing to take you forward. The key is to collaborate and partner with the right people based on an alignment of objectives and culture. It’s when you don’t tick all the boxes that things don’t work out.
2. Make sure you get the basics right
Never neglect business fundamentals. Do you have the processes and systems in place to scale the business?
3. Understand your value proposition
Are you on a journey with your clients? Is your value proposition aligned to the need you’re trying to solve for your clients? Are you looking ahead of the curve — what’s the problem, what are your clients saying and are you being proactive in leveraging that relationship?
4. Unpack your value chain
If you want to diversify, understand your value chain. What is it, where are the opportunities both horizontally and vertically within your client base, and what other solutions can you offer based on your areas of expertise?
8. Don’t ignore technology
Be aware of what’s happening in the tech space and where you can use it to enable your business. Tech impacts everything, even more traditional industries. Businesses that embrace technology work smarter, faster and often at a lower cost base.
Ultimately, Desigan and Shawn believe that success often just comes down to attitude. “We have one entrepreneur in our programme who applied twice,” says Shawn. “When he was rejected, he listened to the feedback we gave him and instead of thinking we were wrong, went away, made changes and came back. He was willing to learn and open himself up to different ways of approaching things. That business has grown from R300 000 per annum to R20 million since joining us.
“Too many business owners aren’t willing to evaluate and adjust how they do things. It’s those who want to learn and embrace change and growth that excel.”
Networking, collaborating and mentoring
Property Point holds regular networking sessions called Entrepreneurship To The Point. They are open to the public and have two core aims. First, to provide entrepreneurs access to top speakers and entrepreneurs, and second, to give like-minded business owners an opportunity to network and possibly even collaborate.
“We believe in the power of collaboration and networking,” says Desigan.
“Most of our alumni become mentors themselves to new entrants to the programme. They want to share what they have learnt with other entrepreneurs, but they also know that they can learn from newer and younger entrepreneurs. The business landscape is always changing. Insights can come from anywhere and everywhere.”
The To The Point sessions are designed to help business owners widen their network, whether they are Property Point entrepreneurs or not.
To find out more, visit www.ettp.co.za
Bain & Company Give You The Data On How To Become 40% More Productive
Top performing organisations get more done by 10am on a Thursday than most companies achieve in a full week. They don’t have more talented employees than everyone else though — they’re working with the same people and tools as you. Michael Mankins unpacks what separates these businesses from everyone else, and how you can learn to be more like them.
- Player: Michael Mankins
- Company: Bain & Company
- Visit: www.bain.com/offices/johannesburg/
“Engaged employees are 45% more productive than satisfied employees. An inspired employee is 55% more productive than an engaged employee and 125% more productive than a satisfied employee.”
When Bain & Company partner, Michael Mankins evaluates businesses, he clearly distinguishes between efficiency and productivity. Efficiency is producing the same amount with less — in other words, finding and eliminating wastages. Productivity, on the other hand, is producing more with the same, which requires an increased output per unit of input and removing obstacles to productivity.
Interestingly, when businesses face challenges or tough operating conditions, the first response is always to become more efficient, instead of more productive. Restructuring and ‘rightsizing’ are the result. The problem, says Michael, is that when companies take people out, they don’t take the work out, and so the people end up coming back, along with the costs.
A better response, he says, is to identify the work that could be removed to free up time, which could then be invested in producing higher levels of output.
While businesses have become very good at tracking the productivity levels of blue-collar and manufacturing workers, tracking the productivity of knowledge workers is entirely different.
“There’s no data around white-collar productivity,” says Michael. “The problem is that the world is shifting towards knowledge work, and so, if we can’t measure productivity, output and obstacles in that space, businesses will never get the great levels of performance they’re looking for.”
Because of a complete lack of statistics in this area, when Michael and his colleague, Eric Garton, were approached by Harvard Business Review Press to write a book dealing with this issue, they had to devise a way of looking at the relative productivity of organisations comprised of white-collar workers.
The results were unexpected. “We were asked to research the difference between top performing organisations (the top quartile) compared to average organisations. I honestly thought the answers would be obvious, even if we didn’t yet have the tools to track them. I thought the best companies would have the best people. That’s 90% of the answer. Simple as that.”
As it turned out, it wasn’t that simple at all. Of the 308 organisations in the study, drawn from a global pool, the average star performer or A-player was one in seven employees. This statistic held true whether the company was in the top 25% of performers or an average performer. The difference was that the top performing businesses were 40% more productive than their counterparts — and yet their mix of talent, on average, was the same.
“There were some exceptions, but on the whole, the best in our research accomplishes as much by 10am on a Thursday as the rest do the whole week. And they continue to innovate, serve customers and execute on great ideas — all with the same percentage of A-players as other, more mediocre businesses.”
So, what were the differentiating factors?
What’s dragging your organisation down?
First, we need to understand how Michael and Eric approached their research before we can understand — and implement — their conclusions.
“We began with the notion that every company starts with the ability to produce 100 if they have a workforce that’s comprised of average talent, that’s reasonably satisfied with their job and can dedicate 100% of their time to productivity — bearing in mind that no-one can dedicate 100% of their time to productive tasks.
“The question we were focusing on was around bureaucratic procedures, complex processes and anything else that wastes time and gets in the way of people getting things done, but doesn’t lead to higher quality output or better service to customers. That’s what we call organisational drag. You start at 100 and then the organisation drags you down. The good news is that you can make up for organisational drag in three ways: First, you can make better use of everyone’s time. Second, you can manage your talent better by deploying it in smarter ways, which includes placing it in the right roles, teaming it more effectively and leading it more effectively. Third, you can unleash the discretionary energy of your workforce by engaging them more effectively.”
This trifecta — time, talent and energy — became the basis for Michael and Eric’s book, Time, Talent, Energy: Overcome Organizational Drag & Unleash Your Team’s Productive Power. “The way you manage the scarce resource of talent can make up for some, potentially even all, of what you lose to organisational drag,” says Michael.
What the research revealed: Time
“Wasted time is not an individual problem,” says Michael. “It’s an organisational problem. The symptoms include excess emails and meetings and far more reports being generated than the business needs to operate.”
These are all manifestations of an underlying pathology of organisational complexity, which is managed by senior leadership. “The best companies lose about 13% of their productive activity to organisational drag. The rest lose 25%. The most important thing is to reduce the number of unnecessary interactions that workers are having. That means meetings and ecommunications need to be relooked.”
The easiest manifestation for Michael and Eric to observe were hours committed to meetings and how much time workers spend dealing with ecommunications. What’s left-over is the time people can actually get some work done.
What they found is that the average mid-level manager works 46 hours a week. 23 hours are dedicated to meetings and another ten hours to ecommunication. That leaves 13 hours to get some work done — except that it doesn’t.
“It’s difficult to do deep work in periods of time less than 20 minutes. When we subtracted all the other distractions that happen daily, we were left with just six and a half hours each week to do work.” What’s even scarier about this statistic is the fact that meeting work and ecommunication time is increasing by 7% to 8% each year and doubles every nine years. If left unchecked, no-one will have the time to get any work done. “This is why everyone plays catch-up after hours and on weekends,” says Michael.
“One of my clients told me that his most productive meeting is at 6.30am on a Saturday, because it doesn’t involve one minute that isn’t required or one individual that doesn’t absolutely need to be there. If the same meeting was held at 2pm on a Tuesday, there’d be twice as many people, it would be twice as long and there’d probably be biscuits.”
The point is clear: We don’t treat time as the precious resource that it is, and if we did, we would radically shift our behaviour.
Start by asking what work needs to be done and then figure out the best structure to do that work. “Don’t confuse having a lean structure that does the wrong work with being effective,” says Michael. “One of the biggest problems we see is that companies are not particularly good at stopping things. Things get added incrementally, but nothing ever gets taken away. For example, we found that 62% of the reports generated by one of our clients had a producer — but no consumer. Time, attention and energy was invested in reports that no one needed and no one read.
“Ask yourself: How many initiatives have you shut down? If you made the decision that you could only do ten initiatives effectively, and each time you added an initiative, one had to be eliminated, what would your organisation look like?
“Unless you routinely clean your house, it gets cluttered. The same is true of companies. Initiatives spawn meetings, ecommunications and reports, which all lead to organisational drag.”
What the research revealed: Talent
According to Michael, the biggest element in their research that explained the 40% differential in productivity is the way that top performing organisations manage talent.
“We conducted research in 2017 that revealed the productivity difference between the best workers and average employees. Everyone knows that A-level talent can make a big difference to an organisation’s performance, but not everyone knows just how big that difference is.”
To put it in context, the top developer at Apple writes nine times more usable code than the average software developer in Silicon Valley. The best blackjack dealer at Caesars Palace in Las Vegas keeps his table playing at least five times as long as the average dealer on the Strip. The best sales associate at Nordstrom sells at least eight times as much as the average sales associate walking the floor at other department stores. The best transplant surgeon at Cleveland Clinic has a patient survival rate at least six times longer than that of the average transplant surgeon. And the best fish butcher at Le Bernadin restaurant in New York can portion as much fish in an hour as the average prep cook can manage in three hours.
It doesn’t matter what industry you investigate, A-level talent is exponentially more productive than everyone else.
This is why Michael thought that the obvious answer to why some organisations perform better than others is the mix of talented employees they’ve attracted.
“When we asked senior leaders to estimate the percentage of their workforce that they would classify as top performers or A-level talent, the average response was slightly less than 15%. And that’s despite the fact that most companies have spent vast sums of money in the so-called war for talent.”
The big difference, as Michael and Eric discovered, is how that talent is deployed. “It’s what they do with that one in seven employees that makes the biggest difference,” says Michael. “Most companies use a model called unintentional egalitarianism, which basically means that they spread star talent across all roles. The best on the other hand, are more likely to deploy intentional non-egalitarianism. They ensure that business-critical roles are held by A-level talent.”
The challenge is that approximately 5% of the roles in most companies explain 95% of a company’s ability to execute its strategy, and very few organisations articulate which roles those are — but the ones that do tend to be top performers.
“There’s an excellent historical example of this at work,” says Michael. “Between 1988 and 1994, Gap was a high-flyer in the retail sector. They performed globally on all levels — they grew faster than anyone else, were more profitable, had higher shareholder returns, and were the most admired company.
“During that time period, the organisation was led by Mickey Drexler, and his strategy was to focus on what he believed was Gap’s critical role, which was merchandising. He wanted every merchandiser to be a star. ‘No one will tell us what the colour is this year — we’re going to tell the world. We’re going to determine which styles are in and what everyone will be wearing.’
“And they did. If you want proof that Gap’s merchandisers were in fact stars during that period, you can look at today’s CEOs and COOs of the world’s largest retailers. Most of them were merchandisers at Gap during those years.”
The challenge of course is that everyone is always trying to hire stars, and yet only 15% of employees can be described as A-level talent. What can organisations do to utilise their stars wisely?
“First, move a star into a different position if they’re not in a business-critical role. To achieve this, how you define a star might have to change. Some companies hire for positions, and others hire for skills across positions. Stars, in my view, are more the latter. They can learn different skills and fill different roles.
“Second, start defining your business-critical roles. If you ask executives what percentage of their roles are business critical, most say 54%. They’re not discerning. It’s unintentional, because they don’t want to signal to their workers who aren’t in a business-critical role that they’re not as valuable to the organisation, but the reality is that people figure it out anyway, and you just end up with business-critical roles that aren’t filled by the right people, and stars in positions that anyone else could fill.”
Teams perform better than individuals
To understand how important teams are when deploying talent, Michael uses an example from the world of racing — Nascar in the US to be precise.
“Between 2008 and 2011, there was one pit crew that outperformed everyone else on the track,” he says. “A standard pit stop is 77 manoeuvres, and this crew could complete them in 12,12 seconds, which was faster than any other team. However, if you took one team member out and substituted them with an average team member, that time jumped to 23 seconds. Substitute a second team member, and it was now 45 seconds. The lesson is simple: As the percentage of star players on a team goes up, the productivity of that team goes up — and it’s not linear.”
Michael and Eric also discovered that the role leadership plays on team productivity is both measurable and exponential.
“In 2011, the National Bureau of Economic Research wanted to quantify the impact of a great boss on team productivity. They found that a great boss can increase the productivity of an average team by 11%, which is the same as adding another member to a nine-member team.
“If you take that same boss and put them in charge of an all-star team, productivity is increased by 18%, and this is with a team whose productivity was exponentially higher to begin with. Great bosses act as a force multiplier on the force multiplier of all-star teams.”
According to Michael and Eric’s research however, what most organisations tend to do is place a great boss with an under-performing team in the hopes of improving them, when what they should be doing is pairing great bosses with great teams.
“We did a survey that asked a simple question: When your company has a mission-critical initiative, how do you assemble the team? A: Based on whomever is available. B: Based on perceived subject matter expertise. C: We attempt to create balanced teams of A, B and C players to foster the development of the team. D: We create all-star teams and we put our best leaders in charge of them.
“We thought everyone would answer D. We were wrong. 30% of our bottom three quartiles answered B, closely followed by C, and then A. Only 8% of them answered D.
“The results were very different in our top-performing quartile though. There, 81% of respondents answered D. In other words, the 25% most productive companies in our study set were ten times more likely to assemble all-star teams with their best players than the remaining 75% of the organisations in our research.”
How talent is deployed makes a difference. “I recently had this highlighted for me through another sporting analogy. The world record for the 400-metre relay is faster than the 100-metre dash multiplied four times. How is that possible? When your role is clear and your position is clear, the handoff is seamless. Under these conditions, the best teams outperform a collection of the best individuals.” Michael does offer a word of advice though.
“Don’t fall into the trap of believing that if you do have the best talent, you don’t need to worry about anything else. I don’t believe that’s true. There are always higher levels of performance that can be achieved because there are always areas you can improve on.”
What the research reveals: Energy
According to Michael, employee engagement and inspiration is a hierarchy. “There are a set of qualifiers that have to be met just to feel satisfied in your job: You need to feel safe, have the resources you need, feel that you’re relatively unencumbered in getting your job done every day and that you’re rewarded fairly.
“To be engaged, these all need to meet, and more. Now you also need to feel part of a team, that you’re learning on the job, that you’re having an impact and that you have a level of autonomy.”
Inspiration takes this a step further. “Inspired employees either have a personal mission that is so aligned with the company’s mission that they’re inspired to come to work every day, or the leadership of their immediate supervisors is incredibly inspiring, or both.”
Why does this matter? Because how satisfied, engaged or inspired your employees are has a real, tangible impact on productivity. “Engaged employees are 45% more productive than satisfied employees. An inspired employee is 55% more productive than an engaged employee and 125% more productive than a satisfied employee.”
The really scary statistic is that 66% of all employees are only satisfied or even dissatisfied with their jobs, 21% are engaged, and only 13% are inspired. “These statistics are pretty constant, although top organisations can improve their engaged and inspired ratios,” says Michael. “What we found amongst those companies that did have more engaged and inspired workers was that they all tended to believe that inspiration can be taught. It’s not innate. You can become an inspirational leader with the right attitude and training.
“For example, one organisation surveys its employees every six months and specifically asks workers to rate how inspirational their leaders are. If you’re rated uninspiring by your team for the first time, you’re given training. If, six months later, you’re still rated uninspiring, you’re given access to a coach to evaluate why the tools aren’t working for you.
“By the third, two questions are asked: Should you be a leader, and should you be at the company? Many productive employees can be effective individual contributors but aren’t necessarily leaders, or aren’t happy as leaders, and would best serve the organisation in a different role. The second question is tougher, but even more important. If an inspired employee is 55% more productive than an engaged employee and 125% more than a satisfied employee, an uninspiring leader is a tax on the performance of the company, and there has to be a consequence to that. We have to constantly enrich our workforce and leaders need to be included in that.”
The problem is that very few organisations are asking how inspiring their leaders are. “If you don’t know if your employees are engaged or if your leadership is inspiring, you can’t address it,” he says. “You can take a satisfied employee and make them engaged, but you can’t inspire someone if they aren’t first engaged — that’s the hierarchy. Employee engagement is largely achieved through the way you manage teams. You have to give people the sense that they are having an impact, working within a team and learning. Get that right, and you’ll unlock a powerful level of discretionary energy that will drive productivity in your organisation.”
Time, Talent, Energy: Overcome Organizational Drag and Unleash Your Team’s Productive Power, by Michael Mankins and Eric Garton, focuses on the scarcest resource companies possess — talent — and how it can be utilised to drive productivity.
Visit www.timetalentenergy.com to find out more.
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.
- 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.
“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.
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.”
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.
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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