- Player: Peter du Toit
- Company: Soccer Laduma
- Established: 1997
- Turnover: R90 million
- Visit: soccerladuma.co.za
It was 1993. Peter du Toit had long hair and an earring, and he’d just made the decision that he never wanted to wear a suit again. He wanted to wear flip-flops, surf and go to work in shorts.
So far life hadn’t quite turned out the way he’d planned. He’d left South Africa in the mid-70s to play professional football overseas but his dreams were shattered when he broke his leg, and to make ends meet he started a micro-computer business. It was the 1980s, and although he knew nothing about this fledgling industry, he learnt enough to build a business that he was able to sell for a decent profit a few years later.
But now what? He was nearing his late 20s and wasn’t actually sure what he wanted do with his life. All he knew was: No suits.
And so he did what any young man in his 20s with no responsibilities would love to do. He travelled. For four years he followed football around the world, indulging his greatest passion, even if he could no longer play himself.
And along the way he stumbled across an amazing business idea. “There were only a handful of dedicated football newspapers around the world,” he says.
“And I was buying them all. I couldn’t even read most of them, but if I was in Brazil, I was buying their Portuguese football newspaper and muddling my way through it. That’s what passion for a subject does, and people can get really passionate about football.”
So… a business built around football. Could he make it work? “I knew nothing about publishing, but then, I’d known nothing about micro-computers or the stock market either, and I’d managed to build a business there.
“The first rule of business is: Don’t do something you know nothing about. But I’ve always found that rules are made to be broken. Plus, this was something I genuinely loved. The universe would teach me what I needed to know. I just needed to get started.”
For the first 18 months Du Toit lost money. A lot of money. “Because I didn’t know this industry, I’d hired experts. That just meant that we were doing what already existed. There was nothing special about us, and the business wasn’t working.”
So Du Toit made a risky decision. He replaced his industry experts with himself and readers as writers. He chose passion over skill and industry experience. And something magical happened as a result.
“For the first 18 months we sold 27 000 copies a week. Within two weeks of my changes, we were up to 40 000 copies a week. It was a quantum moment for me. If you’re doing what you love, and you’re surrounded by people who are doing what they love, success is inevitable.”
It’s all about the passion
“From the moment we hired readers who were passionate and could write, we started to skyrocket. Hiring like-minded people was a game-changer for me. I realised that experience is irrelevant. You can learn skills, particularly if it’s around a subject you’re passionate about. You don’t even need to ask them. They’re committed to your vision. If you offer trust upfront, they’ll even redirect themselves after mistakes. If you love what you do, this comes naturally. Even mistakes don’t come from a bad place. You can find a solution together, and nine times out of ten it won’t happen again.”
Soccer Laduma’s current success lies in the fact that Du Toit has maintained this culture, even though the business has grown to 45 full-time employees.
“Those early hires were incredibly important, because they brought like-minded people into the business. As we grew and needed to hire more people, they knew exactly what we were looking for. We all wanted to maintain the same team dynamic. I’m not even needed anymore in that respect. The team understands its own make-up.”
Du Toit’s first rule is that he’s not the boss. The reader and online user is the boss. “No one works for me. They work for the reader. It’s an important mindset, because it means that everything we do is with the reader in mind. What do they need from us? What do they care about? Are we delivering on those needs?”
Even though the reader is the boss, Du Toit has implemented a system to ensure everyone works towards keeping that boss happy. It’s called the six golden rules: Planning, planning, planning, preparation, preparation, preparation.
“If a story didn’t do well we know that one of the six golden rules was missing. I’m able to ask the writer if they followed the rules, and they’ll know that somewhere they cut a corner, and the result is clear for everyone to see.
“I don’t like conflict, so I’ve found it’s important to all be on the same page. If the guidelines are clear you can point to them when something doesn’t have the desired effect. No arguments needed.”
The system’s working. Soccer Laduma has a 100 to one compliments/complaints ratio.
“I believe this is because we don’t have an opinion or ego. We haven’t set ourselves up as industry experts, but instead bring readers and fans to the players and coaches. We connect those dots, and so everything is all about their opinions. We’re not telling you what to think. We’re giving you access. No one in our organisation is an expert. Experts focus on what they know. We believe that what we don’t know is far more important. That’s what we’re always pursuing.”
This attitude means that Du Toit will put anything into the paper that his readers want. “We receive reader letters and are then able to call players and tell them how much our readers want an interview with them. They’re happy, the readers are happy, and we’re living up to our values of connecting those dots.”
Soccer Laduma takes this a step further though. Readers can send in questions for specific players as well, and they’re published with the reader’s name. “We sell 310 000 copies per week, and have an even larger online user base, and we’re still managing to feel like a small community. Each of our readers feels a sense of ownership over the Soccer Laduma brand, and that fosters real loyalty.”
Clients above all else
As the business has grown, a level of sophistication has grown alongside it. 310 000 weekly copies is a far cry from 23 000, and that growth is maintained through a level of understanding amongst Du Toit and his team of Soccer Laduma’s readers.
“What we do is only as successful as our understanding of our readers. We think of it as a relationship. The first encounter is simple: I like football. The second encounter is where we can start developing a relationship with a reader or user, and this is our job, not theirs. We need to understand them: Who they are, what they care about, what they need from us. They need to trust us as well — that we’re listening to them, understanding them, and focused on delivering to their needs. The work needs to be on our side; not theirs.
“I think it’s easy for businesses to forget this, particularly successful brands. You can easily start buying into your own hype and believing that you’re somehow doing your customers a favour. That should never be the case. They’re doing you the favour, and you need to keep earning that trust and loyalty.
“As with any relationship, real trust doesn’t come easily, and it should be cherished.”
The reality though is that as a brand, Soccer Laduma is trying to maintain a relationship with three million readers, which is no small task. In addition, advertisers are the company’s clients as well, and they have their own needs. Du Toit believes that the only way to achieve this is through authenticity.
“Once you’ve earned trust, people will accept mistakes if they know you’re authentic. We understand that people get bored. They’re growing and developing, and we need to as well. We need to reach new levels, incorporate new skills, deliver new offerings.
“Because our readers know we’re continuously striving to achieve this, they’ll accept a few stumbles along the way as well. We’re a community.
“I’ve put a score in incorrectly due to finger trouble. People noticed. I spent an hour responding to each of them individually. Almost everyone laughed and said no problem. It actually created a relationship with them. But if I’d left it, I shouldn’t be on twitter!
“It must be consciously done though. You need to have a system in place, as well as a culture that everyone believes in. Digital is of course easy to track, and we have a philosophy to always listen to our readers, which means we’re very responsive. It’s built into our DNA. Because of this, we learn so much, but it’s also clear that we’re listening, which goes a long way towards building and maintaining trust and loyalty.
“But digital and social media is also tough. It’s a different kind of content creation that evokes immediate reactions and requires quick response times. It’s emotionally more rewarding but it can also be more challenging.
“Social media is such a medium for knee jerk reactions, especially when you’re dealing with topics people are passionate about — and South Africans are passionate about football. We have to remember that they love us. That’s why they’re on our site. And they have a form of ownership over it; they’re emotionally invested. They have the right to say something. If you respect that, you won’t just react to criticisms, whether you see them as unfair or not. And if you do, then they have a right to get offended.
“We’ve found that the best way to handle online criticism is to step back and understand that it’s not directed at you. What is the person saying? Is their opinion valid? If you understand their viewpoint and the language they’re using to get that across, you can respond from a place of understanding. Something could sound bad, but they’re actually asking you for something.
“The website is the same. You need to think of it as your shop. If 100 people come in a day, your manager can’t treat them badly. You’re trained to give good service — but you get good and bad customers.
“Through our website we’ve opened our doors to thousands of people. Are your staff trained to deal with them? Think back to a bricks and mortar store. Is service fast, efficient, with no queues at tills? Imagine a scenario where the store is flooded with people all talking at the top of their voice. That’s the reality of an interactive website. And you need to treat everyone with respect or they will destroy your shop.
“Everyone is expected to have empathy towards our users, and to focus on their section of the site. That’s how we ensure community engagement and that we’re quick and responsive. It means a lot of trust, and that the whole team needs to share the same values and have the same voice, and that means working together as a close knit team, even as we grow.”
Learning to listen
Du Toit believes that most of Soccer Laduma’s growth is as a result of listening to its customers. “We created an internal unit, Brands Laduma, whose sole purpose is determining what our readers want and think: What’s important to them, their challenges, how articles and adverts make them feel. It’s not a division designed to generate profit, but rather feeds into our editorial team and also offers valuable insights to our advertisers.
“We’re able to give them feedback on which adverts delivered the message they were aiming for, which adverts fell flat and how our readers feel about their brands.
“Brands Laduma allows us to engage with our supporters in a deeper manner, and this led directly to the formation of Educate24. While engaging with our readers, we started digging into what is most important to them, and we discovered that education is high on that list. Education is seen as a status symbol. It leads to jobs and wealth, but it’s also often out of reach.
“If we really started evaluating our readers’ pain points, this was a big one: Qualifications cost money, but we can’t make the money to pay for the qualifications without having the qualification in the first place.
In the interim, The University of Cape Town had approached Soccer Laduma because they wanted to use the business as a case study for their MBA students, particularly given the level of engagement the company has with its readers.
“Through this engagement we started asking our readers new questions: What would people like from education? What courses will give them something now? What did they see as actionable skills?
“UCT Marketing Department found the study fascinating, and of course they can provide the quality and credibility to short courses to make them valuable for job seekers who cannot afford higher qualifications.
“Next, Media24 came on board, offering their support and input. Educate24 grew from our user base. This soccer business has given birth to something incredible for the needs of the people.
“Professors from around the country are involved, and the platform has been developed for online and mobile to increase its accessibility. It’s also affordable for the people who it can help the most.
“This has been the most incredible journey for me. It’s taken two years to come together, but it’s also shown what you can achieve when like-minded people come together to solve a real need. We posted two adverts and received 13 000 enquiries, proving that the need does exist.
“We also assist with CVs and psychometric tests, which have been provided for free because the companies want the research they provide. It’s a win-win for everyone involved. I know nothing about education. I did one year of university and failed. And yet here I am, hopefully playing one tiny part in improving thousands — hundreds of thousands — of lives. For me, that’s what entrepreneurship is about, and I hope we continue to find new ways to add value long into the future.”
7 Self-Made Teenager Millionaire Entrepreneurs
These teenager entrepreneurs have already made their first million and more. How did they do it and what’s their secret to success?
1. Evan of YouTube
Evan and his father Jarod started a youtube channel ‘Evantube’ to review kids’ toys. The channel was a resounding success with other kids – so much so that today it boasts just over 6 million subscribers.
Evantube brings in more than USD1.4 million a year from ad revenue generated on the channel.
How did it start? With a father-son fun project making Angry Birds Stop Animation videos, and morphed into doing reviews on toys and video games. But Jarod’s dad is aware of the responsibility of Evan’s sudden fame and hopes to teach Evan about the importance of being a good role model for others.
“Most recently, we had the opportunity to work with the Make-a-Wish Foundation, and were able to fulfill the wish of a young boy whose dream was to meet Evan and make a video with him at Legoland,” explains Jared. “It was a really incredible experience. YouTube has definitely opened many doors, and the kids have gotten to do some pretty amazing things.”
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.
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