The year was 1993. Schindler’s List was showing in cinemas, humans were cloned for the first time, the European Union was formally established and at CERN, just west of Geneva, the birth of the World Wide Web was announced.
In Johannesburg Ronnie Apteker and Thomas McWalter, two Wits University graduates, were dabbling with the Net and discovering how easy it was to access real time solutions to IT problems. The Internet was being used largely by academics to swap documents but Apteker believed it would become an important business tool. He began persuading South African companies to incorporate it into their business systems, and thus Internet Solutions was born. In 1994, Apteker graduated cum laude with an MSc in Computer Science. Technically, he and McWalter excelled, with Apteker’s knowledge and selling skills opening doors for him all the way. But their debt was rising, so Alon Apteker and David Frankel were brought in to turn the finances around. The company focused single-mindedly on providing corporate customers with Internet access, a factor which enabled IS to dominate the market from the beginning.
In 1996, when most organisations were embracing the concept of the corporate website, IS needed to grow, and it required the finance to do so. A deal was concluded with networking giant Dimension Data, which bought 25% of IS. One year later, Dimension Data bought the remaining 75% of the company, paying its directors Apteker, his brother Alon, David Frankel, Thomas McWalter and Andras Salamon R300 million. Today, IS provides e-business services to more than 80% of South Africa’s top 250 listed companies and has over 4 500 customers.
Entrepreneur: What was your vision for Internet Solutions?
RA: At that tender age we did not have a sense of purpose, but we wanted to do something magical with computers. We were involved with corporates from the start, but we first focused on dial-up home users. After six months we realised that we wanted a people-oriented business and you don’t get close to people when you have a mass consumer business like a dial-up Internet service provider (ISP). With corporates we could grow relationships and we could invest time and resources in building things like online banking, reservation systems, media archiving, payment gateways and complex security solutions.
E: How did you identify the market opportunity?
RA: It wasn’t so much about identifying the opportunity as it was about doing what we loved. We were crazy about technology and we knew the Internet would be something everyone would want to explore.
E: How did you finance the company?
RA: We used furniture from home, our own computers and whatever we had lying around to set up the office. It was a tight and humble operation and didn’t need too much money to start. The biggest cost was the fixed line infrastructure from Telkom. Fortunately, Telkom supplies a service and only bills you months later which helped us from a cash flow perspective. Start-up finance for a new venture is largely about attitude. You can start a new business in your garage, or you can sign a five-year lease in some fancy building in Sandton and before you know you will be in the hole for a small fortune. Having fancy offices doesn’t make a company better.
E: What were the most difficult obstacles you faced as a start-up?
RA: We were all very young and didn’t know what it meant to lead people. As we grew we started getting older people on board who had more world and work experience and who were more set in their ways. The biggest challenge was to align everyone. On the business side, there was competition all around us. We had to be smarter than the rest, and we had to work harder to carve out more market share. And that we did. IS is still the dominant corporate service provider by far. The company’s culture plays a central role in this. There is a drive and a determination that goes back to the issue of alignment and purpose. We wanted to win, all the time. Complacency will kill any business and as a bunch of young leaders we were never satisfied. We always tried to stretch ourselves, month on month, and we never took “no” for an answer. This, coupled with chutzpah, a sense of humour, a love for technology and some sharp skills made for a selling and marketing tour de force.
E: Can you identify what your big break was?
RA: Our big breaks came from our first few customers who included Price Forbes (now known as Alexander Forbes), Sasol, Times Media (Johnnic), Q-Data, The Argus Group (Independent Group), ICL, IBM, Sybase and a host of others. As the virtual online community grew so we formed a critical mass of Internet users. Also, our timing was really good. We were there from the start of the global Internet phenomenon. Many people say we all got lucky, and yes, we all admit that we were there at the right time, with the right people. But luck did not make the venture work. Making IS work was about hard work, sacrifice and risk taking. There was competition all around us. We were selling people on e-mail, but, who were they going to e-mail? Well, I volunteered for the job. Yes, every time we got a new customer up and running, the majority of emails they would send and receive would be to and from their new IS friends. And so the online community grew.
E: How did you build your client base?
RA: We were relentless. We knocked on every door we could find. We also asked our customers to help us. We learnt that happy clients multiply. I remember in the early days asking a customer if they were happy. When their face lit up I would then ask them if they would help us get more customers. All corporates have partners: auditors, IT providers, advertising agents, furniture suppliers, landlords, bankers. We made it our mission to connect everyone in the chain, and so the virtual network grew. When you love what you do it is not work any more. When you love your products and services it is not a sale any more. We were simply out there evangelising with anyone who would give us five minutes of their time.
E ;What are your views on leadership?
RA: A key thing we learnt at IS was “who works for whom”. Leaders work for the people they serve, not the other way round. When you hire 10 people, it means you have to work 10 times harder to grow and inspire these people. And of course, your ultimate job is to develop them into future leaders. We went on many leadership courses and we sought enlightenment all the time. We learnt that leaders command respect, whereas bosses demand it. We learnt that leaders lead through goodwill, where as bosses lead through authority. We learnt to say “we” instead of “I”. Another key and fundamental element we embraced early on was how to have fun. It is important to celebrate victories. Remember to laugh, often. Having fun is the most important aspect of any venture. If you are not loving it then something is fundamentally wrong.
E: What was your key sales strategy?
RA: Selling is about listening. I am not a good listener so this was an interesting realisation for me. We learnt that the more we listened the more we would get business. I remember going to a presentation at Edgars over 10 years ago. The CEO there loved to talk. I was the guest speaker at their corporate lunch. After a minute of my presentation I said “Sir, I would be more interested to hear your views on how you see the Internet playing a role at Edgars.” He perked up and started going on and on. After an hour he said that was the best presentation he had ever been to. I had hardly said a word, but while he spoke I wrote it all down. When we sent our proposal, they said that we seemed to know so much about their business and their strategic direction – of course we did, the CEO told us everything.
E: What is the most important lesson you have learnt about sales?
RA: If you are waiting to close a deal and it is not happening then one way to find out what the problem is, is to ask the customer “What do we need to do to get your business?” But then, also offer that prospective customer a set of answers, like a multiple choice exam. There are a bunch of reasons there could be a hold up. Perhaps they can’t afford the service. Or perhaps their budget cycle is six months away and they can only commit the funds then. Or perhaps the guy you are selling to needs to get sign off from the board. Yes, there are a bunch of common reasons that generally strike a chord when trying to close a deal. Then there is one big fundamental question: does the person you are selling to like and trust you? If you don’t know that answer then all bets are off.
E: What was your marketing strategy?
RA: Like our selling strategy, it was relentless. When we started IS we never had big budgets to spend on marketing so we had to be as vocal with limited resources. What emerged was a creative culture. The Internet was an intriguing place in the early 90s. We would get calls from people asking us why “they should Internet”. We weren’t selling IS as much as were selling the benefits behind networking technology in general.
E: How did you differentiate your marketing?
RA: We learnt to become story tellers. The more we made people feel comfortable, the more we established trust, and the more we did that the more the business grew. People were afraid of this new technology and what it would mean to their business. So we made them laugh. And we told them colourful anecdotes about people who would call us up and tell us that they wanted to buy the Internet. I have a friend whose husband thought he had broken the Internet. I remember people asking Dave Frankel and me for discounts. And we would say “I’m going to have to check with the board.” What we didn’t tell them was that we were the board. Of course, the board always said no. Paul Harris once told us that when they started RCI (Rand Consolidated Investments) they would call people and say “We are calling you from our Johannesburg office.” What they didn’t say is that there weren’t any other offices. The name of the company was also a big bonus. When Time magazine ran the first big Internet story at the start of 1994, with the word “Internet” in big letters on the cover, a lot of people thought they were writing about us.
E: What was your growth strategy and what it is now?
RA: When I was at the helm our growth strategy was to work seven days a week until we collapsed. We continually tried to find new leaders and we always empowered people to make their own decisions. In effect, my task was to work myself out of a job. I have done this quite a few times now in my life. Now I am quite removed from the running of IS. I am there helping out on a few ventures and cultural activities. The company is stronger than ever and the CEO, Gus MacRobert, is the greatest guy, with the biggest heart. The business is in a new and inspiring chapter in its history.
E: How do you develop your knowledge and skills?
RA: You learn by listening. I have developed my knowledge and acquired new skills by spending time with inspired people. A mentor is always an asset. I have been very privileged in my life to have had some humble and brilliant mentors share their wisdom with me. At IS we also bought a lot of books – on leadership, values, purpose, business, you name it. We loved sharing and swapping books. We also would organise a lot of team building events where people went on leadership courses. We were always looking to be provoked.
E: What have been the key elements of your success over the years?
RA: Investing in people. Empowering people. Growing people. Trusting people. Listening to people. From the first day we were aligned. The original team were aware of their individual strengths and weaknesses. Entrepreneurs always surround themselves with good people. We never had to meet and have long discussions. We met to celebrate, to brainstorm and to discuss challenges and obstacles, but we never wasted time with politics and power struggles. There was a healthy respect for each other and there was a common set of values which bound everyone together. We also learnt early on about money and motivation. A motivated person is someone who is enthusiastic, happy, passionate, thrilled, excited, energised and inspired. Imagine I ask you to wake up tomorrow morning at 4:00am and to come to my house to clean my driveway. Imagine it is the middle of winter and I will be fast asleep as you do this uninteresting task. Would you be excited or enthusiastic? Would you be inspired or passionate? Of course you wouldn’t. Even if I paid you a million rand, you would do it in a flash, but you still wouldn’t be motivated. Money moves people, but it doesn’t motivate them.
How do you define innovation?
Innovation is about attitude.
It’s about changing the way we think.
It’s an emotional construct.
Innovation is about taking risks, and doing what is in your heart.
Innovative ventures involve the most fundamental things we know: chicken, soft drinks, fashion, watches, music systems.
Someone once asked Ronnie Apteker how to make a small fortune in the movie business. He replied: “Start off with a big fortune.” He has spent over R80 million on films in the last seven years. Apteker pumped a significant amount of money into Purpose, the first film he produced, in 2002. In South Africa it earned R175 000, although it did earn much more around the world for its distributor. A movie set during the height of the dotcom boom, it has been said to reflect his own life. In 2005, he put $400 000 into the horror flick Reeker. That year also saw the release of teen flick Crazy Monkey, Straight Outta Benoni, a film which Apteker acknowledges was not to everyone’s taste. The budget for that was R8 million and it made around R3 million at the box office. His latest venture, Footskating 101, had a budget of just R1 million and is said to have achieved the quirkiness Apteker and co were trying to capture in Crazy Monkey. It’s due for release next year.
The business of making a film can be a lot of fun, but that of selling it is another story altogether, Apteker says. “I stay motivated because I am still inspired, still excited, still enthusiastic. But I often get anxious about the money side of things.” He says, however, that his experience in the industry is starting to pay off; for the first time, he is making a return on his investment in Reeker. He’s had a lot to say about the local movie industry and its shortcomings, so it will be interesting to see what comes out of his stable next.
What is your key advice to anyone seeking to start a business?
- Having a good idea helps, but starting a business is all about investing in good people. I would rather invest in a bad business with good people, than in a good business with bad people. Arrogant, lazy, obnoxious people can take the best plans and mess them up. But good, humble, enthusiastic, honest people can take the most arbitrary plan and bring you joy
- Don’t ever abandon your sense of judgment. If something is not feeling right then you can place a bet that something is going to go wrong. We all suffer from pride; we all tell ourselves things like “the train has left the station”. Rather pull the plug on something before the wheels come off
- Always stick to the fundamentals
- Mean what you say, and say what you mean
- Be tough minded, but don’t be hard hearted. Make small decisions with your head and big decisions with your heart
- Listen, and you will learn
- Always remember, luck favours the persistent
Apteker vottles the classifieds market
It was American computer scientist Vinton Cerf who said: “By placing intelligence at the edges rather than control in the middle of the network, the Internet has created a platform for innovation.” Ronnie Apteker continues to take advantage of that platform with his new concept, The Vottle Project. A free Internet service that allows people to interact via a virtual marketplace, it enables users to buy and sell goods and services, to engage on a social level, and to promote local arts and culture. Vottle also includes a crime watch facility where people can report on criminal acts in their areas. “We were inspired by Craigslist in America and we are trying to establish an online community here in South Africa where people can interact, socialise, and trade,” says Apteker. “Our goal is to build critical mass over time and then roll out further enhancements and value added services. If we ever do build that mass we will be in a strong position to leverage this for further online business activities.”
Craigslist is a network of online urban communities featuring free classified advertisements. It was founded in 1995 by Craig Newmark in San Francisco. By June 2006, Craigslist had established itself in approximately 310 cities across the globe. Its sole source of revenue is paid job ads in select cities, and paid broker apartment listings in New York City. Apteker says the online classifieds space is one of the fastest growing areas of the Internet. In South Africa there are almost a dozen websites focused on second hand goods. Vottle recently introduced a payment facility that allows eBucks members to pay with eBucks currency. “This is the first facility of its kind in South Africa,” says Apteker. “With Vottle we can now test and perfect micro payment solutions.” This in itself is an important development for the local market. Micro payments are means for transferring small amounts of money electronically. Since it is not practical – or cost-effective – for individual users to charge small amounts of money to a major credit card, this method of payment is needed for sites like Vottle where low-cost items are traded. It’s worth noting that Craigslist serves over five billion page views per month. Although the company does not disclose financial information, it is speculated that its annual revenue approached $10 million in 2004.
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.