Walking around the extensive premises of The Creative Counsel (TCC), co-founder and joint-CEO Gil Oved makes the kind of statement one doesn’t typically hear from an entrepreneur: “People look at this company and are impressed by its growth, but in our minds there is always a degree of disappointment because we know how much bigger it could be and how much further down the line we would be had we not made many, many mistakes.
I’d also love to be able to say that all of this happened by design, according to some grand pre-thought-out master plan, but the fact is that it didn’t. In many ways we are where we are today by mistake instead of by design.”
Gil Oved and co-founder and joint-CEO Ran Neu-Ner are at the helm of South Africa’s biggest activations agency – a company with a R500 million turnover, employing 650 permanent people, running between 200 and 300 campaigns a year, and placing up to 15 000 temporary activations people in the field on any given day.
It’s a company with arguably 50% of the instore promotion market share servicing a portfolio of blue-chip clients across a broad spread of industries.
It’s taken this dynamic partnership just 11 years to get here, having started with a zero capital base, no knowledge of promotions and not a single client. Little wonder then that people are impressed.
It could be argued that, whatever their own impressions of the journey, this level of success simply doesn’t happen by accident. They might not have specifically planned to lead a company of this size and diverse structure, but certain fundamentals must have been in place for them to not only dominate, but develop what was a very small and immature industry.
With this Neu-Ner and Oved would probably agree. A number of critical ingredients have driven their success, but so too have the mistakes they’ve made. “We want to share both,” says Oved simply.
This is what they know about starting, growing and sustaining a top-tier entrepreneurial company.
Never ever EVER give up
The story of how TCC started is a lesson in sheer tenacity. When their online trading company was liquidated, Oved and Neu-Ner went to a coffee shop and wrote down how much money they had between them.
“It was a short list,” says Neu-Ner. The partners had lost everything in the venture and were casting around desperately for ideas when the money that Neu-Ner’s then-girlfriend was earning doing promotions caught their eye.
Teaming up with the former owner of a promotions company, the pair took premises in a 15m2 office, decorated it with garden furniture, opened the Yellow Pages and got cold calling.
“I hate cold calling. I don’t know if anyone enjoys it. It’s a terrible, awful thing to have to do,” says Oved. But, without any experience or credentials, it was their only option.
“I kept a spreadsheet to record each call and interaction with the person. Most of the time I got to speak to the PAs of marketing directors, who I’d targeted as a more promising prospect than brand managers.
I learnt very quickly how to be warm and likeable over the phone in 20 seconds, and I’d try to find out anything I could about the person I was talking to. Things like their birthday or their family, so when I next called them the call would be more personal.
In the end they’d feel sorry for me and schedule a meeting.”
Neu-Ner adds: “We learnt two things from that experience. Firstly, PAs are immensely powerful people, so build a relationship with them. And secondly, never, ever, ever give up. If someone tells you that they don’t meet with suppliers, call back. And call back again. And again after that. Break down the door if you have to. And if you can’t, break down their resistance until they’re dying for an opportunity to see you just so they can tell you to go away. Often, what separates people who succeed from those who fail is the willingness and ability to overcome whatever hurdle is placed in their way.”
Oved agrees, “‘No’ is not the end of a negotiation,” he says, “It’s the beginning of one.”
This is what got the partners through the first seemingly impossible months. “Our monthly expenses were R30 000 and we couldn’t raise this money, so Gil went out to work as an IT consultant and handed his cheque over to the business each month, while I tried to get it to work,” remembers Neu-Ner.
From August to February they broke even but never made any money and couldn’t draw a salary. “This meant we’d gone almost a year without having any money for ourselves. That really knocks your confidence, especially when all your friends around you are making money and carving out careers.”
Fed up, Neu-Ner suggested they throw in the towel, but Oved suggested they give it one more month, during which time he gave up his consulting work and came over to give the business everything he had.
“By the end of March, we still hadn’t made any money so we gave it one more month and in April we landed an account for Danone. We got an opportunity to pitch because we just kept calling back and eventually got through to the right person,” says Oved.
This tenacity is a value enshrined in the business today and it informs how TCC hires staff. “We put interviewees through hell. We keep throwing challenges at them to see how much more they are willing to come back for. We’re looking for people who can devise a solution no matter what the problem.
They have to keep their eye on the end goal and keep going after it no matter what. In this industry it’s critical. This is the worst industry to be in if you go home when you hit a hurdle.
Things can and often do go wrong, so you have to be able to think on your feet, come up with plan B and achieve your objective in spite of what goes wrong,” says Neu-Ner.
Related: Hey, Dealmaker!
Pursue opportunities with a clear vision
Oved and Neu-Ner may not have initially planned the way the business grew, but early on they developed a vision of what they wanted to achieve and this was refined as the business matured. “We wanted to own the full activations value chain – to get into the hearts, minds, souls, homes and mouths of consumers so that we could influence their purchasing decisions,” says Neu-Ner.
Having this vision in place proved critical in directing which opportunities they followed. As Oved comments, “All too often entrepreneurs are sinking in a sea of opportunities, and the more successful you become the greater the opportunities that come your way.
You need to find the balance between being open to exciting new possibilities and having a clear idea of where you want the business to go.”
Over the years TCC has developed, invested in and partnered with a range of different businesses. At first glance the reasons for each may not be apparent, but each one of these businesses feeds into the over-arching vision of owning the activations value chain.
The Mr Delivery deal is a good example. Roughly two years ago TCC purchased a 50% stake in Mr D Media, a subsidiary of Mr Delivery. What possible connection could there be between a promotions company and a fast food delivery business?
“It gives us direct access into the homes of 1,5 million consumers, as well as information about where they live, what they buy, what they eat, how much they spend, where they bank and which credit cards they use,” says Oved.
Mr D Media delivers 1,5 million Mr Delivery guides to households around the country, so it provides us with a unique ability to offer clients a platform for their brands that goes directly into people’s homes.”
TCC also owns the South African franchise for the global Product of the Year competition, the largest consumer survey of its kind that rewards brands for innovation across a range of categories.
“We know that brands invest more in campaigns for new innovative products because these have higher margins. By rewarding innovation we are therefore directly encouraging growth of innovative products, which in turn grows the market that we service. It’s also a platform that positions us as leaders in the industry,” Oved explains.
The growth of the company into other areas – eventing, social media, field marketing, among many others – has always been driven by the vision of owning the activations value chain, says Neu-Ner. “From the time a consumer sees an above-the-line advert to the time they make a purchasing decision, there are a number of opportunities to create experiences that will prompt them to buy.
We look for these opportunities where we can implement a range of activations. And we’re aggressive about pursuing them. At the end of the day, our competitor is not the other company that does promotions or activations. Our competitors are rather television, billboard and other traditional media.”
Partners are not suppliers or employees
TCC starts new businesses that feed into its vision or invests in and partners with existing businesses. “These are usually innovative and exciting entrepreneurial companies,” says Oved.
Minanawe, for example, devises strategies to access the township market and is responsible for the Gauteng Beach Party held in Soweto and the Tour de Soweto.
Fusion is a small incubation business that creates partnerships between brands, allowing them to leverage each other’s platforms for greater differentiation, while Popimedia is a fast-growing social media specialist that enables TCC to offer holistic and integrated activation campaigns across a range of social media platforms.
Integrating a small business into an existing, larger one is notoriously difficult, and Oved and Neu-Ner have learnt a great deal about how to absorb these enterprises without stifling the creativity that made them attractive prospects in the first place.
As Neu-Ner says, “Buying into or partnering with another business is probably the toughest thing I have experienced to date. If you put aside the glamour and hype and actually look at the core of what it means, you are effectively taking two entities, each with their own vision, strategy, processes and most importantly culture and trying to merge them.
By definition this is no easy task.” Oved adds, “I think the thing to remember is that partners are neither your staff nor your suppliers. They do not work for you. They work with you – so treat them accordingly. Nurture and support them, but don’t try to manage them. We had to learn the difference between mentorship and management.”
Related: Meet the Young Guns
Systems can make or break a growing business
The company’s extensive, diverse and rapid growth pushed the partners into unchartered waters.
“All our entrepreneurial experience was in start-ups. We’d never had a company that had really grown before, so it was new territory for us. We didn’t know what growth looked like and in a sense I don’t think either of us ever really believed that the company would get as big as it has,” says Neu-Ner.
The result was that, in many respects, they failed to put the right systems in place to facilitate and manage growth. As many entrepreneurs have learnt, growth can be destructive. “It certainly cost us,” says Neu-Ner.
He elaborates: “Combine a lack of systems with a fanatical devotion to delivering excellence and you put your people under enormous pressure. We lost a lot of good people because, without the necessary systems in place, they needed to work 24/7 to deliver on our high standards. It came at a significant human capital cost.”
Oved adds that financial systems were also lacking. “Cash flow was often a mess and collections were an issue. I think some customers even got freebies in the early days because we failed to invoice them! Technology can make or break you.”
Since then the company has invested heavily in implementing systems to manage and facilitate its growth. A state-of-the-art technology platform housed in a call centre manned by operations and logistics specialists helps the company to keep track of the 15 000 people doing different activations work on different brands across the country.
“We tried to buy something off the shelf but eventually realised we’d need to develop this system in-house. It addresses our needs precisely,” says Oved.
And as much as systems can be a hindrance to growth, they can equally be a differentiator. “Having this system in place raises the barrier to entry for competitors,” says Neu-Ner. Oved adds, “Anyone can start a promotions business – all you need is the proverbial man, van and fax machine – but not anyone can run a multiple activations business this size on a national scale.” It’s also helped the business to identify new efficiencies.
Think big — even if you’re small. That’s their advice to start-ups. “If you don’t build foundations for a big business, it will cost you later on. You’ll need to do it eventually so if you’re planning on being big, build for big even while you are small.”
Pass passion onto your staff
Systems have been equally important in ensuring ongoing human resource success. “Passion is everything. It’s the engine that drives this business, and we’ve learnt how important it is to pass this down the management line,” says Neu-Ner.
Doing so was what got them noticed in the first place. “The first pitch that we won, with Danone, was for a cottage cheese promotion in 12 stores over a weekend. They were giving us a chance to prove ourselves.
We ended up getting the account because, in the words of the brand manager at the time, we were able to pass our passion and energy on to our promoters.”
As a company grows, it becomes more difficult to achieve this.
“You need to continually communicate, be visible, and be involved. But you also need to have happy, motivated people. This industry requires more than the usual work ethic. Hours are long and there is a lot of weekend work. We’ve put systems in place for mentorship and coaching.”
Expect excellence – uncompromisingly
In as much as motivation and passion are key ingredients among TCC’s employees, so too is a strict adherence to uncompromising levels of excellence.
“I’m a perfectionist. I want 100%, 100% of the time. In reality I don’t deal well with failure and I adopt a hard stance,” says Neu-Ner, “You can deliver the most brilliant pitch but my whole passion for it will die when I see a spelling error.” The partners are relentless about pursuing the right idea and “bringing brilliance to life.”
“We have our own internal standards and we judge our people by those standards. We might win a pitch but if I feel we didn’t deserve to because our work was not perfect, then I’ll tell staff that. Equally, if we lose a pitch but I know the team gave it their all, then I’ll tell them so.
But it’s not about whether or not it’s good enough for the client or the industry. We need to keep pushing the boat out in terms of excellence.”
Neu-Ner, a self-confessed football fanatic, uses the following analogy: “If a footballer plays a brilliant game and makes one wrong kick, it can cost the team the match. It’s the same in business. You have to be at your best for the full 90 minutes of the game.”
What about human error and the fact that, no matter what your standards, people will fail at some point? “Failure is not acceptable as an end-point,” Neu-Ner answers, “I believe that you may fail initially, but it’s not a failure if you can find a way to fix it.
It’s only a failure if you can’t rectify it or use it as an opportunity to learn from it,” he adds.
Hire people who will grow your business
Excellence relies to a large degree on having the right team in place, and Neu-Ner and Oved have learnt a great deal about surrounding themselves with the best people.
“If I could go back and do one thing differently, I’d hire the best operations person and the best financial director I could find – from day one. We hired them later on and, to some extent, they had to come in and pick up pieces,” says Neu-Ner.
He and Oved say they’ve made the same mistake made by countless other cash-strapped entrepreneurs. “When you’re counting the pennies in the early days you hire the cheaper resource. For the first eight years I always believed in hiring talented people and growing them as we grew.
Today I sing a different tune. Hire the best people. Pay top dollar and get people who can grow your business. Don’t worry about the cost of good people – the return is worth it and the cost of replacing people is often way too high,” he says.
The right partnership is potent
Like most successful (and truthful) entrepreneurs, Oved and Neu-Ner have made their fair share of mistakes. But there’s a great deal they’ve done right too, and one of their key success factors has been their dynamic and potent partnership.
In a rare arrangement – and one that seldom works – they are joint CEOs. “On some things – like the bigger vision and where we want the business to go – we always agree, but on other issues like how to go about getting there, we disagree often and loudly. New staff members are surprised to see us frequently ‘fighting’,” says Oved.
“We work together on the broader strategic stuff, but we worked out early on that we can never meet operationally,” says Neu-Ner.
The fundamentals of the relationship must be in place. Trust, honesty, transparency, consistency, reliability, and above all, equality in everything.
“We share everything equally – risk, reward and responsibility. This is a partnership split down the middle in every respect and I think that’s a very important ingredient for partnership success,” Neu-Ner explains.
“A business partnership is like a marriage – you fight, you make up, you share good times, you endure bad times, one of you is strong while the other is weak and vice versa.
Once you accept that this is how things will be, the partnership becomes a lot easier to manage,” says Oved.
He and Neu-Ner have been friends since childhood, but neither of them believes friendship or a long-time relationship is necessary for partnership success.
“One thing we are and have always been is incredibly competitive – in everything we’ve ever done. So in a way my biggest competitor sits next to me and this pushes me to ever increasing heights on a daily basis,” says Neu-Ner. Oved agrees, “Choose someone who will challenge you to do your best,” he says.
Top tips for entrepreneurs
- Challenge everything, question all. There are inefficiencies all around. Each one is an opportunity to make money and change the world.
- If you analyse something long enough, you will find all the reasons why you shouldn’t do anything – sometimes you just need to go with your gut and have faith.
- People will have more faith in you than you do in yourself – they are generally right.
- Act with integrity, it will make you more profit.
- Your personal brand is the most valuable or damaging thing you have. Never compromise your integrity and never let anything leave your desk that is below your standard of brilliance.
- As an entrepreneur, accept that you are a ‘doctor-on-call’.
- Spend time on the future – don’t let your current success blur your vision. Companies that get caught up in their success often lose sight of innovation and before they know it the wave ends and they land up with a huge infrastructure and a product that is out of favour.
- The CEO should live at least a year ahead of what the business is doing today.
- Put in proper foundations. Investing in the systems upfront will save in the long run and make you really competitive!
- Cut. Don’t throw good money and time after bad investments. Often the cost of rectifying may be higher than the loss incurred in exiting.
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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