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Virgin: Richard Branson

Richard Branson – innovator, philanthropist and the ultimate entrepreneur – has developed a powerful business philosophy that generates opportunity from conflict and contradiction.

Greg Fisher

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Richard Branson of the Virgin Group of Companies

Richard Branson, the founder of Virgin, is the only person in the world to have built eight billion dollar companies from scratch in eight different sectors. One of those companies, Virgin Mobile USA, reached a billion dollars in revenue faster than any other company in history, faster than Google, Microsoft and Amazon. So how does he do it? What mindsets, tactics, strategies, practices and philosophies have enabled this extraordinary entrepreneur to build a privately held business empire of over 200 companies operating in over 15 countries and across multiple industries (travel, publishing, retail stores, gyms, telecommunications, entertainment, financial services, healthcare, beverages), all proudly carrying the Virgin brand?

 
This article draws on insights from three books: Losing my Virginity (1998); Screw It, Let’s Do It (2004) and Business Stripped Bare (2008) to unpack what makes Branson and the Virgin brand so successful.

Richard Branson was never educated in a business school or university; in fact he did not even finish high school. He learned his business lessons “on the street”. Action, experimentation and adaptation are central to his development of a powerful and practical business philosophy – a philosophy from which we can all learn a great deal. Central to his philosophy is his ability to deal with paradox – he has learned to become comfortable with ambiguity and he has developed a mindset that enables him to effectively develop innovative new businesses within the context of contradiction and uncertainty. Many people regard Branson as a flamboyant, attention-seeking prankster/adventurer billionaire with a high-flying playful lifestyle. Yet, when you examine more closely how he does things you soon discover that he is very deliberate and reasoned in the way he uses his time to maximise his impact in different areas of his business empire. He pays very close attention to detail when necessary; making copious notes about what needs to be improved. He is dedicated to execution and delivery and he still has an active hand in managing many aspects of his business empire. Thus, although he does some wild and crazy things that attract a great deal of media attention, these antics most often have a clear purpose and contribute effectively to the expansion of the Virgin empire. Here are seven specific paradoxes that appear to have contributed significantly to the business success of Branson and to the growth of the Virgin Brand.

The Branson mindset

  1. Be gutsy but protect the downside risk

Branson is nothing if not gutsy. Calculated risk lies at the core of what he has achieved as an entrepreneur. He has shown guts and bravado in the small things and the big. His idea to launch an airline came when he and his wife, Joan, were stranded in an airport in the Virgin Islands on route to Puerto Rico after an American Airlines flight was cancelled. “The terminal was full of stranded passengers. I had had enough,” he says. “I called a few charter companies and agreed to charter a plane for
$2 000 to Puerto Rico. I borrowed a blackboard, divided the charter cost by the number of people stranded, and wrote down the number. We got everyone to Puerto Rico for $39 a head”.  In addition to small nervy things he also did massive, sometimes scary things.  He took on a number of the world’s super brands, including Coke and British Airways. In some instances Virgin came out on top and in the other instances Branson was left licking his wounds. Yet he was never discouraged and has always been keen for the next big business adventure. He makes the point that “to be a serious entrepreneur, you have to be prepared to step off the precipice. Yes it’s dangerous. There can be times, having jumped, when you find yourself in free fall without a parachute. There is a real prospect that some business ventures will go smashing into the ground. It has certainly been very close at times throughout my own business life. Then you reach out and grab a ledge with your fingertips – and claw your way back to safety.”

Yet whenever Branson has taken on risk, he always sought to protect the downside and was clear on what he was putting in and what he was willing to lose. “What’s the most critical factor in any business decision that you will ever have to make?” he asks. “Basically, it boils down to this question: If this all crashes, will it bring the whole house tumbling down like a pack of cards? One business mantra remains embedded in my brain – protect the downside”. He protected the downside in every venture that he went into: when he bought his first plane he negotiated a deal with Boeing to sell it back to them in the first year if things did not work out; when he went into mobile phones, he used others’ networks instead of building his own to avoid the massive capital investment and when he went into cola he set aside what he was willing to spend (and lose if necessary) so that he would not be drawn into pouring more and more money into a venture with an uncertain future.


  1. Simplify things but appreciate complexity

Branson almost always seeks to understand and describe issues in their simplest form. Most people in business seek to make things more complex – consider the international accounting standards, or Porter’s Five Forces1, or a description of the reasons underlying the recent financial crises. All these things require a deep level of analysis and an examination of intricate detail just to understand what is going on. Yet, when Branson looks at a new business or a problem within an existing business, he always strives to explain it, for himself and for others, as simply as possible. He says: “It is vital to think clearly, reducing business to its essentials…Complexity is your enemy. Any fool can make things more complex. It is hard to make things simple”.

 
Making things as simple as possible allows him to appreciate the essence of an issue or a business model and to evaluate a proposal or a problem based on gut feel and intuition, without getting too wrapped up in numbers, analysis and calculations. His simple approach to business helped him make quick and efficient decisions when deciding on an approach to get into mobile telephony, when making decisions about setting up a consumer finance arm and when first making a call about setting up an airline. In all cases he merely considered key issues from the customer’s perspective and came up with simple solutions to solve a clear customer need. Yet, while Branson is all about simplicity, he does not shy away from complexity. Although he will often, in a humble way, try to describe himself as a simple person, he takes the time to understand the intricate key details of an issue when he realises that simplification will not give him the answers he needs. He has therefore educated himself on key, complex details pertaining to global warming. He has researched and tried to get into the gritty detail of the social and scientific factors driving the Aids pandemic and he educated himself on banking regulations in the process of trying to make a bid for Northern Rock (the massive banking institution first hit by the mortgage crisis in the UK). Thus, Branson is neither simple nor complex, he is both. He first tries to simplify issues and if that does not give him the solution he needs, he delves into the complex details, often with the help of experts.

    3.  Listen to experts but make your own decisions 

Branson has always surrounded himself with brilliant people. A large part of his success can be attributed to his uncanny ability to quickly and easily tap into the collective wisdom of those around him. He has never once been a specialist in any area where he has set up a business – he knew nothing of journalism and publishing when he first started a magazine called Student as a sixteen year-old school pupil yet he asked lots of questions of anyone in the know and hired people who had worked for a magazine before. After a few months of running the business as a high-school pupil, using the school’s pay-phones to call advertisers, he dropped out of school to focus on the business full time and continued to learn from others who were willing to share their business knowledge and insight with him.
 
When creating Virgin Atlantic he tapped into the experience and wisdom of Sir Freddy Laker, the founder of Skytrain, a no frills, low cost airline offering transatlantic flights that was launched in 1977 and squeezed out of the market by the major airlines in 1982. In 1984 Branson had meals with ‘Freddy’, called him numerous times and unashamedly asked him for help and advice. When making a bid for Northern Rock, he convinced Sir Brian Pitman, “the leading banker of his generation and a man of huge know-ledge” to become the chairman of the committee making the Virgin bid. This did not come easily, says Branson, “But I pestered him and eventually he relented. He would at least hear us out”. After hearing them out and agreeing to come on as chairman, Branson had the most knowledgeable and credible person possible to help him understand the risks and rules related to banking.
 
Yet, in spite of always looking for the best people to help provide information and insight, Branson is adamant that the final decision must belong to the person taking the risk. Entrepreneurs cannot outsource the important decisions and the development of big ideas. He says: “You need to flesh out your own ideas. You need to do your own research. You need to take responsibility for how you plan to turn an idea into action. That way when you approach the experts – the accountants and the legal brains – they have something to get their teeth into.” 

         4. Tackle adversity head-on but have a plan B

In the first week that Virgin Atlantic flights were flying from London to New     York and back again, Branson got a visit from the bank. Virgin was “insolvent” they told him. The company had used its three million pound facility and he was told he would need to shut the airline down and cut his losses. Branson spent an anxious few days literally hiding from his bankers while he put arrangements in place to extend his overdraft facility with another bank. He could see that Virgin was in a temporary bind yet others told him he had failed and should shut the thing down. If he had believed them we may never have had Virgin planes flying all over the world today. He says that in every one of his businesses there were moments of extreme challenge, where doubt set in and he questioned whether the initial grand idea would ever work. The true entrepreneur must be able to “distinguish between real and apparent danger… you need to understand the challenges to your enterprise and face up to them. Equally you have to resist the temptation to overreact at the first sign of trouble.” He goes on to say, “ If you’re hurt, lick your wounds and get up again.
 
If you’ve given it your absolute best, it’s time to move forward … as I write this the economy is deteriorating; it may be that some of you will be faced with this task in the near future.” Although Branson is a big proponent of persistence, he has also learned to recognise that it is important to have a plan B. One cannot just press on down a particular path if something significant changes. When Branson set up Virgin Records, his LP mail order business in 1970, he took out adverts in many music magazines to say that Virgin would be selling LPs via mail order. Everything was in place and orders were flowing in but a few days later “the post men and women of Britain began a bitter dispute for more pay. The strike lasted forty-four long and desperate days for us – and our business dried up. We needed to diversify the brand. Fast,” says Branson. “Here I learned another key fact about running a business: try to have a plan B.” A few days later they had secured a short-term rental on some retail space in Oxford Street and a few weeks later they had opened a music retail store, giving the company an alternative distribution channel.

      5. Be yourself but learn from others

In his most recent book, Business Stripped Bare, Branson is very explicit about his understanding of entrepreneurship: “It’s about turning what excites you in life into capital, so that you can do more of it and move forward with it. I think entrepreneurship is our natural state – a big adult word probably boils down to something much more obvious like ‘playfulness’. I believe that drudgery and clock-watching are a terrible betrayal of that universal, inborn entrepreneurial spirit.” Therefore, at its core, entrepreneurship is about being yourself and doing what you want to do the way you want to do it. But while Branson believes it is important to be true to oneself, he also embraces the opportunity to learn and borrow ideas and insights from other entrepreneurial legends. In the book he goes into great detail about what he has learned from Herb Kelleher, the founder of Southwest Airlines, from Steve Jobs, the founder of Apple, from Sergy Brin and Larry Page, the Google founders and from Nelson Mandela (no explanation necessary). He has carefully examined the mindset and practices of these people and adopted what he believes will work for him and for the Virgin group of companies.  

   6. Diversify but know what’s core

Branson points out that diversity of the Virgin Group is one of the brand’s key strengths. The diversity of revenue streams, industries and geographies will give it the ability to endure in the economic downturn. “Right now everyone in battening down the hatches and preparing for the twenty-first century’s first really big global recession. Virgin turns out to be ready for the storm as well, because its risks are spread; the failure on one part – even a major part – will not ruin the whole.” Although Branson sees this as a strength of the group, many times Virgin has been accused of being a disparate group of companies with no common core and no real focus. Yet, despite the group’s diversity, Branson is absolutely clear about the group’s focus and what binds its many companies together. He says: “Contrary to appearances, Virgin is as focused as any great company. Its oddness comes from what it focuses on. We might have hit upon the exception that proves the rule: our customers and investors relate to us more as an idea or a philosophy than as a company… Virgin’s success seems to contradict the wise rule that you should stick to what you love… I have never made any secret of what gets me out of bed in the morning. It’s the challenge. It’s the brand…. what gets me up in the morning is the customer, the idea of giving the customer a good time. ” 


  7. Be patient and observe but take bold action

Branson is most often depicted as a person who takes quick, risky decisions, many of which have paid off, making him very rich over time. Yet he explains that he and the managers in the Virgin group are often more watchful and cautious than depicted in the press. “This is the unseen part of the business,” he explains, “the part that nobody ever discusses because, to be fair, there’s not a lot to discuss. The secret to success in any new sector is watchfulness, usually over a period of many years. It’s hard to spin waiting and watching into a vibrant business lesson, but if there’s one thing you take away let it be this: that Virgin’s sudden emergence as a leader in cutting edge industries was decades in the making. You need a huge amount of sheer curiosity to make it in a new sector.” While being watchful one does need to come to the point of taking action and this is where one’s entrepreneurial inclinations play a key role.
 
Branson describes an entrepreneur as a person who has “the dynamism to get something started. They view the world differently from other people. They create opportunity that others don’t necessarily see and have the guts to give it a go.”

These seven paradoxes capture the healthy tension that any entrepreneur needs to embrace and Branson has done a remarkable job of recognising paradox and developing a business philosophy for making the most of conflict and contradiction. He is the ultimate entrepreneur and an inspiration and voice for other entrepreneurs, as reflected in this bold statement: “Entrepreneurship is business’s beating heart. Entrepreneurship isn’t about capital; it’s about ideas. A great deal of entrepreneurship can be taught, and we desperately need to teach it, as we confront the global challenges of the twenty-first century. Entrepreneurship is about excellence – not excellence measured in awards, or other peoples’ approval, but the sort one achieves for oneself, by exploring what the world has to offer. I wrote to someone recently who, like me, is dyslexic. I said that it is important to look for one’s strengths – try to excel at what you are good at. What you’re bad at actually doesn’t interest people, and it certainly shouldn’t interest you. However accomplished you become in life, the things you are bad at will always outnumber the things you are good at. So don’t let your limits knock your confidence. Push them to one side and push yourself toward your strengths.”

Branson: A man of many milestones

For Sir Richard Branson, getting the most out of life has come from a combination of business and pleasure–though this guy’s idea of pleasure tends to be a little warped. Hot air balloon crash landings in the ocean. Boats sinking out from underneath him. Fighting arctic wind and temperature in ’round-the-world attempts. What follows are the highpoints from Branson’s life–so far.

1950–Richard Branson is born in Blackheath, South London. No word on whether he was the first baby to leap from crib to crib on his way to a record.

1967–Branson set up a charity called Student Advisory Centre, which came on the heels of his first successful business, a magazine called Student.

1970–Branson, barely 20 years old, founded Virgin, which operated out of the trunk of his car for a time and then was established as a mail-order record business.

1977–Bucking other record labels’ conventional wisdom, Branson signed the Sex Pistols to his Virgin Records music label, which the budding entrepreneur had founded in 1972. Virgin Records is now part of EMI.

1984–In a move that led to a protracted lawsuit with British Airways, Branson founded Virgin Atlantic Airways. He eventually prevailed against British Airways and received a hefty settlement.

1986–No longer content solely with the buzz of starting new businesses, Branson unleashed his adventuresome side. In 1985, he made an unsuccessful attempt to cross the Atlantic by boat in world-record time. He had better luck in ’86, breaking the record by a couple of hours in the Virgin Atlantic Challenger II, successor to a waterlogged Virgin Atlantic Challenger.

1987–Eschewing the water for the air, Branson became the first human–and, presumably, the first creature of any kind–to cross the Atlantic Ocean in a hot air balloon, the Virgin Atlantic Flyer, the largest balloon ever.

1991–Not to be outdone–by himself–Branson crossed the Pacific Ocean in another, even larger, hot air balloon, establishing a record for some other adventuresome soul to chase.

1997–In a move that may seem odd to Americans and their car-centric culture but makes perfect sense to Europeans, Branson founded Virgin Trains.

1998–Branson made his last attempt to circle the globe in a balloon, coming up short with an unscheduled stop in Hawaii. (Even the guy’s letdowns lead to sunny places.)

2004–Not content to leave behind the trappings of sea and land, Branson founded Virgin Galactic, with plans to provide sub-orbital spaceflights for those willing to spend $200,000 or more to leave behind the trappings of gravity.

2007–The merger of several media companies with different media interests led to the founding of Virgin Media Inc., a provider of television, mobile phone, internet and land-line phone services.

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

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Entrepreneur Profiles

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.

Nadine Todd

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shawn-theunissen-and-desigan-chetty

Vital Stats

  • 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.”

Related: Property Point Creates R1bn In Procurement Opportunities For Small Businesses

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?

Related: Want To Start A Property Business That Buys Property And Rents It Out?

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

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Entrepreneur Profiles

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.

Nadine Todd

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Vital Stats

“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.”

Related: (Slideshow) Top Advice From Local Entrepreneurs That Will Change Your Business In 2019

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

time-management-productivity

“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.”

Related: Entrepreneur Erik Kruger On The Importance Of Clarity And Embracing Failure

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.”

Related: How Yoco Successfully Secured Capital And The Importance Of A Pitch

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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Entrepreneur Profiles

7 Foundational Values Of Brand Cartel And How They Grew an Iconic Business From The Ground Up

Marco Ferreira, Renate Albrecht and Dillon Warren built Brand Cartel, a through-the-line agency, that delivers exactly what they wanted — and has grown exponentially as a result.

Nadine Todd

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brand-cartel

Vital Stats

  • Players: Marco Ferreira, Renate Albrecht and Dillon Warren
  • Company: Brand Cartel
  • Launched: 2013
  • Visit: brandcartel.co.za

“We’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do.”

When Dillon Warren, Renate Albrecht and Marco Ferreira launched Brand Cartel in 2013 they were in their early 20s with zero agency experience between them. The idea had started when Marco recognised that social media was taking off, but no agencies were playing in that space yet. It was a clear opportunity.

Printing flyers that said ‘Your social media is so last season’, Marco and Renate went from store to store in Sandton City, pitching their services. When Dillon joined them a few months later because they needed someone to handle the company’s finances, they had two laptops between them, R6 000, which Dillon had earned from a Ricoffy advert, and sheer will and tenacity.

“We shared a house to save on rent and split everything three ways,” says Renate. “At one point we hadn’t eaten in two days. My mom lent me R500 so I could buy Futurelife and a bag of apples for the three of us.”

The trio hired their first employee soon after launching Brand Cartel, and after prioritising salaries and bills, there wasn’t much leftover. “Dillon actually paid us R67 each one month,” laughs Marco. “That’s what was left — although I still can’t believe he actually sent it to us.” It was at this point that the young business owners realised they needed credit cards if they were going to make it through their start-up phase — not an easy feat when your bank balance is under R100.

Related: What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew

“Looking back, those days really taught us the value of money,” says Dillon

We spent a lot of time with very little, and we’re still careful with money today.” Through it all though, the partners kept their focus on building their business. “It almost didn’t work for a long time. We were young and naïve, but in a way, that was our strength. We didn’t have any responsibilities, and we’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do. All of our business has been referral business. It takes time, but we focused on being the best we could be and giving everything we had to our clients. Our differentiator was that we really cared, and were willing to offer any solutions as long as they aligned with our values.”

This is how Brand Cartel has grown from a social media agency into PR and Media Buying, SEO and PPC Strategy, Digital and Print Design, Web Development, Campaign Strategy and now an Influencer division. “It’s an incredibly competitive space with low barriers to entry, which meant it was easy to launch, but tougher to build a client base,” says Renate. “I’d sometimes cry in my car between sales pitches, and then walk in smiling. We had no idea if we’d make it.”

The perseverance has paid off though. Strong foundations have laid the groundwork for exponential growth over the past year, with turnover growing almost ten-fold in 2017 thanks to relationship-building, strong referrals and fostering an internal culture and set of values that has driven the business to new heights as a team.

Like many start-ups, Renate, Dillon and Marco have made their fair share of hiring mistakes, but as the business grew and matured, the young entrepreneurs began to realise that the success of their business lay in the quality of their team and the values they stood for.

This meant two things: Those values needed to be formalised so that they could permeate everything Brand Cartel does, and they needed a team that lived, breathed and believed in them.

“We’ve had some nasty experiences,” admits Dillon. “You should always hire slowly and fire fast, and for five years we did the opposite. We’ve hired incredible people, but we’ve also ended up with individuals who didn’t align with our values at all, and that can destroy your culture.

Dillon, Marco and Renate realised they needed to put their values on paper. “We did an exercise and actually plotted people based on a score grading them against our values, so we knew where our issues were. We knew what we wanted to stand for, and who was aligned with those values. We were right; within a few weeks resignations came in and we mutually parted ways.”

The team that stayed was different. They embraced Brand Cartel’s values, and more importantly, it gave the partners a hiring blueprint going forward.

“Values are intangibles that you somehow need to make real, so it’s important to think about the language you use, and how they can be used in a real-world work context,” says Marco.

The team has done this in a number of ways. First, they chose ‘value phrases’ that can be used in conversation, for example, ‘check it, don’t wreck it’, and ‘are you wagging your tail?’ Team members can gently remind each other of the value system and focus everyone on a task at hand simply by referring to the company’s values. “In addition, when someone is not behaving according to those values, you can call them out on the value, which is an external thing, rather than calling them out personally,” explains Dillon.

Related: How Matthew Piper And Karidas Tshintsholo Launched Their First Business From Their UCT Dorm Rooms

Second, all performance reviews are based on the values first. This means everyone in the organisation begins any interaction from a place of trust, knowing they are operating according to the same value system.

“When you’re in a production environment with jobs moving through a pipeline, there can be problems and delays,” explains Marco. “Instead of pointing fingers when something is over deadline or a mistake is made, our team can give each other the benefit of the doubt and work together. They trust each other, which creates cohesion. We all work as a team, which impacts the quality of our work and the service we offer our clients.”

The system is simple. Coaches will step in first if there is an issue before it escalates to the Head of Team Experience, Nicole Lambrou. If Nicole is called in, she will address the problem head on. “Inevitably it’s something fixable,” says Marco. “By addressing it immediately and in the context of our values it can be sorted out quickly. Ultimately, the overall quality of our team improves, and we are a more cohesive unit.”

The founders have seen this in action. “I recently arrived at a client event and three different people came up to me and complimented my team on the same things — all of which aligned with our values. Everyone at Brand Cartel lives them, internally and externally,” says Renate.

The value system has also shaped how the team hires new employees. “We used to meet people and hire for the position if they could do the job,” says Renate. “But then we started realising that anyone can hold up for an hour or two in an interview. You only learn who they really are three months and one day later.

“We need people who walk the talk, and we really only had a proper measurement of that once we articulated our values. Our interview style has changed, but so has what we look for.”

brand-cartel-south-african-agency

Here are the seven values that Dillon, Marco and Renate developed based on what they want their business to look like, how they want it to operate, and what they want to achieve, both internally, and in the market place.

1. Play with your work

Our goal is for everyone on our team to become so good at what they do that it’s no longer work. Once that happens you love your job because you’re killing it. It’s why sportsmen are called players, not workers, and it starts with the right mindset.

2. Wag your tail

The idea behind this value stems from Dale Carnegie, who said ‘have you ever met a Labrador you don’t like?’ In other words, we all respond well to people who are friendly. It needs to be genuine though, so again, it’s a mindset that you need to embrace.

We live these values whether we’re at the office or meeting clients. If you go into each and every situation with joy and excitement, from meeting someone new to a new brief coming in, you’ll be motivated and excited — and so will everyone around you.

3. Check it, don’t wreck it

The little things can make big differences. Previously it was too easy to pass the buck, which meant mistakes could — and did — happen. Once you instil a sense of ownership and create a space where people are comfortable admitting to a mistake however, two things happen. First, things get checked and caught before there’s a problem. Second, people will own up if something goes wrong. This can help avoid disasters, but it also leads to learnings, and the same thing not happening again.

4. What’s Plan B (aka make it happen)

We don’t want to hear about the problem; come to us with solutions, or better yet, already have solved the problem and made it happen. We reached a point where we had too many people coming to us with every small problem they encountered, or telling us that something wasn’t working so they just didn’t do it.

That wasn’t the way we operated, and it definitely wasn’t the way we wanted our company to operate. We also didn’t want to be spoon feeding our team. It’s normal for things to go wrong and problems to creep in — success lies in how those problems are handled.

Ignoring problems doesn’t make them go away, so we embrace them instead, encouraging everyone on our team to continuously look for solutions. For example, the PR department holds a ‘keep the paw-paw at Fruit & Veg City’ meeting every morning, where we deliberately look for where problems might arise so that we can handle them before they do. We start with what’s going wrong and then move to what’s going right. You need to give your team a safe and transparent space to air problems though. We don’t escalate. We need to know issues so that we can collectively fix them, not to find fault.

Related: The 5-Hour Rule Used By Bill Gates, Jack Ma And Elon Musk

5. Put your name to it

It’s about pride in work and making it your own. When someone has pride in what they’re doing, they’ll not only put in extra time and effort, but they’ll pull out all the stops to make their creative pop, or go the extra mile for a client.

We need to find the balance between great quality work and fast output though. One way we’ve achieved this is by everyone reviewing the client brief and then committing to how long their portion will take.

When someone gives an upfront commitment, they immediately take ownership of the job. It took time for us to find our groove with this, but today we can really see the difference. Our creative coaches also keep a close eye on time sheets and where everyone is in relation to the job as a whole to keep the entire brief on track. If someone is heading towards overtime we can immediately ask if something is wrong and if they need assistance.

We also celebrate everything that leaves our studio. Every morning we have a mandatory 15-minute catch up session where we check in on four core things: How am I feeling (which allows us to pick up on the mood in the room and the pressure levels of our teams); What’s the most important thing I did yesterday; What’s the most important thing I’m going to do today (both of which give intention and accountability); and ‘stucks’, issues that team members need help with. We then end off with our achievements so that we can celebrate them together.

6. Keep it real (aka check your ego at the door)

We believe in transparency. At the end of the day we’re all people trying to achieve the same thing, but it’s easy for ego to creep in — especially when things go wrong. You can’t be ego-driven and solutions-orientated. If clients or team members are having a bad day, you need to be able to focus on the solution. Take ego away and you can do just that. It’s how we deal with stucks as well. We can call each other out and say, ‘I’m waiting for you and can’t do my job until I receive what you owe me,’ and instead of getting a negative, ego-driven reaction, a colleague will say, ‘sorry, I’m on it.’

7. Walk the talk

For us, ‘walk the talk’ really pulls all our other values together. It’s about being realistic and communicating with each other. If you’ve made a mistake or run into a problem, tell your client. Don’t go silent while you try and fix it. Let them know what’s happening and fill them in on your plan of action.

Walk the talk also deals with the industry you’re in. For example, if you’re a publicist, you need to dress like a publicist, talk like a publicist, and live your craft. In everything we do, we keep this top of mind.

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