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Howard Blake Stays Hungry With His Innovation Strategy

Staying agile and innovative isn’t easy, especially when you’re running a large and established operation that’s been around for decades. Howard Blake, however, has managed it. Entrepreneur finds out how he stays hungry and keeps his finger on the pulse of innovation.

Paul Smith

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Key Learnings

  • Stay at the edge of innovation. Disrupt your own operation before someone else does it.
  • Don’t treat risk as a dirty word. The key to growth often lies in embracing calculated risk.
  • Diversify without losing focus. Create verticals that complement and feed off each other.
  • Innovation and execution are not the same. They need different approaches.

Howard Blake started his business when he had nothing more than a typewriter and a scooter to his name. He would work from his kitchen and visit clients on his scooter. But those days are far behind him. Today, Blake owns a large international company that’s been in operation for more than 25 years and is worth around R350 million.

This is not a bad position to be in — who wouldn’t want to grow their business so successfully? But it does bring its own challenges.

Like an aircraft carrier or cruise ship, a large company has the size and heft to survive stormy waters, but it also turns very slowly. Change is not instantaneous, and in our modern business world, this is becoming increasingly problematic.

While large operations find themselves stuck in a whirlpool of corporate governance and risk management, small, agile operations are leapfrogging over them and disrupting established industries. One need only look to companies such as Uber and Airbnb for examples of this. Taxi operations and hotel chains all over the world are being threatened by companies that they failed to even identify as competitors.

Related: 5 Things Warren Buffett Does After Work

How does one safeguard against this? For Howard Blake, the answer is simple: Never allow yourself to become complacent.

Disrupt yourself

When Blake started his business, he did so by innovating and disrupting the way things were done.

“When I started in 1990, if you had a fax machine, you were at the leading edge of technological innovation. Most businesses weren’t utilising computers properly yet. I looked at the way people were processing legal documents, and I thought it should be automated. At the time, collecting debt was slow and laborious, so I developed a computer-based system that sped up the process,” recalls Blake.

Now, the rate of innovation is much faster, which makes it harder to stay on top of new technologies. And the fact that Blake is managing a large operation with thousands of employees can make it tricky to roll out new systems and technologies.

So, to bring about constant change and innovation, he forces his company to ‘disrupt itself’. “We take nothing for granted,” says Blake. “Every six months, we reassess the business. It’s like an airplane teardown. We take everything apart for inspection. We used to do it every 18 months, but the rate of change is now too rapid for that.”

The aim is to find ways in which things can be done in a more efficient and cost-effective manner. “We don’t mind disrupting our own services and product offerings. If there’s a better way to do something, we pursue it.

“You need to open your mind and put your prejudices behind you. It’s almost a philosophical thing — you need to fundamentally question what you’re doing. Don’t believe you’re doing things in the best way. Humility is important.”

Blake is also weary of processes that become routine. “Nowadays, as soon as something becomes routine, the profit line tends to take a dip. Your product or service won’t exist in its current form in five years’ time. If you’re not innovating, you’re dying.”

Embrace risk

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For Howard Blake, risk is not a bad thing. In fact, he believes embracing risk is an important component of long-term survival. Companies have become exceptionally risk averse, and this is impeding their ability to innovate and grow.

“Risk has become a dirty word in the business world, something we all take great pains to avoid. We hire risk management companies and take out risk insurance to help us minimise risk,” says Blake.

“The problem is that many enterprises take an extreme approach to minimising risk, pigeonholing themselves in the process. Over the course of my career, I’ve seen the benefits of constantly moving out of your comfort zone and taking calculated risks. Rejecting the status quo is one of the main reasons that Blake Holdings has grown from a one-man show to a R350-million business over the course of 26 years.”

He does not, however, suggest that companies adopt a laissez-faire approach to risk management.

“As the skeletons of many failed start-ups can attest to, it’s all about calculated risk. From the start, we employed a scientific approach to the collection business in order to create better default prediction models. This approach saw us secure important clients such as Foschini and Truworths.”

You want to avoid what Opsware founder and angel investor Andy Horowitz calls ‘stupid risk’. Good risk brings with it the potential for tremendous reward. Stupid risk offers little chance of corresponding reward. 

Related: How To Build Your Business Like A Boss

Diversify

Diversification is notoriously tricky. While embracing multiple verticals can certainly result in more revenue streams, it can also lead to a loss of focus and the relinquishing of a hard-won market position.

Once one of the stalwarts of the American business world, the RCA Corporation (originally the Radio Corporation of America) decided to diversify in the 1960s and 1970s. RCA wanted to become a conglomerate, and therefore decided to acquire companies that focused on industries as diverse as carpeting, frozen foods and car rentals. Things did not go well. These endeavours had a disastrous effect on the company’s bottom line.

Frustrated employees purportedly even started referring to RCA as Rugs, Chickens and Automobiles. This attempt at diversification was one in a long list of bad decisions – decisions that ultimately resulted in RCA being purchased and broken up by GE.

But there are countless examples of companies that managed to diversify very successfully: Disney was once just an animation studio, today it has its fingers in countless pies, including a list of theme parks. Once purely a maker of computers, the bulk of Apple’s revenue now comes from cellphones. One of Amazon’s biggest money makers, meanwhile, is its cloud-computing service, which boasts a long list of large companies as clients.

“Diversifying successfully requires a careful balancing act,” says Blake. “You don’t want to lose focus completely.”

It also helps if there is some cross-pollination between your various ventures.
In the case of RCA, the company was throwing the net too wide. Apple applied
its technology and flair for design to a related field.

“While Blake Holdings may have begun as a collections company, it utilises its technology — alongside its already-existing databases — to render services across the verticals of contact centres, customer service, customer analytics, WiFi, marketing and data analytics, to name a few,” says Blake.

“These specialties all build and feed off each other, making it easier to not only launch successful new ventures, but also to hone the innovation capabilities of the existing ventures. With the advent of the digital age, previously distinct verticals have now become converged business solutions.”

Think like a start-up

The Virtual Agent is a recent addition to the Blake family of companies and an excellent example of the organisation’s approach to diversification.

“The Virtual Agent is a realty solutions company that has emerged from our experience in database services. And, like many of the successful ventures we’ve undertaken over the last decades, it wouldn’t have come to be if not for a curiosity to seek out new ways of making things better and improving industries,” says Blake.

Getting The Virtual Agent off the ground wasn’t easy, though. The Blake organisation was sailing into unchartered waters, and not everyone was convinced it was a good idea.

Related: Work Smarter Says Matsi Modise

To push the project through, Blake adopted a lean start-up approach. With Debbie Leo-Smith (an ex-estate agent) heading up product development, creation of The Virtual Agent offering was kept small and cost-effective.

“We brought The Virtual Agent to market very quickly. It was an industry ripe for disruption, and we acted decisively. The venture broke even five months after we came up with the concept. That’s the speed at which you need to operate, even within a large organisation. There’s a hunger, a desire to innovate that tends to fade into the background the more resources a business has access to. If you want to be successful, you need to find a way of holding onto that hunger.”

Paul Smith is a writer and startup scientist. He currently manages an accelerator, Ignitor, which helps entrepreneurs start and grow their businesses. Ignitor has developed a new model that significantly improves early stage start-ups odds of success. His primary research interests include understanding the behaviours of expert entrepreneurs, as well as, how to most effectively support high potential start-ups. Follow him on Twitter and visit his website.

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Lessons Learnt

#Wealthiest List: 8 Self-Made Millionaires On How They Built Their Wealth

These inspirational self-made millionaires built businesses with nothing less than hard work and sheer determination.

Catherine Bristow

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1. Nick D’Aloisio Wrote a Million Dollar App At Age 15

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At the age of 15, Nick D’Aloisio wrote an app while sitting in his parent’s bedroom in the UK. At the age of 17, D’Aloisio sold his app Summly – a mobile news summarisation app to Yahoo for a staggering USD 30 million.

As one of the youngest millionaires, D’Aloisio is also the world’s youngest entrepreneur to be backed by venture capitalists – having secured seed funding from Sir Li Ka-Shing, Hong Kong’s billionaire, as well as raising USD 1.23 million from celebrity investors, including Yoko Ono and Ashton Kutcher.

“The number one thing I did that I think was wise was to get, through some of my advisers, was a Chairman; basically someone who was a very experienced business person, an industry veteran — Bart Swanson, who had been at Amazon and then Badoo. Then, myself and Bart really started finding people and growing the team.”

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7 Cannabis Industry Millionaires Making It Big In The Marijuana Business

These entrepreneurs have capitalised on a new market set to continue to grow rapidly as more countries legalise marijuana across the world.

Catherine Bristow

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1. Brendan Kennedy

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Brendan Kennedy worked on job sites as a carpenter to pay his way through university, with his eyes set firmly on becoming an architect, until the allure of Silicon Valley changed the course of his direction. While working at technology start-ups Kennedy began thinking about the possibilities that medical marijuana provided.

“I was really sceptical of medical cannabis,” he says. “It took a year of having conversations with patients and physicians and hearing the same story, repackaged but essentially the same, over and over and over again, where my scepticism eroded and I became a believer.”

In 2013, Kennedy and his partners applied for a licence from Health Canada and launched Lafitte Ventures, which was later renamed Tilray. Today, the company is a global leader in medical cannabis research, cultivation, processing and distribution.

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Lessons Learnt

Scaleup Learnings From Our Top Clients – What The Most Successful Entrepreneurs Do Right

So, how do our successful clients move through these constraints to scaling up? We see four key drivers of success, and they are: people, strategy, flawless execution and finance.

Louw Barnardt

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You’re out of your start-up boots, staff is increasing, your client base is growing, revenue is up and you’ve proven your case to the market. Now it’s time to scale up. The challenges of this vital growth phase are different and it’s a time that demands different mindsets and different actions. In a world littered with small business failures, it helps to be well-prepared for scaling up using a proven methodology. At Outsourced CFO, we get an inside look at the success factors of our clients who are mastering the transition.

On the one hand, scaling up is a really exciting phase; this is what moves you into real job creation and making an impactful contribution to economic growth. On the other hand, it is really hard to scale up successfully. We see three major constraints that limit companies’ transition from start-up to scale-up:

Leadership

The business has to have the leadership that can take it to the next level. When you start scaling up, especially rapidly, the founders can no longer do everything themselves. The team must grow and include new leadership talent that can take charge and execute so that the founders are working on the business instead of in the business.

Infrastructure

The processes, procedures, networks, systems and workflows of the business all need to be scalable. This is imperative when it comes to your infrastructure for the financial management of your business. You’re only ready for growth when your infrastructure can seamlessly keep pace.

Market access

Scaling up demands more innovative marketing and storytelling so that you can more easily connect and engage with the new employees, clients, network partners, investors and mentors that need to come along with you on your scale-up journey.

Businesses that build a market conversation and a compelling brand narrative during their start-up phase are better positioned to have this kind of market access when they need to scale up.

People

It is critical to have the right people on your team. Our successful entrepreneurs have what it takes to attract, inspire and retain top talent. A strong team of smart, ambitious and purpose-driven people who love the company and want to see it succeed contribute greatly to a world class company culture. They are adept at communicating a compelling vision and establishing core values that people can take on. These entrepreneurs are tuned into the aspirations of their people and focus on developing leaders in their teams who can in turn develop more leaders.

Strategy

It is planning that ensures that the right things are happening at the right times. At successful scale-ups strategies and action plans are devised to ensure that the most important thing always remains the most important thing.

Strategy includes input from all team members and setting of good priorities for the short, medium and long term. Goals are clear and everyone always knows what they are working towards. The needle is continuously moved because 90-day action plans are implemented each quarter to achieve targets and goals that are over and above people doing their daily jobs.

Flawless execution

Top entrepreneurs are not just focused on what operations need to achieve, but how the business operates. They have the right procedures, processes and tools in place so that everyone can deliver along the line on the company’s brand promise. Frequent, quick successive meetings ensure the rapid flow of effective communication. Problems are solved without drama. There is no chaos in the office environment. Everyone is empowered to execute flawlessly to an array of consistently happy clients.

Finance

Everyone knows that growth burns cash. A rapidly scaling business faces the challenge of needing a scalable financial infrastructure to keep the company healthy. Our successful entrepreneurs pay close attention to finance as the heartbeat of the business, ensuring that everything else functions. They look at the tech they are using for financial management and for the ways that their financial systems can be automated so that they can be brought rapidly to scale. The capital to grow is another vital finance issue.

The best way to finance a business is through paying clients on the shortest possible cash flow cycle. However, when you are scaling up and making heavier investments in the resources you need for growth, it is likely that you will need a workable plan for raising capital. Our scale-up clients know the value of accessing innovative financial management that provides high level services to drive their business growth.

Navigating the scale-up journey of a growing private company is one of the hardest but most rewarding of careers to pursue. Having people in your corner who have been through this journey before helps take a lot of pain out of the process. No growth journey looks the same, but there are tried and tested methods that will – if applied diligently – lead to definite success. Happy scaling!

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