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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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Can Being Deceptive Help You Build Your Business? It Worked For These 5 Entrepreneurs

We’ve all told little white lies. But what about the big ones? What if telling them would bring your business success?

Jayson Demers

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We all commit little acts of deception, like saying we got stuck in traffic when we were really late to the meeting because we wanted to watch the last five minutes of a favourite TV show. Little white lies? I’ve told them. You’ve told them.

But what about big lies, the kind truly lacking in integrity – like misrepresenting your sales to a prospective investor?

Obviously, there are often severe consequences to lying. Depending on the context, you could lose the trust of a peer, break a professional relationship or even face legal action. Yet, despite these consequences, lying is more common in the entrepreneurial world than you might think.

Just take as an example these five entrepreneurs, who might not be as well known or successful as they are if it weren’t for some clever acts of deception:

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Three Habits That Underpin Entrepreneurial Success

Here are three powerful habits that will help you stay focused, define your entrepreneurial attitude and take your business from zero to hero.

Nicholas Bell

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Successful people and businesses don’t all share the same traits and commitments. Yes they all have managed to break barriers and achieve impressive goals. They’re the leaders, the movers, the shakers and the industry creators. However, not all entrepreneurs are created equal and their recipes for success can differ wildly.

Some swear by a three-hour run every morning followed by a nice salad and the bustle of busy work life. Others need an incredibly early start so they can spend time with their emails and focus on their business. Every entrepreneur has their  own secret tricks that keep them on the straight and successful narrow, but most share a few simple habits that are guaranteed to make a difference.

Here are three habits that will help you become better at business and at leading others towards long-term success:

1. Always be ready to change your assumptions

Many people are unable to change the assumptions they have about their business and its future as it evolves. No business model should be locked in cement and rigidly upheld, it will need to adapt and adjust as it grows and customer needs change. As an entrepreneur you need to understand this concept and be prepared to evolve and change in new directions and markets.

Related: Business Plan Format Guide

This also ties into failure. Do you understand why you failed at something? Are you aware that perhaps your business model is changing? Can you learn from these experiences? Can you adjust your business model, get better research, refine your ideas? If you are ready to take positive value out of these moments and experiences, then you are an agile and inspired entrepreneur.

2. There’s no off switch

Passion and commitment are absolutely key to the success of your business and your own personal growth. You can’t switch off or walk away or just take a sick day because you feel like it, not if you want to stand as an example to your employees or if you want to build a brilliant business.

It may sound trite and tired, but a work ethic is the single most important habit to have as an entrepreneur. You need to always hold yourself to the highest standards, commit to ethical practice and work harder than anyone else.

3. Take it personally

This doesn’t mean gentle sobs in your office when Susan from accounts ridicules your maths skills. If you take your business personally, then you are wrapping the skills learned in points 1 and 2 above into one cohesive whole – you are embedding your passion into every crevice of your company. Care about what you do, be passionate about what it stands for, and be prepared to fight for its life. The route from zero to billion-dollar business isn’t easy. If it was, everyone would be doing it.

Remember, the idea is only 1%. Sweat, work, commitment and focus are the other 99% of the success equation.

Related: 22 Defining Entrepreneur Characteristics

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Head Of Audi South Africa Shares His Top Lessons On Weathering The Storm In Turbulent Times

When the economy isn’t playing ball, it’s time to roll up your sleeves, face your challenges head-on, and get to work, says Head of Audi SA, Trevor Hill.

Nadine Todd

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Vital Stats

  • Player: Trevor Hill
  • Position: Head of Audi South Africa
  • Visit: www.audi.co.za 

“In everything we do, across the organisation, we ask this question: Is it the best? That’s our value proposition. Without it, we don’t have a clear direction for everyone to follow.”

Some of the biggest brands in the world are well-known for keeping things lean. Amazon is a prime example, where even Amazon-branded employee backpacks are reused. Many bloated organisations learnt the hard way in 2008 that if you aren’t efficient and focused on the bottom-line, you’ll struggle to survive in competitive and volatile environments. On the other hand, businesses that were already lean and flexible not only survived the recession — many of them actually thrived, mainly because they were far better equipped to handle new economic realities than their competitors.

According to research conducted by Bain & Co’s authors of The Founder’s Mentality, Chris Zook and James Lane Allen, 85% of the biggest growth challenges large-scale organisations face are internal. This doesn’t mean the economy and competitors don’t matter. But the way leaders and managers of those organisations react to economic and external stimuli does.

Trevor Hill, Head of Audi South Africa, is well-versed on the impact external stimuli can have on a brand — even an established premium brand like Audi South Africa. Economic and political conditions in South Africa have impacted consumer confidence, and the premium vehicle market has experienced year-on-year double digit declines over the past three years. “The premium market is almost half the size it was three years ago in South Africa,” he explains. “Consumer confidence, the high pricing of premium cars, and a general buying down trend have really impacted our market. Three years ago, we were selling close to 20 000 vehicles per year. Today we sell around 10 000 vehicles. You can’t ignore market conditions. You need to face them head on, and do what’s best for your employees, the brand and your consumers.”

Related: 10 Ways To Develop A Success-Oriented Mindset

Here are Trevor’s five lessons for weathering the storm so that your business and brand are well positioned when market recovery begins.

1. Have a clear value proposition that everyone understands and embraces

“We will never be the biggest in the South African market,” says Trevor. “Mercedes-Benz and BMW produce in South Africa and have an advantage over us in terms of export credits. If we can’t be the biggest though, we can focus on being the best. That is entirely within our control.

“Our ‘Best’ strategy says that we want to be the best organisation, have the best product, the best brand and the best customer service. Everything we do must be looked at through this lens – is it the best? If we host an event, have we chosen the best venue, event organisers and caterers? Does the look and feel match our standards? If we can’t be the best — we don’t do it.

“In everything we do, across the organisation, we ask this question: Is it the best? That’s our value proposition. Without it, we don’t have a clear direction for everyone to follow.”

2. Understand what’s in your control and then roll up your sleeves and get it done

The rate cut at the end of 2017 really helped the premium market towards the end of the year. The problem is that there are things you can control — such as running a lean organisation — and things you can’t control, such as whether or not there will be another rate cut. So how do you ensure a proactive culture rather than a defeatist mentality when times are tough?

“The spirit of Audi has always been to challenge boundaries, roll up our sleeves and forge our own future,” says Trevor. “It’s in our ‘Vorsprung’ DNA. This has never been more applicable than when we’re weathering a storm, but it has to be fostered when the waters are calm.”

The theory is straightforward. If an organisation isn’t used to challenging boundaries and being in control of its own destiny, it’s difficult to find those characteristics when they’re really needed. When something is woven into a brand’s DNA, it’s because it’s always there, and the organisation’s entire culture supports it.

Trevor can point to examples everywhere. For example, in the 1980s, Audi was the first car manufacturer to put a five-cylinder engine and four-wheel drive on a rally car, and cleaned up two years in a row as a result.

“The Audi spirit is that you can improve anything. You just need to be willing to put in the work.”

Faced with extremely tough local conditions, the South African team is now doing just that: Rolling up its sleeves and finding solutions.

“This is how we handle the business as a whole. We’ve been completely upfront with head office and our investors about current market conditions, but we aren’t complaining — we’re putting the facts on the table, showing them what we can control, and unpacking how we’re going to see the business rolling forward. Because of that attitude and transparency, we have everyone’s full support.”

3. Never throw money at a problem; smart solutions aren’t necessarily the most expensive

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“Spending a fortune on brand campaigns isn’t going to change the reality of the current market conditions,” says Trevor. “It’s easy to throw money at a problem, but then what? We’ve taken a different approach. We’ve selected a number of brand ambassadors whose values really align with our own. These include TBO Touch, Cameron van der Burgh, Wayde van Niekerk and Nomzamo Mbatha. Their followers know what they stand for, and associate Audi with those same values. It’s a much more targeted and niche way to gain awareness for our brand.”

For Trevor, not throwing money at a problem is a value that should be ingrained in an organisation. “We approached 2018 with this value top of mind. At the end of 2017 our management team went away for a strategy session. We collectively took a look at the entire business and asked what we needed to do to drive this business through the stormy waters of 2018.

“Each manager then got a target for their division that was aligned with the other divisions and organisation as a whole. They then conducted individual strategy sessions with their teams. The whole thing was a problem-solving mission: This is the budget we have, this is where our focus needs to be, now how do we go out and deliver the best? What’s our plan?

“These plans were then aligned with each other to ensure everyone was going in the same direction, and we measure everything. My KPIs filter down to the management team, and theirs filter down to their teams. It’s a very inclusive system; everyone can workshop the problem, and in that way we don’t only gather some out-the-box ideas, but we get everyone’s buy-in as well.”

Related: You Need This One Trait To Succeed In Reaching Your Goals

4. Encourage your team to try new things and communicate collaboratively

Very often, individual divisions communicate well together, but the message and camaraderie is lost across divisions, particularly between sales and marketing. “We’ve found two ways to encourage participation and camaraderie across the business,” says Trevor. “The first is that we always encourage new ideas. If something is tried and tested and doing well, especially in marketing, try to own that property. But if something isn’t giving you what you want, change it. We’re often too scared to change things that aren’t working or to try something new. We encourage participation and thinking differently. The bigger your pool of ideas, the more you have to work with.”

The company also has a number of monthly meetings that bring different divisions into the same room for workshop sessions. “We have a lot of field staff who aren’t often in the office. We need to keep communicating with them to pull them into the fold,” explains Trevor. “For example, once a month we have marketing and product meetings. The marketing, product and sales teams all attend. It gives everyone an opportunity to know what’s happening and hash out any questions or issues then and there. The communication between divisions — particularly marketing and sales — is much better as a result.”

5. Keep your core motivated

Like many industries, there’s a lot of employee movement in the consumer and premium brands segment. “People move. That’s the reality of job markets around the world,” says Trevor. But stability is important, and at Audi SA, that means identifying your core employees and keeping them happy.

“We have a very strong core. Within the organisation we’ve identified a core group of employees whom we absolutely need if we’re going to continue to run this business efficiently and successfully. Once you’ve identified your core, you need to keep them happy, and that’s about a lot more than their paycheque.

“Different people want different things — advancement, developing their careers, an opportunity to work abroad or perhaps spend more time with their families at home.”

The lesson? Figure out what’s important to each member of your core and try your best to give it to them. Success is a team sport — you need to keep that core team in your corner.


MAKING A SUCCESS OF NEW TERRITORIES

Trevor Hill began his career with Audi as an area manager in 1989. In 1997 he left South Africa to join Audi’s head office in Germany. Since then he has headed up divisions in Germany, Japan, China, Dubai and South Korea. One of the biggest lessons he’s learnt through his travels is that while there are certain business fundamentals that hold true everywhere, each culture has its own way of doing business, and you need to understand what that is on the ground if you’re going to make an impact and be successful.

“One of the biggest things I’ve had to communicate back to head office is that each territory operates slightly differently,” explains Trevor. “For example, in Germany, you have 100 days in any new job to prove yourself. If you don’t make something happen in those 100 days, you’re not seen to be successful. This is impossible in Asia, where business is all about relationships. You have to develop a relationship based on trust and honesty, and that doesn’t happen overnight. Until you have that trust though, your employees and customers won’t work with you. When you enter a new territory, take your time. The first year is all about understanding the lay of the land. In the second year you can implement your strategy, and in the third year you can start reaping rewards.”

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