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Security Sector Success In Africa With Securitas SA

Until 2009, Securitas had no presence in South Africa. Today it’s a large and respected local player. Here’s how the company posted extraordinary growth in record time by having the courage to make some very bold moves.

GG van Rooyen

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Securitas-SA-founder-Loic-Potjes

loic-potjes

Vital Stats

  • Player: Loic Potjes
  • Position: CEO
  • Company: Securitas SA
  • Established: 2009
  • Visit: securitas-rsa.co.za

As the saying goes, Africa is not for sissies. For any company wishing to do business here, there are unique challenges to contend with. Take, for example, the South African security sector. It is, to put it mildly, very different from the one you’ll find in Europe.

A key reason is the ubiquity of crime in South Africa. In fact, it’s the third-most violent country in the world (Venezuela is first, and South Sudan second).

The prevalence of crime has subsequently resulted in the local security sector becoming a very busy one. There are no less than 9 000 security companies active in the country. Moreover, the average offering consists of low-cost entry-level manpower services, and in the case of some small operators, employees don’t receive the salaries and benefits dictated by law.

So establishing yourself in this difficult industry and turning a profit can be hard. But that is exactly what Securitas decided to do in 2009. The company (large and established in Europe) made the move into South Africa. The transition wasn’t a simple one.

Related: How Do I Start A Security Company?

Here’s what the company learnt about succeeding in an industry where competition is fierce and margins are small.

1. Use acquisitions to jumpstart business

When you’re faced with a plethora of competitors in a given market or industry, getting your foot in the door can be hard. Even with a respected international name and brand behind you, organic growth is often difficult. So, to jumpstart things, Securitas acquired a small but respected security firm, which gave them a solid base to operate from. Suddenly the company had the licences, workforce and assets needed to start doing business on a meaningful scale.

“We quickly realised that we couldn’t simply ‘copy and paste’ what we did in Europe,” says Securitas SA CEO Loic Potjes.

“South Africa is unique, so we needed a unique strategy. When you enter a new market, you have to be willing to listen and learn. We decided that the best way to do this was to acquire a local business that was entrenched in the market.”

Lesson

When you find yourself playing catch-up in a particular field or industry, a strategic acquisition remains one of the best ways to draw level (and surpass) the competition.

Modern examples are easy to find. Despite having its own instant-messaging app in the form of Messenger, Facebook bought WhatsApp as well, instantly making itself one of the key players in the industry.

Just as videos were becoming ‘a thing’ on the Internet, Google purchased YouTube. Thanks to this, Google largely owns the online video space.

In fact, YouTube is officially the world’s second-biggest search engine — only Google itself is more popular. Most recently, Microsoft decided to stop sitting on the social media side-lines by purchasing LinkedIn for a phenomenal $26 billion. Suddenly, Microsoft is a big social media player.

Related: En-novate Goes Toe-To-Toe With The Best In The World

2. Differentiate yourself

Securitas-SA-founder

With 9 000 players in the local market, it can be hard to grow your market share when you’re not only a new player, but also positioned at the premium end of things.

Securitas SA’s situation was exacerbated by the fact that the global financial crisis struck just as the company arrived in South Africa. Businesses were looking at areas where they could cut costs, and security expenses seemed as good a place as any. After all, there were plenty of small operations out there willing to undercut the competition.

“Our offering was better than the vast majority of players. Our guards were well trained, and our success rate in preventing incidents was higher,” says Potjes.

“We had the data to prove it. When you’re dealing with a lot of competition, you need to differentiate yourself in a meaningful way. And this doesn’t mean just having a nice brochure that lists all your accolades. You need the cold, hard data that proves you’re worth the price you’re asking for.”

Securitas SA’s strategy worked. By 2011, it had more than 2 000 employees, an impressive list of blue chip clients, and was viewed as one of the top-ten players in the industry.

Lesson

A product or service is worth what clients are willing to pay for it. If you don’t want to be drawn into a price war, you need to demonstrate your value. And a slick sales pitch is not enough. It’s all about data. Show your value. Prove it.

Why do so many companies use Apple products, despite the fact that they are often far more expensive than other available systems? Because they are user-friendly and great to use. They improve productivity, which makes them worth the extra expense.

Related: Customers Will Pay For Amazing Experiences – If You Deliver Explains Karabo Sepharatla

3. A service business is hard to scale

As 2011 was drawing to a close, Securitas was in a reasonably good position. But it was finding it increasingly hard to scale. Why? It was facing a problem that many service-based operations have to deal with when trying to expand.

Whenever Securitas grew its client base, there was a corresponding growth in cost and complexity. Because Securitas was using highly-trained guards, the marginal cost associated with every new client contract was substantial.

“We realised that the very nature of the business was constraining growth. The business model was based on low-cost, low-margin, manpower-based services, which couldn’t easily scale,” says Potjes.

Lesson

There is a reason why modern tech companies are receiving sky-high valuations and massive investment: They are eminently scalable. And why are they so scalable? Because the marginal cost of a tech product or service is practically zero. Just consider a company like Dropbox, Airbnb or Uber.

Signing up an extra user brings with it virtually no cost. The opposite is often true when selling a physical service in a bricks-and-mortar world. The marginal cost is significant, it takes time to implement and it adds complexity to the business.

4. You need to find a scalable business model

Securitas-SA-offices

To take the business to the next level, Potjes and his team realised that a fundamental shift was needed. Growing Securitas SA incrementally through its existing service offering would take too long. But pivoting a business with thousands of employees would not be easy. So the company relied on a strategy that had worked well early on: Acquisition.

“By 2011, we had realised that we needed to start looking at different products and services. Specifically, we wanted to move away from the traditional manpower-based service offering towards technology-based solutions,” says Potjes.

“We started aggressively pursuing this strategy in 2013, which was why we acquired an excellent South African company called Rentsec that focused on providing offsite monitoring.”

Securitas brought Rentsec into the fold, and radically changed the business. The company started selling security solutions that were based on technology and upskilled specialised manpower — operated largely out of control rooms.

“A number of security functions can easily be replaced by technology,” says Potjes.

“For instance, it’s inefficient to have guards patrol a boundary wall. They can only guard a small section of wall at any given moment. A proactive solution consisting of security cameras with video analytics managed by off-site control room operators can do a much better job.”

The company was overhauled completely. It went from 90% of its bottom line being based on low-cost manpower services to 75% of its bottom line being dependent on highly-differentiated tech services with specialised manpower.

“We managed to quadruple our bottom line. Moreover, we didn’t need to let any of our employees go. In fact, we have 4 000 employees today. And we’ve managed to upskill them and, to a large extent, keep them out of harm’s way,” says Potjes.

Lesson

Many great businesses in history have hit growth ceilings, and were only able to punch through once they changed their business models substantially. A great example is Starbucks.

The company was founded in 1971, and sold coffee beans and espresso makers. By the late 1980s, there were only 11 Starbucks stores. Then Howard Schultz bought the brand and took the concept of the Italian coffee shop to the US. It now has
24 000 stores worldwide.

Another interesting example is PayPal (originally called Confinity). Initially, the company offered a way to ‘beam’ payments from one PDA (like the Palm Pilot) to another, but these early versions of smartphones went extinct pretty quickly, leaving the company without a platform for its service. But a smart merger with Elon Musk’s online banking company X.com saw it become a hugely successful online payment platform.

Related: What To Focus On At Each Stage Of Your Business Growth

Key Learnings

  • An acquisition can be a great way to play catch-up in a market or industry.
  • If you want to play in a saturated market, you need to differentiate your offering. What makes it special?
  • Not every business model is scalable. If yours is not, you need to find a way to make it scalable.
  • Pivoting is not only for start-ups. Making that leap from medium to large enterprise might also require some pivoting.

Lessons Learnt

(Podcast) ‘Bizarre Foods’ Andrew Zimmern: ‘I’m Addicted To The Hustle’

How this week’s ‘How Success Happens’ guest overcame personal struggles and built an empire.

Dan Bova

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I didn’t know what to expect when we scheduled an interview over breakfast with today’s guest Andrew Zimmern. As you may know, the chef, writer, restaurateur and TV personality made a name for himself traveling the world and eating some, well, bizarre foods on his hit travel/food show, Bizarre Foods.

Turns out our breakfast was pretty normal – we didn’t dig into a fresh plate of scrambled brains or anything – but the conversation was anything but typical.

Over the past couple of years, Zimmern has built a true empire around his name with books, TV shows, restaurants (including his new Twin Cities joint Lucky Cricket), and a production company, but as he very candidly told me, the road to success has not been easy. He has gone through a lot of personal pain on his journey, and he says it is a daily endeavour to keep himself moving on the right track.

As Zimmern explained, over the course of his life, he’s had problems with substance abuse, depression – even homelessness – and he was very open about sharing the lessons he’s learned along the way about coping and finding redemption. We also spoke about his dear friend, Anthony Bourdain, and about the struggles of feeling overwhelmed that most of us face.

Related: Gareth Cliff Shares His Tips For Starting Your Very Own Podcast

But don’t get me wrong, he’s really funny, too! There’s nothing “normal” about Andrew Zimmern. Hope you’ll enjoy our conversation, thanks for listening.

This article was originally posted here on Entrepreneur.com.

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Lessons Learnt

How BrightRock Is Disrupting The Insurance Industry With These 2 Pivotal Strategies

Developments in technology, and clear communication are positioning BrightRock to disrupt their industry and transform the consumer experience.

Monique Verduyn

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brightrock

Vital Stats

  • Players: Sean Hanlon, Leopold Malan, Schalk Malan, Suzanne Stevens
  • Company: BrightRock
  • Est: 2011
  • Visit: www.brightrock.co.za

BrightRock was started around a dining room table in 2011 by four people with years of industry experience and — importantly — a diverse set of complementary skills.  They wanted to make changes to an industry with an age-old methodology by allowing customers to co-create a solution that precisely meets their individual needs, and adjusts as those needs change. Today, BrightRock is the fastest-growing insurer in the intermediated individual life risk market. It also provides underwriting management services to funeral parlour businesses and, more recently, has entered the group risk insurance market, offering its needs-matched approach to employees.

The founders of BrightRock, established in 2011, knew the life insurance industry all too well, and they found its methodology wanting. “Traditional life insurance lumps all the individual’s needs into one policy,” says CEO Schalk Malan.

“It’s a methodology that has been around for centuries. We started afresh and looked at how we could design life insurance based on individual requirements. Our cover is designed to exactly match each specific financial need. Because there is no waste, it’s more cost efficient and sustainable. And if circumstances change and our customer needs more cover, it’s easy to get it because needs-matched design enables the policy to change in line with changing needs.”

1. Embracing digital technology to provide needs-matched insurance

Suzanne Stevens, marketing executive director at BrightRock, points out that this type of innovation achieves efficiency (cost savings) and effectiveness (higher returns). “By harnessing digital technology, we have made our operations more efficient, and aggressively lowered costs by up to 30% for our customers. Every rand they spend with us works harder for them. That’s the benefit of a solution designed around the customer.”

BrightRock’s founders took a similar approach. ‘We ditched legacy thinking in favour of creating a product that is intuitive and easy to navigate. An enormous amount of time and effort went into writing and designing that system, and creating the optimal customer journey.”

Related: How BrightRock Is Rocking The (Industry) Boat In Only 5 Years Since Launch

Unlike clunky legacy systems, BrightRock’s platform is modularised, and was built according to the agile principle of rapid delivery cycles. The result is a technology stack with longevity, that is also flexible enough to be tweaked when needed.

“The advantage of the technology available today is that you can plug things in and pull them out as required,” says Suzanne. “That’s one of the enablers of a truly disruptive mindset. To step away from accepted norms and find new solutions requires curiosity and creativity, as well as a lot of courage to go up against large incumbents in the market. There is always resistance to new technology, although we are fortunate in this country to have one of the most innovative insurance sectors in the world.”

2. Effective communication is critical

These disruptors have set themselves above the rest through one surprisingly simple tactic —  effective communication. They agree that it simply doesn’t matter how world-changing your product or service is if you don’t communicate it to the right audience at the right time. New companies that fail to communicate their remarkable new development will quickly be pushed aside by other disruptors. Without a clear communication strategy that reaches the audience in the industry you’re trying to disrupt, you’ll set yourself up for failure. A key question to ask when you are developing your communication strategy is simply whether people understand what you do.

“Because the premise for our product was fundamentally different from anything on the market, communication and clear messaging were critical to convincing our clients to put their trust in us,” says Schalk.

“It was especially important to educate insurance advisors so they would understand what we were doing, why we were doing it, and how it was better than the other options available. That was key to disrupting the individual life market.”

Currently, BrightRock employs 380 staff, has experienced 40% year-on-year growth, and has an annualised premium income of more than R1,3 billion. The company has recently entered the group risk environment with a similar offering that addresses many of the same shortcomings of traditional group risk products. “The inefficiencies of the structuring of group products has meant that, to remain competitive, insurers have cut the benefits offered to employees, undermining their sense of financial security. Change is needed, and we believe our needs-matched philosophy positions us to change the group risk market too.”

‘We ditched legacy thinking in favour of creating a product that is intuitive and easy to navigate. An enormous amount of time and effort went into writing and designing that system, and creating the optimal customer journey.”

Unlike clunky legacy systems, the BrightRock’s platform is modularised, and was built according to the agile principle of rapid delivery cycles. The result is a technology stack with longevity, that is also flexible enough to be tweaked when needed.

Related: BrightRock’s 5 Entrepreneurial Tips For Start-ups

This iterative, modular approach typically begins with defining the strategy and programme plan upfront, delivering a core capability fast so it can provide benefits immediately, and then continuously improving with regular, incremental capability improvements to achieve the objectives of the strategy. It’s an approach that fosters closer collaboration between stakeholders, improved transparency, earlier delivery, greater allowance for change and more focus on the business outcomes.

“The advantage of the technology available today is that you can plug things in and pull them out as required,” says Suzanne. “That’s one of the enablers of a truly disruptive mindset. To step away from accepted norms and find new solutions requires curiosity and creativity, as well as a lot of courage to go up against large incumbents in the market. There is always resistance to new technology, although we are fortunate in this country to have one of the most innovative insurance sectors in the world.”

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Lessons Learnt

The 9 Obsessions You Need To Have To Become A Self-Made Millionaire

Here’s how to stay focused on your millionaire goals.

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elon-musk

The ones who succeed weren’t handed a golden ticket; it wasn’t chance that helped them cultivate their fortune. To reach millionaire status, you must be driven to reach your dreams. You must be obsessed in order to be successful.

These are the nine obsessions that give every self-made millionaire an edge in creating success and wealth.

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