COPYRIGHT AND CITATION CONSIDERATIONS FOR THIS THESIS/ DISSERTATION
o Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
o NonCommercial — You may not use the material for commercial purposes.
o ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.
How to cite this thesis
Surname, Initial(s). (2012) Title of the thesis or dissertation. PhD. (Chemistry)/ M.Sc. (Physics)/ M.A. (Philosophy)/M.Com. (Finance) etc. [Unpublished]: University of Johannesburg. Retrieved from: https://ujdigispace.uj.ac.za (Accessed: Date).
The FirstRand Founders’ Story: Exploring Synergistic Relationships
by
CHRISTEL FOURIE
A thesis submitted in fulfillment for the Degree of Doctor in Philosophiae
in
Industrial Psychology
Department of Industrial Psychology and People Management Faculty of Management
UNIVERSITY OF JOHANNESBURG
Promoter: Prof J. S. Uys
2016
DECLARATION
I certify that the thesis submitted by me for the degree Doctor in Philosophiae (Industrial Psychology) at the University of Johannesburg is my independent work and has not been submitted by me for a degree at another university.
i DEDICATION
I dedicate this study to my promoter
Prof J. S. Uys
(1945-2015)
Thank you, Professor Koos Uys, for being a central figure in my life over several years. To call you only my promoter does not do you justice. It is because of your inspiration, commitment and kindness that I have been able to have this thesis see the light. I am truly grateful for everything that you ploughed into this journey. Working with you has been a privilege and one that I will treasure for a lifetime. There can only be one Koos Uys. Your work will stand. Your legacy lives in the people that you helped to shape. You are loved and missed. Rest in peace.
ii ACKNOWLEDGEMENTS
I give thanks for God’s grace and comfort in times of difficulty and joy and am humbled by the talents I have been blessed with, through which I can do good with in this life.
To my promoter, Professor Koos Uys, the words of this story lived in our heads and hearts for a long time. I am deeply grateful for your guidance, compassion and devotion as we walked this journey together. Thank you for not faltering in your belief in me. It is a tremendous gift.
To my husband, Gerhard, it is hard to put my gratitude into words. This journey was not mine alone. I thank you for unconditional support at every turn with words from Elizabeth Barrett Browning’s Sonnet 43: “How do I love thee? Let me count the ways.”
To six-year old Nina, who came into our lives when we were losing hope of a child, you have altered life for the better. You test me and you teach me. A ginormous thank you for helping Mamma1 to finish her book.
I am so grateful to my parents, Johan and Magdaleen Lötter, who have only ever encouraged and supported me. You always provide a loving home and from you I learnt the value of hard work.
To my sister Marlise Sharrock, family and dear friends, I am thankful for your understanding and the joy you bring to my life. To Carolin Burghardt and Charmaine Young, two strangers who became friends in a foreign land, I thank you for tirelessly cheering me on.
I would like to acknowledge FirstRand for presenting a research case like no other. I am indebted to Dr Francois Hugo for his vital support, ear and for being a genteel person. Every encounter is a master class. A sincere thank you to the founders, Laurie Dippenaar, GT Ferreira and Paul Harris, who generously shared their views, intellect, humour and light years of experience with me. My deep appreciation extends to the FirstRand participants for contributing rich perspectives with enthusiasm. Every interaction was truly exceptional. Thank you to Melanie Kleinhans (Investor Relations)
3 for providing assistance with corporate information. Whilst the participants’ narratives form the backbone of this thesis, the interpretation and presentation thereof is the author’s own and does not necessarily reflect the views of FirstRand.
Thank you to Gail Pearman, Tia Pienaar and Heather Graz who assisted at different points with editorial improvements. Heartfelt thanks for your support that stretched far beyond bringing a “can do” attitude and fresh pairs of eyes to the text.
I would like to acknowledge and express my gratitude to the staff and those associated with the Department of Industrial Psychology and People Management and the Faculty of Management. Thank you in particular to Lorinda Landman, Yvonne Geleta, Fozia Kasoojee, Prof Freddie Crous and Prof Willem Schurink for assisting me in special ways.
4 ABSTRACT
The study explores and describes the FirstRand founders’ efforts and influence in how a business success story unfolded. The research is driven by a desire to understand what made this story. FirstRand is one of South Africa’s largest and foremost financial services groups. The group is made up of world-class companies such as Rand Merchant Bank, First National Bank and WesBank. Hallmarks of all its companies, present and past, include a track record of innovation, strong values and an owner- manager philosophy. The group’s entrepreneurial history can be traced back to 1977 and the founding partnership of GT Ferreira, Laurie Dippenaar and Paul Harris. Over several decades the founders, together with a stable management team, built the group through a series of strategic acquisitions and mergers.
The research question was formulated as: What did the three founders contribute individually and collectively to FirstRand’s success? Accordingly, a qualitative mode of enquiry was adopted and a case study design applied. The data were collected through semi-structured interviews with the founders and key role players such as chief executives, supplemented with other data sources. Data were analysed using narrative analysis. The goal was to describe the research setting comprehensively so as to enable readers to see the case study as the writing of history.
The researcher’s insights clustered into four main interpretation themes: firstly, the founders’ partnership and complementarity as a success factor, secondly, how leadership worked in the founders’ eyes, thirdly, the founder-leaders as architects of culture formation and fourthly, how the founders created the conditions for emergence. What these insights mean was explored in the section on sensemaking by drawing links to theory that offer plausible perspectives on the FirstRand story.
The study’s findings are relevant in revealing theories-in-use from three of the most highly regarded business leaders. There is no similar example to be found. The study’s key contribution is of a theoretical nature. The researcher’s overall impressions point to the founders having contributed a significant leadership and culture perspective that was lived and time-tested over more than three decades. Herein lie the true value-add and uniquely original contribution from this study. In addition several practical and life lessons came to the fore with possible application to readers’ own situations. The
5 study’s contribution to expanding the current body of knowledge about applied leadership and organisational culture as a driver of business results contain potential points of interests for a wide audience.
6
TABLE OF CONTENTS Page
DECLARATION i DEDICATION ii ACKNOWLEDGEMENTS iii ABSTRACT v TABLE OF CONTENTS vii LIST OF FIGURES xvi GLOSSARY xvii PROLOGUE xix
PART 1: PURPOSE AND PLANNING 1 Chapter 1: Introduction and Background 1 Introduction 1 Background 1 Why is this story worth telling? 3 Problem statement 5 Research question 6 What stirred my interest in the FirstRand story? 7 The story of the thesis 8 Committing to the study 9 The research context 10 Gaining access 10 FirstRand’s interest in the study 11 Affiliation 11 Anticipated contribution of the study 12 How the study is organised 14 Editorial notes 14 Conclusion 16
Chapter 2: Research Design 17 Introduction 17 Research approach 17 Philosophical assumptions 17 Ontology 18
vii
Epistemology 18 Different ways of inquiring 20 The use of theory and literature review 20 Research method 21 Interpretive case study 21 Unit of analysis 23 Data collection 24 Interviews as main method 24 Additional sources 25 Sampling procedure 25 Who did I involve? 26 Special circumstances at the time of interviews 27 Recording of data 28 Narrative analysis 29 Thematic data analysis 30 Reporting the case study 31 My responsibility as researcher 31 Strategies to enhance the quality of research 32 Difficulties in the study 34
PART 2: THE DATA 36 Chapter 3: The Company 36 Introduction 36 Who is FirstRand and how did it come about? 36 Group history at a glance 37 Rand Consolidated Investments 37 Rand Merchant Bank 38 Momentum 38 Discovery 39 OUTsurance 40 The formation of FirstRand 41 First National Bank 41 WesBank 41 Black Economic Empowerment deal 42 The founders prepare to exit 42
Sizwe Nxasana takes over as CEO 43 Unbundling of Momentum 43 Ashburton Investments 43 CEO Sizwe Nxasana to step down 44 This organisation excites 44 Perspectives on the group and its founders 46 Conclusion 48
Chapter 4: The Founding Partnership 49 Introduction 49 How the partnership formed 50 Handpicking partners 52 The founders’ mindset 53 Conclusion and interpretation 56
Chapter 5: The Founders 58 Introduction 58 GT Ferreira 58 On meeting GT 59 In prime of life at 60 60 Organisational culture is a difficult concept 61 Analogies for business 62 Leadership succession a perpetual relay 63 Work harder than the competition 66 Mischievous and a skilled diplomat 66 A strategic perspective and critical gaze 67 In closing 68 Laurie Dippenaar 69 On meeting Laurie 69 Entrepreneurs start young 71 Honesty and trust 72 Best business brain and intuition 73 An accountant by training not by attitude 74 Laurie’s logic 75 Laurie the storyteller 76
Enormous energy 77 As a boss 78 A love for newspapers 79 A leader who takes the right decisions not for own gain 80 A family man 81 Reminiscent of Warren Buffet 81 Highlights 82 In closing 83 Paul Harris 84 On meeting Paul 85 Can I call you Paul? 87 How you are naturally 87 A lot came about intuitively 88 A good innings at RMB 89 Paul inspires 89 It is not all our own doing 90 His big loves 90 The dealmaker 91 From hustlers to grey haired men 92 In closing 93 Pat Goss 93 The combination of the founders 95 Three different individuals 95 We are similar people 96 The complementary effect 100 The combination between Laurie and GT 102 The cohesion was stronger than the conflict 102 Their lives became interwoven 104 A bit of luck 104 The secret behind the founders’ success 105 Conclusion and interpretation 106
Chapter 6: Rand Consolidated Investments 107 Introduction 107 Started with pocket money 107
Choose a name with gravitas 108 The first photocopying machine 109 A secretary and three files 109 Humble beginnings is where we came from 110 RCI starts to make respectable money 112 The legacy of the RCI phase 113 In closing 115
Chapter 7: Rand Merchant Bank 116 Introduction 116 A promising marriage 116 GT as the first chief executive 119 The founders made an effort with staff 120 Take the wheel of this ship and steer 122 GT’s leadership style 122 The decision to get shareholders in 124 Traditions that became entrenched in RMB culture 126 Traditional values. Innovative ideas. 126 The BSD award 126 RMB’s Book of Rules 126 The annual RMB conference 127 Laurie Dippenaar as chief executive 127 GT retires from active duty 129 Paul Harris as chief executive 129 Michael Phaff as chief executive 131 What is said about the RMB environment? 132 Growing larger has an effect on a small company culture 133 RMB develops into a talent brand 134 Culture fit is very important 134 Conclusion and interpretation 135
Chapter 8: Momentum 137 Introduction 137 The founders’ roles in the early 1990s 138 Momentum at the time of the take over 139
Laurie Dippenaar’s exceptional leadership 141 Hillie Meyer’s role in changing the culture 144 What changes took place in the business? 146 The cultural transformation 148 Use of first names and dress code 148 Looking at things differently 150 How the culture was experienced 153 Allowance for differences 153 It is not always comfortable for a leader 154 People loved working here 154 Vying for the strongest cultural roots 155 The vehicle to later list FirstRand 156 Company successes and culture in 2008 156 Conclusion and interpretation 157
Chapter 9: First National Bank 159 Introduction 159 The context of the 1990s 159 The challenge 161 Turning bankers into business people 163 FNB before the merger 164 Not adept enough to cater for the future 164 Changes underway and stopped during the merger 165 The founders do not care for bureaucracy 166 “Grin and bear it” 167 Getting to work on the turnaround 168 Profit centres and chunking 169 Decentralised owner-managed with some centralisation 170 A mission to bring in more professionals 170 It is your business. Manage it. 171 The FNB culture 172 Essentially about caring 172 Merit, respect and diversity 173 We work here because of the culture 174 Culture does not live in one single person 174
xii Leaders set the example and help people achieve 175 Every company in the group has its own culture 175 Towards a more performance-orientated culture 176 “Care & Growth” strategy 178 Impressions of the founders 178 “Die Kopdokter” 179 Conclusion and interpretation 180
Chapter 10: The formation of FirstRand 182 Introduction 182 What came about in this phase? 183 How the FirstRand philosophy came about 183 A centre and decentralised brands 185 What stands out about the FirstRand philosophy? 185 The Philosophy workshops 187 FirstRand culture 189 A FirstRand culture does not really exist 189 A performance culture 190 People are given space and informality 191 Culture custodians and culture is embedded 191 10 Years of FirstRand 192 The founders’ influence 194 Conclusion and interpretation 195
PART 3: INTERPRETATION AND SENSEMAKING 197 Chapter 11: Interpretation 197 Introduction 197 Theme one: The three founders’ influence 197 Sub-theme 1: Intent 198 Driving forces 198 Inherently entrepreneurs 200 Magic moments and what makes each founder tick? 201 Sub-theme 2: A specific approach to business 202 Sub-theme 3: The founders’ values 204
Sub-theme 4: The combination of the three 206 Theme two: Leadership 207 Sub-theme 1: The founders understood the context 208 Sub-theme 2: How leadership worked in the founders’ eyes 210 Sub-theme 3: These leaders took followers with them 213 Sub-theme 4: How we choose our leaders 214 Succession 214 How do you keep exceptional leaders engaged? 215 Theme three: Culture 216 Sub-theme 1: How culture unfolded 216 Sub-theme 2: Culture fit 218 We look for a certain kind of person 218 Sub-theme 3: How were successes celebrated? 219 Sub-theme 4: How did it work in times of failure or mistakes? 220 Theme four: Creating conditions for FirstRand to emerge 221 Sub-theme 1: “It happened” 222 Sub-theme 2: Complexity and ambiguity did not derail 223 Sub-theme 3: The FirstRand story cannot be repeated 223 Conclusion 224
Chapter 12: Sensemaking 225 Introduction 225 A perspective on the secrets to FirstRand’s success 225 What role did culture play? 227 A developmental view 227 Defining and observing elements of culture 228 How does culture begin? 230 How culture functions 231 Culture evolves 232 Cultural marriages are hard 234 What role did leadership play? 236 There are natural processes at work 237 Learning from the quantum world 237 Participation and organisational intelligence 239 Ownership describes emotional investment of employees 240
Acknowledge basic human needs 241 Leaders entrain followers 243 Synergistic relationships 244 Emergence and the FirstRand story 248 Higher-order complexity arising out of chaos 249 How emergence behaves 249 It takes time 250 Impressions of emergence at work 250 An example of strong emergence 254 Towards an integrated perspective 255 It did not play out apart 256 In closing 257
Chapter 13: Conclusion 259 Introduction 259 The founders’ legacy 259 Overall impressions of the study’s contributions 259 Theoretical and practical contributions 261 Limitations of the study 264 Suggestions for further research 265 Final thoughts on the founders 266 In closing 267
REFERENCES 269 FOOTNOTES 275 EPILOGUE 276
LIST OF FIGURES
Figure 1. Historical timeline 38
Figure 2. FirstRand adjusted share price shows significant outperformance 45
Figure 3. GT Ferreira 58
Figure 4. Laurie Dippenaar 70
Figure 5. Paul Harris 85
Figure 6. Pat Goss 94
Figure 7. Then and now 97
Figure 8. The RCI milestone 107
Figure 9. The first strategic transaction 116
Figure 10. RMB chief executives (CEOs) 116
Figure 11. The second strategic transaction 137
Figure 12. FNB – The third strategic transaction 159
Figure 13. Creating FirstRand 182
viiix16iiixxixi
Figure 14. A unique corporate structure in 2007 188
Figure 15. Nina’s drawing 278
Figure 16. Zozoji temple, Tokyo, June 2013 283
viiix17iiixxixi GLOSSARY
Company names Abbreviation Description FirstRand A listed South African financial services group made up of a number of leading financial services franchises FirstRand Limited FSR FirstRand’s listing on the Johannesburg Stock Exchange (JSE) FirstRand Bank Limited FirstRand Refers to the banking interests of the group Bank Ltd Rand ConsoIidated RCI The original business started by the founders as a small Investments financial structuring house Rand Merchant Bank RMB A leading merchant bank rated as a top franchise
Rand Merchant Bank RMBH or A holding group with RMB as one of its subsidiaries Holdings RMB Holdings Momentum or A life insurer taken over by the founders and RMBH Momentum Life Discovery DSY An industry leading specialist health insurer First National Bank FNB The retail banking arm that is rated as the most innovative bank WesBank South Africa’s largest vehicle and asset financier OUTsurance A direct, short-term insurance company that is a market leader Ashburton Investments The asset and investment management business Rand Merchant RMIH The holding group for Discovery, Momentum and Insurance Holdings OUTsurance since unbundling from FirstRand MMI MMI Created through the merger between Momentum and
MMI Holdings MMIH Metropolitan Insurance
Abbreviations Description GT Founder G. T. Ferreira is known as GT Exco Executive committee eBucks An innovative customer loyalty reward programme ROE Return on equity BEE Black Economic Empowerment Market cap Market capitalisation CE or CEO Chief executive or chief executive officer (used interchangeably) CFO Chief financial officer
xvii
MD Managing director IDC Industrial Development Corporation
Terms Meaning in FirstRand context The founders GT Ferreira, Laurie Dippenaar and Paul Harris, are also referred to as founder-owners. External parties tend to refer to co-founders. FirstRand’s companies In the present: RMB, FNB, WesBank and Ashburton Investments. Interchangeable terms: divisions, branches, independent brands, operations and business units. Professional managers The next generation of leaders who are not one of the group’s founders. FirstRand brand CEOs Also known as group leaders. “The Queen” The name by which the founders’ first appointee, Anneke van Zyl, became known in RMB. “Die Kopdokter” The term used to refer to the group’s senior psychologist Dr Francois Hugo. An English equivalent is not used. FirstRand philosophy The guiding business philosophy that binds all the group’s companies. Philosophy Session or An event hosted by the CEO and other senior leaders in which the workshop guiding principles of the group are explained to every new member. Owner-manager A core principle of the FirstRand philosophy, run the business as if was your own. What your mother taught The phrase refers to taken for granted values with non-negotiables you including honesty, respect and trust. Profit centres Breaking the business up into small units. Robust debate Debating an issue comprehensively before decisions are made. Business case The only criteria in decision-making. The business case prevails over emotion and politics. Centre In FirstRand’s federal model a small centre provide the broad framework for strategy. Decentralised and empowered teams implement and run their own businesses. Culture Refers to corporate culture and include as elements: entrepreneurial, innovation, owner-manager and strong values, evident in all FirstRand’s companies. In addition, each brand or company has a strong and distinctive culture. Traditional Values. RMB’s pay off line that epitomises the soul of the corporate culture Innovative Ideas. according to the founders.
18 PROLOGUE
In 1977 three young entrepreneurs considered the South African landscape of their time and felt optimistic enough to start their own business. A year had passed since the Soweto Youth Uprisings. It was a time of profound activism, political turmoil and uncertainty. Many people were leaving local shores, for different reasons. Yet three entrepreneurs were not deterred and in a move that was to become their hallmark, spotted opportunities in previously uncharted waters.
It took one man with a novel idea to turn thought into action. In kick-starting a series of events, he took his big idea to a friend who could be trusted. This friend in turn, roped in a third man who could be trusted and harboured thoughts of his own with promising implications in financial services. These entrepreneurs were fired up by the goal of starting a small business to make money and seeing it survive. The initial three partners, GT Ferreira, Laurie Dippenaar and Pat Goss trusted their instincts. A few months into the partnership, Pat was called away and Paul Harris, another friend, was called upon to take his place.
It is from grassroots beginnings that this trio grew their start-up, steadily yet aggressively. In those days, conglomerates largely ran corporate South Africa (SA). There was little choice other than to be more innovative than the competition. These focused businessmen ran their small business like a proper company from the start and in ways that came naturally to them. The success of the first venture paved the way. What follows is the story of how the three-man band of GT, Laurie and Paul, together with the many like-minded people and talented leaders they surrounded themselves with for more than three decades, built the corporate giant that is FirstRand. Through a combination of strategic business transactions, enabling conditions and by doing business in FirstRand’s signature way, the founders built far more than what they set out to do.
Some years ago the promoter, Professor Uys realised that the remarkable story of these entrepreneurs offered an ideal opportunity for doctoral research. As a result of his vision, passion and leadership this dream eventually became a reality.
19 PART 1: PURPOSE AND PLANNING
CHAPTER 1: INTRODUCTION AND BACKGROUND
Introduction
My doctoral study tells a story, the FirstRand story from the angle that it is hardly possible to consider how this group’s story unfolded without considering the prominent influence of its founders. My thesis is therefore also the FirstRand founders’ story. Herein lies the key to what this study is about. The chapter opens with an orientating background on this mega financial services entity. My perspective as to why this business’ story is worth telling leads to a description of the problem statement and the research question that guides the investigation. Thereafter I describe what stirred my interest in this study and touch on the background to the research topic, which is a remarkable story in its own right. Aspects pertaining to the organisation as research context and the anticipated contributions of this study are incorporated. Finally I outline how the thesis is organised and point out some editorial aspects.
Background
The FirstRand story is a story about the rise of a business empire. It is the extraordinary tale of a trio of entrepreneurs, who founded a first successful start-up, Rand Consolidated Investments (RCI). They then merged this successfully with a fledgling merchant bank and grew Rand Merchant Bank (RMB) into a market leader. Next came a leap into unknown territory with the acquisition of a listed company, the life insurer Momentum Life. Through a reverse takeover, this business underwent a dramatic turnaround and culture transformation. Along the way the three entrepreneurs supported and guided two new innovative start-ups off to the best possible start, Discovery and OUTsurance, both pioneers in their respective industries. The next very big transaction was a game-changer. It entailed a risky merger with the country’s oldest retail bank, First National Bank (FNB), dwarfing the size of their other businesses and operating in vastly different ways to the founders’ signature way of work. The FNB merger was a massive challenge and yet one that paid off in an unprecedented way. The FNB merger coincided with the formation of FirstRand. This, in a nutshell, is how this group’s history unfolded. It is by no means all that happened in this complex story that
1 evolved over time. It is the intertwined story of a business that was built from the ground up and its initial creators.
The three founders of the original business that kick-started the organisational growth path, GT Ferreira, Laurie Dippenaar and Paul Harris, are collectively credited for how this group developed:
There was a time when the three old men of FirstRand were young hustlers with a little experience, big ideas and a few connections. The company that now includes many household names in financial services grew out of the three-man band partially thanks to serendipity, and partially because of their defensive strategy. Building big was never the plan, it just sort of happened (Fischer- French, 2005, p. 39).
There can be no doubt that FirstRand is a South African business success story. The group’s expansion strategy has seen it grow into the largest financial services group in Africa (see http://www.rmb.co.za/aboutGlance.asp). Its success is an aggregate of the success of a number of strong independent business brands, each taking a leading position in its particular market segment. The views of business peers, financial analysts and journalists coalesce in recognition of this enterprise as a success story. Internally, the founders, past and present leadership, and employees across the group’s companies take great pride in being part of this organisation.
Over time the likes of Momentum and OUTsurance in the insurance sector have loosened ties through unbundling. In the present FirstRand’s portfolio consists of four well-known business brands or franchises, namely FNB, RMB, WesBank and Ashburton Investments. A corporate overview is presented in Chapter 3, which includes a timeline on how the group’s history unfolded. The end result is a successful financial services group, but it is not where the story started. What developed into a mighty group grew from humble beginnings. From a small nucleus of three entrepreneurs and a modest investment, this organisational story developed. Three people, the founders, did something remarkable together. These founder-owners took the lead at different times and steered the business that grew underneath them, in different roles, for more than 30 years. The founders’ story is not a rags-to-riches story, but one that has the term “self-made” written all over it.
2 The founders’ story encapsulates a total process that was initiated, conceptualised, planned, implemented and concluded, when they started taking their leave from executive roles at different exit points, up until 2010. Founder, Paul Harris, handed over the reins as group chief executive officer (CEO) to his successor, Sizwe Nxasana, and a next generation of leaders to steer the organisation on its continuing success path. The founders remain involved to varying degrees through representation on the group’s boards and structures. Continuity is evident with Laurie Dippenaar serving as non- executive chairman. The founders leave a significant legacy for this group.
Why the story is worth telling?
From my perspective there are many aspects that make this organisation’s story compelling and worth telling. I highlight only selected aspects. When thinking of examples in corporate SA where a company’s history unfolded over a period of more than three decades, born out of tripartite partnership, the pickings seem rather slim. This in itself makes the business story unique. The history of how the organisation was built makes for interesting reading. How this group evolved and how its diverse businesses came to live side by side is unlike the history of any other group. At different points in this federation of businesses’ history, different divisions competed head on. As a rule, this type of tension or competition does not sit comfortably in organisations.
FirstRand is regarded as one of the most innovative business groups and has an enviable innovation track record. This sets it apart. The group encourages creatively minded individuals, seeking out the mavericks. It is an organisation where high innovation and high integrity live side by side. This in itself requires specific qualities of its people - to be highly innovative and to act with high integrity; qualities that are not necessarily easily found in the right mix in the same person. It makes for an interesting combination: mavericks and bankers and is but one of the intriguing combinations that seem to be meshed into the fabric of this business. The organisational members of this group seem to work productively amidst what appear to be contradictions to outsiders’ eyes.
The group’s companies are renowned for its entrepreneurial spirit. On being asked to lift the veil on its stellar success, Laurie Dippenaar voiced it as follows:
3 The main secret of a group that prides itself on its entrepreneurial spirit is that it attracts the right people. We don’t have to go and find them…they come to us. And with good partners rooted in values, a company attracts opportunities (Van Zyl, 2005).
Over the years the organisation has been highly successful. It is not uncommon to wonder why it is that this group manages to do what others only talk about or aspire to. For all its admirable track record, its companies and divisions are not exempt from difficult operating conditions, setbacks and occasionally, getting things wrong. What intrigues is how the group deals with challenges such as these. In SA and the world over, where businesses buckle and become casualties, this financial services group seems to be a beacon of strength and light. It is an organisation that commands the highest respect. Leadership is felt and lived in a particular way. It is an organisation that holds high expectations of its people. This business’ view of people is rooted in the belief that people want to accept responsibility, thereby freeing them from the clutter and confines of bureaucratic rules. At the heart of the story is an organisation that goes through change to the point that it renews itself continuously. The phrase, change is the only constant, is a cliché, but in this case, it rings true. This perpetual progress is one of the aspects that enthuses and keeps employees glued to it.
What caught my attention are two aspects that the founders, over the years, spoke of with consistency. The first has to do with the group’s corporate culture, which has been described as a winning culture. In this organisation, there is much ado about culture. Laurie Dippenaar is of the firm belief that the group’s success is directly attributable to its enterprising culture. In his view: “This culture is the secret to our success…and I hope it continues to exist for a long time and that future generations will be able to maintain it” (Van Zyl, 2005). The second aspect, raised by GT Ferreira and repeatedly reiterated by his fellow founders, emphasises that: “You must understand that we have this fantastic team; we did not do this on our own” (Fischer-French, 2005, p. 40). Whenever asked about the secrets to their success, the founders extend credit to each other, and the many committed people who have been instrumental in co-building this group over many years.
The founders come across as incredulous that their small business started with pocket money, grew to such unexpected proportions and survived over many decades,
4 considering the number of business fatalities in the local financial landscape. When prompted on their personal roles in this success story, their responses speak of humility, often mixed with a hint of humour, as is evident from the following excerpt:
When the three talk about their history they are distinctly bemused by the success, and perhaps even a little embarrassed. They swap stories of employees who treat them with reverence, or businesspeople who react to their names….But, like proud fathers, the men are happy to take credit for the initial creation of the group that no longer needs them (Fischer-French, 2005, p. 40).
Problem statement
As stated in the beginning, my study tells a story. It therefore veers in a somewhat different direction to that of the traditional problem statement. My point of departure is that FirstRand is an example of a business that “works”. It is therefore a relevant context to study and warrants a closer look. The focus of my thesis is on how one small business, started by three entrepreneurs, developed into one of SA’s most successful business groups over a 30 year period. The founders’ business partnership is an exemplar partnership in South African business history and has endured over many years. Through the founders’ efforts and leadership they built a group consisting of several successful companies. This study is driven by the desire to understand what “made” this story. What made this business grow from humble beginnings into a financial services giant? In its broadest sense, my research has to do with developing an understanding of: “What happened here?” and “What allowed it to happen?”
The study’s title: “The FirstRand Founders’ Story: Exploring Synergistic Relationships” holds the key to what it is about. The first part, the FirstRand founders’ story, has been explored to some extent. The second part of the title introduces the notion of synergistic relationships. The phrase “the whole being more than the sum of its parts” is often heard in everyday life. Similarly, the phrase and variations on, “the combined effect being greater than the sum of its individual parts”, features in different scholarly disciplines. The word synergy is a universal occurrence in nature and human societies alike. Synergy in the context of organisational studies refers to the co-operation between, for instance, two organisations, achieving more than what could be achieved separately.
5 When something is synergistic, it means various parts are working together for a common goal or purpose to produce an enhanced result (https://www.vocabulary.com/ dictionary/synergistic). A further definition of the word synergistic sheds light on how people, groups or companies might be cooperating by adding, “…in a creative, innovative and productive manner” (http://www.collinsdictionary.com/dictionary/ english/synergistic). When musicians have played very well together, it might be spoken of as a synergistic symphony. The term synergetic, a synonym for synergistic, is often used to describe the effect of drugs or muscles working together so that the total effect is greater than the sum of two or more.
One definition put forward from the world of practice and management consulting, describes achieving a synergistic working relationship, as a powerful phenomenon to witness in action. “…Simply stated, operating synergistically means effective ‘teamwork’” (http://www.connerpartners.com/frameworks-and-processes/the- importance-of-synergy-during-transformational-change). Collectively the founders achieved far more than they imagined. The combined effect of these three leaders and their complementary strengths are crucial factors in how the story unfolded. The interpersonal dynamic in the partnership set the tone for an interorganisational dynamic that rippled out into the organisation. This is an important aspect in this study. As the title suggest, in this synergistic relationship, collaborative action amongst the founders resulted in an overall effect that was greater than the sum of what each founder could produce independently.
Research question
Research questions are central, whether they are pre-specified or whether they unfold during the particular project. They do five key things: firstly, they organise the project and give it direction, secondly, they delimit the project, showing its boundaries, thirdly, they keep the researcher focused, fourthly, they point to the data that will be needed and lastly, they provide a framework for writing up the project (Punch, 2005). The core of my investigation centres on the role of the three founders, the original leaders. I focus on the influence of these three people. Individually, they brought different skill sets and different temperaments to the founding partnership. Collectively, they happened to complement each other exceptionally well. The research question that guides my study is formulated as: What did the three founders contribute individually and collectively to
6 FirstRand’s success? In answering this question, I aim to provide a holistic and integrated perspective on this story.
What stirred my interest in the FirstRand story?
Firstly, I remember a comment from a radio show in 2006 that caught my attention and stayed with me. These were the words that stuck with me: “Twenty-three years ago, three men started a bank and the rest is history.” I found it an intriguing choice of words. The phrase came from award-winning financial journalist and business editor, Bruce Whitfield, presenting a well-known business programme on the South African radio station, Talk Radio 702. I was a regular listener to his programme, called The World @6, as I was often in the car stuck in traffic. The presenter was promoting an upcoming live radio interview with Laurie Dippenaar. That poignant line: “Twenty- three years ago, three men started a bank and the rest is history” nestled in my memory. I did not manage to listen to the actual interview, however I perfectly remembered this incidental remark. When the opportunity to work on the FirstRand story came along, it would be apt to say: “And the rest is history” borrowing Bruce Whitfield’s words.
A second strong influence came from reading a business article. While I read it only after the Talk Radio 702 broadcast, it dated from a few months earlier. In December 2005, the second edition of the business magazine, Maverick, hit the news stands. The magazine positioned itself with a strapline proclaiming to appeal to “people who can afford to think differently”. The cover page announced the lead story as: “Three men and their incidental empire”. It referred to the story of the three entrepreneurs who helped to grow FirstRand into a remarkable success story (Fischer-French, 2005). The history of how this group was built and the hand of its founders in doing so was described factually and presented in a style seemingly favoured by financial and investigative journalists, in a tone of wry amusement. The article made for a compelling read.
This particular issue of Maverick magazine opted for an unconventional move in magazine publishing. It appeared with three different front covers. Each of the three founders graced a third of the print-run and front cover. What prompted this unusual, and I suspect, costly tactic, is speculative. A group photo with all three possibly looked too crowded. They are after all, big men, if not in physique, in stature, business
7 reputation and personal net worth. Or was it a clever ploy for publicity on the magazine’s part and an attempt to live up to its maverick claims? Be it as it may, in my view, each of the three individuals can “carry” a magazine cover. A little ironically, Maverick magazine went out of print soon after. The world of print media was and remains in flux all round. It was, however, only a temporary silencing and the magazine soon switched to electronic form. The Daily Maverick now circulates to e- mail subscribers and still offers critical analysis and opinion pieces laced with a biting sense of humour.
Yet in answering the question of what brought me to this study, to be perfectly honest, this research project found me. It is a study that crossed my path at a time when I was on the lookout for a doctoral topic that intrigued me. In the advertising world, a creative concept is often discussed in terms of whether it has “multiple legs” to stand on. I was looking for a multi-faceted topic with multiple legs to stand on. I had yet to find a topic that gripped me sufficiently to sustain the effort over several years, as is the reality of a doctoral study.
The story of the thesis
When this project was first raised with me to consider for my doctoral research, it had already earned the working title of “The FirstRand Story”. This research topic, in fact has a textured history as two earlier attempts at bringing it to life, turned out to be unsuccessful. Some years ago the promoter from the University of Johannesburg (UJ) was approached by a student wanting to study the role and influence of the founders of Rand Consolidated Investments (RCI), the predecessor to FirstRand. This student was one of the first appointees of the founders at RCI. She spoke about the memorable experiences and the challenges in establishing the original business with very little money, yet marked by the highest professionalism. Her descriptions made a lasting impression on Professor Uys. It was a business story worthy of being documented. Sadly the research came to an abrupt end. At this point, the promoter remained convinced of the inherent value of this topic. A second candidate came to the fore and the project was rekindled. One year into the project, a change in personal circumstances unfortunately made it unfeasible for the candidate to continue.
8 Unwilling to see the topic that had become part of the Department for Industrial Psychology and People Management (IPPM) at UJ go unexplored, the promoter “cornered” me to consider this as a topic for my research. I had been assisting him as a part-time lecturer and still remember the exact spot where we stood on the campus during that first informal discussion. With his extensive experience in organisational practice and academia, and having successfully supervised numerous masters and doctoral candidates, it felt as if I was in safe hands. It was a dream of Professor Uys to launch a study into this noteworthy business story. Over the years his colleagues have witnessed him tirelessly champion this study. I credit my promoter for his conviction and committed guidance in turning the FirstRand story as a research project, into a reality.
Committing to the study
I took this topic on as a doctoral study as it was a big opportunity and too challenging to turn down. The opportunity to interact with business leaders of the founders’ reputation and other executives was both a privilege and a daunting task. I realised at the commitment stage that besides the academic challenge that comes with this study, I would be faced with a huge responsibility. This is a high profile group and to do the business story intertwined with the founders’ story justice, would be a big task. To find my voice and offer my perspective on this multi-faceted story turned out to be no small feat.
Researchers are eager to study high-performing organisations and leaders who sustain their performance over time. There are many lenses through which this topic can be investigated. Different scholarly disciplines will be interested in different angles, for example entrepreneurship, business strategy, innovation, mergers and acquisitions and organisational change, to name but a few. Two clear angles grabbed my attention in the beginning. The one had to do with the emphasis placed on the group’s corporate culture, acknowledged as one of the key secrets in its success.
The other angle had to do with the founders’ prominent leadership at the helm of this dynamic entity. At different points in my career I delved into the scholarly work of Edgar Schein. One of the central tenants of Schein’s perspective on corporate culture is that culture and leadership are essentially two sides of a coin (Schein, 2010). This view
9 has always held a strong appeal for me. It was a hunch at the start that this perspective could be part of what informs sensemaking later on. I intuitively felt that the interrelatedness of the two constructs of leadership and organisational culture, both of interest to me, and a series of events from my personal and professional life had led me to this research journey.
The research context
Gaining access
The factor that facilitated access to the organisation was without a doubt the involvement and support of founder, Laurie Dippenaar, from the outset. He was instrumental in gaining entry and securing endorsement for the study. On initial approach, he listened intently. The proposed idea sparked his interest. Before committing he said, “Give me a week. I just want to talk to the other two founders.” It did not take a week to receive word back from him. Within days he phoned to say that the three of them were in agreement and gave their support for the research project to proceed. Laurie had one specific request to add and that was: “Involve our senior psychologist, Francois Hugo”.
This request was a welcome one, in fact, it was crucial in operationalising this study. Francois’ involvement made a considerable difference in elevating the profile and level of access to the top leadership tier. With a distinguished career in FirstRand spanning more than twenty years, he knew this group inside out. My conversations with him were positive from the start, as were the numerous discussions that followed over the years. Tapping into his vast experience and insight, helped to raise the bar significantly.
In one of our earliest meetings, Francois told me a story that has stayed with me all along. He told me the tale of an African tribe who refused to be photographed. The tribe was apparently concerned that if a photograph was taken of them, it might steal their soul (F. Hugo, personal communication, 21 January 2008). What I read into this story was that trying to uncover the source of success was a process fraught with perils. While success, personal and organisational, can be fleeting and an ever-moving base, I could hardly steal the spirit or “soul” that infuses this group’s success. And yet, I never forgot this story while working on the study.
10 FirstRand’s interest in the study
This group of companies is firmly in the public eye and there is no shortage on what has been written on it. Its history, growth trajectory, innovations track record, financial performance and the views of its leaders, receive ongoing coverage. Over the years the group and its individual businesses have received numerous accolades and awards. Similarly, the founders’ outstanding achievements have been recognised within the organisation and publically by industry peers and the business community. The founders have been the recipients of numerous business and leadership awards. The appeal of a study such as this is therefore not motivated by a need for personal validation.
When the idea for the research was first presented, what struck a cord with the founders was to have the FirstRand story documented in a scientific manner. They expressed the view that the research could make an important contribution to the group as an empirical writing up of its history. Over the years the founders have demonstrated their openness to feedback and alternative viewpoints. Even with the founders retired as executives, part of the legacy they have built is that this organisation’s leaders welcome opportunities where they can learn something. A study such as this potentially held such an appeal.
In my encounters with the founders, my impression was that each one was interested in the idea behind the research and ever so slightly curious as to what conclusions might surface at the end of the project. GT curiously quizzed whether I would conclude by saying: “whether we went about things in the correct way” (G. Ferreira, personal communication, 16 May 2008). Not that it was up to me to conclude that this vast and profitable business built over time, was a success. That had already been established. I explained that my interest was not in writing a financial story, but what I viewed as a unique business and leadership story.
Affiliation
In terms of affiliation, I am neither a FirstRand employee, nor did I receive financial funding from it. Some years before, in 2005, I gained a degree of exposure to FNB when I was co-opted to a HR project team. Whilst this exposure afforded me a certain
11 vantage point, the scope of work was different and I was not privy to the top leadership tier, as was the case during this research project. In light of the study, the fact that I am not part of the particular context I studied might hold the advantage in that I view the organisation and its leaders with fresh eyes.
One downside of not being located within the research context might be that my grasp of the complexity of the group’s history, how employees experience life in this organisation and the challenges to its leaders might not be as comprehensive. There is also the chance of depicting this business and its founders in an overly positive way because I am not part of it. These are realities and potential blind spots that qualitative researchers are familiar with and pay attention to. However through this study I see an indisputable opportunity to look at the FirstRand story with fresh eyes and highlight, as an outsider, a unique perspective.
Anticipated contribution of the study
What does this study offer the professional community, scholars and practitioners? In the broadest sense, documenting how the three founders together with the organisation’s management, have built FirstRand into one of SA’s foremost financial services groups, potentially contains many points of interest. The role of the founders in laying the tracks for FirstRand to emerge as a success story, presents an interesting case and in my view, tells us something new. The group and its divisions have been in demand in generating topics and as examples of best practice in a number of teaching case studies. However, to my knowledge, the business story has not been studied in an explorative- descriptive way or with a similar research question in mind, as I present in this thesis.
Back in 2006, FirstRand observed that much of the existing writing on leadership seemed to be imported, with little homegrown South African material on leadership (FirstRand Philosophy workshop, 2007). This in itself makes a case for more work to be done in writing about local organisational successes and leadership stories. Through this study I hope to make a modest contribution through an in-depth qualitative exploration of a proudly South African business that works.
It is my contention that this study makes a theoretical contribution and is relevant in revealing theories-in-use as it manifested in the founders’ distinctive and time-tested
12 leadership perspective. The founders often tell of how they trusted their instincts, how things evolved naturally, and how their leadership views were not copied from textbooks. Through the way that the founders practically lived and demonstrated leadership over several decades, many of their sayings filled with common sense were instilled in other leaders and became absorbed in the organisational system. A common sense saying or an old adage functions like a theory in how to negotiate life (Hatch, 2006). In this way, the founders developed their own theories of leadership, which I bring to the fore and theoretically, constitutes an original contribution.
A further theoretical contribution is that of using and applying the work of other leading scholars. The data and narratives pointed me to certain theories that shed light in making sense of the insights from the FirstRand story. Seeing how the founders’ theories-in-use and other dynamics from the case study find confirmation in other scholars’ conceptualisation in domains such as: organisational culture; leadership and organisational thinking that draws on learning from the natural world; and an abstract construct, emergence, constitute a further attempt at expanding on current knowledge.
The anticipated practical contributions of this study, likely to be of interest to organisational scholars, leaders and entrepreneurs, include confirmation of and expand on our understanding of for instance: The role that founders play in the formative phases; how a unique view and demonstration of leadership sets the tone and create the conditions for organisational performance; how founders shape culture and how a winning culture enables business results; and the importance of complementary skills in bringing about superior teamwork.
In addition to the envisaged value add, there are lessons on cultivating an entrepreneurial spirit, innovation and an owner-manager mindset in the descriptions of the chronology of the group’s development. There are also lessons envisaged from other of the organisation’s senior executives who participated in the interviews, whose perspectives cannot be overlooked.
As a qualitative case study this research does not purport to have transferability to, for instance, other financial services groups in or beyond SA. However, I envisage that the study’s key contributions and its potential benefits are likely to go beyond the FirstRand context and be of use to a wide audience of business and organisational scholars.
13 How the study is organised
I present the study in three parts. The present chapter followed by Chapter 2: Research design, constitutes Part 1: PURPOSE AND PLANNING. The main part and heart of the study is laid out in Part 2: THE DATA. It is informed predominantly by the narratives as seen through the eyes of selected participants, supplemented with other data sources. Part 2 opens with Chapter 3: The Company, which offers a corporate overview. Chapter 4: The Founding Partnership describes how the nucleus was formed. Chapter 5: The Founders introduces each founder and concludes with a glance at the combination of the three.
Next I shift to telling the FirstRand business story in a chronological way. Chapter 6: Rand Consolidated Investments describes the marker event that is the formation of the founders’ original small business. Chapter 7: Rand Merchant Bank describes the next significant event and the merger between RCI and RMB. Chapter 8: Momentum tells the story of this company’s dramatic turnaround after the reverse takeover by RMB. Thereafter Chapter 9: First National Bank describes the boldest transaction and merger, which coincided with the formation of FirstRand, covered in Chapter 10. The latter covers aspects relevant at the time of formation up to the group’s 10th anniversary and the founders’ exit from executive roles. Chapters 3 to 10 form the core of the investigation as per the scoping boundaries for this study.
Part 3: INTERPRETATION AND SENSEMAKING opens with Chapter 11: Interpretation, which focuses on my strongest impressions from the data organised along main focus areas. In Chapter 12: Sensemaking, I ask the question: “What is the story here?” I introduce relevant theory that sheds light on what is revealed in the case study. In Chapter 13: Conclusion, I present my overall impressions and concluding thoughts. The thesis closes with an Epilogue, capturing something of the complexity of the academic journey and my personal story that played out in parallel.
Editorial notes
I round off with a brief clarification on certain approaches and style conventions applied in the thesis. As might be evident from this first chapter, I take the preference for the personal in writing, as is increasingly the case in contemporary qualitative work.
14 Narrative researchers often write in the first person, thus emphasising their own narrative action (Denzin & Lincoln, 2008). Further to that, in telling the story, the FirstRand business story, I often adopt use of the term “voice”. For example, “a FirstRand voice shared the perspective” to preface a point of view, a narrative or information shared. The use of the term “voice” might be unusual to some scholars or readers as it is typically used by researchers applying autoethnographic designs. As an alternative to voice, I make use of other terms like participants, colleagues, narrators and so forth. Similarly, for other frequently used terms such as “FirstRand”, I alternate word choices to cut back on repetition.
In the thesis I largely refer to the founders, senior leaders and other role players by their first names. It must be noted that this is done respectfully. The use of first names is a distinct feature at the heart of this organisation’s culture. Even if a more formal stance is often the convention in writing, the use of first names is in fitting with the tone of this study and storytelling in general. Further to this point, Laurie Dippenaar, emphasised that there is hardly anything he or any of the other participants can reveal that has not made it into the public domain. How to go about handling identifiable case material and participants’ identities and narratives, was a topic of much deliberation. Not opting for explicit anonymity lends to the credibility of the study. In some instances the use of composites was a feasible option.
In terms of the use of abbreviations, FirstRand has a complex structure and there are a multitude of abbreviations for companies with an equal number of variations, often used interchangeably. Taking into account that readers might not be as familiar with the abbreviated company names, some of these are written out in the early parts. However, to make it less cumbersome, I used the abbreviated form for the most part. A glossary is included in the beginning of the thesis for frequently used abbreviations and terms with specific meaning in the organisation. I noted discrepancies across sources on for instance job titles and made an effort to adopt a uniform approach. With a handful of interviews conducted in Afrikaans, the English translations for terms requiring translation are included as footnotes at the end of the thesis. From a stylistic perspective I have standardised on the use of “group” with a lower “g” for ease of reading, and similarly, “bank” even though capitalisation is the correct treatment in many instances. This approach fits with the treatment of these terms in corporate
15 communications. I adopted a modern British English convention in the write-up but have retained the spelling used by participants and authors in quoting their words.
Conclusion
In looking back, this chapter sets the scene for you, the reader. I made the point that the story of this successful South African group is intertwined with its founders’ story. The focus of the study is on the influence of the founders. The research question guiding the study is phrased as: What did the three founders contribute individually and collectively to FirstRand’s success? In an attempt to answer this question, I have adopted a specific implementation design, which is addressed in the next chapter.
16 CHAPTER 2: RESEARCH DESIGN
Introduction
To answer the research question, I opted for a qualitative approach that led me to the use of certain research methods. The nature of the investigation makes it more suitable to an inquiry that does not presuppose that there is an answer, is holistic in nature and allows for in-depth exploration. I begin with a brief insight into the underpinning philosophical assumptions. Following on, I outline how the research design led to an interpretive case study, how the design determined the empirical data needed, the data collection methods used and participant selection. Furthermore I outline how the data was analysed and how the chosen method informed my interpretations. I briefly discuss my responsibilities as researcher and strategies for ensuring quality research and round off with some inhibiting factors in the study. Myers (2009) notes that although the building blocks in conducting qualitative research are presented in a logical order, there is usually much iterative activity between them with the effect that, “…you can never plan everything perfectly from day 1” (p. 26).
Research approach
Qualitative research has grown in its acceptance across different science communities. I adopted this approach to gain a deeper understanding on a phenomenon as it occurs in FirstRand. Such a level of understanding is often lost when textual data are quantified (Kaplan & Maxwell, cited in Myers, 2009). One of the key benefits of qualitative research methods is that it allows a researcher to see and understand people’s motivations and the context within which decisions take place. Understanding people’s thoughts by talking to them or reading what they have written goes a long way towards explaining their actions.
Philosophical assumptions
Every research project is based on some philosophical assumptions about the nature of the world and how knowledge about the world can be obtained. As a point of departure I offer clarification on the research paradigm and the underlying assumptions on which I worked.
17 Ontology
The philosophical concept, ontology, aims to answer the question, “What is there in the world?” It refers to the study of reality. Ontological assumptions embrace all theories and methodological positions with several qualitative approaches being rooted in its core assumption, namely that reality is understood as “subjective” (Eriksson & Kovalainen, 2008). This means that ontology is based upon perceptions and experiences that may be different for each person, and change over time and context.
The division between “objectivism” and “subjectivism” is one aspect of ontology. The term “constructionism” is often used instead of subjectivism, to describe the social nature of reality. The objectivist view on ontology assumes that social reality has an existence independently of people and their actions, including that of researchers, an assumption associated with quantitative research. The subjectivist view on ontology, or constructionism, assumes that the reality for a researcher, such as myself, is an output of social and cognitive processes, “therefore, two realities alike cannot exist” (Eriksson & Kovalainen, 2008, p. 14).
In this study I looked at the world through the participants’ eyes – those of its founders, nominated executives and others. The ontological perspective of my research is that it is reality constructed through these participants’ involvement. I heard diverse perspectives gathered at a particular point in time. There is not going be another FirstRand story as seen exactly in this way. For instance, not everyone shared the same perspectives, or introduced the same topics and even when the same topics were raised, there were divergent views. My insight lies at a different place. I adopt the ontological approach that there is no fixed or established world-view. It fits with the position suggesting that there are multiple realities. Based on participants’ different perspectives, I made deductions, interpretations and in the end, I came to interpretations based on this is how it looks to me.
Epistemology
Ontology is closely related to epistemology and stems from the Greek word epistēmē, which means knowledge (Myers, 2009). It refers to a general set of assumptions about the best ways of inquiring into the nature of the world and is preoccupied with the
18 questions, “What is knowledge and what are the sources and limits of knowledge?” (Eriksson & Kovalainen, 2008). Similar to ontology, in epistemology there is also an objectivist and a subjectivist view. “According to the objective view in epistemology, it is possible that there exists a world that is external and theory neutral. According to the subjective epistemological view, no access to the external world beyond our own observations and interpretations is possible” (Eriksson & Kovalainen, 2008, p.14). Accepting that there are several directions through which epistemology can be defined, allows for the idea that whatever knowledge we produce in research, it is seldom based on a uniform idea of science and research. Instead, equally legitimate and different philosophically embedded views exist of knowing and inquiring into the world.
My role comes from constructivist and interpretivist epistemology and allows for knowledge as it is captured in the assumptions, knowledge and experience of the study’s participants. I hold the view that people create their own reality based on their perceptions of the world around them. This underlying research philosophy supports interpretive research and is underpinned by the belief that we need to reflect upon what we want to make sense of. In this study I report and reflect on what happened in this organisational story. The role I played during the research process was that of as a “detached knower”.
While several textbooks label all qualitative research as being interpretive it has become common practice to speak of research as falling within one of three paradigms: modern, interpretive, and post-modern. Eriksson and Kovalainen (2008) note that there are many forms of interpretivism and constructionism, but common to all of these is a concern with subjective and shared meanings. The background of interpretivism and constructionism is in hermeneutics and in phenomenology. Such researchers focus on the full complexity of human sensemaking as the situations emerge and assume that there are many possible interpretations of the same data, all of which are potentially meaningful. In this study I worked from an interpretive paradigm.
There are both weak and strong versions of social constructionism that differ in their views regarding the social construction of everything (Schwandt, cited in Eriksson & Kovalainen, 2008). Constructionist views on knowledge production are useful as they emphasise the close relationship between the researcher, the researched context,
19 interaction and understanding as basic tenets of research. My position is one of weak social constructionism.
Different ways of inquiring
There are two basic models of inquiry, namely “deduction” and “induction” in bringing forth scientific knowledge in social research. In deduction, theory is the first source of knowledge and research proceeds from theory, through hypothesis, to empirical analysis. A strict form is not necessarily suitable for qualitative research. Induction implies theories are outcomes of empirical research. When taking the relationship between theory and empirical results as inductive, one follows the logic of proceeding from empirical research to theoretical results. Pure induction is rare, or even impossible. Eriksson and Kovalainen (2008) state that in addition to these two extremes, some researchers prefer to apply what has become known as “abduction” in linking their research findings to theory. In terms of the logic of my research, I applied abduction by initially starting off inductively and then later on, in making sense of the findings and conclusions, I employed deductive reasoning.
The use of theory and literature review
Unique to the qualitative process, is to consider the extent to which theory and literature review should be used to guide the research process (Delport, Fouché & Schurink, 2011). “For quite some time qualitative researchers argued that existing literature should not be used before data were collected” (p. 298), with one position being, to “…avoid the literature altogether, and let the world of experience lead us directly” (p. 298). In contemporary qualitative inquiry researchers have come to value theory as an overarching perspective assisting in attempts to integrate various diverse findings and thoughts. Since the primary focus of such research is preoccupied with an examination and inquiry into meaning, theory can be helpful in guiding a growing sense of richness of meaning.
Related to this debate, is where best to utilise existing literature. In this study I did not rely on an in-depth literature review to formulate the research question, nor to refine it. I found the following observation useful “…readers (and listeners) want to be and ought to be engaged immediately with a sense of the problem you are addressing, rather than
20 first be subjected to a testimonial to how learned you have become” (Wolcott, cited in Delport et al., 2011). In case study design, the use of literature and theory is often varied. Theory might be completely absent from it, with a focus on a description of the case. In other instances, literature and theory are employed toward the end of a study after data collection. However, a literature review is relevant to place one’s research in context, to become familiar with the current state of knowledge and learn how other scholars have conceptualised on issues.
One of the reasons for embarking on the study was to offer an outsider’s perspective on an original business case. In this study I treated field data on its own terms. At the outset I consulted a varied base of literature on leadership and organisational theory. In ongoing exchanges with my promoter we considered at what point to incorporate theory, as to not contaminate insights. We discussed broad scholarly concepts that could shed light in sensemaking. Towards the end of data collection and the iterative process of analysis and write-up, I offer integration with a few prominent theories to put the empirical findings in context. As such, the timing of incorporating relevant literature is somewhat altered. A point of distinction in this study and a central argument throughout, is that the founders did not subscribe to theorising, even rejecting it in favour of a more intuitive approach. It is the construction of theories of their own, rooted in practice, that forms a focal point of the study.
Research method
In conducting an interpretive qualitative inquiry there is no singular way to go about it. The most commonly used research methods in business and management include action research, case study research, ethnography and grounded theory (Myers, 2009). In this study I opted for a case study method since this design allows the researcher to explore individuals, organisations and relationships, all of which are pertinent aspects in this investigation.
Interpretive case study
There seems to be no shortage of definitions for what a case study is. There are often also misconceptions about how a case study research contributes to evidence-based decision-making and professional practice. At its simplest, qualitative case studies
21 afford researchers opportunities to explore or describe a phenomenon within its context using a variety of data sources (Baxter & Jack, 2008).
Two leading authorities on case study methodology, Yin (2003) and Stake (1995), have contributed two distinct approaches. In business, a case study has an explicit organisational focus and as such, tells the story of that organisation. Both approaches seek to underpin the topic of interest in full so that the essence is revealed, but the methods employed, are quite different. Both Yin (2003) and Stake (1995) base their approach to case study on a constructivist paradigm, in that truth is socially constructed and dependent on one’s perspective. Therefore there are many points of entry into any given reality. Interpretative case studies generally attempt to understand phenomena through the meanings that people assign to them. The interpretivist/constructivist paradigm emphasises an iterative process of constructing the case study. One of the goals of such research is to offer a description that goes deep enough to aid analysis (Van Wynsberghe & Khan, 2007). The quality of interpretive case studies is defined in terms of the plausibility of the story and whether the overall argument is convincing (Myers, 2013).
The main advantage of case study research, especially in the business disciplines, is that it has high face validity. A well-crafted case study based on empirical research represents a real story that most researchers can identify with. This is especially true if the case is about a well-known organisation where there is familiarity with the company or its products. Such cases often capture contemporary stories and the issues that surface are likely to be of interest to and raise issues that other organisations also grapple with or have experience of (Myers, 2009).
In terms of disadvantages of case studies, the most relevant issues are: Firstly, there can be difficulty in deciding what are the most important issues to focus on, given the demands of a high volume of data. Secondly, case study research takes a long time, even for experienced researchers, as every step of the process takes time (Myers, 2009). The encouraging news is that interpretive case studies have become more accepted over the past decade and now make a reasonably regular appearance in top journals and conferences of most business disciplines (Myers, 2013).
22 The definition of case studies offered by the American Psychological Association (APA) recognises the difficulty faced by case study researchers in balancing ethical considerations with the need to provide sufficiently rich detail. The following extract illuminates this challenge: “…In writing case studies, authors carefully consider the balance between providing important illustrative material and using confidential case material responsibly” (Publication manual of the APA, 2010, p.11).
Unit of analysis
In case study research there are ongoing discussions about the relationship between the unit of analysis and the case itself (Van Wynsberghe & Khan, 2007). The case study cultivates a state of tension between the researcher’s unit of analysis and the iterative flow between the “case of” and its larger context, which is potentially limitless. A relevant question could be: Can the particular phenomenon being analysed, be separated from the broader phenomenon from which it stems? The reality is that a case study can become more refined as evidence continues to be gathered, regardless of how well the boundaries were drawn at the outset. The case study is a “coming to terms” with the unit of analysis, which is itself dependent on a number of considerations.
Yin (2003) and Stake (1995) use different taxonomies to describe a variety of case studies. Yin uses the terms: explanatory, exploratory, or descriptive and further differentiates between single, holistic and multiple-case studies. In turn, Stake distinguishes between intrinsic, instrumental, or collective case studies. In this study the boundaries have been defined and the case has been delineated as: The role of the founders in how this business story unfolded. Within this scope are the three major transactions through which this group was built and the period up until the founders’ retirement from executive roles as a further boundary. Within this business group there are multiple companies and each can be viewed as a case.
Whilst I endevour to explore and describe the case, I approach it as a collective case study with embedded units and for the sake of its intrinsic value (Stake’s approach). It allows the researcher to understand one unique case in all its particularity. Given how the case has been delineated, only selected companies in the group are included in scope and are viewed as embedded units. Collective case studies are similar in nature and description to Yin’s definition of a collective case (Baxter & Jack, 2008), but differ
23 from multiple-case studies where several cases are examined to understand similarities and differences. The unit of analysis is the three founders’ influence. It ties in with the research question: What did the three founders contribute individually and collectively to FirstRand’s success?
Data collection
The main data collection technique used was interviews, from which the narratives were derived, supplemented with the use of documents and one instance of observation of a significant organisational event.
Interviews as main method
According to Myers (2013) interviews are an excellent window into an organisation and particularly useful for finding out people’s motivations, and their rationale as to why they did certain things. It is possible to conduct a case study that is based almost entirely on a few interviews with key people. These key people represent diverse perspectives and are the people who know the most about the particular topic of interest in the organisation. I used semi-structured interviews which sit somewhere between structured and unstructured interviews. I prepared a few broad pre-formulated questions, but did not strictly adhere to it. One or two such prompts usually opened the conversation and there was a degree of consistency across the interviews. The participants differed in how much prompting and guidance was needed to get going. New questions emerged during the conversation and prompted improvisation. The important issue was to phrase the few prompts in an open-ended way and not to lead the participant in a particular direction.
My role as researcher was to invite stories or narratives from participants. It was necessary to build rapport quickly and create comfort so that the participants could open up and speak freely. I was mindful that the majority of participants are often interviewed and I tried to get beyond rehearsed answers. My focus was on active listening and to a large extent, to keep myself out of the way. I tried to remain open and observe the shifts in energy, the non-verbal clues, as much as what was being said and taking place. In preparing for the interview phase, I found the following comments from my promoter helpful: “Trust the process to let it go; do not try to sound too clever and do not go in with a lot of assumptions.”
24 Additional sources
To obtain a more in-depth view I incorporated a number of written documents. The latter can be valuable as they often provide evidence of aspects that people sometimes have difficulty remembering such as the exact dates of a particular event (Myers, 2013). I was offered a number of unsolicited documents by interview participants, for example, one participant gave me a memorandum he had written, another gave me a copy of a speech he had written, and in another instance I was given a hand written note of one of the founders, used to structure his talking points before a presentation.
I also consulted a number of corporate sources, printed publications and electronic sources, ranging from past to present. An internal publication intended for the group’s employees, compiled in celebration of its 10th anniversary, turned out to be especially helpful. An important point is that I obtained this copy after conducting all the interviews in 2008. Whilst this document became an important source to contextualise and create a chronology for some of what I had heard, it did not contaminate my thinking at the time of the interviews. The document encapsulated what I already instinctively started puzzling together. I also consulted and studied various printed and electronic media sources to add to the richness of data. I attended and observed one corporate event, possibly the most significant event, in understanding the organisational context, namely the FirstRand Philosophy workshop.
Sampling procedure
In this study I relied on the snowballing sampling technique to determine interview participants. In simple terms, snowballing has to do with an organic process whereby a researcher asks a participant: “Which other participant’s voice should be heard or added?” In other words, who else could shed light or add an important or interesting perspective? I used an approximate 70% snowballing as sampling technique.
In selecting interview participants, I initially started with the three key people, the three founders. In turn, the founders proposed a handful of key role players. These participants were predominantly senior leaders such as the chief executives of some of the group’s companies, or former chief executives. Other nominated participants were role players who had walked a path with the founders over many years. The founders’
25 participant nominees met an important criterion in that they were there at significant points in the group’s history.
In addition to the founders’ recommendations, and in discussion with Francois Hugo, certain additional participant names were added, casting the net wider. As part of the snowballing technique, a further participant’s name or two were added to the interview list. I soon realised that there was a danger in adding more participants, although all very interesting, it kept adding perspectives and to the volume of data. One interview occurred much later and came about spontaneously. I met with Francois in a follow-up session and in a chance encounter was introduced to a senior executive who had worked with the founders from the earliest days.
Who did I involve?
The names of interview participants are outlined and I offer the primary responsibility or designation for each participant at the time of the interviews. For brevity I do not include all the board memberships and other positions held. The interviews were conducted over two periods during 2008, during May and then, July to August. Conducting the interviews over two periods was motivated firstly by, allowing sufficient opportunity to digest and reflect on the narratives and the vast amount of content gathered in the first round and secondly, by logistical constraints on my part.
Interviews conducted in May 2008:
Laurie Dippenaar - Founder and incoming FirstRand chairman GT Ferreira - Founder and outgoing FirstRand chairman Johan Burger - FirstRand chief financial officer (CFO) Sam Moss - Head of investor relations Paul Harris - Founder and FirstRand Ltd. chief executive officer Hendrik du Toit - Strategy advisor for the group
Interviews conducted in July to August 2008:
Anneke van Zyl - An early appointee and long-serving RMB employee Michael Phaff - RMB outgoing chief executive officer
26 Michael Jordaan - FNB chief executive officer
Sizwe Nxasana - FirstRand Bank chief executive officer
Viv Bartlett - Former FNB chief executive officer and group board member Francois Hugo - Head of HR Strategy and senior psychologist Beth van Heerden - Communications advisor for the group Hillie Meyer - Former Momentum chief executive officer
Interview conducted in 2012:
Ferdie Swanepoel - RMB Enterprise risk management
The interviews were conducted at respectively the group’s corporate head office and those of FNB and RMB. I met with GT Ferreira at his Stellenbosch office. The interviews were approximately 90 minutes in duration and all were individual interviews, with the exception of a joint interview with Sam Moss and Johan Burger. Prior to the interviews, I prepared a briefing email introducing myself and describing the focus of the study. The briefing email and the email to thank participants for their participation were circulated by Francois Hugo’s office. Francois wore multiple hats in that he was the internal sponsor for the study as well as an interview participant. He acted as liaison with participants and oversaw the logistics of arranging the interviews. During the initial contracting it was also agreed that he would cast an eye as an internal auditor at different points.
One of my strongest impressions from the interviews was how the participants clearly enjoyed talking about the organisation. I found the participants to be receptive and engaged without being over eager or deliberately trying to steer the narratives in a particular direction. Each of the three founders, and many of the other participants said I could contact them again if I needed further input or had more questions. Within the scope contracted for the interviews, there were few topics, if any at all, that I experienced as being out of bounds.
Special circumstances at the time of the interviews
It so happened that the data collection interviews in 2008 coincided with the group’s 10th anniversary. It was not intentional. What struck me was the amount of reflection
27 on what was taking place in the organisation at the time. In terms of global context, in 2008 the sub-prime mortgage crisis in the United States of America was unfolding and shortly after, Lehman Brothers collapsed, setting in motion a chain of events globally. Also in 2008, the founders were making preparations to take their leave from the organisation. In my view this reflective mode brought aspects to the fore in the interviews that contributed depth and richness.
Recording of data
I kept the data organised, as is crucial, and created several back-up systems – hard copy and electronic. Most important was to safeguard documents. I treated the narratives as confidential documents, although the participants did not implore me to do so. The documents that were shared with me could be read as containing sensitivities and therefore I treated it as confidential. I heard narratives that were shared in good faith to enlighten me on necessary context. There were no objections to audio recording the interviews.
I also made notes during the interviews as not to only rely on the recordings and expanded on my notes after each interview. Relying on memory alone over time would have been foolish. I drafted cryptic field notes pertinent to each interview capturing the context of the interview, the setting and timing against which it took place, what stood out from the interview, the atmosphere and mood, and what impressed or intrigued me. I took stock of what I said to myself before and after meeting the founders, and similarly, each of the participants.
Transcribing the audio interviews was a painstaking process. As a first step, I contracted an experienced resource for this process. Early on I could see I needed more from the transcriptions and therefore took the process further. I wanted to capture how something was said, the non-verbal cues, the mannerisms, the favoured words and phrases, the nuances, where pauses and hesitations occurred in speech and where there was laughter. It was cumbersome but I am convinced of the value-add. As a result I became very familiar with each interview’s content and each participant’s communication style. Knowing that I know my data well and that the typed up transcription is a reliable reflection of what occurred in each interview, secures my faith in my data and credibility thereof.
28 Narrative analysis
Different authors note that most qualitative research projects generate vast amounts of data therefore data analysis calls for a plan in dealing with such high volumes (Baxter & Jack, 2008; Myers, 2009). Even though data collection and data analysis are logically different steps, in reality, they often go hand in hand. Data collection and analysis occur concurrently and often proceed in an iterative manner (Baxter & Jack, 2008). Narrative inquiry refers to a broad term encompassing the interdisciplinary study of the activities involved in generating and analysing stories such as life histories, narrative interviews, journals, diaries, memoirs, autobiographies and biographies and reporting such research. It refers to both product and process (Schwandt, 2007). A narrative can describe the significant events in the life history of one person whilst other narratives describe the significant events in the life of an organisation (Myers, 2009).
Most audiences can relate to stories. This study tells a story by describing significant aspects and events in the life of FirstRand as viewed through the eyes of key role players. The use of the word “narrative” emphasises the voice of the person telling the story and focuses on the uniqueness of the story. “Traditionally, a narrative requires a plot, as well as some coherence. It has a linear structure, with a beginning, middle, and end” (Myers, 2009, p. 174). According to Schwandt (2007), narrative analysis refers to a variety of procedures for interpreting the narratives or stories generated in research. It could include first, a formal means of analysis such as examining how a story is organised, how it is developed and where it begins and ends. Second, a functional analysis of what is being told in a story such as telling a success story, or a chronicle of trials and tribulations, or a telling a moral or cautionary tale. Third and last, it could include analysis of stories as a particular kind of oral performance. In this study narrative analysis is used as the procedure to organise, analyse and interpret the data from telling a business success story.
Narrative analysis was employed as a “bottom-up” approach customary to interpretive case studies. Instead of using a formula and fitting data into that formula, the bottom- up approach uses elements in the text to build a structure for analysing the whole (Myers, 2009). This approach leads to greater variety in narrative structures. Whilst narratives can be written in different styles or according to different conventions I did not adopt any specific genre exclusively in telling the story. In terms of voice, I
29 adopted a style where the different participants’ narratives are interwoven and they “speak for themselves”. At times I maintain a distance and other times my voice comes more to the fore.
Thematic analysis
In developing themes, thematic data analysis was employed to derive the main themes and sub-themes from the data. In aiming for a holistic picture, it involved many intuitive and iterative processes. Thorpe and Holt (2008) point out that this type of process to synthesise and get to main focus areas, is already a form of sensemaking:
…Since thematic analysis requires that the researcher interprets the data, it is, ultimately, a sensemaking process. Thus, convincing others of the credibility and dependability of the data and their analysis…are addressed by acknowledging prior assumptions, by making the researcher’s role in the project clear, by describing…how links were made and how concepts were defined and applied (p. 188).
Thorpe and Holt (2008) continue that by exposing the process of interpretation for review, the researcher invites the reader to believe that the approach adopted is consistent with the aims of the research, and that the interpretation applied, was conducted in good faith. Most researchers define the concepts and themes that they generate and provide examples of “texts” or narrative excerpts that support their interpretation. The reader is shown how a deep analysis of the data has generated ideas about the subject under review and they are invited to “see” how the themes identified are linked through narratives constructed by the researcher to back up their “story”. In conducting thematic analysis, specialist software was not utilised.
In developing a holistic picture, the strategy was to first look within each interview before looking across interviews for emerging patterns or themes. I compiled a summary per individual transcription which I termed What and How summaries. I continuously asked: “What did this participant emphasise?” It was a useful starting point to distill the essence and to begin discriminating between data that was highly interesting, but potentially superfluous. When it came to looking across interviews and drawing comparisons, it further distilled the analysis of, “What came to the fore in this
30 interview, that did not feature or reveal itself in any of the other interviews?” A next question was, “What are the main themes for the three founders?” Similarly, “What are the main themes for the business heads or brand leaders?” Also, “What are the main themes for the other key role players and former executives?”
Although sampling logic and weighting does not apply, the founders’ narratives carry significant “weight” in this study in that these were one-of-a-kind encounters. The founders shared views and recollections, of which some had not been captured in company records, for example: “You won’t find this in the minutes of a meeting” (G. Ferreira, personal communication, 16 May 2008). The founders’ perspectives constitute a unique contribution and add to the authenticity. Similarly, the voices of senior leaders and key role players who were present in certain key moments or phases carried significant weight.
Reporting the case study
The process of writing up the research is just as important as doing the research itself. Baxter and Jack (2008) concede that it can be a difficult task and that there is no correct way to report a case study. The goal is to describe a complex phenomenon in such a comprehensive manner as to enable the reader to feel as if they had been an active participant in the research and can determine whether or not the study’s interpretations could be applied to their own situation. There are various writing styles or genres that can be used and I predominantly adopted a narrative style. This style tends to see the case study as the writing of history. Both the researcher and the subject matter are situated historically, and the researcher pays attention to the chronological nature of events. A researcher studying a particular organisation might document some of the significant events that occurred over the life of the organisation or in a particular time period. The advantage of the narrative style is that it is often easy for the reader to see how things progressed in the way that it did and how one significant event led to another.
My responsibility as researcher
As a researcher, I acknowledge the many ethical issues that are present when researchers engage in moral activities. I have taken reasonable steps to uphold the
31 integrity of the research process and to ensure the human rights of the participants to this study are preserved. I take my responsibility seriously to preserve the dignity of the participants involved. Throughout I have tried to act respectfully to my participants, sensitive in my portrayal of people who feature in this story and accurate in my portrayal of events. Rules of engagement for this study included voluntary participation, explaining the purpose and focus of this study upfront, explaining the interview format and ensuring ease and consent with regards to process.
As addressed in the APA definition of case studies, this study introduced challenges in terms of balancing the researcher’s interest in illustrative material and the issue of preserving anonymity and confidentiality. It is an aspect discussed at various points. The topic of this study is FirstRand as is explicitly stated in the title and design of the study. By revealing the identity of the research participant, and the organisational capacity in which he or she were appointed at the time, contributes to the credibility of the study and has an impact on trustworthiness. As indicated in Chapter 1, founder Laurie Dippenaar, with the agreement of his fellow founders, offered their blessing for the study to proceed in the way that it has. The research project and the interviews were conducted in good faith. There was no discomfort expressed about disclosing identities. It is congruent with the spirit of openness and transparency evident in the group’s culture and the maturity and acumen of its leaders.
As a general rule the APA states that researchers interviewing research participants should not cite personal communications as this would breach the participants’ guarantee of confidentiality (Publication manual of APA, 2010). However, these guidelines do take into consideration the nature of the interview such as in the case of informational interviews. In such an instance, the source is cited as a personal communication in the text only and such entries are not included in the references.
Strategies to enhance the quality of the research
As in all research, the goal is to conduct credible and good quality research, therefore paying attention to demonstrating the soundness of a study, remains a critical aspect. The conventional criteria for good research namely validity (internal and external), reliability (representativeness) and objectivity are inappropriate for qualitative research projects (Eriksson & Kovalainen, 2008). Numerous and novel other frameworks have
32 been developed to evaluate the rigour of qualitative research. Amongst the most well- known alternative paradigms are the four constructs of credibility/authenticity, transferability, dependability and confirmability proposed by two prominent qualitative researchers. This set of criteria endevours to address the trustworthiness and specifically the quality of the inquiry process (Lincoln & Guba, 2002).
The first of the constructs, credibility or authenticity, is considered the most important criterion. The underlying issue focuses on whether there is a match between research participants’ views and researchers’ reconstruction and representation of these. With respect to the criterion of credibility, I employed various strategies to enhance the quality of this research project. Firstly, in this study there was prolonged engagement in that I was immersed with this research topic and the research context for a length of time. On completion of the data gathering interviews and observation of a key organisational event, I continued to follow developments in the organisation with interest.
Secondly and thirdly, I made use of respectively member checks and peer debriefing through the ongoing involvement of the group’s senior psychologist, Francois Hugo. As internal sponsor, technical expert and progressive thinker, he contributed significantly to the internal quality and credibility. In the analysis and theme development phases we discussed the preliminary themes. Francois concurred and also introduced a couple of other angles that expanded my thinking. After reading a draft in January 2015, his overall impression was positive. I am grateful for his role in acting as a sounding board. I also had ongoing discussions and peer debriefings with my promoter over the course of this study. Every contribution made a difference and I have immense gratitude for his guidance.
Fourthly, I made use of triangulation to enhance the quality and credibility by using multiple data sources to obtain multiple perspectives. I triangulated data between different interviews in terms of areas of agreement or disagreement in the description of similar events or concepts. I also triangulated by incorporating information from other data such as unpublished documents, company documents and media articles, containing objective and “hard” data. Thus my interpretations were triangulated across different organisational sources, independent external authors and perspectives raised by participants. I did not make use of formalised qualitative methods such as grounded
33 theory and analytic induction. With respect to Lincoln and Guba’s transferability construct, due to the nature of a holistic case study and the specificity of the research context, the interpretations from this study and transference to another situation or case, is likely to be limited. However, I am of the opinion that there are many lessons that can be taken from this study that have applicability and relevance to other organisations and our field of practice.
In terms of Lincoln and Guba’s dependability construct, I have paid attention to the management of the research process to promote quality by ensuring the research process is logical, well documented and audited. An example of an audit trail mechanism to enhance transparency is that I intuitively started keeping what I termed a Study Log. This was before I became aware of Schurink’s (2005) sound advice of keeping a research diary. The Study Log captured and tracked the journey over time with entries on documents created, topics worked on, agenda points and questions for my promoter and others, version control, records and notes of meetings, emails, Skype sessions, phone conversations and decisions taken.
Another strategy that I employed to enhance quality was that of reflexivity. Eriksson & Kovalainen (2008) point out that reflexivity is a key part of constructionism and has become crucial in present day qualitative research. Practically, reflexivity means that you reflect on how you produce knowledge as a researcher, what kind of knowledge it is, and how you can relate this new knowledge to other knowledge you might already have. Reflexivity is the scientific equivalent to reflection in everyday life. Throughout this research journey I reflected much on the data, the process and what it means in terms of the FirstRand story and the process of theoretical inquiry. In my view this reflection has added to the sense of ownership, even if I am not part of the organisation that I studied. With respect to Lincoln and Guba’s final construct, confirmability, throughout the thesis I include narrative excerpts which contribute to building the case and provide evidence that corroborates the interpretations and insights that I have come to.
Difficulties in the study
I have already raised the issue of protecting the rights of participants to privacy and confidentiality. The narratives form the backbone of the data gathered. Where
34 appropriate I made use of composites and used my discretion. Throughout I have tried for sensitivity, maintaining high ethical standards, considering the relevance and specificity.
Whilst it may not be an inhibiting factor, as this was always intended to be a retrospective case study focusing on the founders’ influence, with the passing of time there have been a number of significant changes in the group’s context. Examples include the unbundling of OUTsurance and Momentum, the formation of new holding entities as well as the founders’ retirement. In my view the passing of time does not impact on the “validity” or “reliability” of the perspectives raised at the time. A possible positive is that some perspectives raised have become tested since. It strengthens some of my arguments and lends further credibility to the data.
One difficulty was the fact that I conducted a handful of the interviews in Afrikaans. It was not a conscious research design decision. At the time it felt spontaneous and natural. Interviews with Laurie Dippenaar, Michael Jordaan, GT Ferreira, Ferdie Swanepoel, Hillie Meyer and Francois Hugo were conducted in Afrikaans. In my view it aided authenticity, added rich descriptions and I heard idiomatic expressions that were revealing. It required some effort to obtain equivalence in meaning in the translation to English. It has been a learning curve. I take the advice on board that field notes and transcripts are already subject to many possible distortions; do not introduce any more (Taylor & Bogdan, cited in Schurink, 2005).
In the last instance, I raise a difficulty not introduced by my study design, but by personal circumstances. The approval of my research proposal coincided with a country move and a temporary relocation to Japan. Subsequently, another country move followed to the United Kingdom. Working on this study long distance, despite enabling technology, introduced additional complexity to an already challenging study. Once again I acknowledge my promoter for navigating unusual circumstances and his support across geographic boundaries.
This concludes the discussion on Part 2: Introduction and Background. Henceforth the focus shifts to the heart of the study, laid out in Part 3: The Data, which opens with a corporate overview.
35 PART 2: THE DATA
CHAPTER 3: THE COMPANY
Introduction
This chapter offers a brief overview of the FirstRand group. How to introduce this entity and its impressive corporate fact file presented me with a dilemma. This group has recently been referred to as a behemoth, a beast of mythical proportions (Business Times Staff Reporter, 2014). Where do I start to tackle this beast? One angle could be to say that in its relatively short lifespan, the group has become one of the most prominent financial services groups in SA. The individual brands that form the core of the group today, are household names and include Rand Merchant Bank (RMB), First National Bank (FNB), WesBank and more recently, Ashburton Investments. Other well-known and trusted brands like Momentum, Discovery and OUTsurance, formed part of this diversified family of businesses before unbundling in recent years.
Whether in starting from the top or the tail, I can at best only offer a glimpse of this corporate beast. First up is a snapshot of who this group is and how it came about. Thereafter follows an abridged history of the group, selected milestones and a brief description of the businesses that, at one time or another, formed part of the organisation. Lastly I highlight aspects about the group that excites, what is said about the group, and specifically its founders.
Who is FirstRand and how did it come about?
The companies in the group’s portfolio provide banking, insurance and investment products to retail, commercial, corporate and public sector customers in SA and several African countries (see http://www.firstrand.co.za/Pages/Firstrand.aspx). The origins of the group can be traced back to the 1970s and the original business RCI founded by GT Ferreira, Laurie Dippenaar and Paul Harris. It is from this partnership that what eventually became FirstRand Limited in 1998, developed. Since then, the founders, together with a long-standing and stable management team, have created one of the largest local financial institutions (see http://www.firstrand.co.za/AboutUs /Pages/ownership-structure-and-operating-model.aspx).
36 The group developed organically, built through a series of successful strategic acquisitions and mergers and a strategy of diversified earnings. In a media interview some years ago, Laurie Dippenaar outlined the historic steps in the business’ growth path and emphasised that this enterprise was not built overnight. The group was built step by step over a steady course of three decades. There were many highlights, yet he singled out three major transactions, concluded at different points in time and under different brands, that have been instrumental in the organisation’s development. The first transaction was the merger of RCI and RMB after the latter was taken over from the Rupert family. The second transaction was the reverse takeover of Momentum in 1990 in order to list RMB Holding’s (RMBH’s) shares. The third transaction was in 1998 when RMBH acted audaciously by taking over FNB and Southern Life and merging its financial interests with that of Anglo American (Van Zyl, 2005).
Laurie Dippenaar, the group’s chairman, has since echoed this concise summary of the three major strategic transactions, with consistency. I found his summary insightful in making sense of the vast array of corporate actions, milestones, and intricacies that span the company’s more than 30 year history. The three major strategic transactions as distilled by the chairman inform the framework that I have adopted in documenting the business story in this thesis.
At the time of the third major transaction, the disposal of Anglo American’s interests in FNB and Southern Life, and the merger of these assets with RMB and Momentum, it was one of the largest transactions in the history of local financial services (Corporate publication, 2008). The group was also instrumental in the start-up and growth of two highly innovative companies – Discovery and OUTsurance – that each transformed its respective industries (Van Zyl, 2005).
Group history at a glance
Rand Consolidated Investments
The original business Rand Consolidated Investments or RCI for short, started off in 1977 as a small financial structuring house through the founding partnership of GT Ferreira, Laurie Dippenaar and Paul Harris. RCI was rapidly built up into a successful
37 specialist investment bank and eventually became FirstRand Limited in 1998. Figure 1 depicts a summary of key corporate milestones.
Figure 1. Historical timeline. Adapted from FirstRand publications.
Rand Merchant Bank
In 1985 after a mere eight years of operation the founders bought a bank. Acquiring Rand Merchant Bank (RMB) through a reverse takeover offered the founders the traction that they were after, namely acquiring a banking license and the opportunity to move into regulated business. The RCI-RMB merger marked the beginning of its trajectory as one of the leading investment banks in the country. In 1987 RMB Holdings (RMBH) was formed, with RMB as a subsidiary. RMB’s brand promise Traditional Values. Innovative Ideas epitomises the core of its business philosophy and has not changed in 30 years (Corporate publication, 2008). Over time, all three founders would serve as chief executives of RMB, which is a unique part of the business story.
Momentum
In 1992, RMBH acquired Momentum Life, a listed company, bought in the same way as RMB, through a reverse takeover that saw RMB sold to Momentum Life in return for shares and management control (Fischer-French, 2005). The founders now had a listed financial group on their hands. This acquisition offered the type of investment that they were after at the time: a more sustainable income source to balance the more erratic
38 nature of income derived from merchant banking. The benefits of this transaction and the RMBH takeover would only be realised after a dramatic turnaround intervention at Momentum. The involvement of the founders set Momentum on a healthy path for a continuance of its history of mergers. The merger between Momentum and Metropolitan would follow a decade into the future, in 2012, after the unbundling of Momentum from FirstRand.
Discovery
Discovery was established in 1992. In reflecting on this pioneering milestone, Discovery CEO, Adrian Gore, said: “We started Discovery because Laurie decided to back my idea” (Corporate publication, 2008, p. 8). Adrian Gore conceived the idea of a specialist risk management company that offered clients innovation, flexibility, value and excellent service (see https://www.discovery.co.za/portal/individual/corporate- view-content?corporateNodeName=about-us). FirstRand fully supported this vision to create a new paradigm in South African healthcare. The Discovery start-up is a clear example of the group’s appetite for starting and growing new businesses. When Discovery Health was launched over two decades ago, it was a small specialist health insurer that made a clear and profound promise: to make people healthier. Today it is the country’s largest healthcare funder, managing 14 medical schemes. In 1999 Discovery listed on the JSE with a market capitalisation of R3 billion (Corporate publication, 2008).
In 2007 the decision was taken to unbundle the group’s 57% shareholding in Discovery. Since its creation, Discovery has delivered R8 billion of shareholder value to the group (Corporate publication, 2008). Commenting on the step to unbundle Discovery, CEO Paul Harris, said:
Following the decision in 2000 to allow Discovery to enter the risk market, shareholders increasingly questioned the merits of FirstRand having two insurance businesses competing in the same markets. The group’s strategy was that two horses in the race was producing significant growth, as both companies were growing at the expense of the competition and therefore not destroying shareholder value. This strategy was monitored on a regular basis by the Boards of FirstRand, Discovery and Momentum (FirstRand media release, 2007).
39 Discovery was subsequently listed separately on the JSE. Adrian Gore alluded to some of the benefits from the close collaboration amongst the two businesses over the years:
While we were still part of the group, there was constant cross-pollination of ideas between the two of us; FirstRand gave us a lot of intellectual support. FirstRand’s input into Discovery has been one of the key reasons for our success (Corporate publication, 2008, p. 8).
In turn, Laurie conceded that it was sad to say goodbye to one of those children he helped raise, as he no longer served as the chairman of the Discovery board. Yet, he still had breakfast with Adrian Gore on a regular basis and followed Discovery’s fortunes closely at the RMBH level (Hogg, 2012). Today the Discovery group’s health and life insurance, and investment products touch the lives of nearly six million clients across several continents. The group’s South African businesses include Discovery Health, Discovery Life, Discovery Invest, Discovery Vitality, Discovery Insure and Discovery Card. The country’s leading wellness programme and repeatable business model is also exported to the North America market. In the United Kingdom the group’s operations include VitalityHealth and VitalityLife. In Asia the Vitality business was launched through Ping An Health and is playing a major role in this growing private health insurance sector (see https://www.discovery. co.za/portal/individual/ about-us-map).
OUTsurance
In 1998 the group started and grew yet another completely new business. OUTsurance the direct, short-term insurance company that turned the industry on its head, started at virtually the same time as the FNB merger took place. It was an idea formulated by three young entrepreneurs who approached Laurie Dippenaar to back the concept. “We presented a clear business case combined with passion and the appropriate skills,” says CEO Willem Roos and one of the initial founders. “Laurie and the RMBH board decided to back us” (http://www.outsurance.co.za/about-outsurance/general- information/#history). The team identified three focus areas: OUTsurance would deal directly with the public therefore removing the cost of intermediaries’ commissions, the company would use sophisticated actuarial modeling, and create a culture of service in an industry notorious for its bad service delivery.
40 OUTsurance began with three employees and a secretary and, in a decade, has grown to become one of the largest short-term insurance companies in the country with a market share of 17% and one million policyholders. Premium income now equals R3,6 billion with pre-tax profits close to R1 billion. In November 2009, Willem Roos together with Howard Aron, won the SA leg of the Ernst & Young World Best Entrepreneur Competition. The Australian operation was launched as Youi – an abbreviation for “You Insured”. OUTsurance is a member of the Rand Merchant Insurance Holdings (RMIH) group.
The formation of FirstRand
In reality the formation of FirstRand, a mega financial services group, constituted more than one milestone. The founders’ initial interest was in the insurance asset Southern Life, but FNB was thrown into the deal too. The founders saw this as an opportunity they could handle. “From running what they refer to as a bucket shop, the trio now headed up a mammoth corporation” (Fischer-French, 2005, p. 44). The merger offered the founders a number of advantages and an equal number of challenges. The merger between Momentum and Southern Life was used as the vehicle with which to list this new group on the JSE.
First National Bank
The inclusion of FNB in the 1998 merger deal offered the founders the opportunity to add a retail arm to its portfolio. This asset, with a history dating back to 1838 was officially the country’s oldest bank. Buying FNB was philosophically about survival during the South African banking crisis in the early 2000s, which destroyed Saambou and BOE and could have easily wiped out a lone RMB. GT Ferreira described the deal as a sardine swallowing a whale, but the unpredictability of the market made it possible (Fischer-French, 2005).
WesBank
As part of the merger, WesBank entered the group’s portfolio. With over 40 years of experience, WesBank had become the country’s leader in asset-based finance solutions. The company is focused on providing asset finance and fleet management solutions for
41 a number of market sectors, including aviation, agriculture, commercial and company vehicles, plant and office equipment, and franchise finance solutions. It credits its shared values for driving the growth and business success. The values at the heart of the WesBank business and everything that is done, are phrased in the following way: “My word is my bond. My work is my signature. We strengthens me. I get better and better” (see https://www.wesbank.co.za/wesbankcoza/about/index.xhtml). The company has also been a consistent performer in the Deloitte’s Best Company to Work For competition, including being ranked as the best large company in 2008 and 2009.
Black Economic Empowerment deal
In 2005 the group announced its Black Economic Empowerment (BEE) deal, one of the first broad-based deals of its kind. The group sold an effective 10% interest to three partners with which it had long and strong relationships with. These included the Mineworkers Investment Company (MIC), the Women’s Development Business and the Kagiso Trust Investments (KTI). According to RMB’s head of corporate finance, James Formby, these were all companies “with long track records of bringing tangible benefits to their beneficiaries” Corporate publication, 2008, p. 36). The transaction also included a staff component where Black South African staff and non-executives acquired 3,5% of FirstRand as well as the FirstRand Empowerment Foundation.
The founders prepare to exit
Long before their retirement from active duty, the founders started preparing the organisation for their exit and handover to a next generation of leaders. GT Ferreira was the first to take his leave from executive duty in the early 1990s. When FirstRand was formed, he became its non-executive chairman. In 2005, Laurie Dippenaar announced his resignation as CEO of FirstRand Limited with Paul Harris taking over the reigns from him. Laurie Dippenaar succeeded GT Ferreira as the group’s chairman and is likely to continue to influence in this role in time to come. Of the three, Paul Harris served the longest in an executive capacity and retired in 2009. Over several decades the founders remained closely involved, leading and building the organisation in various roles. GT likened the process of handing over the leadership baton to that of running a perpetual relay. Laurie described the handover from founder-owners to professional managers as an evolutionary and seamless one.
42 Sizwe Nxasana takes over as CEO
Sizwe Nxasana made history on a number of fronts when he succeeded Paul Harris as CEO of FirstRand Limited in 2010. Sizwe Nxasana became the first Black CEO of one of the country’s big four banks after heading up Telkom South Africa Ltd., Africa’s largest fixed-line phone company until 2005 (Bonorchis, 2010). He is a business leader who ventured into entrepreneurial territory early on. He was notably one of the first ten qualified Black chartered accountants in SA and went on to start the first Black-owned audit practice in 1989. In FirstRand’s language, Sizwe Nxasana’s appointment marks the transition from a founder-owner phase to a professionally managed phase. In Sizwe’s leadership the founders recognised a leader who thinks like a founder. In turn Sizwe noted that his own leadership and business philosophy closely aligned with that of the founders. His involvement with the group started years before when he joined as a board member. Of his initial appointment to the group Laurie Dippenaar said at the time: “We were very happy that FirstRand was his workplace of choice, as he could pick and choose” (Van Zyl, 2005).
Unbundling of Momentum
In December 2010, FirstRand unbundled its holding in Momentum, the group’s 100% owned insurance division. This followed Momentum’s merger with Metropolitan, which was to become MMI Holdings. The group carefully evaluated the consequences of retaining ownership. It concluded that the unbundling would not only unlock any potential value trapped within FirstRand, but would ensure that the new entity had sufficient free float on the JSE and the necessary financial and regulatory flexibility to realise its strategic objectives (FirstRand media release, 2010).
Ashburton Investments
RMB Asset Management, a wholly owned subsidiary of Momentum, formed part of the unbundling of the life insurer in 2010, which meant that FirstRand no longer had a share of the fund management business. The introduction of Ashburton Investments in 2013 allowed the group to re-establish asset management as the fourth pillar of its business. Sizwe Nxasana was quoted stating that the group wanted to focus on asset management
43 and not insurance, as the latter was not an area of expertise for the group (Cranston, 2014).
CEO Sizwe Nxasana to step down
In March 2015 Sizwe Nxasana announced that he would step down as CEO of FirstRand at the end of September 2015, after nine years at the group and five years as chief executive. Under his leadership, the earnings of the group had grown by a 23% compound annual growth rate to R18.7bn in June 2014 from R8.3bn (Ndzamela, 2015). The group had grown into Africa’s largest bank by earnings, market capitalisation and return on equity and also as one of the top ten companies on the JSE (Ndzamela, 2014). During this period FirstRand’s share price more than tripled, outperforming the growth of its rivals (Moneyweb, 2015). In an interview in 2014, Sizwe Nxasana confirmed that the group was pursuing further growth beyond South African borders, but emphasised that this would be done in a very disciplined manner. “We understand that growing an acacia tree [depicted in FNB’s emblem] takes time” (Ndzamela, 2014). Johan Burger, deputy to Sizwe Nxasana, and who has been with the group since 1987, including terms as chief financial officer and chief operations officer, has been announced as successor (Bonorchis, 2015).
This organisation excites
As a group of companies, FirstRand excites and impresses. It is an example of an organisation that works. Since inception and throughout its history spanning decades, it has continued to grow in leaps and bounds. In financial and media reports different adjectives are used to describe the growth of the group and that of its individual franchises. These include: phenomenal growth, organic growth and aggressive growth. Success intrigues. On the whole, this is a group that has been very successful over the years. Its success is an aggregate of the success of a number of leading financial services franchises. Thus the group generates economic value greater than the sum of its parts. In terms of market position, the individual franchises are all leading players in their respective market segments. As Paul Harris put it, “Our story has always been one of the benefits of diversification” (Corporate publication, 2008, p. 3).
44 If the “size matters” yardstick is applied, this is an organisation that matters greatly. It is a large-scale employer by South African standards. The group employed 38 542 employees (see http://www.firstrand.co.za/InvestorCentre/Pages/investor-info.aspx) by year end, 30 June 2014. The group counts as one of the 10 largest companies on the JSE (Ndzamela, 2014). In business, survival is key. It is an expectation and not often seen as a reason for celebration. To have lived through and endured turbulent times and continued onwards and upwards is, in my view, a cause for celebration. The onset of the global financial crisis did not leave South African institutions unaffected. In 2008 the group experienced what one journalist described as “torrid times” incurring significant losses (Mittner, 2011). The company’s response was to take fast and drastic action. Recovery takes time but the businesses affected have recovered and are performing with renewed vigour. Figure 2 depicts FirstRand’s adjusted share price significantly outperforming the JSE All Share Index (ALSI). FirstRand history has been adjusted for the unbundling of Discovery (DSY) and Momentum/Metropolitan Insurance (MMI). The index shows growth in the share price if DSY and MMI were retained in FirstRand as a measure of value created by building and backing new businesses.
Figure 2. FirstRand adjusted share price shows significant outperformance (of the JSE All Share Index based to 100 on the same date). Supplied by FirstRand Group Treasury, 2015.
45 To obtain a perspective on why the FirstRand group is hailed as a South African business success story, the hard measures are called for. With respect to a financial snapshot, for the financial year that ended 30 June 2014, the group’s total assets came in at R945.5 billion (USD89.0 billion). FirstRand’s normalised net asset value was R81.6 billion (USD7.9 billion) and normalised earnings R18.7 billion (USD1.8 billion) (see http://www.firstrand.co.za/InvestorCentre/Pages/investor-info.aspx). Nine years before, in 2005, the group’s total assets came in at R462.2 billion with a market capitalisation at that time, three times the size of Sanlam, another South African financial services giant (Fischer-French, 2005).
Perspectives on the group and its founders
Back in 2005, many financial analysts viewed FirstRand as the premier South African banking group. Firstly, the group had the highest market rating based on price-to-book. Secondly, the management team as a whole was viewed as best in peer. Thirdly, it was viewed as the most innovative banking group in the country. Fourthly, it was very good at starting business from scratch and building these up to substantial outfits, such as Discovery and OUTsurance (Fischer-French, 2005).
Nine years on, in 2014, Laurie Dippenaar commented on surviving the financial crisis of 2007. “We were on a ship in a hurricane. Our share price collapsed 50% and everything we’ve worked for seemed to be at risk through no fault of our own” (Business Times Staff Reporter, 2014). In this article, the journalist credited FirstRand’s strong reserves, relatively conservative management and limited exposure to subprime housing loans as the reason why the group emerged unscathed. Laurie warned against complacency: “Business is a bit like sport…you win the cup for three years then the competitors come at you. The other teams will hire a new coach, study your game and they will come at you” (Business Times Staff Reporter, 2014).
After the 2014 financial results, analysts acknowledged that the group could “…stay ahead of the curve, but it would be difficult”, echoing Laurie’s view that “the playing field is being levelled, but it is still ahead of the curve”. A more recent perspective is that FirstRand’s diversified earnings and the potential to grow earnings in Africa are listed as positives for the group, as well as the strong performance of RMB, the success
46 of FNB’s disruptive business tactics and the dominance of WesBank in vehicle finance sector (Ndzamela, 2014).
The group has a high media profile and evokes much commentary. What is interesting is that a conversation about the group almost always includes references to the founders. A perspective that came through in different narratives is that one could not talk about this group without talking about its founders. Up to a certain point in time, FirstRand and its founders were almost synonymous concepts. The views that industry peers and South African business leaders express about the founders, the group’s executives, employees and the company as a whole, add another dimension to its reputation. It speaks of high regard and admiration for the way this group goes about its business. In 2008, in celebrating the group’s 10th anniversary, different business leaders acknowledged the company’s achievements and that of its founders. Paul Hanratty, then CEO of Old Mutual SA, described the group as a success story. His phrasing was as follows:
They are great people – serious, professional and always considerate about what makes sense for the customer. I have found them more focused on the customer and the business than their own egos or agendas. I believe FirstRand’s people are a great credit to South African business. They are a South African success story (Corporate publication, 2008, p. 8).
Another perspective at the time came from Standard Bank Personal and Business Banking, CEO, Peter Wharton-Hood, praising the group for amongst other aspects, setting high benchmarks for the industry, as is evident below:
Competing with FirstRand is hugely challenging and intellectually intense. Because they are very innovative, we often wait in anticipation to see what they will do next: sometimes they get it wrong too. But they are very responsible in their game and manage risk extremely well. Their equity franchise is peerless and sets very high benchmarks for the industry. I admire their courage (Corporate publication, 2008, p. 8).
In addition to praise for being a tough competitor, the considerable impact of the founders were acknowledged in 2008 by Nedbank CEO, Tom Boardman, in this way:
47 I have the highest regard for FirstRand as a formidable competitor and a highly professional organisation. The group’s achievements over the past 10 years are remarkable and the trio of GT, Laurie and Paul has left a huge mark on the South African business environment (Corporate publication, 2008, p. 8).
In turn, chief executive of ABSA at the time, Steve Booysen, saluted the founders for strong business instincts, leadership capabilities and building a financial services empire:
It is great to see how three individuals have built such a successful and credible empire. It takes courage, long hours and sound judgement. They are South Africans with exceptional leadership capabilities as well as being excellent bankers, with a lot of wisdom, who have allowed investors to take an amazing ride with them. But it is good to see they have some balance too, as I have heard many stories about their golf endevours on golf courses both here and around the world (Corporate publication, 2008, p. 8).
Conclusion
FirstRand is a dynamic organisation that developed over several decades built through three major strategic transactions. The group’s origins lie in an entrepreneurial-led business, which was built from scratch. This entrepreneurial stance and a spirit of innovation are evident in the DNA of all of its businesses. “We have remained a very entrepreneurial group…but have managed to combine innovation and entrepreneurship with the disciplines required for a large financial services group” (Corporate publication, 2008, p. 3). Growth over time has been driven by distinct strategies such as a multi-branding approach and the group’s unique structure. Some of the praise for this group and its founders from different vantage points confirms the impression that FirstRand is no ordinary company. A strong impression is that this business group is an organisation that continuously reinvents itself. The group has been described as a credible empire, a success story and the organisation’s people, a credit to the country. In the next chapter my gaze shifts to where it all began: with three entrepreneurs deciding to start a small business.
48 CHAPTER 4: THE FOUNDING PARTNERSHIP
Introduction
It took more than 30 years of hard work and many tough business decisions to build this group as it stands today. The end result is a corporate giant, but where did it all begin? The FirstRand story started with three people. When GT, Laurie and Paul came together, these intrepid entrepreneurs had no idea that they would be instrumental in building a financial services empire. “It was a journey that was helped by being at the right place at the right time” (Forbes, 2013, p. 14).
In media articles there is often a short recap on the group’s history and a brief reference to how the founding partnership started. For instance, GT Ferreira and Laurie Dippenaar “…are two of the three musketeers who were joined by Paul Harris in the early days of the formation of Rand Consolidated Investments (RCI) – the business that is today FirstRand and all its offshoots” (Finweek, 2013, p. 16). Other references to the founding partnership include for example: “He is one third of the partnership” or, “he forms part of the three-man band” or “the trio of men”.
In the group’s corporate communication, how the founders came together as business partners, typically amount to a mere sentence or two. However, employees are well versed in the history of how the founding fathers started out. The story has been told and retold many times over and is ingrained in the fabric of this group. Its entrepreneurial spirit, on which it prides itself and still permeates the group today, stems from the founding partnership.
A business partnership formed over three decades ago, set in motion a chain of events. What transpired was something much bigger than anticipated at the outset, as is apparent from Laurie’s words: “Not for a nano-second did we think we would grow to this size” (Forbes, 2013, p. 18).
This chapter considers the circumstances that brought the three men together and the founders’ mindsets right in the beginning. How the founding partnership started is intricately linked to their first small start-up business, however I handle the two story lines separately and RCI is the focal point of Chapter 6.
49 How the partnership formed
I heard about the very beginning of the partnership from the founder who is credited for having the idea, for handpicking his business partners and for getting their first small business, RCI, off to a good start. To hear the story from the proverbial horse’s mouth in a private audience is a rare opportunity. “I guess you probably know the story of how it started?” is the rhetorical question with which GT drew me in (G. Ferreira, personal communication, 16 May 2008).
In his gentle voice GT offered, “for what it’s worth”, to put the story into context. He must have told the story hundreds of times over the years to growing numbers of employees, shareholders, the media, financial analysts and so forth, but he still managed to make me feel as if he was telling it to me, afresh. It made for easy listening. On later reflection I thought about how he kept his descriptions simple, especially on the technicalities of high finance, which was but one of his strengths and none of mine.
Like many students making their way through a university education, GT did not necessarily have in mind the exact direction in which things would unfold for him career wise. At Stellenbosch University he majored in finance, economics and marketing. A MBA degree followed. Afterwards he was attracted to the advertising business because, “It was creative. The guys earned good salaries. You got a car and there were pretty girls” is how he jokingly explained his interest. As he spoke I thought it sounded like an ambitious person sizing up a world of possibilities. Much later I would come to realise that this brief narrative showcased two of GT’s defining qualities – his capacity for pragmatism and his characteristic sense of humour.
Yet, the world of advertising would not see GT join its ranks. Instead he landed, completely by coincidence, in banking. He joined a small bank, the Bank of Johannesburg, and was kept busy putting together structured finance transactions. “We happened to be rather successful at the structuring of these transactions,” GT remembered. In fact, so successful that:
We eventually had used the complete tax base of the bank. This meant the bank no longer enjoyed a benefit that it could pass on to the client via lower interest rates. This forced us to start using other tax bases and we then, for example,
50 went to Senbank or other people in the group, saying we have a transaction and
will handle the funding, but we just need to use your tax base.
After we had completed a number of transactions like this and also because most of these involved municipalities, who back then had very good credit ratings, meant that we were doing transactions with money that we borrowed from the likes of Sanlam on a long-term basis and using another company’s tax base. This meant, in other words, that we no longer needed a bank” (G. Ferreira,
personal communication, 16 May 2008).
With a number of practice laps behind him with transactions of this nature, GT’s experience was bolstered. “This is where the idea came from”, he told me. GT still remembered the conversation with himself all those years back: “I had the knowledge, the background and the contacts and the idea, if I may say so, but I did not have the accounting background.” With a small sigh, he explained the intricacy: “The thing gets terribly complex to sell and to structure.” The challenge seemed to be not so much in the structuring of these transactions, but the bookkeeping, proved to be tricky.
It is at this point that GT approached Pat Goss with his idea. As a matter of interest, GT pointed out, he first met Pat at the Army Gymnasium. Afterwards they both headed for Stellenbosch University and happened to be in the same men’s residence on the Maties2 campus. GT reasoned that you go to someone that you know, that you can trust and that you know you have common touch points with. This is how he framed his decision to approach Pat. GT was all too aware of how people sometimes sneered about the old school ties. “But it is because you know someone. If you’ve been through the army together, through university together, you know which guy is honest, you know which guy works hard” (G. Ferreira, personal communication, 16 May 2008).
GT thus handpicked Pat Goss as his first business partner and got Pat to go along with his plan. Pat was working at the Industrial Development Corporation (IDC) at the time and agreed to the wild plan (Fischer-French, 2005). Pat in turn, came up with a suggestion of his own, someone who could work with numbers. GT was specifically after this skills set to complement his own know-how. GT remembered it as happening more or less in this way:
51 Then Pat said, “Look I have a friend here who I would really like to bring in”, and that was Laurie Dippenaar. GT responded with: “Look, I don’t know the guy. I don’t know what he can bring to the table, but if you say it is all right, let’s do it!” (G. Ferreira, personal communication, 16 May 2008)
Pat effectively vouched for Laurie and because GT trusted Pat, “this is where the three of us started” (G. Ferreira, personal communication, 16 May 2008). The initial founding partnership, the first nucleus consisted of GT, Pat and Laurie. The phrase “let’s do it” cemented the partnership and saw a novel business idea transform into reality with the launch of RCI. The year was 1977. The mission of RCI was to focus on structured financing and leveraged leasing (FirstRand Philosophy workshop, 2007).
RCI was started with R10 000 in pocket money. Notwithstanding, it was run like a proper company from the start. Three months into RCI’s life, Pat Goss’ dad passed away and he resigned to attend to the family’s business. He described the circumstances in the following way:
When my father died, I had to help my mother wind up her estate in the (former) Transkei and therefore had to resign from RCI. But I have remained a director of FirstRand and a good friend of the founders (Corporate publication, 2008, p. 8).
GT once again looked for common ground before bringing in a new partner. Another university friend, Paul Harris, was called to fill the gap (Forbes, 2013). Paul and GT met at Stellenbosch University and Paul was a former IDC colleague of Laurie’s, also involved in structured financing. In GT’s words, “This [emphasis added] is how the small group formed” (G. Ferreira, personal communication, 16 May 2008). Henceforth, when mention is made of the founders, it refers to the three-man band of GT, Laurie and Paul.
Handpicking partners
GT is avid in his recollection that the founders’ coming together was anything but a random act. There was a selection process after all, in the “original thing”. It is not as if it was this wild shot in the dark. From the beginning GT had always made it known:
52 “I would like a partner that I wouldn’t mind going away with for a weekend or on holiday with.” It did not imply that the other person had to enjoy the same things that he did, for instance, like hunting. He explained, “You can find many different touch points with people.” At the heart of it, it had to do with, “Do you fit in?” As the organisation grew bigger, “…of course you can’t keep to it” but in the beginning, this is what GT was looking for in his partners (G. Ferreira, personal communication, 16 May 2008).
With GT handpicking his partners the scene was set for a unique journey and a special friendship. Shared history, trusting your gut feel, finding shared interests and not minding spending time together, all played a role in how the original partnership formed. Over decades this glue, which bound their destinies together, was to grow stronger.
The founders’ mindset
On asking Laurie what was going through the founders’ heads right at the beginning, he responded with: “That’s relatively easy. One of the common denominators was that all three of us were inherently entrepreneurs. We were all interested in business” (L. Dippenaar, personal communication, 13 May 2008). These two factors were vital in binding the partners together. When they started out, the founders were young guys on the block (P. Harris, personal communication, 19 May 2008). GT, Laurie and Paul were close to celebrating their 30th birthdays. They were clear about their goal. “For the most part, people who start a small business have one main goal, simply put, it’s about making money. And because it is difficult to start from scratch, survival is a huge factor” (L. Dippenaar, personal communication, 16 May 2008). While the founders were intent on making money and surviving, building big was not what they set out to do. In Paul’s words, “If you had asked us when we started if we saw our future running a company the size of Sanlam we would have laughed. We were hustlers who saw an opportunity” (Fischer-French, 2005, p. 40). Laurie agreed, “Did we think we will ever end up here? Never” (L. Dippenaar, personal communication, 13 May 2008).
Of the three, GT had the most hands-on experience to bring to the table, but this was not all that was needed. “In merchant banking you cannot only be clever and have experience, you must also be hungry. We were equally hungry and keen” (G. Ferreira,
53 personal communication, 16 May 2008). GT further illuminated how things worked practically over the years:
There was a time that I probably played the most important role because I had the knowledge. There was another period that Laurie of course took the lead and currently it is Paul. Our shareholding was not always the same, but I would like to believe that we always viewed and valued the contributions the same (G. Ferreira, personal communication, 16 May 2008).
Trust played an important role in how the partners came and worked together. Reflecting on their success years later, Paul singled out “…always trusting one another” as one of the secrets to the founders’ success (P. Harris, personal communication, 19 May 2008). In handpicking his business partners, GT was guided by his belief of wanting partners that he could see himself spending a weekend with. Laurie pointed out, “We are similar people. We don’t take ourselves too seriously. That is very important” (L. Dippenaar, personal communication, 13 May 2008). GT echoed the same sentiment (G. Ferreira, personal communication, 16 May 2008). Paul mused, “We just wanted to get things done. We didn’t have big egos” (P. Harris, personal communication, 19 May 2008). When your business starts from humble beginnings and consists of only three members, it makes perfectly sense for egos to stay firmly in check. Thirty years on and with employee numbers in the group exceeding 38 000, the founders were still only ever introducing themselves simply as GT, Laurie and Paul.
Things started small. Paul talked about starting out “…from nothing with innovation…I mean RMB started from nothing” (P. Harris, personal communication, 19 May 2008). Being small however, does not mean that you are not serious. That is why they ran their small business like a proper company from the start. Owing to small origins, a lot of things came about intuitively. What was instinctive and natural in the beginning was articulated and found to actually work. “The things your mother taught you” and “values come from your wiring” are both aspects that Laurie emphasised (L. Dippenaar, personal communication, 13 May 2008). Paul maintained, “we realised that this [emphasis added] is the way you should be treating people” (P. Harris, personal communication, 19 May, 2008). Laurie further added: “We behaved naturally. We didn’t really do anything over the years that we read in a textbook. We essentially just
54 applied a management style that was natural to us” (L. Dippenaar, personal communication, 13 May 2008).
Interestingly, over the years the founders, on occasion, were caught by surprise when made aware of a book or that an actual “name” exists for something that they have been doing for years. Laurie likens it to traditional medicine and elaborates with: “It is like something used by a witch doctor [traditional healer] and later a pharmaceutical company picks up on it and develops it into a medicine. But someone long ago already realised that if you use a particular leaf on a wound, it has antiseptic properties” (L. Dippenaar, personal communication, 13 May 2008).
Paul echoed Laurie’s view in talking about applying a management style that is natural and authentic. “You have to be a bit natural too, it has to be how you are naturally….It is not necessarily the only way to do it. But it’s the only way we know how [emphasis added]” (P. Harris, personal communication, 19 May, 2008). Laurie firmly acknowledged, “…that there are, in all likelihood, other philosophies, which are just as good as ours, with different types of companies calling for different approaches (L. Dippenaar, personal communication, 13 May 2008). Laurie remembered the beginning as, “You don’t sit around a table and discuss values. I didn’t know GT and I knew nothing of his values. You start by doing things and the value system then comes through in the doing. Problem solving, we’re in a situation, now what?” (L. Dippenaar, personal communication, 13 May 2008)
Soon enough the founders realised they were in alignment in terms of values. “If one person wanted to dominate or consistently impose his will on all, it wouldn’t have worked.” Laurie expanded, pulling me into his story:
Surely in my marriage there was also role division that came about naturally. “And that role division was not always conventional, right?” A faint nod was all the agreement he needed. Laurie continued with, you might not be mad about cooking but your husband might be a keen cook. It happened to be the exact case for a friend of his, where his wife disliked cooking and happily left this over to her husband. It might not be a traditional division of roles, but it suited them both just fine. Neither the wife nor the husband felt threatened by this allocation of roles (L. Dippenaar, personal communication, 13 May 2008).
55 The point of Laurie’s anecdote was that the founders quickly saw a natural role division developing and because it practically worked like that, they went along with it. When they started out there were friendship ties helping things along. In fact, Laurie explained, it might have been the founders’ wives who had the stronger friendship ties in the beginning.
There is also a coincidence that rarely happens in other situations where people work together. So, Estelle [Laurie’s wife] and Jean [Paul’s wife] and GT’s wife, Anne-Marie, all coincidentally attended Stellenbosch University at the same time. They were contemporaries and continued to be good friends.
The founders are absolutely friends but maybe more importantly, our wives are friends. This is probably a critical element, because if they weren’t, then the friendship can fade. Not that it means a loss of friendship, but you don’t have the same closeness any longer. It’s not just tolerating each other. I mean, who could have predicted that the women would be friends? Some things are just coincidence and is not necessarily going to be repeated. There is luck also in this whole recipe (L. Dippenaar, personal communication, 13 May 2008).
In business, friendship is hardly the goal, but an unexpected by-product in this partnership is that a strong friendship developed.
Conclusion and interpretation
How the founding partnership formed set the scene and tone for everything that followed. This is a strong legacy that runs through the entire business story. It laid the foundation for a way of doing that evolved and endured thereafter. When FirstRand was formed, this way of doing was articulated into the group’s philosophy.
From humble beginnings and a small nucleus of like-minded individuals, a strong partnership was created. In walking the path together the founders went along with a natural role division that fell into place. This is hardly a surprise as GT handpicked partners he trusted and who complemented his own skills set. What he could not foresee is how pivotal this business partnership would turn out to be. Reflecting on his career, GT cited his best ideas as, picking the right partners and starting RCI (Corporate
56 publication, 2008). In time others would join them and help to grow the business into a sustainable business. However, in the beginning, it was the founding partners who owned and shaped the business.
In this chapter the focus was on the origins of the tripartite, entrepreneurs at heart, with youth and appetite for business, in common. Amongst them they had the makings of a strong team. The phrase “let’s do it” cemented the partnership, launched RCI and became an underlying attitude that would prevail. It would be passed on from the founders to other like-minded individuals and become multiplied many times over.
My sense is that the young founders turned their backs on job security and promising careers with, in those days, “good” employers to start something of their own. The business of financing capital projects was a sophisticated business. The founders took a leap of faith and got in early on what has been described as a wild plan. The founders were clear about their goal, making money and seeing their small business survive. Building big was not what they set out to do.
Next, the discussion shifts to the individual founders and a strong complementary effect.
57 CHAPTER 5: THE FOUNDERS
Introduction
This chapter offers a glimpse of what makes each founder unique. Vital to the FirstRand story is the combination of the founders that speaks to the heart of synergistic relationships. What comes to the fore is certainly not all that can be said about them. I heard such rich narratives that a book probably should be written about each of them. However, a participant thought that it is unlikely that you will see a book about these respected businessmen or an exposé about their lives, because they happen to be very private people. My hope is to capture something that resembles a likeness of them individually and collectively. It has been a challenge to decide where best to weave data into the chronology. As the chapters unfold, more will come to the fore on their respective styles.
GT Ferreira
Figure 3. GT Ferreira. Reprinted with permission from FirstRand.
58 On meeting GT
By way of introduction, the initials G. T. stands for Gerrit Thomas. In the organisation and publicly he is known as GT. At the end of an internal memo, he ends off simply with, “Kind regards, GT”.
When I met GT in 2008 he was the outgoing non-executive chairman, a role he served in for 10 years, since the creation of the group in 1998. I was told before setting out to meet him, that nowadays, “GT farms”. I thought the phrasing was peculiar. It sounded very casual, as if this farm was a place to leisurely potter around on. The reality is that it is an award winning wine farm, the spectacular Tokara property on the Helshoogte Pass, near Franschoek, with which GT has made a name for himself in the Cape wine industry. He also coined a new phrase for the wine industry: ROE, meaning “Return On Ego” (Ferreira, 2013).
Besides the “GT farms” comment, I also heard that this man is an absolute gentleman, the ultimate diplomat and that he will make you feel like his best friend. The chance to get into his diary came about sooner than initially anticipated. “Can you go and see GT in Stellenbosch the day after tomorrow?” Of course I could and booked a red-eye flight from O.R. Tambo International Airport.
The office development where “the Office of GT Ferreira” is situated is in a leafy and tranquil street that oozes Stellenbosch charm. The gleam and smell of the wooden staircase leading up the first floor office worked its magic on me. It felt solid and wholesome. This setting could not be more different from the corporate head office in Sandton, Johannesburg where I met with Laurie, Paul and other executives. The group’s head office is one of understated elegance, yet it still stood in definite contrast to GT’s more informal and atmospheric base.
I noticed GT’s personal assistant referring to him as Meneer3 Ferreira. She was clearly full of admiration for her boss. When GT walked in, his manner was warm. We smiled and shook hands, taking our seats on opposite sides of his large, yet comfortable looking desk. His office was not pretentious. A wooden bookcase lined the one wall with ample sunlight streaming in through the windows. It looked like a place where you could air your thoughts.
59 In the prime of life at 60
GT appeared tall and trim, dressed in jeans. Not everyone can wear jeans well, and not everyone can pull-off the casual Friday look and still look put-together. He could do both. What struck me about him is how fit and youthful he looked. If I had not known that he celebrated his 60th birthday only weeks before, I would not have guessed it. I thought of the cliché: “Age is only a number”. In this case it seemed to ring true. GT was the first of three founders to reach, as he referred to it in typical tongue-in-cheek manner, “the ripe old age of 60” (G. Ferreira, personal communication, 16 May 2008).
I was aware of his 60th birthday bash making it into the newspapers and causing a bit of a media buzz. I heard that it was a magnificent occasion. The guest list read like a South African “Who’s who” of business leaders, VIPs and people near and dear to GT over the course of his life and career. Guests apparently received invitations hinting at a surprise to come. On arrival at the rendezvous point, guests boarded a plane to a secret destination. The whole party was flown to Mauritius. “I was lucky enough to be on the invite list when GT took all of us to Mauritius”, is but one of the narratives I heard. During the main celebratory event GT delivered an incredibly moving speech. He spoke about his parents and his life story, and “…when GT started crying…everyone sat with their napkins wiping away tears…people were so touched” (A. van Zyl, personal communication, 28 July 2008). Laurie followed shortly on GT’s heels in celebrating his 60th birthday in 2008 and Paul was next to reach this milestone. The issue of age came up at different points in our conversation. GT thought of 60 as more or less marking the prime of one’s life, intellectually and experience wise (G. Ferreira, personal communication, 16 May 2008).
When my conversation with GT got underway it did not take long for it to flow with ease. What he talks about is as revealing as how he talks. The topics just kept coming. He speaks in a gentle unhurried manner, listening attentively and often reflected back with, “your words” before he responds to a question or embroiders on a thought. He spoke with humility about people and events and I interpreted his phrase and offer, “…to put things into context for what it is worth”, as the first of many displays of humility.
60 Organisational culture is a difficult concept
In GT’s view, organisational culture is a difficult concept. He used to summarise the culture of an organisation as the values of and way that senior people in the organisation behave, which sends a message to other people as to how they should react in certain situations. He agreed with the statement often made by Laurie, that the enterprising culture of the group is the secret to their success. However, GT maintained there are of course a number of other factors that contributed too, but by and large, culture is probably the most important factor.
Stellenbosch was GT’s turf in his student years. He checked for common ground, “You did not study here?” and noted my: “No, I was a Raukie4.” He shifted smoothly into narrative gear remembering a dynamic he observed as student. There was a system in place of first years’ residences at Stellenbosch University. Only after your first year could a student choose which residence they wanted to go to. In GT’s years, one such men’s residence was Dagbreek5 and the senior students in this residence, for some reason or another, were all enrolled for theology studies, or Tokkelokke6, and was as such seen to be more conservative. At the end of the first year, when students could choose, the guys that liked the Dagbreek (see Footnote 5) regime opted to stay. The guys that did not like the regime, left. This resulted in a homogenous type of residence, not something in GT’s mind, that you ideally want at a university. However, if you took a group of first year intakes and placed them in the same residence and they progressed through first, to second to third years jointly, it resulted in a much more balanced situation (G. Ferreira, personal communication, 16 May 2008).
Seeing this mechanism of natural selection at work taught him much about how culture develops and functions in organisations. The choice remains in the hands of the individual – cultures attract like-minded people and those who do not like a culture, step-out and go elsewhere. I noted that GT used the word regime more than once. He would later talk about culture as a mantra. Strong words I thought at the time and revealing.
GT sometimes compared the incredibly strong unifying effect of a business’ culture to provincial rugby. Historically, in South African provincial rugby, it was said that Western Province (WP) played running rugby and Northern-Transvaal played kicking
61 rugby. If you look at the history then you could see that each of those teams had won more or less the same number of trophies. So there is not only one strategy that can lead to success. Why then compare culture to rugby teams? In GT’s mind because it is useful to illustrate the difference, as each of these teams with their different strategies can win, but you have to know which team you are playing in. Because if you suddenly come up with kicking rugby in WP, you destroy the WP pattern of play and vice versa. It is probably different in the present day, but that is how things used to be, he maintained.
Analogies for business
As I was listening to GT’s comparison of organisational culture to rugby, I did not know at the time that he played good rugby in his younger days. In fact, as a sportsman, he excelled in a range of sports. In athletics it was the triple jump. I later heard a participant recall an incident from an interuniversity athletics meeting of 7 decades before where he was competing as part of the Rand Afrikaans University
(RAU) team. “Here came this Maties (see Footnote 2) guy who kept everyone going, chirping the whole time. That guy was GT Ferreira.” The participant still had the athletics team photograph on which he and GT appeared together (F. Swanepoel, personal communication, 17 August 2012).
Knowing GT was a good sportsman might explain something of his tendency to often reach for a sporting analogy to illustrate a point. The analogies just kept coming, from the holiness of provincial rugby, to a cricket match, onto running a race, a marathon, a perpetual relay, to the world of heavyweight boxing, the paddle sport canoeing and coming back to rugby again. He used the analogy of a cricket match to describe the loose-tight structure that developed in the organisation over time. GT argued that if a batsman is doing well and hitting sixes, a captain will let him get on with it. But if things start getting difficult and you have lost a few wickets and the light is becoming poor, then the captain has to get up and say, now is the time for more cautious play and blocking. In certain times you can loosen the reins, at other times it is necessary to tighten them (G. Ferreira, personal communication, 16 May 2008). GT compared the process of the founders’ exit from executive roles and the handover to the next generation of leaders, to that of running a race. Sometimes people say it is a race over 100 meters, possibly a longer race, maybe a marathon. GT disagreed. His
62 comparison was that of a perpetual relay. He pointed out that many batons had passed hands in the group’s history. You take the baton and you run your best round or rounds and then you hand over to the next runner in the best possible way. Then it is up to the next person to run a strong race. At one point he spoke of the danger of executives hanging on for too long to their positions. In the world of heavyweight boxing only one champion retired unbeaten. Every time they stay one fight too long. Be very careful not too stay too long, cautioned GT.
Leadership succession as perpetual relay
To put the founders’ success into perspective, GT sagely reminded me that along the way you needed a bit of luck. His image of two canoes, the one canoe getting into a fast-flowing stream and the other getting stuck in the reeds, was a particularly memorable one.
We were very lucky that we found ourselves in the right stream. Once again it’s the story of two canoes, one guy lands in the fast stream, the other in the reeds. They are equally good but one guy ends up in the fast stream. In our case the financial services stream flowed quickly and it went well. We were also very happy that our temperaments, our talents were complementary (G. Ferreira, personal communication, 16 May 2008).
GT raised many other analogies too, for instance, talking about when a business encounters a serious setback. You could but a Band-Aid on the wound. In time a scar might remain, but at least it is not terminal. It might even be a good thing for an organisation. He spoke too about birds flying out of formation and that this can break the speed of everyone. However, it was sport analogies that topped the leader board, so to speak. He was undoubtedly aware of this quirk, because with a wry smile he prefaced his next example with, “sport again”, and with that he launched into yet another example, with rugby picking up another mention.
At the time of our conversation, GT seemed to be in a contemplative mood. There was much to occupy a chairman’s mind. A particular business area had suffered significant losses. There were some musings and signs of unease about the founders’ departure.
63 The details of their transition were being carved out. The group was celebrating its 10th anniversary since its formation and there was much to reflect on.
On a national level, it was an election year with Jacob Zuma the frontrunner for a first presidential term. GT evenly remarked that the organisation had been very successful throughout the years. The group was uniquely diversified, had a stable balance sheet, provided shareholders with very good returns and had an excellent management team and prospects for the future. However, he conceded, 2008 was turning out to be a tough year and probably the first year “where we stepped into a few traps”. Mistakes had been made, and accountability for this, stretched beyond the affected areas and as far as board level. Meanwhile the global economic crisis was still unfolding and its impact was far from being entirely clear.
GT knew that one of the aspects that interested me had to do with the organisation’s culture and its role in contributing to the group’s steady successes. “You say our culture is so fantastic” – he picked up on my sentiment, if not my actual words. What followed was a candid revelation on his part that made for an interesting juxtaposition. GT shared with me an opinion expressed by the Registrar of Banks, the banking sector’s external regulator. The Registrar had apparently proportioned some of the blame for the mistakes made and the significant losses in a particular area, on FirstRand’s culture and structure. The Registrar was of the view that too much responsibility and authority had been left to the divisions, without strong enough central decision-making at times. GT was of the opinion that the Registrar’s perspective was an interesting one. In the division that took serious knocks, questions were asked, but were enough questions asked? Probably not, he concluded. I was impressed with how candid he was, how he shared a potentially less flattering perspective and how he admitted that the senior leaders were not exempt from making mistakes. Many leaders cannot bring themselves to own up to mistakes.
At one point, GT said with a smile, in merchant banking the egos can be big.
You have to work with those egos, but then again, to get the team right, if you do not care who gets the credit ... sport and rugby again ... it does not matter who scored the try, as long as you score the try. Give the ball to the guy who has the best chance to score the try and win the cup, rather than try so hard to get
64 the glory yourself. But it's a tough one. It's also difficult for sportsmen and women (G. Ferreira, personal communication, 16 May 2008).
As a leader he had to find a way of working with the big egos on display in a merchant bank. In contrast, GT’s leadership seemed to be marked with great humility as the following narrative illustrates:
GT has always been extremely humble in his treatment of me. A small touch is the fact that each time he wants to talk to me, he personally picks up the phone and calls. He never gets an assistant to put me on hold. Small touches like that make a huge impression” (M. Phaff, personal communication, 28 July 2008).
One of GT’s favourite sayings, “There is nothing that we can’t accomplish as long as we don’t mind who gets the credit”, stems from the days that he headed up RMB. Much later I came across an article, by chance, that refers to the sign that United States of America’s president Ronald Reagan kept on his Oval Office desk: “There is no limit to the amount of good you can do if you don’t care who gets the credit” (Matthews, 2013). This saying seemed to have inspired more than one prominent leader. A further important perspective on leadership had to do with how GT views the role of a leader. He made it known that a leader’s role was not to make all the decisions, but rather to facilitate good decision-making.
In GT’s view the most important responsibility of a leader is, if you leave, there should not even be a ripple. It needs to be a seamless handover. It should not be a jarring thing. This is a profound leadership perspective in my estimation. His image of leadership succession as a perpetual relay, with the baton being passed on from one runner to the next, comes to mind again. GT also relayed that early on, when the business was still young, the founders took the decision that it would not be a dynastic organisation. If any one of the three decided to leave, the business essentially could not continue, GT explained. Therefore they had to grow the business so big, that any one of them could step out without as much as a ripple to be felt.
The first acid test came when GT was the first of the founders to leave the organisation to become non-executive. The circumstances that prompted him to get “off the track”, as it is often referred to in the media, was as a result of a botched hijacking in 1992
65 which he miraculously survived. Different participants speculated that GT’s departure softened the markets and probably prepared the way for Laurie and Paul stepping down from executive roles, later on. As for the transition to the next generation, GT’s message was clear: “…we have many good runners” (G. Ferreira, personal communication, 16 May 2008). When GT, Laurie and Paul retired as founder-owners it was not a crisis, such is the confidence in the organisation and the quality of its leaders.
Work harder than the competition
GT revealed that he is mad about the film industry. His son was in the film industry with his sights set on becoming a film director. If GT had to offer his son financial advice, he would be conflicted. Simply doing the math, it was clear to him that filmmaking was not a very successful industry, since eighty percent of films made losses. Despite it not making good business sense, he would likely hold back on his cautionary advice. The reason for this stems from one of GT’s firm beliefs: regardless of what you do, you are not going to achieve success if you work from 8-to-5. You have to work longer hours than your opposition. If you dislike what you do, then you will want to go home. You have to find yourself an industry, that when it is 7 p.m. you have to almost force yourself to go home. Whether in the film industry or any other, you will not achieve the highest step on the success ladder if you do not like what you do, or the environment, or the culture. It is because of this philosophy that GT had no choice but to say to his son: “Man, follow your dream!”
GT’s love of movies was clear. Knowing that I had recently moved to Tokyo, he asked me whether I had seen the Japanese version of the movie, Shall we dance? It apparently preceded the Hollywood blockbuster and he thought this version was infinitely better. It turned out to be a jewel of a recommendation.
Mischievous and a skilled diplomat
GT has a unique wit and a sense of mischief. I heard the view, “he’s a mischievous fellow”, from different participants. He appears to always be ready to lobby fun at himself and others. There was a light tease that came my way, when he solemnly said, “You know that I have Industrial Psychology 3” (G. Ferreira, personal communication, 16 May 2008). GT did not seem to take himself too seriously. He also does not seem
66 to spare anyone. He was quoted in a media article joking about marrying his wife just in time to support him through the first nine months of RCI’s life. GT’s mischievous side came through in many examples. Not many people can flatly mention their intention of making money in Gauteng and then returning to Stellenbosch. To me GT came across as relaxed and unaffected, speaking openly. When a cautionary stance slipped in, it had to do with being sensitive to the feelings of others in the organisation. Once he checked himself, “Now I am worried what you are going to write if I tell you this.” It was clearly important to GT to project people’s dignity and the company’s reputation.
GT is not one to censor himself when a mild swear word or two interjects in a sentence. He can plant a straight punch, but his skill is that of straight-talking diplomacy. No doubt he is good with words and he writes equally well. He had me pause with: “Quickly switch off the recorder and then read this little something I wrote”. GT handed me a then recently written memorandum. In the subject line it read: “The Hunters who became Farmers”. It was a well-crafted memorandum in which he stood his ground, possibly exposing a nerve. He used vivid images to challenge the next tier of leaders in a particular business to be bold, to venture out of what could be read as a comfort zone, and like the founders who came before them, develop a taste for hunting big (Ferreira, 2008).
Later I heard that a colleague had kept a file with copies of things that GT had written and said over the years. This narrator recalled one example, a memo that talks about not taking your eye off the ball, which would, in his opinion, be as relevant in the present as it was when it was written all those years back. At an obvious level there is GT’s trademark wit, but without fail there seems to always be a thought-provoking message.
A strategic perspective and critical gaze
GT is a Stellenbosch man. It was always his plan to make his money in Johannesburg and then return. If one considers the friendships formed at Stellenbosch University and the notion of the “Boere Billionaires” who hail from under the oaks at Stellenbosch (Whitfield, 2013), GT’s connection to this town is absolute in loyalty.
67 Regardless of the many pressing issues on the mind of the outgoing chairman in 2008, I came away thinking that a reflective mode was likely a default setting for GT. He looks at things with a critical gaze. To listen to him is to know, this is what a chairman sounds like. It is clear why GT commands so much respect in the organisation. Laurie had deep respect for his fellow-founder, in fact, he was always the first to say: “Talk to the chairman” (L. Dippenaar, personal communication, 13 May 2008).
GT seems to bring a strategic perspective to every point of conversation. His perspectives on the organisation seemed to be a couple of steps removed. In my view it was not a result of being geographically further from the corporate base or the fact that GT had been away the longest, having “retired” from active duty 15 years before. I got the sense that GT looks in on things - what management consultants like to refer to as – taking a “helicopter view” on matters. He is the voice of reason and offers a balanced view. GT challenged me more than once during our conversation. Other examples include the challenges he put out to specific businesses, cautioning them against falling into traps, comfort zones and big egos tripping them up. In one of his memorandums GT placed the word, retire, in inverted commas (Ferreira, 2008). It is not a coincidence I suspect. Entrepreneurs such as GT and his fellow founders, Laurie and Paul, do not “retire”. They simply do not.
Before we parted GT asked me questions on what I saw as the outcome of my study. He was clearly curious. “Are you going to say we went about things in the right way? He shook his head slightly, almost a bit disbelieving. “You know, I don’t know what you are going to get to, I can maybe give you a bit of guidance, but build a similar organisation, I don’t know if it can be easily done. I don’t know how it happened, this thing…it happened” (G. Ferreira, personal communication, 16 May 2008). Herein lies a deep truth of the FirstRand story.
In closing
On reflecting on my conversation with GT, I remember thinking how easy it was talking to him. In fact, it was so easy engaging with him that I probably did more talking than I intended to. If he was somewhat amused by how he drew me in, it of course never showed. But then, it fits right in with how other role players describe the
68 effect he has on people. GT is an impeccable observer and listener. He is indeed always the gentleman.
GT is a man with a stellar nose for business – for banking and wine farming. But then, even in the early RCI dealmaking days, he was dreaming of buying more farms. Offering a balanced perspective and acting as wise counsel were aspects of his interpersonal style that lingered with me. This was confirmed when I asked him if he could suggest other role players in the organisation to whom I should talk, who could add interesting perspectives on how things developed. He thought for a moment and started this way: when his overseas friends come to visit the country, he is happy to show them the Cape’s beautiful places. Let them see the mountain and appreciate the scenery, but they also need to see the informal settlements, the harshness of many people’s daily struggles. GT’s point was this: “Don’t just talk to the prophets”. Talk to the cynics in the organisation who might not have agreed with everything, talk to those who need to take over the baton in terms of succession. Get the full picture. His recommendations were every bit as valuable as I had hoped for.
Weeks after interviewing GT, the expected speeding fine arrived. As I drove into Stellenbosch on the day of our meeting, a traffic camera caught me driving 80km in a 60km zone. It was worth every Rand and cent and I paid up with a smile.
Laurie Dippenaar
There are many qualities that make Laurie, or Lauritz Lanser Dippenaar, incredibly special. In the present he is the non-executive chairman of the group, a role that he is not planning to relinquish within the next five years at least (Mittner, 2011). Before meeting Laurie, I was told that he is the numbers man. Those in the inner core also spoke of him as the values man.
On meeting Laurie
On meeting him and hearing the word Teazers, a South African adult entertainment bar, roll from his lips (L. Dippenaar, personal communication, 13 May 2008), was somewhat unexpected. The name Laurie Dippenaar and the name of this establishment in the same sentence did not go together. But some stories, irrespective of how
69 colourful, need to be kept waiting in the wings until the timing is right. Such is the lot of this morsel of a story. That much I learnt from observing a brilliant storyteller at work, Laurie Dippenaar!
Figure 4. Laurie Dippenaar. Reprinted with permission from FirstRand.
Of the three founders, I met Laurie first. I arrived early on a Monday morning and welcomed the extra minutes to settle the butterflies in my stomach. In mere minutes I would be in the company of one of the most successful businessmen in the country, and a billionaire at that. As Laurie walked in, I noticed that he was a big man, taller than I had gathered from photographs. He too picked up on the contrast in our frames. When we shook hands he spoke his mind: “You have tiny hands. You are tiny.” A smile spread easily and generously across his face.
It did not take long to warm to Laurie. He apologised for being a little late due to an overrun of an early morning appointment at his house. He brushed my, I-understand-
70 these-things-happen response, aside. He knew how much it irritated him when he was kept waiting in a doctor’s waiting room. As I positioned the microphone on his tie, he said with a chuckle that he would rather not help. He might just break it. Another inch of distance melted away. Only later did I hear that he was often teased about being impractical with anything remotely resembling mechanics.
I knew the answer already but still asked the question. How was I to address him? Predictably came the answer: “Everyone calls me Laurie”. He politely listened while I thanked him for taking an interest in my study. When I made the point that whatever information he shared with me would be dealt with responsibly and sensitively, he gently halted me in my tracks. He assured me that there was very little that he could tell me that had not been said in public before; it really was that transparent. One sentence that conveyed so much. Met with such openness, I put my preparatory notes aside.
I found Laurie to be respectfully professional in a very personable way. It did not feel as if I had only just met him. It somehow felt as if I knew him from before. That is the sense of comfort he creates with people, like being in the company of a favourite uncle, as one participant described it. I was told before my conversation with him, that he would require little guidance to get going.
Entrepreneurs start young
Laurie and I spoke in Afrikaans because it felt congruent. We were both Afrikaans native speakers, or so I thought. He shared that growing up, his home language was English because his mother was English-speaking, but he attended Afrikaans schools from nursery school onwards. This was advantageous to him in later life because he could easily make the shift across cultural borders. In those days, he reminded me, differences in language such as Afrikaans and English, functioned as a big divide. Both Laurie’s mother and father were medical doctors and he grew up discussing livers with his parents over dinner. Unlike the rest of his siblings, he was not interested in following in medical footsteps (Caboz, 2013).
As a child Laurie dreamt of owning a bank (L. Dippenaar, personal communication, 13 May 2008). “Dream thoughts” are what he equates this to, devoid of a concrete plan or 15 to 20 year timeframe. Like a good rugby player with a dream to one day play for the
71 Springboks, and not dissimilar to 5 000 other rugby players nurturing the same hopes. Listening to Laurie reminisce, I could see how boys could covet the dream of pulling a Springbok jersey over their heads. But owning a bank was sort of specific. To Laurie, it did not seem odd. You only had to look at what he termed “freakishly successful people” in business and sport to see how, in early life, inborn talent gets developed. He thought of the example of Warren Buffet, unequalled in his class, who started reading business books between the ages of six and 11. In one short exchange I learnt about two of Laurie’s great passions, business and Springbok rugby.
As a child Laurie would sit in church and guess how much each person would put in the collection plate and thus calculate the day’s collection (Caboz, 2013). A participant recalled that as a university student, Laurie ran a money lending business. It was this person’s contention that Laurie obviously lent to the right people, those who would pay him back. It illustrates the point that entrepreneurs do indeed start young.
Honesty and trust
The basic things can be traced right back to one’s youth. In Laurie’s case, it was his mother who taught him about uncompromising honesty. The following excerpt is revealing:
I incidentally had a mother who was a pain about honesty. You just can’t believe it. If she received a traffic fine, she would pay it on the spot. The instance she received it, she would pay up. The moment she bought something with “that piece of plastic”, she would put money into her credit card, just in case she did not see the monthly statement (L. Dippenaar, personal communication, 13 May 2008).
As he grows older, Laurie increasingly realises how important a person’s “wiring” is. His contention is that people are wired in a certain manner. Within that wiring you can still tweak to some degree. DNA is important. And yet, what boggles the mind is how a child, who grows up with siblings from the same parents, in the same house, then goes on to do something terrible, something incomprehensible.
72 In our conversation, Laurie spoke of one of the biggest success factors in his life. He singled out trust and his efforts at building trust. Making a further link, which to him appeared obvious, he noted that if you have a good value system in a company, it builds trust. This automatically leads to another priceless commodity, a good reputation. Elsewhere in our conversation he mentioned trust again. “We look for a certain type of person. Someone we almost like. We look for someone we can trust” (L. Dippenaar, personal communication, 13 May 2008).
In Laurie’s view entrepreneurs who start a small business have one main goal. Simply put, it is about making money. And because it is difficult to start from scratch, survival is a huge factor. For them as founders it was no different. Laurie stands for making money the honest way. The way in which he expressed this made a strong impression on me: “You don’t have to be dishonest to be competitive.” He shared that honesty was so important to him that he was even doubtful about someone entangled, by virtue of association, with a dishonest person. He elaborated with an example: like a wife who claims she had no idea about her husband’s underhanded dealings. How can she not know? Different voices described Laurie as scrupulously honest and he expected the same level of honesty from those around him (J. Burger & S. Moss, personal communication, 15 May 2008).
Best business brain and intuition
The successful turnaround at Momentum came with Laurie at the helm as its chairman. It was a matter of transforming the business, for one, by changing the mindset from that of copying competitors. Laurie made it emphatically clear: “Copying is not [emphasis added] what we are about”. This phrase and the way he said it, stuck with me. We do not copy. His strong belief that you can make money the honest way and outsmart your competitors with your ingenuity has much to do with the innovative mindset that took root within the group.
Laurie and his co-founders are rightly proud that they immediately spotted the potential of Adrian Gore’s idea for Discovery. I heard from different angles that much of the credit for Discovery belongs to Laurie. He has that ability to spot a good idea. And then he gives people wings. In our conversation Laurie referred to Discovery and OUTsurance as his babies. Later I came across an article in which he was asked if
73 OUTsurance was his favourite business in the group. The ever-fair Laurie declined to respond: “It’s like asking a parent, do they have favourite children – they’ll never answer that question” (Hogg, 2012, p. 3).
Laurie has been called by different names. A memorable one is that of “Mr Big Deal”. If Laurie Dippenaar is involved in a deal, you know it must be a big deal (Caboz, 2013). A colleague described Laurie as the “best business brain”. He made this point abundantly clear by repeating, best business brain, three times in a matter of minutes.
According to Laurie, the founders followed their instincts. What developed came about by acting naturally. It was not based on textbook thinking, and the management style applied was based on what felt natural to them. He made it sound believable, not like a stock phrase. I heard on good authority that the founders were definitely not hung up on management books.
An accountant by training not by attitude
Laurie trained at the University of Pretoria and holds a Masters degree in Accounting (Dippenaar, 2012). A fellow trainee accountant remembered Laurie’s youthful high spirits: “You could hear when the guys came down the passage for lunch. One guy’s voice was more prominent, louder” (F. Swanepoel, personal communication, 17 August 2012). The rowdy one turned out to be Laurie Dippenaar.
He started his career as an investigating accountant. Of his only three years spent working for someone else, he has this to say:
What I did at the IDC was to investigate companies for creditworthiness, and as you know there is only one thing that really kills a bank or…get [you] into trouble – is a really poor credit decision. So I thought that [the] three years I had there was absolutely invaluable by giving you a sense of who can absorb credit (Hogg, 2012, p. 4).
Laurie shared that he tended to be more conservative than the other two founders when it came to money. If he and GT were considering putting their own money in an investment, GT would for instance put in X amount of Rand. He would be far more
74 conservative and cautious than GT. I heard from different viewpoints of Laurie’s discipline with money. Regardless of the personal fortune he built up Laurie remained prudent. He shows no apparent interest in owning a wine farm.
FirstRand voices describe Laurie as being steady, solid, with a high level of integrity, scrupulously honest and concerned with doing the right things. He is very technical, can easily become pedantic and can be “a pain in the backside with accounting things”. In the founding partnership Laurie acted as the necessary brake at times. He is someone who will not embark on a new idea unless he has thoroughly tested it. Laurie brought thoroughness to the group and is known as the follow-through man for good reason (H. du Toit, personal communication, 19 May 2008). He is incredibly conscientious, almost in a schoolboy sense, “I must do my prep”. The more information Laurie has, the better. If you write a document for a meeting and Laurie is attending, then you know at least one person will definitely read it. There will be notes made all over the pages (H. du Toit, personal communication, 19 May 2008). In Laurie’s words, “I like to tell people I’m a chartered accountant by training, not by attitude” (Hogg, 2012, p. 4).
Laurie’s logic
I heard from Laurie how he arduously believes in checks and balances and thoroughly debating an issue (L. Dippenaar, personal communication, 13 May 2008). One of his ways is to pull you into his little stories and their plots. Laurie asked me, “Do you have children? There was of course a charming follow-on story to it. A narrator recalled with affection how he years ago asked her in an interview, “Why are you not married?” She knew, that how she answered this question, would tell him all he wanted to know about the kind of person she was. How she handled it was more important than the actual answer. He is direct and does not shy away from asking a risky question. He also does not shy away from asking a simple question.
Seemingly idiosyncratic is how Laurie, who is invited to the renowned international World Economic Forum in Davos, and described as “a man of enormous brains” has to understand something at a very basic level (H. du Toit, personal communication, 19 May 2008). He will keep up the questions, indifferent to how irritating it may be and to whom. He will not give in and will not say yes, until he understands the reasoning and is satisfied that it is completely sound. In the organisation Laurie is admired for asking
75 the so-called stupid question that no one has the guts to ask but is dying to know the answer to. At the time of the Momentum takeover, he relentlessly asked wonderfully obvious questions that no one could answer at the time: “How do you make your money? Who is your target market? What do we stand for?” During the FNB takeover he did the same.
One of his trademarks is that he is not impressed with big words. One perspective noted that it is incredible how Laurie will bring down the entire temperature in a room where someone is using big words. He has been known to shoot holes in this kind of posturing. He has a way of looking at things, that simplifies matters. He uses common sense thinking to zoom-in and to distill the essence of things. When you write something for Laurie, he wants it without “MBA speak”. He would implore you to find examples that make the principle or the message crystal clear, examples that people can relate to. Outgoing CEO of RMB, Michael Phaff, in his farewell speech described interacting with Laurie as follows:
I always found that when I wanted clear, rational unemotional advice, I could go to Laurie. I found Laurie to always be intelligent and clear-thinking. He also has an uncanny ability to always look at things from a slightly different point of view (Phaff, 2008).
These impressions of colleagues and my own experience align with commentary from another source. Vorster (2013) commented on Laurie’s “…absolute logic with which he approaches a subject: first he places the answer in context, highlights the key points and then draws a logical conclusion – as if it couldn’t be any other way!” (p. 14)
Laurie the storyteller
To enter into conversation with Laurie, for any length of time, is to become captivated. With his authentic voice he, tells a story like no other. Over time his storytelling ability became one of his trademarks and resulted in the coining of a phrase, namely a “Laurie- ism”. On an obvious level, it has to do with the topic he is talking about. My sense is he can probably carry on an intelligent conversation about most topics under the sun. The treat, however, lies in how he talks. To hear him weave in the varying strands of thought, hued with figures of speech, intersected with his signature, “let me tell you a
76 little story” precursor, is a talent. Of the non-stop stream of stories, anecdotes, examples, metaphors and figures of speech I heard from him, I suspect that many were not conjured up on the spot or uniquely for my benefit. No doubt he has a repertoire of stories. FirstRand is an organisation with its own lexicon and it is used continuously. What Laurie does exceedingly well is to weave together a coherent tapestry, impromptu, that is as informative as it is entertaining.
During our talk, he did not mix Afrikaans and English terms, without qualifying first if a switch was needed or a phrase borrowed. Laurie displays an old worldly but not redundant level of etiquette. Everyone seemed to have a favourite Laurie story. Mine would be his vignette about “little boys not being born hygienically”. On seeing how much that line amused me, Laurie maintained, “they simply are not.” The moral of this Laurie-ism was that you could not think up enough rules for your children. Instead, try and teach them values and then by the time they are grown up, you do not have to ask or threaten anymore. He shared this perspective with me in an endearing manner and we laughed spontaneously.
Enormous energy
Participants commented on Laurie’s “enormous level of energy”. This is a quality he shares with the other two founders. I heard this illustrated in the following viewpoint: “The founders have the ability to work incredibly hard, and then to relax incredibly well” (F. Hugo, personal communication, 7 August 2008). From a participant I heard of an incident, which took place years ago when he joined Laurie in attending a conference in New York. Laurie made it his absolute business to get his colleagues to take to the town every night. He would phone the office back home to find out the names and locations of the best musicals, shows or restaurants and canvassed everyone to attend. No opportunity could be missed. Just prior to departing for the conference Laurie hosted a session with financial analysts and afterwards he flew to the other side of America to play at a famous golf course. Intrigued by the pace of it all the colleague asked, “Don’t you get tired?” Laurie looked at him as if he could not comprehend the question (H. du Toit, personal communication, 19 May 2008).
It comes as no surprise then that Laurie is considered the workaholic amongst the three founders (Dolan, 2012). Of his years at Momentum, leading the company’s turnaround,
77 he said: “I worked myself into the ground”. A participant asked me: “Do you know how Laurie works?” I indicated I did not. “He works probably from 8 or 9 in the morning until about 8 p.m. Then he goes home to quickly eat, goes to bed around 10 p.m. and the next morning he is up at 4 a.m. and working again” (F. Swanepoel, personal communication, 17 August 2012). This was more or less his pattern until he turned 60. When Laurie resigned as the group’s CEO in September 2005, he referred to his schedule in this way:
You must understand that just from moving from a 15-hour day to an eight-hour work day feels like a holiday. I don’t want a diary that looks like a dentist’s. I want mental space to think and read, look at the bigger picture, get involved in overseas projects without having to execute them, be a sounding board, a catalyst and a mentor (Fischer-French, 2005, p. 45).
Another perspective I heard is that if you phone Laurie, you had better know what you want to say and you have to be quick to end the call. Do not waste his time. Laurie admitted that he had a tendency to make himself busy. He just kept piling things on the lorry, as he put it (L. Dippenaar, personal communication, 13 May 2008). In 2008 people was still stunned by his busy schedule and that when in Johannesburg, he would go to the office everyday.
As a boss
Genuinely trusting people is a much-praised Laurie quality. I heard from different participants the view that he is an exceptional listener, which meant it was very easy to work with him. When others are done with listening, he still listens. I heard that he likes people who apply themselves. He is a kind-hearted person to work for and with. An interesting view was, that it was exhausting working for Laurie. There is a special dynamic around him that created additional pressure. It was almost a kind of personal onus on the person to really perform. It was unthinkable to let him down.
Laurie always applied good principles. He was hundred percent fair. If he could not do something for the entire group, then it did not happen. There were no grey areas with him, no double standards. If something were illegal, it obviously would not happen. From different accounts it was clear that he was more prescriptive and a definitive
78 father figure for the group. He was always mindful of the importance of a good reputation. Not just his own reputation, but also of others’ and how it could impact the business. I heard a recollection about him not hesitating, years ago, to address an issue in a direct way. “The Stock Exchange guys drove very flashy cars…” and when a colleague of Laurie’s bought a new car, he got a ride back from a meeting in the brand new car. He reportedly remarked: “This car does not suit your image. I suggest you get rid of it.”
What I experienced firsthand was echoed by different individual voices. One perspective was that it is not possible for Laurie to just sit in a meeting. Even if he tried to just blend, tried not to influence, it was not possible. The same sentiment was echoed from other angles. Even without uttering a word, Laurie could never just sit anywhere. He just has a presence.
Besides exuding a strong presence, he clearly has a good sense of humour. A smile easily crosses his face and he is known to enjoy a joke. He does however seem to have a weak spot. “Did he tell you how impractical he was?” came the question from one participant. He relayed the following: “The guys would hang a loose pipe from inside the bonnet of Laurie’s car. He would get really flustered because he knew nothing about car engines. If you opened his car’s bonnet, the mechanic’s phone number was glued to it” (F. Swanepoel, personal communication, 17 August 2012). Another story had to do with a tactic Laurie employed once during a bike race. His bike got a flat tire and he reportedly stopped the first person saying, “I know how to do the rest, if you could just help me with this first bit.” Then he would stop the next person with the same phrase, “…I know how to do the rest, just help me with this particular bit.”
A love for newspapers
Laurie has astounding knowledge on a broad range of topics. To listen to his expertise on business, politics, sport, economics, international affairs, to name but a few, and to observe how he uses this knowledge to drive home a point, is a unique Laurie ability. One of his great loves is reading newspapers. He had to become non-executive and turn 60 to get to a stage where he could afford to happily spend one and a half hours a day reading newspapers. Do not think it is hard work, he assured me. His favourite is the Financial Mail. In Laurie’s words, if you read this newspaper, you know what goes on
79 in the world (L. Dippenaar, personal communication, 13 May 2008). But then he recalls reading the Financial Times from an early age in life (Caboz, 2013).
Laurie’s curiosity and his in-depth general knowledge make him an extremely interesting person to listen and talk to. I was not prepared for how much I enjoyed spending time with him. I was not alone in feeling this way. Another view illustrated what is was like engaging in conversation, even a chance encounter, with him over the years:
I don’t remember ever having a conversation with Laurie that was not extremely interesting or where I didn’t learn something. If I had to choose three people to have dinner with every night for the rest of my life, Laurie would definitely be on the list. Just in case you think I’ve lost the plot, the others might include Claudia Schiffer and Sharon Stone (Phaff, 2008).
I heard many thought provoking ideas and interesting angles on leadership from Laurie.
A leader who takes the right decisions not for own gain
He is a firm believer in implementation and leading by example. Often business leaders claim certain behaviour but fail when you test them on the implementation and follow- through. Laurie often weaves in references to statesman leadership. He believes the world has enough politicians, but what it has in short supply is statesmen. He is a strong advocate of statesman-like conduct, a code he would like to think he personally ascribes to. A statesman is a leader, who takes the right decisions not for his or her personal gain. Someone who will put a business or a country’s interests above their own personal interests. There are not many leaders who seem to qualify in this category. According to Laurie, in a succession race there are more candidates who can be cabinet ministers, but very few who can be presidents or exhibit the qualities of statesman leadership.
He often thinks the way in which school councils are elected is a worthy model. It is not a democratic election, but such people do it for the cause and serve for a couple of years until their children leave school. You hardly know who they are. They offer their time and expertise and are there for the right reasons. They then select equally minded
80 people to handover to. Sadly, in companies, different forces come into play like politics.
A family man
Marriage is important to Laurie. During our conversation he made a number of references to marriage and used analogies about it. He recalled with a smile how he used to favour themed corporate functions. His fondness for fancy dress events was rooted in the fact that it stretched people to think a little. His wife Estelle, used to cringe, just cringe, when told there was yet another fancy dress coming up. Laurie referred to his three children, two sons and a daughter, a couple of times. A participant thought he has the most incredible and decent children. I heard of his boots-and-all involvement with his children. At an earlier point, Laurie was quoted in a media interview saying he was not so sure if being called a banker was such a good thing anymore. “I don’t think my children think it sounds good. It might have been better to be a heart surgeon or something” (Fischer-French, 2005, p. 42).
Besides references to his children, I formed the impression that children in general are close to Laurie’s heart. Equally so is nurturing potential. A possible combination of the two passions materialise in the FirstRand bursary scheme that carries his name for incredibly special and gifted children (L. Dippenaar, personal communication, 13 May 2008). The essence is that he has endowed the Laurie Dippenaar scholarship, offering to pay $44,000 a year towards a South African with leadership potential for a postgraduate degree. Laurie’s wife takes a personal interest with him in this scholarship fund (FirstRand media release, 2013).
Reminiscent of Warren Buffet
A participant shared the perspective that Warren Buffet reminded him a little of Laurie (H. du Toit, personal communication, 19 May 2008). I wondered what Laurie would make of Warren Buffet being compared to him, and not the other way round? It is no secret that he does indeed follow Buffet, his group and its many subsidiaries closely. He has done more than half a dozen trips to America to attend the famous Berkshire Hathaway shareholder meetings. What is it about this businessman that Laurie admires so much?
81 I think it is the simplicity of his decision-making and he simplifies matters. He makes it very easy and then I think he’s extremely courageous about sticking to his principles. He didn’t buy Google…he said, “I can’t pick a winner in that industry for 20 years….It’s that type of insight that I really appreciate” (Hogg, 2012, p. 2).
Besides clearly emulating Buffett’s successful long-term approach to investing (Dolan, 2012), Laurie agrees with Buffet’s observation that it is not cleverer or more hard working people that makes the difference, but a system that allows people to develop their full potential.
[Buffet] said America doesn’t have cleverer people or more hard working people than China, Brazil or Russia – but its system allows people to develop their full potential. Now that’s the American dream. I think in our group, we’ve created a corporate culture that achieves exactly that, so that we don’t necessarily have cleverer people than other groups, but people can grow and develop themselves and realise their full potential – maybe to a greater degree than other groups (Hogg, 2012, p. 1).
Keeping things simple does not imply keeping things small. This, in my view, is one of the important aspects that Laurie Dippenaar and Warren Buffet have in common.
Highlights
Over the years there have been many highlights. On asking which of his many career highlights was the most meaningful to him, Laurie said, “The turnaround at Momentum. I did not know if it could be done” (L. Dippenaar, personal communication, 13 May 2008). Another clear highlight and one of his best ideas include, “…being able to identify (Discovery CE) Adrian Gore’s idea as a winner when he walked into my office” (Corporate publication, 2008, p. 4).
A few months after meeting Laurie in 2008, he was recognised as the Sunday Times Business Leader of the Year. In 2014 Laurie was honoured with the Sunday Times Lifetime Achiever Award (“Dippenaar recognised at Top 100”, 2014). Of this achievement he is particularly proud as it is based on recognition from his peers. In
82 accepting this award he extended special gratitude to his fellow founders, GT and Paul, and to all FirstRand’s people, reiterating that is has been and remains a team effort.
What Laurie does not have time for though, are meaningless rankings such as the so- called “rich lists”. In fact, he hates it. He is also likely to dispute the arithmetic. To put it into context, in 2014 Laurie Dippenaar was listed as Africa’s 37th richest person on Forbes’ list of Africa’s 50 Richest. His net-worth was estimated as $730 million (Dolan, 2014).
Money does not feature in Laurie’s advice to young people about their future careers. His advice is simply:
Don’t do anything that you really don’t like simply because it pays well – that’s the worst thing. It’s a sort of gunslinger. Only do things that you like doing and if you like doing something, generally [you will] be good at it (Hogg, 2012, p. 4).
Once again, he makes something that is hard to attain and remarkably elusive to many people, sound simple.
In closing
My first and continued impression is of Laurie’s presence. It is not as if he has a particularly large physical build, yet when he walks into a room, he fills the space with stature. Even when he tries to keep a low profile or keep out of the way, he cannot help but make a strong impact. Laurie has said that he has few regrets about his life (Hogg, 2012). If I can concede to a personal regret, it is that I did not tell him the full truth th when he asked me: “Do you have children?” Technically it was true. I was in the 12 week of pregnancy but did not say so, not wanting to detract from the discussion. However, when you spend time in the company of someone who places such a premium on honesty, comes across as unguarded and trusts you before he even knows you, you want to mirror that.
As for Laurie’s Teazer’s story, it was not an attention-seeking ploy. It came up in the context of him telling me incredulously about the enormous proportions to which the
83 group had grown. Whether he wanted it or not, people recognised him. Whenever he spoke for instance at universities, there would be in the audience, people employed by the group. He recounted a story from a time when he was following his son’s canoe race and his car accidently bumped into the car ahead of him. After apologising, he handed the owner his business card. The man smiled and said: “Don’t worry, I work for you guys”. It is along those lines that Laurie used to often say to his wife, she could be glad, very glad that he would not visit a public place of this nature, because she could be sure, the moment he set a foot inside, someone working for the group would recognise him!
In a nutshell, Laurie is described as the numbers man, back to principles, the best business brain, the values man and the workaholic. He is loved for his prolific storytelling, his Laurie-isms. He is admired for being the most interesting conversationalist, for always introducing a different perspective, for the questions he asks that have changed many a “game”. He is referred to as Mr Big Deal, an enigma and a business giant. Laurie is no stranger to praise being bestowed on him. Sometimes it comes from angles that even he might find surprising. Once a Pretoria based healthcare professional asked me questions about the topic of my thesis. She reacted to Laurie Dippenaar’s name with: “You know of course he matriculated at Menlo Park?” She was referring to Hoërskool Menlopark8, only a few blocks away.
With the certainty that comes from knowing a universal truth she concluded: “One of Menlo Park’s finest ever.”
Paul Harris
Whilst waiting in the reception area, I took in the ambience on the fourth floor, home to FirstRand’s executives. It seemed fitting of the gravitas of the work called for from its ranks. The surroundings imbued elegance not flash, seriousness not frivolity. Even before I knew of Paul’s love for art, I noticed the plentiful artwork adorning the perimeter.
While still observing my surroundings, quite incidentally, the next person to take a seat in the reception area was Francois Pienaar, former Springbok rugby captain and SA’s winning captain in the 1995 World Cup. It had been 16 years since I saw him last at university. A flash of recognition crossed his face and we exchanged pleasantries. He
84 used to refer to me as Buurvrou9. As students, we lived in neighbouring flats on the RAU campus (see Footnote 7), for a while. Francois could clearly not be more pleased with his job as FNB’s head of sponsorships. He was intrigued to hear my reason for waiting to meet with Paul. A terrific guy, he volunteered.
Figure 5. Paul Harris. Reprinted with permission from FirstRand.
On meeting Paul
When I met Paul, whose full names are Paul Kenneth Harris, he was 58 and still working his butt off, as he put it (P. Harris, personal communication, 19 May 2008). As CEO of FirstRand, he was actively involved in steering an ever-increasingly complex ship. His office had an undeniable executive feel to it. I was happy to be guided to a comfortable seating area rather than perch on opposite sides of the imposing desk. Whilst settling, my mind wandered. Paul was the last of the three founders in to bat, to put a sporting analogy to it, something that the founders do exceptionally well. I
85 wondered what it was like when the three entrepreneurs were still young hustlers wanting to make a buck, to borrow Paul’s words.
From stories about the early days of the partnership I knew the men were often out “hunting” for business and doing their own thing. If they happened to be in the office, they were busy with the things that often irk many an entrepreneur, doing whatever needs to be done. Typically the things that small business owners do, not future CEOs. I had heard enough to know that there was much energy, laughter, office banter and camaraderie amongst the three.
Paul is a poised man with a distinguished look about him. He is soft-spoken and highly articulate, albeit economical with words. If he came across as somewhat distracted, it was not inexplicable. I met Paul in the afternoon of a busy workday and our interview was an interlude in a day with a brutal schedule and miles from an end in sight. I had been warned that he was a CEO under pressure. On meeting him, he appeared tense. The financial markets and the operating conditions were tough and there had been some setbacks in the business.
A participant was of the view that it was particularly hard on Paul, as this was taking place in his term at the helm. Keeping the divergent aspects and strong-willed personalities in the group together, proved challenging. It was but one of the aspects making the group CEO job, as tough as they come. Paul appeared more guarded with his thoughts than his fellow founders. As such, it took some time for the conversation to develop a sense of flow.
Our conversation started with talk of one of Paul’s interests outside of business, namely Cricket South Africa, the national governing body for the sport, where he served on the board (P. Harris, personal communication, 19 May 2008). He apologised about the need for his personal assistant moving in and out, with updates for him. He had to hear progress on an urgent matter. He was skilled at staying on track, despite the interruptions. The Cricket South Africa matter turned out to be revealing. Whilst sketchy on the specifics, Paul filled me in on the issue he had to resolve.
He was trying to get an executive to acknowledge that he had received a fax sent to him earlier. Simple one would think. The executive’s repeated refusals triggered repeated
86 efforts at resending, all successful attempts. Paul knew the issue to be about acknowledging the content. He interpreted this behaviour as stalling, ducking and diving and obstinately refusing to accept responsibility. Paul was not known to be a patient man (Fischer-French, 2005). Things had to happen and happen quickly. This scenario and the underlying “games people play” were visibly frustrating to him. It was the complete opposite of what they were trying to achieve at FirstRand and what the group’s corporate culture embodied.
Can I call you Paul?
On posing the question “Can I call you Paul?” he chuckled. He interpreted my question as a sign of respect. It reminded him of sub-cultures that existed in the group. Momentum was based in Pretoria, and predominantly Afrikaans, even though a Meneer (see Footnote 3) culture had not existed since the time the founders got involved. But in Upington, he said, people still called one another Oom en Tannie10. He was asked the “Can I call you Paul?” question all the time, especially from employees new to the group. His standard response was, “My driver calls me Paul. Why shouldn’t he?” That is just how things are, naturally.
How you are naturally
You have to be a bit natural. This was something that Paul firmly believed. He recalled a scene at the end of the movie Jerry McGuire, a favourite of his, where Tom Cruise’s character hugged Cuba Gooding Junior’s character. On witnessing this scene another athlete then turns to his own sports agent, with a questioning look as to why they did not have a similar relationship. The latter sports agent then half-heartedly tried to copy the embrace, but it was an unnatural gesture.
Paul knew a lot of people in top positions who similarly could not do it, copy a style of doing, that is. They could not pull off something they did not feel. They may be good at what they do and their way of doing things. Yet, no matter how hard they try, they are not going to live our philosophy, the FirstRand philosophy. They will never be comfortable. He conceded that the way the founders did things were not necessarily the only way to do it, but it is the “only way we know how” (P. Harris, personal communication, 19 May 2008).
87 A lot came about intuitively
For Paul, the way they conducted business over the years was intuitive. This was the way things had developed from a very small group of people. “The origins of the thing is that we were a small company and never into the hierarchy side of things”. In his mind they did not have big egos about their positions. They just wanted to get things done. This sentiment comes through clearly in the following excerpt:
We were never, none of us, ever in a hierarchical type of position. We didn’t get to our positions by climbing the corporate ladder. The ladder just kind of appeared below us. We always just worked with people rather than ordering them around. That actually changes with growth, but in our minds, mine and I know the others too, we don’t see it that I’m the boss and you’re not (P. Harris, personal communication, 19 May 2008).
It was important to Paul that I accurately contextualised one aspect. To say the founders grew things from a small beginning into a big operation with 30 odd thousand people was not entirely accurate. He told me with great conviction that he cringed when people said to him that he had helped build this great big business, because it was not really true.
It’s a little windgat11 to think we built this group. Our shareholding has been diluted a lot. We built a small part of the group, which is RMB. That I think we can take credit for. But FNB was started in 1838 and Momentum was started before we were here. So it all sort of came together (P. Harris, personal communication, 19 May 2008).
A good innings at RMB
In 1987 Paul headed to Sydney, Australia where he started Australia Gilt Securities that became a major player in the bond and futures markets (Harris, 2014). This business was later bought by RMB and became RMB Australia. I learnt of a story that illustrated the closeness of the bond between the founders. Apparently during the time that Paul was in Australia, he would come up with a bright idea, only to realise that he could not just jump up and go over to GT and Laurie to discuss it (F. Swanepoel, personal
88 communication, 17 August 2012). After four years Paul longed to return to his home country, where his heart was. He rejoined RMB as deputy director in 1991. He succeeded Laurie as CEO of RMB when Laurie went to Momentum the next year. This sealed the deal of all three the founders serving as RMB CEOs.
In cricketing terms, it was a good innings for Paul at the helm of RMB. During his last year as CEO, he experienced a career highlight. Of the many achievements over the years, this was the one that held the most meaning for him. RMB became the recipient of the very first Deloitte Best Company to Work For award. “It was the most authentic thing, because it is sort of what we believed in” (P. Harris, personal communication, 19 May 2008). There are many stories about Paul’s leadership style and how it contributed to the distinctive “RMB feel”. Many insiders, who grew up with the group, consider RMB as the holy grail of culture. Not everybody might like it, but the central gravity comes from this company, Paul assured me. I heard from old timers that Paul oozed love and passion for the RMB business. As part of his induction address to RMB newcomers he used to say, “If you behave as if this is your own company, we are all going to be in great shape” (M. Phaff, personal communication, 28 July 2008). He was also known for saying with a poker face that he had no problem if someone wanted to work from 8-to-5, as long as it was not at RMB. There can be no argument that Paul is outspoken.
He would often say, “You are your own Pty Ltd”. He was not about to babysit anyone. Paul’s style was one of, get-up-and-go, and let’s move things forward. To him, attitude mattered. It surfaced in the unconventional interview question, “Do you sulk?” directed at one of the first employees to join RCI. The successful candidate and Paul would get on like a house on fire for decades to come. Paul was known to always be generous when it came to charitable causes. Once during a fundraising event, he shaved his head. This was one of the many ways in which leadership was humanised. Paul’s philanthropic initiatives are extensive, including funding and involvement in disadvantaged rural training initiatives and teacher outreach programmes.
Paul inspires
Paul is someone who inspires enormously and is one for rousing the troops (H. du Toit, personal communication, 19 May 2008). To the latter, I can attest. The first time we
89 met was in 2007, when I attended a FirstRand Philosophy session. During the tea break Francois Hugo introduced us and Paul was attentive in that briefest of moments. I mentioned that I was impressed, even inspired by the senior leaders hosting the session. A participant’s perspective was that the credit for the success of these sessions goes hundred percent to Paul. He was the one to recognise that without an effort, the FirstRand Philosophy sessions would fall flat (J. Burger & S. Moss, personal communication, 15 May 2008). In turn, Paul told me that he had done hundreds of these sessions, once a month for 10 years, missing maybe one, and added: “I can tell you, I’ve enjoyed just about every one of them. It makes me feel engaged”.
It is not all our own doing
One of Paul’s remarks lingered; he addressed me by name when he made this emphatic statement:
Christel, if I can say one thing and I’m really not saying this in order to be modest, I think a lot of the things we’ve been able to achieve are because we’ve been put on a bit of a pedestal. It is not necessarily all our own doing. We’ve got some brilliant people and because of the culture of respecting the next person, sometimes I think we got credit for things we don’t really deserve. I mean Mike Phaff has taken RMB to a totally new level from when I was there. I would like to think that what happened was the result of each person, but it’s the culture. It’s the culture that allows it and we’re the custodians of the culture. It’s not our brilliance. It’s the culture that unlocks potential in people (P. Harris, personal communication, 19 May 2008).
To me, this was powerful because it was said with sincerity. I did not get the feeling of impression management.
His big loves
Paul has a great many passions and interests. Sport was a big priority from his early years. He grew up on the family farm in Greytown and was educated at Maritzburg College in the KwaZulu Natal Midlands (Harris, 2015), where he played first team rugby and cricket. At Stellenbosch University whilst completing a Masters of
90 Commerce (Economics and Finance) degree, he played for the Western Province B- side. Paul’s teammates included fellow Maties (see Footnote 2) friends, GT Ferreira, a fellow RCI founder, and SA rugby legend, Morné du Plessis (F. Swanepoel, personal communication, 17 August 2012). Paul also played cricket for the South African University team. Decades later he still liked to keep fit, but also knew how to relax. He was one of the top CEO golfers who played the game with a single handicap (FirstRand Philosophy session, 2007). He once interviewed a candidate on the Plettenberg Bay golf course. Of this arrangement the candidate said, “I was mightily impressed by Paul’s lack of self-importance, even in the face of his considerable success” (M. Phaff, personal communication, 28 July 2008).
The dealmaker
Amongst the founders, if GT is the diplomat and the strategist, and Laurie the accountant, the values man and the necessary brake, then Paul is the original thinker, risk taker and out-of-the-box thinker. GT thought of Paul as a very creative thinker (G. Ferreira, personal communication, 16 May 2008). From another angle came this phrase describing him: “Another day, another idea. The sexier, the stranger and the more different the idea, the better” (V. Bartlett, personal communication, 29 July 2008). I heard that Paul differed completely from the other two founders. He could passionately counter with, “Yes, why not?” and would come up with alternatives. A vivid image describing his love for new things and new ideas, which stood out for me, was this perspective: “Anybody who comes to Paul with new things, his antennae immediately goes up” (V. Bartlett, personal communication, 29 July 2008).
Of the three, Paul was always the one who was more prone to risk taking. He was a capital market dealer at heart and excelled as a dealmaker. I heard that Paul as a younger man, if the prices were good, would move out of his house into a rented house if he could make money in the process (F. Swanepoel, personal communication, 17 August 2012). A further story tells of him coming into colleague Anneke’s office once, in the early days, saying: “You better keep your fingers crossed, because I’ve just put my house up for collateral for a deal”. After her shock subsided, Paul calmly explained that it needed to be done. And no, his wife did not know (A. van Zyl, personal communication, 28 July 2008).
91 Paul was described as dynamic, passionate and a maverick with a sixth sense for business. He is both inspirational and humble. He brought intensity and a focus on quick results. Paul’s undeniable natural strength is that of a dealmaker (M. Jordaan, personal communication, 29 July 2008). His passion sometimes shone through in his emotions.
I heard about a touching moment at RMB. It was just after the first national democratic election in 1994. There was a flag hoisting ceremony and at the singing of the new national anthem, Paul was moved to tears (A. van Zyl, personal communication, 28 July 2008). From another colleague I heard about one of his pet peeves. When working with him, do not come with long monologues for him to listen to or long reports for him to read (H. du Toit, personal communication, 19 May 2008). As a CEO it was always evident that Paul’s greatest passion is to make South Africa a great place (FirstRand Philosophy session, 2007).
From young hustlers to grey haired men
Paul used to think of himself as a young buck. In a poignant moment towards the end of our conversation, he revealed that he looks at the young merchant bankers at RMB and thinks to himself, “I’m one of the oldest guys here and it’s not a nice feeling”. Whether he likes it or not, he has less colleagues and peers than he used to have. It is actually not so lekker12. He was still having fun, but was honest enough to admit that it was getting a little bit lonely (P. Harris, personal communication, 19 May 2008).
Paul made what the founders have achieved sound simple. He reinforced this idea with, “I think you’ve caught on to this thing that it’s intuitive. We saw something that’s working, articulated it and reinforced it. And that’s what happened” (P. Harris, personal communication, 19 May 2008). He also did not think there was much science in the way the founders first got together. Once again, it sort of happened. What he conceded to, as a “pretty unique thing” about their story, is “the founders hanging on for their entire careers together”. He does not know where else it has happened (P. Harris, personal communication, 19 May 2008). One of Paul’s best ideas was phrased as, “Hanging in to enjoy the incredible experience of being part of FirstRand and its wonderful people for the past 10 years” (Corporate publication, 2008, p. 3).
92 In closing
Before engaging with Paul, I was primed that it might be harder to talk to him. Our conversation was shorter than expected. However, my sense was that he emphasised different aspects than the others. I heard more about reality from him, and less about the philosophical behind-the-scenes views. I witnessed some of the pressures he was dealing with for just over an hour or so. I heard less of the figurative speech and more of the group’s internal language from him. His were not non-executive views or from a helicopter view vantage point. Instead, he presented an engaged, all action, and boots- and-all perspective. As such, he brought a valuable, balanced contribution to my understanding of the FirstRand story. My sense was that Paul was feeling the weight of the significant responsibility that rested on his shoulders. As CEO he was leading a complex group through a difficult period.
My other lasting impression of Paul relates to how, after our conversation ended and technically off the record, he reacted when he heard I was expecting a baby. I did not mention it to Laurie or GT. By this time Paul was visibly more relaxed and we spoke spontaneously. He offered his heartfelt congratulations. This was a different Paul, a father of two children, speaking. He gave me the sense that while this study was important, becoming a parent was way more important. I have often recalled these words while working on this study and juggling it with parenthood. Subsequent to Paul’s retirement as the group’s CEO in 2010, he has made time for other pursuits like “…accepting an honorary professorship in business management at the University of Stellenbosch” (Mittner, 2011). Paul’s professional activities include an impressive array of board appointments such as non-executive positions and directorships (Dolan, 2011). Besides his extensive interest in art, Paul is also referred to as a gadget-man who enjoys the technologies area immensely (Hogg, 2012). He is an investor in several start-up companies mainly in the technology and mobile phone space and recently acquired a significant stake in MXit, the largest mobile phone social network in Africa (Harris, 2015).
Pat Goss
Patrick Macquire, or Pat as he is known, was the first partner GT famously approached with his idea for starting RCI.
93
Figure 6. Pat Goss. Reprinted with permission from FirstRand.
Pat’s direct involvement in the RCI partnership might have spanned only a few short months, but his business interests and relationship with the founders have grown and endured:
The fourth founding father, Pat Goss, is usually excluded from the group but has been quietly amassing a small fortune of more than R600m in the past decade as a FirstRand director. His connection with the three dates back to the days when he and Dippenaar worked at the Industrial Development Corporation (Mittner, 2011, p. 41).
“Pat loves this group” (J. Burger & S. Moss, personal communication, 15 May 2008). He remains a good friend of the founders and serves on several of the group’s structures. Of his board involvement Pat says the following:
I find the FirstRand board far more intense than other boards I sit on….A financial services group has the responsibility of protecting depositors and
94 shareholders and governance has to be extremely high. But I have so much confidence in the executives and the depth of management talent that I seldom have sleepless nights (Corporate publication, 2008, p. 8).
From another angle came this view: Pat is a gentleman of great character who sets an incredible example. Like GT, he is a people’s person (F. Swanepoel, personal communication, 17 August 2012). Pat is described as someone with a wide interest in a variety of things – flying, the bush, travelling and obviously, business.
The combination of the founders
Each founder brought something unique to the partnership. At the heart of this business story is the power of the tripartite partnership. Some of the aspects that made this such as strong union are quite obvious and as the founders might say, common sense. However, there are other aspects, which are of a more subtle nature. The question that beckons is: What exactly made the combination of the three so good?
Three different individuals
Each founder brought a distinct and different personality to the partnership. GT’s take on the different temperaments are: Paul as a very creative thinker, kind of off the wall. With a snap of his fingers, he would say: "Let's try it." Paul has that talent. Then Laurie would apply the brakes a bit or say, "No, but you know we have to be conservative now" and so on, although Laurie is not a conservative guy (G. Ferreira, personal communication, 16 May 2008).
A strong view is that the three individuals did not bump into one another in terms of skills sets (J. Burger and S. Moss, personal communication, 15 May 2008). This was no coincidence as GT consciously looked for complementary skills when handpicking his future partners. Each individual contributed strong points, which developed over time into unique strengths. What GT could not have predicted was just how vital these differences would turn out to be in bringing about collective success.
Different voices coalesced in the message that the success of this partnership is a function of the founders not being the same. The founders are three very different men.
95 This is what made this partnership. A perspective that sums up this sentiment was: “The different individuals made for strong cohesion. It is very powerful in terms of how this thing evolved” (J. Burger and S. Moss, personal communication, 15 May 2008).
We are similar people
Initially there were commonalities that smoothed things over. As young entrepreneurs they had the right instincts and took the leap together to set out on their own. They brought a similar approach to business, characterised by clear thinking and generous doses of common sense. A colleague recalled Laurie’s sane voice: You’re here to make money. Paul has that too. They understood succinctly that if you are going to make money, you had better have clients that like you and for that to happen, you had better have happy staff (H. du Toit, personal communication, 19 May 2008). A further perspective was as follows:
I just love the fact that after an interaction with them it seems to me that I have been exposed to some very clear basic thinking. Cut the crap. Thinking is what buzzes me and I find it from these three people (H. du Toit, personal communication, 19 May 2008).
Another perspective highlighted that: “You can’t do what they’ve done if you don’t have a combination of an approach to business with a predefined value system. Their approach to business is identical and they brought different skills to the party” (J. Burger and S. Moss, personal communication, 15 May 2008). This narrative emphasises three common aspects: an approach to business, complementary skills and an overlap in values. One of the most memorable narratives highlighted that “…the real overlap was in values and it is probably one of the most successful components of their triumvirate. The founders have similar values, although not necessarily to the same strength” (J. Burger and S. Moss, personal communication, 15 May 2008). I thought the word triumvirate, used in the context of values, was of considerable significance.
Figure 7 depicts the founders’ journey from young merchant bankers to the present day. The first photo was featured in the cover story “New Independents” in Finance week,
96 Oct 18-24, 1984. The second photo captures the founders in 2014, with from left to right GT Ferreira, Paul Harris and Laurie Dippenaar.
Figure 7. Then and now. Reprinted with permission from FirstRand.
All three have almost a schoolboy sense of fair play. They have those values such as take it like a man (H. du Toit, personal communication, 19 May 2008). People often
97 comment on the founders’ humility. The following comment spoke volumes: “They want to be with the ordinary people. That’s when they are at their happiest. That’s why they never built up a huge public profile. They don’t want to hob nob. We go away for a weekend and play volleyball or cricket” (J. Burger and S. Moss, personal communication, 15 May 2008). Tying in with the topic of sport, different voices raised the founders’ love of sport as a unifying factor. “They absolutely love sport and watching sport (B. van Heerden, personal communication, 8 August 2008). There are stories about golf encounters and of excursions to major sports events. “They’ve never missed an Olympics…they’ve been with their families to every single one (H. du Toit, personal communication, 19 May 2008).
Paul’s sentiment that the founders did not cut their teeth in a hierarchical environment and that titles were not important to them, brought an interesting participant perspective to the fore:
I think Paul and Laurie and GT have a natural humility…but it’s also been helped by the fact that they’ve never had to fight their way up the corporate ladder. They’ve always been on top of the pile that just keeps on getting bigger and bigger….They never worked with Mr and Mrs titles. They never had to.
…They’ve never had to fight…never really had their authority questioned, they’ve never been under threat…it is a combination of the right instincts and “life has never abused them”…they don’t understand corporate politics. They’re almost naïve in a way (H. du Toit, personal communication, 19 May 2008).
Other participants thought this to be an astute observation. The founders made it clear that they certainly did not care for politics. It was not in their repertoire. It never needed to be. A further impression was, that the founders are extremely confident individuals who have a strong social presence. Such individuals do not need titles. I heard a follow-up story that showcases the accessibility of these leaders. There was an incident of a youngster, who came over from one of the other big retail banks, who said that he had, what he thought was a novel idea. Immediately came the response from someone in the room, “Did you phone Laurie about your idea?” The young man was stunned and replied with words along the lines of: “You say it as if it is normal. Where
98 I came from, that would never happen” (H. du Toit, personal communication, 19 May 2008).
A notable area of overlap in values is that all three founders are very pro-South Africa. It is not just their personal stance but is also evident in the business initiatives that the group’s companies and leaders have championed over the years. Some of the corporate examples include sponsoring the “South Africa – The Good News” (www.sagoodnews.co.za) initiative, FirstRand Volunteers, the OUTsurance pointsmen initiative and the FNB’s Heartlines campaign, to name but a handful.
A further aspect that the founders have in common is two-pronged. They share a very positive view of life and have a zest for life. It is framed eloquently in the following narrative: “Something else in all three of them…they’ve not allowed setbacks to affect them…they expect the best of people rather than the worst…they have a very positive view of life. Life’s to be enjoyed” (H. du Toit, personal communication, 19 May 2008).
I heard much about the three’s seemingly boundless energy: “The founders have an enormous energy … you cannot underestimate that. It is true of all three of them. They enjoy it. It is not artificially driven. It is not driven by greed” (H. du Toit, personal communication, 19 May 2008). Senior executive, Sizwe Nxasana, who would in time succeed Paul Harris as group CEO, also echoed a similar point of view. He spoke of the commitment and the passion, which the founders injected into the business: “It never ceases to amaze me to observe the amount of energy…that they bring to the table, the commitment, the passion. You can’t sort of miss that” (S. Nxasana, personal communication, 29 July 2008). How the founders handled a problem, was particularly revealing:
It was rather a case of, “Let’s have some fun”. It’s not “Oh we have to push this thing up the mountain” [said dramatically], but more a case of, “Here’s another problem [said with energy]. Come let’s see how we can fix this. This is a challenge”. It is fun and achievement and going places and being relevant (H. du Toit, personal communication, 19 May 2008).
Personally, I remember a photograph of GT with Laurie in the background at an RMB corporate social event involving a drumming group activity. The caption of the photo:
99 “Drumming their hearts out”, could not have better captured the two’s engagement in this activity. At the time I thought, whatever the activity, I suspect they would pour their hearts into anything they did. The following narrative echoed my impression: “The founders are energisers. They have an ability to energise a big room of people” (H. du Toit, personal communication, 19 May 2008). It seems that not only did the founders bring high energy to everything they engaged in; they infused the business with their energy.
An important view addressed the founders’ ability to focus intensely and then to subsequently relax actively (F. Hugo, personal communication, 20 May 2008). There are many references to working hard and playing hard in this group. An aspect that cannot be overlooked in the founders’ story is their absolute commitment from the very beginning, never wavering over decades and their capacity for hard work (F. Hugo, personal communication, 20 May 2008). It fits with GT’s philosophy that you must work longer and harder than your competition.
In the organisation, the founders’ energy and zest for life is admired: “I think it is fantastic because it is a case of you work to live. And they do” (B. van Heerden, personal communication, 8 August 2008). Another narrative reveals an obsession that goes beyond business: “They pursue a number of things. I mean they are very involved with their children too. These are not people obsessed simply with business. It’s being obsessed with life” (H. du Toit, personal communication, 19 May 2008).
In summary, the founders brought a heightened sense of energy, passion and a sense of life is to be enjoyed. They displayed an unparalleled capacity for hard work and a deep commitment to building this group. They are people who are not obsessed simply by business, but obsessed with life. These similarities helped to forge a strong bond to survive the ups and downs of decades to come.
The complementary effect
Different narratives attested to the strong complementary effect. For instance: “Laurie, Paul and GT complemented each other” (H. Meyer, personal communication, 28 July 2008); “The single biggest success factor is that they complemented one another. Together the three was an incredible combination (F. Hugo, personal communication, 7
100 August 2008); “They are obviously exceptionally successful entrepreneurs, but they complement each other very well too (Nicolaas Kruger, MMI chief executive, cited in Vorster, 2013, p. 144).
The differences in personality - the one running away with an idea, with the other applying the brakes a bit – and the fact that they let the one with the applicable skills take the lead each time, made this team so good (F. Hugo, personal communication, 7 August 2008). One can add, the allowance for each to play to his strengths and the tolerance for differences, as additional stand out features. With the gentle diplomacy that GT is a master of, he offered the following: “If there was friction over the years between the founders, it was probably between Laurie and Paul...because they were more...different to one another. But that's what made the team so good” (G. Ferreira, personal communication, 16 May 2008).
There were tangible differences in how Laurie and Paul engaged with new ideas. The description of how new ideas could make Paul’s antennae go up, comes to mind. As for Laurie’s knack for spotting a good idea, his track record in recognising Discovery and OUTsurance as winning ideas, speaks for itself. Another view singled out a further complementary effect between Laurie and Paul:
If Laurie hadn’t had Paul, probably not enough new stuff would have been done. If Laurie hadn’t been around, there would be no follow-through. They both needed one another. There was a big contrast in how Laurie and Paul approached a document for a meeting. They used to irritate one another. Yet, it made for this complementing effect. Paul not allowing to get stuck on detail and Laurie’s thorough, almost schoolboy-approach. It would have been relentless for the one to try and be like the other (H. du Toit, personal communication, 19 May 2008, 2008).
The observation of Laurie and Paul not trying to be like the other holds much truth. In my view it emphasises the importance of being your authentic self. In the founders’ story the strength seems to lie in the power of the tripartite. One sentiment conclusively summed it up: “They couldn’t have succeeded without one another” (H. du Toit, personal communication, 19 May 2008). It seems they possibly needed each other to be around: Paul to ensure that enough new things were done, Laurie to provide the
101 necessary follow through and GT to challenge and at times, mediate. The whole thus became greater than the sum of its parts. It is speculative, but would the founders have tasted the same success if they had not found one another as business partners? One narrative framed it as follows:
I think they would have all been very successful, but in this whole setup, I think they needed each other. Laurie needed someone to try and break the rules so that he could find out how far he could go… I always say the three of them are like the three tenors. I’m sure they can each be fantastically successful and sing on their own. But together, they just made better music (A. van Zyl, personal communication, 28 July 2008).
The three tenors analogy has a good ring to it. It reminds of a synergistic symphony – the effect of hearing musicians playing exceptionally well together. The founders seem to have harmonised in a way that made them effective and produced exceptional business results.
The combination between Laurie and GT
According to a colleague who worked with the founders from the early 1980s, the combination of Laurie and GT was outstanding. GT and Laurie complemented each other hundred percent. “The one’s absolute strong point is the other’s absolute weak point”. GT knew how to get the best out of people. Laurie brought good principles and is the ultimate business brain (F. Swanepoel, personal communication, 17 August 2012). A special effect was felt between GT and Laurie in combination, the two strangers who were introduced by mutual friend Pat.
The cohesion was stronger than the conflict
The dynamics of a business partnership of three people contain inherent potential for conflict and power struggles. If any one of the three dominated in the beginning it would not have worked. If any one’s ego got in the way, it would not have worked. The founders’ shareholding differed over the years and they assumed different leadership positions, but GT thought of their contributions as equal.
102 The founders’ differences sometimes ushered in friction and irritation with one another. They have never denied this. Paul attested to this with: “At times over the years we battled together, but it was never destructive” (P. Harris, personal communication, 19 May 2008). Whatever the battle, the founders seemed to manage to rise above the issue. The co-operation was greater than the conflict. One viewpoint underscored it in this way: “Make no mistake, they clashed. But the end game is important enough to them that they get above it and present this united face. There is something very strong about that” (H. du Toit, personal communication, 19 May 2008). Another perspective emphasised that egos never triumphed:
A lot of boxing went on but the end result was always more important than who gets the credit or applause. There was trust among each other that these things could be sorted out between them. The founders set that tone. That, which triumphed, was never ego (M. Jordaan, personal communication, 29 July 2008).
The founders’ leadership was marked by self-confidence, strong opinions, personality differences, resulting in different styles and ways of working. Such combinations contain much potential for conflict. A narrative spoke of a possible way in, which they dealt with this: “The founders did not live in each other’s pockets, they liked to do their own thing. It was allowed. They each played to his own strengths” (J. Burger & S. Moss, personal communication, 15 May 2008). From another angle I heard of a possible benefit in their diversity:
The differences between them and the resulting tension at times had the effect that big decisions were really quite thoroughly debated. Maybe not always made with everyone involved but certainly after extensive thinking…the magic of these three, because they complemented one another, the output was very rational. They may not have been as competent and rational if they had done it in isolation (H. du Toit, personal communication, 19 May 2008).
The founders are not immune to human failings. No leader is exempt to feelings of insecurity, pangs of jealousy, not always agreeing, not always approving of another’s behaviour, and internal conflict over the direction the one in the lead is taking. These are dynamics just as relevant to “an old married couple” as it is to a business partnership stretching over decades. However, the founders tried to not interfere with each other’s
103 running of things, even if it led to intrapersonal or interpersonal conflict. What they concede to is that they worked at keeping their relationship healthy. Above all, they managed to maintain a united front, with integrity and reputation always being their major priority. A view that made a strong impression is that “the founders never had public spats” (V. Bartlett, personal communication, 29 July 2008). Similarly, “they have always been unbelievably protective of their reputation” (B. van Heerden, personal communication, 8 August 2008). Their ability to keep their personal disagreements personal, maintaining a united front and managing their reputation is but some of the elements of the founders’ journey, which I find refreshing in terms of leadership conduct.
The founders deserve credit for the partnership not fragmenting on the back of personality differences. Like in any long-term relationship, there were times of strife and tension. It would be naïve to think otherwise. What they succeeded in is rising above their own interests. They managed to place the greater good of the group above their own.
Their lives became interwoven
The trio spent the greatest part of their working careers together. The founders maintain that they are still firm friends. There is a strong sense of loyalty that exists and compassion for one another. My impression is that the founders grew to love each other over the years. A memorable narrative cut to the heart of how a synergistic relationship developed amongst them:
Partnerships develop. You don’t create that. These are people who met years ago and learnt to work together and put up with one another’s nonsense. Learnt when it’s worth their while to step back and let the other one take the limelight for something. They’ve worked out their shuffle; they’ve got their minuet figured out (H. du Toit, personal communication, 19 May 2008).
A bit of luck
When the founders are asked about their story, they liberally refer to a bit of luck and coincidence playing a role (Fischer-French, 2005; Vorster, 2013). As GT pointed out,
104 they were lucky to land in the fast flowing financial services stream early on. Pointing to another bit of luck is the view that “they’ve had a wonderful ride with the institutional investors” (H. du Toit, personal communication, 19 May 2008). In all likelihood lady luck might have been at work in some instances, but you cannot be in the right place at the right time, all of the time. A view that echoes in part my own is, that what the founders attribute to a bit of luck, might actually have more to do with strategic thinking (Vorster, 2013). Knowing what your strategy is and then when the right opportunity presents itself, going along with it. Not the other way round. A participant’s view offers the last words on the notion of a little bit of luck:
My little theory on the three of them is that they were extraordinary lucky in finding one another…just that magic of finding one another, absolutely lucky. I give them credit for sticking together. Like a couple that find one another and then through thick and thin, just keep at it (H. du Toit, personal communication, 19 May 2008).
The secret behind the founders’ success
When a journalist prompted Paul to share the secret behind the founders’ success, his answer was as succinct as an executive summary should be:
In essence it comes down to always trusting each other and leaving parts of the business to the one with the appropriate skills. “It’s like a sports field; we each have an area to cover. A team that runs around trying to cover each other’s positions will not win the game.” He adds that, as the years passed, the partners grew to value each other more – and worked at keeping their relationship healthy. He maintains corporate politics never came into play. “We have a set of values – all of the things your mother taught you. Mutual respect, deal on a handshake, a win-win philosophy” (Fischer-French, 2005, p. 45).
How Paul describes the secret to their success sounds to me like a recipe for a healthy long-term relationship of any kind. Central to the success of the founders’ story is how the three, individually and in combination, worked co-operatively together for many decades. They had worked out their shuffle and together they thrived.
105 Conclusion and interpretation
Looking back, I offered glimpses of the uniqueness of each of the founders and ways in which they complemented each other in the partnership. In the FirstRand founders, I came face to face with leaders of exceptional qualities. I met natural entrepreneurs with a nose for business, rooted in values and with leadership capabilities and experience honed over impressive careers. They count under the country’s most highly regarded business leaders. As people, they are passionate and compassionate. As leaders they inspire, albeit in different ways. Some of the strongest impressions of how the founders are experienced include: GT as the absolute gentlemen, the strategist, the people’s person, the diplomat, the wise one and the mischief-maker; Laurie as the numbers man, the best business brain, renowned for his principles and values, his art of storytelling and always bringing a different perspective; and Paul as the ultimate dealmaker, the “Why not?” man, an out-of-the box thinker, intensely passionate and with the drive to make things happen quickly.
Before you meet the three founders, you know they feature on the Who’s who lists and the rich lists, locally and beyond. Yet, when you meet them, it is not the impression you get from them. The humility with which they handle themselves in the face of their success is a true mark of their leadership in my opinion. It is a rare find indeed.
In the next chapter we move back in time, to the launch of the original start-up business, from which an entire journey unfolded.
106 CHAPTER 6: RAND CONSOLIDATED INVESTMENTS
Introduction
In taking the view that in the FirstRand story there is both a business and people story to tell, this chapter takes us right back to the launch of the original small business. As indicated before, the start of RCI is intricately linked to the story of how the founders came together (Chapter 4). The RCI business is where it all started. It represents the birth of what became one of the largest financial services groups and its offshoots. This is why the founders are referred to as the fathers of FirstRand and sometimes the grandfathers of its portfolio of businesses, past and present. Figure 8 depicts the marker event that started the process of building a corporation.
RCI RMB FNB Rand Rand Momentum First FirstRand Consolidated Merchant National Investments Bank Bank
1977 1984 1992 1998 1998
Figure 8. The RCI milestone.
Rewind thirty years, to a time when GT, Laurie and Paul were thirty-something men. Fischer-French (2005) observes of the early days: “…they used to have more hair and more fun back when they were young guns. They also used to be a lot poorer” (p. 36). The backdrop against which RCI was launched include: financial services were growing fast, culturally Afrikaans-English constituted a partition in business, corporate SA was run by conglomerates, city councils had good credit ratings, and banking licenses were scarce.
Started with pocket money
RCI was started with R10 000 of pocket money, which according to Laurie, equates to about R70 000 in today’s money. “We did not draw salaries for the first nine months, because there simply was not enough money” (Vorster, 2013, p. 14). RCI’s mission as a business was to focus on structured financing and leveraged leasing (FirstRand Philosophy session, 2007). Phrased differently, I heard that RCI’s business was to do
107 tax driven transactions with municipalities. The founders saw a gap to cut out the banks by going directly to municipalities for leasing, for instance, their own machinery (F. Swanepoel, personal communication, 17 August 2008).
Even though RCI was a “penniless start-up” (Fischer-French, 2005, p. 40), it did not deter the three entrepreneurs from managing it as a proper company right from the start. Even though RCI was worth R10 000, “[It] grandly opened offices on the corner of Harrison and Anderson streets in downtown Johannesburg. The furniture was bought at an auction and paid for on hire purchase” (Fischer-French, 2005, p. 40). The goal from the very beginning was to make money and survive. In doing so, the trio tried to save money at every opportunity (Vorster, 2013).
Choose a name with gravitas
The founders chose a serious sounding name for their first venture:
With nothing else to trade on, the three came up with the impressive name of Rand Consolidated Investments, or RCI, which they felt had sufficient gravitas to overcome the lack of pretty much everything else. The name did not translate into cash immediately, and Ferreira jokes he married his wife just in time for her to support him during the first nine months of RCI’s life (Fischer-French, 2005, p. 40).
Paul maintains, “We were hustlers who saw an opportunity” (Fischer-French, 2005, p. 40). Laurie reminisced with, “We had a couple of good product ideas.” What undoubtedly rang true for the founders is that starting from scratch is hard (L. Dippenaar, personal communication, 13 May 2008). It was a time that Laurie’s wife often had to answer the question: “What does your husband really do for a living?” A perspective from a colleague was that using their own money, pocket money, is important in how things evolved.
They started out in financial services with virtually nothing and consequently were not able to throw a big balance sheet at a particular issue. I think it was a very natural thing for them. They had to say, “Well, this intuitively makes good sense, so let’s give it a stab.” They were probably making considered
108 judgments, based on it’s my money, I do not have a lot of it, so I’m making an intuitive call. We can’t apply textbook criteria, as we don’t have the resources; so we will make decisions on the fly as we go along (V. Bartlett, personal communication, 29 July, 2008).
Whilst RCI’s start-up capital might have been modest, the founders were mindful of keeping up appearances. An early RCI employee developed a deep appreciation for the three men when asked to get them some decent suits. The founders did not have the money for designer suits, but the image of utmost professionalism was vital from the start.
The first photocopying machine
When a business is funded with your own money, every cent matters. A charming snippet illustrating the early problems that the founders dealt with comes through in Laurie’s recollection of an incident in the first few months.
RCI had no spare money and used the services of a photocopying company on the ground floor of its office building. Ferreira, frustrated by the hassle and cost, wanted the company to buy its own machine. Dippenaar turned him down flat. “When I told him we had no money, he offered to buy it himself and rent it to us on the same basis as the photocopy shop. I did the sums and realised that he would pay for the machine in three months.” RCI bought the photocopier (Fischer-French, 2005, p. 42).
The photocopier turned out to be a first of many investments that paid off.
A secretary and three files
Two years into RCI’s existence, in 1979, a secretary joined the small team. The secretary, Anneke van Zyl, was working as a Girl Friday at the time. In those days it was known as an answer-the-phones, do-the-typing, sit-in-reception type job (A. van Zyl, personal communication, 28 July 2008). RCI consisted of GT, Laurie and Paul, a messenger and the new appointee, Anneke (Corporate publication, 2008). She recalls what happened when she went for her interview at RCI:
109 …Paul asked me only one question: “Do you sulk?” I replied: “No, do you?”…Paul also gave me a page of scribbled figures and calculations to type. I couldn’t make sense of what he had written, but I tried to type them in neat rows. When I handed the typed page back to him, I said I really didn’t understand what he wanted me to do and it was all Greek to me. He looked at the page, smiled and threw it in the dustbin saying: “This means nothing, I just wanted to see your attitude” (Corporate publication, 2008, p. 29).
This would not be the last use of unconventional selection practices. The exchange between Paul and Anneke in this incident captures something of the atmosphere and tone in the beginning, which would be carried into the future. Anneke recalls nearly hitting the ceiling but took the job thinking she would look for something better, like a real decent accounting job. That was almost 29 years ago. She never found anything better, “because this job just became better and better” (Corporate publication, 2008, p. 29). Things grew from there, recalled Anneke:
The more they gave me, the more I enjoyed myself. They had three files when I joined: Correspondence IN, Correspondence OUT and Payments. I had to carry the accounting books up and down to Laurie’s office until I was allowed to keep them with me. I wasn’t allowed to photostat copies of letters but had to use carbon paper (Corporate publication, 2008, p. 29).
In the beginning, Anneke’s primary task was that of typing. Then she said: “Okay teach me how to do the settlements” (A. van Zyl, personal communication, 28 July 2008). GT taught her how to work out the prices of stock on a very sophisticated HP calculator and she became the Settlements Clerk. Everything was done manually with not a computer in sight (Corporate publication, 2008). The founders were good mentors from the start and with a new skill and responsibility under her belt, Anneke moved from the reception desk and into her first office. A new secretary was appointed. RCI’s headcount soared once more.
Humble beginnings is where we came from
The beginning was small, humble and informal. There were no big egos. The three young entrepreneurs spent a lot of time together, with sleeves rolled up as they got the
110 business off the ground. Anneke had no problem sending the founders on errands. “On a Thursday, the guys weren’t allowed to go far from the office, as I needed them to run around and deliver scrip, pick up cheques and bank them (Corporate publication, 2008, p. 29). She would say to Paul, “the messenger has gone to Nedbank. I need you to go and bank this at Standard Bank.” And he would say: “Okay I’ll quickly go” (A. van Zyl, personal communication, 28 July 2008).
She shared this recollection of what it was like in the beginning:
I knew what it was like when we were shouting down the passage: “Answer your phone!” Imagine you do that to the CEO of the company now. You don’t do it, Anneke remembered with a disbelieving shake of the head. This is where we came from (A. van Zyl, personal communication, 28 July 2008).
As they grew in size, things changed rapidly. Anneke explains, “my title changed to whatever was needed to appear at the bottom of a letter: Personnel Manager, Bookkeeper, Admin Manager, Settlements Clerk, Party Organiser…” (Corporate publication, 2008, p. 29). You became the personnel manager if you needed to write a letter for someone. There were no human resources (HR) in those years. “You just took on that role. You became that person” (A. van Zyl, personal communication, 28 July 2008). I recall GT also saying that in the beginning you don’t have HR and then you just toddle along. In my view it corresponds with how things are in an entrepreneurial start-up phase. There is not the luxury to say: “This is not in my job description”. You do whatever needs doing. “From thereon the bookkeeping side grew, the administration grew, and the business grew. Steadily the founders employed more and more people” (A. van Zyl, personal communication, 28 July 2008).
It was fun back then. RCI had been going for three years and GT was still clearly not taking himself too seriously. An example stemming from August 1980 can be found in a newsletter of Robert Barker (PTY) Limited, a joint venture company RCI set up in order to buy property. GT was the chairman of this young company. He was clearly satisfied with the company’s results as is evident from his chairman’s address for Robert Barker (PTY) Limited:
111 And though in 1980, as in previous years, your company had to contend with spiraling labour costs, exorbitant interest rates and uncontrollable government interference, management was able and more, through a combination of deceptive marketing practices, false advertising, bribery, corruption, eviction orders and price fixing to show a profit which in all modesty can only be called excessive (Fischer-French, 2005, p. 44).
RCI starts to make respectable money
A transaction to the value of R250 000 is a big deal for most young companies. For this start-up it was a seriously big deal. GT’s humour shines through again in commenting on their first deal worth R250 000: “We thought we were filthy, stinking rich” (Fischer- French, 2005, p. 40). It is a quintessential GT utterance. After this first major transaction Paul rushed out to buy “champagne” to celebrate the good fortune. Getting his two fellow founders together for a toast, proved to be trickier. Paul half impatiently asked, “What’s wrong with you?” Laurie apparently backed out saying he had to get home to help bath his children. GT was taking his wife out to dinner. Celebrate they eventually did. Celebrating success would remain important into the future.
Business continued to take off. “RCI started turning over big sums and making respectable money, but the young go-getters did not settle down” (Fischer-French, 2005, p. 40). In the first four years, the company grew from R10 000 to profit after tax of R657 000 (Forbes, 2013). In its fifth year of operation, Laurie received a phone call that would continue the growth spurt.
Dippenaar still incredulously recalls being in a Rosebank restaurant one Saturday evening in 1982 when Ferreira phoned him, at a time when the company was still getting on its feet. “He told me he had just bought a 200- hectare farm for R2-million at a liquidation sale and wanted to know what collateral he could use,” says Dippenaar. “I told him there were some bond certificates in the safe.”
Dippenaar went to Hoedspruit to see the farm, Ingwelala, and confessed to Ferreira he had been having nightmares about their ability to sell off portions of
112 it, as was the plan. Ferreira replied: “I’ve been dreaming about buying more farms” (Fischer-French, 2005, p. 42).
The farm turned out to be a good investment and the founders still owns a shared house on Ingwelala. This farm-buying incident highlights how GT did what entrepreneurs do – take risks. When the opportunity came up, GT bought the farm, regardless of the fact that he was flying solo. He phoned Laurie, because finance was clearly Laurie’s portfolio. This event also highlights the personality differences between GT and Laurie. One man’s nightmare constitutes another man’s dream. The RCI business continued to grow rapidly. The founders employed more people, more divisions were added, and more product offerings developed. I heard the perspective that “GT and them were successful in the market. Those guys did well” (F. Swanepoel, personal communication, 17 August 2012). To illustrate how much value was created through the original business, the departure of Pat Goss in RCI’s early months puts it in context. When he resigned:
The remaining trio, being avaricious, gave Goss five percent of the company’s shares in the hope that he would reciprocate with a shareholding in the valuable trading store his family owned. Instead, a wily Goss gave them a share in another speculative investment – a racehorse called Scoop (Fischer-French, 2005, p. 40).
Pat Goss left with R500-worth of RCI shares. Currently, his shareholding with the company is worth R740 million ($74 million). The racehorse did not do as well (Caboz, 2013).
The legacy of the RCI phase
All three founders’ influence had direct impact in the RCI phase. GT’s presence was felt particularly strongly as the founder to initially walk in front. Over the years that followed, the founders would take turns in taking the lead. GT gets the credit for initiating and launching RCI. A participant shared this sentiment:
I read between the lines that GT was probably the primary strategist. I think often GT played the role to say, “Listen hold on you two, I know you want this
113 and you want that” and after all this thinking, this is probably what we are going to do (H. du Toit, personal communication, 19 May 2008).
In the RCI phase GT got a first taste of a chairman role. Amongst the signature qualities that Paul brought to the partnership was his passion, ideas and appetite for risk. If money could be made, he would find a way to do the deal. He also did not miss the importance of celebrating that first taste of success. Celebrating successes continued to grow in importance over time. What Laurie brought to the RCI start-up was the technical accounting skill and yet, he brought so much more. Laurie’s caution equated to safe hands that helped to balance some of the enthusiasm of dealmakers GT and Paul. As Laurie described it:
I think I am inherently more conservative than the other two. Which is not a bad thing because we always ended up in the middle ground…[the others] would try to increase the risk profile a little and I made sure that we did not take excessive risks (L. Dippenaar, personal communication, 13 May 2008).
Another narrative, emphasising the balance between risk taking and caution, is pertinent here:
Paul and GT are more risk takers. They would do things and think later, safe in the knowledge that Laurie will sort out the paper work. Laurie would always say: “You must make photocopies of this and of that.” And he will say to you: “Please post this letter. But you must first put a stamp on.” He will tell you that, still today. Laurie would do the tax and the admin and make sure that everything is done according to what is right. Not that the other two won’t, but they will take chances (A. van Zyl, personal communication, 28 July 2008).
What made this phase special is that with the launch of RCI an entrepreneurial story began. It was the start of the journey from which FirstRand’s history developed. In the decades that followed, in my view, the founders did not forget the humble beginnings from which things started. They were laying the foundation for something major and permanent, even if they did not know it then. In the RCI milestone, the founders were the business. They started with pocket money, were the first three employees who did not call themselves by fancy titles and did not earn salaries for the first nine months.
114 They were working hard, spending long hours in each other’s company. They did what entrepreneurs do, whatever it takes to make money and survive. Their fingerprints are all over this first business, which would not remain a small business for long. At RCI the founding ideals were formed and put to the test. Over the years as the business expanded, these ideals were transplanted to other businesses and the hearts and minds of growing numbers of employees. First and foremost are two founding ideals, namely an entrepreneurial spirit and a constant striving for innovation. From the start, the founders’ way of looking at business was different from many of their contemporaries.
They were constantly on the lookout for opportunities to grow the business. They were hunting for the big deals. They took risks with their own money and were seemingly comfortable with not knowing if things were going to work or not. Starting from scratch is hard, yet they were having fun in the process. From the very beginning they were mindful of the attitude of the people they wanted to surround themselves with. An important legacy is that the partnership survived the early years. Many partnerships fail under the strains of building a business or because of incompatible styles or a combination of both. As the founders were building and establishing their reputations as good businessmen, they were also honing a range of skills. Special relationships started here that would grow stronger and endure.
In closing
The original small business achieved more than making money and surviving. In seven short years RCI grew from a humble start-up to a rapidly, growing business making respectable money. GT, Laurie and Paul had grown their reputations considerably. The opportunity for drastic growth came a mere eight years later when the search was on for reputable partners to take over Rand Merchant Bank (RMB).
115 CHAPTER 7: RAND MERCHANT BANK
Introduction
The scope of this chapter covers the first of the three major strategic transactions, the reverse takeover of RMB. This merger kick-started the acquisitive growth path as depicted in Figure 9. The focus is on what developed consciously and spontaneously in the period in which the founders were directly involved.
RCI RMB FNB Rand Rand Momentum First FirstRand Consolidated Merchant National Investments Bank Bank
1977 1984 1992 1998 1998
Figure 9. The first strategic transaction.
All three founders were RMB directors and succeeded each other as CEOs of RMB. As depicted in Figure 10, GT paved the way as the first CEO after the merger, followed by Laurie and then Paul. Much of what would make RMB one of SA’s leading investment banks over time, and a top division in the group, took root in the early years. RMB’s brand promise Traditional values. Innovative ideas is at the core of its business philosophy and has not changed in 30 years (Corporate publication, 2008). In 2000, Michael Phaff became the first non-founder to be appointed in this role. Alan Pullinger took over the reins in 2008 and remains at the helm.
Figure 10. RMB chief executives (CEOs).
A promising marriage
In corporate years, RCI was a relatively young business, even if it was moving up in the world and was soon to move to a new address. The founders had been on the lookout
116 for opportunities to expand. I heard that GT and his fellow founders realised that they would not be able to progress in the way that they intended to if they did not have a banking license. It was at this point that Johann Rupert started looking for someone to take over his bank. Laurie explains that the founders had made earlier attempts to obtain a banking license but failed. In his mind a bit of luck came their way when their group was chosen and this opportunity fell into their laps (Vorster, 2011). The context of this transaction has been described as:
In 1985, after eight years of operation, RCI bought a bank. Anton Rupert had asked his son Johann to join Rembrandt, the family group, and Rand Merchant Bank (RMB) came up for sale. “Johann wanted to leave his business in good hands. He felt he owed it to his clients and shareholders,” says Ferreira. The trio knew Rupert, who had started RMB at the same time they launched RCI. They had been trying to buy a banking licence for a while, but this was a commodity scarcer than honest politicians, thanks to a moratorium on the issuing of new licences. Harris believed the time had come to move into regulated business and Dippenaar saw it as a way to gain credibility quickly.
The move also sat well with Ferreira’s mother, who would finally be able to tell her friends that her son was a banker – explaining the operations of a hustling bucket shop having proved difficult (Fischer-French, 2005, p. 42).
Besides their business connections, Paul, GT and Johann Rupert knew one another from university days. I heard amusing anecdotes about how, as students, they played sport together and the many antics they got up to. More recently a financial journalist argued that some of the most successful Afrikaans-speaking business leaders of the past two decades, which he referred to as the Boere billionaires, seem to have strong education or business connections and emerged from under the oaks at Stellenbosch (Whitfield, 2013).
For RCI a merger with RMB was a big deal. It would fast track the founders into a bigger league. It was also a big deal for RMB (F. Swanepoel, personal communication, 17 August, 2012). I heard the perspective that the merger with RCI was the best thing that ever happened to RMB. The transaction put RMB on the map. RCI was a profitable business and had a stronger position in the market. The founders had gone
117 some distance in proving themselves as capable businesspeople. As a result, the founders entered the transaction as the more senior partners.
The strength of the founders’ reputations seemed to have oiled the wheels for the RMB transaction to happen. Strong reputations, shared history and mutual friends were contributing factors that smoothed things over. A financial magazine reporting on the RCI-RMB merger in 1984 featured a photograph of the two dealmakers, GT Ferreira and Johann Rupert on the cover. It referred to the deal as “Merchant banking’s promising marriage”. At first glance the sentiment was that it hardly amounted to a string of beans (Fischer-French, 2005). Another recollection was that the merger was essentially a paper transaction. Both businesses put things together, valued their businesses and “I don’t think a single Rand changed hands” (F. Swanepoel, personal communication, 17 August 2012).
The view from a journalist is that RMB was a good platform for more wheeling and dealing and soon developed a reputation as a cowboy outfit. Yet the company was managed conservatively to the point that the balance sheet was structured to withstand a run on the bank. All its assets could be liquidated very quickly if the need arose. Laurie contextualised by saying that they knew they did not have a “big daddy” to bail them out in a banking crisis (Fischer-French, 2005). This sketch again highlights, from my perspective, the individual strengths of the founders and the complementary effect between them. The combination of an appetite for risk with a cautionary stance, pragmatism and sound management comes to the fore again.
The legal date settled on for the deal to come into effect was the 1st of January 1985. Paul, Laurie and GT officially became directors of RMB as of the 7th of March 1985. Anneke van Zyl, who would become known as “the Queen” in RMB in later years, remembers this date well because her son was born on the same day (A. van Zyl, personal communication, 28 July 2008). The deal was structured as a reverse takeover of RMB by RCI. While the name RCI disappeared, the entrepreneurial spirit with which the founders started RCI did not. The RMB staff moved over to RCI’s Twin Towers office. RMB had approximately 38 staff members when the merger occurred. A participant recalled the breakdown with surprising clarity, “…7 or 8 messengers, 2 secretaries and the rest of us, were workers” (F. Swanepoel, personal communication,
118 17 August 2012). RCI had about 15 employees and also some staff members at RCI Insurance Brokers.
This transaction was the start of an enduring relationship between the founders and the Rupert family. The founders often talk about dealing on a handshake. This norm would make its way into the FirstRand philosophy in time. Different narrators thought that dealing on a handshake, in all likelihood, was still in place between the founders and the Rupert family today. While the group still ascribed to the intent and the spirit of dealing on a handshake, it was not necessarily still realistic or practiced in a group that included over 30 000 people (J. Burger and S. Moss, personal communication, 15 May 2008).
GT as the first chief executive
GT initially took the lead of the newly merged entity. His leadership was particularly prominent in the early period following the merger, the formative years. To make the promising marriage a success, much work was needed. The processes and ways of two businesses needed integration and the employees, to grow as a new team. The founders tackled the task with devotion. Many strategic decisions were taken that would set the business up for growth. RMB’s image changed in the hands of the founders. GT’s leadership was felt strongly and his personality rubbed off. He was instrumental in shaping the atmosphere that would not only linger, but also develop into a strong company culture. Soon after the merger it became clear that things were going to be different at RMB with the founders in charge. An amusing incident occurred one Monday morning at a management meeting directly after the merger:
Top management was sitting around the table, about 20 guys with Johann Rupert, the chairman of his new outfit. “Where’s GT?” No one knows. Someone will phone him. “GT is quickly having breakfast, he will be here any minute.” Okay. “Where’s Laurie?” Someone phones Laurie. “He has just finished playing squash. He is in the shower and will only be in at 9 a.m.” Johann is irritated. “Are these guys not interested in business? Are they serious enough about what’s going on here?” Johann was straight down the line (F. Swanepoel, personal communication, 17 August 2008).
119 The crux of the matter is that the founders were beating to the rhythm of their own drums. They were not clock-watchers. In their first business, RCI, they had the freedom to do things their way. They operated on the principle of trust, according to a role division that had developed naturally; they were similar people who placed the same premium on hard work. “They were in any case going to work until who knows what time”, is how this narrator interpreted the management meeting incident. The founders undoubtedly knew about working hard and they brought total commitment to everything they did. This incident highlighted an important aspect of the founders’ way of working. They were anything but conventional.
The founders made an effort with staff
An early initiative was for the RMB and RCI employees, or marriage partners as in the case of a merger, to get to know one another. Anneke remembers a phone call from GT while she was still on maternity leave. The RMB staff had moved in. A booklet was needed with a photograph and a story about everyone. “Do you want to come and do it?” asked GT. She jumped at the opportunity. Her son was five weeks old. “I packed the child in the pram and went to work.” Producing the booklet meant getting to know everybody from RMB’s side. It was a thrill to work on such a project (A. van Zyl, personal communication, 28 July 2008).
The next thing she knew, Anneke was given a farewell party. She protested: “I never resigned. What’s it with you guys? I’m not going anywhere. You know I’ll be back’’ (A. van Zyl, personal communication, 28 July 2008). Her words were not yet cold. By then, RMB had so many subsidiaries. She started writing up the books for the subsidiaries from home. It was about a year that she worked on and off on an hourly basis, coming into the office to pick-up and drop-off work, as needed. Then her car was stolen and Anneke bartered: “If I get a company car, I will come back full time” (A. van Zyl, personal communication, 28 July 2008). That, apparently, is more or less how it happened.
Looking back, Anneke admitted that she could thank her lucky stars for her good timing in returning to work full time after the merger. It turned out that RMB had a personnel department. There was an admin department. There was an entire settlements department. Everything was formalised where previously at RCI, “I was this one
120 person doing five things. They had five departments” (A. van Zyl, personal communication, 28 July 2008).
The Twin Towers office in downtown Johannesburg was spread across two floors. There was only one exit right across from the receptionists’ desk and next to it, the entrance to the bar. A narrator recalled:
GT stood there at the main entrance door every Friday evening. If you wanted to go home, then he would say, “Okay, you can go home, but you can’t go before joining us for one small drink.” And you had to go in there. But you must remember, GT and them were very good. They got to know us. They talked to us. The atmosphere was absolutely, absolutely incredible. They were genuinely interested in the people. I can still remember, the first evening that I was there for a drink, the questions that GT asked me. Some of my answers to his questions were a little foolish. He asked me: “Who is your protégé?” I did not have a clue what a protégé was! (F. Swanepoel, personal communication, 17 August 2012)
“Come and have a drink” was the beginning of an RMB tradition, Friday night pub evenings that continued for many years. Those were fun times. For new RMB employees it was a bit daunting finding themselves in the presence of the founders on such occasions. Michael Jordaan, who in time would become CEO of FNB, remembered these occasions well.
Paul was always there on a Friday night and he mingled with everyone. You could always talk to him…even though we were in awe. We were always a little intimidated by Paul and them…because of the aura around them (M. Jordaan, personal communication, 29 July 2008).
Michael then developed a plan for Friday night pub evenings when he found himself in Paul’s company. “My tactic was to ask Paul questions…by the way, the founders have a very broad knowledge base” (M. Jordaan, personal communication, 29 July 2008). Another sentiment confirmed that GT and them made a big effort with the staff: “They organised the most incredible functions and parties. The functions were always the best quality that one could think of. It was organised and run in the best possible way. The
121 Queen had much to do with this” (F. Swanepoel, personal communication, 17 August 2012). Such events became a draw card for clients too. Clients were enticed to bank with RMB, almost with the promise: “Become our client and get invited to our functions.” An event like Starlight Classics became an institution and is still a highlight decades later. There are hundreds of examples of incredible events over the years, recalled different role players.
Take the wheel of this ship and steer
RMB soon outgrew its offices and the founders felt the time had come to build a new company head office. Laurie thought that Anneke would be perfect for co-ordinating the office move. “I think this is a nice project for you”, Laurie challenged. She accepted, thinking: “I’ll try this one”. The office move was a massive logistical project, but new and exciting to her. Soon Anneke’s additional office move responsibilities started clashing with the dates and times for her payroll duties. “So the payroll had to go” and she appointed a new staff member. She managed to get all the office move information together, the move plan, handled the actual move, sorted out the furniture, all while still doing all the functions and social events (A. van Zyl, personal communication, 28 July 2008).
When everyone had moved to the new office, she said to Laurie: “Okay, that’s it. Now I’m finished.” Laurie responded with: “I think you can now run the building.” Anneke felt that it was ridiculous of him to think that she could do it. She would never forget the exchange of words that followed. Laurie listened patiently to all her protests and simply said: “Anneke, I’m giving you the steering wheel of this twenty million Rand ship and you must steer it.” She retorted with: “I can’t.” Laurie said: “You can.” She thought to herself, if Laurie thinks I can then I can. “The thing is, they trusted you. Then you try to almost outperform yourself” (A. van Zyl, personal communication, 28 July 2008).
GT’s leadership style
While the founders were not concerned with egos, they did aim for fairness. What I heard from Laurie added to my understanding of the founders’ sense of fair play. He explained as follows: “In the early years at RMB we were five or six directors and we
122 all earned the same. Symbols like that started it all” (L. Dippenaar, personal communication, 13 May 2008). As RMB grew bigger, chief executive GT got a taste of a dynamic that was not easy for a leader.
Especially in a merchant bank the egos are bigger than the building in which it is housed. Which make it so difficult to manage. The management principles and leadership skills for managing a bunch of merchant bankers are very different from managing clerks. It is two different management philosophies. You just have to work with those egos (G. Ferreira, personal communication, 16 May 2008).
It is in these years that GT started quoting the phrase: “There’s nothing that we can’t achieve, provided we don’t mind who gets the credit”. He actively advocated this sentiment at RMB. In our conversation, he illustrated this with a rugby metaphor: “It doesn’t matter who scores the try, as long as you score the damn try.” The essence being, that if you can put big egos aside and can get the team sorted, then you improve the team’s chances of winning. GT admitted that it was difficult to get it right. Nevertheless his favourite phrase was woven into the RMB memory bank. It would become a favourite saying in the organisation. Years later, it was still in use.
GT’s modus operandi was always to sit quietly and listen in a meeting and when each person had contributed, he would summarise the discussion. He always had the answers, but he would make it sound as if someone else came up with it. He would ask you the most basic of questions and as you gave him the answers, you were actually presenting the solutions to the problem. A narrator remembered with amusement how GT often said: “I’m the CEO but I’m really a damn glorified personnel officer.” He had to sort out everyone’s problems and he did sort out everyone’s problems (F. Swanepoel, personal communication, 17 August 2012).
GT was in your face. He would walk around disturbing people at their desks. He walked into meetings to stir things up. He is absolutely a people’s person. More than anything, he wanted people to be happy at work. Financials were important to him, but not as important as whether people were enjoying themselves at work. A narrator recalled a particular conference that illustrates how important this was to GT:
123 We discussed financial results… at the end Laurie summarised the income and compared it to the previous year. “See how wonderful we are doing and how hard we are working”, and so on. GT’s turn came right at the end and he said, “Do you see these things”, pointing to the financials projected on the wall, “These things are important, but it isn’t important. What is very important is: Are we having fun? Do we want to come to work?” (F. Swanepoel, personal communication, 17 August 2012)
The “are we having fun?” question and GT’s attitude is significant. RMB developed into a great place to work and the founders had much to do with this. “Employees felt spoilt. It was a pleasure to work there” (F. Swanepoel, personal communication, 17 August 2012). RMB employees tend to stay with this company. They do not want to leave. Many people are happy spending their entire careers at RMB. One of the founders’ first appointees, Anneke de Beer, has never stopped loving her work at RMB. There are many employees who started working at this company years ago and are still in its service. One memorable phrase was: “RMB was the best thing that ever happened to me in my life”.
The founders continued to each play to their strengths. I heard many examples of the founders’ strengths and differences in personality style that came to the fore at RMB. GT’s mischievous side, his knack for stirring and unconventional ways continued to reveal itself. Laurie was as conscientious as always as is illustrated by the following: “There were something like twenty different companies in the group and twenty different cheque books. Laurie insisted that the protocol for signing private and company cheques were absolutely observed in full, no short cuts (A. van Zyl, personal communication, 28 July 2008).
The decision to get shareholders in
Early on the founders were faced with a pivotal decision: keep RMB small or make it bigger. If they wanted the business to grow, they needed to get shareholders in. GT’s view on this bit of history was, that it is not a decision that you will find somewhere in the minutes of a meeting (G. Ferreira, personal communication, 16 May 2008). It was a conscious decision to say that it was not going to be a dynastic business. In taking this
124 decision the founders accepted that their shareholding would be diluted and that they were not going to retain absolute control.
GT was precise in the way he explained it. If there were three partners and for argument’s sake, each had 30% shareholding and one took his leave, you would be left with a big gap in the company. However, if all three partners were to leave, the company could not continue. Therefore you would have to make it so big that the moment you walk away, there should not even be a ripple. It ties back to GT’s view that the most important function or responsibility of a leader is that of a seamless handover (G. Ferreira, personal communication, 16 May 2008). While some things came about intuitively and developed spontaneously, the decision to grow the business big and give up ultimate control was a conscious decision. The founders actively managed the business in that direction. In my view this decision and a pertinent leadership philosophy, laid an important cornerstone for sustainability.
Another GT narrative that comes to mind is that after some time the founders were joined by a couple of directors at RMB. One of the directors insisted on seeing a five- year plan. “I mean we almost fell over backwards with laughter”, GT recalled. Upon which the particular director became more insistent on how serious he was about this issue. GT in no uncertain terms made his sentiment known, prefixed with some spiced language. “We did not even know what was going to happen in one year’s time!” Years later he did not dispute the importance of the particular director’s question (G.T. Ferreira, personal communication, 16 May 2008). However, back then, the business’ survival was certainly still not guaranteed.
Another GT philosophy that influenced RMB in the early years was the idea of a loose- tight structure. To recap, like a cricket captain, a leader needs to know when cautious play is called for and when to loosen the reins when the batsman is hitting sixes. The founders continued to innovate, as they had done all along. Paul shared that sometimes he looked back and thought: Was that such a big deal? “We started Futures Market. We actually registered the name. And now everyone has a Futures Market but not everybody started it in a small company” (P. Harris, personal communication, 19 May 2008). Another example that illustrates the growth and innovation that occurred at RMB also came from Paul:
125 In the late 1980s and early 1990s RMB was growing at breakneck speed. These were the early days of the sophistication of the South African financial services industry. Without being too immodest, we were at the forefront of a lot of these markets that were also developing globally after the liberation of the industry in the UK, USA and later Europe (Harris, 2015).
Traditions that became entrenched in RMB culture
Traditional values. Innovative ideas.
In asking Laurie about the soul of the culture in FirstRand, he said, “It’s not just one word, it’s the pay-off line of RMB. Traditional Values. Innovative Ideas. You can call it a strategy in four words. You can analyse every word. Traditional values, it goes back to what your mother taught you, respect for the individual, integrity and so on. Add to that continuous innovation. To understand the group, the holy grail of culture comes from RMB. It is the mothership (L. Dippenaar, personal communication, 13 May 2008). Paul agreed that the gravity for values and culture for the group emanated from RMB.
The BSD award
The first time I heard about the “Big Swinging Dick” or BSD award, I wondered if I heard correctly. An RMB old-timer explained the origin and intention of this award to me. It is a recognition award for the top performers - RMB dealers and dealmakers who made a million Rand’s profit. Already after the first year, the bar was raised higher, much higher, “because a million, everyone made a million.” The inspiration apparently came from a book referring to a dealmaker, becoming so successful and so busy that he or she is conducting two telephone conversations at once. The imagery in the book depicts such a dealmaker as becoming almost as big as an elephant in the jungle. The BSD award is announced at the company’s annual conference. Interestingly enough, there is no monetary prize associated with this award (A. van Zyl, personal communication, 28 July 2008).
The Book of Rules
RMB has the legendary Book of Rules. It is a sizeable book with a serious looking
126 cover in the colours and corporate identity of RMB. Open it up and the inside is completely empty, except for the following inscription:
At RMB we’ve always been guided by a strong set of values, and because we trust our people to live by those values, we’ve never needed a book of rules. Providing our clients with imaginative, destiny-changing solutions is what drives us…and that isn’t found in a book of rules (Fischer-French, 2005, p. 45).
The fundamental premise of the Book of Rules is: hire people you can trust and then the need for a myriad of rules disappear. “It is a symbolic thing” (L. Dippenaar, personal communication, 13 May 2008).
The annual RMB conference
GT told me that in the beginning he used the RMB conference “to tell the story a bit.” The latter refers to how the three partners got together, their mindset when they started RCI and essentially, how the entrepreneurial story was continuing at RMB. He thought it helped to somewhat reinforce the cultural roots that developed in the business and to strengthen it. This company conference was and remains an annual highlight. Every single person is invited, from the most junior to the chief executive. CEO of RMB, Michael Phaff, told me, “Nobody knows our culture until they’ve been to our conference.” He was quick to follow up and invited me on the spot with, “in fact, you should come to our conference on Saturday. Attending the RMB induction session is not the same, I promise you.” He elaborated:
We laugh with each other and if somebody is too self-important…we’ll laugh at them until they laugh at themselves. And it just sorts all the rubbish out. I think it is part of the culture here where you are not allowed to be self-important (M. Phaff, personal communication, 28 July 2008).
Laurie Dippenaar as chief executive
Laurie succeeded GT as CEO in 1989. His tenure in this role was brief; the Momentum merger would take place soon. When I relayed Laurie’s sentiment, that others in the group looked to RMB as sort of setting the trends, Michael Phaff responded with:
127 “Considering that Laurie had the least involvement with RMB of the three founders, it is hugely meaningful to hear him say this (M. Phaff, personal communication, 28 July 2008).
When I asked Laurie: “Who else could offer an important perspective as part of my data gathering?” he was pensive for a moment. He then said: “Do you know Anneke van Zyl? She was there from the beginning.” Laurie recapped on the Queen’s history, how she started out, and had been on the move ever since. Anneke developed a role for herself over the years and now she’s in charge of gees13 at RMB. “She created a portfolio for herself. No one created it for her” (L. Dippenaar, personal communication, 13 May 2008). The phrase, “she created a portfolio for herself”, made a strong impression on me.
Laurie told me about the time the company won the coveted Deloitte Best Company to Work For award. The very next day, in the newspaper, there was a full-page advertisement congratulating and celebrating this achievement. The entire page was covered with stars, 830 or so, one star for each RMB staff member. “Anneke did it on her own without anyone asking and it’s expensive business to place a newspaper advertisement. She did not give a damn who outside of RMB read it, she wanted the people inside the company to see it.” She did things like this, he remembered. Coming up with ideas without asking anyone. She has an unlimited budget, but she doesn’t waste money. Laurie said it would be a mistake to think of the role of the Queen as that of a court jester. In his view a court jester is somewhat of a clown and that the Queen is not. Instead, he thought of the role as someone who kept the people in the palace happy and laughing (L. Dippenaar, personal communication, 13 May 2008).
I asked Anneke where the name the Queen came from. In her mind, it probably coincided with the move to the Sandton building. It started very slowly with GT’s secretary always referring to her as “Queen bee”. Or she would say: “Ask the Queen bee, she’s been here the longest.” People started saying things like: “Ask the Queen” or “Ask Queen bee” or “Hi Queeny!” Her role has changed many times since. “Now I am in charge of the Palace, where my job is to create a home away from home for the RMB family” (Corporate publication, 2008, p. 29). Anneke maintains she never says she is the Queen. She just works for her.
128 GT retires from active duty
In 1992, a major trauma awaited GT. The incident dramatically altered his outlook and altered the course of his career. This excerpt from a media source describes the circumstances:
Ferreira was the first to consider leaving the company in new hands, in the aftermath of a 1992 hijacking during which he was shot in the chest. A fortunate deflection sent the bullet through his ribs rather than his heart. He still has the necktie moment, decorated with a bullet hole.
“I was incredibly lucky,” says Ferreira in one of his few somber moments. “That was the turning point, lying in intensive care and questioning God and your life. It did prompt me to say I did not want to be an executive until 60. I told the guys I wanted to live a less stressful life and that I would come in mornings only.”
That did not work out as planned. So, in an effort to “get off the track”, he moved to Stellenbosch where he takes aesthetic pleasure in the typically nouveau billionaire fashion of losing money on his wine farm Tokara (Fischer- French, 2005, p. 44).
A colleague remembers the year that GT was shot. At the RMB annual conference he announced his intention to go on a sabbatical. He went traveling for six months or so. When GT made his speech, everybody was in tears (A. van Zyl, personal communication, 28 July 2008). GT was much loved in RMB.
Paul Harris as chief executive
I heard the view that as CEO, Paul’s love for the business was tangible. His passion made a strong impression on a new staff member who attended an RMB induction in 1997.
Paul walked in and said: “If you behave as though this is your own company,
then we are all going to be in great shape.” And then he walked out. He
129 obviously came back and chatted a bit, but that was the important message (M.
Phaff, personal communication, 28 July 2008).
As CEO, Paul was involved in a hands-on way in the business and I learnt of numerous examples through the narratives. On one occasion he put a challenge out to his team during a fundraising event. When his team won the bet, Paul kept his word. He had his head shaved as part of the fundraiser. Paul used to say, don’t tell someone what you want done and how to do it. If you do that, you are stifling them or you have hired the wrong person.
A personal highlight for Paul was when RMB won the Deloitte Best Company to Work For award. It was in a way the confirmation of “everything we believed in” (P. Harris, personal communication, 19 May 2008). He did things that went against the grain of convention. I heard about the following incident from the candidate Paul interviewed on a golf course. The narrative speaks of their earlier introduction at the Plettenberg Bay airport:
“Mike, meet Paul Harris.” I was face to face with someone in even dirtier slops and with a more unshaven face. I was looking at an incredibly successful person who was not self-important – who wasn’t taking himself too seriously (Phaff, 2008).
The interview on the golf course was a success. Not only did Paul appoint Michael Phaff, but also three years later he put this newcomer, who was not on the RMB management board at the time, forward as his successor. Paul was never afraid to go out on a limb if he strongly believed in something (M. Phaff, personal communication, 28 July 2008). The way in which Paul handed over is revealing. In the words of his successor:
When I was appointed CEO, I was reluctant, but Paul came into my office and said: “We are appointing you because we want you to do what you think is right, not to do what we have done.” That statement had a profound effect on me. It gave me confidence because they trusted me, but it also made me accountable because I could never blame me. Paul gave me the opportunity of a lifetime –
130 no doubt the best job in corporate SA – and then simply got out of the way (Phaff, 2008).
Paul was highly supportive. “From the beginning he made sure that he did not interfere, but he was always there in unwavering support with his passion, his ideas, his energy and his love of the business” (M. Phaff, personal communication, 28 July 2008). Paul has always been incredibly passionate about nurturing talent. He recalled that in the early years when RMB was growing fast, the business continually seemed to be in short supply of high quality staff. Even if a suitable candidate with a good culture fit could be found without too much difficulty, the recruiting and hiring processes seemed to be haphazard. Paul then came up with the idea of a graduate training programme in 1993. It was called the “Class Of” programme, for instance “Class of 1993” and so on. The objective was to create excess capacity and a management pipeline. “The very top echelon of management conducted the interviews…I spent about 20% of my time with the “Class Of” professionals (Harris, 2015).
This programme is unusual in that it targets candidates with at least three years’ work experience who do not have a background in banking. The more unusual the candidate’s work experience and degrees the better. The programme is structured in terms of projects and opportunities to offer exposure to different parts of the RMB business, and on the other hand, it is so unstructured that it works through a process of “benign neglect” (Corporate publication, 2008, p. 34). This makes for an interesting paradox. Paul and RMB are rightly proud that this programme has been an incredible success, past and present. The real success is evident in the alumni of the programme. For instance, Michael Jordaan (CEO of FNB) is a product of this programme as are many others who have gone on to great careers within RMB, the group and beyond.
Michael Phaff as chief executive
For Michael Phaff, the first non-founder CEO, it must have been a daunting task. In conversation with him, two particular comments stood out. Firstly, hearing that the investment bank really did have an entrepreneurial culture where you could run your own business and secondly, that he experienced RMB’s culture as one where the not-so- corporate person could thrive. One of GT’s views on leadership stayed with him:
131 When I succeeded Paul as CEO, I asked GT what he thought I needed to do. His response was that there is no such thing as I, but only we and us. This made a lasting impression on me – that is, the need for the CEO to speak and think at every possible opportunity for the collective RMB team, because it is a team (M. Phaff, personal communication, 28 July 2008).
Michael Phaff commented that the biggest trauma of his eight-year tenure was the equity trading losses over the 2008 period.
Obviously we got things very, very wrong here, but there were two aspects that made me incredibly proud. The first was that everyone, from the traders to myself, accepted their full responsibility and accountability. The second thing that made me proud was the fact that every single person involved has seen the problem through. No one, including those who clearly no longer had a financial incentive, was selfish enough to just walk away from the problem (M. Phaff, personal communication, 28 July 2008).
What is said about the RMB environment?
Different voices described what it felt like over the years to work at RMB. The majority of people working in this company are specialists, are high on achievement orientation and there are many seriously competent people to be found in this business. Michael Phaff described it as a tough, hard working environment and one that is loose on rules but strong on empowerment. The RMB way is to hire good people, empower them and get out of their way. What was emphasised is that “at RMB we work hard but we also play hard” (M. Phaff, personal communication, 28 July 2008).
I heard that the founders built the RMB culture and that they absolutely deserve the credit for doing so (M. Phaff, personal communication, 28 July 2008). What Michael saw as a potential contribution from his tenure as CEO, was that he articulated the RMB culture. He recalled that at his second annual conference he made a presentation outlining: “This is what I see as our culture”. In hindsight it sounded simplistic, but as a result it became something tangible. A colleague of his phrased it in an interesting way namely, “you eulogised the culture.”
132 Growing larger has an effect on a small company culture
Michael Phaff expressed the opinion that growing larger has certainly had an effect “on our small company culture and has necessitated more structures being put in place.” One way was by chunking things down and as such, the company has retained its culture by empowering people to make their own decisions and take responsibility for their actions. RMB culture has no doubt changed over the years. If you speak to people who have been around for thirty years, or RMB oldies, they would say the culture has changed or it has been diluted and it is not the same as it was. Michael’s view was that these individuals are a hundred percent right. He explained it in this way:
It is impossible to have the same culture in a business that has 50 people as in an organisation that has 1 300 people. In Paul’s period we probably went from 50 to 300 people. In my period we went from 300 to 1 300. The big challenge in my time was what do you keep in the culture and what do you have to let go of to allow the organisation to grow. So I often tease the old timers and say: “I know you guys grew up in a culture where everybody got a hug and a hello and goodbye kiss from everybody else. We can’t do that anymore” (M. Phaff, personal communication, 28 July 2008).
Change and growth certainly introduce dynamics of its own. RMB is not a company immune to people resisting change at first. Staff numbers increased drastically over the years. In time more people would be hired from outside of its ranks. Hiring externally is a practice that developed over time. Even office moves brought with it pain of its own. I heard the perspective that the company’s gees (see Footnote 13) took a knock during the time of moving from the old building to the new. “Suddenly we were on smaller floors and we were on top of each other. No longer were we spread out where we could see each other and pass one another’s desks” (A. van Zyl, personal communication, 28 July 2008).
The Queen remembered during this time coming up with an idea for a staff event around the theme: “Let’s fix the heart of RMB”. Amongst other things, each person was given a picture of a cut-up heart and the idea was that the person had to fix it and wear it. This initiative concluded with a major staff social (A. van Zyl, personal communication, 28 July 2008).
133 RMB develops into a talent brand
People are so fundamental to investment banking, that if you want to be the best investment bank, you have got to be the best employer. Once in a leadership programme Michael Phaff was asked: “What is it like running a company when you’ve got 200 people who all think they can do a better job at running it, than you?” It was indeed a bit like that he told me, because RMB has so many seriously competent people. In response he offered:
You can only cope if you are comfortable with who you are. If you are insecure, you will stifle the place completely. Do not think you are special. Just be comfortable with, I am who I am. But that does not mean I am the best. If I think I am the best in everything that is a problem. And if I am stressed about not being the best at everything, that is also a problem. The one problem is arrogance. The other is insecurity. You cannot be either of those things (M. Phaff, personal communication, 28 July 2008).
What he proudly emphasised is that the company developed the reputation as a talent brand. RMB is a clearly a sought after employer as is evident in the following:
The statistics might have changed again but at one stage we were getting over 1 500 unsolicited CVs a month. Our total staff compliment is between 1 200 and 1 300. We were getting more unsolicited CVs than our total staff complement. In theory, by numbers it just means if you were hiring 10 to 20 people a month, we could just hire the top 1% of unsolicited CVs, which is amazing (M. Phaff, personal communication, 28 July 2008).
Culture fit is very important
At RMB it is crucial to get the right match between the company’s people and its culture. In asking Michael if there was anything that he would like to see more of in the RMB culture, I heard an interesting answer. “I would like to wave my magic wand and make the 5 percent of unhappiest people go” (M. Phaff, personal communication, 28 July 2008). His view was shaped by an earlier experience. The effect of one or two very unhappy individuals can mess up a whole area or part of a system, until the last unhappy person leaves. Then it becomes a happy, stimulating, successful area again.
134 The lesson for him was, if people are unhappy they must move on. They will be happier elsewhere. The organisation they leave behind will be happier and get back to success much quicker. It comes back to that fit (M. Phaff, personal communication, 28 July 2008).
Conclusion and interpretation
The strength of the founders’ reputation made the RMB transaction a reality. Their goals were clear: they were searching for opportunities to expand. Even after failing once to obtain a license, it did not deter them. This merger opened the way to move into regulated business. RCI was a young business when it took over RMB. It seems that the RCI-RMB merger was the best thing to happen to RMB. After the merger the three founders gained access to a bigger league. The founders’ strategic decision to grow RMB big and get shareholders in, worked for them. GT’s reasoning to grow the business so big that any one of the partners could walk away without so much as a ripple being felt, in my view, set things up for how succession and leadership transitions would be handled in the future.
The founders were directly involved in the running of RMB. The company was still small enough that they could engage with everyone. What is a unique part of the story is that all three founders were directors and chief executives of this company. Following the merger, GT was instrumental in creating an atmosphere that made it a great place for people to work in. The founders made a considerable effort to get to know RMB staff after the merger. There was a distinct feeling of support that employees praised.
The founders are credited for building the RMB culture. It is a culture of excellence. The brand slogan: Traditional values. Innovative ideas epitomises a promise and a philosophy that has not changed since its inception. Many innovative “firsts” saw the light here. RMB pioneered many of the products and services that form the backbone of the investment banking sector in the country today. Many traditions, symbols and artifacts took root, like Friday night pub evenings, RMB’s renowned Book of Rules and the BSD award. The annual conference and the company’s induction sessions became important vehicles through which to grow and reinforce the company culture. RMB has the Queen. Not many companies can claim such a phenomenon or a portfolio that
135 includes organising the best staff functions, remembering birthdays, hosting special events and orchestrating numerous charity drives.
RMB has come a long way since that first merger. Considerable growth followed. Buildings were outgrown. Staff numbers grew. Complexity grew. The list of accolades grew. When selecting staff for an investment bank, cultural fit is crucial. The founders infused the business with an owner-manager mindset and lived it to the extreme. It was a case of “You make the decisions. You were in control the entire time, surrounded by competent people. You are in charge, but we will see to it that your division performs” (F. Swanepoel, personal communication, 17 August 2012). In terms of atmosphere, it was a pleasure and a privilege to work in this company. With the RMB transaction, the founders’ entrepreneurial success continued. This merger proved to be a promising marriage indeed. It can hardly be attributed to luck.
136 CHAPTER 8: MOMENTUM
Introduction
The focus of this chapter is on the second of the three major transactions, the merger between RMBH and Momentum as depicted in Figure 11. This transaction was a continuance of the founders’ entrepreneurial spirit and a further deliberate step in growing the business. The decision to diversify away from merchant banking was a defensive tactic by the founders. Around the same time, Remgro and Volkskas decided that Momentum should either be sold or absorbed into the Sanlam group. Instead of facilitating the deal, RMBH offered to buy the company for itself (Fischer-French, 2005). In my view this was a brazen move on RMBH’s part. It reminds me of GT’s reference to chutzpah, meaning boldness or self-confidence. This second deal was a display of chutzpah, one of many qualities shared by the founders.
RCI RMB FNB Rand Rand Momentum First FirstRand Consolidated Merchant National Investments Bank Bank
1977 1984 1992 1998 1998
Figure 11. The second strategic transaction.
What did this second major milestone contribute to their expanding business interests? Laurie offers a logical explanation. The income from merchant banking can be highly erratic, with ups and downs. They were on the lookout for something that would give them a more sustainable income source, or what is called, annuity income. He explains that they had identified the insurance industry as the right type of investment that would offer them such income. Once again another stroke of luck came their way. When the then shareholders decided to sell the company, they came to see RMBH, to help them to find a buyer. Then, “we put up our hand, we will buy you”, and that of course turned out to be a wonderful investment (Vorster, 2013, p. 15).
The founders’ reputations were bolstered by, what was referred to as, putting RMB on the map. I heard that the founders “were businessmen who could [emphasis added]. The business community rated them” (H. Meyer, personal communication, 8 August
137 2008). RMBH had been growing at 20% a year and the buyout of Momentum, which cost R412,2 million at the time, was described as a great deal. Six years later, in 1998, the deal was worth R8,6 billion (Shevel & Spira, 1998).
Momentum’s history dates back to 1966 when the business, AVBOB formed a life assurance company called the Afrikaanse Verbond Lewensversekering Genootskap Beperk (AVL). The latter acquired Momentum Assurance Corp and became Momentum Life Assurers. Next it expanded its interests with the takeover of Yorkshire General Assurance Co, and then Allianz Life and Rand Assurance Co. (Corporate publication, 2008). Insurance was an entirely new ball game for the founders as comes through in this excerpt:
Ferreira recalls that Momentum CEO Neil Krige was more than a little hesitant about being bought out by a bunch of minor merchant bankers, but was eventually convinced, and an offer was made. In 1992 Momentum was bought in the same way as RMB; through a reverse takeover that saw RMB sold to Momentum in return for shares and management control (Fischer-French, 2005, p. 44).
If the merger between RCI and RMB in the early 1980s blew the roof off, this acquisition propelled their business interests into another stratosphere. The founders were now merchant bankers and life insurers. They had a listed financial group on their hands. It became the vehicle through which to list RMBH’s shares. The benefits however would not come without a dramatic turnaround intervention, a strong display of leadership and an incredible amount of hard work. Laurie recalled how, during his time at Momentum, he worked himself into the ground (L. Dippenaar, personal conversation, 13 May 2008).
The founders’ roles in the early 1990s
At the time of this transaction, Laurie was CEO of RMB and the big task and appointment as non-executive chairman, landed on his shoulders. Paul succeeded Laurie in heading up RMB. GT was the executive chairman of RMB and deputy chairman of RMBH. The cover of the August 1992 issue of RMB’s internal magazine, shortly after the takeover, was a cartoon depicting all the leading characters. Laurie,
138 with his secretary by his side, was moving to Momentum’s head office in what is now Centurion. In a scene depicting a marriage ceremony, GT was the groom to Momentum’s Blignaut Gouws, with the latter holding a wedding bouquet. Paul was depicted as being pushed in a baby stroller as RMB’s brand new CEO (Fischer-French, 2005).
Momentum at the time of the takeover
Momentum Life was troubled with inefficiencies and recovering from a difficult earlier merger, when RMBH became involved. The company’s earlier takeover of Lifegro had not been a happy marriage and a setback. As a result of the Lifegro merger, client service dropped to an all time low (Vinassa, 2003). Other difficulties at the time are noted in the following excerpt:
In 1989 it took over Lifegro, then the fifth largest life assurance company in SA. It was a case of a small fish swallowing a whale. Cultural differences and incompatibility of technological infrastructure kept management focused on sheer survival. There was little time for strategic thinking (“Holy cows make the best steaks,” 2000, p. 35).
Momentum’s transformation began with the RMBH takeover. What was happening in their latest acquisition seemed out of kilter with the founders’ core beliefs and the business philosophies that had brought them success at RCI and RMB. It seemed to be a company struggling on a couple of fronts. Turnaround for claims settlement was seven days, the worst in the industry. The industry norm was five days. The company’s strategy at the time was to take over businesses’ “books”. Its product strategy was to follow, “like a child that just wanted to pass matric” (H. Meyer, personal communication, 8 August 2008). This image of a student just wanting to pass that final year of high school, when strictly speaking it was the minimum requirement for entry into tertiary education, made a strong impression.
The company that Laurie encountered was into copying and not innovation. “And that [emphasis added], we are not,” he reminded me emphatically (L. Dippenaar, personal communication, 13 May, 2008). The Momentum world was very different from the one he knew at RMB. It was a foreign world. In sheer size, it dwarfed RMB, the latter
139 being a small outfit with about 300 people at the time, compared to the larger life insurer. A participant emphasised that it called for a different leadership approach:
RMB was such a small player before it became involved with Momentum. The style of the people leading the company when you’ve got fifty, eighty, a hundred employees, is way different than what is the case in a company the size of Momentum (B. van Heerden, personal communication, 2008).
In his leadership, Laurie had to take stock of and cater for this new environment. For one, Momentum employed a great many actuaries and equally so, many back-office client service people (Vinassa, 2003). There were seriously clever employees in the acquired business, and no doubt the same could be said of RMB, and yet, the two company’s cultures differed like day and night. A characteristic of the Momentum 14 culture at the time of the takeover was a strong Meneer (see Footnote 3) and Mevrou culture, recalled a narrator with a wry smile. To put it into context, the life insurer had a conservative Pretoria culture. It stemmed from the late 1980s when it was a traditional Afrikaans company (Vinassa, 2003). Laurie did not have an inkling of an understanding of this type of culture. Company insiders remember him referring to this phenomenon as a grey shoes15 culture.
There were also clear differences in the personal styles of key senior leaders. For instance, a very detailed and short-term focus stood in contrast with a predisposition for looking at the big picture, which did not facilitate cohesion. Every business has a self- image. That is very important, I was assured. Momentum was a company with a poor self-image (H. Meyer, personal communication, 8 August 2008). Apparently a member of staff of an industry competitor, Sanlam, described Momentum’s self-image at the time as, “like a guy who grew up in a house in Pretoria West16”.
It was not an easy environment for a leader, especially for one set on bringing about change. In the midst of this unfamiliar world that Laurie encountered at first, he noticed incredibly competent people in the next generation of leaders. He described it in this way:
I have to just add that we were incredibly lucky. There was inherently a bunch of very competent people including Hillie Meyer. It was actually the second tier
140 of management back then, that included Francois Hugo. They gave me fertile soil to work with (L. Dippenaar, personal communication, 13 May 2008).
Hillie Meyer, an actuary, was already hard at work tackling the challenge of improving client service and bringing about much needed change when the ownership of the company changed. When he volunteered to take responsibility for client service, the obvious question came up. What did an actuary know about client service? Hillie’s reported response was something along the lines of it is impossible to make it any worse than it is (“Holy cows make the best steaks,” 2000).
Also part of the second tier of leadership that Laurie referred to was Francois Hugo. Before joining the company in 1990, Dr Francois Hugo, a registered clinical and counseling psychologist, was an associate professor in psychology at the University of Johannesburg. At Momentum, Francois was instrumental in creating a new HR philosophy. He could have insisted on a fancy title, instead, he simply called himself an internal HR consultant. He led by example. Francois saw to it that the HR consultants did not report to him, but back into the business, and acted as a mentor, passing on best practice, allowing problems to be addressed as they arose, without prescriptions from on high (“Holy cows make the best steaks,” 2000). In my conversation with him, he described his work in the company at the time, as simply doing organisational development (OD) work. He elaborated with “Laurie and them did not have a guy like me at RMB. In the early days, Laurie knew I was there, but he did not really know what I was doing” (L. Dippenaar, personal communication, 13 May 2008).
Laurie Dippenaar’s exceptional leadership
Different participants described Laurie’s leadership at Momentum as exceptional. One view on why he was so brilliant had to do with the fact that he did not push anything. He listened, asked questions and learned about the business of insurance that was quite new to him. Laurie said that back in 1992, he “knew nothing of insurance and did not know if he could make it work” (L. Dippenaar, personal communication, 13 May 2008). Of the three founders, Laurie was the most closely involved and served as the company’s chairman for many years. His leadership was pivotal in the company’s turnaround. Nicolaas Kruger, appointed CEO in 2009, has high praise for Laurie: “We naturally learnt a massive amount from him. His long-term vision, his leadership, but
141 also his sound value system” (Vorster, 2013, p. 144). One of Laurie’s greatest contributions to the success in the company’s turnaround must be how he asked critical questions. He put a simple challenge to the business: Tell us exactly where you make your profits. It happens to be a difficult question for a life insurer to answer (“Holy cows make the best steaks,” 2000).
A narrator recalled with great clarity the particular occasion on which Laurie asked what was probably the most pivotal question that “changed the whole thing”. He just said: “Chaps, where do you make your money?” (H. du Toit, personal communication, 19 May 2008) Then the actuaries would come with clever answers and in the end he would simply say: “Just tell me: Where do you lose money? Where does it cost you? Where do you make money?” More actuarial answers followed about embedded value and so on. Laurie heard he would not understand because he was a chartered accountant. In an effort to provide an answer to his persistent question of: “Where do you make your money?” the idea of profit centres originated in the company. Multiple voices agreed that the important thing was that he kept asking.
Laurie also came in and said, “I want a winning company”. Once again I was reminded that it was a self-image thing; the company could go into a positive spiral or it could stay as it was (H. Meyer, personal communication, 8 August 2008). One of Laurie’s other quotable quotes was, “Champions in the Making”. A further phrase that developed during this time was: “Ordinary people doing extraordinary things”. I was told with conviction that the reason why ordinary people could do extraordinary things, was because of the environment that had been created for them (B. van Heerden, personal communication, 8 August 2008).
When it came to performance, Laurie sent a clear message about what he expected. Then he left people alone to get on with their work. He raised the bar, took things up a notch. Hillie was thrilled, thinking this was bakgat17. Laurie, inherently an entrepreneur, influenced Momentum in another significant way. He sowed the seeds for cultivating innovation and three years down the line, it started filtering through.
Management wanted to stimulate creativity and innovation. Leadership was digging their heels in a bit. It needs gravitas. If you want to encourage innovation, you must tolerate mistakes. You have to leave room for allowable
142 weaknesses. Laurie started certain sparks. It was our home turf, the three guys that reported to him. I don’t know if it was a good idea, but he just sort of left us to get on with things. The breaking down of defenses took the better part of a three-year period. Innovation started coming through. We liked to be called a little maverick (H. Meyer, personal communication, 8 August 2008).
Laurie acted as a role model. He certainly demonstrated the notion of play the ball not the man, something that this business was hard pressed on. It was explained in this way; if you play the ball you talk about the issues, but it has very little to do with the person. Whenever there was a debate about something, it would always be about the issue, not about the person. Laurie did that one hundred percent (B. van Heerden, personal communication, 8 August 2008). What Laurie and them succeeded in, was to celebrate successes. The company was bought at January year-end and by August of that year, its successes were already acknowledged at the annual conference. The company’s poor self-image had started changing. Other departments started feeling it too; such was the ripple effect, a case of success breeding success. The positive spiral had started (H. Meyer, personal communication, 8 August 2008).
People who have worked for Laurie are rarely out of stories and impressions of him. Colleagues from this phase contributed some impressions that stood out. He is scrupulously honest and he expects other people to be so too. He is really prepared to listen; that makes a big difference. I heard that with Laurie it is interesting how one almost needs to talk sport, then he understands (F. Hugo, personal conversation, 7 August 2008). He has this huge amount of integrity, which makes it very easy to work with him (B. van Heerden, personal communication, 8 August 2008). Another colleague told of Laurie’s zero tolerance for cutting corners; how he did not meddle with management (H. Meyer, personal communication, 8 August 2008). What stood out is how he really trusted. If you have earned Laurie’s trust, you have earned a great deal.
With Laurie recognising that there was considerable strength and depth in the second tier of leadership, he let a young team loose. His leadership created a certain atmosphere. He created the circumstances for people to be successful. Many talented and committed people came to the fore and blossomed in this atmosphere. A sentiment that testifies to this effect is, “It felt as if I got a second life during this time in my
143 career”. It seemed that in the conditions as was described to me, people could do their best work.
The combinations of people in the leadership team worked well. With Laurie in the equation, the effect was amplified. Employees recognised that something special was coming about, and warmed to it. The most enduring testament about the atmosphere that took root in the company must be, “people loved working at Momentum” (B. van Heerden, personal communication, 8 August 2008). External parties commented on the “buzz” as they walked through the building. A journalist picked up on this too, struck by the enthusiasm radiating from a team that had come down to lunch, their lively debate continuing as they sat down to a meal (Vinassa, 2003). A powerful testimonial of what it felt like to be working in the company at the time, was, “Momentum’s culture gave me freedom. Here you feel at home” (H. Meyer, personal communication, 8 August 2008). There is much praise for Laurie’s leadership and involvement in this era. I heard the phrase, “Laurie was incredible at Momentum”, and variations on it, echoed repeatedly. From different angles I heard confirmation: Laurie gets the credit for Momentum.
Hillie Meyer’s role in changing the culture
Appointing Hillie as Chief operating officer (COO) was one of Laurie’s watershed decisions. If Laurie’s leadership created the space and atmosphere for strong leaders to blossom, Hillie rose to the occasion. The two of them immediately got on well it seemed. Reflecting back, Hillie was quick to remind me that the Momentum transformation was set against a certain era of the country’s history. One only has to look at the period in which the transformation played out. Madiba18 did not wear ties.
Cabinet ministers had criminal records. Our eyes opened to diversity (H. Meyer, personal communication, 8 August 2008).
Laurie is famous for his Laurie-isms or telling his little stories. Statesman-like conduct in leaders is also something that he holds in high regard. Hillie made it known to me that he was not necessarily a statesman and did not think it to be so important. He could hardly relate to standing up and being a big orator and less so, to be thought of as a father figure, is another perspective I heard. One of Hillie’s leadership views was that a genuine leader was someone who could rein in the troops and keep shareholders happy.
144 Intellect was naturally very important too in his estimation. He was conscious of the fact that some people operated better upwards and others operated better downwards. You must understand your business well as a leader, technically, people skills and character. These are important qualities, Hillie reiterated.
He continued with, a leader without a personality for creativity, you cannot force it. If you do not have the personality for creativity, you can only talk it. If a leader starts faking things by saying one thing to shareholders and another to staff, it cannot work (H. Meyer, personal communication, 8 August 2008). Some leaders just live the culture with greater ease. My interpretation is that you cannot be what you are not or at least in the long haul.
An interesting viewpoint had to do with how Hillie involved Laurie as chairman. “The wonderful thing about Hillie is how he was clever enough to know how to use Laurie. He used him as a resource and not a chairman” (F. Hugo, personal communication, 7 August 2008). This was in stark contrast with how the CEO of another company put him in the traditional chairman role. Before a board meeting, there would be pre- boarding and everything was ironed out. Then in the actual board meeting, he just sat there listening. “Momentum drew Laurie in, involved him in their debates, their arguments and he was part of the thing. It was a huge success” (F. Hugo, personal communication, 7 August 2008). Laurie had direct involvement, of course with the other two founders’ support (H. Meyer, personal conversation, 8 August 2008).
I heard multiple views on the contribution of Hillie Meyer’s leadership. A close colleague of his for 13 years, considered his leadership as fundamental to the culture that took root in the turnaround time. Hillie understood a system. He just automatically understood social systems. He also understood how to use the grapevine and did it exceptionally well for whatever he needed to accomplish. Hillie had a way of working with people. Another colleague of his vividly remembered the amount of laughter at Exco meetings. Exco meetings were fun. A further comment was, “Hillie was a bit of a mischief-maker, he has a playfulness in him.”
I also heard about Hillie and Laurie striking a deal. Laurie liked competitions, which is no surprise given his strong competitive nature. He wanted Momentum to participate in the Deloitte Best Company to Work For competition. Hillie, ever the actuary, felt the
145 process could be rigged. He struck a deal with Laurie; if the company ended up in the top five, it would be done and dusted. The company would never have to participate in it again. As it turned out, Momentum achieved a good result in the survey, making it into the top five. However due to factors beyond the company’s control, a gap of many months followed before the survey results were released. By then the mood inside the company had somewhat changed. Some unhappiness started raising its head and negative vibes started coming through about Black Economic Empowerment (BEE) (H. Meyer, personal conversation, 8 August 2008).
When the survey results were eventually released, it was against this backdrop and atmosphere that Hillie presented the feedback to the business. His presentation to staff members contained two messages. One, we as leaders and management have failed you. Two, with your help we can fix it. A member of staff made the following observation: “We were expecting rhetoric. Instead we got honesty.” In the context of this example, it is relevant to add that this observation came from a Black member of staff. In this instance Hillie showcased leadership qualities such as accepting responsibility and “unexpected” honesty.
What changes took place in the business?
Leadership is something that evolves; it has an enormous influence, Hillie told me. “Some things are done by design - you do a bit of that. Some things have to happen symbolically.” Some changes brought about by his team to improve the company’s standing as the worst claims processing performer in the industry, included firstly, replacing the conveyor belt approach of claim applications, steeped in hierarchical structure, with four multi-skilled teams. Secondly, the implementation of competition based on criteria of quality, cost and time and set a three-day target (“Holy cows make the best steaks,” 2000).
Hillie challenged staff to bring down the average for processing claims from seven days to two or three days. Those who could deal with the paradigm shift got themselves organised into multi-skilled client service teams. There were no hierarchies and no rules. He insisted that the most important person in the team answered the phone – not the least skilled person, as had been the case in most companies. The teams were pitted against each other – competing to see who could come out tops. One team was lucky or
146 unlucky enough to have an ex-matron in their group. When she brought her skills and the sheer force of her personality to the task, team members did not stop until all backlogged admin was complete. They brought the average for processing claims down to six hours, the best in the industry by far back then (Vinassa, 2003).
Earlier I referred to Laurie’s persistent question, “Where do you make your money?” Through the influence of Laurie and Hillie’s leadership, the idea of profit centres originated in the company. Profit centres had to do with chunking the business into different units. Marketing, sales, product development, administration, the entire business was broken up to cease the ongoing subsidising across different departments. People started to run those businesses as if they were their own. This is how the owner- manager principle took root in Momentum. This new way of doing, chunking the business and establishing profit centres, was given a try before being totally embraced as the Momentum way of doing business. It changed the course of events and the company became a leader in the practice of calculating the cost of a product. It was an important milestone in the company’s turnaround.
Information Technology (IT) stepped into line. That way you would have people developing IT structures for your products and your distribution strategy. HR became a line function. The rationale was that you do not want somebody centrally determining HR strategy if the needs of your business are different. The last thing you want is for HR to grow its own arms and legs, is how Francois described it. Back then, he was often asked about his controversial view of traditional HR practice, many of his arguments flying in the face of thinking at the time. Francois’ arguments called into question the very basis of separate HR structures. His view was that this inevitably led to “us versus them” thinking, setting line managers against the support team. He further argued that HR integration into profit centres reduced conflict and politics while removing the temptation to play up problems and casting the HR professional as the indispensable solution finder (Vinassa, 2003).
Besides such progressive thinking, there were two other influences during this time. Hillie conceded that the book Maverick was influential. Also Toward Excellence, the Tom Peters programme had a major influence (H. Meyer, personal communication, 8 August 2008). The original research was summarised in the best-selling book by Thomas. J. Peters and Robert H. Waterman, yet the Toward Excellence programme went
147 beyond the initial research reported. It assisted executive and management groups to accelerate the transition to excellence based on unique company goals (Peters & Waterman, Toward Excellence handout, date unknown). Francois explained:
You bought the programme from Tom Peters, a file with workbooks. It was very action orientated. There were breakaways for one or two days, then the team did their homework, got their action steps and next steps sorted. After three months we met for follow-ups (F. Hugo, personal communication, 7 August 2008).
I also heard from Hillie how the programme was used:
We devoted a reasonable amount of time to it. It forced the leaders to focus. It put topics on the table, heightened awareness of issues. It was an opportunity for Laurie to sit and discuss issues with the team. It helped to start structuring thought processes. Many tiny seeds were planted there, one of those being chunking (H. Meyer, personal communication, 8 August 2008).
The positive point about the Toward Excellence programme was not the content. It became a vehicle. Laurie had the chance to talk to the executive team for two days in a very informal manner. Hillie described this programme as a talking tool. Laurie’s presence at these discussions was powerful. The process was definitely more important than the content. Both Hillie and Francois emphasised the impact of this intervention. From this process followed the writing of the Momentum philosophy. Thereafter it was easy to write the FirstRand philosophy (H. Meyer, personal conversation, 8 August 2008). Different narrators were firm that many of the ideas that were later articulated in the group’s philosophy, came from thought processes that originated during Momentum’s transformation.
The cultural transformation
Use of first names and dress code
One of the early changes was the decision that everybody would call each other by first names. This decision was taken during an early strategic planning meeting. The newly
148 appointed chairman was one of the first to say: “Call me Laurie.” This does not sound like a milestone in the present day. Over time, in many companies, there has been a shift to informality and the use of first names even in addressing executives. However, in Momentum in the early 1990s the decorum was formality, typical also of predominantly Afrikaans companies.
What the leadership spearheaded by Hillie wanted to bring about, was to cultivate a healthy disrespect for status symbols. Almost like the emperor’s clothes, he explained. The dress code was one of the first symbols that called for a change. The thinking about the company’s dress code was contextualised in the following way:
The thought process of the time was to say people can come to work dressed as their day dictates. When you think about it staff members, outside of work, are involved in their own communities. They are community leaders, church leaders and do fundraising events…but still we treat people on a daily basis, as though they cannot decide what to wear (B. van Heerden, personal communication, 8 August 2008).
It was a case of stop treating people like school children. The latter often being a by- product of too many rules and regulations. The following example showcases how thinking on this issue developed:
If you are an “IT Techie” and look after the staffs’ computers, and in summer you want to come to work in shorts and slip slops, that’s okay. And they do. And if you are a call centre operator and you sit behind your workstation and telephone the whole day with no client interface, that’s also all right.
But if you come to work and you are expected to go through to RMB or FirstRand’s head office, where people dress differently and more formally, or you have a meeting with ABSA brokers…you dress accordingly and then tie and jacket is called for (B. van Heerden, personal communication, 8 August 2008).
The debate regarding whether to wear or not wear a tie generated much heat and debate. Hillie was a strong proponent of the, “no ties” principle. A management peer of his felt that the marketing team should wear ties. “Second floor always wore ties, on my third
149 floor it was a massive debate”, Hillie told me. Years later people still notice that Momentum staff dressed far more informally than people across the rest of the group. The reason being, you are treated like an adult. You dress according to what you expect to happen that day and the way that clients expect you to dress.
Job titles and what was printed on a business card also received attention. Essentially you could write anything on your business card, but it needed to be registered centrally. There were a few official titles, those of a statutory nature, but those were in the minority. You could do what you wanted to, as long as you told management about it. With slight amusement Hillie shared that, “junior guys initially chose very impressive titles, then quickly felt ashamed and got in line.”
The underpinning principle was that you have as much freedom as you want and as is needed to do your job. Of course there were certain boundaries, such as you never embarrass the company. This principle applied to job titles on business card, dress code, and everything else. The notion of never embarrassing the company took care of something like wearing inappropriate clothing, which “was simply not on”. What happened if somebody overstepped the mark? “A sort of mumbling started somewhere somehow, the message always got through” (B. van Heerden, personal communication, 8 August 2008).
Changing to first name terms, relaxing the dress code to what your day dictated and deciding what you call yourself on a business card, were examples of where Momentum took that extra step and simply believed in it. These changes, fuelled by Hillie and his team’s desire to create a healthy disrespect for status symbols, started as a small wave. Four or five years later a more symbolic “tie burning ceremony” took place. It was a sign that the company’s poor self-image was changing to an “all-right self-image” (H. Meyer, personal communication, 8 August 2008).
Looking at things differently
Certain things have to happen symbolically, like the graffiti wall. Francois came up with the suggestion to build a graffiti wall for writing down ideas. An electronic graffiti wall was built which was hugely successful in capturing ideas and innovations (Corporate publication, 2008). The message was that it was acceptable to criticise
150 senior management. Laurie was adamant that the company’s internal newspaper should not be seen as management’s mouthpiece. His view was to get an external journalist in to capture the feelings of staff. If someone thought a particular strategy was rubbish, it should be okay to say it, Laurie maintained.
I heard the view that Momentum was one of the first companies to opt for a no reserved parking policy. That meant no allocated parking bays. Not even for the chief executive. The only exception made was for visitors’ parking. Hillie’s firm view was that something like this could not be done in half measures. What applied to one applied to all, regardless of your position in the company, you could not pick and choose. Often there is talk about a non-hierarchical company and non-hierarchical culture, but the no parking policy was one way in which the company lived its strategy of cultural transformation. In contrast to the no allocated parking policy at the life insurer, a different practice was observed in RMB. I was told that the Queen auctioned off parking bays when a staff member left this company. The money raised in this manner was put towards her vast charity drives. The logic was that at RMB some individuals were paid exceptionally well and could afford to buy a parking bay at a substantial amount.
Momentum always had a completely different way of looking at things. I heard about an incident where complaints surfaced about an individual who had allegedly been sending around emails - the sort of thing people giggled about at the time. It appeared as if this person must have been spending huge amounts of time on the internet. I was reminded that this was before companies had strict policies in place about internet usage for personal purposes and what was deemed unacceptable. What struck this participant is that the MD’s view was that people are adults. The issue was raised as: Does this person have enough work to do? And if this person did not have enough work or was not utilised to capacity, what was the solution to that problem? It made for a completely different way of looking at the situation (B. van Heerden, personal communication, 8 August 2008).
An enduring physical change was the design of a new company head office in Centurion. The brief for the design was: make it serious looking from the outside, transparent from the inside. Give us light and air. One of the requirements was to go against the custom of putting the IT staff in the basement. The motivation was that
151 these employees often work 24 hours and weekends and therefore, they needed good conditions in which to do their work. Secure your mainframes but position your IT staff in air and light.
The latter constituted a major shift in thinking at the time, even if it sounds commonplace today. The company’s head office happens to be an award-winning building and has been described as breathtaking. The physical space was supportive of the developing Momentum culture and value system, with its transparent glass and light wood structure and the sense of openness throughout (Corporate publication, 2008).
The Momentum that came about developed a language of its own. Conversations were peppered with words and concepts like: Keep it simple, informal, no titles, no allocated parking and values versus policies. Phrases like: first league players, champions in the making and celebrating small successes, surfaced. Other phrases that caught on and featured in the conversations amongst staff and management were aspects like: own company mentality, run it as if your own company, ownership versus destiny, little tolerance for victims, best practices, lively debate, address issues directly, no holy cows, transparency and openness. It was not a job title or level that determined whether one should be on the attendance list for a meeting or not. Attendance was based on, “Can you contribute to a meeting?” Peer pressure was an important concept. In my view this manifested for instance as a form of informal performance management.
In Hillie Meyer, this business had a leader who could champion the cause for change and follow through on some of the most unsettling changes. A colleague illustrated with this narrative:
Make no mistake, it was not as if Hillie was this friendly outgoing personality all the time. He could be ruthless. He had the courage to say that there are no holy cows and anything can be discussed. It took an incredibly strong leader to give voice to some of the changes that were happening, at the time that it was happening.
To say things like: From now on, we use first names. Nobody has allocated parking bays: not the MD, not the Exco. We moved into new head offices at Momentum and everybody had open plan offices. So it was very difficult for
152 other people to say, we need an office, if the MD doesn’t have an office. He absolutely led by example (B. van Heerden, personal communication, 8 August 2008).
On his part Hillie relayed that the person who lay down the law or certain rules and principles must believe in it one hundred percent. Be prepared to discuss it, but leaders have to firmly believe in it. Leadership cannot fake culture.
How the culture was experienced
Allowance for differences
Earlier I referred to Hillie being in favour of the no ties policy but a senior colleague of his, was not. Even if his peer felt that marketers should wear ties, there was still tolerance for opposing views and different management styles. In the Momentum culture, people with very different styles of doing “made it”. It was not a case of one- size-fits all. It seems that there was room for different views and accommodation of different personal styles. The following narrative is fitting:
You get certain managers who want all their staff at the office at 8 a.m. and get very agitated if they get in five minutes late. Then you get other managers for whom it truly doesn’t matter, as long as your work is done….Two phrases were used regularly: play people to their strengths and allow people their allowable weaknesses. There were allowances for both, but definitely play people to their strengths. It was used a lot (B. van Heerden, personal communication, 8 August 2008).
There were differences between Laurie and Hillie’s styles too, but the outcome of the combination seemed to work well. Hillie agreed that within the company there were differences, but there was enough common ground. The company had a good time moving people around, rotating them. Back then there was very little politics. Hillie continued with a rhetorical question, “After all, does politics really pay off?” One strategy was, as soon as someone became comfortable, then it was time to move him or her around.
153 It is not always comfortable for a leader
As soon as you become a little democratic, it brings pain for a leader. If you say, like we did at the time, that every person has an equal right to say what they think, it makes it an uncomfortable place for leaders (H. Meyer, personal communication, 8 August, 2008). I heard it was difficult for a leader to keep people focused and move towards a decision if every person around the table had an equal right to say what they thought about an issue. “When you say that everything is up for rational debate, I can truly say of my 13 years at Momentum, I can put up my hand and say that is [emphasis added] the way I experienced it” (B. van Heerden, personal communication, 8 August 2008). There were no holy cows at Momentum. Everybody knew it. But it was not something that was continuously challenged and checked. What is true is that it does lose some of its impetus if not lived and led from the front. A further view was if people have enough trust in a system, they would criticise a leader. It cannot work if there is not genuine respect. If great transparency is part of your company culture, it creates discomfort for a leader.
People loved working here
One memorable viewpoint was the following:
People loved working here, but it wasn’t a mollycoddling or overprotective environment. You had to go out and make your case for what you wanted to do. The thing I’ve experienced at Momentum is, if you were passionate about something, if you were prepared to do the research, present it and drive it, actually do the work, I don’t know if anybody was ever stopped from doing anything. But don’t come up with a fantastic idea and expect somebody else to run with it. If you are passionate enough about it, you will fit it in with the work you are already doing (B. van Heerden, personal communication, 8 August 2008.
I heard the story of a person championing a cause because of a strong belief. This is a further illustration of how Momentum leadership at the time looked at things from a different angle.
154 In the new building we wanted to install an ATM [cash machine]. The company was not prepared to subsidise it. So ABSA wanted to bring one in and I just found it fundamentally wrong to have a competitor’s machine there. So I got FNB to subsidise a portion of it, for the risk involved. The MD’s attitude was, if this was the best price, go with ABSA. But because there were people who felt passionately that it shouldn’t be a competitor’s machine, the business case prevailed. You were allowed to find another route, another way of doing it. Momentum quite simply, did not subsidise anything. Not even the canteen. It was always the goal to get good quality catering and the catering management would change very often (B. van Heerden, personal communication, 8 August 2008).
In this time period, staff members experienced a certain “something” from the leadership of the day. It is an ambiguous reference no doubt, but different narrators spoke of a “special something” that happened during the turnaround.
Vying for the strongest cultural roots
What is interesting is that Momentum and RMB each present a strong case for having the strongest cultural roots or strongest influence on what was later absorbed and articulated in the FirstRand philosophy. Statements from participant voices were powerful, as is evident from the following two narratives. Firstly, “Things developed at Momentum. You will find more culture in this company than anywhere else in the group”. Secondly, “Momentum is the better one for the embodiment of principles”.
RMB’s Traditional values. Innovative ideas phrase would be cited well into the future as an embodiment of the corporate culture that took root in FirstRand. The addition of Momentum also had a considerable impact from a systems perspective on RMB. The whole had grown bigger than the sum of its parts. Issues like “them and us” manifested. I heard about an incident where an RMB employee in a disagreement heatedly said, “We are not Momentum.” Another interesting view was that RMB made so much about having no rules. I heard the view that RMB had that empty Book of Rules of theirs and if you open it, nothing is written inside. And yet, RMB had way more rules than what Momentum lived by.
155 There are other examples of jockeying for position and inevitable competition between the two companies. Competition between the different brands was a reality in the growing group. Competition was in the DNA of the founders and it was in the DNA of the companies that they helped shape. Having two horses in one race would later find its way into the group’s philosophy. In fact, competition was allowed and encouraged, up to the point where the business case no longer supported it.
The vehicle to later list FirstRand
Momentum had certainly come a long way since the once small life insurer took over a much bigger Lifegro in 1989. The company’s entire history seems to be made up of a series of mergers. The reverse takeover by RMBH in 1992 and the subsequent successful turnaround of the company, created a platform for future mergers. The formation of FirstRand in 1998 resulted in Momentum merging with Southern Life, which became the vehicle to list the group. In helping to bed down the latter merger, Laurie had this to say: “My initial impression is that we will have a comfortable cultural fit. The biggest difficulty we are wrestling with at present is branding and, in particular, where the cut-off points between the brands should be made in terms of market segments” (Shevel & Spira, 1998). In 2005, Momentum was ready for yet another merger, by acquiring 100% of both Sovereign Health and Sage, increasing its market position and diversity in its distribution channels (Corporate publication, 2008).
Company successes and culture in 2008
The turnaround and the cultural transformation of the early 1990s put the company on a success path. There were many noteworthy achievements in this time. For instance, for two consecutive years, in 2007 and 2008, Momentum won the coveted first place as the Investment Product Supplier of the Year at the Financial Intermediary Association awards. Momentum also proved its ability to successfully integrate companies through the various mergers it had completed. During the acquisition of Sage in 2005, the company converted and integrated 260 000 Sage policies on to the Momentum IT platform within 100 days.
EB Nieuwoudt, Momentum MD in 2008, expressed the view that the company’s culture was still sound and firmly entrenched.
156 The culture is about creating the right environment where people with a positive attitude can make a success of life...through our winning psyche we will be the employer of choice. We want employees to be passionate about their work and excited about Momentum. We want to sustain the Momentum vibe....We believe in people who believe in themselves” (Corporate publication, 2008, p. 14).
Conclusion and interpretation
In looking back, the founders’ second major strategic transaction was a continuance of their entrepreneurial spirit. This phase was a definite triumph. The rationale for the transaction was to add insurance as a sustainable source of income. The founders now had a listed financial group on their hands. A key point is that the founders knew what kind of opportunity they were looking for. A good opportunity can only be capitalised on if you know what you are looking for.
Momentum’s transformation was set against a certain era. The company underwent a dramatic business transformation. It started with small waves of change. In time it achieved no small feat – going from target to predator in a relatively short period of time. The transformation played out over a three-year period. In 1998 the new Momentum was ready to take over Southern Life. Examples of successful company turnarounds are few and far between. Successful turnarounds in a short space of time, is an even greater rarity.
Various aspects contributed to the success of this business’ transformation. The turnaround was brought about through a strong display of leadership. Incoming chairman, Laurie, supported by co-founders GT and Paul, had direct involvement in this company and thereby its success story. What makes this turnaround unique is that it was achieved with essentially the same team of people. Laurie recognised the talent of highly competent individuals and let them get on with business. His clear and consistent message was that he wanted a winning company mentality. It created the conditions for the “right” culture to take root over time, through which it could bring about continued success.
157 The combinations between key leaders and the synergies were special. Hillie Meyer’s leadership was rated as brilliant and fundamental to the culture change during the turnaround period. Under Hillie’s leadership, the company’s poor self-image started to strengthen. The company’s management team embarked on a process to change the hierarchical culture to a more informal culture, one where innovation could flourish. Laurie initiated certain sparks and in time, the innovation sought by the founders and leadership emerged. Laurie’s persistent question of, “Where do you make your money” was pivotal in changing the paradigm and way of conducting business.
Many thought processes that started during the transformation, such as profit centres, not only became industry benchmarks, but were later transferred to other businesses and incorporated in the FirstRand philosophy that was yet to come. Momentum earned itself the reputation of being a little maverick. The way the company organised and ran its business was considered unconventional, some outsiders thought of it as a bit of anarchy. What is undisputed is that this company was ahead of its time. Later others would try to emulate and incorporate what had become industry best practices here.
Employees, who experienced the 1992 merger and the turnaround period thereafter, talk about something special happening during this time. Narratives like: “we built something special there”, and “it was a wonderful time”, capture something of the positive mood and energy of the time. People loved working at Momentum. Ordinary people could do extraordinary things because of the environment that was created for them.
The Momentum phase was very positive for Laurie and his display of leadership exceptional. He takes pride in the success of the turnaround, describing it as personal highlight. “It was wonderful. And it was not necessary to help them. The young team under MD Hillie Meyer just had to be set loose” (Van Zyl, 2005). In talking to Laurie he added, Momentum was a personal highlight because it was a dramatic change that occurred there. “We established a management style and a way of thinking and a value system there. We took over a country and changed it completely. And there was no book, no recipe” (L. Dippenaar, personal communication, 13 May 2008).
Next, the discussion shifts to the merger with FNB.
158 CHAPTER 9: FIRST NATIONAL BANK
Introduction
The third major strategic transaction involved a large merger, or as Laurie phrased it, the next very large deal (Carboz, 2013). In 1998 a daring move by RMBH to take over First National Bank and Southern Life resulted in the merger that culminated in the formation of FirstRand as depicted in Figure 12. Even though the two milestones occurred at the same time and are interdependent, it is covered as sequential phases. FirstRand was built step-by-step over time, yet this third transaction was more of a leap than a step. A host of challenging issues entered the equation.
RCI RMB FNB Rand Rand Momentum First FirstRand Consolidated Merchant National Investments Bank Bank
1977 1984 1992 1998 1998
Figure 12. The third strategic transaction.
The context of the 1990s
The 1990s marked a period of radical change in the country. The historic first democratic election took place in 1994 and a miraculous shift in power came about, peacefully. After the jubilation for millions of South Africans who cast their vote for the first time, came the reality and late president Nelson Mandela’s government was faced with an enormous task to kick-start drastic social, economic and political reforms at every level. The eyes of the world and investors were once again on the country. Almost two decades had passed since the launch of RCI. With the reverse takeovers of RMB and Momentum, the founders’ business interests had already grown to unexpected proportions. Why not stop there? Even though RMB had already gained a reputation as one of the most innovative and successful investment banks, the founders were continually looking for new opportunities to increase the diversification of earnings (Corporate publication, 2008). The founders’ thinking at the time is illustrated in the following excerpt:
159 Then, in 1995, the new democratic dispensation got them thinking again. “We realised there would be an influx of merchant banks into South Africa and RMB was vulnerable,” says Dippenaar.
They decided retail banking was the answer. Barriers to entry into this arena are high, and foreign banks seldom enter the space other than through an acquisition – as evidenced by the Barclays/ABSA deal (Fischer-French, 2005, p. 42).
RMB first tried to increase its 20 percent stake in NBS in order to create a retail arm, but this did not work out as planned. The founders and RMBH’s leadership were not deterred. A shift in gaze brought another opportunity into focus. Laurie explains that they identified Southern Life. It was ailing at the time, so they decided it was a target they could take over and fix (Caboz, 2013). RMBH were interested in acquiring Southern Life for a merger with Momentum. When the founders approached Anglo American, the then owners made it clear, if you want Southern Life you have to take FNB too. The first meetings were initiated by Viv Bartlett the CEO of FNB, who identified RMB as a potential partner because this business was known to attract bright, young people, who were at the cutting edge of their game (Corporate publication, 2008).
About a year later, RMBH left with a bit more than they bargained for. The way the deal panned out was somewhat fortuitous for RMB. They soon realised that the real value lay in FNB and not Southern Life. The latter company was completely absorbed by Momentum. GT admits that RMB probably would not have bought this retail bank if Anglo director, Mike King, tasked with the negotiations had not been as insistent that it was both or nothing. “But then Ferreira also says that the softest thing about King was his teeth” (Corporate publication, 2008, p. 3). Laurie remembers everyone asking what a small merchant bank knew about retail banking and there was some truth in that. Soon enough the new owners realised that the negotiations were the easy part of this merger (Corporate publication, 2008).
The merger gave birth to the largest company on the JSE with a market capitalisation of R59 billion (Shevel & Spira, 1998). At the time it was one of the largest transactions in the history of local financial services and according to Laurie, it would have ranked as one of the bigger merger deals in the world (Carboz, 2013). Laurie also referred to this
160 merger as “clearly frightening” (Corporate publication, 2008, p. 3) and a massive deal that was beyond our size, “…but we took it as a massive opportunity” (Carboz, 2013, p. 16). In turn GT described this transaction as a sardine swallowing a whale but the unpredictability of the market made it possible (Fischer-French, 2005).
The challenge
It was a merger with officially SA’s oldest bank. The bank’s chequered history traced back to 1838 and was marked by takeovers, being bought out and multiple name changes with most notably in 1925, an amalgamation to form Barclays Bank. The latter company also operated under various guises before Barclays plc. disinvested from the country and sold its local interests. The bank that was left behind became FNB (Corporate publication, 2008). There is a touch of irony in the fact that Barclays, under the name of FNB, eventually landed in the FirstRand stable. This twist is not lost on Laurie. If anyone had said to him way back, that eventually he would become the boss of his wife’s employer, he would have thought they were smoking something (Van Zyl, 2005).
The retail banking business added thousands of staff members and contributed an extensive client base. The founders were now playing in a much bigger and public league. Paul explained that it called for a different way of thinking:
The difficult part was merging an entrepreneurial culture with one of centralised control and command, and becoming accustomed to an environment which suddenly grew from one of 400 people to one of 30 000. It also meant moving from managing a balance sheet of R200 billion to R800 billion today and profits growing from R2,5 billion to this year’s R12 billion. “It required a totally different mindset” (Corporate publication, 2008, p. 3).
However, what one does not often see in corporate communications or media coverage is about the founders’ initial hesitation. A participant recalled with a faint smile, that the transaction came at a time when “Laurie thought he was going to have more time for cycling” (F. Hugo, personal communication, 7 August 2008). GT was uncertain whether they should do this deal and solicited opinions from trusted partners.
161 Ferreira remembers asking long-time RMB shareholder Johann Rupert, and his late father Anton, what they thought of the deal. “Johann sent me a note saying that when you become a large company, you’ll generally be considered to have become a sinister influence, but if you stay small, you’ll be considered to have been a failure” (Corporate publication, 2008, p. 3).
Another recollection illustrated GT’s deep reflection: “A pensive GT came into my office, sat down and put his feet on the table. In a serious voice he asked me what I genuinely thought about the merger.” GT consulted widely, as he does. He also asked his secretary what she thought about the idea (F. Hugo, personal communication, 7 August 2008). Once decided, the deal was done in record time.
Fiona Massey, responsible for RMB Strategy and Business Development at the time, described the circumstances:
It took only five weeks to put the deal together. I remember going to BankCity [FNB’s head office] with Laurie, Paul and Wendy [Lucas-Bull] on the day the merger was announced. Viv had called in his management team of about 500 people and Laurie was asked to speak to them. He spoke about RMB bringing its entrepreneurial culture to the new group. Someone stood up and asked: “Well, what’s your strategy for FNB?” Laurie replied: “We don’t have a blueprint in some bottom-drawer, we’re interested in hearing what your strategic plans are.”
During the due diligence process each party was asked to produce the strategic plans. FNB had for some time been working with a large management consulting company to formulate a strategy and there was a whole room full of documents explaining things in the greatest detail. We were asked for ours and pulled out a few slides. Paul very quickly told them that our strategy doesn’t live in files, it lives in people” (Corporate publication, 2008, p. 13).
The most memorable aspects from this description point to: the short time frame in which the deal was finalised, Laurie re-iterating that they do not work from strategic blueprints and Paul’s strong statement that their business strategy lives in people not files.
162 Turning bankers into business people
At the time of the merger, some management reforms were already underway in the bank. However, Fischer-French (2005) pointed out, “…at the time of the acquisition it was, not to put to fine a point on it, a dog” (p. 44). This view was confirmed by a phrase reportedly used by one of the founders: “I thought we bought a Porsche and here we got ourselves a bus” (A. van Zyl, personal communication, 28 July 2008). Paul got a clue as to why FNB was in the shape that it was at an early stage of the deal. He encountered a mindset that he had not experienced before: “At the first meetings, these guys from FNB saw this bunch of young merchant bankers who thought they knew all the answers” (p. 44). Paul was told that he had to understand that most of the people at FNB just wanted to come to work and collect a pay cheque at the end of the month. It was the complete opposite of everything he believed in. It became a quest of turning bankers into business people. The retail bank’s culture could not have been more different from the high performance culture of RMB and the thriving culture and buzz at Momentum. If Laurie had trouble six years earlier in understanding the hierarchical and grey shoes [see Footnote 15] culture at Momentum at the time of acquisition, the reigning culture at the colossal retail bank was equally foreign.
The size of the merger meant that there was much to bed down. It was a time of incredible hard work. In Laurie’s mind, undoubtedly the worst time was after the deal was announced and when the euphoria of the moment had worn off (Corporate publication, 2008). He spoke about this merger as taking years off his life (L. Dippenaar, personal communication, 13 May 2008). However, he admits, along the way he also learnt a few things: how to take tough decisions, dealing with people in a sensitive way and not making too many compromises (Corporate publication, 2008).
The founders assumed different roles, just as they had since the beginning of their partnership. The merger was meant to be one of equals, but because RMB had management control, it could appoint the CEO and the bulk of the members on the executive committee. As it happened, Anglo American approached GT to fill the chairman role. It was a job he reluctantly accepted, but it is a role that suited him well, “especially given his talent for pouring oil on troubled waters” (Fischer-French, 2005, p. 44).
163 Laurie was appointed as CEO of FirstRand Limited and Paul appointed on the banking side as the CEO of FirstRand Bank Holdings Limited. They rolled up their sleeves and got stuck in. There was much work to be done. Viv Bartlett, the bank’s CEO for three years running up to the merger played a strong leadership role in the transitional period. The founders could hardly have asked for a better strategic partner. Philosophically many of Viv’s views were aligned with the founders’ thinking and approach to business.
FNB before the merger
In a candid account, Viv spoke about how banking worked in the past. To put it into context, going back 40 years ago, there was no competition in banking, absolutely none (Viv Bartlett, personal communication, 29 July 2008). Yet there were local industry leaders who read the signs of the time well. They understood that competitive forces were going to become stronger, with overseas banks eyeing up the local scenario. He shared many stories of what the company was like before the merger and also some of his profound concerns at that point.
Not adept enough to cater for the future
In the 1990s, FNB was a monolithic kind of entity. It existed because it had existed. As CEO, Viv was very concerned about firstly, the company not being adept enough to cater for what he thought the future was going to bring. Secondly, he was concerned about foreign banks coming in and cherry picking their market. Thirdly, it was very incestuous, fourthly the organisation was incredibly hierarchical and lastly, he was worried about performance-orientation not being top of mind. Viv offered many examples to make his point. For instance, the bank seldom hired from the outside. “Every time we employed mavericks and they wanted to shake the tree a bit, the system worked them out very quickly.” In terms of hierarchy there was an unsaid philosophy of: “We’re a family”. The organisation was highly paternalistic. An extreme example he shared was, that in the early days, you ought to get permission to get married. The company was essentially designed around the weakest link. It eliminated mistakes. As a result, the mesh of rules and regulations were often stifling in the extreme.
After casting a critical eye and unflinching views about the prevailing culture before the
164 merger, he mentioned some innovations that should not be discounted.
We were the first bank to bring credit cards into the country. We were also the first to introduce ATMs. So I must not denigrate the whole thing. However, those were flashes of inspired creativity. It was not an ongoing drive, as far as I was concerned (V. Bartlett, personal communication, 29 July 2008).
Changes underway and stopped during the merger
As CEO, Viv Bartlett, had started implementing a great number of changes, which were quite significantly under way, to address the historical shortcomings he described. Even before the merger, he was experimenting with a practice that stemmed from experience at a Barclays subsidiary. After the merger he learnt that RMB had a term for this practice, namely an owner-manager culture. Ironically, Viv’s role in instituting changes were made easier because of the culture of the place as he explained:
If the top guy said: “This is it”, everybody got in a straight line behind the idea. Resistance was not an issue. There may have been dissention, but if so, it was informal and behind closed doors. Nobody would ever come to you and say to your face: “Hey, listen you’re nuts” (V. Bartlett, personal communication, 29 July 2008).
His narratives turned somber when highlighting the risks contained in this toeing the line type of culture as is evident in the following: “It was good in one way but also dangerous. I mean there is enormous risk. If somebody decided to be a bit maverick in something, you can collapse an organisation very quickly”. When the founders came in after the merger and said: “We’re going to break this business down into small pieces”, as far as Viv was concerned, it was a happy mindset. He had already made a start at doing exactly that and honing the business down by closing head offices. On RMB stopping many of his initiatives he observed, “I primarily think they were interested in cutting costs so that they could make sure that the numbers looked proper following the merger” (V. Bartlett, personal communication, 29 July 2008).
From my conversation with GT, I recalled his recommendation: “Speak to Viv Bartlett.
He did not necessarily agree with everything we were doing at the time of the merger.
165 It could not have been easy for him” (G. Ferreira, personal communication, 16 May 2008). On the issue of disagreement on the way some things were handled, Viv diplomatically observed:
I think many of the RMB people came in with an attitude of – look, this is a big fat lazy old commercial bank - there must be enormous cost savings we can achieve here. And they did that very quickly, before in my opinion, they understood the issues, before understanding the nuts and bolts.
The founding fathers had a mission because they obviously stuck their necks out given the size of what was going on. They had to very quickly show there was some merit in having put these organisations together. I think they would probably admit some of these things were done in haste rather than after full consideration and around personalities and the like (V. Bartlett, personal communication, 29 July 2008).
The founders do not care for bureaucracy
According to Viv, the founders had every right to be a bit cynical about commercial banks as bloated bureaucracies. The bank was a strongly hierarchical organisation where titles and pecking order was important. What has been a consistent message thus far is that the founders do not care for bureaucracy and titles are irrelevant to them. Viv offered his interpretation:
The founders probably came from a background where they said: “Look we’re starting this. We’ll be doing everything from making tea to making the big decisions, so it doesn’t really matter. I don’t need titles to signify to my fellow managers that I can make a decision.” Where as in a big organisation like FNB with so many layers and specialisations, you had to have the titles. Otherwise people say: “Who on earth is he?” That was the difference.
The founders never felt the hierarchical threat of people under them angling for their jobs. It is easier when you have that as a background than if you’ve started here and fought your way up the ladder. So they’ve not had to have their thinking sullied by positional power and titles and things like that. They just do
166 what has to be done (V. Bartlett, personal communication, 29 July 2008).
“Grin and bear it”
In a large-scale merger there is huge potential for conflict. One of the early messages Viv put out was that of “grin and bear it”. His core message comes through in this excerpt:
These people [the founders and RMBH] are going to be controlling shareholders, so just knuckle under. Many of the things you may find unpalatable but it is the path we are going down, so grin and bear it (V. Bartlett, personal communication, 29 July 2008).
Not to say it was easy, he reminded me. Viv recalled an incident where he and senior members of his team met with Laurie, Paul and GT and a couple of others at a session facilitated somewhere in the bush. Viv and Laurie had a serious exchange. At one point Viv responded with words to the effect of: “Well that’s easy enough for you to say Laurie, because that’s where the ultimate power lies. Laurie got most affronted by it”, he recalled. Laurie said: “We don’t deal in power.” Viv responded with: “Laurie you can think that and say that you don’t do that, but that’s human nature. Expect people to say, ‘Who is ultimately going to call the shots here?’ You’re now dealing with 34 000 odd people and they know no other way.” Laurie again repeated his curt refrain: “We don’t deal in power.” I mean he really was affronted (V. Bartlett, personal communication, 29 July 2008).
A story that captures something of tensions flaring in a merger comes from Iris
Dempsey, CEO of FNB Commercial Banking. She described the following incident:
There was tension between a RMB and FNB team, which both sides obviously denied, and Francois Hugo was brought in to facilitate a session. Francois asked the team to expose their socks. All the RMB members had on corporate socks, justifying suspicions of collusion and underlining the need to have the session (Corporate publication, 2008, p. 22).
After the merger it was a time of discovery and learning on both sides. An RMB
167 employee who moved over to FNB after the merger noticed peculiar behaviour to do with answering telephones.
It was not part of the culture to answer the phone within three rings. It was a culture of not answering phones…just in case the person answering the phone was found guilty of doing something wrong. It was a matter of convincing people not to be scared to make a mistake, to learn from your mistakes, to be courageous (J. Burger and S. Moss, personal communication, 15 May 2008).
After the merger there were change workshops. In one such a session, banking staff listened with disbelief when RMB’s the Queen said she could decide to leave work at 3 p.m. The stunned question came straightaway, “How can you just leave?” The answer was simple, “You just do it.” The Queen realised that it was clearly not as easy, or even an option, for a FNB manager working in a bank with thousands of staff members. The impression was that RMB staff had it nice. Therefore she made the following point: “Tomorrow night I might say to my team, ‘please work until 9 p.m.’ and then it happens. I think it is because we grew up with that. That is how it works in RMB” (A. van Zyl, personal communication, 28 July 2008).
Viv Bartlett remained on in the CEO role for some time. From different angles came confirmation that Viv’s contribution was as good as gold in the transitional period. The entire FNB stood behind him. Many of the changes that came about in the company are a credit to his leadership. The following narrative captures an example of the praise for his leadership: “Viv Bartlett is a very smart man, a tremendous person and from a school of diplomacy like no other” (F. Hugo, personal communication, 7 August 2008). In the group, the incredible talent and the strength in succession planning has always been consistently emphasised. Outgoing chairman GT, commented on how the change from the old guard to the new leadership played out in this time: “…at FNB Michael Jordaan was the ideal candidate to take over from Wendy Lucas-Bull and Theunie Lategan” (Corporate publication, 2008, p. 5).
Getting to work on the turnaround
Michael Jordaan became a CEO with a demanding task ahead. He was one of the high profile exports that cut his teeth at RMB. Earlier in his career he worked at Deutsche
168 Bank in Germany, which he found to be very formal and hierarchical. “You put your jacket on when you went to see your manager and you addressed him as Sir”. It was completely the opposite of what he encountered when he joined RMB (M. Jordaan, personal communication, 29 July 2008). It did not take Michael long to transplant his RMB roots. Soon he became a flag bearer for FNB’s culture. I heard different narratives acknowledging that under Michael’s leadership, FNB blossomed. People knew where they stood with him. As a leader, people loved him.
In an interview with chairman Laurie, a journalist prompted him on Michael’s strong performance at FNB. Laurie was asked: “How do you keep a guy like Michael Jordaan, appointed managing director at, how old was he, 36 – a few years on now – how do you keep him interested? How do you keep him in the group?” Laurie responded in this way:
I think the best answer I can give is Rowan Hutchison [who] worked for us, he was in asset management, and he said the difference is that this place is my spiritual home. It’s not somebody who pays me…I think if we can achieve that, if people feel it’s their spiritual home, that’s when they stay. And obviously you have to reward them adequately (Hogg, 2012, p. 1).
In our conversation, I heard about some of Michael’s views on leadership. One perspective was: “I didn’t learn leadership from a textbook, I was inspired by my colleagues. I see my role as one of creating an environment where 30 000 great people are fully empowered to grow” (M. Jordaan, personal communication, 29 July 2008). He recalled with a wry smile a comment at an Exco meeting. Someone made a statement to the effect of, “We have implemented a culture of high performance.” If only it was that simple. It is not as if you switch off the old and say: “Okay, this is now our new culture” (M. Jordaan, personal communication, 29 July 2008).
Profit centres and chunking
Introducing the principle of chunking in the bank is the reason why, “We at FNB have more CEOs than the JSE.” Michael conceded that people external to the company were often mystified by the many CEOs. It stems from the principle of chunking. The notion again of breaking businesses down into the smallest parts possible and saying to
169 a person: “You are the executive officer of this unit.” What is very important is that alongside the principle of chunking runs a corresponding culture principle. By making someone the head of an area and by saying, “You are the boss”, you empower the person to do just that. Take charge. In this way you empower people to make decisions (M. Jordaan, personal communication, 29 July 2008).
The bank’s tactic of creating profit centres and the effects of chunking can be measured in terms of compound annual growth and return on equity, both of which positions this company ahead of its competitors. Michael elaborated: “We’ve significantly outstripped our peers….One of the benefits of chunking is the ability to identify problems early in the process and isolate and react to them before they affect other parts of the business” (Corporate publication, 2008, p. 11).
Decentralised owner-managed with some centralisation
In 2008 the pendulum was swinging back from extreme decentralisation to somewhat more centralisation. Michael explained that the owner-manager culture has been effective but centralising some support services has allowed the bank to take advantage of the benefits of belonging to a big group. For him it also depended on how you define owner-manager. Does it mean that each person of the 30 000 can decide which phone- system to purchase? Or does he and his Exco as owner-managers of the bank say, “We feel it makes more sense to have one technology across the companies in the group? The same applies to the value system and the corporate culture of the group. You just define and apply it on slightly different levels across the group’s companies (M. Jordaan, personal communication, 29 July 2008).
A mission to bring in more professionals
The bank’s one mission was to bring in more professionals, for instance, chartered accountants. At the time of the merger, there were more chartered accountants in the back office of RMB’s treasury department than the entire FNB. After the merger, a great many new people and professionals joined the bank. At that stage the RMB brand worked very well for us, Michael recalled. People were not so eager to come and work at FNB, because it was seen as one of the weaker banks. However, RMB’s brand
170 helped greatly. The fact that the bank was part of FirstRand helped a great deal. It made a huge difference.
The appointment of process people from RMB brought considerable benefits. One of the most significant differences came from appointing new people, even from outside the group (M. Jordaan, personal communication, 29 July 2008). The shifts that occurred in the bank as a result of bringing in professionals and heads of divisions were dramatic. This was a departure from the retail banking of old where, “traditionally, merit rating systems valued seniority and keeping your nose clean” (V. Bartlett, personal communication, 29 July 2008). The infusion of new people and skills was a deliberate strategy, positioned to make a cultural difference. Michael expressed the view that the drive towards professionalisation triggered a cultural revolution:
We wanted to get to a scenario of skilled individuals who were professional managers. By bringing in a flood of new people, it helped to revitalise FNB. New people brought in another way of doing, not just in the values, but also brought new energy and new ideas. It was the beginning of a cultural revolution (M. Jordaan, personal communication, 29 July 2008).
Evidence of the direct and indirect benefit of the professionalisation drive came through in this powerful narrative: “The first three, four, five year period’s profit growth was essentially a result of bringing in intellect” (M. Jordaan, personal communication, 29 July 2008).
It is your business. Manage it.
At the heart of the FNB culture is the message: “It is your business. Now manage it.” People then buy into it more whole-heartedly. That is very important, Michael assured me. At the merger stage, there were only global profit numbers. He recalled Laurie going to different people asking: “How much money do you make?” Adding everything up, it came out at three times the bank’s profit – a gross over estimation. Individuals clearly did not have a thorough understanding of their profit. They attributed other business areas’ profits for themselves (M. Jordaan, personal communication, 29 July 2008).
171 He continued with, “our owner-manager model has a great number of benefits”. Modern, young people want to work in this type of model, in a working environment where there is freedom. Those are then the candidates you attract, young people who want to experience such an environment. It would be naïve to say the owner-manager model does not have its downsides, Michael countered. Like any model, it has its pros and cons. A definite downside to the owner-manager model is that you get individuals who make a strong argument that it is entirely logical for them to pursue a similar direction or enter a specific market, similar to your business’ plans and timing (M. Jordaan, personal communication, 29 July 2008).
He recalled an example where the owner-manager principle was interpreted incorrectly in a branch. In summer, customers told us: “Please provide drinking water while we wait”, but this request was not acted upon because of a flawed interpretation. Head office had apparently said that branches did not look professional with water coolers in it. Typically this is an issue that the branch manager, as an owner-manager should decide on. In this instance, there was a lack of judgement (M. Jordaan, personal communication, 29 July 2008).
The FNB culture
Essentially about caring
At its core, the bank’s culture is essentially about caring. Michael recalled how Paul always said: “It’s not rocket science. It is really just caring.” Michael could not agree more and continued with a view he believed in strongly. It is like a restaurant owner who works in his restaurant every day. You know when you walk into a restaurant and the owner is there and involved. The food is prepared with love. When the owner comes round to your table asking if you are enjoying your meal - and something happened or was not to your taste or liking – an owner would almost change the recipe or something. That is how seriously owners take such feedback. He illustrated with the following example and it is a revealing narrative from a CEO:
If I walk in here then I look at how the flag at the entrance is hanging. Noticing small details like that every day. If you feel it is your business, it makes an
172 enormous difference. It is a hundred small reactions every day (M. Jordaan, personal communication, 29 July 2008).
Merit, respect and diversity
Central to the bank’s culture is the belief that you surround yourself with people who are incredibly competent. Michael goes one step further. You surround yourself with people who are actually better than you are. The company’s culture is a culture founded on merit. Another pillar of equal strength written into the FNB philosophy is: We respect diversity. This is important. This, according to him, is how innovation comes about. When you do not have homogenous thinking (M. Jordaan, personal communication, 29 July 2008). An additional spin-off from the belief that innovation and diversity are intricately linked, is that in the bank, “we do not need a special philosophy for transformation.” Michael told of a team, headed up by a senior executive, tasked with looking into whether a special philosophy for transformation was needed. He explained what transpired:
They came back and reported that a new philosophy wasn’t needed. Yes, we may have to interpret the existing policy more accurately. What is so lekker (see Footnote 12) about our culture is that a culture change is not required. It is a culture based on merit. But there is nothing about transformation saying that it is not about merit. It is all about merit. It is about respect. Is it easy? Not quite (M. Jordaan, personal communication, 29 July 2008).
Michael continued by saying that in the bank, they took a decision to say that transformation is not about compliance. This viewpoint and the importance of celebration is evident in the following excerpt:
We say transformation is the target. Just as profit growth is a target or sales figures is a target. These targets are equally hard to achieve. We say, every time when we do things better at FNB, we are going to celebrate it. In our employment equity numbers we performed very well. Then I tell everyone and I include it in my weekly e-mail [titled, On Michael J’s mind]. These types of measures can typically be seen as a stick, but here is the carrot. When you improve you celebrate it (M. Jordaan, personal communication, 29 July 2008).
173 However, with the industry’s financial charter, and so many people needing access to banking services, in Michael’s view, there was a huge amount of bickering about the instruments for measurement. It seemed that increasingly more rules become built into it. The stance of the bank’s leadership was to go back to the principle. “You help the client and that is what we are going to do. If you always go back to the principle or the value that underpins it, it makes it much easier to do these things” (M. Jordaan, personal communication, 29 July 2008).
We work here because of the culture
A viewpoint from Michael that stood out was: “Most of us only work here because of the culture” (M. Jordaan, personal communication, 29 July 2008). He continued with, “It is like a new convert to religion. You almost become more radical than the people who thought about it in the first place.” He is doubtful if he ever would have been able to work at another South African bank. He is not sure he would have made it in a political environment. Maybe there are other businesses that he would have succeeded in, he mused. In his estimation, it must be very difficult in a business with a low performance culture. Or, if you cannot trust the people or trust how processes work, like decision-making. His engagement was very evident in the following narrative:
It takes time to build trust and trust can be broken in an instance. This for me was just the most incredible place. You can hear I am a huge supporter, not only of the three founders, but also of the culture…Sure there are difficult days, but for the most part, they do not have to pay me. I so enjoy what I’m doing. I want to be here (M. Jordaan, personal communication, 29 July 2008).
Culture does not live in one single person
Michael did not foresee any major changes in culture when the founders left. They would remain involved in some way or another. New personalities might bring a new accent on culture, and yet the foundation of the culture runs deep. “The three are actually clever in the process of how the baton is being passed on. The culture is so much deeper than just three people…everyone here bought in. We are tuned in” (M. Jordaan, personal communication, 29 July 2008). In his view, it is not as if you take away one person and then the entire culture falls apart. Culture does not live in one
174 single person. However, it does not mean that culture is not something that you have to work at continuously. You have to keep at it and keep on polishing. It means that that you need to behave according to that culture every single day (M. Jordaan, personal communication, 29 July 2008).
Leaders set the example and help people achieve
The example a leader sets every day is very important. Michael recalled Francois Hugo always saying, “Don’t underestimate the role of leadership. Sometimes even if you just smile in a certain way, the team notices.” Michael thought of an example underlining the importance of leadership and the commitment it requires. “If a client phones and you do not offer good client service, then it is going to have an impact on the entire FNB’s client service.” He was convinced it is not about a magical moment. To manage a business is putting in hard work, every day, putting in many hours.
In a similar tactic to that often used by the founders, he thought of sport analogies. The big sporting stars - they always make it look so easy. How can Roger Federer miss that one shot? He makes it look effortless. Because it looks easy, you forget how many hours he puts in every day. “Tour de France, you do not realise how hard those guys practice the entire year round. Success in the business world is very much the same thing” (M. Jordaan, personal communication, 29 July 2008).
The bank has taken steps to make the results that people are responsible for, more explicit, even public. It created a different type of positive culture and one of competition. “It is management’s role to help people to do well and achieve those results” (M. Jordaan, personal communication, 29 July 2008). In talking about the merger, Michael said candidly: “We did make mistakes. Viv Bartlett would tell you this” (M. Jordaan, personal communication, 29 July 2008). My impression is that his comment related to the process and speed with which certain operations were closed down as part of the major restructuring.
Every company in the group has its own culture
Michael was of the view that at FNB, “you can say we have an informal culture.” Even so, it is the bank’s ambition to do exceedingly well. Informality does not mean being
175 laidback. When people hear about the company’s informal culture, it is sometimes interpreted as, people not working hard. That would be a grave mistake. His view was that because people worked so hard, there should be fewer strict rules tying them down. “You don’t want to add more constraints to people who are already working incredibly hard” (M. Jordaan, personal communication, 29 July 2008).
I heard that the bank had a completely different culture than any of the other brands in the group. Michael thought it to be obvious that within the bank it was not realistic to expect a singular culture. Amongst the company’s 30 000 employees there were a great number of different types of people. For some staff members there is a greater dependency on that salary cheque at the end of the month, which you do not have if you own a luxury sports car and work elsewhere in the group (M. Jordaan, personal communication, 29 July 2008).
How is conflict sorted out in a group as varied as this one? Michael’s view was pragmatic. It involved getting the parties together, keeping in mind what the bigger interests are. It is essentially rooted in trust and good interpersonal and interdepartmental relations. He elaborated with this example:
When there is conflict at FNB, it is relatively easy for me to get everyone in a room and say, “What are we going to do?” There is also trust, I would hope, in me to ultimately be the arbitrator for what is right for the bank. But it is much more difficult when there is conflict with RMB. Logically, they would want to look out for their interests. By the way, it is important for me to have good relations with my colleagues. I would pick up the phone and call Mike [Phaff, CEO of RMB]…or sometimes he calls me or sometimes we go out for a beer and say: “Okay, what’s the story?” Sometimes we disagree, but we’ve always been able to resolve things this way (M. Jordaan, personal communication, 29 July 2008).
Towards a more performance-orientated culture
According to Michael, getting better at performance management was a deliberate culture intervention in the bank. Since the merger, the bank has undoubtedly become more performance-orientated, but there is still some distance to go. From his perspective, the company’s leadership was conscious of it and trying to do a culture
176 correction. The bank aimed to become as performance-driven as the group’s merchant banking arm. He contextualised as follows:
RMB has such a performance culture. It is largely driven through incentivised remuneration. You don’t even have to say to someone to leave his or her job at RMB. You just pay the person less. It is felt so personally, that people just leave on own accord (M. Jordaan, personal communication, 29 July 2008).
In terms of how to get the best out of both worlds, Michael contributed some interesting perspectives. FNB has existed since 1838 and has built up its own momentum and culture. The question he grappled with was: How to get the best out of that “solid guy” who just wants to do his job? He wants to do it well and then go home. He does not want to read about banking. He wants to read the You magazine and support the Bokke19. Those are the interests of this particular group and that is fine. But how to marry such a view with management’s drive towards more super performers and people whose passion is banking? It is a long process. Michael thought it would be naïve to think, he or anyone else can change it overnight. It is also not what you want to do. It is about trying to get the best out of both, “like two people who are different and get married” (M. Jordaan, personal communication, 29 July 2008).
One of the topics he raised was FNB’s Innovators initiative launched in 2005. The bank’s definition for innovation extended beyond a good idea to include the implementation of that idea, up to where the company felt the benefits coming through. This encompassing view encouraged individuals and teams to take ownership, drive it and implement these innovative ideas in the business. Ideas are put forward, followed by a rigorous judging process. The top 50 ideas and innovators presented directly to Michael and his top team. The stakes are high with monetary prizes and recognition awards a continuous process. The winning innovators at the time stood to gain beside the prestige, R1 million after tax.
In 2008 FNB achieved the first position in the Top 500 Financial Brands survey conducted by The Banker, a financial magazine, in conjunction with Brand Finance, the leading United Kingdom based independent brand valuation firm. FNB was rated as the most valuable South African bank brand with its brand value estimated at US$2 358- million (Corporate publication, 2008). In 2012 the bank scooped up a prestigious award
177 at the Finacle Global Banking Innovation Awards. FNB was chosen as the winner of the “Most Innovative Bank of the Year Award” among 150 entries from 30 countries (“FNB wins global banking award”, 2012). This accolade recognises the bank’s culture of innovation and its considerable strides in the advancement of retail banking. FNB and FirstRand can be rightly proud of this award that recognises and supports breakthrough innovation in the industry.
“Care & Growth” strategy
Michael placed considerable emphasis on the bank’s Care & Growth strategy or philosophy. He explained that employees quickly figure out whether people are using them or whether it is rooted in actual care. The Care & Growth philosophy says: We do not use people to achieve financial and other goals. We use those goals to grow people. We are challenging people the entire time (M. Jordaan, personal communication, 29 July 2008).
In his view, culture has a way of protecting itself. Almost like a protective mechanism such as immunity in the body. Foreign bodies are forced out. If a leader does not fit with FNB’s Care & Growth strategy, then there is resistance and such leaders do not get the best out of their staff. It is a vital reason why Michael thought one has to take a careful look at the culture of a place before you join. He continued by saying, people with mismatched management styles fail in this culture. Someone with a very different management style that does not resonate with that of his or her colleagues, is likely to fail. Someone who is autocratic and who only wants to accomplish the task at hand, as opposed to what the bank’s Care & Growth strategy espoused, is likely to fail. He has seen high flyers come in and maybe achieving something, but the next thing you know, it did not work out. These were very competent individuals, but where values were incompatible (M. Jordaan, personal communication, 29 July 2008).
Impressions of the founders
Without repeating what has come through prominently thus far, what clearly impressed was the trust amongst the founders. Also, they always surrounded themselves with the strongest people and rewarded such people accordingly. The founders had absolutely no hesitations in hiring somebody who may not have the same sort of views as they do,
178 but whose intellect and ability and willingness to do things, impressed. They are happy to live with people like that around them, who differ from them, as long as they accomplish things. In my view these impressions are very telling about the founders’ approach to and practice of leadership. The following narrative speaks of a culture, ethos and synergy – all vital ingredients in the success of the founders’ partnership and what attracted talented leaders to become part of this business story.
To a very large extent they epitomised what I think I was trying to do with FNB. The founders had a culture and ethos around the way they did business. This attracted me to doing something with them. There was synergy in thought and once that happens, then you have to find the compelling business reasons for it to work. What I sensed around these people was, you make your own future (V. Bartlett, personal communication, 29 July 2008).
“Die Kopdokter”
The previous chapter touched on how Francois Hugo, the group’s senior psychologist, played a strong role in Momentum’s turnaround. In time, he took up a new role, heading up HR in FNB and formed part of Michael Jordaan’s Exco. Michael offered the following:
We call him, Die Kopdokter20. Francois is an amazing individual. His real contribution is in what he brings as a person. He is completely unique. I don’t think there is another person like him in SA – as wise and with such a sense of humour. We have absolute faith in him. I would say that every single member of the team has tremendous trust in him (M. Jordaan, personal communication, 29 July 2008).
Other participants had equal high praise for Die Kopdokter (see Footnote 20). Laurie apparently said on occasion, if only he had many more people like Francois. I also heard appreciation for his role expressed in this way, “Not many organisations have a Francois” (J. Burger & S. Moss, personal communication, 15 May 2008). Different FirstRand voices spoke about the ways in which Francois had contributed over the years. He noticed things, spotted aspects in the organisation that needed attention and pointed out the misalignment of people and culture needs.
179 I heard how Francois was particularly skilled at diffusing conflict amongst senior people in the group, with sensitivity and in a way that preserved the dignity of all involved. I heard the view that he has the ability to express whatever the jarring issues happen to be, and then frame it in a different way, to take the issue to another dimension. Michael explained that often his and Francois’ roles became completely reversed. Michael did not hesitate to say to his fellow Exco member: “Francois, now I need your advice. How do I handle this particular matter?” In speaking about Die Kopdokter (see Footnote 20), Michael concluded with: “Francois is a wise, wise man. He is wonderful person to have in your team” (M. Jordaan, personal communication, 29 July 2008).
Conclusion and interpretation
In looking back, this chapter covered the merger that the founders thought of as beyond their size, and at the same time, a massive opportunity. With this deal the group grew to massive proportions. The third transaction culminated in the formation of FirstRand, the second largest financial services company in the country, with normalised earnings of R12.7 billion ($1.27 billion) in 2012 (Caboz, 2013). This merger is the deal that made billionaires out of founders Laurie Dippenaar and GT Ferreira (Shevel & Spira, 1998). In the present day FNB contributes 54% of FirstRand’s earnings (Ndzamela, 2014).
What the founders and their respective leadership teams succeeded in doing was turning FNB around from once the most poorly rated among the big four banks into the most highly rated (Fischer-French, 2005). Today, it is one of the most innovative of the country’s retail banks. At the time there was pressure to show the merit of putting these brands together during the merger. Making bankers think like business people was a major challenge. Not everyone agreed with the direction and the speed of some of the changes, with various participants acknowledging, “We did make mistakes”. The crucial issue was to learn from your mistakes.
Paul’s message: our plans live in people and we therefore would like to hear your thoughts, is important. My impression is that the founders played a strong role in sorting out areas of conflict between the separate brands in the group. The bigger picture was always more important to them than individual egos. This carried over into
180 this phase, the consideration of what is best and in the interest of the common good of all.
FNB presented another opportunity to transplant the principles like owner-manager and chunking the business in profit centres that have worked for the founders up until then. It is not frowned upon that in the bank there are more CEOs than at the JSE. It is your business, manage it, is an aspect that this company has embraced with open arms. Other principles that spilled over into the bank’s thinking and language included: the business case prevails, no holy cows and rationale debate. The bank was revitalised through the infusion of intellect and this professionalisation translated into increased profits. Soon FNB’s brand developed into a very strong brand.
The constant refrain, we did not do it on our own, comes to mind. Different and exceptional leaders came to the fore in this phase. Viv Bartlett the CEO before the merger, played a strong role in the transitional period. In Michael Jordaan, the young CEO, the founders recognised someone who was steeped in this culture (Caboz, 2013). When Michael had “run long enough” to use the founders’ phrase, having served as CEO from 2004-2013, Jacques Celliers succeeded him as CEO.
In the next chapter the focus shifts to the formation of FirstRand Limited.
181 CHAPTER 10: THE FORMATION OF FIRSTRAND
Introduction
The year 1998 was a busy one for the founders and for the organisation’s leadership. The creation of FirstRand, as a result of the merger of WesBank, FNB, Southern Life, Momentum and RMB, gave rise to a mega financial services group. Figure 13 depicts the milestone that came about as a result of the third strategic transaction (Chapter 9). This marked a major transition in the history of a group built on an entrepreneurial philosophy.
RCI RMB FNB Rand Rand Momentum First FirstRand Consolidated Merchant National Investments Bank Bank
1977 1984 1992 1998 1998
Figure 13. Creating FirstRand.
Also in 1998, an entirely new business in the form of OUTsurance was born. The formation of FirstRand was an exciting time and a game-changing phase, not only for the group but also for the founders. It is the pinnacle in the organic growth process through which the group was built. It is well illustrated in Paul’s words: “Our story has always been one of diversified earnings” (P. Harris, personal communication, 19 May 2008). This phase brought about much change, not only in obvious aspects such as in size, new brands being added, structural changes and formalisation, but also in other ways typical of major transitions.
The sheer size of the business changed dramatically. With massive mergers on the go between FNB and RMB and Southern Life’s incorporation into Momentum, employee numbers rocketed. Now it became an organisation employing 38 000 people across the different brands. It took longer for messages to get through and reach every nook and cranny of the organisation. The founders never cared for hierarchy and bureaucracy yet, in becoming a large corporate more hierarchical challenges surfaced. More formalisation was needed to stimulate innovation and capture innovative ideas. It was not a case anymore of, “Have you phoned Laurie with your idea?” In this phase, it was
182 not just the founders’ influence that was pivotal in making a success of the merger. It required a considerable collective effort and for all the divisional leadership teams to fly in formation.
What came about in this phase?
To pick up on the words of a journalist: “FirstRand dealt the deathblow to the fast and loose days of old...the trio now headed up a mammoth corporation” (Fischer-French, 2005, p. 44). GT was appointed chairman, Laurie as FirstRand CEO and Paul as CEO of FirstRand Bank Limited. I heard that for the first time, it felt as if the founders had left. In the words of RMB’s the Queen:
…Things changed when my boys left…when Paul and them left and went next door to this FirstRand ship. In the past they never left. Laurie went to Momentum, then Paul became the CEO, but they were always here…and then they became FirstRand and they physically moved out (A. van Zyl, personal communication, 28 July 2008).
Laurie on occasion said that the organisation did not believe in big head offices. FirstRand’s head office took up one floor in an RMB building.
How the FirstRand philosophy came about
An important question facing the leadership was how to get a unified message on business objectives, ethos and modus operandi through to this vast corporate. How do you get all your businesses to fly in formation? A significant contribution of this phase was the crafting of the FirstRand philosophy. Even before there was a FirstRand, the founders operated with clear business philosophies. In the early phases the founders spread their way of thinking, what was important to them, what was not negotiable and “our story” by talking directly to employees. The FirstRand philosophy was an articulation of what the founders had been doing all along and found to be working. This view is illustrative: “Remember, the philosophy was not written and then the founders started RCI. The philosophy only came later, after doing business for a number of years. It was a case of let’s write down how we do things around here” (J. Burger and S. Moss, personal communication, 15 May 2008).
183 The manifestation of the philosophy came from a real, honest place – three individuals inculcated it into a handful of people first, then into hundreds and it gained impetus to the point of thousands (J. Burger and S. Moss, personal communication, 15 May 2008). I heard different perspectives on where a key component that fed into the FirstRand philosophy, breaking up the business into profit centres, first originated. Both RMB and Momentum leaders lay claim to pioneering the thinking and this practice. One perspective was:
The DNA has got to be RMB. There’s no doubt about it. It’s where the whole philosophy of chunking individual standalone businesses came from…the founders lived it there from day one (V. Bartlett, personal communication, 29 July 2008).
Hendrik du Toit, tasked with writing the FirstRand Philosophy, emphasised that the philosophy was not something created from scratch. It was a case of distilling what had been done all along in simple terms. The simplicity requirement came from Laurie. It stems from his sentiment, “Don’t give me MBA speak” (H. du Toit, personal communication, 19 May 2008). I heard appreciation for Hendrik du Toit’s efforts in the form of: “He did a good job at articulating the FirstRand philosophy”.
It is not a textbook philosophy. I heard that likeminded people came together and contributed their instinctive thoughts on, “How do we do business? Things were grinded out from that point onwards. It was a unique way through which people distilled their intuition on how you should do business. It was not a simple process. I was told that almost every word of the philosophy was debated for days. “The founders helped draft every single word” (J. Burger and S. Moss, personal communication, 15 May 2008).
A participant told me the following story that illustrates the point. When FirstRand celebrated its 10th anniversary in 2008 she compiled a booklet to commemorate the occasion. One section of text featured an overwhelmingly busy visual. Even though its core message was important for everybody in the group, the visual was excluded because it did not convey the intended message. When she spoke to Paul about this, he suggested an alternative way to phrase it. He said: “The FirstRand Philosophy can be put down on one page, but every word has been debated for days.” I heard further
184 confirmation to this effect. “It is not just something that somebody else drew up for them on, ‘This is how we ought to behave’” (B. van Heerden, personal communication, 8 August 2008).
A centre and decentralised brands
The concept of a “centre” is important in understanding how FirstRand was designed at the time, how it operated and how the group’s philosophy was implemented. FirstRand embraced a federal model, with devolution of power. When FirstRand was formed, the centre decided broad strategy, which was then cascaded to each brand or franchise for implementation. In line with the owner-manager philosophy each brand owner or business unit head had the authority to implement strategy. The message was, run your business in the best way you see fit. It was described to me as “power doesn’t sit at the centre, it has been devolved to the businesses” (J. Burger and S. Moss, personal communication, 15 May 2008). Divisional heads or brand owners run their divisions with high freedom, high autonomy and high empowerment. Over time, there was more centralisation of the management of information technologies and human resources, for instance. The thinking kept on evolving and conversations were ongoing about how the pendulum swings between decentralisation and centralisation.
What stands out about the FirstRand philosophy?
In the first instance, the owner-manager principle implies that line management takes full ownership. In the second instance, importance is placed on emotional maturity and strong competence, which is at the heart of the FirstRand model. “We have incredibly competent people…you say to them, ‘Here is your business, grow it.’ Over and above this, we expect maturity” (H. du Toit, personal communication, 19 May 2008). Thirdly, what stands out is how seriously the philosophy is taken. There is alignment between what is said and what is done, as the following narrative suggests:
Very often when you talk to a lot of companies or even government, for that matter, everybody will tell you, they employ a participative style of management...but when you really talk to people and you look at the structures, they say more than they actually do (S. Nxasana, personal communication, 29 July 2008).
185 Different participants made it clear that the philosophy is not just talk. One example is: “They say it in the philosophy and that’s the way it happens, almost a hundred percent” (J. Burger and S. Moss, personal communication, 15 May 2008). The counter side of the picture followed. While the philosophy is taken seriously and all the businesses are expected to follow, it cannot be said that all employees bought into it. “…You can’t assume that all 35 000 people is completely inculcated in the philosophy and culture (J. Burger and S. Moss, personal communication, 15 May 2008).
Another distinct feature that stands out is the notion of, “No holy cows”, which in the organisation means everything is up for rational debate. My impression of FirstRand as an organisation where people laugh – at themselves and each other – was strengthened when I heard this perspective. “Most of the organisations [independent brands] chuckle about no holy cows. It depends on whose holy cow it is. But the fact that we can all laugh about it is the healthy part of the culture” (M. Phaff, personal communication, 28 July 2008).
In the fifth instance, the philosophy is underpinned by values. The stuff your mother taught you. There is a premium placed on trust, an important value in FirstRand’s world. An executive recalled, when he was young and a newcomer to the organisation, Laurie said to him: “Don’t give me a surprise. Rather come and tell me it’s a disaster. If I ask you, tell the truth.” In FirstRand the value system is high on integrity, very loose on structure (J. Burger and S. Moss, personal communication, 15 May 2008).
In the sixth instance, the philosophy was intended to apply uniformly to all the businesses. “It is not a matter of pick and choose” (B. van Heerden, personal communication, 8 August 2008). However, given the scale of the organisation and because individuals and structures respond differently, it can be expected that certain elements of the philosophy might get different emphasis in different businesses.
What made a strong impression is that the FirstRand model could be replicated, but the culture would be difficult to copy. “Ultimately it’s in the people, it’s in their DNA and it’s in the way you react and we talk to each other” (J. Burger and S. Moss, personal communication, 15 May 2008). Lastly, a feature about the philosophy that caught my attention has to do with how the philosophy spread. An interesting perspective was that it spread by a process of osmosis. “If you’re a bit of a self-starter, smart, get on well
186 with people, you almost get sort of sucked in” (J. Burger and S. Moss, personal communication, 15 May 2008).
The Philosophy workshops
Once the philosophy was crafted, an important vehicle for implementation developed in the form of the FirstRand Philosophy workshops. In essence these workshops are a planned and managed event hosted by the CEO and other senior leaders in which the philosophy’s guiding principles binding all the companies together are explained and discussed with every new staff member. It sounds like a typical corporate intervention, and yet my experience of attending this event tells me that it is anything but typical. The workshop I attended was held in the auditorium of the FNB Training Centre in Sandown, Johannesburg. I was part of an audience of probably 80 people and Francois Hugo facilitated. It was always Paul, Laurie and Sizwe joined by other senior executives.
It requires a significant commitment from leaders to keep an intervention like this going over many years. Even if they grew wary of it, it was important enough to keep it going, repeating the crucial messages more or less every six weeks. In the first ten years or so of FirstRand’s existence, the executives must have done hundreds of these workshops. I heard that Paul deserves the credit for driving these workshops and giving it impetus (J. Burger and S. Moss, personal communication, 15 May 2008). In turn, Paul shared how he enjoyed these sessions: “I can tell you, I’ve enjoyed just about every one of them. It makes me feel engaged” (P. Harris, personal communication, 19 May 2008).
In terms of workshop content it touched on the history of the companies that merged, the group’s statement of strategic intent, explanation of the FirstRand philosophy and what it has delivered and then an overview of the pillars of the business model. In essence, the philosophy consists of different components: a financial philosophy, a resources philosophy, a market philosophy and concluding with coverage of aspects like leadership and corporate citizenship (FirstRand Philosophy workshop slides, 2007; FirstRand Philosophy workshop author notes, 2007).
187 Figure 14 depicts the FirstRand corporate structure as it had evolved in the decade since the group was formed.
Figure 14. A unique corporate structure in 2007. Adapted from “FirstRand philosophy workshop presentation slides”, 2007.
In workshops prior to the one I attended, attendees received a concise handout summarising the group’s philosophy. In the narratives I heard criticism on this one- pager because it was perceived to oversimplify the considerable thinking that had gone into crafting the philosophy. The document was titled: FirstRand Philosophy, Ethos and modus operandi. The opening paragraph of the preamble is worthy of consideration. I present the words as it appeared in the document:
FirstRand is a unique “federation” of business entities in which the whole is greater than the sum of the parts. It is active in the financial services industry and at the strategic level is held together by a shared business philosophy which has its roots in an entrepreneurial culture and is essentially captured by the concept of “traditional values, innovative ideas” (FirstRand Business Philosophy, Ethos and modus operandi, philosophy, workshop handout, 2006).
What stands out are the references to: the whole being greater than the sum of its parts, a shared philosophy, entrepreneurial culture and then the four-words that run through
188 this story as a common theme: traditional values, innovative ideas. The content of the workshop was interesting, especially to an outsider not familiar with the intricacies of the group’s strategy. However, it is the process and the way in which the four hours were handled that made the greatest impression on me. It was business-like, yet informal. There was humour, energy and engagement. Hands would go up to ask questions, to clarify or to challenge. One question was more of a statement to the effect of “How do we deal better with performance issues?” Paul responded along the line of, “Replace what you just said with I. How do I deal better with performance issues?”
Hearing the strategy and philosophy explained by the senior leaders was engaging. The thinking, explained in this way, made a great deal of sense. Four hours was certainly not enough to gain an in-depth understanding, however it was not just any four hours. I could see how these workshops could energise and inspire newcomers. I was an outsider and I felt enthused. I could also see how the philosophy could serve to guide, unify and align autonomous businesses if the messages became absorbed.
FirstRand culture
A distinction is needed between the group’s philosophy and its corporate culture, even though these terms were often used interchangeably in the narratives. I heard “our philosophy” also spoken of as “our model”, “our system” and “our strategy”. What is undisputed is how strongly the participants felt about “our philosophy”. It was also spoken of as “our religion”, “our mantra” and “our regime”. Early on in the interviews I realised the term FirstRand culture needed clarification. Whose culture are we talking about? Would that be FirstRand culture or the culture of the individual brands as such? Culture was also referred to as a value system, for example, “our value system is very open door” (J. Burger and S. Moss, personal communication, 15 May 2008). Participants referred to the culture of the autonomous brands such as FNB, Momentum, WesBank and RMB as being very strong. It was sometimes referred to as sub-cultures.
A FirstRand culture does not really exist
The perspective, a FirstRand culture does not really exist, is a view heard from different participants. FirstRand seemed to exist as a holding company. The owner-manager culture was so imbued in the individual brands, that there was no real need for a
189 FirstRand culture. Also, when you are empowered to run your own business, it is very difficult to have a true corporate culture for the group. Another perspective was that FirstRand culture entailed allowing the brands to do their own thing. I heard that business unit leaders actively promoted strong individual brands. One sentiment was the following:
I think there are sub-cultures. I think WesBank has a fantastic culture and has benefited in no way at all from the RMB culture. I think FNB is much better off having benefited from lots of RMB learning. But FNB can never have RMB’s culture. It mustn’t try to have RMB’s culture but it can take lessons (M. Phaff, personal communication, 28 July 2008).
A comment that made an impression is: “You take a place like WesBank…they will not in a hundred years talk about working for FirstRand”. From what I heard in the narratives, organisational identity seemed to be firmly rooted in the brand that you work for. FirstRand as a corporate entity provided the base for a shared philosophy and an aligned value structure.
A performance culture
A strong theme had to do with the notion of a winning culture. Irrespective of whether it was FirstRand culture or the culture of a specific brand, it was a winning culture. It had to do with conformity in business output (H. du Toit, personal communication, 19 May 2008). From another angle I heard, “I certainly never found Laurie or Paul to be at all particular about what you look like or your personal habits or religion. They don’t care as long as you perform” (J. Burger and S. Moss, personal communication, 15 May 2008).
A strongly emphasised aspect was that performance mattered a great deal in this organisation. I heard that a formal system was not really needed to get a sense of who was performing and who not. “Perform perform perform perform. Ask any person, even without a formal performance appraisal, everybody will tell you who are the people who are lazy, whether an administrator or senior dealmaker”. I furthermore heard that the system could be ruthless if one does not perform. A correction followed quickly: “Unforgiving was a better word than ruthless. There is nowhere to hide. An
199 underperformer never makes it. The system will expose you” (J. Burger and S. Moss, personal communication, 15 May 2008).
People are given space and informality
I heard that people are given space in the organisation. Due to the looseness in culture, a framework is put in place to make up for it. It was explained as matching people who are more interested in management with management roles and those interested in processes with process roles. It is important for people who are not suited to a specific aspect to recognise it. Then it is a case of surrounding them with people who compensate for that. “It is something that is done quite well here” (J. Burger and S. Moss, personal communication, 15 May 2008). When I heard this narrative, the complementary effect in the founding partnership came to mind. Other narratives spoke of matching people with roles and responsibilities that played to their strengths. Putting people with complementary styles and skills sets together, balance it out.
Another feature that stood out is that it was clearly an informal culture. Different participants highlighted this aspect. Laurie was the first to describe the culture to me as informal. At the core it had to do with doing the right thing. Another participant voiced, “very informal, but not a lack of respect.” Informality, rooted in respect, seemed to be the balancing act. A view that tied it together and emphasised the crucial role of respect, is: “There’s no doubt about the culture being respectful of firstly, business acumen, and secondly respect for people as individuals. One without the other will be anarchy” (V. Bartlett, personal communication, 29 July 2008).
Culture custodians and the culture is embedded
The role that leaders play as culture custodians was repeatedly emphasised.
Whether we like it or not, we are custodians of the culture and therefore it is important for people to hear it from the leadership. And people do want to hear these things from leadership. If we just outsourced or delegated it to the communications department or the HR department and we did not demonstrate the seriousness with which we take the culture and philosophy, very soon it
191 would undermine the culture we are trying to promote (S. Nxasana, personal communication, 29 July 2008).
Another perspective addressed the extent to which the culture has been embedded:
It is not just in what people say in different forums, like the philosophy sessions. The culture has been underpinned by appropriate structures to give it expression. That’s why the culture would endure for a long time, because it is something that has become so embedded and ingrained in the organisation (S. Nxasana, personal communication, 29 July 2008).
10 Years of FirstRand
The timing of my conversations with FirstRand’s leaders seemed fortuitous. It was incidental that it coincided with the group’s 10th anniversary in 2008. The leaders seemed to be in a reflective mode. I was reminded that the group was still young in corporate terms. Perspectives illustrated clear respect for FirstRand as an entity and recognition of its significant value in terms of reputation. There was much cause for celebration. Numerous benefits had been realised since the group’s formation. The following excerpt speaks of how RMB had benefited from its inclusion in the group:
In terms of profit, RMB has grown more than 10 times since the merger while the number of people has grown more than five times. One of the biggest changes of the merger was the access it gave us to a large balance sheet. It allowed us to become involved in a broader spectrum of investment banking and allowed us to grow (M. Phaff, personal communication, 28 July 2008).
In belonging to a larger group certain benefits could be realised such as centralising specific support areas across the independent brands. Certainly in FNB, the infusion of talent was vital in the professionalisation of the retail bank. The merger also provided many career opportunities. Several high profile movements from RMB to other areas in the group initially included: Michael Jordaan who became FNB CEO, Johan Burger as FirstRand CFO, EB Nieuwoudt appointed as Momentum CEO and Theunie Lategan as Head of India (FirstRand publication, 2008).
192 Participants did not shy away from critical analysis and being outspoken in their views. There were strong opinions and questions on whether the federal model was inhibiting the willingness to work together, whether the group had developed too much of an entrepreneurial culture, whether the corporate entity was artificially put together and whether there was excessive internal competition. Much was said about changes in the environment with the issue of governance spoken of as a hot button. A viewpoint emphasised that as the natural growth opportunities decrease domestically, FirstRand’s focus was increasingly turning to international expansion.
I heard from different angles that 2008 was a difficult year, “the worst it has been for the organisation”. There were setbacks and losses and corrective action was called for. A question mark was placed on whether too much freedom was built into FirstRand’s model. Chairman GT said: “There was nothing in our model that said we cannot adapt the rules or pull the reins tighter again” (G. Ferreira, personal communication, 16 May 2008). In conversation with Sizwe Nxasana, he pointed out that much stronger leadership and direction would be needed from the centre in the future (S. Nxasana, personal communication, 29 July 2008).
Different participants spoke of the challenges that come with growth. A complication of a large organisation is that your mistakes draw more attention. When you are small you are under the radar screen. If you do not make a success of something it lives in the past. However, when you grow bigger it gets much more complex. Everything is in the public domain (V. Bartlett, personal communication, 29 July 2008). Another perspective was: “This organisation thrives on successes. The question would be, how successful it would be in failure. How well will it cope?” (J. Burger and S. Moss, personal communication, 15 May 2008). These words turned out to be very relevant given the then unfolding economic crisis and the tests the group were about to face.
With the escalation in the organisation’s size, its complexity increased drastically. There were signs of more layers and the business becoming more hierarchical. This did not sit well with the founders. There were more people to convince and decision- making took longer. The following offers a view on what the founders were experiencing 30 years down the line:
They struggle a bit with the sheer numbers of people because now they have to
193 convince more people about more things than before. It used to be we’ll make quick decisions and we’ll move and we know that everybody down the chain is in alignment. Now, it’s more people in the decision-making process, more people to get into a straight line. I think that’s been a bit more difficult than they may have imagined.
…That’s probably one of the most difficult roles that Paul and senior leaders, have to play by saying, “We can’t just do things on the fly anymore. It’s nice to be an owner-manager culture but you also are in the big league now” (V. Bartlett, personal communication, 29 July 2008).
The founders’ influence
In 2008 the organisation was preparing for a handover with the founders about to disengage. Paul was the last of the three to remain and had signaled that he wanted to start moving out. The details of the transition were being debated. Chairman GT Ferreira was reassuring the organisation that the group was no longer dependent on its founders:
In some quarters, there is a perception that the organisation is over dependent on the three founders, but that was only true when RMB was a very small investment bank. At present, we have a fantastic group of leaders who are more than able to take the baton and lead this amazing group to the next level (FirstRand publication, 2008, p. 5).
Different participants referred to the founders’ departure as a transition from an era of founder-owners to an era of professional managers. It would bring to an end a unique era of the three’s close involvement. Different voices pondered over the issue of what it would be like when the circle of founding fathers leave. One perspective had to do with whether the amount of glue that the founders bring, could be replicated. “Their influence is still a great glue in the whole thing” (V. Bartlett, personal communication, 29 July 2008). The opportunity and challenge was to institutionalise what the founders had been doing all along and get the next generation to buy in. The question that was mulled over was whether the philosophy would remain as strong in the wake of the founders’ departure.
194 Despite founders GT and Laurie serving in non-executive roles at the time, and Paul signaling less visibility in the future, the founders’ influence was still strongly felt. The following viewpoint contextualised it as:
People at board meetings, number one, respect their views. Two, know that they are significant shareholders. Three, anybody who wanted to do anything big or try something new, bounced it off them, in even the most oblique sort of way. So, they are still influential. They will be horrified to think so. They don’t want to hear people say: By the way, when I mentioned it to GT. They sit on various structures and boards and their views are given appropriate consideration (V. Bartlett, personal communication, 29 July 2008).
From Sizwe Nxasana’s perspective the founders’ greatest contribution to FirstRand has to do with: Firstly the articulation of the cultural philosophies in order to share and communicate it to a wider community. Secondly, cascading and passing that culture from one generation to the next so that it is ingrained into the organisation. “Therefore it outlives the people who may have introduced it and made it happen…that would certainly be a legacy”. Thirdly, having a continuing and sustainable business that remains profitable, in fact, outperforms its peers in a whole range of areas. That would be the real test whether the culture works or not (S. Nxasana, personal communication, 29 July 2008).
Conclusion and interpretation
Through the formation of FirstRand the organisation’s leadership created the second biggest financial services group in the country. It never entered the founders’ minds that this is where it might lead to when they started RCI three decades earlier. The founders brought vision, stability, acumen and a wealth of experience in bedding down a massive deal. In all likelihood the founders experienced pressure to show the merit of bringing all these businesses together, to prove that the whole was bigger than the sum of its parts.
FirstRand is a complex organisation. Steering such a complicated federation of businesses imposed many demands. It required strong displays of leadership to ensure that the parts, the strong individual brands, did not make the whole entity fly apart.
195 Getting independent and strong brands, which in some cases competed head-on, to fly in formation, posed a significant leadership challenge.
Another challenge brought about through creating FirstRand, was how to unify this federal model. The FirstRand philosophy was crafted through a process of distilling what had been done all along and brought success. What had been strongly advocated all along by the founders, and absorbed and emulated by other leaders informed the group’s philosophy. The founders managed to successfully transplant their philosophies, approach to business and values that started this entrepreneurial journey. The collective knowledge of everything that was found to work, pioneered, experimented with and perfected in the preceding growth phases, was articulated and formalised in the corporate philosophy.
The founders’ legacy is strong and multi-faceted. One of the strongest aspects of their legacy is the articulation of the FirstRand culture, incorporating the DNA from businesses they had a strong hand in building like RCI and RMB and those businesses they strongly influenced in their transformation like Momentum and FNB. What the founders had done over the years had become institutionalised. A second significant aspect of the founders’ legacy is that they transferred the culture to others in the organisation. The culture had become self-perpetuating and other leaders in the organisation had become flag bearers of the culture. Also attributable to the founders’ legacy is the depth of leadership, not just in the next generation to succeed them but also across the breadth of the organisation. They created a group that no longer needed them. The three entrepreneurs had mentored exceedingly well and identified successors, long before it was called for and set these leaders up for running the best possible race. It was always the founders’ intent to see a smooth handover of the leadership baton and they actively steered things in that direction.
It is at this point where I conclude the FirstRand story built up through the narratives and other data sources. In Part 3 the focus shifts to interpretation and sensemaking.
196 PART 3: INTERPRETATION AND SENSEMAKING
CHAPTER 11: INTERPRETATION
Introduction
This chapter marks a shift from telling a story to an interpretive lens. My aim here is to offer integrated main impressions on this remarkable story. In reality, presenting my interpretation of the data has not been totally reserved for this chapter. My interpretations have also surfaced in the way that I used the narratives in describing selected segments and significant events in the business story. This in itself has constituted an act of interpretation. There are many factors that contributed to this business group developing into the success story that it is. It is neither feasible nor the purpose of this chapter to explore all the possible themes that emerged from the data. I therefore present my interpretation of the data according to four main themes evident throughout the business story. What these main focus areas mean is addressed in Chapter 12: Sensemaking.
Theme one centers on the significant influence of the three founders, whilst theme two covers leadership as defined and practiced by the founders. Theme three addresses how the founders shaped organisational culture. The themes of leadership and culture fit with the hunch I had when I embarked on this study, namely that the interrelated nature of leadership and culture hold important keys to explaining what came about in the FirstRand story. The fourth and overarching theme brings all the themes together. Something happened in this business story that could not be foreseen. The founders could not have planned for everything that happened here. Theme four therefore relates to the founders creating conditions for FirstRand to emerge. There are areas of overlap between the four themes, with data potentially fitting into more than one place, as is the nature with closely related concepts. The themes are fleshed out further in different sub-themes or areas of distinction that stood out for me.
Theme one: The three founders’ influence
The first focal point centers on the three founders. This is a sizeable theme as the founders’ influence and how it carried over into the group of companies touches the
197 heart of the research question. The business story started with and was initially built around three people. The founding partnership is unique and instrumental in building the group. It is about the individuality of the three and what they brought to the business for over 30 years. They surrounded themselves with people who sufficiently mirrored their way of thinking and became co-builders of this group.
What stands out most prominently about the three founders’ influence is clustered into four sub-themes. Firstly, the founders’ intent, secondly, the founders brought a specific approach to business, thirdly, the founders’ values and fourthly, the combination of the three. These are by no means the only definitive factors, but from my perspective, these are four of the most potent factors that the founders brought to this story.
Sub-theme 1: Intent
The entire business story speaks of clear intent in the way that it developed. It has more to do with a way of thinking than with plans. Intent offers a yardstick of whether something fits in or not. The founders were the senior leaders for many decades and their stable leadership presence shaped the business. Intent relates to what drives a person. It comes from deep within. It lies in deep-seated assumptions. In distilling the essence of this theme, I encountered murky areas with data potentially fitting in more than one place. I arranged the data where it seemed to fit best.
Driving forces
The question beckons as to wherein lay the founders’ drive? What was their purpose, mission or goal that set their general direction and continued to fuel their journey? There are a number of drivers or driving forces that reveal themselves in the business story that come from within the founders. These come through strongly in their thinking at the start of the business story. The driving forces might have gone unnoticed by the founders right at the beginning. With reflection, the passing of time and hindsight, these drivers become clearer. The prominent driving forces evident in the beginning of the story also played a strong role in the subsequent growth phases of the business. The founders knew the general direction they wanted to go in. The details of how to get there, that they made up along the way. I developed an insight from the narratives about the founders’ drive.
198 The founders are strong competitors - from sport to business. They like winning, whether it is playing sport at a university or provincial level or later a volleyball game at a team building, or a RMB corporate road race or a game of golf. Paul is competitive. Laurie is incredibly competitive. GT too but he will not tell you that. He would just “do it”. The founders have a winning mindset. They did not shy away from success at a relatively young age. Nor did they buckle under the weight of achieving bigger success than they ever imagined. Fischer-French (2005) in writing about the reverse takeover of RMB expressed the following opinion, “…beneath the bravado, were men already a little daunted by their success and new responsibilities.” If the founders were daunted at any stage I suspect it was not for very long. Much later followed one of the biggest deals, the FNB merger, and although clearly “frightening”, their mindset was one of take it as a massive opportunity.
It seems to me the founders had faith in their ability to pull things off. It is evident in every single transaction, from leaving behind the security of established employers to start RCI, the reverse takeover of RMB, entering the insurance industry with the Momentum transaction and then the FNB merger. In the founders there is a mix of being very self-confident as leaders, balanced with great humility in the wake of considerable business success and personal wealth that ensued.
Whatever the founders do, they do with passion. This applies to doing business and the zest with which they live their lives. They bring intensity and great energy to what they do. They know no half-measures. They were extensively involved in building, leading and growing their businesses. They bring this same deep involvement to their many interests and pursuits outside of work. They actively lived the advice they dispense to others wanting to make a success of their chosen line of work. Set off in a direction that you enjoy. If you like doing something, you tend to generally be good at it. Find something you love, find something that you are passionate about and it will take you further. Success comes when you work harder than the competition.
After a first taste of success, why not stop? It has to do with drive. They continued to pursue opportunities to play in a bigger league. Later, they started taking on the “big boys”, established businesses, with histories stretching far back and much larger in size. If you combine youth and hunger (motivation), with good business instincts and add to that the need for autonomy (doing our own thing) with, we want to be the best or the
199 first (achievement), I suspect it might bring me a bit closer to uncovering what the drivers are. What will get me closer to a holistic picture, involves acknowledging that the founders are inherently entrepreneurs.
Inherently entrepreneurs
All three of the founders are inherently entrepreneurs. They are not just interested in business; they are all passionate about business. This is key. Back in 1977 they were all young, hungry and keen. This is a powerful combination. To paraphrase Paul, they were young hustlers wanting to make a buck. They saw a gap in how leveraged leasing and structured financing were handled. They spotted an opportunity and broke with convention. They had a few good product ideas and an intent to bring a novel product to the market. It might even be that the founders were creating products where there was not yet a market for this type of product or offering. They got in early.
The overarching goal when starting a small business is to make money and see it survive. This message carried over into the business: there is no shame in making money. In the narratives I heard how years later Laurie’s sane voice reminded business leaders, “We are in business to make money.” The founders gave up stable jobs with employers where they potentially had good career prospects. This takes courage. They knew what they wanted to do. We do our own thing. Entrepreneurs are often driven by a need for autonomy. I recall reading once that an entrepreneur is someone who will work 80 hours for him or herself, instead of working 40 hours for someone else (Source unknown).
The R10 000 start-up capital for RCI, was not a princely sum, yet it did not scare them. This is where the respect for money comes from. It is our money, we do not have much of it, therefore it needs to work as hard as possible for us. They made sacrifices, not paying themselves salaries for the first nine months. The question put to Laurie’s wife, “What does your husband actually do for a living?” gives me the impression that they did not have it all figured out. They started their first business from scratch and starting from scratch is hard.
The founders took a risk in starting RCI. The appetite for risk amongst the founders varied. The narratives suggest that Paul was always drawn to adventurous
200 environments and the one with more appetite for risk. Laurie thought of himself as the more conservative of the trio, but then, that helped the three of them to end up somewhere in the middle. The founders seem to thrive on risk, calculated risk. This is a strong point supported by the data. In my mind it is a blend of logic and caution, appetite for risk and courage. This is an example of the combined effect of what each of the founders brought to the partnership. Over the decades the founders took many more risks. I recall Laurie’s words: “We don’t do many deals, but if we do, they are big ones.”
The founders looked at opportunities. Being serious about growth set the course and the direction for organic growth to follow. Over the course of the group’s history these leaders made a myriad of significant decisions, for instance, to fall under regulation, to get shareholders in and to opt for a defensive strategy whilst pursuing organic growth. Within the context of entrepreneurship, the founders were very ethical. They always had this innovative entrepreneur mindset. Within the process of disrupting, they were ethical. The idea of an ethical entrepreneur is not a contradiction in the founders’ view of business.
Not all entrepreneurs have what it takes to lead what they create and lead it well. This does not apply to the founders. They were the creators and leaders of their initial concern. There can be no doubt that the entrepreneurial history and spirit come from the three founder-owners. In concluding this sub-theme, my impression is that the founders’ intent is to build and make businesses succeed. This is a vital influence that stems from the founders and took root in all the businesses.
Magic moments and what makes each founder tick?
For many people it is a difficult question to answer: Why do you do what you do? The founders experienced many highlights over the course of their careers. They have received many awards and much praise as business leaders, both individually and collectively. The founders’ magic moments differ. Even though they are similar people in important ways, they are distinctly different individuals. A personal highlight GT singled out was the decision to start RCI and choosing the right partners. Laurie singled out the turnaround achieved at Momentum as a personal highlight. Laurie’s best ideas include spotting the idea for Discovery as a winner and later getting OUTsurance off to
201 a good start. For Paul it had to do with enjoying the experience of being part of FirstRand and hanging in for the bulk of his career as part of this amazing journey. The impression from all three, expressed in different ways, was that the real test would be if the organisation could continue successfully without them. Only then would they know they had a hand in building something sustainable. They had confidence and trust in the next generation of leaders to steer the organisation successfully without them.
What makes each founder tick is as unique as the individual himself yet there are areas of overlap. In isolating the strongest impressions, I come to the following. Laurie operates from a deep interest in business, all business, even the trivia of business. As a child he dreamt of owning a bank. Laurie loves a challenge, whether a big deal or a good debate. Paul operates on off the wall ideas and the thrill of dealmaking, whether in the chase or in the wrapping-up. Paul brings his deep love of the business and passion to the equation. He has a particularly soft spot for working with young minds, new business ideas and nurturing talent. All three founders are energised by good ideas. GT seems drawn to creative opportunities. He acted as a strong creative conceptualiser in the early growth phases of RCI and RMB and as chairman of the newly merged mega group. GT the voice of reason, operates as a strategist, stirs the pot and if personal circumstances change, moves on to another pursuit, building a wine farm into a thriving enterprise.
Sub-theme 2: A specific approach to business
One of the narratives that made a strong impression on me was that the founders brought a specific approach to business. This approach was absorbed first by a handful of employees and followers, then 60, then 250, then 6 000 and to the point that it permeated the fabric of the organisation. What stood out is how that the founders’ way of doing business was not copied from textbooks. The founders maintain it came about intuitively. It developed from how they are naturally. Be yourself. It comes from an authentic place. The founders had strong ideas about what model (strategy and structure) to pursue. Later, this model turned out to be very successful at creating new businesses from scratch. A key factor in the group’s performance has been its ability to establish from scratch, businesses like Discovery and OUTsurance, something that the group’s competitors have not managed to duplicate. Eventually this model for starting
202 new business model earned a name and a place in the group’s strategy. It is known as its “greenfields approach”.
The founders brought good business principles. It has been said before, yet is worthy of repetition, that the founders are counted among some of the best business brains. There is much evidence of clear common sense thinking. This kind of thinking impresses and people get a buzz from being in the presence of such thinking. We do not copy, that is not at all what we are about, comes through strongly in the data. We innovate. This is where the innovative spirit comes from. We do our own thing. Also we lead, we do not follow. It is about being the best at what you do. It is about excellence in business.
The three entrepreneurs were at the forefront when they started RCI. The novel idea they launched with, essentially cutting out the middleman, had not been brought to the market in the same way before. The founders are talked of as disrupters who later encouraged others to disrupt through innovative ideas. The founders’ take on strategy is an important ingredient not to be overlooked. Different strategies can bring about success. For example, is your team’s strategy running rugby or kicking rugby? Either way, know what team you are playing on. They had a clear sense of what strategy they wanted to pursue, what type of structure supported this and also their own personal styles. If you know what you want to do and are clear on the strategy, then it becomes a case of looking for the right opportunity that fits with that strategy. In time they became even more skilled at identifying and attracting opportunities that suited their strategy. The result is an organisation that is good at seizing opportunities.
An aspect that stood out is how well the founders knew their businesses. It sounds obvious. The impression I got is that knowing how a business thinks and behaves also extends to using that knowledge to implement your plans in a way that works for your business. In later mergers, the acquired businesses came with their own histories. The founders put in the effort to come to know these operations and its people. One question in this ongoing quest comes to mind: Where do you make your money? These leaders got to know their processes well. Through accumulated experience and intuition, recognising signs and dangers, when to be cautious and when to take a considered risk, they could flush out whether a deal was right for them or not.
203 An inherent requirement of the founders’ approach to business revolves around hard work, or what Paul termed, “working your butt off”. In the narratives there are many references to and admiration for the founders’ work ethic and immersion over the years. The founders deserve credit for the absolute dedication and commitment with which they built this group. As RCI’s founder-owners it was a case of it is what it is and you put in the hours to build something of your own. For the founders it made sense that you have to work harder than your competition, take a long-term view and persevere. This is a demand that entrepreneurs sometimes underestimate. The power of senior leaders setting the example of a strong work ethic in order for it to become absorbed in the organisation, is not to be underestimated. It is through hard work and repetition that the founders gained the considerable experience that is necessary to stay ahead of the pack.
What comes through repeatedly is that it takes time, patience and a long-term view to build a group such as this. It also requires putting own interests aside for the greater good of the business. Another noteworthy aspect is the learning that accumulated from integrating diverse businesses. The founders built an empire through successful mergers and acquisitions, a significant accomplishment given the high failure rate of mergers. It forms part of the core competencies that were carried into the group.
In bringing this sub-theme to a close, what stands central is that business gets managed. The humble start-up was managed like a proper business from the start. If you set things up correctly, it signals that you are serious about business. Call it intuition, call it good business principles, call it strategy, call it a model, the founders brought a specific approach to business. This approach was seen to work, became absorbed and informed the practices and processes that developed.
Sub-theme 3: The founders’ values
Laurie Dippenaar said it best when he spoke of a person’s wiring as being important. The founders brought to the partnership and thus the business their personal beliefs, outlooks, attitudes, principles, assumptions and values. Theoretically these terms are different albeit closely related and sometimes used interchangeably. Laurie’s reference to a person’s wiring offers a useful image to think of the founders’ individual differences that they brought to the partnership. The one aspect that comes through
204 prominently in this story has to do with values. The founders make much of the things your mother taught you. These are spoken of as common sense values. The narrative about Laurie’s mother instilling the value of honesty, comes to mind again.
The values and principles that come through with regularity in the data make for a long list and include for example fairness, humility, integrity, acting ethically and loyalty. There are phrases that have an old-fashioned ring to them: dealing on a handshake and being good for your word. It does not mean these are outmoded virtues, quite the contrary. The world seems to be in short supply of these virtues. RMB’s much quoted pay-off line places values prominently and upfront: Traditional values. Innovative ideas.
The big three values from my perspective, the fundamental values, have to do with trust, respect and honesty. This entire story is permeated with the word trust. It was a key factor in how the founding partnership started: trusting the word of a friend, trust your business partners, trusting your gut feel, placing trust in your colleagues and employees. Honesty is non-negotiable. My impression is that honesty stands central: you do not have to be dishonest to make money, do things according to the book and according to the letter and the spirit of the word. It is essentially about doing the right thing.
Values are universal and many companies will say they operate according to similar set of values. To lay claim to certain values is not a differentiator per se. The real test to see if values align comes through not in talking, but in doing. Early on values surfaced and became tested, for instance, in how the founders made decisions, the mutual respect with which they treated each other and how they treated other people. The founders brought decent value systems. There was a sufficient overlap in values, even if there were degrees of personal variance. The crucial point to lift out is that the founders had shared values in common.
Laurie Dippenaar in particular, was seen as the custodian for values. In time, Sizwe Nxasana took over a similar role. Even if this group does not have “copyright” or “exclusivity” to the values it lives by, values are owned in this organisation. This is when values become a differentiator. It lies in the implementation and the consistency with which it is role modeled. The founders lived by the values they deemed important and non-negotiable. All the companies in the group pride themselves in strong value
205 systems. I found the narratives that spoke of the organisational context as being low on structure and high on values, illuminating.
The founders accumulated significant personal fortunes, but that is not the impression you get from them. They care deeply about this group, its employees and its customers. It is not about doing a deal or making money at all cost. It is not about greed. They are very happy about other people’s successes. They stood by the principles and the values they believe in, even if it sometimes loses you money. As business leaders they care about their communities and are determined to make South Africa a better place.
Sub-theme 4: The combination of the three
The collective effect of the founders had been spoken of as “the magic of these three” and of their “triumvirate”. Together these leaders were a creative force. GT’s strategy in handpicking his partners paid off: be clear on the skills you need to complement and strengthen your own. What made this partnership is that they are not the same. There was sufficient commonality (backgrounds, interests, motivation, the right instincts) and diversity (skills, temperaments). Part of what made the founding partnership effective is how they could make their differences work for them. I formed the impression that because of their differences, good debate on an issue was called for. My hunch is that the notion of robust debate spilled over into the business and similarly, that the phrase “play people to their strengths” has much bearing on the founding partnership.
I recall the narrative about the founders seeing a natural role division falling into place. GT had the most knowledge initially and took the early lead. They went along with it and did not fight what seemed to obviously work. My impression is that especially in the early growth phases, it was a time of intense co-creation. Typically people with common interests are attracted to similar environments. The founders created an atmosphere and an environment in which they wanted to work. This is important. That is what they created in RCI and beyond, an environment that they enjoyed and what others seemed to enjoy too. The net effect was continued high performance and profitability.
What intrigues is how the founders’ individual strengths have almost become a way of framing their complementary effect in the partnership. On RMB’s corporate website, as
206 part of a brief historic overview, the founders are described in a telling way. In the words of RMB’s Derek Prout-Jones: GT is a world-class negotiator and a bit Machiavellian; Laurie is stable, conservative and a big thinker and Paul is the deal-a- day guy with a great passion for the business (Corporate publication, 2008). These descriptors come across almost as a typology of sorts. There are undoubtedly problems with typologies, such as reducing what is multi-faceted, and yet on the positive side, categorisations help people to make sense, simplistically. It left me with the impression of different personal brands of leadership within the partnership.
A founding partnership of multiples that stays together is rare. A special bond and camaraderie came about and yet the founders admit that they sometimes battled. On occasion one would put up a hand to say, “I think I need help, I might have messed up here”. They make no secret that they worked at keeping their relationship healthy. Because the cohesion was greater than the conflict, the founders deserve much credit for staying together. Their FirstRand careers were a resounding success with GT, Laurie and Paul each finishing strongly. The longevity of their partnership contributed greatly to how this enterprise grew and its continued performance. By cooperating synergistically, working together effectively over decades, the founders achieved more than if they had worked separately.
Theme two: Leadership
The founders’ leadership touched the lives of many of FirstRand’s people, past and present, over decades. How the founders’ take on leadership influenced the direction and success of the business, and how it rubbed off on other leaders, employees and the system, come through succinctly in the data. The founders understood that culture and leadership go together. To paraphrase Laurie, if the organisation can keep on choosing its leaders in the same way, the culture will prevail.
Some of the perspectives that stood out for me could potentially fit with either the leadership and/or culture theme. I placed ideas where it seemed to be a best fit. The sub-themes include firstly, the founders understood the context. Secondly, I highlight how leadership worked in the founders’ eyes. Thirdly, these leaders took followers with them. The final sub-theme relates to, how the founders chose the organisation’s leaders.
207 Sub-theme 1: The founders understood the context
From the data I developed the distinct impression that the founders read and understood the context of their time well. They knew what was needed at a particular point in time and into the future. Especially in times of uncertainty and upheaval it is important to look beyond the horizon, to develop peripheral vision, to notice what might come next. They were not just in step with the context of their time. They were at the forefront.
The track record of innovation stretches across the entire history of the organisation. Identifying the ideas for Discovery and OUTsurance, respectively, are the most prominent examples of radical innovation. However, there are many other examples of Discovery type ideas accomplished in the early years in a still small business. The data spoke of industry peers waiting in anticipation to see what this group would do next. They set benchmarks for the industry and trends for others to follow. The turnaround of Momentum played off against a certain historic backdrop and this called for leadership that was relevant for the time.
The narratives spoke of the founders noticing developments, conditions changing and opportunities opening up long in advance. Their combined business acumen, common sense thinking and knowing their business extremely well revealed vulnerabilities at different points. The business story developed beyond RCI because of the opportunity for growth as merchant bankers (RMB), wanting to add annuity income to the fickleness of merchant banking income (Momentum) and, with the advent of democracy, recognising that RMB was vulnerable to takeover by a foreign bank and that a retail banking strategy was needed (FNB). I also heard that the founders saw the financial crisis on the horizon, long before many others did.
The founders remained open to their environment and kept themselves informed. In the early growth phases when mergers and acquisitions were starting to experience a boom, they read everything there is to read to stay on top of their game. The founders noticed shifts. RCI came about because GT noticed a discrepancy. He noticed the considerable gap in how much money he was making for his employer versus how much he was getting paid in return.
208 Noticing such aspects, noticing gaps and remaining open to the environment are crucial leadership qualities in an entrepreneurial setting. It might sound like a contradiction, however I also formed the impression that once the founders were clear on intent and strategy, what was happening externally did not derail them. I interpret this as an illustration of being clear on the course that you are on and not changing direction without a very compelling business case and considerable robust debate.
Throughout this study I was struck by examples where the founders were unknowingly ahead of their time. Leadership behaviours that came naturally to them, that they lived all along before these even had a “name”. They cared about their reputations before the phrase reputation management was coined. The founders modeled and lived the owner- manager philosophy and culture long before anyone else did. They were advocating and implementing an owner-manager environment before it was a concept that had gone mainstream. The founders knew what they were looking for when hiring and when appointing leaders, before the taxonomy of competencies and competency models found its way into HR practice. They realised the importance of creating an environment in which people wanted to come to work, before concepts such as employee engagement or employee retention were coined.
The founders did not copy from textbooks, embrace fads, copy what their competitors were doing or care for consultant-speak. My impression is that the founders maintained that in FirstRand we think for ourselves, to the point that they remained wary of consultants and external expertise that could diminish self-reliance. Where external expertise and consultants were engaged, my impression is that of a philosophy of, we pay you for your contribution, we make sure the knowledge transfer happens and we implement in a way that works for us.
The founders set things up well ahead of time. There are numerous examples; from knowing they needed to fall under regulations, to needing a retail banking strategy, to identifying and grooming suitable successors. In terms of succession planning they set things up early, demonstrating vision and foresight. The founders were skilled at succession planning, once again more intuitively so, than through formal processes. They spotted Sizwe Nxasana’s potential when he joined initially as a board member. On joining the organisation as an executive, Sizwe Nxasana had time to get to know the business and years to establish himself preceding his appointed as FirstRand CEO.
209 Sub-theme 2: How leadership worked in the founders’ eyes
From the founders’ angle, leadership worked in a particular way. They developed their own definition of leadership. This is what they passed on through their example. What stood out for me is the founders’ perspective that a leader does not have to make all the decisions. A leader’s role is to facilitate good decision-making. It is at the heart of the founders’ brand of leadership. Therefore a leader does not have to “know it all” or come up with all the clever ideas. The organisation’s managers experience this leadership view and practice as quite liberating. To me it says something important about how the founders view authority.
The founders did not have hierarchical ideas or aspirations when they started out. They deliberately did not want a command and control style of leadership. Such a style is not congruent with who they are naturally and not the kind of environment that they themselves wanted to work in. The founders’ brand of leadership is democratic and empowering. Personally they liked to do their own thing. I am of the opinion this premium placed on autonomy came through in how they practiced leadership. It is illustrated by often quoted phrases such as “You are your own Pty Ltd.” and “we are not into baby-sitting”. It is managing with a light touch and, to an extent, leadership by letting go. It is not to say that it is to be interpreted as an abdication of leadership. There are checks and balances in place as a counter force. The strong owner-manager philosophy is balanced with a culture statement that emphasises professional competence and maturity.
The founders’ democratic leadership style also came through in how they structured the business in a federal model. When FirstRand was formed, the group was structured as a federation of businesses with a small strategic centre and a high degree of decentralised implementation. A question that leaders and organisations often grapple with relates to whether or not to decentralise. Typically in businesses the pendulum often swings back and forth as circumstances change and the same happened in this organisation. The centre developed a stronger role from 2008 onwards because the situation called for it.
It is my view that the founders understood the value of a team in that a team has the potential to drastically improve an idea or a decision. It also builds ownership. The founders had experienced the dynamic at work in their own partnership, where an idea
210 or decision can be improved if you bring different skills and viewpoints to the table. The founders over the years acted as a united front, even if decisions were increasingly made individually due to their roles deploying differently. One of GT’s leadership perspectives, there is no “I” in leadership only “We”, comes to mind. To me it contains a significant truth about the collective nature of leadership. What resonated with me is that leaders are all in this, together. However, if you engage with leaders in for instance coaching conversations, they often tell of the incredible loneliness they experience. The impression I get is that the spirit of the “we” aspect was lived and therefore more widely embraced in this organisation.
The founders’ main goal was to empower others. They held firm beliefs about ownership and empowerment. Their empowerment philosophy revolved around training and mentoring to make people independent. They empowered people by really trusting them, by believing in them and by challenging them. Their aim was to equip people to stand on their own. An important point that featured several times in the data is that once individuals were seen to be heading in the right direction the founders got out of their way. Not meddling sounds simple enough, but like many a parent knows, this can be hard and often the parent ends up being the barrier to independence. The bottom line is that the founders trusted the people they put in charge and then got out of their way.
The founders’ passion and commitment to growing people are exceptional. From the data it is clear that the founders are good mentors. They support with intellectual capital and time and share their knowledge and experience generously. It was their mission to make other people successful and they were incredibly happy about others’ successes and not threatened by it. They created opportunities for people to grow in knowledge, experience, spiritually and financially. Many staff members of this group over the years experienced great success as a result of the opportunities created.
The history of how the founders developed the business, in that it would not be dynastic, is also important. I find myself drawn to the narrative that illustrates the founders’ thinking and that they were prepared to share with others. In essence, get more people in who think like us and who are prepared to work as hard as us and then we share what comes out. Wealth creation was an objective, but there was enough to go round. Employees who joined the founders early on saw how the founders worked,
211 were motivated by it and got drawn in. From my perspective, being prepared to share and not being motivated by ego or greed are leadership default settings that have fallen on hard times.
The founders are exemplary role models. They believe that leaders should send the right signals. What caught my attention is the founders’ attitude when faced with difficult circumstances, tough decisions or difficult tasks. It was not a case of “let’s push this thing up the mountain”; instead, it was made light of. My take on it is that this set the tone and example for the business on how to reframe difficulties as opportunities or challenges. Scores of staff members learnt from the example set by the founders. Many leaders have learnt from their outlook on leadership, their unique style and how they have put it into practice over the years. The founders presence, influence, involvement, their example and the stability of leadership over more than 30 years is unusual and a critical differentiator in the success of FirstRand.
Together with empowerment, the founders’ central belief revolved around ownership. If you own your business, you care more. If you feel it is your own business, you treat it differently. Therefore, involve people, give them a say and a meaningful influence and hold them accountable. This is what the owner-manager philosophy is all about. The founders absolutely lived the owner-manager philosophy. They referred to the CEOs of the different companies or brands as owners. Laurie deliberately referred to the individuals who conceived of the idea for a start-up as owners, even if they technically were not owners. This is symbolically significant.
Youth and grey hair makes for a potent combination in this group. Its emphasis on democratic, empowered and owner-manager philosophies could be the reason why many different generations manage to work together in harmony across diverse businesses in a federal model. Younger generations are attracted to more freedom and less bureaucracy, not so dissimilar to what the founders wanted to create. To refresh and paraphrase GT’s narrative: you need the young ones who can run fast and hard, and the older ones to slow the pace of the young runners down a bit, because they have the experience and can point out the potholes in the road ahead. I suspect the youth and grey hair image can be applied to the founders’ journey together. They started out with youth and appetite for risk on their side. They essentially “grew up” and matured
212 alongside the business to the point of influencing its course with wisdom and experience under their belts.
The founders recognised the importance of protecting your reputation. A lesson from Laurie is that in a banking crisis it is not about liquidity, but confidence. Equally so, confidence in leadership and sound management is vital. What I remember vividly is Laurie sharing how the founders allowed for people to criticise them and countered this with “but then a leader needs a lot of self-confidence”. The group’s founders are open to criticism, as long is it is done with mutual respect. In concluding how leadership worked from their perspective, the founders developed their own brand of leadership. The founders’ influence, commitment, their example and the stability of leadership over more than 30 years, made a vital contribution to FirstRand’s success.
Sub-theme 3: These leaders took followers with them
A strong impression is that the founders are leaders who inspire. They inspire differently, but they draw you in. They take an interest in people and the feeling that you get is that it is genuine. The narratives and my own experience leave me with the impression that the founders are exceptional in how they relate to people. They have not put themselves in an ivory tower. They have little interest to hob nob, rather being, talking and engaging with ordinary employees. These are not leaders who watch from the sidelines. They actively participated, playing volleyball at a team building, running corporate road races and drumming their hearts out at a corporate event. What stood out for me is their humour and that they do not take themselves too seriously. They did frivolous things in their time and had much fun along the way. It ties back to you are more likely to be successful if you enjoy what you are doing. The founders brought their humanity with them to work. It is a common thread that weaves its way through the story. They demonstrated that they really care. It is a state of being, not a way of behaving when the cameras are rolling.
When the business was still relatively small it was easy to rub shoulders and have access to the founders. Their thinking, influence and consistent messages spread by talking to people. Even with massive growth, and the need for formalisation through processes and forums, the founders tried to remain accessible leaders. They continuously created an atmosphere of success. Phrases like “a winning culture”, “a
213 winning company” and “champions in the making” serve as examples. Even when the organisation grew to massive proportions and it became more challenging for their messages to filter through to every staff member, the founders saw it as an immense challenge to take thousands of employees with them on an incredible journey.
In terms of communication what stands out is the founders telling stories to get their messages across. The more complexity is involved, the greater the need to simplify. They each developed an own style of telling stories and using idiomatic expressions to make their messages understood by everyone. This is important in how the culture spread. They are really interested to hear what people’s views are. They ask questions to really understand the business. They ask questions to spark ideas. It fits with a hallmark of their leadership definition in that leaders do not have to make all the decisions or always have all the answers. More importantly, these leaders can admit that they do not have all the answers.
The data is saturated with references to how the founders listen. Their individual styles played out differently, yet a common feature that drew employees in is how they listened. I recall the narrative and I paraphrase: “In this group I feel listened to”. I also recall examples of the founders listening to wise counsel. Often there was role reversal. In fitting with the founders’ view that good ideas can come from any level of the organisation, learning can come from all angles.
Sub-theme 4: How we choose our leaders
Succession
I reiterate Laurie’s view in that the organisation will continue on its success path as long as it keeps on choosing its leaders in the same way. There can be no uncertainty that the group’s leaders are handpicked, picked on merit and typically, picked young. It comes through in the business story that the founders have always been good with succession planning. The image of leadership succession as a perpetual relay comes to mind again. To put it into context, the founders’ take on succession planning essentially revolves around employing the right people. If you get the right people onboard, then succession is not really an issue. GT, Laurie and Paul can spot talent a mile away. In addition to
214 being good mentors, they spent a significant proportion of their time on grooming talent.
A memorable narrative that illustrates this mindset is GT’s question after the RMB merger: “Who is your protégé?” Paul was particularly invested in the annual graduate trainee “Class of” programme he came up with at RMB and that is still running today. Laurie’s concept of statesman-like leadership comes to mind. Even in FirstRand where the impression is of considerable depth and range in leadership talent, there were more individuals suited to be cabinet ministers, than those with the qualities required of a president or a statesman. A statesman can put the interests or the greater good of an organisation or a system ahead of his or her personal interest or agenda. The founders put a great deal of thought and effort into creating the conditions for a seamless handover to their successors, in order to tip toe away.
How do you keep exceptional leaders engaged?
Laurie’s response to this question has stayed with me. To recap, exceptional leaders remain engaged when they enjoy what they do, when they grow in their roles, when you let them get on with things and hold back on interfering and, a point not to be missed, when you pay them well. It is another example of making something that is highly complex sound simplistic. More importantly it sounds achievable. The impression from this financial services group’s track record and its business story is one of stable leadership. There are many examples of leaders who presented themselves or were attracted to this group and its companies as their workplace of choice. This is an enviable and strong position to be in.
FirstRand is a competitive environment that attracts enterprising individuals who like to be empowered in the work that they do. It is an environment where smart people can carve out their own career path, where colourful and symbolic personas such as the Queen can develop a role for herself. I recall another narrative that stood out: around the founders you always felt in control. Such was the impact of the founders’ leadership. They created a space for business, employees and leaders to succeed.
In concluding the leadership theme, the founders influenced the process of choosing leaders so that it reflects great care and specificity. The founders, with the support of
215 like-minded leaders who bought into their philosophies, built a number of exemplar businesses. The founders practiced leadership that was courageous and relevant for the context of their time, stretching across several decades. In many instances their practice of leadership was way ahead of the thinking of their time. The founders operated mostly on instinct and experience gained, especially when seeing it delivering the desired results. The founders’ example set the tone also for other leaders to adapt to an organisation that was growing increasingly in size, diversity and complexity. More importantly the founders took their followers with them on this journey in hearts, mind and action. The founders defined and lived their own brand of leadership.
Theme three: Culture
The answer to what makes FirstRand successful is no secret at all. Laurie has said it all along: What makes us successful is our winning culture. It stared me directly in the face from the outset. If the answer is a winning culture, what is the question? What undisputedly grabbed me about this story are the words and images that frequent the data whenever the organisation’s culture is spoken of. I heard words like “embedded”, “ingrained”, “articulated”, “absorbed”, “culture statement”, “steeped in culture”, “culture sponsors”, “flag bearers”, “culture philosophies”, “corporate culture”, “culture custodians”, “culture correction”, “sub-cultures”, “our mantra”, “our religion” and “an obsession with culture”. The list could go on. It confirms there is much going on with respect to this group’s winning culture.
With everything that I know about this story of three people and an organisation, I handle this theme by way of several sub-themes: firstly, how some of the underpinning features of the group’s culture unfolded, secondly, the importance of culture fit, thirdly, how were successes celebrated and finally how it worked in times of failure or mistakes.
Sub-theme 1: How culture unfolded
In this organisation culture is a living thing. It is spoken of as a mantra, a regime and a religion. That is how seriously culture is taken. All of the influences from the founders gave rise to a certain feel and way of doing business. It came from a real honest place. The culture developed in phases, just as the organisation was built one step at a time, its culture developed gradually. From the circle of founders, the culture rippled out to like-
216 minded individuals who worked alongside the founders and became attuned to their philosophies and ways of working. The founders never intended for it to be Laurie or Paul or GT’s culture. They worked hard over decades to instill the culture and transfer it to leaders and followers.
Over time what was lived and practiced was reflected upon and articulated in order to share it with escalating numbers of employees. What struck me is how the organisation, built up of different components that were added to the whole, developed such a strong unifying culture. The founders started and owned RCI. At RMB they encountered a relatively young business. As part of the reverse takeover they obtained management control and it is my interpretation that what was characteristic of RCI at the time, was carried over to RMB. This is where the culture really took root and took off. Much growth happened in this phase, many traditions and symbols developed here, to the point that RMB is seen as embodying the soul of the culture for the group. Every acquisition and merger brought its own challenges with Momentum and FNB respectively bringing very different cultural histories to the growing group.
GT made it clear that culture comes from the top leaders and it signals to people in the organisation how to behave in any given situation. What these leaders signal, centres around an entrepreneurial culture with innovation as inherently part of the culture. It is also spoken of as an owner-manager culture and an achievement orientated culture. According to Laurie innovation has to be part of the DNA or the culture of an organisation. Therefore the right signs and messages need to come from the top. The culture initially spread by talking when it was still a small company. Whilst some things developed spontaneously, the need to manage certain aspects of culture was acknowledged. With growth, for instance, more formalisation was needed.
What makes the organisation’s winning culture unique is multifaceted. Firstly, the way the organisation chooses its leaders, secondly, how it implements, thirdly, how innovation is handled and lastly the commitment of senior leadership to develop and entrench the culture. The deep commitment started with the founders. Whilst many organisations have processes like induction workshops and culture interventions, the FirstRand Philosophy session is not a typical process. It has much to do with a different result being attained.
217 Sub-theme 2: Culture fit
Culture fit is a common thread that runs through the entire story. Different descriptions of the corporate environment and that of its respective companies were evident in the data. Descriptions spoke variously of an adventurous, competitive, high achievement, entrepreneurial, innovative and owner-managed environment. GT phrased it particularly well: it essentially revolved around: Do you fit in? If one does, the culture takes you further, people flourish and business flourishes. And if there is not a good culture fit what then? According to the founders, you cannot ignore it. This was a key contribution that stood out. If you are serious about culture, it is likely to cost you money. It would be a mistake to think every appointment that this group makes, results in a good culture fit. I heard in the narratives of instances where leaders’ behaviour was not “good for this place”. What I noticed though is how things are handled in such cases. The founders handled it with logic, integrity, fairness and respect. It was thought of in this way: when there is a leader-misfit, the organisation suffers, but when a new leaders steps in, it can recover, sometimes spectacularly so.
Where there is a good culture fit, people are given wings. High performers can double their salaries or more. Ultimately, employees of this group do not want to leave the organisation. Individuals who started with the founders, of which there are multiple examples, still see it as a privilege to work in this group. People who fit in feel very much at home. Which is not to same as feeling at ease. To hear an executive say: I only work here because of the culture; they do not even have to pay me, drives home the power of culture fit.
We look for a certain kind of person
While culture fit was emphasised, what stood out is the sentiment that different types of people make it in this group. Different types of people succeed, but the one type that does not, are underperformers. I will add to that if there are a mismatch in values, especially the big three of honesty, respect and trust, a culture fit is highly improbable. As highlighted in the leadership theme, the founders know what they look for in people, they have a nose for talent and if you hire the right people, you get out of their way. Without wanting to repeat or making it sound like a person specification, the founders over the years demonstrated that in a nutshell, they look for: like-minded people, with
218 the right attitude, who are seriously competent, individuals who are action orientated and not just talkers, hardworking individuals and last but not least, for a value fit that stems from the symbolic phrase “the things your mother taught you”.
The aspect of like-minded individuals, features strongly throughout. In my view it does not mean “sameness”. It does not mean you have to mirror the founders’ or other leaders’ thinking, as long as you can think for yourself. Different viewpoints and strong opinions are encouraged. That is were good ideas come from. The premium placed on teamwork and robust debate flush this out. The founders encouraged diversity from the start. Their whole drive was to start a South African bank, where people with different backgrounds could work together. The reference to like-minded individuals relates to those who ascribe to the values and the FirstRand philosophy, guiding the organisation.
Sub-theme 3: How were successes celebrated?
FirstRand is an organisation that thrives on successes. When you thrive, you celebrate. But where does it come from? The founders paved the way. One example that comes to mind is the incident where Paul went to buy a bottle of bubbly to celebrate their first big transaction. The occasion to celebrate was not lost on Paul. It fits with the founders’ wiring: life is to be enjoyed. We enjoy what we do and we celebrate when we clinch deals, when innovations - big and small - materialise and when we improve.
In the early growth phases, the founders paid much attention to getting to know staff. In the first merger, two cultures were getting married. In speaking about that era, the narratives reflect that staff were made to feel special, even spoilt. The events, the celebrations, the traditions that took off always reflected great care, high quality and evoked feelings of being incredibly lucky to be working at this company. The Queen’s initiatives at RMB had much to do with the atmosphere, from small gestures and courtesies, to pull-out-all-the-stops initiatives such as when RMB won the Deloitte Best Company to Work For competition.
When Momentum’s self-image started changing, it was cause for celebration. It does not always have to be an event. A sense of occasion and celebration is a mindset. From the FNB phase I recall the sentiment, if we do well or improve, we celebrate. What also come to mind are the generous money prizes for the FNB Innovators campaign. You
219 reward what you want to see more of. My impression is that the founders understood that people have a need to feel appreciated. This is key. If you are at the top of your game, celebrating success and appreciating people’s efforts, should not loose its impetus.
Sub-theme 4: How did it work in times of failure or mistakes?
The angle I have taken focuses on how a business success story came about. However, the group is not immune to or exempt from making mistakes and getting things wrong. Around 2008 a relatively new experience was entering the group’s consciousness. During this time participants spoke of difficult operating conditions and symbolically, stepping into potholes that were costly and painful. Senior leaders were reflecting on how well the organisation would cope with failures? A core principle in the FirstRand’s philosophy was this: if a business is not performing, do the surgery and take the tough decisions.
My impression from the data is that the founders do not dwell on mistakes, finger pointing and blame. That is not what their energy is spent on. It does not mean there are not consequences, but “paying school fees” is an investment in learning. The focus is on what decisions do we need to take to recover, did we ask enough questions, what did we learn from this and what good can come out of this. I also formed the impression that people own their mistakes. It goes with the owner-manager philosophy and empowerment. If you are accountable, be accountable. I heard from a CEO, of a business area that experienced considerable losses, that he took pride in staff members not leaving their positions but seeing things through, even when there was no longer a financial gain.
Senior leaders emphasised that if you want to encourage innovation, you have to be prepared to tolerate mistakes. With Laurie, you can make an honest mistake, but do not give him a surprise. It is a matter of, what have you learnt from it, and let us move on. Another impression I formed is of perseverance. Success takes time. It also takes perseverance. The same with failures, it takes time to recover. When the founders initially tried to obtain a banking license, they failed. It did not stop them from trying again. The other saying that resonated with me is, you do not learn when things are going well. There is potentially a learning opportunity even in the most testing of
220 times, if you can see beyond the immediate troubles. Related to this is the saying that developed in the group around the time of the global economic crisis: “Don’t waste a good crisis.” Once again the learning opportunity is emphasised and it becomes absorbed in the organisation’s language.
An aspect with a different angle, but that seems related, revolves around how senior leaders stand up for their principles and in support of their people. In doing business over decades in a high profile organisation, not everyone is going to agree with you, controversies arise, and the positions that leaders take, are not always popular. What strikes me is that in the founders’ behaviour, in the behaviour of Sizwe Nxasana and that of other senior executives, I recognised leaders who stand up for their people. These are senior leaders who absorb the pressure and flack that comes their way, if it means it goes against their principles, against how mandates are defined or against that of the ethos and spirit of the FirstRand philosophy.
In concluding this theme, culture is a universal thread that binds this group, its business units and component parts together. I formed the impression that corporate culture is more pervasive and felt more strongly in FirstRand than in many organisations. The founders enabled a strong culture to develop over time. Whilst some of the cultural elements came about intuitively, others were more consciously engineered. One of the greatest contributions of the founders in the FirstRand story revolve around planting the seeds of culture and the articulation of this culture to the point where it can be explained and shared with different organisational audiences. Culture is intertwined with learning. Many organisational members have been apprentices of the founders over the years and in the process the culture has carried over to generations of current and future leaders. It has set in motion what is spoken of internally, as an obsession with corporate culture.
Theme four: Creating conditions for FirstRand to emerge
This theme brings the other three themes, namely the founders’ influence, leadership and culture, together and concludes my interpretation. It is a theme not preoccupied with obvious success factors and possible recipes, but speaks of bigger dynamics and truths at work. In the end, what are we dealing with in this business story? The final theme deals with the founders creating the conditions for a financial services group to emerge that is acknowledged as a business success. It is a theme, compact in words, yet
221 it packs a mean punch in uncovering what happened to make FirstRand into the organisation that it is today, and what allowed it to happen.
Something developed in this business story that could not be foreseen. The founders could not have planned for everything that happened here. From the data it is clear, way back at the beginning of the story, that the founders had no idea what things might look like even one year into the future. While it is true that no one knows for sure what the future holds and what journey might unfold, something else was at work here. It is embodied in what happened in-between the plans made, the business strategies embarked on, the like-minded people employed and the distinct atmosphere that developed. A context was created for a unique story to emerge. Something developed for which the right conditions and the right circumstances were created, for which the right kind of support was in place. What developed into FirstRand as it stands today is testament to the founders creating the conditions for people in the organisation to act in an entrepreneurial manner, to innovate, to disrupt and to make things happen. For more than 30 years the founders knew the direction they wanted to take the business in, even if the details and options on the way to get there, revealed themselves as time progressed. Many elements blended together to see a business success story emerge that cannot be repeated. This something that was allowed to happen is not to be confused with the benefit of hindsight.
Sub-theme 1: “It happened”
The notion of “it happened”, which came through repeatedly in the words of GT, Paul and Laurie, supports my insight that in this story the conditions were created for the organisation to emerge. This does not in my mind imply that FirstRand came about randomly, mysteriously or through strokes of repeated good luck. This group came about through a series of conscious decisions. The founders are people of action. They came with diverse talents and temperaments, a clear intent, their wiring was grounded in the values that your mother taught you and they brought a specific approach to business.
What there is also evidence of in this story are things that were allowed to come about spontaneously. A natural role division came about amongst the founders, relying on your intuition was allowed, people were allowed to develop portfolios for themselves, to use their initiative, given freedom and trusted that they would do the sensible thing.
222 There are narratives that speak of individuals’ roles developing in ways that they could not have anticipated. It felt almost like a new lease on life and it could not be traced back to a specific decision or action, the circumstances just seemed conducive.
There is evidence of both in this story: conscious decisions and aspects left to develop spontaneously. The question beckons, what was managed consciously? The data is full of references to elements that were planned, managed, championed and orchestrated in a certain way, and not left to chance. In contrast, other aspects were allowed to just happen, naturally. The founders created the conditions for the organisation to develop in the way that it has by creating a certain space, right from the very beginning. Besides the mechanics of building high-performing businesses, a certain space and atmosphere was created for talented, committed and engaged employees to feel at home, to do their best work and blossom.
Sub-theme 2: Complexity and ambiguity did not derail
What stands out is how the founders worked with ambiguity, complexity, uncertainty and paradoxes in the business. They seemed comfortable dealing with all the unknowns, handling matters as they occur, considering opportunities as it presented itself. Change and ambiguity is something that is for example welcomed in the RMB environment and not positioned as something to be viewed with trepidation.
The data speaks of handling things as they come up. Things kept moving at a most dynamic pace. The organisation did not just go through predictable growth cycles. It went from tiny beginnings to a mammoth corporation. These are not circumstances conducive to comfort zones developing. The nature and face of the group kept on changing. The founders’ decades of individual and collective experience, three pairs of founder eyes looking at a situation that was new or reminded of something they had seen before, brought calm, logic and the knowledge that the group’s top leaders represented safe hands.
Sub-theme 3: The FirstRand story cannot to be repeated
I have been looking from the outside in and it is clear that this is no ordinary organisation. There can be no other organisation like FirstRand, in its history, its DNA,
223 its idiosyncrasies, and its cumulative successes and also, some of its failings. Can one rebuild a similar organisation as FirstRand? The founders did not seem to think so. In substantiating this viewpoint, it is appropriate to revisit the founders’ narratives on this issue. GT as diplomatically as ever, replied with, probably not. Laurie’s rational response was that competitors do not have the time to copy us. They will try and they will catch up, but it will take time for the benefits to come through. For Paul it came down to being a bit natural. No matter how hard other people successful at their style of doing tries, they are never going to live their philosophy, the FirstRand philosophy.
There are many aspects in business that can be copied from other successful businesses. Products are copied in no time. Imitations are everywhere - in products, services and practices. Most aspects can be reproduced. Elements of a business’ strategy or business model can be emulated. Where it becomes trickier is to try and emulate values and elements of organisational culture.
FirstRand’s history and DNA is a product of people that came together at a certain point in time in a certain environment. Some things cannot be repeated or reconstructed. It is a once-off occurrence. What made this group happen in the way that it did is a convergence of people and time and place. Even if there was a recipe to follow to try and recreate the magic, the result can never be the same. The success lies in the combination of people, context and circumstances. It lives in FirstRand’s people. It lives in the system. In my view this is emergence at work.
Conclusion
I came to a number of insights in working with this business story. If you allow things to happen, to develop naturally and trust the process, you can create something. If the right conditions are in place you can create something that is not person-dependent. In FirstRand’s case the founders built a business empire that no longer needs them. The organisation that they strongly shaped has continued its high-performance path. It is an organisation that can recover from setbacks. Overall it has succeeded in raising the performance bar even higher. The founders through their role and influence as leaders, and the culture that took root, created the conditions for this organisation to emerge. Once such conditions and circumstances are in place, it takes a business further.
224 CHAPTER 12: SENSEMAKING
Introduction
In this chapter I work with what came to light in the data of the FirstRand story. I address the meaning of the main interpretation themes. Sensemaking is a term created by an influential thinker, Karl Weick, as an all-encompassing description of the human response to complexity and ambiguity. In the simplest terms sensemaking, according to Weick, is a process where interdependent people search for meaning, settle for plausibility, and move on. “In the context of everyday life, when people confront something unintelligible and ask ‘what’s the story here?’ their question has the force of bringing an event into existence...” (Van der Rede, 2007, p. 1).
In order to get to a plausible answer as to “what’s the story here?”, I offer my perspective on what comes to the fore in this case study. I give substance only to my strongest impressions. In my interpretation I came to four main focus areas and argued that the founders’ influence, leadership and culture worked together for this organisation’s story to emerge in all its uniqueness. These themes do not stand separately. I see connections, notice links and interdependencies. Culture and leadership are intertwined, so is culture and emergence. In sensemaking I work towards an integrated perspective based on my impressions of how these themes worked together.
A perspective on the secrets to FirstRand’s success
In working with the data, writing the story, thinking about how it ties together, I developed an informed perspective on the FirstRand story and the role of its founders. While I do not know all there is to know about this story, and my interpretation is personal and does not touch on every strand in the data worthy of exploration, I gained an in-depth perspective on a unique South African business success story.
For success to emerge in the way that it has in this organisation, it takes more than a handful of ingredients thrown into a pot and left to infuse over time, more than a couple of powerful variables working together, more than a sequence of enabling conditions brought forth. It takes more, or at least equal measures of the lot and yet, it might just
225 take far less. I have argued that this group of companies is an example of a business that works. It is a group that excites and intrigues, specifically, the secrets to its success.
Whenever asked about the secrets to their success, the founders’ replies are modest, the same clear message reiterated time and again. It encompasses culture. It includes how they view the role of a leader. It has a central focus on people: respecting people, asking people their thoughts, getting the right people onboard, allowing people to have a meaningful influence and putting them in charge of their destiny. It involves creating an environment that you personally want to work in, and then preparing such an environment for everyone. It has to do with respect, trust, honesty and being a decent human being. Essentially it is about being mindful of the things your mother taught you. Such values are often, incorrectly so, assumed to be commonly shared. Such values are often easily forgotten and checked in at the door at many places of work. It is then that value statements become framed reminders of good manners placed on walls. Yet, these visible reminders do not mean anything unless what you see is lived, as much in the hundreds of tiny actions and reactions daily, as in the big decisions of your senior leaders, for decades on end.
From my perspective this does not sound like a bag of tricks. It has little to do with luck. What happened in this business story does not involve magic, although granted, to perform these behaviours well and consistently, sounds as if it requires magical powers of leaders and managers. What it does take is for all these elements, all these ingredients to be present, to work in synergy, to be in balance, while the business gets on with the job.
Wherein lies the answer to: “What’s the story here?” In an attempt to answer this question, there are many theoretical perspectives that could shed light on this case study. What has surfaced in this story has been observed, conceptualised and written about by a host of leading thinkers in the organisational, leadership and applied psychology fields, amongst others. However, the answer to “what’s the story here?” does not come from a book. It does not lie in theories. The answer does not lie in obvious success recipes either. It came through in unison as a common theme, that in this organisation, our philosophies do not come from books. It does not come from textbooks or business schools. There is a symbolic book in one company, that suggests
226 it contains substantial rules, and on closer inspection it turns out to be empty, except for inspiring lines capturing deeper truths. A leader speaks out on not learning leadership from a book. Instead, he drew inspiration from the people that surrounded him. It does not come from books. In the FirstRand story, the answer lies in the story. The founders did something remarkable together. They did their own thing. The answer to: “What’s the story here?” centres on deeper truths. To a great extent it relates to life lessons and to natural processes being at work.
In uncovering some of these deeper truths embedded in the story, I approach sensemaking by exploring a handful of fundamental questions. Firstly, what role did culture play in this story? Secondly, what role did leadership play? Thirdly, I touch on a web of synergistic relationships that developed. Fourthly, I explore how the abstract notion of emergence behaved in this story. Lastly, I conclude with integration across themes that highlight shared features.
What role did culture play in this story?
To answer the question: culture played an indisputable role in this story. To borrow a word often heard in the narratives, culture played an “enormous” role. As is evident from the interpretation chapter, culture is a sizeable theme that weaves its way throughout the entire business story.
A developmental view
There are many different interpretive lenses that can be applied in looking at culture. The view and thinking of Schein (2010) on organisational culture fits my impressions of what surfaced in this story in how culture takes root, how it functions, how it stabilises, how it is self-protecting and how it evolves. Why do I favour Schein’s thinking in what I noticed coming through in the data? My sense is that I can almost take Schein’s entire approach and overlay it as a framework over this case because it takes a developmental and organisational view of culture. His thinking is rooted in anthropology, is informed by clinical psychology and lived and tested in extensive consulting practice. Furthermore, Schein (2010) maintains that culture cannot be separated from leadership as it is fundamentally intertwined, a view that resonates strongly with me. In taking a
227 developmental view of organisational growth, he notes that in organisational culture, there are natural processes that are distinguishable from managed processes at work.
In contemplating the role that culture played in this story, the following observation caught my attention. Schein (2010) observes:
…One of the most mysterious aspects of organizational culture is how two companies with similar external environments, working in similar technologies on similar tasks and with founders with similar origins, come to have entirely different ways of operating over the years (p. 219).
This observation points to one of many intriguing aspects about culture. It fits particularly well with this case study, in that FirstRand’s story and culture developed differently than that of another investment bank, Investec that also originated in the 1970s in Johannesburg. Investec CEO, Stephen Koseff, said of the long relationship between these two successful businesses: “We basically grew up together. We have always had a good, competitive relationship…” (Corporate publication, 2008, p. 8). It speaks to Schein’s notion of two companies originating around the same time, faced with similar environments, yet developing different ways of operating over the years.
Defining and observing elements of culture
Whilst Schein’s seminal work and definition of culture was first published in 1978, he has continuously interrogated and updated his thinking through theory and consulting practice, to the effect that it remains as relevant to organisational life today as it was when first conceptualised. Schein (2010) defines culture theoretically in this way:
The culture of a group can now be defined as a pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (p.18).
What Schein carefully laid out in his definition of culture, is often simplistically explained as “the way we do business around here”. On the one hand culture is so
228 obvious to detect. You feel the differences the moment you walk through the door. But what are these differences that are immediately noticeable? This is the aspect of culture that still mystifies because certain elements of culture are imperceptible. You can feel its existence but cannot put a finger on it even if you tap into all your senses. Some aspects are obvious, visible and in your face. This variability is what Schein (2010) deciphers and describes in fine detail according to three layers of how culture behaves. The FirstRand story is saturated with examples of cultural elements at all three layers or levels. The term “level” means the degree to which the cultural phenomenon is visible to the observer.
At the surface, the first level, are the artifacts. It refers to what you can clearly see, hear and feel when you encounter a new group with an unfamiliar culture. It includes very tangible overt demonstrations, and I include examples from the story in brackets, such as: visible products, the architecture (Momentum’s new building), its language (phrases and terms used in the group), its technology, its style (informal, customer focused), as embodied in clothing (dress code, no reserved parking), manners of address (Call me Laurie), its myths and stories told about the organisation (“our story”, sporting analogies, Laurie-isms), its published lists of values (RMB’s Book of Rules) and its observable rituals and ceremonies (the FirstRand Philosophy session).
Among these artifacts is what is commonly referred to as “the way we do business around here” or the “climate” of the group. Schein (2010) argues that climate is better thought of as the product of some of the underlying assumptions, and is therefore a manifestation of culture. Most notably, at this level, culture is both easy to observe and very difficult to decipher. One can easily get it wrong. Examples that come to mind from the story that looks obvious but can be misinterpreted are: informality does not mean lack of respect or that we do not want to do exceedingly well, the owner-manager principle does not mean everyone can make a decision for the group and lastly, in FNB we have more CEOs than the JSE. To an outsider these examples could appear like anarchy if not understood in context.
At the next and second level are the espoused beliefs and values. Here ideals, values, goals, aspirations and ideologies play a central role. All group learning ultimately reflects someone’s original beliefs and values, a sense of what ought to be, as distinct from what is. If a leader convinces the group to act on her beliefs, the solution works,
229 and the group has a shared perception of that success, then the perceived value becomes transformed into a shared value or belief and ultimately into a shared assumption (if actions based on it continue to be successful). The espoused beliefs, moral or ethical rules remain conscious and are explicitly articulated. It functions to guide members of the group in how to deal with certain key situations, and in training new members how to behave. It often becomes embodied in an ideology or organisational philosophy. The group’s Philosophy sessions serve as an example here, as does GT’s narrative that culture guides the organisation’s people on how to behave in different situations.
At the third and deepest level lie the basic deep-seated assumptions that define the essence of culture. This level relates to deeply embedded and unconscious beliefs and values that determine behaviour, perception, thought and feeling. Basic assumptions are so taken for granted that someone who does not hold them is viewed as a “foreigner” and is automatically dismissed. It is in this psychological process that culture has its ultimate power. Examples from the story operating at this level include: influences from the founders’ early life experiences such as learning from your mother about honesty, observing how culture works at university men’s residences, and knowing whether your army buddy is trustworthy.
How does culture begin?
Cultural beginnings according to Schein (2010), spring from three sources: firstly, the beliefs, values, and assumptions of founders of the organisation; secondly, the learning experiences of group members as their organisation evolves; and thirdly, new beliefs, values, and assumptions brought in by new members and leaders. There is strong evidence of culture sprouting from all three sources in this story.
As a first and vital source, culture stems from the founders of a business. The early leaders are entrepreneurs and the architects of culture (Schein, 2010). Founders of a business tend to have strong ideas and readily impose these viewpoints on followers. In the early life of a business, survival is the ultimate struggle. The demise or survival of a business seem to pivot on two demands, that of external adaptation and that of internal integration. If the founders of a young business can successfully navigate these two demands and reduce the typically high levels of anxiety of early members, an important hurdle is cleared. If the leaders’ ideas or proposals to overcome these early demands of
230 external adaptation and internal integration turn out to be unsuccessful, such leaders are often ousted and new leaders come to the fore. What brings success in the early life of a business starts laying the tracks for culture formation. Herein lies an important aspect of how culture takes root. It involves learning. The actions and behaviours that lead to success get repeated, reinforced, reiterated, until such time as the same results are no longer achieved and a serious re-think and adaptation is called for.
How things came about in the beginning of the founding partnership was allowed to develop naturally. It was not culture yet, but it made for the beginnings of culture to take shape. The cultural roots of the group stems from GT, Laurie and Paul’s partnership and original start-up. What the tripartite brought in terms of their wiring, their different temperaments and capabilities, and how their roles in the partnership developed organically, carried over into the culture that developed in RCI. Where human life and organisational life mirrors each other is that you do not choose your parents. To have organisational parents like GT, Laurie and Paul, gives a business the best possible start in life.
It sounds a bit like the nature-nurture debate. What then if you are not lucky enough to have parents with such DNA in a business’ early life? I suppose that is when the nurture aspect kicks in. In such businesses there is much hard work needed to cultivate the desired cultural elements, often with mixed success rates. Research and practice tells us, culture change is hard (De Vries, 2011; Schein, 2010; Weick, 2007). Schein (2010) goes as far as saying that culture change is unwise, unless the starting point is that of a real business issue.
How culture functions
From the story there are references to culture that unifies, guides people how to behave in different circumstances, is self-selecting and self-protecting and almost functions like immunity in the body. In this group corporate culture functions as a powerful force. What strikes me is that this group’s winning culture is not taken for granted. It is not left to fend for itself. Corporate culture is talked about, articulated, written down, shared in various ways and looked after as carefully as FirstRand’s assets. It makes sense to wisely preserve what is considered one of the reasons for the group’s success.
231 The notion that culture is a shared experience of success and failure is one that fits well with this business story. The following view from Dunphy and Fishman (2006) explains it as follows:
Culture is a collaborative attempt to make meaning from the business of doing business, and is most strongly influenced by collective experiences of success and failure that take place as people at all levels grapple with the exigencies (demands) of life at work (p. 38).
In culture there is a paradox that surfaces and it is well illustrated in the distinct and strong cultures of each of the respective companies in the group. FirstRand corporate culture functions as a strong binding and ideological force. As came to the fore in the business story, in this group, many paradoxes live alongside each other. A paradox to navigate is how strong culture that stabilises - is binding, unifies and acts as important glue that holds an organisation together - can also inhibit its ability to adapt. While culture signals to the group’s members how they are to behave and respond in a given situation, when the environment changes and the reins need to be pulled tighter, culture introduces rigidity and it is not unusual for members to kick in their heels.
Culture evolves
While the cultural beginnings started in the small RCI, the founders were not consciously trying to create culture. Yet, what they paid attention to, what they turned a blind eye to, what they rewarded, what they celebrated, how they thought of mistakes as “school fees paid”, the certainty that they look for a certain kind of person, the like- minded leaders they surrounded themselves with, these are the behaviours and dynamics that shaped the culture. What the founders were clear on is what they did not want: a homogenous culture, a command and control type leadership, an environment full of hierarchy and bureaucracy and where you look over people’s shoulders.
The culture was powerfully transmitted through the three entrepreneurs’ example. The founders are exceptional mentors and role models and they understood the importance of this. The culture further spread through learning. Soon the founders realised they could not do it all on their own. This is a trap many entrepreneurs fall into. When to get help in and what kind of help? Over the years leaders were selected through careful
232 processes that paid attention not just to technical ability, but also importantly, culture fit. The story revealed that autocratic leaders do not make it. Those with big egos do not make it. Leaders with limited self-insight do not make it. In the story there is talk of the culture spreading by osmosis, you sort of get sucked in. Also, the culture spread through other leaders’ messages and behaviour, leaders who are trusted, steeped in the culture and learnt from the founders in what behaviour was reinforced and rewarded and what was discouraged.
When the business was still small, the culture spread through talking. If you had a good idea, for example, you could phone Laurie. Later on with growth, managed processes and more specific formal vehicles were required to facilitate the spread of the culture and to capture innovation. The founders did not necessarily like this type of formalisation, but it is what the growth phase called for. The formation of FirstRand was a major transition. The business had grown to such proportions that creating a framework and an articulation of culture was needed for the group. Forums were used to spread the culture through learning such as the Philosophy sessions. When the group’s philosophy was written, it involved a process of figuring out what is the “it” that leaders and the group’s companies have been doing all along that seemed to be working. It was achieved through the founders and leaders’ introspection, participation and debate on, “What has worked all along?”
This captures a crucial truth about culture: it is the residue of past successes. It was not a process of telling or forcing culture down people’s throats. People were invited to participate and invited to be involved. The founders were persuading and, in turn, open to being persuaded. Once the senior leaders had figured out what about this culture was working to make the business successful, it earned a name: a winning culture. From a winning culture it progressed to being spoken of as an obsession with corporate culture.
The story tells us that there is corporate culture that cuts across the group, basic principles and philosophies shared by all. There are also strong sub-cultures, the cultures of the respective independent brands. The narratives suggest that the culture of the respective brands is stronger than that of the group’s corporate culture, yet the critical philosophies, assumptions and values are evident in all of its companies.
233 What resonates strongly with me is Schein’s thinking that leadership, the leadership paradigm and quality of leadership, determine what is possible for the culture that develops over time. In turn, the culture that exists determines what leadership is possible (Schein, 2010). We see the interrelated nature of these two themes prominently in the business story.
Cultural marriages are hard
Successful cultural marriages are rare. This financial services giant was built through a series of successful mergers and acquisitions. The merger between RCI and RMB was a first test. The histories of merging companies are different, the parents are different, hence the differences in culture. A due diligence process hardly picks up all the areas of compatibility or probability of a successful merger. It is a gamble. There is much evidence on how the founders made the RCI-RMB marriage work: through taking an interest in people, talking to staff, through traditions that developed like Friday night pub evenings, the booklet that the Queen put together so people could get to know each other and the social events to celebrate and make staff feel valued. It may sound frivolous, even lavish, but it does resemble a courtship of sorts. It seemed to have come from an authentic place, it was not an act and it was not about ticking the boxes. The three partners were actively participating in what they were creating in RMB. Here were leaders who were growing in reputation, who were increasingly more successful, but who wanted to be with “ordinary people”. It created an atmosphere in which people wanted to work. It created an atmosphere of success. Similar cycles repeated itself in the Momentum and FNB mergers, albeit the scale, diversification and complexity increased drastically.
Culture runs far deeper than the way we do things around here. At its core it lays in deep assumptions which function unconsciously. That is why it is so hard to change culture. It is for this reason that it has been noted that to change culture; new neurological pathways need to develop (Dunphy & Fishman, 2006). It is not just that you need to get your head around the change - you need to get the change in your head. Weick (2007) also echoes that culture change is hard, slow and subject to frequent relapse, therefore only attempt culture change if there is a specific business problem to be solved.
234 The idea of starting with the end in mind or zooming-in on a business issue to attain culture change is well illustrated in the business story. One example that comes to mind is the culture revolution at Momentum. The focus was on improving client service, on improving efficiency, on getting the business right. In the process, the self-esteem of the business started changing. In FNB there was talk of a culture correction, becoming more performance-orientated, bringing in an infusion in talent. The latter aligns with the proposition that culture can sprout from new thinking embodied in people entering the organisation from the outside. Weick (2007) expresses the view that Schein is correct in his advice that a company should never start with the idea of changing culture as a standalone goal, as is evident in the following:
Always start with the issue the organization faces; only when those business issues are clear should you ask yourself whether the culture aids or hinders resolving the issues. Always think initially of the culture as your source of strength. It is the residue of your past successes. Even if some elements of the culture look dysfunctional, remember that they are probably only a few among a large set of others that continue to be strengths. If changes need to be made in how the organization is run, try to build on existing cultural strengths rather than attempting to change those elements that may be weaknesses (p. 120).
In conclusion, the founders, individually and collectively, were a strong ideological force over more than three decades. Schein’s theoretical perspective and those of other leading scholars, confirm that culture stems from the founders of a business. They influence at an obvious and observable level, but more importantly and more enduringly, through their deep, taken-for-granted assumptions. Culture is to a group what personality or character is to an individual (Schein, 2010). Culture comes from shared or collective experiences from that which has been found to work. As a construct culture is complex, like an onion there are many layers to be peeled back, that functions to protect the core. Over time other organisational leaders became culture carriers and custodians. While FirstRand’s culture continues to evolve it is embedded so deeply that it has survived and strengthened through cycles of growth, expansion, re- direction, periods of upheaval, transition and leadership succession. I am left with the distinct impression that the founders and this organisation’s leadership understand culture, its nature, its dualities and how culture guides and enables business success.
235 What role did leadership play?
To answer this question: leadership is what made this story. The founders’ leadership is one of the most significant factors in this story. “We did not do it alone.” This is the refrain reiterated throughout. From the story it is evident how the founders extend credit to the many “brilliant” people and scores of like-minded leaders they have worked with over the years in building this business.
In this case study the focus is on the group’s founders. However, what became vividly clear to me in collating the narratives, is that through this research I encountered not just the practical wisdom and insights from three of the country’s most accomplished leaders, the founders, but also the philosophies and life lessons of many other exceptional leaders. Each individual business leader, from the select group of the top tier of leaders I interviewed, cannot be overlooked. Executives like Sizwe Nxasana, Johan Burger, Viv Bartlett, Hillie Meyer, Michael Jordaan, Michael Phaff and Francois Hugo, together with each of the other participants that offered perspectives from an area of expertise or drawing on the memory bank from a particular phase, cannot be overlooked. I could see and hear the effect of the founders’ influence in these participants’ stories and examples, but each individual’s own unique views, strengths, philosophies and contributions stood independently and were exceptional on own merit. The knowledge that there are more tiers of leaders and followers in each of the group’s companies that mirrors this type of quality is something that is a unique testament to leadership in this organisation.
In thinking about how leadership presented itself in this story, it is leadership as it manifested in the day-to-day leadership practices of three exceptional individuals. The founders’ thinking and philosophies were shaped by learning, experience, gut feel, the way they were trained, knowing their business well, reading the context of the time well, choosing involvement and then committing. FirstRand is an organisation that originated, burst onto the scene and continuously reinvents itself. It is a story about continuous business renewal. It is about change and transformation embedded in the fabric of how the group conducts business and not as a result of interventions that are separate, named and engineered to achieve this result. It goes to show that remaining robust and tuned in to what is required now and in the future, can also be achieved by sticking to guiding principles, rooted in values and trusting your instincts.
236 In exploring the role that leadership played in this story, I developed a hunch from the narratives, that some of the forces that worked in unison to bring about success on such a grand scale, are as much out of our sight, and yet as undeniable and powerful as those that operate in nature. Looking toward nature for metaphors on leadership is not a new idea and yet new metaphors surface on an ongoing basis.
There are natural processes at work
From the FirstRand story I formed the impression that there is an understanding that in the organisation as a living system, there are natural processes at work. A phrase like “benign neglect” is not a typical phrase. It was used in the context of the unstructured and unsupervised nature with which the successful graduate development programme in RMB was handled. Similarly, a phrase like “leadership by letting go” is not a typical response. Francois Hugo used this phrase to illustrate how such a stance, unleashes creativity and exceptional performance. There are countless phrases like this in the business story. The founders’ speech and metaphors are riddled with metaphors and ideas from nature. They were not alone in this way of thinking. There were numerous other outstanding leaders who were let loose over the years who understood complexity, understood paradoxes and how organisations function as systems.
The founders allowed some aspects to develop naturally and spontaneously. Instinct and intuition and benign neglect can take you a good distance. What balances it out is an understanding of what cannot be left to take its own course. There seems to be a deep understanding of what needs to be managed and over time, what needs to be formalised if the system changes. I start with a perspective that does not veer towards typical leadership thinking and explore this avenue because it is intriguing. It could contribute towards a plausible answer on: “What’s the story here?”
Learning from the quantum world
Wheatley’s (2006) thinking introduces a bigger perspective on leadership. She searches for more embracing truths on leadership by turning to the natural world - the world of “new science” - to enhance understanding of organisations as living systems and the implications for leadership. Wheatley (2006) turns to nature, to space and to quantum physics. She turns to the natural world and reaches for explanations and examples from
237 physics, ecologists, biologists, scientists and chemistry. It is a theoretical perspective that is informed by complicated theory explained with elegant simplicity. One of Wheatley’s propositions, which from my perspective have clear applicability to the FirstRand story, relates to field theory. The idea that in organisations some behaviours do not need to be taught, we draw it from the field, is a thought provoking interpretation.
Wheatley (2006) introduces the idea that space is not empty, unseen influences affect behaviour. She opens with: “Space is the basic ingredient of the universe; there is more of it than anything else” (p. 49). Even at the microscopic level of atoms, subatomic particles are separated by vast distances, so much so that an atom is 99.9 percent empty. In Newton’s world of cause and effect, it required great expenditure of personal energy to get someone else moving, to get something done. However, Wheatley (2006) notes that in the quantum world something strange has happened. Space everywhere is now thought to be filled with fields. These invisible, non-material influences are the basic substance of the universe. We cannot see these fields, but we observe their effects. In biology, Sheldrake, has postulated the existence of morphic fields.
Morphic fields are built up through the skills that accumulate as members of the same species learn something new (Sheldrake, cited in Wheatley, 2006). After an unspecified number of a species have learned a behaviour, such as bicycle riding, others of that same species will be able to learn that skill more easily. The behaviour collects in the morphic field. “When an individual’s energy combines with it, the field patterns the behavior of that individual. They don’t have to actually learn the skill; they pull it from the field” (Wheatley, 2006, p. 53).
This idea, that organisational members pull a skill from the field, without having to actually learn it, is powerful. It can explain the lingering effect of a leader’s influence, even if they are not around. My impression from the business story is that the organisation feels the founders’ presence and influence in the system, even if they are not present. You could not always see these leaders, but their presence was felt in the system.
Field theory offers a possible plausible perspective on learning in this organisation. If accumulated members of the organisation have learned a new behaviour, it collects in
238 the field. Other individual members do not have to actually learn the skill; they pull it from the field. The founders’ learning accumulated over more than three decades. They gained experience through repeated practice and have learned how to innovate, how to disrupt, how to add diversified businesses and how to work productively with integrating and merging diverse businesses. They gained learning on how to articulate a winning culture, how to instill an owner-manager and entrepreneurial mindset, how to choose like-minded people and how to work well with succession planning and leadership transitions. Many leaders and followers in the organisation have observed their example. What the idea of field theory introduces, is that others might not have had to actually learn these skills through years of practice and trial and error. Potentially they pull the skill from what has accumulated in the field.
Field theory is as abstract as it is intriguing. And yet, for years leaders have been encouraged to consider the impact of non-material forces in organisations such as culture, values, vision and ethics. According to Wheatley (2006) each of these concepts describes a quality of organisational life that can be observed in behaviour yet does not exist anywhere independent of those behaviours. Field theory also explains the “feel” you get of a business. It is similar to what Schein observed about culture and the “feel” you get the moment when you walk through the door. For instance, visitors to Momentum picked up on the buzz, the atmosphere. Something was going on, they could feel it, even if they could not describe why they felt it. Wheatley (2006) seems to think field theory provides a plausible explanation. You cannot see a field, such as the founders’ deep assumptions, but you could see its influence by looking at their behaviour. For one, the FirstRand story illustrates that values and a strong philosophy are powerful leadership tools.
Participation and organisational intelligence
A command and control type of style did not fit with how the founders are naturally. It did not fit with the kind of environment they themselves wanted to work in. Possibly they knew that a command and control style might not get them very far. The founders’ chosen response was to encourage participation. Wheatley (2006) builds a case from a quantum interpretation as to why participation is such an effective organisational strategy. In a traditional model, interpretation of data is the domain of senior people or experts. She argues that if left only to a few people charged with interpreting data, they
239 are likely to observe only a very few of the potentialities contained within the data. In contrast, if such data is free to move, it will meet up with many diverse observers. We can expect these interpretations to be different, because people are. Instead of losing so many of the potentials contained in the data, multiple observers add richness. From the business story it is clear that diversity is embraced because multiple views can lead to innovations. The value of a team is strongly emphasised with the potential for a team to improve and add to a conceptualised idea or decision through robust debate. It leads to higher quality of decisions and more cohesive teams. Wheatley (2006) argues that organisations rich with many interpretations, where participation is effectively lived as a strategy become more intelligent.
Ownership describes emotional investment of employees
Wheatley (2006) gained a deeper understanding on the importance of ownership by exploring the participative nature of the universe. She explains that ownership does not only imply the actual owners, but more importantly the emotional investment of employees in their work. Ownership describes personal connections to the organisation, the powerful belonging that inspires people to contribute. The group’s founders understood this well. The owner-manager model is built around this fundamental belief. You refer to the leaders walking in front or championing an idea as owners, even if they are not technically owners. In doing so, a different outcome is achieved.
Wheatley (2006) notes: “A tried and true maxim of my field of organizational behaviour is that…people support what they create… we know that the best way to create ownership is to have those responsible for implementation develop the plan for themselves” (p. 68). The organisational insights on aspects such as participation and ownership that Wheatley has gained from quantum physics, underscores a central truth. “We live in a universe where relationships are primary…nothing happens in the quantum world without something encountering something else…this is a world of process, the process of connecting, where ‘things’ come into temporary existence because of relationships” (p. 69).
To scores of managers autonomy is just one step away from anarchy. Wheatley (2006) notes that it is almost a case of, I fully believe in autonomous work as long as it stops one level below me. She elaborates:
240 Yet everywhere in nature, the freedom to self-determine is essential. What’s peculiar about this freedom is that it results not in anarchy, but in global systems that support all members of the system. Individuals and local groups are free to do what makes sense to them. These local units respond, adapt, change… (p. 167)
The important point to note is that people need to be free to do what has to get done. Wheatley (2006) observes that what emerges is a globally stable system, rather than a rigid organisation piece by stable piece. The motion of these systems is kept in harmony by life’s great cohering process, that of self-referencing (Wheatley, 2006). This perspective confirms to me what is evident in the business story: the owner- manager philosophy allowed for the freedom to self-regulate within a broad framework, and in accordance with a guiding culture statement.
Acknowledge basic human needs
Working with relationships, together with participation and being besieged with information, are some of the most pertinent leadership challenges according to Wheatley (2006). Relationships are a growing theme in today’s leadership thinking. She argues that for many years the prevailing tenet of management stated: “Management is getting work done through others.” The “others” or employees, were often seen as distractions that needed to be managed. There is a growing realisation that organisations are failing to create the outcomes and changes needed because the “human element” is denied. Many well-intended organisational improvement processes fail because it is approached too mechanistically or turn into fads. What seems to lie at the root of an alarmingly high failure rate has to do with denying what it means to be human.
What Wheatley (2006) argues is that in many workplaces the “messiness” and complexity of being human is denied. Organisations are often filled with people terrified of the emotions aroused by conflict, loss and love. There are struggles in working with uniqueness and diversity. In all of these struggles it is being human that creates the problem. Wheatley (2007) offers this eloquent description:
241 …We have not yet learned how to be together…most basic human dynamics are ignored: our need to trust one another, our need for meaningful work, our desire to contribute and be thanked for that contribution, our need to participate in changes that affect us (p. 164).
What is described in this excerpt in terms of basic needs, all wove its way through the business story like a common thread: the premium placed on trust, engaging in meaningful work, having a meaningful say and influence, being thanked for your work, a sense of celebration, respecting the individual, involvement in decisions and showing appreciation. What struck me in the narratives is how much acknowledgement and genuine appreciation came through for peers, colleagues and other leaders’ contributions or insights. It did not sound like false praise, self-congratulating or like politeness. To hear different leaders are loved, as I did in many of the narratives, is powerful. It does not imply a popularity contest or impede a leader to stop taking tough decisions.
I recall the different references in the narratives to laughter. I heard of the amount of laughter at Exco meetings. Many of the stories and examples were characterised by humour. It came through in the phraseology: we take our work seriously but not ourselves, having fun was emphasised, doing frivolous things that humanise leaders. From Wheatley’s (2006) perspective, the amount of laughter tells leaders they are onto something important.
Many companies have interventions like induction workshops, change management initiatives and corporate events with similar intentions as the group’s philosophy sessions, even if called by different names. So what is different? As Wheatley (2006) explains, in the traditional view of organisations, strongly influenced by Newtonian thinking, you move the mass of an object with velocity and force. In quantum thinking this is not the case. It relates rather to energy. The references to the founders as energisers from the story are plentiful. It rippled out to the entire system. The founders started many sparks over decades and the effects come through in expected and unexpected ways.
Leaders who “chat” is a picture that started taking shape. Paul came into the RMB induction session and “chatted” a bit. What also stands out is the devotion and time
242 these leaders invest in talking to people in the organisation. At the Philosophy workshops it was always Laurie, Paul, Sizwe and the most senior executives talking to new members. The amount of time senior leaders devote to people in this business is exceptional. My impression is that it shows in the quality of relationships. It is not a talking “at”; it is talking “with”. The impetus is not in the content alone. It is in access to and the visibility of the senior leaders. FirstRand’s executives understand that employees want to “hear these things from management”. My impression is that the interpersonal dynamics in the founding partnership set the example of leaders who have learned how to be together. The human element was allowed. There was enough respect, trust, tolerance and space to accommodate their differences and play to their strengths. In acknowledging what it means to be human, and to be comfortably with people, confirms my thinking that it is as much a people story as a business success story.
Leaders entrain followers
From the business story I formed a strong impression that entrainment is at work. The entrainment effect was first named by an important figure in physics, Christiaan Huygens (1629-1695). The notion of entrainment is described in the following way by Ungerer, Herholdt and Le Roux (2013):
He [Huygens] was a clockmaker and, after fixing the clockwork mechanism, he would hang the clocks on a wall to check their functioning. He noticed that the pendulums would end up swinging in time, although in opposite directions. The heaviest clock would act like a “master clock” and the other pendulums would gradually swing in time with it (p. 21).
The application in organisations is that the behaviour of the leader tends to entrain the behaviour of followers. This principle explains why authentic leaders tend to have authentic followers. The inverse is also true. Entrainment can best be seen in the emergence of a culture within an organisation. The entrainment effect is also noted and acknowledged in Schein’s (2010) thinking.
In concluding the leadership theme, in this story the role that leadership played speaks for itself. In addition to the founders casting the role of a leader as someone who does
243 not have to take all the decisions and come up with all the clever ideas, but facilitates good decision-making, I have selectively lifted out perspectives that could offer plausible answers to the role that certain aspects to the founders’ leadership played in this story. The most interesting theoretical perspective for me is Wheatley’s (2006) idea that stems from field theory. If enough members of a system have learnt a new skill, other members do not have to learn the actual skill; they pull it from the field.
Synergistic relationships
The founders’ collaboration is an example of productive working relationships (effective teamwork) that played out over many years. As offered at the outset, definitions of the word synergistic include references to working together with energy and innovation. These words characterise the founders’ union and the businesses that it gave rise to. There was complementarity and diversity in this trio; it is what made this team strong. It is not only the nuts and bolts of growing businesses that they got to know well, but also each other. The founders developed synergy in thought and behaviour. Achieving synergy, however, does not imply sameness (Kline, 2015). In working closely together over many years, they developed a deep insight into how to play each partner to his strengths. A sense of prediction developed, in that I can anticipate how you are going to respond or behave, even before you say a word.
The literature on what optimal team performance looks like to meet today’s work challenges and how effective teams think and function, is extensive (Kets de Vries, 2011). To single out but one observation, when we say a team has “jelled” it typically refers to the experience of individuals who are increasingly able to work in harmony, with the earlier sticking points becoming smoother, leading to an effortless flow in working together. It is an experience of things “coming together” or a team effort far exceeding what we could do alone. When a team reaches this point it is often experienced as slightly miraculous. Possibly because team efforts do not always produce enhanced results, for any number of reasons. However, when things come together in a team, order emerges as elements of the system work together, whilst discovering each other and together inventing new capacities (Wheatley, 2006).
A pertinent question that beckons is: What does it take for people who are highly competent and competitive in nature, to co-operate? The answer is neither straightforward nor one-dimensional. The business story is not devoid of examples of
244 competition, often actively encouraged, playing out at different levels and phases. Whilst the dynamics of competition, power and conflict are inherent to organisational life, the prevalence of strong co-operation at individual, team and interorganisational levels, constitutes the overarching impression.
One plausible explanation on what it takes for competitive people to co-operate productively is that the founders adopted a win-win philosophy. Theirs was not a scarcity mentality, meaning that if one person gets a piece of the pie, there is less for everyone else (Peltier, 2001). By way of example, the founders did not treat knowledge and experience as a scarce commodity. As clearly established, they were active as mentors, supported with intellectual leadership and took pleasure from the successes of others. Their approach to business did not speak of a zero-sum game mentality. There was an understanding that we may create more of everything if we work together (Peltier, 2001). While the founders’ approach might not have been rooted in “dealing in power”, they certainly understood power well. It seems that they went about this paradox with care: the more power you give away, the more powerful you become.
A word that is widespread in the FirstRand story is the word trust. There was trust amongst the founders, trust placed in appointed leaders, trust in how organisational processes worked, and interdepartmental conflicts could largely be resolved satisfactorily, because the relationships were rooted in trust. In exploring how synergistic relationships are defined theoretically, different scholars have studied the role of trust.
Hardy, Phillips and Lawrence (1998) distinguish between trust and power in the context of making interorganisational relationships (joint ventures, strategic alliances, new acquisitions) function more effectively. Trust, in the interest of promoting co-operation, is acknowledged as inherently beneficial to reduce uncertainty and complexity, curtail opportunistic behaviour, solve problems and spark innovative solutions. In this way, trust appears to achieve co-ordination beyond that which is attainable by formal agreements.
Hardy et al. (1998) examine two definitions of trust commonly found in the management literature, one that defines trust as predictability, and one that emphasises the role of goodwill. The researchers suggest that neither approach is satisfactory in
245 that both ignore issues of asymmetrical power. They point out that theory and practice of interorganisational relations, tend to ignore that power can be hidden behind a façade of “trust” and a rhetoric of “collaboration”. Hardy et al. (1998) argue that a broader definition of trust, combining expectations (predictability) and goodwill, is called for. Based on this conceptualisation they propose a model of four forms of co-operation: two trust-based (spontaneous trust and generated trust), and two power-based (manipulation and capitulation) between organisations.
Following a discussion illustrating the four different interorganisational relationship forms, the authors conclude that co-operation can be produced by both trust and power, but each has a different implication for the nature and outcome of the co-operation. For instance, where new partners from different organisations are thrown together, trust is unlikely to emerge spontaneously. In the face of conflicting interests, or different goals and values, there is a need to learn how to create trust between parties for reciprocal relations to take root. The following observation is pertinent: “Synergistic outcomes are thus produced through the contribution of all participants in a communicative process that builds the necessary foundation for a trusting relationship” (Hardy et al., 1998, p. 11).
FirstRand leaders’ narratives offer support for the following: building trust is a complex, dynamic and continuous process. It is a process dependent on signaling trustworthiness in ways that create meaning for others. Hardy et al. (1998) maintain that sincerity and mutually compatible goals are, by themselves, irrelevant if their meaning cannot be demonstrated. While broadening participation helps to produce synergy and innovation, it also increases the likelihood of conflict. Hardy et al. (1998) state that it is “…trust, rather than power, that allows partners to resolve conflict creatively and arrive at a mutually advantageous, cooperative relationship” (p. 17). The impression from the FirstRand story concurs – trust, rather than power - is what allows for synergistic relationships to develop.
Jones and George (1998) explore the relationship between trust and interpersonal co- operation as an important component of organisational performance and competitive advantage. How trust spreads, how it is sustained and, equally, how it weakens, has been an area of extensive research. Jones and George (1998) propose that the experience of trust is determined by the interplay of people’s values, attitudes, moods
246 and emotions. They distinguish between two different forms of trust: conditional trust and unconditional trust. The tenet is that both forms of trust may result in interpersonal co-operation and teamwork, yet the proposed nature of organisational co-operation and associated performance benefits is likely to be fundamentally different. This position aligns with that of Hardy et al. (1998), in that co-operation can be produced by both trust and power, but each has different implications for the nature of the co-operation.
Conditional trust, in which attitudes are favourable enough to support future interaction, is sufficient to facilitate many kinds of exchanges between coworkers and business acquaintances (Jones & George, 1998). However, when unconditional trust exists, in which shared values create a common bond, a different scenario occurs. When unconditional trust exists, people begin to feel they are not mere coworkers or business acquaintances but colleagues, friends or team members. It is argued that the existence of unconditional trust can fundamentally change the quality of the exchange relationship. It is what converts a group into a team.
If unconditional trust exists, the parties’ shared values determine their behavioural expectations as they invest in their relationship and look more to the future than the present when deciding how to behave (Dasgupta, as cited in Jones & George, 1998). Shared values and positive emotions are displayed in interpersonal co-operation and there is a strong drive in team members to contribute to the common good. The act of working together often makes people feel good and stimulate others to act in a similar fashion. In this way it reinforces shared attitudes and affect. Research findings indicate that positive affective states promote social interaction and creativity, two important contributors to the development of synergistic team relationships (Jones & George, 1998).
While unconditional trust has direct effects on interpersonal co-operation and teamwork, it can have indirect effects as well. The sharing of values characteristic of unconditional trust also promotes seven kinds of social processes that can lead to the development of synergistic team relationships in organisations. George and Jones (1998) summarise the seven processes as: broad role definitions; communal relationships, a high degree of confidence in others, help-seeking behaviour, free exchange of knowledge and information, suppression of personal needs and ego for the greater common good, and high involvement. From my perspective, the founders
247 consistently displayed behaviours characteristic of each of these processes deemed necessary for synergistic relationships to emerge.
In tying the strands together, I have a hunch that the synergistic relationships evident amongst the founders, is rooted in the fact that their union is built on a partnership. Whether in life or in business, a partnership starts and grows on shared goals, trust, openness, and communication, is more relational than transactional and requires a high level of engagement. For a partnership to continue to work, a win-win mentality is what makes it sustainable. For a partnership to grow, it takes time.
Synergistic relationships might not have been a term that the founders were familiar with in getting people, teams and external parties to co-operate effectively. Whether intuitively or through acquired practice, they seemed to have understood a fundamental truth, in that trust, and specifically unconditional trust, not power, is what lies at the heart of healthy relationships, empowering people and achieving productive collaboration in an organisation.
Emergence and the FirstRand story
I formed a strong impression from the narratives that emergence is at work in this story. The word “emerge” or the noun “emergence” are hardly new words. In telling the business story, I have used words such as: “the rise of”, “inception”, “origins”, “develop”, “unfold”, “come about”, “come to light” and “birth”. These words happen to be synonyms for emergence, a process of coming into existence or prominence. As a narrator these are the words that describe what happened in FirstRand. It describes a journey to prominence.
Emergence as a field of theory and practice in the scientific community is a relatively new philosophy. Scholars of emergence study scientific literature on complexity, self- organisation and chaos theory, in addition to the developing body of literature on emergence and engaging emergence. A leading scholar, Holman (2010), acknowledges the abstract nature of emergence as follows: “For most of us, the notion of emergence is tough to grasp because the concept is just entering our consciousness” (p. 17). She further notes, “We are early in understanding what it means to social systems –
248 organizations, communities….We are just learning how to work with it to support positive changes and deep transformation” (p. 27).
Emergence, in Holman’s (2010) thinking, relates to the practice of change and offers practical perspectives on the dynamics of emergent complexity – connectivity, interdependence and interaction in the self-organised functioning of a system. From my perspective, purely on visual inspection, these descriptors apply to FirstRand as a complex system, with numerous sub-systems and, as a unique feature of this organisation, the proliferation of multiple smaller self-determining components in accordance with the owner-manager philosophy. Words like “disturbance”, “disruption”, and “dissonance” are part of the vocabulary of emergence and often used interchangeably. Emergence, according to Holman (2010) talks of what is needed to renew our systems and ourselves wisely.
Higher-order complexity arising out of chaos
How the term emergence is defined theoretically, warrants exploration. At its simplest, emergence is order arising out of chaos (Holman, 2010). A more nuanced definition of emergence is “…higher-order complexity arising out of chaos in which novel, coherent structures coalesce interactions among the diverse entities of a system” (p. 18). Emergence is what occurs when these interactions disrupt, causing the system to differentiate and ultimately something novel arises. The two key elements in the definition to take note of are: chaos and novelty.
How emergence behaves
Scientists generally agree on the following five qualities of emergence: radical novelty, coherence, wholeness, dynamic and downward causation. The often-quoted phrase, “The whole is greater than the sum of its parts” captures the essence of these ideas. It is a phrase that fits with the FirstRand story. It fits with the complementarity of the founding partnership, the effect of synergistic relationships and the effect of a business model underpinned by diversification and multi-branding. Holman (2010) explains it as a case of: birds flock, sand forms dunes and individuals create societies. Each phrase names a related but distinct system. Each system is composed of, influenced by, but different from its mate: birds and flocks; sand and dunes; individuals and societies.
249 In describing how emergence behaves, Holman (2010) cites the two most frequently observed dynamics. Firstly, no one is in charge. For example, no conductor is orchestrating orderly activity. Secondly, simple rules engender complex behaviour, which implies that randomness becomes coherent as individuals, each following a few basic principles or assumptions and interact with their neighbours (for example, birds flock). From my perspective, intuitively, the first dynamic, no one is in charge, does not seem to fit as well as the second dynamic, simple rules engender complex behaviour. In this organisation there is an understanding that the more complex something is, the greater the need for simplicity. The FirstRand philosophy statement can fit onto one page, but every word was debated for days. In the organisation guidance does not come from rules, but principles and values.
It takes time
FirstRand was not built overnight. It was built one small step at a time over several decades. The role of time is important in how the business story developed. It fits in with Holman’s (2010) view on emergence: time is the essence. The founders’ togetherness from the formative years throughout different growth phases makes for a very different reality than for a singular CEO serving for a much shorter tenure. The business story looked different after ten years, after 20 years and after 30 years of the three’s involvement. The width and depth of the founders’ knowledge and experience brought significant benefit, stability and continuity to the group. Generations of employees and future leaders across the businesses had access to GT, Laurie and Paul’s considerable business acumen, experience, wisdom and institutional memory. The founders absolutely lived the narrative “great leaders tell stories”. Different generations in the organisation heard the founders’ stories, or their stories being retold, of what it was like when RCI began and the founding ideals, of cross road decisions unlikely to be found in the minutes of a meeting and of instances where values and principles were tested over decades.
Impressions of emergence at work
Holman (2010) offers practical perspectives on how to engage emergence. In the data there is ample evidence of Holman’s suggested practices, principles and orientating questions playing out. For instance, the author offers five principles that she has
250 termed; firstly, welcome disturbance, secondly, pioneer, thirdly, encourage random encounters, fourthly, seek meaning and lastly, simplify. Simply by reading and hearing these terms, they seem to fit with the business tory. In delving deeper into and studying what the essence of each of these ideas entail, the examples from the business story are overwhelming. These ideas on how to work with emergent change is a neat fit and offers a theoretical perspective on what played out practically in the FirstRand story. However, the founders could not have known that what came about in the organisation, resembled a theoretical perspective and an abstract concept such as emergence so closely. They did not copy from textbooks nor did they have emergent change in mind. Doing business was at the top of their minds, and yet the founders achieved the effect of working successfully with emergence.
Cultivating the conditions for engaging emergence requires humility, curiosity and the willingness to involve others (Holman, 2010). The author explains that engaging emergence involves creating a “space” in which innovations can arise. A hospitable space or good conditions have a clear purpose, has a spirit of welcome and invites the diversity of the system. This perspective fits in so many ways. The founders created the conditions for people to do their best work. It takes thought, care, a time investment, generosity, sharing your space, a sense of occasion and even love to create such conditions. These are behaviours that to me sound like what could be expected of a good host. It is then no coincidence that Holman, in the context of emergence, talks about “the art of hosting”.
In terms of demonstrating clear intent, Holman (2010) introduces an interesting idea, namely: hold intentions clearly but lightly. This idea entails that even if one has a specific outcome in mind, remain open to whatever forms emerge. It is my impression that the founders demonstrated through various actions and decisions in the three key strategic transactions that they were clear on the direction they wanted to take the business in, yet “loose” on the way to get there. The trio knew what opportunities and enabling conditions they were looking for in order to grow the business. Not every tactic or avenue pursued worked out, yet they remained open and when an opportunity presented itself, even if not on their initial radar, they could quickly adapt, seize the opportunity and opted to frame it as a massive challenge.
251 Taking responsibility for what you love, as long as it benefits the greater good, lies at the heart of practicing emergence. If this practice occurs daily, it changes behaviour drastically. Holman (2010) argues that no longer is there a need to wait for formal leaders to come up with all the initiatives or pose all the good questions. Anyone can take responsibility for what they love as an act of service. “When invited to do so, people consistently rise to the occasion” (p. 47). The author states that by pursuing what matters to us individually we often discover communalities in our mutual needs. It is about paying attention to what we love. Paul’s words come to mind: “It’s not rocket science, it’s really just about caring”. Holman (2010) describes the outcome from this practice as: “When both individuals and the collective win, higher-order coherence is emerging” (p. 48). Necessary conditions include: be yourself, and show up fully. It is then that people’s distinctions cohere into a larger whole. This notion, taking responsibility for what you love as long as it benefits the greater good, aligns well with my impressions of how the founders view business and life.
Pioneer is one of Holman’s five principles for engaging emergence and fits the FirstRand story like a glove. “Pioneers are known for the clarity of their quests…Single-minded determination strips away all but the essence of a calling…[it] fills them with the courage to act” (Holman, 2010, p. 69). As part of the vocabulary of emergence the author includes the word “disruption”. If I think about how change played out in this story, my impression is less of managing change and more of causing change. From the story we know these senior leaders, the founders, are disrupters and they encouraged others in the organisation to disrupt. The words “disruption” and “disruptive practices” are now used in the same breath as FirstRand and FNB. The founders’ way of going about change was to disrupt.
From a different source I found confirmation of Holman’s (2010) take on disruptive change. It strengthened my view that emergence played out in this story. A participant introduced me to a document on disruption that also shaped his understanding of this concept. Not all innovation is disruptive by definition. An innovation could be something novel or an improvement to an existing process or product, but if it does not make it to the market or is not a market success, it is not considered a disruption. According to this perspective, and I paraphrase: disruption is a disturbance; the act of breaking the regular flow; especially an event that results in discontinuity (“Disrupt This,” 2008). One would expect a disruptive innovation to be something new that
252 shakes up a market, which is threatening to the existing order of things and changes the status quo.
The founders were pioneers in their analysis and reading of the context. They mostly noticed something coming, before it has taken shape on the horizon. Even in a crisis. A vital sphere developed around these three leaders. Causing change, pioneering and disruption is evident from the RCI phase and a common thread that runs throughout. It goes beyond coming up with clever ideas, beyond anticipating change, beyond being proactive. It comes through in what these leaders notice. It is evident in the instance and certainty with which they spot a winning idea. Both Discovery and OUTsurance are examples that fit the definition of disruption well. Industry cynics said these respective disruptive innovations could never work. History tells us they were wrong. Disrupting and disruptive practices extend beyond noticing novel opportunities. It also permeates how the different businesses are run. In the founders’ time, Momentum made the leap from worst performer to a pioneer that set benchmarks for the industry. FNB experienced a cultural correction and renewal that led to it becoming a pioneer on many fronts. In the present this company is cementing its position as one of the most innovative retail banks.
My impression from the FirstRand story is, “here we can do things, try things”, rather than plans merely being rolled out. It comes through in innovation and how people participate meaningfully. My impression is of internal order and managed processes up to a point, but not everything is predetermined. There is the opportunity and an expectation to hear what people’s thoughts are. There is strong reliance on intuition to make it up as you go along. There is space for both logic and intuition. These impressions fit with the concept of emergence.
“What is possible now?” is a question so simple, yet powerful. It is central to engaging emergence. The idea behind the question is, given everything that is going on, what is possible now? A practical example could be, when preparing for an exam and you have a nasty cold and sleep poorly the night before, you enter the venue, take the exam, with the full knowledge it is not the situation you wanted to be in. Given all that is going on, given these circumstances, you put in your best effort. This question asks a moment of pause, taking stock of reality, working through what is or is not ideal, and then introduces the option to choose your best response. Herein lies the potential of a
253 liberating outcome, working through and bringing forth an enabling situation. To me it ties in with aspects of the FirstRand philosophy and particularly a phrase such as: “Let’s not waste a good crisis.” The latter is an example of reframing from a negative to a positive outlook. It fits right in with the pivotal question: What is possible now?
An example of strong emergence
Scientists make a distinction between two forms of emergence: weak and strong emergence (Holman, 2010). Predictable patterns of emergent phenomena, such as traffic flows and anthills, are examples of weak emergence. In contrast, strong emergence is experienced as upheaval. Weak emergence describes new properties arising in a system. A baby is wholly unique from its parents, yet is basically predictable in form. Strong emergence occurs when a novel form arises that was completely unpredictable. We could not have guessed its properties by understanding what came before. Holman (2010) explains: we see stories on television yet we could not have predicted this form of storytelling from books. Emergent systems increase order even in the absence of command and central control: useful things happen with no one in charge. In emergent change processes, setting clear intentions, creating hospitable conditions, and inviting diverse people to connect, does the work (Holman, 2010). In this case study there are examples of strong emergence such as launching Discovery and OUTsurance, novel forms that could not have been predicted. How this group was built is an example of emergent change. GT’s words are illustrative: “You make the best decisions, you do not know if the thing is going to work, but you give it your all” (G. Ferreira, personal communication, 16 May 2008).
In concluding, there is evidence of emergence written all over this story. However, there are idiosyncrasies that make it challenging. It fits with the notion of becoming comfortable with paradoxes of which there are many that seemingly live productively side by side in this organisation. I thought about this for some time, how would I if asked, explain the theoretical concept of emergence to Laurie? I know he used to say, “Just don’t come and explain theory to me.” With Laurie you have to explain things practically and possibly by way of metaphors. What I am almost certain of, when I manage to pin down an appropriate metaphor and Laurie hears me out on the idea of emergence, it might be a case of him saying: “But we’ve been doing it for years. Now there’s a name for it.”
254 Towards an integrated perspective
Firstly, the beginning is very important. It is evident in the founder-leaders’ strong formative influence on how the organisation developed (Schein, 2010). Also, complexity theorists tell us the beginning is important (Holman, 2010). There are other examples of successful business groups with distinctive entrepreneurial histories. The industries differ, the business models differ, the styles of their leaders over the years differed and as a result, these organisations have different organisational cultures. Leaders are entrepreneurs, architects of culture and a creative force. It is about a clear intent and making your intent known (Holman, 2010). Knowing what kind of environment you want to work in yourself, being clear that your goal is to make money and survive. The founders remained on course to make businesses successful and sustainable. They allowed maneuverability in the way to get there. This is how an “incidental empire” came about (Fischer-French, 2005).
Secondly, it takes time to build an organisation like FirstRand. Strong emergence takes time (Holman, 2010). It takes time for strong cultures to develop (Schein, 2010). It takes time to build the strength and cohesion of teams across the organisation. It takes hundreds of consistent actions every day from leaders and for such actions to be aligned throughout the organisation. It takes time to build layers of top performing leaders, employees and owner-managed small businesses. It takes time for a partnership to develop.
Thirdly, being clear on what is allowed to happen naturally and which processes are to be managed. Some things came about through conscious decisions, actions and behaviours. However, there are also natural and unconscious processes at work. Many aspects of the business story came about spontaneously and were allowed to unfold naturally. Some aspects of culture develops naturally, others need to be managed. Culture is an abstraction (Schein, 2010) and so is emergence (Holman, 2010). Values, ethics, integrity, and honesty – these are unconscious phenomena – yet we see the effects in behaviour. Field theory exists outside our realm of consciousness, and yet we cannot deny its existence (Wheatley, 2006).
Fourthly, it is not an individual effort. An individual does not whistle a symphony. It takes working with and working through people. At individual, team and
255 interorganisational level, synergistic relationships developed. It takes depth and breadth of like-minded people, with shared assumptions and experiences and creating shared meaning (Dunphy & Fishman, 2006). It takes the power of a collective to ignite action, set off a course of events and lay down the roots for a culture that enables entrepreneurs to grow successful businesses. Leaders plant a seed, start a spark, create the conditions and see how the effects come through in unexpected ways. The founders’ legacy far exceeds articulation of culture and a distinct view of leadership for the organisation. It is more than their influence and a mindset that rippled out. The founders created a movement of leadership excellence.
Fifthly, the parts are not identical to the whole, but enough of the characteristics are shared (Holman, 2010; Wheatley, 2006). Followers tune in to and synchronise with their leaders’ behaviour. In FirstRand you hear the thoughts and words of the founders voiced by other leaders. The words are not identical but the intent and spirit is messaged in the same way. The senior leaders are independent thinkers and their diversity and uniqueness, is respected. The three founders built a group, made up of companies with different histories and cultural heritage. The parts are different from the whole, yet they share likenesses. The companies are diverse in many ways, yet what they have as common ground is this: an owner-manager culture (entrepreneurial, empowerment); a pre-occupation with excellence (leading market position, performance driven, meritocracy) and they all have strong value systems.
It did not play out apart
Leadership and culture are features of all organisations. Values are universal and not exclusive. Concepts prominent in thinking on leadership like involvement, participation and relationships (Wheatley, 2006) are not novel or exclusive. The founders created the conditions for this organisation to emerge without having read or copied from a textbook on working with emergent processes. Many questions beckon. Wherein lies the difference? What makes the FirstRand story different? What did the founders bring that is different? How do they go about these concepts differently, handle these ideas differently to the point that a different outcome is achieved? One possibility is that these ideas, the practices and processes that underpin it, did not play out apart. These are not isolated or detached themes. It is integrated. It is continuous and uninterrupted.
256 Natural processes took their course. The founders intuitively understood the nature of participation, relationships, ownership and involvement.
Where not driven by instinct, it most likely originated from learning through practice and consultation. It does not come from a book. Another plausible explanation could come from Wheatley’s (2006) idea on invisible fields shaping behaviour. The founders surrounded themselves with seriously competent people over decades. If the notion of space is not empty - there are invisible forces at work is applied - if enough members have picked up the skill or the learning, you do not need to learn it. You pull it from the field. The learning on how FirstRand’s people are to behave comes from observing the senior leaders’ example. Possibly, the organisation’s people also draw learning from the field. Employees have seen the lessons and the desired behaviour enough to recognise and replicate it.
The themes, the founders’ influence, culture and leadership, played out together. The three leaders and their authentic ways and wiring, how they remained inherently entrepreneurial and retained an owner-manager mindset, the length of time spent leading the organisation, how their unique view on leadership unfolded and influenced the culture taking root, all played out to create an atmosphere and a context for FirstRand to emerge. The context was right, the depth and breadth of support was right. The founders’ view of leadership and the group’s winning culture became a pervasive paradigm: a way of thinking and behaving. It was lived and modeled consistently over many years. This is important. It took time for a winning culture to filter this deep and become this pervasive. It required time for leaders to become steeped in the culture and for future leaders to be nurtured and embrace it. The effect is felt and talked about with FirstRand’s people all the time. That is how the culture evolves and remains relevant. Talks can be delivered, presentations made, memorandums circulated, but pervasive thinking grows in a system, it does not cascade mechanistically.
In closing
To return to the central questions: “What’s the story here?” What happened in the FirstRand story and what allowed it to happen? In an attempt to come up with plausible explanations, I linked selectively to examples of existing and more recent theoretical
257 perspectives that seem to fit neatly in making sense of this unique case. In the end, I maintain, the answers do not come from books. It lies in the story: the FirstRand story.
The deeper truths that come through in the FirstRand story lie in an integrated and continuous interplay between themes. The themes did not play out apart. It is a combination of the three founders’ influence, the synergistic result of three people’s togetherness over more than three decades. It is a combination of their unique view of the role of leaders. It involves casting a leader in a role of facilitator, enabler and creator of the conditions for people to do their best work. Through deep personal involvement, the architects of RCI’s core beliefs and deep assumptions spilled over and became a mantra for the growing organisation.
A clear understanding of what has brought success was articulated and earned a name, a winning culture. It developed into an obsession with a culture. This does the job. FirstRand is in the business of creating and operating successful businesses. Its entire business story is an illustration of emergence as is summed up by the narrative: The founders needed each other to see how far they could go. A number of factors worked together for this organisation to emergence. FirstRand can be rightly proud of its parents. The three founders can be rightly proud of their role in the initial creation of a business group marked by excellence.
258 CHAPTER 13: CONCLUSION
Introduction
From three entrepreneurs who did not draw salaries initially and a secretary doing calculations on a high tech HP calculator to a financial services group with over 38 000 employees and customers transacting on iPads, the founders have been on an incredible journey together. In their time they have experienced much, taken huge leaps, effected considerable change and spent almost their entire careers together. To return to an earlier prompt: “All three freely admit that luck and coincidence played a big role….In the end, it may be because they never set out to build big, and were driven by caution rather than ego. And so built an incidental empire” (Fischer-French, 2005, p. 45).
The founders’ legacy
Much of FirstRand’s success has been pinned on its entrepreneurial culture. It is has earned the name of a winning culture. It is this innovative culture, which will probably be the most powerful legacy of the founders (Corporate publication, 2008). As the business story reveals, you can only truly be an example of an owner-manager if you are one. The three initial founder-owners lived this philosophy one hundred percent. As a result “…through the pain, is a legacy of FirstRand entrepreneurs” (Caboz, 2013, p. 16). A further powerful legacy pivots on the founders’ role in articulating the organisation’s cultural philosophies in order to share and pass it on from one generation to the next. Of considerable significance is the founders’ role in creating a framework that acts as a binding force that glues the whole and sub-components of the organisation together (J. Burger & S. Moss, personal communication, 15 May 2008). This was never more critical than during one of the largest mergers of its time that culminated in the formation of FirstRand. What was abundantly clear in the narratives is that the FirstRand founders will be missed. A partnership like GT, Laurie and Paul’s will not be repeated again.
Overall impressions of the study’s contribution
It is fitting to return to the research question: What did the three founders contribute individually and collectively to FirstRand’s success? From my overall impressions of
259 the FirstRand story I conclude that the founders, three exceptional entrepreneurs and leaders, contributed a significant leadership perspective and a culture perspective that was lived and tested in practice for over more than three decades. It is an integrated perspective on how leadership and culture practically worked in the eyes of the founders and took root in the organisational system. It is leadership and culture a la FirstRand. There is no similar example to be found in South Africa. Herein lie the value-add and the original contribution from this study.
The study succeeds in fulfilling its fundamental premise of documenting a uniquely South African business success story. In offering an integrative perspective on how leadership and culture worked practically for the founders, the thesis conveys the importance of the FirstRand founders’ story. It illuminates the founders’ exceptional leadership and describes aspects of their business and leadership practices. There is a contribution in the uniqueness of the study, specifically in the local context, with some value-add to the qualitative research methods literature. The contribution of the study does not lie in the generalisability of the findings, but the dynamic understanding of how the behaviour of the founding members contributed to the development of FirstRand. In terms of the organisation (research context), the thesis contributes by documenting in an academic manner from an outsider’s perspective, the role of the founders at different historic moments.
Typically a research case contributes to scientific knowledge by generalising to one or more theories or by constructing a model. A point of distinction in this study is that the contribution is not in offering a model, but is contained in the value-add found in the founders’ understanding and practice of leadership and organisational culture. It ties in with the argument that in the FirstRand story, the deep truths do not come from books, it is revealed in the story. It lies in an integrated and continuous interplay between themes, practices and theories-in-use.
Since the study’s contribution pivots on the intrinsic value of the case investigated, it impacts on the transferability of the key insights to other contexts. An equivalent FirstRand cannot be recreated and a similar founding partnership cannot be replicated. A success story emerged through the combination of extraordinary people, circumstances and set against a particular context. Irrespective of the specificity of the case, it is my contention that it is possible for a reader to extract transferable knowledge
260 from the historical overview of building a business group such as FirstRand. Besides theoretical and practical insights that could be of use to a wide audience or provide guidance to practitioners who find themselves in comparable circumstances, there are some gems of wisdom that extend beyond business that might resonate with readers.
To suggest that this thesis, as a way of documenting how leadership and culture was lived and practiced by the founders and like-minded leaders, constitutes a textbook of some sort would be presumptuous. It would also be ironic given the founders’ insistence that they do not take their cues from textbooks, often even rejecting theorising in favour of intuition and what comes naturally. However, I suspect the humour and the irony would not be lost on them, as they do not take themselves too seriously. Even if it does not constitute a textbook, the study uncovers useful knowledge that contributes to the fields of business leadership, entrepreneurship and industrial psychology.
Theoretical and practical contributions
The study succeeds in making a theoretical contribution by revealing theories-in-use. I return to the idea that everyday sayings and old adages function like theories in how to navigate life (Hatch, 2006). Although knowledge in this study cannot be transferred to all companies, it expands knowledge by learning about leadership and culture from prominent business people who are successful in revealing their theories-in-use. It is evident in the business story that there is no shortage of common sense sayings, analogies, quotes and life lessons attributable to the founders. In this respect the founders constructed many theories of their own. Examples of the numerous wise sayings attributable to GT include: his analogy of leadership succession as a perpetual relay, that he wanted business partners that he did not mind spending a weekend with and, it does not matter who gets the credit as long as you score and win the game. Examples of the many nuggets of wisdom from Laurie include: if a company has a good value system it builds trust and it automatically leads to the priceless commodity of a good reputation, in a succession race many candidates can be cabinet ministers but few can be presidents, and being an advocate for implementation and leading by example. Paul contributed many quotable quotes including: we did what came naturally to us, we have always only worked with people rather than ordering them around, and if you behave as if this is your own company we are all going to be in great shape.
261 The study deepens our understanding of the role of founders in laying the foundations for future success. Founding partnerships are fraught with perils and partnerships of multiples even more so. Partnerships like the FirstRand founders’ are not made; it develops over time. At the core it has to do with common goals, handpicking partners, complementarity and shared values. Synergistic relationships emerged rooted in the experience of trust. The powerful interpersonal dynamic amongst the founders, rippled out and became absorbed in the organisation. The founders demonstrated clear intent, acted as energisers, messaged success and adopted a win-win philosophy.
The study builds on our understanding of organisational culture. The data confirms and illustrates how culture begins, functions, becomes embedded, evolves and highlights some of its sticking points, as conceptualised by Schein (2010) and others. The founders understood the nature of organisational culture and how the behaviour of senior leaders as the custodians, signaled to others in the organisation how to behave in certain conditions. The founders credit the organisation’s winning culture for its business success. They demonstrated that the quality of leadership determines the culture that develops over time. In turn, the organisational culture determines the quality of leadership that is possible. As long as the organisation keeps on choosing its leaders in the same way, sustainable success is viable. The case highlights how founders’ values became absorbed, how leaders’ understanding of culture and the strength of a culture can attract and keep talented, like-minded people with a good culture fit, glued to an organisation. FirstRand’s corporate culture seems to create a space where employees can achieve their full potential.
The study expands on the prominent concept of emergence as conceptualised by a leading scholar, Holman (2010). From the description of the case it is clear that FirstRand’s leaders have an understanding of emergence’s building blocks, intuitively or through acquired knowledge, on systems theory, theories on complexity and self- organising systems and chaos theory. Emergence, defined simplistically, is order arising out of chaos. The notion of emergence fits with how change played out in the FirstRand story, how the founders acted as disrupters and pioneers, encouraged others to disrupt, to the point that the words, “disruptive practices”, are now used to describe FNB’s leading position. Emergence theory contributes a plausible perspective on FirstRand’s owner-manager philosophy with a proliferation of multiple smaller self- determining components adding up to numerous sub-systems and a complex whole.
262 The study makes a modest contribution to the literature on leadership, specifically contributing to a better understanding of synergistic relationships. Effectively working with others in an energetic and innovative way that benefits the greater good is an important focus in a world with an increasing need for such leadership in business and other areas of life. Each of the FirstRand founders developed a unique brand of leadership. But then, they lived and practiced it all along, before the need of branding leadership. Collectively the founders ascribed to a view of leadership that suggests a leader does not have to make all the decisions, but rather that the role of a leader is to facilitate good decision-making. The case study illuminates aspects of the founders’ leadership “wiring” such as: be yourself; confidence balanced with humility; values such as trust, honesty and respect; the importance of an entrepreneurial mindset; how people are viewed in a positive light and treated with respect and appreciation.
The data showcase how senior leaders act as a master clock and that authentic leaders entrain authentic followers. It further illustrates that there are natural processes at work that are distinguishable from managed processes. Knowing the difference is important. The implications from groundbreaking scholar, Wheatley’s (2006) conceptualisation on the existence of morphic fields, offer an interesting perspective on organisational learning. The idea that if enough members have learnt a skill (such as the founders’ accumulated experience) other organisational members can pull a skill from the field, without having to actually learn the skill, holds promise. The FirstRand story illustrate that you can build a business, which is not person-dependent; which can continue successfully through multiple transitions when a spirit and ethos become absorbed in a system.
A further contribution from this study is the description of some of the best-known companies in South Africa such as RMB, Momentum and FNB at particular points in their history. The challenges faced, how the leadership of prominent leaders played out and was experienced, and other insights are likely to be of interest or resonate with some readers. Furthermore, there is a practical contribution in illustrating how the owner-manager philosophy is understood and implemented in FirstRand and across its companies. If people feel they own their business, they care more. Herein lies the value of the owner-manager philosophy. There are examples on the legitimacy an owner has, the practical and symbolic efforts at making employees and professional managers think like owners, how an owner-manager mindset is underpinned by a
263 culture statement and conditions such as high competence and leadership maturity. There are also perspectives on the pros and cons of embracing an owner-manager mindset. Leadership in a high empowerment environment, where potentially many other individuals think they can do a better job as CEO, does not necessarily make it comfortable for a leader.
Linked to this are insights on innovation. Some of the lessons include, in cultivating innovation, be prepared to tolerate mistakes. Also, you do not learn if it is going well all the time. An important perspective is that one does not have to be dishonest to be innovative. A company can outsmart its competitors with ingenuity.
Further practical contributions touch on organisational aspects. There are practical lessons on starting a small business; handling acquisitions and mergers; achieving a successful turnaround and culture revolution; do not make changes before you understand a system; know what team you are playing on and operate from a clear intent but loose on the way to get there; handpicking your partners, your employees and your leaders; the importance of culture fit (and that poor fit can cost you) and finally, setting leaders up to run the best possible race in the perpetual succession relay.
Limitations of the study
What constitutes more of a reality than a limitation is that in FirstRand as a research context, there are a multitude of cases that can be delineated and are worthy of investigation. My interest was in the three FirstRand founders and therefore I conducted a holistic and collective case study with embedded units. In order to better understand the particularity of this case, I explored the founders’ influence, framed by how the three major strategic transactions deployed. Closely linked to the importance of clearly delineating the research case, is the challenge of staying within those defined boundaries. Certainly not unique to this study, but possibly of use to other qualitative researchers, is the reality of the vast set of data gathered in this study and the challenge it posed throughout such as coherence and writing succinctly.
As mentioned, due to the intrinsic interest in understanding the particularity of this one case, the case study design implies that the interpretations and conclusions from this study are likely to have limited transferability (Baxter & Jack, 2008). The study offers a
264 unique snapshot of a period that now lies in the past. At the time of the interviews, the era of the founders’ direct leadership influence in FirstRand was drawing to a close. Paul Harris retired from executive duty shortly afterwards. In terms of limitations, the narratives that form the bulk of the data were gathered at a specific point in time. The narratives reflect the views of a select group of participants from the top leadership tier and other key role players, largely nominated by the founders. These encounters and the perspectives gathered cannot be repeated.
Suggestions for further research
There are many strands that can be explored in view of further scholarship and research publications. Further exploration and enhanced understanding of the concept of synergistic relationships can make an important contribution to the field of industrial psychology, people management and leadership. There is an opportunity to explore beyond the important role of trust in promoting effective interpersonal and interorganisational relationships. A further area for consideration and possibly of interest to other researchers is the time component, emphasised strongly, in how trust grows and builds. Mobile workforces are on the increase, people are increasingly working and co-operating virtually, communicating via technology and possibly never meeting face-to-face. In what way does trust and power play out in such work situations? Furthermore how trust and trustworthiness function or could be developed rapidly in such encounters and work relationships, present areas for research.
There is an opportunity for further exploration of the qualitative data to build tentative models, respectively for entrepreneurship, leadership and synergistic relationships. Such research efforts are likely to contribute pertinent knowledge to the field of industrial psychology, business management or leadership and strengthen the contribution from the FirstRand founders’ theories-in-use and their practical and time- tested leadership and culture perspectives. Closely related is to consider and place the findings of the study in context of the vast scholarship on for instance leadership and entrepreneurship. From an in-depth literature review, potential shortcomings could be identified, confirmation sought for how the founders’ and other leaders’ practical wisdom ties in with existing literature, or new areas opening up, identified. A comprehensive integration of the findings and knowledge from this study could extend the value-add to the literature in business leadership.
265 The field of emergence is still relatively new. This developing topical field presents many areas for research, specifically the functioning of self-organising systems and practices to engage emergence, could potentially make a contribution to the scientific community and our understanding of emergence in action. In terms of leadership there is an opportunity to grow the body of work on African leadership and report on more homegrown South African high-performing organisations, its business leaders, their philosophies, practices and possibly, knowledge from lessons learnt. The phrases: “Don’t waste a good crisis” and, “If everything is going well, you’re not learning” from the FirstRand story, could serve as references or offer inspiration.
Final thoughts on the founders
If I have a regret it would be that I did not experience the founders together in one room. I cannot help but wonder what it was like when they started their journey together, when cash flow was an issue and buying a photocopy machine a luxury. I wonder what it must have been like to see GT pulling a prank and dreaming of buying more farms, to see Laurie chewing on a pencil, deep in thought, with gears shifting in his business brain or to see Paul get excited about an off the wall idea and his eagerness for closing the next deal. It must have been quite something.
In my view the founders’ leadership represents the kind of leadership that businesses are in short supply of. The world stage seems to be in short supply of leaders who focus on the greater good and can hold back on their own interests. All over this kind of leadership seems to be in short supply. It reminds me of a particular tribute to late president Nelson Mandela that described him as a leader who could admit to his mistakes. It is a rare leadership quality that seems to have fallen on hard times. It links to Laurie’s idea of statesman-like conduct.
The FirstRand founders’ story makes me want to believe that it is possible in business to make money the honest way. The founders are not apologetic about making money. What their story illustrates is that success can indeed come about when you deal on a handshake, when you aim to do the right thing, when you are good for your word, when you adopt a win-win philosophy, when you do what you love and work harder than the competition.
266 I could not help but develop an appreciation for the founders. There is something really honest about their story. To have built a successful group and in so-called retirement continue to influence businesses and grow future generations of entrepreneurs, that is a demonstration of connecting with one’s passion and connecting with your intent. It is a state of being that is admirable and a source of inspiration.
In closing
The FirstRand story speaks for itself. It is a leadership story and a people story that I see as containing hope. It contains messages of hope for entrepreneurs who want to be in charge of their own destinies and create something that outlives its initial creators. Amongst the many messages for business leaders is this important message: You can make money the honest way. There is a message of hope for every person who wants to make the best of their circumstances, their talents and their opportunities, in the form of the enduring life lesson: There is no easy way to success; there are no short cuts.
I have lived with the common sense words of the founders, worked with theory that sounded like poetry and science that reads like fiction. It seems apt to bring my version of the three founders’ story to a close with words that illustrate the power of intuitions. From a work of fiction and a favourite author, Alexander McCall Smith (2005), the following excerpt:
Angus Lordie smiled,….“I just had a feeling that it was our friend Mr Vettriano [a well-known Scottish painter] underneath. I don’t know why, but I had this feeling.” “Never underestimate the power of intuitions,” said Domenica. “They are a useful guide. They can show us the way to all sorts of things – including the way to being good.” Angus Lordie raised an eyebrow. “How so?” he asked. “What have intuitions to do with goodness?” “Intuitions help us to know what is right and wrong,” said Domenica. “If your intuitions tell you that something is wrong, then it probably is. And once you start to use your moral faculties to work out why it’s wrong, you’ll see that the intuition was right in the first place.”
267 “Interesting,” said Angus Lordie. “But I suspect that the intuition is merely a form of existing knowledge. You know something already, and the intuition merely tells you that the knowledge is buried away in your mind.” “But that is exactly what intuition is,” said Domenica. “That’s exactly why they’re so useful.” (p. 323-424)
In applying the exchange between these characters to a financial services success story, I come to the following: What started out as a hunch - starting a small business and cutting out the middleman, picking the right partners, hanging in together for over three decades – was more than a hunch, it was stored somewhere as prior knowledge. It is a useful combination indeed, intuition and knowledge, as is youth and grey hair and Traditional values. Innovative ideas.
268 REFERENCES
American Psychological Association. (2010). Publication manual of the American Psychology Association. (6th ed.). Washington, DC: Author.
Bonorchis, R. (2010, November 18). FirstRand head is South Africa’s best-paid bank CEO. Bloomberg. Retrieved from http://www.bloomberg.com/news/articles/2010- 11-18/firstrand-s-nxasana-becomes-south-africa-s-best-paid-bank-ceo
Bonorchis, R. (2015, March 6). FirstRand CEO retiring with deputy to take on top role.
Moneyweb. Retrieved from http://www.moneyweb.co.za/category/news/companies- and-deals
Baxter, P., & Jack, S. (2008). Qualitative case study methodology: Study design and implementation for novice researchers. The Qualitative Report, 13(4), 544-559. Retrieved from http://www.nova.edu/sss/QR/QR13-4/baxter.pdf
Caboz, J. (2013, September). A man for all numbers, who turned $50 into $74 million.
Forbes Africa, 3(8), 12-18.
Corporate publication. (2008). FirstRand: 10 Years of ideas. [Limited circulation in- house document]. Copy in possession of author.
Cranston, S. (2014, April 17). Ashburton goes off the beaten track. Business Day.
Retrieved from http://www.bdlive.co.za/business/financial/2014/04/17/ashburton- goes-off-the-beaten-track
Delport, C. S. L., Fouché, C. B., & Schurink, W. (2011). Theory and literature in qualitative research. In A. S. De Vos, H. Strydom, C. B. Fouché & C. S. L. Delport (Eds.), Research at grass roots for the social sciences and human service professions (4th ed., pp. 297-306). Pretoria, South Africa: Van Schaik.
Denzin, N. K., & Lincoln, Y. S. (2008). Collecting and interpreting qualitative materials (3rd ed.). Thousand Oaks, CA: Sage.
269 Dippenaar recognised at Top 100. (2014, October 26). Sunday Times. Retrieved from http://www.bdlive.co.za/businesstimes/2014/10/26/dippenaar-recognised-at-top- 100
Dippenaar, L. L. (2012, September). Curriculum Vitae. [Supplied by FirstRand].
Disrupt this: Disruption theory. (2008, September 22). Retrieved from http://www.disrupt-this.com/disruption_theory
Dolan, K. A. (2014, November 19). Africa’s 50 richest. Forbes. Retrieved from http://www.forbes.com/africa-billionaires/list/#tab:overall
Dunphy, D., & Fishman, R. (2006). In great company: Unlocking the secrets of cultural transformation. Auckland, New Zealand: Human Synergistics.
Eriksson, P., & Kovalainen, A. (2008). Qualitative methods in business research. Los Angeles, CA: Sage.
Ferreira, G. T. (2008, February 25). The hunters who became farmers. [Memorandum to executive team of a FirstRand division]. Copy in possession of author.
Ferreira, G. T. (2013, January). Curriculum Vitae. [Supplied by FirstRand].
FirstRand business philosophy, ethos and modus operandi. (2006). [Workshop handout material]. FNB Training centre, Johannesburg.
FirstRand philosophy workshop. (2007, February 6). [Presentation slides]. Copy in possession of author. FNB Training centre, Johannesburg.
FirstRand philosophy workshop. (2007, February 6). [Author’s notes of the presentation and discussion]. FNB Training centre, Johannesburg.
FirstRand media release (2007, September 4). Joint media statement from FirstRand and Discovery. Retrieved from http://www.firstrand.co.za/Pages/News.aspx
270 FirstRand media release. (2010, March 3). New insurance power house created as Momentum and Metropolitan merge. Retrieved from http://www.firstrand.co.za /Pages/News.aspx
FirstRand media release. (2013, July 31). The 2012 FirstRand Laurie Dippenaar scholarship for postgraduate international study awarded. Retrieved from http://www.firstrand.co.za/Pages/News.aspx
Fischer-French, M. (2005, December 1). Three men and their incidental empire.
Maverick, 36-45.
FNB wins global banking award (2012, October 10). Fin24.com. Retrieved from http://www.fin24.com/Companies/Financial-Services/FNB-scoops-global-banking- award-20121010
Hardy, C., Phillips, N., & Lawrence, T. (1998). Distinguishing trust and power in interorganizational relations: Forms and façades of trust. In C. Lane & R. Bachmann (Eds.), Trust within and between organizations: Conceptual issues and empirical applications (pp. 64-84). Oxford, United Kingdom: Oxford University Press.
Harris, P. (2015, January). Curriculum Vitae. [Supplied by FirstRand].
Harris, P. (2015, April 30). Exuberant youth tied to grey hairs. Business Day website.
Retrieved from http://www.bdlive.co.za/opinion/2015/04/30/exuberant-youth-tied- to-grey-hairs
Hatch, M. J. (2006). Organization theory: Modern, symbolic, and postmodern perspectives. Oxford, United Kingdom: Oxford University Press.
Hogg, A. (2012, March 14). Moneyweb upper echelon podcast: Laurie Dippenaar chairman FirstRand group [Audio podcast]. Retrieved from http://www.moneyweb.co.za/moneyweb-financial/a-chartered-accountant-by- training- not-by-attitude
271 Holman, P. (2010). Engaging Emergence. San Francisco, CA: Barrett-Koehler.
Holy cows make the best steaks. (2000, April). Management Today, 35-37.
Jones, G. R. & George, J. M. (1998). The experience and evolution of trust: Implications for cooperation and teamwork. The Academy of Management Review, 23(3), 531-546.
Kets de Vries, M. F. R. (2011). Reflections on groups and organizations. San Francisco, CA: Jossey-Bass.
Kline, N. (2015). More time to think: The power of independent thinking. London, United Kingdom: Cassell Illustrated.
Lincoln, Y. S., & Guba, E. G. (2002). Judging the quality of case study reports. In M. B. Miles & A. M. Huberman (Eds.). The qualitative researcher’s companion (pp. 205- 215). Thousand Oaks, CA: Sage.
Matthews, C. (2013, October 7). When politics worked. Time, 46.
McCall Smith, A. (2005). 44 Scotland Street (pp. 323-324). Edinburgh, United Kingdom: Polygon.
Mittner, M. (2011, October 21). Up and at ‘em. Financial Mail, 34-42.
Myers, M. D. (2009). Qualitative research in business & management (1st ed.). Los Angeles, CA: Sage.
Myers, M. D. (2013). Qualitative research in business & management (2nd ed.). Los Angeles, CA: Sage.
Ndzamela, P. (2014, October 16). FirstRand: Ahead of the pack. Financial Mail.
Retrieved from http://www.financialmail.co.za/coverstory/2014/10/16/firstrand- ahead-of-the-pack
272 Phaff, M. (2008, July). Farewell speech [Outgoing CEO’s speech prepared for delivery at RMB conference]. Copy in possession of author.
Punch, K. P. (2005). Introduction to social research (2nd ed.). London, United Kingdom: Sage.
Schein, E. H. (2010). Organizational culture and leadership (4th ed.). San Francisco, CA: Jossey-Bass.
Schurink, W. J. (2005). Lecture twelve: Qualitative research report writing. Leadership in performance and change. Prepared for Department of Human Resource Management: University of Johannesburg.
Schwandt, T. A. (2007). The Sage dictionary of qualitative inquiry. (3rd ed.). Los Angeles, CA: Sage.
Shevel, A., & Spira, J. (1998, March 22). RMBH merger makes billionaires of Dippenaar and Ferreira. Independent Business.
Stake, R. E. (1995). The art of case study research. Thousand Oaks, CA: Sage.
Thorpe, R., & Holt, R. (2008). The Sage dictionary of qualitative management research. Los Angeles, CA: Sage.
Peltier, B. (2001). The Psychology of Executive Coaching: Theory and application.
New York, NY: Taylor & Francis.
Peters, T. J., & Waterman, R. H. (Date unknown). Toward Excellence. [Executive programme handout pp. 4-5]. Copy in possession of author.
Ungerer, M., Herholdt, J., & Le Roux, J. (2013). Leadership for all: Virtue practices to flourish. Randburg, South Africa: Knowledge Resources.
Van der Rede. L. (2007). Sensemaking and organisational storytelling (Unpublished master’s thesis). Stellenbosch University, South Africa.
273 Van Wynsberghe, R., & Khan, S. (2007). Redefining case study. International Journal of Qualitative Methods, 6(2), 80-94.
Van Zyl, A. (2005, September 24). Wenkultuur die rede vir groep se groot sukses [Winning culture the reason for group’s big success]. Rapport, Sake-Rapport.
Vinassa, A. (2003, April). Sky’s the limit. People Dynamics, 36.
Vorster, T. (2013). Sakegesprek met Theo Vorster: Sleutels tot sukses van ons top sakelui [Business discussion with Theo Vorster: Our top business people’s keys to success]. Johannesburg, South Africa: Jonathan Ball.
Weick, K. E., & Sutcliffe, K. M. (2007). Managing the unexpected (2nd ed.). San Francisco, CA: Jossey-Bass.
Wheatley, M. J. (2006). Leadership and the new science. San Francisco, CA: Berrett- Koehler.
Whitfield, B. (2011, October 27). A cool head. Finweek, 10-14.
Whitfield, B. (2013, October 3). Boere billionaires. Finweek, 10-17.
Yin, R. K. (2003). Case study research: Design and methods (3rd ed., Vol. 5). Applied social research methods series. Thousand Oaks, CA: Sage.
274 FOOTNOTES
1Mamma – Mummy
2Maties – Informal name referring to student of Stellenbosch University
3Meneer – Formal address, sir, or mister
4Raukie – Student of the former Rand Afrikaans University (RAU), renamed University of Johannesburg (UJ) 5Dagbreek – The name of a men’s residence at Stellenbosch University
6Tokkelokke – An Afrikaans term for theology students
7Rand Afrikaans University (RAU) – Renamed University of Johannesburg (UJ)
8Hoërskool Menlopark – Menlo Park High school
9Buurvrou – a female neighbour
10Oom en Tannie – respectful address, Uncle and Aunt
11windgat – braggart
12so lekker – a nice feeling
13gees – In this context it refers to the morale, enthusiasm or loyalty with which RMB employees approach the task at hand. 14Mevrou – A formal address, Madam, lady, or addressing a married woman
15grey shoes – In this context it refers to a traditional and/or conservative environment or culture. 16Pretoria West – In this context it suggested a “rough” neighbourhood.
17bakgat – great
18Madiba – The clan name for late president Nelson Mandela. The term is used a sign of respect and affection. 19Bokke – The national squad, the Springbok rugby team
20Die Kopdokter – The term by which Dr Francois Hugo, the group’s senior psychologist, is known. An English equivalent is not used. A possible direct translation could be “The Shrink”. 21Mamma skryf ‘n boek – Mummy is writing a book
275 EPILOGUE
An epilogue comes at the end for a reason. When your work is done. The earlier versions, and what I thought I wanted to say at this point, do not seem to work any longer. If there is one life lesson that was confirmed repeatedly in this story, it is: Be yourself. I will go with that.
If you have been working on a project for an extended period of time, it defies logic when you say: It is not done yet. How can it be possible after years’ work? It comes together when all the components are complete, when you see it cohere. It is done when you believe that you did your best, given everything else that is going on. When you understand what you have written and believe in it. A doctoral journey is meant to be challenging, to illustrate the complexity of academic work. I did not expect “doing a doctorate” to be easy, quite the contrary. I think this journey plays out in the same way as becoming a first time parent. You read about it, your friends share their experiences, but they do not tell you everything. They cannot possibly tell you what it is really like. Partly because it is not the same for everyone and then, once it is over, selective memory kicks in. This is useful.
If I look back on this journey that spanned several years - the thinking, doing, working with thousands of words, the detours, the drafts, the immersion - I know I took on an ambitious project, bigger in scope than first anticipated. I would not be the first or the last student to find this to be the case. Qualitative work took me far out of my comfort zone. I undoubtedly stepped into many potholes. The greater part of my career revolved around consulting and delivery of occupational assessments as input to talent management decisions. At one point I taught basic statistical principles to psychometrists and psychologists. As a novice qualitative researcher, I had a great deal to learn. There were foundational scholarly writings, there were pointers on format and structure, but by and large, creating an original qualitative work comes without prescription. This posed a challenge - coming to terms with the fact that there is not just one correct way. As much as I was searching for “the exemplar” that mirrored sufficiently what I was dealing with, it did not transpire. Once it dawned on me that this work is distinctly personal, I let intuition takes its course.
276 Despite past experience with financial services clients and with some understanding of retail banking operations, I cannot say that the world of mergers and acquisitions held a particular appeal for me. But then, the founders knew their business exceedingly well and in working with their story, I had to get to know their world. One of the many lessons I take away is the notion of, the more complex something is, the greater the need for simplicity. I heard this elegant thought coming through in so many guises, from the founders’ narratives and in the literature. It was not news, yet I wrestled with it a great deal. It will remain work in progress. Reading the literature on leadership, culture and organisational theory, was illuminating, but what surprised, was venturing into realms of philosophy and quantum theory. It took several attempts at picking it up and putting it down, but once I got my head around it, it was gripping.
The thesis did not develop in a linear way. The business story came first with the top and tail sections, developing later. Each chapter had the potential to develop into a full- blown thesis. I had to cut back extensively. There was much iterative activity. It was a process of construction and deconstruction and ultimately it required, forcing a structure. I know that some of the true gems, some exceptional narratives, did not make it into the final manuscript. For a long time I grappled with how the story ended, how to tie it together. It was a big moment when I thought I had cracked the code.
What turned out to be particularly hard, was writing. I used to think I could string together a sentence or two and had heard feedback to this effect. However, this thesis was very different and called for creative writing with business topics in mind. Many days I fell flat on my face. The worst was when I was trying to write well or trying to write clever. The acceptance that I am no novelist, but an industrial psychologist and researcher trying to tell a story, helped me to reframe. Much of what I thought sounded like authentic writing, on the rare occasions when it “poured out of me”, did not survive in the final version. Giving my work to someone else to read was a leap and one I have learnt from. It took some nerve to “kill your darlings”; the old piece of advice often given to aspiring writers by accomplished ones. I have since developed an even higher regard for literary writers and those who make a living through words. It takes talent, discipline, honing your craft and is essentially, unsocial. At no other time was the thesis process as intense as in the last phase, in bringing it all together. Moving from a file- with-chapters to a manuscript, involved more work than meets the eye.
277 In embarking on this study I expected the intellectual aspects to be challenging. What turned out to be the greater challenge was of a personal nature. It did require a great many and long hours. There were many other things that fell by the wayside. I found the solitary nature of it all particularly fierce. However, the sacrifices were not mine alone. I learnt how systems theory works, practically. Noticing how my being wrapped up in this process played out on the people around me was something else. My husband’s words in a casual phone conversation: “We are all doing a doctoral”, drove it home for me.
Working towards this personal and professional goal was not solo work. I could not have come this far without the support of the people closest to me. I do not have enough words to thank my husband, Gerhard, who put up with a great deal while this thesis formed part of our lives. Your own work is demanding and involves much travel, and yet, when you come home, we only see the best of you. Six-year old Nina grew up with: Mamma skryf ‘n boek20. Thank you Sweetheart for the many pictures you cheered me up with and for being independent beyond your years.
Figure 15. Nina’s drawing.
The story behind the story, my personal story, that ran parallel to this study, sounds a bit like: “Life happens while you are making other plans”. It is a cliché and yet, it fits. In the past eight years I have walked on many distant paths and an abundance of life played out. It is a story that involves a country move, becoming a mother, becoming
278 familiar in the unfamiliar, experiencing life’s ups and downs and a next country move. Undertaking this study was a stretch that coincided with other steep learning curves. The year 2008 was a year like no other. To say that it involved much change would be an understatement. Early in the year I boarded a plane that would take me to Tokyo. Leaving the familiar and loved ones behind was one of the bravest things I have done. When my husband was offered an overseas work assignment, some months before, we accepted, thinking it was an opportunity to experience something completely different. The timing felt right. I had been working on a doctoral research proposal and was an opportunity to take a study sabbatical. I put the finishing touches to my proposal during the week that we visited Tokyo for a “look and see” visit. Moving to Japan was every bit as exciting as it was a scary prospect. Besides my husband, I did not know a single person.
We thought we might stay for two years and packed very light. Everything went into storage and tenants moved into our house. As it turned out, we ended up living in Tokyo for five and a half years. We moved apartments three times. An adventure is an undertaking that excites, with the flipside being, an undertaking that also involves uncertainty, even danger. I can attest to experiencing both angles. What it was like to live in Japan is a story on its own. It has been an education like no other.
The early weeks in this new city were typical of a honeymoon period. The first friend I made was my neighbour, Carolin. She and her husband were equally fresh off the boat. Barely unpacked, still learning to navigate daily life, I threw myself into Japanese language lessons, learning Hiragana and Katakana, the two phonetic alphabets, and the way Japanese children are thought in the early years. It offered a window of understanding on the customs, evoked much goodwill and helped in getting by on a transactional level. My language teacher endured much and became more of a cultural attaché. It was quite an experience to be a registered doctoral student, but functionally illiterate in many ways in my new surroundings. Despite the language barrier, I thought I settled in rather well in this city with its millions of people where the sun always rises behind the sea of high-rise buildings.
I responded well to the Japanese way of order and efficiency, the politeness, the safety and freedom to walk about at all hours of day and night and the impeccable work and service ethic. As foreigners we had the advantage, we clearly stood out, and thus we
279 were forgiven for transgressions of custom and culture. An incident that reminds me of how much there was to learn is when we walked into a restaurant and seated ourselves at an empty table. It was a self-service place and when we eventually looked around, we noticed the incredibly long line of people waiting patiently to be seated, at another door. We had entered through the exit doors. In typical Japanese fashion, the other patrons and staff were more embarrassed than we were and would not point this out. There were days where all this decoding took a lot of energy, where I could taste the strangeness of it all. Many times I just had to laugh – when it felt as if I was part of a longitudinal sociology experiment.
A few weeks into our new life, I was totally stunned when I learnt that I was expecting a baby. The news was confirmed on Good Friday. It was the most unlikely of discoveries, much hoped for, but given up on. It came to me in equal measures, a combination of shock and surprise. Some of the assumptions I had worked on clearly flew out of the window. We were in for a seismic shift. In a way, it became part of my Tokyo induction. I joined a group for expecting mums, a mix of foreigner and Japanese women. It resembled something of a self-organising system. Most of us were in the same boat, with no parents, family or familiar support structures close by and essentially in need to build a village to raise a child. Every month we met at someone else’s home, usually in a high-rise, and because the nationalities reflected a mini-United Nations, it offered me a glimpse of many diverse cultures and rare entry into initially strangers’ homes.
In terms of my study, I made two 26-hour trips back to SA to conduct the data gathering interviews in May and July 2008. Our baby girl was born in Tokyo in October and we were smitten. As new parents do, we got on with the business of caring for a new baby. In this time there was no energy or headspace to work on the thesis. However, I often thought about the founders’ phrase, “The things your mother taught you.” It sounds simple enough, but it involves a great deal of work, every day.
There were a number of big life event changes in this time. It brought on a mixed bag of responses from feelings of loss, to experiences of new things gained. In 2010, just before cherry blossom season, I signed up as a volunteer at the Tokyo English Lifeline (TELL). I used to think I understood something about person-centred counseling, but there was much that I needed to unlearn. It was a humbling experience. The quality of
280 the phone counselor training was exceptional. It prepared me for listening to the most difficult of topics and supporting people in life’s vital moments. The practical work was tough. Yet, the shifts were not all somber, it was laced with laughter too. I learnt a great deal about cultural adjustment, not just from foreigners and expats, but also from Japanese returnees and mobile workforces. In reality, my business model for volunteering did not make sense. I was paying a helper to take care of my toddler, in order to volunteer. Yet, I found belonging to this community validating and the work meaningful. I often thought that many organisational leaders would give a great deal to see the same level of commitment in a workforce, as I saw in the volunteers around me. We were all engaged and chose to be there.
Besides the many aspects about Tokyo life I enjoyed and marveled at – the beautiful food from all over the world, how ancient culture and modern technology meet, the aesthetics, the natural landscapes, how the beauty of different seasons are celebrated, the most reliable trains, meeting new friends – there were difficult times too. In my memory, there is a time before 3.11 and a time thereafter. The 11th of March 2011 was one of the darkest days for Japan with the massive Great East Japan earthquake and tsunami killing close on 18 000 people, with the Fukushima nuclear explosion following the next morning. By this time we had grown to love the country and felt a definite kinship as this tragedy unfolded.
My experience of the earthquake was dominated by mother’s instinct kicking in like never before. Nina and I were at home on the Friday afternoon when our apartment building started to slowly sway. There is a tremor almost every day in Japan, but this was different. It went on far longer than normal, the sway intensified and then the bookshelves started to creak. We were on the third floor of a new building with 44 floors. Over the public announcement system came a warning of a major tsunami, in Japanese and English. I could see pedestrians looking up at the buildings around them. They were all swaying. I later heard that the sway of the building was about one meter. On television I watched with the rest of the world what was happening. The phone lines were down. My husband was at the office in Yokohama, 40 kilometers away, but there was a quick email. It was best to remain indoors but my instinct was to be outside. Inside our apartment there was no damage, no breakage, with only a mirror not fastened to the wall, tilting forward.
281 What I was not prepared for were the hundreds of aftershocks that followed in the next weeks and months. Nina and I left for South Africa, while Gerhard remained. The two months apart as a family were difficult, as were the months upon our return with the aftermath of the disasters still unfolding. This experience altered things for me. It also forges close bonds. I learnt from my friend Charmaine’s observation that it is a rare opportunity to experience a natural disaster. It also makes you count your blessings. In the years that followed new coping tactics emerged, whenever there was a tremor or an earthquake, we would check-in with one another, day or night.
I think of my time in Japan as a complex experience, much like the “umami” taste found in Japanese cooking. A delicate blend of the five tastes: sweet, salty, sour, bitter and peppery-hot. I have very fond memories of our lives in Japan. This is where we became a family. I am proud that Nina speaks Afrikaans, although when asked, she always says she comes from Japan.
While my thesis dealt with corporate culture and I looked at it through Schein’s developmental lens, I was experiencing foreign culture through Hofstede’s lens noting differences based on national cultures (cited in Hatch, 2006). In combination it somehow helped in making sense of my daily encounters. In reading another scholar’s work I came across the idea that the real job is not that of understanding foreign culture, but rather your own. It made a strong impression on me and is elegantly worded as follows:
Culture hides more than it reveals and strangely enough what it hides, it hides most effectively from its own participants. Years of study have convinced me that the real job is not to understand foreign culture but to understand your own (Hall, cited in Kets de Vries, 2011, p. 71).
In 2013 we bid farewell to Tokyo for a transfer to London. I was sad to say goodbye. The prospect of uprooting our daughter was unsettling, but then many children travel and adjust far better than their parents. A move to London held clear positives: we spoke and understood the language (or most of it), it was in the same time zone and an overnight flight away from SA and culturally, it was closer to home. When we relocated, it brought on relief and almost delayed shock at how much easier it was compared to moving to Tokyo initially. But then, second time round you draw on the
282 lessons learnt and are quicker out of the blocks. Where real life mimics a line from the thesis is that it takes time to start from scratch. For each country I have grown a special heart.
Figure 16. Zozoji temple, Tokyo, June 2013.
My doctoral journey was as much about crafting a thesis, as it was a road of self- discovery. There were new insights, new possibilities and new sensations. I was reminded of the things I knew about myself, what I do well and under what conditions. Equally so, I was reminded of what I rather wished away, what trips me up and why. This journey was not started with the intention to take as long as it did. It so happened that much life played out alongside it. If there is an aspect that I take pride in, it is that I managed to persevere.
I look forward to what comes next.
283