It’s a simple fact of life that for growing companies, the most important person is the one at the top. GrowthBusiness talks to four successful entrepreneurs in a bid to uncover the essence of their winning ways.
It’s a simple fact of life that for growing companies, the most important person is the one at the top. The attitude, personality and culture instilled into an organisation by its leaders is often the difference between success and failure. GrowthBusiness talks to four successful entrepreneurs in a bid to uncover the essence of their winning ways.
‘I lead through a rewards-based culture’
Over the past eight years, Bob Holt’s Mears Group has blossomed into one of the most dynamic support services plays in the UK. Its core business is the supply of maintenance services to the social housing sector, fixing, repairing and refurbishing housing stock on behalf of local councils and registered social landlords.
Under Holt’s stewardship the group has posted an annual compound growth rate of 43 per cent since listing on the AIM market in 1996. Its last results showed profits of £5.2 million, sales of £112.3 million and a forward order book of £550 million, stretching as far ahead as 2019.
Holt reckons that much of this success stems from the lessons he learnt working for Michael Ashcroft (of ADT) and then Tony Berry (from Blue Arrow) in the 1980s and early 1990s. Says Holt, ‘I know of only one way to lead and manage and that is through a rewards-based culture. This business demands that we work in partnership with many different clients delivering professional services over many years. We have succeeded because there is a “Mears Way” and sufficient incentives for our 2,000-strong employee workforce to embrace this way of working.’
For Holt, these incentives come in many different guises, from salaries and bonuses to share options and internal promotions – always likely in a group growing as fast as Mears.
He admits though that to properly enthuse a team, cash, in isolation, is insufficient. ‘I do believe that I have a flair for getting good people to buy into the Mears project. Part of this is cash but the other part is convincing your senior managers and indeed the rest of the staff that you have the knowledge to commercially exploit the sector and grow the business for everyone’s benefit. When we bought Mears in 1996 I knew about management and had certain insights into this sector. Now I am totally immersed in it. I liase very closely with Councils, Housing Associations, sit on many committees, advise Government agencies when and where I can and attempt to forecast where this industry is heading.’
Holt’s simple argument is that staff need to know that those at the helm have few rivals in the knowledge department. ‘To a certain extent, both myself and David Robertson (the finance director) have continually made ourselves redundant by employing good managers and then good executives to fulfil our operational roles. They all now look after the day-to-day and
we look after the profits and the corporate strategy. I have done almost every job at this company down the years and I am mentally engaged. But I say to staff, work hard and stay focused on your own role. Leave the strategy to us. We know what we are doing.’
Red Letter Days
‘Passion is a driver’
Few people have yet to hear of Rachel Elnaugh, the inspiration and driving force behind Red Letters Days (RLD), the innovative group that pioneered the concept of giving experiences as gifts.
Started back in 1989 in a room in Elnaugh’s house the group achieved sales of just £10,000 in its first year. In its second it achieved £30,000 and by its third, turnover was running at around £300,000. Now the group boasts sales of over £20 million per year and has profits in the region of £2 million. In all, RLD offers over 300 experiences that can be bought as gifts for your nearest and dearest, from America’s Cup sailing opportunities to Ferrari driving, dolphin watching and even, for the very brave, journeys to the edge of space.
Ensconced now in beautiful offices in London’s Muswell Hill, with spectacular panoramic views of all of London, Rachel seems genuinely unsurprised at the success of her business.
‘It’s fair to say that we have created a new industry with Red Letter Days. We have basically found a way of wrapping an intangible and giving it to someone as a gift. Under the surface, though, it’s just a marketing services operation, putting customers the way of suppliers and taking a commission every time someone buys. It is simple, but if there is a difference between competititors, and us it’s the passion we’ve infused the business with.’
Indeed, passionate is probably the best way to describe her leadership style and the ethos that underpins the firm. Says Elnaugh, ‘everything we do here is based around ensuring our iconic brand remains inspirational, premium and exclusive. We don’t dabble at the commoditised end of the market; we’re not “pile it high and sell it cheap”. We’re unique and we strive to keep it that way.’
Her singular determination to keep RLD exclusive colours her management. ‘A lot of our growth has been word-of-mouth and existing customers returning to buy again, which is fantastic. It testifies to our ability to create a company that has an elusive – yet successful – magnetic marketing push. I prefer this approach to the hard, male, sales push.’
Personal is a word she deploys often. The group is not structured conventionally but has a more unorthodox set-up to allow people to engage ‘personally’ with the business. ‘I like to give people the space to move and develop. I don’t like corporate straitjackets.’
The recruitment process she oversees is about finding people who care about the brand. She claims that the board are ‘personally engaged’ in the induction of new employees to ensure they are aware of what the business is about. ‘People have to be passionate, if not, there’s not much point in them working here. With passion comes great products and great customer service.’
She describes her leadership role as one in which she expects herself to ‘inspire and enthuse the workforce, to be a catalyst for innovation’. When people stand out she likes to give them responsibility, saying ‘it’s personally rewarding watching people run and thrive with this.’
As for how decisions are arrived at, Elnaugh claims, ‘At RLD we have a collaborative atmosphere which engenders a healthy team spirit. I don’t hold a veto on all decisions. I like and need to be challenged. It keeps me thinking and the brand and the business alive.’
‘focus, flexibility and control are key’
Nick Robertson’s fashion retailing site ASOS (short for As Seen On Screen) is something of a revelation in the world of online retail. In three quick years it has become one of the top five online clothing stores with over 30,000 customers and 299,000 registered users. It is also highly cash generative and profitable. This year it expects to report earnings of £570,000 while next year it is on course to almost double that.
The business is based on a simple concept. Basically, ASOS finds out what famous people are wearing and heavily pushes related clothes (and accessories) it has swiftly sourced onto its site as fast as it can. Its main target is 16-24-year-old females and its knack of getting the product pitch right is alarming – at one point this year it was selling over 300 pairs of a Victoria Beckham-inspired line of jeans per day.
The group floated on the Stock Exchange in 2001 raising £225,000 and it is the discipline of the market – and its demands – that have shaped Robertson’s leadership of the company.
‘I wouldn’t say I have a strict adherence to a type of leadership as such, but it’s true that my approach and style has changed since we became a public company. The bottom line is that we must meet or exceed (preferably the latter) our financial targets. No ifs, no buts. Everything we do and everything I instruct to be done is coloured with this reality. I get that message across to everyone here.’
His desire to fulfil his public company responsibilities (and his entrepreneurial flair) was exhibited last summer when he quickly realised that demand for his products was outstripping his ability to deliver. Cash-strapped at the time, Robertson couldn’t afford to buy in the stock he knew he could sell. ‘At the time an opportunity arose that we were initially not in the position to fully exploit. If we had carried on the same track we could have made a small profit, but I knew we could really thrive if we could buy more stock. So I quickly raised the money in the market, sourced the stock and the end result will be the profits of £570,000 we expect to report shortly.’
The episode underlined his belief in the core principles of focus and flexibility.
Says Robertson, ‘my role here is to keep everyone focused on our business model. We know it works and we know it generates good profits. Because of this, I refuse to be deviated from it. CEOs from small companies can often get distracted. I refuse to be. Our company is in essence a department store, albeit on the web. To increase the range of what we sell, I will merely replicate the model to cover other goods. There is no other direction to take.’
Because his company is still, in relative terms small, Robertson also knows that he will have to fulfil a range of roles. He expects the same adaptability from his staff. ‘Given the stage we are at I demand total flexibility from everyone here. No job is routine, no role is fixed. Those that are flexible enough to help us grow will be rewarded.’
Perhaps the most important aspect of Robertson’s rule though is his belief that ASOS must control its own destiny. He says ‘our line of work demands that we must react quickly and intelligently in the market. To do this we must have control, which I think we have. We decide what we want to stock. Our buyers source the clothes and our own distribution and warehouse fulfils the orders on demand. We hire our own models and take our own photographs for the website. And of course, we have the technical ability in-house to ensure our website is always up to date and changed when the product mix changes. This chain of command is all in-house.’
Robert Wiseman Dairies
‘A can-do attitude – today, not tomorrow’
Robert Wiseman is probably one of the most down-to-earth, charmingly disarming executives leading a British company today. He describes himself rather willingly as ‘a milkman’, a title that does no service whatsoever to the achievements he and his brother have recorded as the leading lights at Robert Wiseman Dairies.
This group, once a mere supplier of milk to the affable folk of East Kilbride, realised back in the 1970s that milk distribution would be revolutionised by the rise of Tesco et al. They immediately changed their business to adapt and now Wiseman controls around 20 per cent of the milk supply in the UK. He employs 3,000 staff, has sales north of £300 million and in the last half-year boosted profits 21 per cent to £13.5 million. The growth presided over by Wiseman earned him the title of Ernst & Young Entrepreneur of the Year 2003.
Despite the accolade though, he remains unfazed. ‘I have an old-fashioned approach to leading this company, a few key tenets born of my days when I really was a milkman. They have relevance to everyone who works here –
If a job is worth doing, do it well and do it now.’
These simple words of advice have no-doubt been repeated to each and every employee that has been embraced by the company over the years (Wiseman has completed no less than 52 acquisitions).
‘When we acquire businesses we act quickly to turn new employees into RW employees. I am very open and very honest. I explain the situation, outline the changes and wait for the response.’
Wiseman, however, acknowledges that this type of change – a constant feature of his empire – is never easy. ‘I am firm and fair in equal measure. After everything has been explained in detail it’s up to management and employees to adapt or move on. The goal has to be the health of the business.’
For this reason Wiseman refuses to tolerate ‘festering sores’ within the group – either in terms of failing subsidiaries or disgruntled employees. ‘If a manager shirks his responsibility in dealing with a problem a business will fail. Firmness and timeliness in purpose must never be underestimated.’
Of course, those that do stay share in the success of the group. ‘Everyone who works here has a bit of the action. From profit share schemes, to share giveaways [£3 million was recently spent on giving 100 shares to all staff] and long-term incentive schemes, we distribute the wealth back to those that have helped create it. It engenders loyalty and a more alert attitude towards profits by everyone. Staff know that wastage and inefficiency affects profits, which affects their bonuses.’
Wiseman’s other key leadership trait is his engagement with every aspect of the operation. ‘It is paramount that I am always out and about, liasing with customers, communicating with staff, visiting our sites and listening all the time. Management that is divorced from the nitty gritty on the ground is on a hiding to nothing.’