Every business starts small. Creativity, passion and a real entrepreneurial spirit usually drive the successful ones into large impressive corporations. But as these accomplishments take hold, the leaders – the entrepreneurs - often find themselves trapped in the role of corporate warrior, more focused on maximising efficiencies and chasing profits than on guiding the business to ongoing success.
I know how difficult it can be to maintain the entrepreneurial spirit that was the original heart of the business and how without it, the owner may feel that the future is doomed. So I encourage all entrepreneurs to harness their passion and hold on to it for dear life!
Learn to run
While running a smaller business comes with its own challenges, one thing is for certain: it's easy to drive new ideas and be fleet- footed in reacting to market changes. However, innovation is all too often forgotten as it grows into a large corporate with complex structures, systems and bureaucratic processes that streamline operations and increase margins. It shouldn't be like that, because as the market and economic environment changes – which it does constantly – that original entrepreneurial thinking is essential to keep pace!
INNOVATION VERSUS OPERATION
Some argue that the purpose of a big corporation is not to be innovative, but rather to be as efficient as possible, focusing only on operational excellence and maximising returns. I think that banks are a great example of this: focusing on operational excellence as undoubtedly brought down their cost structures.
And yet, when you see the introduction of products like Mpesa in Kenya, or FNB's offerings locally, it becomes quite clear that a bit of out-of-the-box thinking can still disrupt an entire sector, no matter how mature it may appear to be.
Think about it: Mpesa has revolutionized payments systems in sub-Saharan Africa and the Kenyan mobile money market is now worth in excess of $8 billion as a direct result. FNB has introduced a fresh approach to banking which has won them international accolades and has the competition scrambling to replicate. Obviously certain businesses require more innovation than others.
An advertising agency for example, is much less dependent on operational efficiency than a car manufacturer.
I would expect the leader of the business to easily recognize the difference.
The essential role of leadership
So how does an entrepreneur entrench his / her exciting creativity in the business once the corporate structures begin to take root?
Vital to driving the spirit of discovery is to lead by example and to make sure that there is always room for entrepreneurial ingenuity – that it is actively encouraged.
But beware; this kind of environment cannot be faked. It's also not something that can be imported or introduced through the use of consultants, it's either in the leaders' DNA or it is not. There are some obvious ways to incentivise creativity, like introducing incentive structures and applauding success.
While these may be congruent with the environment you are trying to create, it's really the day-to-day manner in which you run the business that matters. This requires connecting with your people truthfully and not by design - people will pick up if you are in any way being disingenuous. Be excited about what your teams do and share their enthusiasm. Above all, don't punish or embarrass them if they make mistakes or come up with an idea that doesn't make it – that's a sure way to kill innovation. As a leader it's very important to keep the entrepreneurial spirit alive so that it can filter through the ranks and survive long after you've retired.
But where to start?
This all starts with hiring the right people: those with the correct DNA and cultural fit. This is one of the challenges I personally have struggled with the most and I really think the difficulty is underplayed. There's the well-known saying: “If you pay peanuts you get monkeys” but sadly the corollary doesn't seem to hold true – paying lots doesn't guarantee that you will get a soaring eagle!
Then there's the question of resources. I think that when it comes to innovation, resources have nothing to do with it. When Apple created the Mac, IBM was spending at least 100 times more on R&D. Therefore, it's not about money but rather about the people you have, creating passion and excitement, and providing the headspace and time to be inventive.
Overcoming the challenges
The biggest challenge in remaining entrepreneurial in your approach is to get buy-in from stakeholders. This is especially true for listed businesses that have a responsibility to shareholders who are primarily concerned with profits. I think Apple was one of the very few listed entities that managed to balance the pressure to produce profit with being simultaneously innovative.
But if you read Apple CEO Steve Jobs biography, he said he never cared for profit, only a beautiful product. “Profits would be consequential to beautiful products,” he said. For listed start-ups, there is a honeymoon period in which investors may not expect a return, but rest assured this will change and so the importance of financial value submerges the desire to come up with new ideas. When Facebook listed, they were hammered right from the start and as soon as Google missed their profit target its share price dived…
Don't sit still!
At Sage Pastel, we play in one of the most rapidly changing and innovative sectors, so for us it's essential to remain quick off the mark in developing cutting-edge products that meet our customers' expectations. This doesn't only position us as leaders in the software market but also as technology entrepreneurs. It's a space we've worked hard to fill, but to keep it as ours we simply cannot afford to sit still! Don't let me make it sound easier than it is: remaining entrepreneurial within a large enterprise is tough.
We've experienced many growing pains as Pastel has transformed from a three-partners-with-two-staff start-up 22 years ago, to a JSE-listed company, and further into the African partner of London-listed Sage Group plc. Throughout, our innovative appetite has never waned. It may be my entrepreneurial spirit or just a solid business principle, but I really believe that creative endeavour is critical to the long-term success of any business and must be nurtured every bit as much as profit margins.
Can CAs(SA) be entrepreneurs?
I believe so, and there are many remarkable examples. But sadly, they tend to be the exception rather than the rule. As a profession we need to see some changes. For a start, we as CAs(SA) must become less elitist. There are other accounting bodies out there such as CIMA (Chartered Institute of Management Accountants) with no such stigma attached to them, and we're in danger of losing membership to them unless we change. I am concerned that the CA(SA) qualification is losing its prestige.
I often give talks to university accountancy undergraduates and find that many of them have no intention of pursuing the CA(SA) qualification. In my day, there wasn't a question in any accounting undergraduate's mind but they aspired to be a proud CA(SA). So what happened that leads university graduates to register with lower profile institutes? By becoming so elitist, I believe we have created a disconnect with the broader accounting profession and the ordinary public, because the average CA(SA) is still not a people's person.
In fact, chartered accountancy is an ideal training ground for entrepreneurism – and ought to be seen more broadly as such. I had a childhood ambition to be a doctor and thank the heavens every day that I instead took my parents' advice to do accountancy. As a CA(SA), you are constantly tested to the limit by a broad range of people. You're exposed to a far more diverse range of experiences and opportunities. In other professions, you typically know where you're headed, but as an accountant the opportunity
lies literally anywhere from financial journalism to charity work. What better grounding for an entrepreneur?
Not a typical accountant
How I ended up as managing director of an IT firm was via a rather circuitous route, but in retrospect probably not that unusual. While studying accountancy at university I concurrently majored in Business Information Systems – something that I had an interest in. Later, when I was called up for military service I got involved in their computer training corps and the deeper I got into this the
more interested I became.
On discharge, I leaned more towards the IT side of business and accounting. I'm probably not a typical accountant in that I'm a lousy bookkeeper – admin is definitely a weak area of mine: it's just not in my personality. In contrast, I connect well with people. Don't get me wrong: I enjoyed studying accountancy and at heart I'm an academic. I still lecture and tutor people today and love hanging out at Wits library! Moreover I'm a good teacher, and used to do it to earn extra money in my army days.
The big switch for me came when we listed. I was the financial director and being such a defining moment in the company's history I decided on some commensurate introspection. I realised I was a far better operations guy than financial guy and switched posts. It was the best move I ever made – not just for me but for the company. What makes me a good ops guy is that I also have a considerable flair for understanding financial information.
Be a people's person, dammit!
That, combined with being a closet teacher and people's person, means I enjoy helping other people. Though not one for accolades, what drives me is the opportunity to make a difference in people's lives – and societies. What I really like to do is employ more people and open their minds. One of the coolest things I've ever experienced is that five people have, at different times, approached me and acknowledged that I'd changed their lives.
Earning a salary or making profit pales into virtual insignificance compared to that! This is what I mean about the profession having to change. I don't believe the stereotypical CA(SA) is seen as a personable entrepreneur, but after all these years retains the image of a little grey-suited man (and occasional woman). In its drive to recruit more people, and different types of people, Saica is definitely trying to get society to view CAs(SA) in a different light, but I believe we all need to dig a little deeper in this respect.
The stereotype just does not sit well with Generation Y and others. It has to change. I hope I can be that CA(SA) entrepreneurial role model for many people. I did not come from a wealthy background, and my early motivation was more based on fear of poverty than earning lots of money. I believe many of today's aspiring youth can relate to this experience. I'm most proud of having employed more than five hundred people, and thereby touched the lives of thousands all over Africa. That's the highest aspiration I can think of. Almost as proudly I can claim Sage Pastel is a truly South African company – we stayed South African when so many others opted to leave in the uncertainty of an unknown postdemocracy society. Employment lies at the heart of entrepreneurship and too many accountants subliminally denigrate employment as an ‘overhead', thereby missing the positive societal impact it has.
The weight of responsibility an accountant has towards ethics
CAs(SA) can still make a major contribution to the entrepreneurial culture in South Africa, even if they do not want to be entrepreneurs themselves, or employ people. CAs(SA) can impact by enforcing ethical behavior. Major fraud rarely occurs without the involvement or acquiescence of an accountant somewhere along the chain. While nobody is saying accountants are unethical, it has to be understood they own the tools that can clamp down on major fraud. People have to be more ethical. Don't bend the rules!
As the gatekeepers of company records, accountants need to be challenged all the time as to their role, which has to be as much about ethical behavior as about the bottom line. I believe what keeps me grounded in ethics and decision making, is that I see myself as working for the people that work for me, more than vice versa. That is a value I live by: I would do anything that I ask my staff to do.
When in doubt, get a mentor
My advice to anyone entering business, whether as a corporate CA(SA) or as an entrepreneur is – seek out a mentor. I have had two. These are not formal programmes, but an understanding that they were mentoring me in areas of life I need a sounding board for. One is close friend Brian Zuk, who through his profession as a psychologist has taught me a great deal about the emotional side of life.
The second is my Sage Pastel partner Ivan Epstein, whose strengths and weaknesses perfectly complement my own, so that
the combination of us two has given us both the full A-Z of leadership skills. In truth, we mentor each other. I would recommend anyone have a mentor – but it has to be someone prepared to put the effort into it. I continually get asked to mentor people and am equally receptive and selective.
For instance, I won't help people ‘make lots of money' or to do an M&A deal, but I will help them to think for themselves. The reality is all of us mentor people all the time – in every conversation, and by changing their view of the world!