How to lead when times get tough: purpose, transparency and team members



The Australian Growth Company Awards recognise and celebrate companies making moves in the mid-market bracket. As part of the 2019 program a panel event was held in Sydney, co-hosted by Investec Australia and Hamilton Locke, where discussions revolved around the following question: ‘how do we lead companies to instigate or maintain growth in times of complexity and volatility?’


The panel was moderated by Simon Beissel, Head of Corporate & Acquisition Finance at Investec, and comprised of Nick Humphrey, Co-founder and Managing Partner of Hamilton Locke, Will Davies, Co-founder and CEO of Car Next Door, Menno Veeneklaas, Chief Operating Partner at Allegro Funds and Julia van Graas, Co-founder of Spiique.


Well, it turns out there is no secret sauce, and it all comes down to three key factors: identifying purpose, maintaining transparency and valuing individuals. These elements are inextricably linked and compounding, leading either to exponential growth if successful, or stagnancy if unsuccessful.


1. Understanding and articulating purpose


Nick spoke about the distinction between purpose and the buzzwords often overused by leadership teams. Purpose is the raison d’etre of the company, distinct from ‘mission’ which is what companies are striving to achieve, from ‘strategy’ which is implementation of the mission and from ‘vision’ which is the company’s aspirations. With purpose comes motivation and unsurprisingly, growth; it’s shown that companies with a clearly defined purpose grow three times faster than those without.


Will’s experience with Car Next Door exemplifies the importance of purpose. After questioning his purpose as a mortgage broker (he’s still trying to figure that one out), he moved on to pursue something environmentally meaningful. The business of Car Next Door is predicated on its primary purpose, being reducing carbon emissions through peer-to-peer car sharing. Amongst other things, this meant that as the team grew, purpose alignment was maintained. It was a source of strength that carried the business through financial struggles between 2013 and 2015. With the underlying purpose articulated and understood by each team member, the company was able to hold themselves accountable, not to profit, but to purpose and from there, successfully continue to grow.


By contrast, Menno witnessed a complete misalignment of purpose when he stepped in as interim CEO of a higher education company. To begin with, there were material gaps in the leadership team, including no CEO or CFO. Furthermore, business units were being propelled in different directions. It was a stand-off between factions, including the marketing team, the academics and the back-office. The pursuit of multiple simultaneous goals detracts from focus, and inevitably, an organisation’s purpose. In this case, this manifested in a broken culture and structural dysfunction at all levels of the company. In order to mend existing fractures, Menno and the leadership team did a deep-dive. They visited each of the six campuses and conducted focus groups with students, being the customers of the business, and connected with each individual staff member. Consequently, a common purpose emerged. One that the leadership team did not initially expect, but ultimately agreed was on point. Menno learnt and now emphasises the importance of a succinct purpose statement that can be easily articulated and widely understood, one that resonates throughout the business. With a clear purpose in mind, issues of the business can be discerned and dealt with successfully, and the group can move forward together.


2. Top-down transparency

Another common theme was the importance of transparency. Will spoke of an experience at Car Next Door when data was presented to him showing customer service and car repair fees were costing the business. Instinctively and initially, it was kept private. But 6 months passed with no significant or successful changes on the issue. It was then that Will decided to share the data and seek input from multiple levels of the business. By doing so, teams were given an opportunity to work on something vital to the continued success of the company. Individual divisions addressed different aspects of the problem, leveraging their expertise. Moreover, a by-product of transparency around the issue was open problem-solving dialogues which ultimately facilitated collaboration on a holistic solution.


Evidently, openness and trust are integral to a company’s success and growth. Entrusting people with a company’s vulnerabilities can often spur motivation by creating both collective and individual accountability. With that comes greater contribution to, and investment in, the business. Without trust, there is low collaboration, low creativity, low engagement and ultimately low retention. So, how do we breed a culture of trust? Nick shared with us the wisdom of Professor Paul Zak. Professor Zak conducted a trial on the behaviour of animals, and found they released oxytocin when they felt trust. The hypothesis was also true for humans, but with added complexity. The results showed oxytocin was released during common trust-building exercises and when presented with consistency in behaviour or performance. Somewhat counter-intuitively though, oxytocin was also released when people were placed out of their comfort zone and thrust into autonomy. For Nick, these techniques do not solely need to be applied in the work-context for benefits to translate to the workplace. He takes his employees canyoning, for example.


As Julia said, trust is multifaceted and built over time and therein lies the difficulty for turnaround or newly acquired leadership positions. It has its own advantages, including no pre-existing loyalties or biases (Menno calls this the ‘Swiss’ mindset), but it also faces barriers to change and initial apprehension. Notwithstanding, the general rule prevails: consistency, persistent transparency and autonomy develops trust, which is vital to a company’s success and longevity.


3. Employees are investors too

Nick highlighted the importance of leaders connecting with each stakeholder of the company, being the company itself, the community, the clients, the team and the individuals. Being conscious of the role of each team member is vital. This is particularly relevant in the modern corporate world. Dame Minouche Shafik identifies the shifting focus of businesses through the ages, from muscle to brains to heart, the latter being where we find ourselves now. A corollary of this is treating employees as investors in the business. Menno elucidated that their contribution and output is the ‘return on investment’. By investing in and encouraging individuals, businesses are able to optimise on the potential of people. This requires regularly tracking people experience and customer experience, which provide the heartbeat of the company and an understanding of its working parts.


Julia pointed out that in evaluating individuals, it is important to assume the positive intent of humans, in that they come to work each day to do good and add value. This creates a safe and positive psychological space, which allows team members to be vulnerable and concomitantly, courageous and creative. A way of breeding that culture is to encourage and create dialogue irrespective of positions and power. Nick agreed and additionally noted the value of taking a step further as leaders and individually empowering team members. Amongst other things, he does this by encouraging attainment of the state known as ‘flow’ (named by renowned psychologist Mihaly Csikszentimihalyi), whereby the mind operates at up to five times higher productivity and three times greater creativity. Without understanding, empowering and recognising team members, motivation slumps and a business can break down. Indeed, a company is not its numbers or profit margins, it is its people, their leadership, experience and efforts.


Conclusion

The Breakfast Briefing concluded with the swapping of business cards and the sharing of ideas. Ensuing conversations agreed on the importance of purpose and transparency throughout a company. A particularly relevant tenet of discussions for growth companies was the understanding, recognition and empowerment of its people, being the invaluable contributors to, and custodians of, the business.

About the Australian Growth Company Awards

Launched in 2012, the Australian Growth Company Awards celebrate excellence in the mid-market. They recognise companies that demonstrate high rates of growth, as well as innovation, integrity, contribution to community and sustainable growth.


The 2019 Awards are proudly co-sponsored by Investec Australia, Computershare, Intralinks, GlobalX, Deloitte, Willis Towers Watson, NAB Health, Hamilton Locke and 2020 Exchange. Mergermarket is the media partner.


About the Author

Amelia Schubach is a lawyer in our corporate team, advising on M&A, private equity, venture capital and general corporate transactions. Amelia previously worked at a large global firm, with experience in acquisition and leveraged finance, having advised debt funds, global investment banks and corporate borrowers in a range of financings. She has worked in Sydney, Perth, Tokyo and Ho Chi Minh City.

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