Published on Africa Can End Poverty

What can we learn from successful companies and teams?

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ImageThis is the time of year when we make resolutions and you may be wondering what you can do better and more efficiently in 2013.A lot of books have been written on the topic but one of the best is 7 Habits of Highly Effective People by Stephen Covey who died in 2012. The 7 habits are: Be proactive; Begin with the end in mind; Put first things first; Think win-win; Seek first to understand, then to be understood; Synergize; Renew yourself.

Covey’s son – also called Stephen – wrote another remarkable book called The Speed of Trust, which includes this noteworthy statement: “You need to trust yourself before you can trust others.”

How do these leadership mantras relate to development and economics? A lot more than meets the eye, since the performance of governments and companies is largely contingent on how they are managed, how their leaders inspire their employees, how they reward performance, learn from failure and which ethical principles guide them. Think of countries as diverse as Mauritius, Singapore or Germany. What do they have in common? They don’t have natural resources to speak of, but seem to have found a way in which their citizens work together relatively effectively.

I always learned a lot from stories of individual companies, which are also fascinating thrillers in their own right. One of my favorite is the tale of “Southwest Airways” about how a low-cost carrier became one of America’s leading and most respected enterprises. A more recent book is Bryce Hoffman’s American Icon. It documents how Alan Mulally, the CEO of Ford since end 2006, saved the company from bankruptcy and returned it to its previous glory despite the global financial crisis and being an outsider to the car industry.

There are many factors that set good and bad companies apart. I have a two word and a one word summary: Great leadership and Teamwork. The greatest companies (also analyzed in Jim Collin’s Good to Great) had modest leaders who were truly passionate about their work and especially their staff. They understood that leadership is important but it is not about the leaders, who need to take their work seriously not themselves.

What does this mean for Kenya? Kenya’s private sector is dynamic and includes a large number of very impressive companies. Since I moved here, I have made it a habit to visit companies with my team. We call them “visits to the real economy”. To date we sampled companies in: cut flowers, tea, textiles, dairy, consumer goods, banks, telecoms, breweries, cement factories, and assembly plants. They have left me with the unshakeable belief that Kenya is uniquely placed to prosper. Already, the strength of these companies and their peers is one reason why, after several waves of shocks since 2008, Kenya’s economy is still standing. Just imagine how well the country could fare if the bottlenecks to private sector development and entrepreneurship were removed!

Despite their differences, the most impressive companies were similar with respect to two related management principles:

  • Empowering the “factory floor”. All strong companies empower their employees. The most memorable moment was at BIDCO, one of the largest consumer product companies in East and Central Africa. At their Thika factory outside Nairobi, we climbed several ladders and, in the middle of many huge pipes, we met the “factory floor manager”. He was responsible for keeping the machine room running. With great pride he showed us his reporting sheet, which documented the pass-through of a substance in 15 minutes intervals, including the measures he took to correct any errors. The mid-level manager who guided us through his company added: “We managers need to follow the 20/80 rule – 20% routine work and 80% strategy. We should not interfere in the day-to-day running of the operation”.
  • Performance culture. Most of the companies we visited measure the performance of their employees on a regular basis. The cut-flower company Oserian in Naivasha impressed us particularly. They recognize the most productive worker on a daily basis. The worker– typically a woman–receives a salary top-up and a flag that everyone can see from across the factory floor.

Are you still unconvinced? Last year, a Kenyan businessman received the prestigious “World Entrepreneur of the year 2012” award. James Mwangi, CEO of Equity Bank since 2004, grew the company from a small outfit to an East African conglomerate with an asset base estimated at over US$1.5 billion. To do that, he followed precisely the core principles we have been talking about: a great vision, high integrity, humility, focus, and a belief that everybody, including the poorest in any society, can make a contribution.

If you are interested to find out more, have a look at the columns of Sunny Bindra, Mike Eldon and many other Kenyans who have been contributing to this discussion every week.

Follow Wolfgang Fengler on Twitter@wolfgangfengler.

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