No industry was hit harder than the automotive business during the Great Recession, but the nation’s biggest vehicle remarketer got through the downturn in large part by focusing on — and trying to meet — the needs of its two most important constituencies: customers and employees.
KAR Global, a $2.4 billion company headquartered in Carmel, Indiana, has benefited from a robust used-car market over the last decade and from the major decision by CEO Jim Hallett to acquire an operation that took the company into e-commerce several years ago. But to achieve that success, Hallett had to lead the company he founded in 1990 through the 2008 and 2009 downturn in shape to take advantage of what the last 10 years would offer.
Primary to his strategy was to put customers and employees at the center of things. With customers — such as the rental fleets that buy used vehicles in bulk — “we would talk to them and ask them, ‘What are your pain points and how can we support you’” through the downturn, Hallett saying“Because if you can support your customers during difficult times, they’ll reward you during the good times.”
For example, some KAR customers needed places to park and store vehicles “because they couldn’t resell them all at the prices the market was offering and had to wait things out for some period of time,” Hallett said. “So we went out and acquired additional land so we could do that at no charge to customers. And then when the recession ended, that business came to us.”
In regard to KAR Global employees — whose ranks number about 15,000 today — Hallett focused on transparency, honesty and opportunity.
“You have to be willing to be really transparent with your workforce and tell them the truth and what you’re dealing with and what the plan is,” Hallett said. For example, the company decided that it needed to cut some employees and to “get fewer people to do more work — to become more efficient,” he said.
“But you’ve got to protect your good people,” Hallett added. “Not just people who’ve been with you for a long time, but who are the people you need when you come out of the recession to help manage you back to where you need to be?”
About 5 to 10 percent of the U.S. population have some form of Attention Deficit Hyperactivity Disorder or Attention Deficit Disorder, according to the literature, meaning that a good number of CEOs are likely afflicted by these conditions. But Genesis10 CEO Harley Lippman proves that a determined business leader can overcome ADD.
In fact, Lippman believes that executives actually can leverage some of the characteristics of attention-deficit disorders to make themselves exemplary leaders—and maybe even provide lessons to other CEOs not so afflicted.
“I do think a lot of CEOs have ADD, because if you have it, you have to be focused on the bottom line and results, on the big picture – which is a hallmark of a successful CEO,” Lippman said “I’m not a details person. But like any CEO, I can hire people who are. A person with ADD is well-qualified for the big picture and for the bottom line because sometimes we almost can be qualified for nothing else. You need details people, and those are valuable roles, but they’re not the role of the CEO, who needs to be looking up, not down in the weeds.”
Lippman founded the New York City-based professional technology-services staffing firm 20 years ago and has built Genesis10 into a national leader with more than 2,000 employees and consultants and more than 20 sales and recruiting offices throughout North America.
Along the way, he said, Lippman has learned to overcome some of the drawbacks of his attention-deficit disorder, such as a short attention span and an inability to stick with the thread of a conversation, and even to turn them into advantages. At the same time, he doesn’t minimize the challenges that having the condition has posed to him as a business leader and communicator.
“People will make a presentation to me as the owner of [Genesis10] and I’ll tell them that I have ADD so they should give me the bottom line first,” Lippman said. “It’s a good business-communication method anyway—knowing the bottom line first. If I know where someone is going and their bottom line, I can follow them a lot better. The problem with ADD is that if someone starts a story, in the middle of what their saying my brain goes somewhere else. And I have to explain that to them so they don’t think I’m being rude or am bored, which invariably is what people feel.
“Yet what I find interesting is that most people don’t listen to my suggestion; they’ll laugh and smile at me and chuckle and don’t take me seriously that this is a learning disability … They’re not listening to my guidance, and yet I’m their customer. They need to listen to me if they want to sell me whatever idea or product or service they are pitching to me. I find it stunning—do I remind them of what I told them, or do I ignore it? I don’t want to make people feel uncomfortable.”
At the same time, he said, dealing with his disorder “gives me greater sensitivity” to things such as the importance of making sure listeners are getting the point. Dealing with ADD, he said, has forced him to compensate by sharpening other skills in the same sense that a blind or deaf person partially compensates for a disability with heightened other senses.
The tolerance and compassion he has gained “improve my relationships with colleagues and personal relationships,” Lippman said. “If you can put yourself in others’ shoes and show empathy, that is critical.”
Lippman said that leaders with attention-deficit disorders “should let people know and not keep it in the closet. It’s a recognized disability.” Be “up front with the disclosure,” he urged, guiding colleagues and others on “being patient.”
Penguins are resilient and reliable. They enter monogamous relationships, nest in the same rookery for life and survived whatever killed the dinosaurs.
That’s why Kristine Anvik Leach, Managing Director of Jotun India, likes to call everyone she works with a penguin. “I’ll walk right up to them and say, ‘Good morning penguin!’”
It seems unusual but at Jotun they call it the ‘penguin spirit’, an effort to associate workers with the symbol of company culture.
“The penguin values loyalty, care, respect and boldness,” she tells The CEO Magazine. “These aren’t values that are written by consultants or referred to once a year. They’re the values that we live by.”
Leading the company, Kristine says her focus is on driving people, and the penguin is a helpful reminder of what she expects from the team. “I’m managing people and ensuring there’s quality from our services. That comes through the ambition I help cultivate, being in the workplace and understanding what people want. I think the penguin really drives that point home.”
One of the world’s largest paint companies, Jotun manufactures a range of performance coatings and decorative paints. Based in Norway, the business was founded in 1926 by Odd Gleditsch Sr., a man who prided himself on his “ability to find able employees and to listen … to their thoughts, suggestions and ideas”.
Operating for more than 90 years, Jotun is today present in seven regions with 40 production facilities spread across more than 100 countries.
Managing Jotun’s operations in India is Kristine. She says she is proud of its presence in the country and the fact that it produces most of the paint it sells to the local market.
“We make paint in India for India, and we have opened a brand new research and development centre because we want to target the Indian market directly while ensuring the entire supply chain is located in India.”
Kristine joined Jotun in 2011 working in the company’s Norwegian office, before moving into the role of Regional Marketing Director of South-East Asia in 2013.
“I was overseeing countries including Singapore, Cambodia, Myanmar, Vietnam, Thailand and Indonesia, and really became focused on people. I wanted to respect and understand their culture, see what they were thinking and help them work towards their goals. It was difficult, but an important and rewarding professional step for me.”
She was there for more than four years before being transferred to India in 2017, moving into her current role as Managing Director. Having learned a lot in Malaysia, Kristine says she was excited to expand her responsibilities in a region as large as India.
“There were so many prospects in the market. I had the opportunity to oversee the production of decorative paints, protective coatings, marine coatings and powder coatings, which was exciting because this is one of the few regions where that is done. It was extraordinarily complex and challenging but it was exciting for me to take on.”
Recognising that “there’s a lot going on” in India, Kristine says her first priority was to clear away the “noise” from the company.
“There are a lot of promising ideas in this part of the world, but we can’t look at all of them. I wanted to focus on what we must do and ensure people know what they’re doing. It’s important we continue down that path of knowing our competencies and not diversifying without reason.”
Jotun is growing by more than 20% per annum in the region, and Kristine believes this will be significant going forward. She says Jotun’s “robust growth strategy” is about ensuring growth for the company is sensible and sustainable.
“India is a complex market and you can get caught in a game of volume and start overproducing. That’s not part of our business model, though. We’re not thinking of short-term benefits; we’re building long-lasting relationships with customers across all four paint segments – decorative paints, protective coatings, marine coatings and powder coatings."
“We’ve already seen the market for decorative paints growing and the market for marine paints slowing. With marine paints, we already have the market share, so we want to focus on working with our partners in the long term. On the other hand, we must target the decorative paints segment more aggressively for growth. That’s how we can be true to our strategy of sustainable, profitable growth that focuses on quality as opposed to quantity."
Part of that strategy will include understanding local factors; Kristine says the depreciation of the rupee along with political uncertainties will create challenges for the business.
“I think though that if we continue our current strategy and focus on our value as a company, then we’ll overcome any challenge. We obviously want to grow along with the Indian economy, but we also need to be ready to withstand its challenges.”
“We obviously want to grow along with the Indian economy, but we need to be ready to withstand its challenges.”
Speaking about Jotun’s Indian manufacturing facility on its 10th anniversary, Kristine returns to a familiar motif. “Looking at this business, I feel that penguin spirit. Everything is safe, clean and compliant with the highest global standards. That’s what I want to see.”
The fact that the manufacturing facilities are so pristine is the result of Jotun and Kristine’s attachment to the penguin.
“Our people are loyal. They want to improve for the company’s sake and their own benefit, even if they don’t think we need to. They feel responsible to help where they can and make suggestions if they think something can be improved. That’s what makes us penguins; everyone knows they play a part in this business. You can’t ask for anything more than that.”
Balram Singh Yadav is a very satisfied man. Forget for a moment the financial success this Managing Director has generated for Godrej Agrovet (GAVL) or the phenomenal growth the company has enjoyed since he took over the reins a decade ago.
There’s a lot more to Balram’s satisfaction. It goes much deeper.
“Coming from my heart, the past 29 years in this job have been enormously satisfying. Seeing the farmers working with us graduate from a bicycle to a motorcycle, learning new things, growing and prospering with us, sending their kids to school. They generate enough income and surpluses to keep investing in their family’s future as well as their businesses, that is what is most satisfying to me."
“Coming from my heart, the past 29 years in this job have been enormously satisfying.”
GAVL has been committed to improving the productivity of Indian farmers since it launched as a subsidiary to the Godrej Group conglomerate in 1991, providing products and services to enhance crop and livestock yields.
The company is the largest seller of animal feed in India, boasting what Balram describes as ‘sizable’ numbers, selling 1.3 million tonnes a year, which translates to about US$450 million.
Its crop protection business caters to the complete crop lifecycle, including plant growth regulators, organic manure, generic agrochemicals, insecticides, fungicides and specialised herbicides.
GAVL is also one of the largest palm oil developers in India, encouraging growers to adhere to sustainable cultivation with zero deforestation and no cultivation on peat land.
GAVL is committed to producing 100% sustainable palm oil by 2025. The company works directly with famers in government-approved regions of the country with its sustainable palm oil policy covering 100% of the palm oil extracted, including crude palm oil, palm kernel oil, palm kernel cake, as well as the in-house processing operations and cultivation processes at the growers’ end.
Meanwhile, it’s evident Balram is not just a leader in India’s agricultural sector, which employs about 60% of the country’s workforce – he understands the business and is clearly passionate about it.
Joining GAVL as a trainee manager in 1991, armed with an agricultural science degree after graduating with honours, he was convinced the way forward to helping farmers reach a potential they probably never even knew existed, was through innovation and sustainability. Once again, his deep sense of satisfaction shines through.
“For nearly 30 years I’ve worked in a sector catering to the under-served,” he says. "I’ve worked with farmers personally, or led meetings attended by hundreds, to tell them about new products, new technology or new management practices."
“It is so heartening to see the people at the bottom of the pyramid in our rural areas coming up slowly, but surely, with the help of our products. I have not seen any farmers who are progressive and share our vision fall off our growth curve at any time. That is very satisfying.”
Balram admits taking over the role of Managing Director was neither a smooth nor normal transition. It was 2007, the company was losing money and a change in leadership was sought.
Balram was coaxed to step up from his role as executive director and president. “When this role came to me, I wasn’t thinking long-term,” he admits.
“In fact, my focus was very short-term, just to find a way to plug the leak of money pouring out of the company. I had the opportunity to try everything possible to turn the company around and that’s all I thought about, making the company profitable."
“We made many changes and our first goal was achieved quickly. We sold some businesses which were losing money to bring the losses down and focused on our core business of animal feed, palm oil plantations and crop protection. Within 18 months, we started to see profits and by FY2008 we were profitable. But when you keep achieving goals, expectations keep rising.”
By 2012, GAVL had a valuation of US$550 million, mostly from organic growth. However, Balram wasn’t satisfied. He knew the company could do more. It was time to explore other options.
“Yes, we did well over those five years, but we knew organic growth was not enough,” he says. “With our ultimate goal being to become one of the most valued agribusinesses in the country, we had to look at other options. So, in 2015, we made two acquisitions, Astec Life Sciences and Creamline Dairy Products.”
Astec is a bulk manufacturer of fungicides in India with an established track record for nurturing long-term relationships with leading companies in the US, Europe, Asia and Latin America.
Meanwhile, GAVL’s foray into the dairy business, with its controlling stake in Creamline Dairy, gives it a significant presence under the Jersey brand name in the southern states of Telangana, Andhra Pradesh, Tamil Nadu, Karnataka and parts of Maharashtra.
Apart from milk, its products include yoghurt, lassi, paneer, buttermilk, ice cream and flavoured milk. Balram concedes milk is a ‘difficult’ business in India.
While the country is the largest producer and consumer of milk in the world, only around 20% of the industry is supported by local cooperatives and private dairies.
Most of the sector is disorganised, hampered by disjointed methods of supply and logistics, including a lack of veterinary facilities, nutritious fodder and technology.
“We were never involved in milk, so we have had to spend time understanding the industry,” Balram says. “We need to consolidate the business and integrate Creamline to a more professional level. While it is one of the top things on my agenda right now, it takes time."
“We are growing, we are redefining our aspirations and it’s a great story to come from not being a profitable company, to making it profitable and then to enter into an entirely different sector.”
Balram cites another, albeit surprising, problem farmers face in various parts of India where crops are thriving. While too much rain, or too little, can affect crop production adversely, sometimes when nature deals a great hand, crops produce too much.
“This is a very different kind of challenge. Some of the agricultural space where we have operated has not suffered massive drought or floods, which leaves us with a different problem, that of plenty. We have surplus production of sugar, milk, cereals and many other agri products,” he explains.
“When we are in surplus, farmers don’t make money and that of course results in shortages for the future. This puts a lot of pressure on the farmers in terms of price and working capital management, and that in turn affects us and the sector as a whole. Traditionally, India is not an agricultural exporter, so we and our farmers have to learn how to manage surpluses. Working with the farmers and encouraging them to continue to invest in their farming is a strong focus and huge challenge for us.”
“Traditionally, India is not an agricultural exporter, so we and our farmers have to learn how to manage surplus.”
Crop diversification is another priority GAVL is encouraging farmers to consider and implement. Balram admits the education surrounding diversification has been slow, but he believes farmers, the government and the private sector are gradually coming on board as they realise the advantages of expanding India’s agricultural sector to other markets.
“This is critical, and something we should be very conscious of in terms of crop production,” he says. “We may be producing lots and lots of certain crops, but we still have shortages of oil seeds, for example or, in some seasons, of vegetables. Whereas, if we diversify, the crop in surplus will be produced less and the crop we are currently importing can be produced more."
“GAVL is helping disseminate all this information to help our farmers. Ultimately, depending on their conditions, working capital status, and irrigation capability, the farmer is the best judge of what to grow. But when they seek guidance and information, GAVL is there to help and provide immediate support.”
Ironically, and perhaps more predictably, while the lack of natural calamities result in surplus for some of India’s farming communities, others are still victims of the devastating effects of disease and monsoons.
Last year, India’s monsoon deluged 20% of the country’s districts in floods, while another 40% faced drought due to a 20% deficit in rain and another 10% suffered a 10% rain deficit.
“Anything can come and hit our crops and animals and this is another aspect of tremendous focus for us,” Balram says.
“In spite of the fact we are a profitable company, our margins are still narrow which, from my point of view, is a risk. Agribusinesses are so dependent on God’s will, that we have to keep on improving the sustainability of the company.”
Balram is convinced one solution to improving farming practices is to connect farmers via digitalisation.
Government schemes, including the direct benefit transfer scheme for fertiliser subsidies, are already delivered electronically and Balram believes technology will continue to spread to rural areas at a rapid rate. “I feel very strongly about this,” he says.
“Many goods and services delivered to our rural population in the future will be through digitalisation, and my sense is that rural India will digitalise much faster in terms of transactions. So, GAVL has to be ready and ensure that in all areas of business, farmers are connected to technology. This will be critical and is a key focus for the future.”
Meanwhile, within GAVL, efforts are being made to retain and engage employees, particularly following acquisitions. While Balram acknowledges the tremendous challenge of integrating a new business into the company, he doesn’t discount the difficulties involved in assimilating new teams.
“It takes time to adjust when new teams come on board after acquisitions,” he admits. “Culturally, we are very different in the sense that we are a value-driven company with our own norms of financial prudence and discipline. So, one of our particular challenges is finding experienced people within GAVL to look after these new businesses and blend them into our working culture."
“Every two years, we conduct an engagement survey of our employees and our last survey score was 81% satisfaction, which is much higher than the Indian average. That is important to us because engaged employees mean they see this as a place, where they would like to work and contribute. It is heartening to know that we’re doing well on this metric because that means the company has a good future.”
A vital lure GAVL dangles to attract good employees is its commitment to diversity ratios. The company boasts targets to include women in all areas of its business, recruiting, developing and training them to succeed.
“I strongly believe that 50% of the world’s talents and capabilities rest with women. Nobody can achieve their targets if they do not hire women in greater numbers. We have started taking women in sales, administration and production in our plants."
“Nobody can achieve their targets if they do not hire women in greater numbers.”
“Diversity is an important metric for us and not just with women. We want to include people with different backgrounds and those who are physically challenged as well. This is close to our heart and one way we can give back to society. We need to give people a start to forge their futures.”
Balram remembers his own start, when GAVL was a small company in animal feed and he was working in factories and sales. He credits all that experience with equipping him with the confidence he needs today to run a business.
“That’s where the rubber hits the road,” he says. “As people rise through the ranks their decision-making becomes sharper. It’s because they have a rich understanding of the consumer, the market and the environment in which they’re working. All that grassroots training definitely helped me.”
The deal values Worldpay at far more than the £2 billion it was sold for by Royal Bank of Scotland in 2010 when the bank was forced to dispose of it under EU state aid rules. The deal creates the world’s biggest electronic payments business by market value, linking banks and credit card companies with billions of consumers who are increasingly shunning cash.
Worldpay, formerly Streamline, was set up in 1989 as a subsidiary of National Westminster Bank. Natwest was bought by RBS in 2002 and the payments business was renamed RBS Worldpay. RBS then developed the business through acquisitions in Europe and America.
In 2010 the bank sold RBS Worldpay to Advent and Bain, the private equity firms, for about £2 billion, to comply with EU rules on state aid after its £45.5 billion government bailout during the financial crisis. The private equity firms floated Worldpay five years later at a valuation of about £5 billion. At the start of last year Worldpay was sold to Vantiv for £8 billion, with the combined entity adopting the Worldpay name.
Worldpay, headquartered in Cincinnati, Ohio, processes about 40 billion transactions a year in 126 currencies. It has 3,700 employees around the world and reported revenue of $3.9 billion last year.
Fidelity National Information Services, better known as FIS, was founded in 1968 as Systematics, a financial technology company.
It grew quickly through acquisitions that began in the early 2000s, culminating in its purchase in 2015 of the financial software company Sungard for $9.1 billion. Headquartered in Jacksonville, Florida, FIS, which is valued at $35 billion, is responsible for moving $9 trillion a year through its payment networks. It employs 47,000 people worldwide and reported revenue of $8.4 billion last year.
Gareth Wilson, managing director for global payments at Accenture, the management consultant, said: “This deal is huge for the payments industry. Consolidation in the market looks set to continue in order for payment companies to grow globally at scale and compete with the threat of new entrants.”
The web shopping boom is driving more consumers to electronic payments and growth is likely to continue as more people in developing countries come online.
The electronic payment market will be worth $2.4 trillion by 2023, Boston Consulting, the management consultant, has predicted.
Gary Norcross, 52, chairman and chief executive of FIS, will remain in the same roles at the merged company, which will retain the FIS name. Charles Drucker, 55, executive chairman and chief executive of Worldpay, will be executive vice-chairman of the new FIS.
Mr Norcross said: “Scale matters in our rapidly changing industry.”
FIS shares closed down $0.76, or 0.7 per cent, at $108.12 in New York. Worldpay shares were up by $9.64, or 9.8 per cent, at $108.32.
Shareholders in Worldpay have been offered $11.00 in cash and 0.9287 FIS shares for each Worldpay share, giving a deal cost of about $35 billion excluding debt. This represents a premium of about 14 per cent on Worldpay's value at close of trading on Friday.
Worldpay shareholders will own 47 per cent of the new company and FIS shareholders the remainder if the deal goes through. FIS said that it expects to refinance about $8 billion of Worldpay's debt.
Ocado’s move today to hive off half of its UK grocery business to Marks & Spencer for £750 million has moved it one step closer to becoming a pure technology company. Talks of the joint venture were first reported in theEvening Standardyesterday. The news sent shares in Ocado soaring 106p, or 12 per cent, to 992p, yesterday valuing the company at £6.9 billion. The shares rose 32p, of 1.7 per cent, to £10.04.
Mr Steiner’s stake is worth about £230 million and he is due to collect a further £40 million in May from a long-term share bonus scheme. Lord Rose of Monewden, 69, the former M&S chairman and chief executive who heads Ocado’s board, owns £12 million of shares in the online grocer.
The deal with M&S will provide some much-needed capital for Ocado. The company is still investing heavily in its high-tech warehouses, where robots pick and pack customer orders from stacks of grocery crates. Its commitments don’t end there. Under its six licensing agreements, the Hatfield-based company must shoulder some of the cost of building new distribution centres, which eats up cash. It has signed deals with Bon Preu, a Catalan retailer, Casino in France and Sobeys in Canada.
However, last year’s tie-up with Kroger, the American grocery group, propelled Ocado into the big league, sending the shares up 44 per cent in a day and pushing it into the FTSE 100. That agreement will mean that as many as twenty warehouses are built within three years.
Question marks remain over how profitable Ocado can become ultimately. Transporting groceries to customers’ homes is an inherently expensive business. Last year, Ocado’s revenues rose 12 per cent to £1.6 billion, but it lost £44 million on a pre-tax basis.
Mr Steiner said recently that Ocado would have generated significant pre-tax profits if he had wanted it to. “We’ve chosen to invest faster, to invest in more stuff and to create and expand a global intellectual property business,” he said.