Staying in the Helicopter!

Winners never quit!

I used to race (poorly!) sailing dinghies and whenever I got into the position of
being in the lead I discovered two important lessons:

Firstly you must set your sights on the very highest objective – in this case
winning – and don’t for one second have doubts that you can do it, and that
you deserve to do it, and that you will never be satisfied with being second
best.

Secondly if you spend your time looking at the guy who is second then the
distance between you will become less and less.

It’s the same in business.

If you operate in a market where there are one or two prominent players -
perhaps many times larger than you are - it's very easy to get into the mindset
that all you can do is chip away around the edges rather than take them on
head-on. The natural assumption is that if you do take them on head-on either
they will simply wipe you out with predatory pricing or the like or that you
need massive amounts of finance to be effective to do so. It’s then very easy to
convince yourself that it's simply too risky and a lot safer to stay as you are.

Well it's not true! – the secret is to not only be bold but also innovative and, as
Michel Robert put it in his book “Strategy Pure & Simple", force the
competitors to play in your sandbox rather than playing in the theirs.

To illustrate the point let’s have a look at three companies that have each
grown from nothing to major players in industries where there where massive,
dominant successful competitors such that they now have those competitors
seeking to play in "their sandbox". The three companies are Olam, Red Bull,
and Virgin

I was privileged to share a speaking platform with Sunny Verghese, the very
impressive CEO of Olam International and he told a fascinating story:

The previous year Olam achieved an annual turnover of nearly £1bn and a
market capitalisation of £700m. They had 5100 employees in 42 countries and
are known as "the brand behind the brands". They operate an integrated supply
chain for 14 products including sheanuts, robusta coffee beans, cocoa, sesame
and cashew nuts, from 12,000 collection points in 40 origin countries delivering
these to over 3,300 customers in 50 destination markets.
Olam is a world leader in many of these commodities with the overriding, and
unique, philosophy of "farm gate to factory gate".

Without doubt Olam International is seen as a very impressive, highly successful

company – a winner.

In 1983, however, Olam was seen very differently. It was an Indian based
importer of cashew nuts with a turnover of £1.7m and a return on sales of
1.31%.

Sunny and his colleagues however had a very clear vision for the future
potential of the business and one in which they passionately believed and they
would never quit.

Traditionally the market for agricultural commodity products was governed by,
in the supplier countries, local buying houses and in the industrial user
countries the commodity futures markets. The result was generally poor
returns for farmers and poor continuity of supply to users. Sunny and his
colleagues’ vision was to cut out both the local buying house and the futures
markets and to provide guaranteed supplies to the factory gate of industrial
users whilst at the supply end, dealing directly with farmers. In this way they
believed they could ensure the quality and continuity of supply at acceptable
prices for all.

This was a brave vision – one which, if successful, would turn on it’s head the
traditional routes to market and be likely to upset well entrenched interests,
including powerful people like third world governments and western City
institutions!

This then was the proposition that Olam started putting to finance providers all
over the world. As you'd imagine they suffered a lot of rejection until finally
Temesek Holdings, the Singapore government investment vehicle, became
interested and had the courage to invest in Olam’s vision.

In the years that followed Olam has grown both sales and profits at a truly
remarkable compound annual growth rate in excess of 50% and their market
capitalisation has been transformed from around £120k to over £700m.

In February 2005 Olam floated on the Singapore stock exchange and the
investors were able to realise an impressive return on their original investment.

So what are the lessons we should learn from the story of Olam International?
For me the belief, passion and courage of Sunny Verghese and his colleagues
shines through - their proposition was bold and transformational but carefully
thought through and they never gave up in trying to convince finance providers
that it was both viable and exciting. Eventually they found an investor who
was also prepared to be bold and give them the support they needed. Both
parties have now been well rewarded for the risks they took.

Winners never quit!

Red Bull is an Austrian company and it’s product of the same name is marketed
as a "high energy” drink (in fact it has just twice the caffeine content of normal
colas and the same as a cup of coffee) and is sold in cans significantly smaller
than their behemoth competitors Coke and Pepsi.

Red Bull was formed in 1984 after Dietrich Mateschitz and Nina Avery travelled
to Thailand and saw that the tuk-tuk (rickshaw) drivers drank a substance to
keep them energized throughout the day. After some alterations to the recipe,
and a flavour modification for the public, Red Bull was born.

Now over 2 billion cans are sold each year in over 120 countries and both Coke
and Pepsi have developed ‘me-to’ products

What Red Bull have succeeded in doing in a remarkably short period of time is
to take on and beat - certainly in terms of contribution - two of the biggest
brands in the world. That is something that most of us would think impossible –
or at least we would have only been possible by undercutting on price. In fact
the reverse is true, Red Bull is close to FOUR TIMES more expensive that Coke
or Pepsi!

What’s stopping you from doing the same? – be a winner

Finally Virgin. If you haven't read Richard Branson's autobiography "Losing my

Virginity” I recommend it to you.

Love him or hate him what he and his remarkable team have managed to do is
to create a brand that is inherently trusted by a vast range of people - having
started with the music industry he's then gone into airlines, mobile phones,
financial products, cosmetics, trains and many other markets. What other
consumer brand would you trust so highly that you would give them your money
to invest if they decided to go into financial services?

When Virgin first moved into the airline business in the UK by far the dominant
player was British Airways and it is now the stuff of legend that the then
Chairman of British Airways, Lord King, dismissed Virgin as a serious competitor
simply because Richard Branson wore a jumper to work, not a suit! - A classic
case I think of sitting in the Room of Contentment in the Change House model
in my book!
Indeed applying the Change House model (see my book ‘Staying in the
Helicopter’ ISBN 0-9549586-1-6) to Virgin you have to agree that they have
been very successful at constantly staying in the Room of Renewal and from
there challenging and beating dominant, entrenched players in one market
after another - it truly is very impressive.

So what's this got to do with you?

Your markets are different aren’t they? - Well I don't believe they are - the
simple message I would give you is one that you've heard from me before:

You must be very good at what you do or, these days, you simply would not be
in business.

If you are very good at what you do then get you shoulders back, believe in
yourselves, work very hard on a compelling "new sandbox" strategy,

- Be a winner! and remember Winners never quit!

© 2010 Roger Harrop Associates

A Speaker of the Year with the Academy for Chief Executives, Roger Harrop is
a former plc CEO, international speaker, author, business adviser and
consultant. He is an expert on sustainable profitable business growth. His
book ‘Staying in the Helicopter! - the key to profitable growth’ is available at
www.rogerharrop.com/products/