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World Economic Forum

Author: Alec Hogg|

27 January 2012 17:19

PODCAST: Tongaat’s CEO on dealing with crisis

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How do you balance the long-term bigger picture with short-term crises?

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ALEC HOGG: One of my favourite KZN businessmen, well South African businessmen, golf partners, is here in Davos again, Peter Staude, the chief executive of Tongaat Hulett. When I say again, how many times have you been to Davos?

PETER STAUDE: The first time I came was in 2002, it’s been a long…so ten years, ja.

ALEC HOGG: Ten years this year and clearly you must have seen some transformation in what’s been spoken about here over those years, we’ll get into that in a moment but perhaps more importantly between South African business and South African government.

PETER STAUDE: Look, I think Davos today reflects the changes taking place in the world for business. Increasingly people realise that the world is much more interconnected and that you cannot really operate in your own silo itself. So, what you’ve seen at Davos is increasingly communities, government and business having to interface on common problems and you’ve seen South Africa, obviously, be part of that too. So you see a lot of people here from government and from business.

ALEC HOGG: And the relationship between business and government is greater trust do you think through organisations or through involvement at events like this?

PETER STAUDE: Ja, look, trust is a little bit like fitness, you’ve got to work on it all the time and you’ve got to be consistent and you’ve got to understand the other party better. Davos is a great opportunity to get that more common understanding in place.

ALEC HOGG: Being a agriculture company now primarily, Tongaat Hulett, focused on sugar, has that been the stream that you’ve been following?

PETER STAUDE: Over the years you follow slightly different streams. One of the things that has happened in the world at the moment where there’s a little bit of a gloomy outlook on the economy and is a realisation that there’s a need for some structural change. At Davos there’s a very good leadership stream at the moment, which gives you the opportunity to workshop and interface with people on leadership topics and it’s a bit of a cross-check again for yourself, what are some of the dominant themes, some of the dominant thought processes that are working in terms of leadership development, particularly under pressure and under crisis.

ALEC HOGG: And much more interactive, much more consensual leadership today than what might have been the norm when you started coming here ten years ago?

PETER STAUDE: Ja, it is, people are realising things like it’s very important from the top down to create positive expectations, particularly very topical at this particular time and it’s no use as leader just to have positive expectations yourself without an engagement with many stakeholders against that positive expectation. The opposite is true, when you create a negative vibe you get into a downward spiral and if you then have to overcome some of your obstacles it becomes hard. But when you know what the bigger picture is and in developing that bigger picture you interface with many stakeholders it creates a very different momentum. A lot of debate at the moment has been particularly where there are a lot of things in crisis of how you balance the long-term bigger picture, your values, your integrity with dealing with the short-term crisis. There have been some interesting conversations in some of the workshops, I was sitting next to one gentleman, he’s a candidate for the France presidential election and had a person in our little workshop standing for the Egyptian election as a president. So, you get so many different perspectives from different people, different parts of the world, different sort of situations that you normally…and it always stimulates your own sword when you go back in your own business, what are some of the dynamics you need to cross-check or maybe accelerate going forward.

ALEC HOGG: And business leaders can sometimes learn from politicians.

PETER STAUDE: And vice versa, they enjoy also interfacing with us.

ALEC HOGG: Just going more into that leadership theme, it does appear as though the business schools have also changed their whole approach towards it. When you studied…

PETER STAUDE:  Yes.

ALEC HOGG: …there must have been one way of maybe doing things, are you finding that that way didn’t work? Is that the reason why people are changing?

PETER STAUDE: I think there has been a serious realisation that leadership is a lot topical and depending on the situation, depending on the circumstances. Also there’s a realisation that there’s not a one fit for all, it depends on organisations, it depends on culture, it depends on the challenges that organisations or businesses change and within that there are different solutions. So you even find here in the old days when you went to university you tend to go to a lecture, today you tend to workshop the issue and when you workshop the issue with some basic framework, you develop quite some astonishing realisations and a lot of that is because of that sort of process that people grow.

ALEC HOGG: We get exposed to interesting people, very interesting people in Davos. This year no doubt there would be a few personalities that you’ve seen or listened to that you didn’t know about before that have really impressed you.

PETER STAUDE: I think linking to impress is also sort of a realisation of some patterns. Today when you read the press about the world economy and you watch things and you hear the commentators, you see that a lot of them on the global picture give some quite pessimistic data. So you would find somebody say that if you look at the United States and you see there’s 13m jobs lost since 2008, that even if they take the best employment months over the last ten years and repeat that it’ll take ‘til at least 2017 to get back to that employment number. So, you sort of have a bit of a negative vibe. One of the benefits of Davos is you interface with CEOs that head up a lot of businesses. I, for example, sat next to a gentleman that’s the CEO of the biggest bank in Indonesia and when you interface with a cross section of them you get a sort of confirmation of PwC’s survey that they did. That survey actually said there’s a bit of a contradiction in the world, you’ve got these bigger commentators a little bit pessimistic and a bit dubious about the world, while when you speak to the individual CEOs most of them are actually quite positive about the prospects of their company and what the growth opportunities and the possibilities in their company are.   

ALEC HOGG: What do you put that down to because I also found that rather strange, the divergence of opinion?

PETER STAUDE: It’s quite a contradiction. I think in crisis sometimes people over analyse and they get so much caught up in the ramification of what’s just happened in the world itself and all it negativism, while CEOs have to find a way forward and they’re much more orientated towards creating a positive picture going forward. When you’re in that you can see the possibilities and the opportunities. I think the world is today caught up where many of the commentators on the one side, while CEOs still see quite a positive future for their businesses going forward. I actually think the CEOs will pull the world through, not the commentators.

ALEC HOGG: We always talk about Zimbabwe because you’ve got a big operation in that country, it hasn’t been on the agenda at all at this Davos. In fact, I haven’t seen any Zimbabweans here, I think that there must be some…Tsvangirai I think has arrived, certainly Robert Mugabe is not. Are you seeing this maybe attention not being focused on Zimbabwe as being a positive thing to get on with business there or is it telling us something else?

PETER STAUDE: Look, I think generally, I was at the dinner last night on opportunities in Africa and it was quite a small venue actually and it was a very good session but the attendance was quite minimal in terms of Davos’ standards. It’s quite an irony actually, generally in Africa at the moment with a more negative view in the EU and the more negative view in the United States, it actually is creating space for more positive expectations about Africa. I’ve just been on a roadshow in London to meet emerging fund managers and I was amazed how much money is flowing from the EU, where people say where am I going to invest my money? Am I going to invest it in the United States? In the EU? No, I better put some of it somewhere else. Then they look at the world and Africa is starting to favour in that area. When it comes to Zimbabwe it’s very much a niche approach when you look at Zimbabwe itself, it often gets very, very bad press. Some of the things about Zimbabwe are completely ignored, so for example, when the macroeconomics was mismanaged up to the end of ’08, you had a horrendous situation. That’s when we laughed about trillions and zillions and there was one stage you couldn’t even withdraw money out of the bank, no cheque was honoured. Now from that really dark low position Zimbabwe’s turned around that when you look at the macroeconomics in Zimbabwe and look at the progress they’re making in terms of tax revenue, the whole freedom of dividend flows and investment strategies, it’s been quite a turnaround. That element of Zimbabwe is getting very little press. What gets a lot of press in Zimbabwe is the political struggle that’s going on there and there’s no doubt in Zimbabwe, like in many places in the world, just think about United States  election at the moment, there’s underlying forces, who’s going to get out on top in terms of a political regime. I would say very simplistically in Zimbabwe you’ve got the MDC, you’ve got what I would call the more moderate ZANU-PF and then you’ve got a more extremist ZANU-PF and at the end of the day I actually think the more moderate ZANU-PF is much closer to the MDC than most people would recognise but within that there’s a lot of noise that comes up all the time, you get big events in that. In Zimbabwe, for example, we as Tongaat Hulett on the empowerment front because the empowerment front also gets a lot of data, there’s a project we’re doing at the moment where two patrons of the project is Vice President Mujuru on the one side and myself on the other side, so we’re the patron of a project to establish some 16 000 hectares new cane for black farmers in Zimbabwe. In November we celebrated when we got beyond the 3 000 hectares. Now those people who don’t know 3000 hectares, don’t realise how big is 3 000 hectares. Now in less than a year we’ve established more than 3000 hectares with black farmers on that particular ground and those are some examples of things where one is working into the themes of the country. One of the more difficult themes of that country, and many parts of Africa by the way, is this whole question of empowerment and how do you best deal with it? If you just deal with it in a very narrow, and I hate the word but it’s an easy way to describe it, Eurocentric market condition, it’s quite difficult to deal with empowerment. Even in South Africa with our BEE scorecard and equity deals it’s quite amazing how few people really have exercised their mind, what does the deals really mean? When Tongaat Hulett at equity level has got a 25.1% BEE deal in SA, so you’ve got to deal with those issues. Organisations like ours have to think through the paradox where you sit in SA with a 25.1% BEE deal but you’re actually the biggest employer in both Mozambique and Zimbabwe after the government and how do you deal with those empowerment issues there? In Zim at the moment our biggest focus on empowerment lies [in] establishing black farmers around our mills and we know as we work in dirt we work right in the psyche of a country. Overall when you look at Zim, by the way, and if you understand Zimbabwe well, it is one of the most attractive countries in terms of platform, it just needs to get into that positive expectation mode. Most of these people - and there’s a paradox there too - most of the people in Zim are actually quite hopeful about the future, which is a good start for the country.

ALEC HOGG: Very interesting because…and that’s your brain, it’s a long-term, it’s a strategic thinking and I saw exactly that coming through in a session that I attended this morning on resources, where Cynthia Carroll was saying that at Anglo American they cannot be waived by the short-term political issues, they have to look 30, 40, 50, even 100 years into the future and that their work increasingly has been with local communities and the kind of empowerment that you’re talking about. So there could be a waive in that direction.

PETER STAUDE: Yes, a lot of the leadership sessions, for example, are like this, this morning’s session was how do you influence out of the boundaries of your organisation and there’s a realisation that many of these sort of seven, ten, year goals that businesses set themselves mean that they have to influence a lot of people outside the operation. They need to be influenced by those people outside the operations to get to those goals, so it’s becoming a critical part. There was a survey done by PwC that for example said is networking outside your organisation a secondary part of your business or is it one of the prime parts of your business? Increasingly CEOs worldwide are saying it’s not a secondary activity of your business, it’s actually central to your business because your business is sitting right in the world that’s a lot more interconnected and interconnected means you’re not by yourself and you can’t, in your own little silo, optimise your business, which means you’ve got to network. Now the whole style how you lead your own people, your own organisation, where you control the pay, the incentives, etc, is very different than the style and the expectation when you have to work with people around you itself, sometimes in companies that effectively compete with you but again where both of your future is related, how you deal with some issues. So let’s say in South Africa a classical example is on the one side you've got the high CO2 emitting energy sources but still the cheapest way of generating energy. Energy store and energy costs remains a critical part of employment itself, at the same time the emerging technologies and possibilities that are a lot more CO2 friendly and over time actually could well be cheaper forms of electricity. Now if those two camps end up just purely on opposing sides, it takes a long time to come to a…for the whole society a better outcome. So organisations today that are a little bit smarter work in collaboration. I, for example, am a member of the CEO’s core forum with Eskom and Sasol Now you might say, well, why would Staude that believes in renewable energy and clean energy get onto that forum? Well, he gets onto that forum because only by being on that forum do you get a better perspective of another side that you maybe not see yourself. So that process is evolving quite rapidly and you see it very much at Davos, one of the big benefits of Davos is session after session people from different perspectives, different industries get together and in many cases workshop an issue and get a better understanding of each other.    

ALEC HOGG: Just to close off with, what are you going to be going home with, a buoyant attitude, maybe optimistic, maybe pessimistic?

PETER STAUDE: Look, you have to start at our organisation ourselves. In our organisation, which is typical of the world today, we’ve actually got too many opportunities rather than too few opportunities. Obviously the challenge when you’ve got too many opportunities is then one of focus and one of delivering and making choices and again, going home, nothing has shifted from that point of view. I realise quite firmly the importance of delivery, I’ve got a few different sorts of inner delivery, how you interface with others to get to that end point and yes, I’m very encouraged by how things look forward for the next five to seven years.  

ALEC HOGG: So the glass for you is still half full?

PETER STAUDE: I can very much see that half full glass.

ALEC HOGG: Peter Staude is the chief executive of Tongaat Hulett.

Topics: Davos, World Economic Forum, Peter Staude



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