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Ackerman on success, succession and South AfricaIf you ignore the quality suit, the spacious (yet modest) office and the two assistants you passed on your way in, it is so easy to dismiss Raymond Ackerman as simply another older gentleman.
More than any other chief executive officer or managing director I have had occasion to meet, Mr Ackerman is by far the most affable.
Nothing in his demeanour hints at the fact that he is the primary architect of a multinational retail chain.
But as the head of one of South Africa’s most well-known businesses, the truth of his nature can never escape the shadow of his reputation.
He is Raymond Ackerman.
Having finally taken the decision to retire after nearly 42 years, Leadership met with him and spoke about his plans for his retirement, his take on the Eskom debacle, and much more.
You are one of the hardest working men in South Africa. Will this be a genuine retirement, your duties as a Pick n Pay Brand Ambassador notwithstanding?
Apart from being a Brand Ambassador, I’m going to retire because I’ve worked so hard: not worked so hard as a person, but worked so hard on my succession planning.
It’s taken me about 10 years. It may sound very simple to come to a conclusion like this and I’m going to hand over to my son, Gareth and to Nick Badminton, my CEO. I will be there for advice and guidance, but not to get in their hair.
So the answer is, “Yes, I am”.
The ambassadorial thing, by the way, if I let it, it could get out of hand. I’ll be busy because it means travelling to Zimbabwe, Australia, all the African countries. We have nine African countries and they all want me to go there.
The moment they heard me mention “ambassador”, I’ve had faxes from virtually each of them.
“Mr Ackerman, you’ve got to come!” (laughter). I’m exaggerating, but we have 792 stores.
So I’m going to have to plan this carefully, otherwise it will be too taxing. But the answer is, “Yes, I am retiring” because I think it’s only fair to cut off, to give these guys a chance – they’re thoroughly trained and I’m there for advice.
You come from a generation of very entrepreneurial men in South Africa – yourself, Donald Gordon, Anton Rupert... gentlemen who established companies.
And [Sol] Kerzner.
Yes, and Kerzner. You all created what are now iconic brands in South Africa. Then the generation that followed tended not to do that much. Now it seems to be happening again, when I think of young men such as Vinny Lingham and Justin Stratford and the most obvious example, Mark Shuttleworth. Why do you think there was this generational gap in entrepreneurship in South Africa?
That’s an interesting point. It could’ve been because of – and without trying to blame everything on the Nationalist Party – but it could’ve been because there was so much fear in the ‘60s, ‘70s and ‘80s. “Is this the country we want to bring our kids up in?”
And that’s why I get so cross with so many people. To me, the problems we’re facing now – and there are many problems – are nothing like the problems we faced back then.
Does one stay in this country, can you build a home for your children in this country? I know many people are saying the same now, and I think they’re wrong because this country is so distinctly different from what it was.
I remember growing up with my father being terribly worried about the Great Depression in the ‘30s. When I was five or seven years old, he was going to golf and I was in the car and he stopped to get a newspaper. I got back into the car and I was chewing on a sweet and boy, did he give me a go on that because I had stolen the sweet from this fruit shop.
He stopped the car and took me back. I had to go and apologise and he said, “You don’t realise that the Great Depression is on. Everybody is suffering and here you are stealing this guy’s stock!” (laughter) I never forgot that.
I think we – the people you’re talking about – grew up in that time. It was the pre-Nationalist Party. We weren’t looking at a racial South Africa. When the Nats came in, there was much fear of the future in this country and it took away the entrepreneurial spirit.
I think the fact that there are so many entrepreneurs starting now, despite our problems that we all know – Aids, corruption, crime, you name it – I think there’s a helluva future, and a good future, in this country. I think that automatically sparks entrepreneurship.
So why did it take 10 years to choose a successor? That is a long time to make up your mind?
It may sound an exaggeration, but if this weren’t a privately – no, publicly – held family business, I would probably have retired at 60 or 62 – that’s when most CEOs or chairpersons leave. But because it’s family-controlled, it’s really tough on succession. That’s why it’s taken so long.
My son, Gareth, who grew right up in the business, at one stage ran our meat operations and stores, he was a trainee – he’d been right through the works, and became the joint managing director with Sean Summers.
But he came to me and said, “Dad, I just feel that I’ve grown up with the company. You are passionate about supermarketing and the consumer, I’m passionate about Pick n Pay, but I think I need more experience”, and he went out in the financial world for about eight or nine years with the intention, hopefully, of coming back.
I use the word “hopefully” because when I saw him becoming involved with many financial matters, financial affairs and so on and learning a great deal, I thought I’d lost him, but we had to take the chance.
He remained on all our Boards and he remained on our Audit Committee and Remuneration Committee and he did much work for me. He took away all the family finances outside of Pick n Pay and so it took me a long time to work out if he would be my replacement, or if I should look for someone else.
I started to train up another family member – my son-in-law, who is a first-class guy – and he was glad to take over if Gareth didn’t come back, but he became ill. He had a recurrence of MS [multiple sclerosis].
Then I thought, “Well, if Gareth doesn’t come back, there are my other two children, Suzanne and Jonathan, who are both in the business and are doing extremely well, but they’re not ready to be chairpersons”.
They were already taking big executive positions, “So, what should I do? Should I go for an outsider?”
I used an American firm, a wonderful crowd of people who have been helping me on this and we went around and around and around and eventually came back to saying [to Gareth], “We want you to come back as a non-executive chairperson with all the experience you’ve had – 23 years at Pick n Pay”, and I think there is now eight or nine years outside.
It’s worked out very well. I feel very confident of it.
But that was always your plan? That it would always be a family business and that one day you would hand it over to your son?
Yes, but with one difference – that is when you run a big company. It has become bigger than I ever thought it would be.
I’ve made up my mind, after talking to these American guys, and I always pick the best person I can find to be CEO and the best family member that I can find to be chairperson, and I think that’s a very good combination. Otherwise you go and perpetuate family and maybe we don’t have the strength in the family to run those positions.
So we made an absolute conscious decision to look for the best experienced person we could find – be it from within or from without – and the best family member, and to make sure the family member has as broad experience as possible.
So I think we’re okay on the way we settled it.
So you are not concerned that without your influence, decisions will be made with which you may not be happy?
I will be unhappy with quite a few, I know that (laughter). But I’m old enough now to take it in my stride.
Even with Nick Badminton now, he’s a terrific CEO – things are happening that maybe I wouldn’t do, but at least it’s discussed with me and he hears my view and I hear his. I go along with the majority of the guys who want to do it, but at least I know about it.
I’m going to be unhappy because much of the stuff I can see that they won’t discuss with me.
They’ll ask my opinion when they want advice, but I have to steel myself for that because that’s life. I’m actually quite relaxed about it.
Pick n Pay has changed so dramatically over the last 10 years. We now have 300 franchise stores, individually owned. [It’s] the most exciting thing that I’ve ever been involved in and it came about – it’s a long story – straight after [Nelson] Mandela came into power, with the call for empowerment.
We tried it out and it worked. We have 300 stores and 180 black franchisees, which I think is living black economic empowerment (BEE). It’s not these fancy BEE schemes that either work or don’t work.
We have over 100 black families whom we nurse and help. We don’t put any money in – it’s their money, but we help them get the money.
Now that’s been really exciting and I think it is going to grow at a pace – this franchising, which gives people the empowerment of running their own business under the auspices of a big company.
We featured a story on Donny Gordon a few months ago, in which we called him a Superstar Businessman – where the CEO of a company is immediately identifiable and people know who that person is. It is not unfair to say that in South Africa, you are indeed a Superstar Businessman.
I appreciate that, but Donny Gordon to me is the brightest guy I’ve ever, ever dealt with by far – internationally and in South Africa.
He told me years ago, “Raymond, no one ever made it broke by not having enough cash.”
He added, “Make sure your cash resources are strong”.
It was such good advice for small entrepreneurs, but we had many dealings with him.
I’ve had much publicity because – and this is a genuine thing, some of my critics think it’s just a good marketing ploy – I fight for the consumer. I grew up believing that that was my role.
I learnt it from the wonderful Professor Hutt at the University of Cape Town, who said, “You’re not in business to make money.
You’re in business to maximise consumers’ sovereignty.”
A doctor should maximise his patient by going out on a Sunday or in the middle of the night, or a lawyer should look after his client. You’ll make money by putting your Mission first, like a doctor or a lawyer should.
And I had that reinforced when I went to America, when I first started Checkers for Greatermans. I opened the first three stores for them and then I was put in charge of 89 stores, working under an American guy for six months who just hammered away at consumer sovereignty.
Supermarketing was built during the Depression years of the ‘30s, that’s how it really grew: when people needed food at low prices and there was much innovation. And that’s why there will be much innovation now, after this world recession we’ve just had.
In the ‘60s, I fought all sorts of fights with the government about bread: allowing us to sell bread at low prices, fighting resale price maintenance.
As with petrol – we’re still fighting that. It’s the only item still controlled and we think it’s ridiculous. The oil companies are so wealthy and so strong and yet, the government completely backs them and we can’t cut the price of petrol.
But we fought a great deal in the ‘60s. If I may say, it’s these guys from whom I learnt, and an American said to me – which I’ve always tried to follow – “You must keep your head and your ear so close to the ground that grasshoppers jump in.”
Is that not the title of your book?
That’s from where I got it [Hearing Grasshoppers Jump], and most of my ideas I got from all these different people – that stops you from becoming big-headed, [from] feeling like, “Oh well, I know it all and I don’t have to worry about my future because I know which way to go.”
It’s to continue listening and to continue hearing, and never becoming complacent.
That is the key then, to know enough, to know that you do not know enough?
Absolutely, and to always see people. I found that of 10 people who want to see me in a day, maybe nine will be a waste of time, but the magic could be in the 10th. So you never know which one it is.
So is that something you do? You always open yourself up to anyone who wants to meet with you?
I see many students who want advice on either their thesis or on what businesses they want to get into.
There were two young guys who came in yesterday and they had such a darn good idea and they asked for my advice. In a way, it’s going to compete with us, but I tried to divorce that because they tried to get my advice and I think that those two are young stars.
They said at the end, “Mr Ackerman, if we have difficulty raising cash or getting our idea off the ground, can we come back and see you?”
I said, “Yes, you can always do that”, and I have a funny feeling that they will indeed come.
Do you find yourself becoming involved with the people coming to present you with an idea and wanting you to invest in that idea?
There’s much of that, but I have to resist it because I’ve always focused on my field and some people do very well by jumping into various fields…
Like Richard Branson, for example?
Yes, that’s absolutely a good example.
I’ve just focused, focused, focused. If they come to me, I give them advice. I do help quite a few small entrepreneurs, so it’s purely just to help them and then that’s the end of it. I don’t take a stake with them, but if it’s in my field, it’s in my field, then I may get involved, which I have done occasionally.
I have at the UCT Graduate School of Business, an entrepreneurial school [the Raymond Ackerman Academy of Entrepreneurial Development] where we take in 60 to 70 young entrepreneurs in January and another group in July. These are all the guys who fell through the cracks. They didn’t have the right education, didn’t have the money to have the business training and now many of those guys come out and they need help.
There are a few organisations that we tap into, but I’ve also helped one or two myself, sort of in my field, but I don’t get involved with everybody and take a stake here and a stake there. I like to focus on what I’m doing here.
I may broaden my interests when I go out, but I’m not sure on what. I haven’t worked quite at how far afield I’m going to go when I retire.
I do know that I want to become more involved with this entrepreneurial school. We opened one in Joburg, by the way, with Joburg University; it’s the second branch.
You have pretty much seen it all: you were there before formalised apartheid, you saw the apartheid system coming and you saw it dismantled, and you said earlier that our problems today are not as severe as in the past. So what are the problems we are facing now?
HIV and corruption. Corruption and crime take away an enormous amount of the entrepreneurial spirit that we want to engender.
But I do feel, strangely, that Mr Zuma is going to do more on corruption and crime than people think. I had one or two meetings with him and I found him far more outspoken and determined than our previous president [Thabo Mbeki].
But is that not perhaps slightly based on their personalities? Jacob Zuma has always been a much more exuberant person, a people’s person. Unofficially, people used to call Thabo Mbeki “The Accountant” because he has such a stoic demeanour.
Possibly, but I got a feeling that he really means it, and he’s making it [a priority].
He’s in an enormous squeeze, with the left-wing having helped to get him [into power] and playing a difficult role of keeping us as a free enterprise society, which I think is absolutely critical.
If we want to create jobs and really get this country going, we can’t reinvent the Berlin Wall here. We just have to have a free enterprise society, but also a caring society.
Do you think there is a responsibility on business to actually look after its customers?
Yes, without any question, and it’s not just a fad.
But if I may say, I’m here today because of people like Hutt – they inculcated in me a feeling that if you were to really care for your society, the more you give, the more you get back.
There are many cynics out there who think you just do everything for money. Caring is actually good business and it’s being seen more by young people today.
I’m really excited, they really believe in looking after the environment and they care for the future of the planet. They are really going back and running big businesses that are environmentally sustainable.
So it is common sense, actually, to treat your customer well?
Yes, and if you look after her society, back her church bazaars and schools, she’ll back you.
It’s not just the merchandise you sell at the right price, it’s what you actually believe in and value which is going to play more and more of a role for the future. I’m convinced of that.
We read a great deal about companies on Pick n Pay’s level which engaged in corruption and price collusion, and you have been accused of that, too.
I’ve never been accused of it. I’m bitterly hurt by the present investigation [by the Competition Commission], but we’re supporting it all the way because if we didn’t, it would appear that we have something to hide. We’ve appeared before all the enquiries over the last few months.
My whole life has been fighting monopolies, fighting collusions and petrol-price fixing, fighting all the things that they now are accusing us of doing.
We’ve had a very good meeting with them and there’s nothing that they can find. It’s rather insulting to be investigated, but I understand.
It’s so competitive, between Checkers/Shoprite, ourselves and Woolworths – it’s one of the most competitive [industries]. Study America and France and Italy – we are more competitive, I think, than any other country I’ve seen, which is good. It keeps people on their toes.
But an enquiry is going ahead because there was some price fixing with suppliers last year, and they have a right to stamp it out completely.
You have been very outspoken about our need to get a solution to our electricity problem, and I’m sure you are aware of the current issues surrounding Bobby Godsell and Jacob Maroga?
Can I just say one word on Bobby Godsell? I had much contact with him in the ‘70s and ‘80s and ‘90s, and this was one of the most moral men that I’ve come across in South Africa, fighting apartheid, fighting racism – which he’s now being accused of, which I find absolutely ridiculous.
Whatever the rights or wrongs of Mr Maroga and Eskom, you’re dealing with a real, true South African who actually put himself on the line by going to help the government.
He did not need to go and work at Eskom?
No, and I’m really upset that he’s being accused of being a racialist because this guy is the exact opposite.
So what do you think the problem is with Eskom; why is it such a non-starter?
What I can’t understand in the present crisis, is that we’re talking about a 45% increase every year for three years, [which will] cripple the optimism of the consumer.
In my mind, and I may be very simplistic, if I were government, I’d borrow the money. I know [the government] says that it has less taxation now because of the world economy and it has affected the income by the Receiver, but when the government wants to buy submarines and planes, it doesn’t go to the consumer and say, “We’re going to jack up the prices by 45%” – it borrows the money.
So if the government would just borrow and then increase by 10% or 15% a year such as many of the other commodities. But to go for 45% is plain ridiculous at this stage.
That’s what I would do.
So you would fully support the idea of the government borrowing R25 billion, or whatever the amount may be?
Without any question. It doesn’t mean that the consumer should be let off. We all should pay more and if [the government] wanted to, it could bring up business by 12% and the consumer by 10%. We could pay a little bit more than the consumer.
It’s a huge problem and it must be righted.
The cause of it? I only know what I read in the newspapers.
What do you think about privatising energy?
I should’ve said that. There are certain parts of Eskom that could be privatised: don’t ask me which, but I’ve spoken to some of the real experts and they say that we can’t privatise at all at this stage, but there are parts that could easily be privatised and many businesspeople who would like to get involved.
So there are solutions other than raising the price by 45%.
What about parastatals in general: consider the SABC. That’s a parastatal in a slight disarray. As is Telkom. Is there perhaps a need for the government to be more hands-off as far as these essential services are concerned?
As countries become bigger, public utilities can increasingly be taken over by private enterprises. I think that we definitely should look at the private sector to do more rather than less.
And the government should be delighted because it should govern and not try and run businesses.
You have had occasion to meet many prominent people; who stands out for you?
Mr Mandela stands out for me, of course. I was very fortunate. I was part of the team trying to secure the Olympics for Cape Town and Mr Mandela was so supportive of that. I came to know him well.
I was able to visit him in the evenings because in the daytime, he’d say I must come and talk to him in the evening. There he would be, sitting in his lounge, phoning up South Africans – people don’t know this about him. He would ask his secretary to give him three or four names every night.
Were these simply random people from the phonebook?
Someone who featured in the newspaper, or somebody who received an award, and he’d phone them and say, “It’s Nelson Mandela here.
I’m so sorry about your son”, or “Congrats on the award you’ve just received”.
And he did this every night. I don’t think any other world leader does things like that.
Have you ever given any thought to entering politics?
When I was involved in the Olympics, I had a real dose of what political life is like and I realised that thank God, I hadn’t gone into politics because it really is tough.
When you’re in politics, having to tow the party line, often turns moral people not into amoral people, but they have to shut up because they are told that you can’t make a statement to the Press, you can’t express a view that’s different. You have to follow the party line.
So politics the world over does turn many really honourable people into those who do not speak out on things they would like to speak out on.
In America, there are quite a few Republicans who wanted to back [Barack] Obama and boy, were they told, “Don’t you back him, because...”.
Politics is not an easy life and I think the South African president today has a very difficult job.
A really, extremely difficult job.
Can you clarify a story I heard about you once? While at Checkers, you had an argument with management about lowering prices, and you and your wife stayed up all night taking the labels off various products, lowering their prices?
That’s absolutely true.
It indeed happened?
At the time, there were three stores that were failing and I managed to gain control of these three little stores.
I said, “I’ve been to America for you and you should let us run these stores differently from the department stores and bring prices down radically.”
“You can’t cut prices on branded goods,” they said.
So I went out to the manager and I said, “We’re going to do something which is against all the rules in the book. They won’t let us cut prices of branded goods, but no one is saying that we can’t have our own brands.”
So we took hot water and took these white labels off 20 lines.
I remember putting newspapers in the window, “An American supermarket comes to Boksburg.”
It was the most ghastly store. What we didn’t do to that store to try and make it exciting!
So we cut these 20 lines and the Board came out and said, “Raymond, we instructed you not to cut prices.”
I answered, “I swear by God Almighty on any Bible you want, we haven’t cut one single brand.”
They said, “But what about those prices in the window?”
I said, “Those are our own brand!” and people flocked in and Checkers did five times the turnover of all three stores in this one store, in one day. Then the Board saw the light and we built it to 89 stores.
I’ll never forget that night. We took Oros, Gillette blades, Lux; we had to put white paper around the Lux. (laughter)
Is that why you were let go from Checkers?
No, the reason I was let go was because I was fighting all the time. I’m not doing this to run them down because they don’t do it now.
In 1965, they said, “Raymond, it’s very tough economically. We’re having a meeting with all the other chains.” So I was called into the boardroom at Checkers. OK Bazaars was there, Woolworths, Spar and somebody else, all with their lawyers.
“From now on, you have to liaise your 100 lowest prices to these guys,” I was told.
I said, “I won’t do it”. I quoted them Hutt and all the principles, never mind the law.
They said, “Raymond, we are instructing you. You have to sit with these guys and fix prices,” and I said, “I’m not going to”, and I walked out of the meeting.
I’ll never forget: my wife was having our fourth child and I took my little Hillman car and I drove home with my golf clubs in the boot. I drove to Crown Mines and I just played 18 holes on my own because I was certain I was coming back to be fired.
But they didn’t fire me. The chairperson, with whom I was actually quite close, said, “Raymond, you can’t walk out of a Board meeting.”
I said, “I know, but I can’t fix prices. It goes against everything that I’ve been taught.”
I refused to meet with these guys and just went on running my 89 stores.
Three weeks later, they called me in and just chucked me out.
And that, ultimately, I suppose, was a good thing?
The best thing in the world, but I didn’t know it at the time. ?
Zaid Kriel
