Big Break of Courage and Passion for Daybreak

Leadership editor, Prof JJ Tabane, sat down with Daybreak CEO Richard Manzini and was fascinated by his views on the economy, his passion for poultry farming, and his leadership approach.

Daybreak CEO Richard Manzini has a deep-rooted passion for helping to fix South Africa’s economy; building an environment within which any business can thrive. Manzini believes that a rapid decline in direct foreign investment is a major problem, with political instability a contributing factor. He emphasises that for any business to invest, there needs to be relative predictability.

Back at the ranch, Manzini’s passion for the poultry industry comes through the Daybreak vision and operations. It’s a truly staggering phenomenon; more than 250 000 birds are slaughtered daily. The operation is vast, including multiple operations. The main operation, based in Delmas, straddles more than forty farms that produce chickens to be slaughtered in two neighbouring abattoirs.

For this business to thrive as it does, one needs a clear view of the entire operational value chain.

The feed must be produced nearby and transported to the participating farms. In terms of the operations, Manzini reveals that their onboarding is good enough to stomach the “hook factor” of 81% of the contract growing being in the hands of external farmers. The critical issue, Manzini indicates, is that the operation is continuous—no stops or breaks in the operation can be tolerated. Manzini has a fascinating leadership approach. He surrounds himself with those who can add value to his operations; admitting that he is seldom the ‘clever one in the room’.

He is clear that the success of the operation is teamwork, as there are so many moving parts. If it were a one-man show, it would fail. The team is energised and motivated, making them highly respected in the industry. Manzini shares that the company is 100% owned by the PIC, but immediately exclaims that support is needed to undergo a turnaround for the business.

Manzini in his own words

Let’s look at your role…

As the CEO, I’ve spent the last couple of months straddling parallel change management processes and business processes. There is a cultural change that I’m addressing and spearheading in the business. The strategic direction of the business is underpinned by a few trends and the future orientation of the poultry industry. Stakeholder engagement has proven critical during this time. I spend time with my employees across the business regularly and other stakeholders. I am rebuilding the trust of all stakeholders around all activities the business is taking. We are intentional about making everyone understand our strategy, and we repeat daily and reinforce it in our practices. This messaging has to reach every one of our employees, daily.

I am also managing a business, in a very tough environment. Potentially one of the worst periods we have had in the sector in a long time. However, I am optimistic. The clean-up I have led, positions this business to take advantage of the renewed optimism in the country, when it brings about positive economic indicators. We have a few challenges around our balance sheet and reorganizing the business for this current economic climate, and I spend more time with the teams building out agility for the business. We are getting better at using some of the learning tools to understand our data and react swiftly to everyday changes in the value chain.

Are you saying that labour sometimes doesn’t understand the nuances? What is a code for the labour laws that is not attractive to investors?

All you have to do is do a simple comparison of the rights that are embedded in our codes, versus those of other countries— comparatively our labour laws are viewed as stringent. However, there is a context to our policy environment. The nuances, though, around my plea to that specific statement was that organised labour should walk the journey with business as we entrench fair labour practices and engage meaningfully with a view on sustainability. The growth numbers have been on a downward spiral. There is a multiplier-effect that has, across various sectors, really made it a very tough trading environment—especially for us in the poultry business.

Leadership readers are often interested in what our leaders are thinking about the broader macro-economic issues, in terms of the African trade environment, as well. Has this increased or not affected the inflow, because the intra-African trade is said to be quite poor, if one compares it to intra-European trade. Does this even matter to the people who move the markets?

It does matter, but I think that the complexities around intra-African trade have been mostly about the logistical costs; the disconnection in our laws; the frustration around the infrastructure and the financial control measures in various regions. There should be concerted efforts to strengthen intra-trade, by policy, infrastructure support. You will find, business will then take advantage of this.

Do you see the GNU as a positive development from an economic point of view or is it going to result in the status-quo remaining? At the end of the day, will the GNU solve out unemployment woes?

It’s about having to see how they’re going to create coherent strategies around key strategic issues facing the country. The optimism around it, is that at least we have people with diverse opinions around the table that are going to give each other checks and balances for what needs to be done. But the coherent way of how we get it right—for me—that’s still up in the air. There will be discussions to convince government about specific actions, and a specific course, and that’s what business wants to understand. We are just waiting to fully grasp what that type of dialogue looks like for us to implement on something. However, it is positive and bodes well for sentiment.

What are the biggest challenges from an operational sense for Daybreak?

The challenges in the trading environment are tough; the prices for our products are at very depressed levels; like it’s tough for us to kind of get our costs back in terms of the pricing we’re able to take out there. Then Daybreak within this environment has a lot of internal challenges and I liken it to, fixing this business while in flight. Remember, I said we can’t stop operations. You have to be systematic in how you bring about changes within the business. This is a very long-term business. The planning and forecasting are long dated to derive value, you have to be intentional about re-investing in the business. This is critical, and we are looking to get support from our stakeholders around this long dated planning horizon.

Just to give you a good sense of what this business does, on a daily basis we are slaughtering about 250 000 birds, without stop. We can’t stop that process. And when I say we can’t stop, I want you to think of it this way: every single day, about 200 000 to 300 000 birds will be 33 days old. We have to slaughter at 33 days. If it goes over that, if it goes over to 34 days, that specific chicken is not profitable anymore. So, I cannot afford the value chain to, at any point, have disruptions on any single day.

We make sure we produce that for our various clients and customers. But that cycle is non-stop. So, what keeps me awake at night, is making sure my chickens don’t stop eating and don’t stop getting fed until they get to the end of the line. My daily job on the team is to make sure every part of the business doesn’t stop; to make sure that the chicken is fed, and that the chicken grows. More importantly, throughout that value chain, I must drive efficiency and innovation to produce at the lowest possible cost.

That’s a massive business! How many people do you hire to do all this? Are they all in the Delmas area?

We have circa. 3 400 people in the business. Our key communities are in Delmas, Kinross and Bela Bela. The business, by design, is a fully integrated business.

Why is it 33 days?

There is a range, however by way of example. There are various factors that inform the slaughter day. We look at a few KPI’s daily to work out exactly what that day should be, and or will be. Our Feed Conversion Ratio’s, Our PEF’s and the Spec of the bird, depending on customers. These ratios in turn give us that optimal bird size, then on that day; we plan accordingly. To simplify it whereas, where you see a chicken, we just see the various inputs until we get it to a desired weight. The South African market is very interesting, dare I say, even to you. You do not go and buy a big drumstick. When you see it big, you think something is wrong with it. You buy a medium sized, very small sized chicken. So, we try and make sure the chicken grows to that specific drumstick or thigh. If you see them bigger, no one buys those products, which is the difference between us and other markets. They prefer their pieces bigger. We prefer them slightly smaller.

In terms of poultry farming, have you found that a lot of people are taking it up? Or is it concentrated around your area? In other words, you don’t get people from Joburg who have planned on trying to get into poultry farming and now you’ve got to go and fetch those chickens from there?

We do, there’s some strategic locations that you must design your own operations around and the reason why we say we have a lot of our farms in the Delmas area, is primarily because of our abattoirs. The two abattoirs that we slaughter at are within the area. So, one would have to apply a rudimentary method that you have to work with.

You want your farms to be within a 50km radius from the abattoir and within a 100km radius from your feed mill.

So, we have a feed mill where we produce the feed for the various farms and we deliver to them every single day to feed those chickens. You must think strategically.

So, it’s all well and good to have land and a farm in Joburg and surrounding areas, but you also need to figure out, at which point of the value chain you want to participate.

If people were to ask Mr Manzini about his leadership strategy, what would that be in terms of running such a massive operation?

It’s very simple. It’s a collective. I think it would be impossible for me to think I can carry this alone, so one has been to build a very strong team.

On average, you would find every single person is either more intelligent than I am, or way more experienced than me, or way more mature than me. That’s really how we designed the team for Daybreak.

It’s more of a servant/leadership design, where I am fully happy to serve my exco members and give them the leeway and also give them a safe environment and the space to fully express themselves. The business is fully integrated. So, you have to be speaking to your entire team. We are clear on the integrity and ethical direction of the business and the measured efforts of trying to make sure we get that right is part of our corporate KPI’s. For us, it’s where we come from, and trying to rebuild trust with our own employees; our stakeholders and being fully being transparent about where we are or what we are doing and participating in the various communities where we operate continues to assure me of the measures in place.

Are you not nervous about having so many factors that are not in your control?

Rightly put. It’s one of the biggest stresses and, like I said, once you get into farming, really what keeps you awake is the fact that you can’t be in control. So, you must, at some point, find peace with getting what you can control amazingly right, and also having very good strategies of how you react to certain elements that you can’t control. We proactively manage risk in that way. We ready ourselves for plan B, plan C, plan D, depending on which parts of the uncontrollable factors are in action.

In terms of production, are some of these chickens produced yourself at the centre? Or is everything outsourced to the neighbouring farms?

No, we’ve got our own farms which is where we also run our quality control, our R&D, and checking the various farms and making sure they measure in accordance with what we deem to be quality. And we control those other farms with the standards we give them. So, on a split basis, about 20% of the farms are internal. 80% of those are external.

Thinking about the ratio, that sounds quite huge, on the part where you don’t have control?

No, not necessarily. The programme is well structured. We have a few levers that we control. With the technical support that the business’s offers the contract growers, we continue to monitor all the farms daily and can assist and intervene immediately.