There's always an element of luck to a company's success. A falling rand or rocketing market prices helped many of this year's winners. But the FM's assessment of the 40 finalists considered the strength of management.
Two companies stand out for having achieved their ratings on the strength of the people behind them: African Bank (4) and Pick 'n Pay (3).
Both have faced challenging marketplaces in the past few years. African Bank's key microlending business found itself in a regulatory mess which took out major players Unifer and Saambou; and Pick 'n Pay had to avoid the fate of retail industry competitors whose margins were pressed.
Pick 'n Pay has progressively improved market share to 38% this year. At the same time it has transformed itself from a successful family-controlled business under founder Raymond Ackerman to a blue chip with an excellent succession strategy in place.
In response to food price inflation in the past year, it launched an aggressive pricing strategy, promising to subsidise basic foods by R50m. Now it's waging a price war against competitors.
Pick 'n Pay's management style emphasises the people factor. CEO Sean Summers, whose appointment in 2001 signalled a break from the Ackerman era, has become a great delegator, as demonstrated by the number of millionaires among branch managers at Pick 'n Pay. "We allow people to be the best they can be", he says.
For courage in the face of adversity, though, African Bank takes the cake. The microlending industry was thrown into turmoil in June 2000, when government summarily ended microlenders' and insurers' access to its employee payroll. Until then, microlenders had had a virtual licence to print money - lend to a public servant and repayments were guaranteed through deductions from their salaries using the government payroll system. Abuse was rife. Some civil servants were left having to pay in cash at the end of the month.
"In December 1999 we knew things were overheating," says Abil CEO Leon Kirkinis. "We decided to cut back on public-sector lending and halved our new business in one month. By June 2000 we had already made huge changes. When it happened, the biggest risk was systemic and we were braced for it." Abil took the step before the market was aware of how drastic government's response would be. Growth in African Bank's lending book remained subdued for two years, but has picked up recently.
Kirkinis, a one-time merchant banker who founded African Bank in its present guise, has become a campaigner for business culture as the main success driver. "In my view, what gives us our style is cutting through the bullshit. You can't be scared of confronting your biggest fear. Big corporates don't like to look in the mirror. That's the beginning of your downfall."
MD Tami Sokutu, who left the public sector as director-general of public works to join African Bank a year ago, also emphasises the people. "It's not just another bank. The quality of the people we have has to contribute to the fact that African Bank has weathered the storms." African Bank tries to build diversity in its top team. "If you create a range of strong, diverse people, you make sure that every issue finds its way onto the table."
African Bank has triumphed over competitors in the microlending industry, but it has to keep its eye on the big banks. One vulnerability is that African Bank does lending only and does not provide transaction accounts. That gives the big four banks a hold over the customer, an obvious route to the microlending marketplace. But no big bank has taken on the challenge.
