Empire Builders - Pt. 1

Wednesday, February 1, 2006 - 08:05

They are at the top of their game in business, turning small, backyard operations into world-class enterprises. What are their secrets? What drives them and their businesses? In the first of a two-part feature, Management Today talks to three outstanding Australian leaders and entrepreneurs. By Cameron Cooper Jim Penman Founder of Jim's Group In the early phase of his burgeoning gardening business, Jim Penman gave his franchisees a strange option - feel free to leave, take your clients and set up another business if you please. The walk-out clause may seem at odds with a man who prides himself on attracting and retaining the best people. But for Penman, the founder of Jim's Mowing and Jim's Group, it is commonsense. "It's not particularly good if you have a person in a franchise simply because they signed a contract," he says. "They tend to sour the network." Rather than merely protect intellectual property and goodwill, Penman strives to earn the trust of his franchisees. If scale is any gauge, it is working: he now runs the largest mowing franchise in the world. Twenty-two years since launching Jim's Mowing, Penman controls, through Jim's Group, more than 2600 franchisees and branches around Australia, New Zealand, Canada and Britain. Mowing aside, service divisions handle tasks such as cleaning, dog washing, handyman and fencing services, and paving and pool care. Putting people before profit has been a driving philosophy for Penman - and it has paid off financially too. "The advantage I have of being a private, wholly owned company is I don't have to refer to shareholders. To me putting people before profit in the long term is putting profit before anything. Because everything we do is built on reputation. You've really got to lean over backwards to do the right thing by franchisees, because in the short term there's always a lot of money to be made by not doing it. But in the long term it'll destroy you." Born in England in 1952, Penman's family returned to Australia in 1955, and he grew up in Adelaide, and later in Melbourne . Before starting university, Penman worked in a variety of jobs: farmhand, door-to-door encyclopaedia salesman and public servant. Later, in 1982, as his PhD in cross-cultural anthropology and zoology wound down, his part-time gardening business started to thrive. Penman soon found he had more lawns to mow and shrubs to prune than hours in the day would permit. Franchising seemed a logical way to go. Penman is committed to constantly improving the care Jim's Group provides to its franchisors, franchisees and customers. "I do feel very responsible. If a franchisee fails that's very painful to me. If a client gets poor service, I hate it." This pledge means that he takes a firm stand with his network of staff when it comes to customer service. He is demanding of franchisees, who are the public face of the business in Australian backyards. "Most of our franchisees get zero to one complaint a year," Penman says. "But you've got some franchisees who are getting one a month, which to us is absolutely appalling. So we need systems - every time a complaint comes through, the franchisor needs to ring the franchisee pronto, discuss it, find out what happened and why." The message is clear: lift your game or go. Equally, he expects a team of franchisors under headquarters to serve their franchisees. "If they don't do it we'll take their power of attorney off them. And they can't find new franchisees until they look after the ones they've got." Such a stringent regime demands a high level of staff skill across the organisation. Penman explains: "There's a big secret in business and that is that you hire people who are better than you. I don't have any trouble with that because I'm not very good at very much." A sophisticated back-end IT department supports the human element to remove and streamline administrative tasks. And Penman eschews power hierarchies in the organisation, believing they are dangerous; so he tries to maintain a sense of equality throughout the organisation and makes himself accessible to staff. Life has changed over the past two decades for Penman, but he still keeps a balance between work and a hectic home life (he has nine children). That includes doing some gardening. "I don't mow my own lawns but I still enjoy the garden," he says. "I just potter around." And Penman doesn't miss the simple old days of firing up a mower or garden shears. "I live on five acres next to the office and love that side of life. But to me the intellectual challenge of business is so much fun. It's like an immensely enthralling permanent computer game." Domenic Carosa  Founder of destra Corporation As five-year-old Domenic Carosa bought and sold postcards in front of his parents' Melbourne house in the late 1970s in his first commercial venture, there seemed little doubt that business would dominate his later life. "I remember back then it was one for 1c or three for 2c," he recalls. "A couple of cents back then could buy a handful of lollies. So it's been very much a part of the blood, the culture -  and it's what I love doing." Now the CEO of dynamic destra Corporation, Carosa is putting those early entrepreneurial lessons to good use in a major IT company that provides business services such as web hosting and voice communications. It is also a leading digital music provider. It is a huge leap from the early '90s when Carosa and his sister Anna started Sprint, selling low-priced game software into the computer market. In 1993 they formed what is now known as destra Corporation, which is now listed on the Australian Stock Exchange, and employs 80 people in five countries. Floating the company has created a whole new learning experience for Carosa, who has grown to appreciate the auditing rigour that is required of an ASX-listed entity. "From that perspective it's definitely helped us grow," he says. "And when the share price is doing well, it's positive. When it's not it's sometimes a bit difficult because you're doing great things but it's not reflected in the share price. But my view is sometimes it takes a while for the market to catch up and work out what we're doing and how we're doing it." Still a relative business youngster at 31, Carosa has packed plenty into his career. Enrolling in university after high school, he dropped out after just six weeks. He later returned to university to complete a Masters of Entrepreneurship and Innovation: "But only after I had gotten out into the real world and had experience". The combination of childhood trading, schooling and on-the-job experience has shaped Carosa's winning formula: get a great product, sell it at an affordable price and provide superior customer service. Underlying that must be a capacity to make the tough calls, and "[make] more right decisions than wrong decisions". "I think in business, like life, a mistake is only a mistake if you don't learn from it. Sure, we've done certain things that haven't worked and we've done other things that have worked... I remember back in the '90s there must have been at least half a dozen times where we just didn't have enough cash to pay salaries. We could have gone to the wall many, many times. And it was through being patient and persistent, and we always just found a way." A mantra he adheres to religiously relates to recruiting: hire slowly and fire fast. "I've got a view that the occasional firing is good in an organisation. Those at the bottom end of the performance spectrum lift their performance in the fear that they're next. And more importantly, those at the upper end of the performance spectrum feel heartened that unsatisfactory performance doesn't go unpunished." As a young CEO, Carosa refuses to put much store in age. He does not play the role of dictator and staff are "team members" rather than employees. And he realises that the fast-moving IT sector demands continuous action and re-evaluation. "I've got a view that one should never underestimate the competition. We run the second largest virtual hosting company in the country. Psychologically, when you're number two you think and act a little bit differently because you're chasing. And someone who chases versus someone who leads. There's a different hunger." To that end, Carosa warns against resting on one's laurels, saying: "Complacency is a killer." And without passion, forget it. "If you're not passionate you're never going to put in 150 per cent. Life is too short to do anything you don't love... I love what we do, I love business - that for me is number one." Craig Lovett  Founder of Cleanevent International It is a business built on the power of a handshake and a mountain of rubbish. The Cleanevent International approach advocates a sense of trust that might sound old-fashioned to some, but Founder and Chairman Craig Lovett is adamant it is the secret to his success. "There's only a couple of things people can't take off me - that being my handshake and my word," he says. "It underpins the culture of this entire business. We're big about empowerment; allowing people to make decisions, and then trusting them to get a job done; and trusting them to tell you when it's right and when it's wrong." From humble beginnings in 1987, Cleanevent now operates in Australia , the United States and the United Kingdom, providing cleaning project management and logistics services for many of the world's largest sports and leisure events. Its stellar portfolio includes contracts at the 2000 and 2004 Olympic Games, the 2002 Winter Olympic and Commonwealth Games, the Australian Formula One Grand Prix, Wimbledon and the US and Australian Open tennis championships. Lovett has worked his way through early roles in hospitality and the police force to hit on a winning formula running his cleaning contracting enterprise with his business partner Ron Kirwan. Employing more than 350 full-time employees and more than 4500 casual workers across the world, Cleanevent is truly cleaning up. Without doubt, though, the biggest break for Lovett and his team was the contract to clean the venues at the Sydney Olympic Games. Five years after the flame was extinguished at the Olympic stadium, the success of the 2000 Games is still discussed all over the world. "And to know that we had an enormous part in that... I think our deployment on the Sydney Olympic Games was something like 1.4 million man hours," Lovett says. "It was an enormous task. My favourite thing was about day four or five of the Games, and Singapore 's New Straits Times newspaper said on the front page - these are the games that Disney would have hosted'. Clean rest rooms, no paper on the ground - it clearly didn't say Cleanevent or Craig Lovett and his team, but it didn't have to." Lovett has no illusions about the fact that cleaning can be a dirty business; it is just that his decision to target major events has enabled the company to play a role in some of the biggest projects on the globe. "That's my favourite saying about the business," he says, referring to his cleaners' less-than-glamorous role at some of the world's most celebrated venues and events. "We do the most unsexy things in the sexiest places." In explaining his success, Lovett is quick to identify the key factors. "People first, people second, people third. Everyone says that they've got great people and I'm sure that they have, but you have to have great people. And great people at different levels. "A lot of people say I'm a generous man but I don't think you can ever be generous enough to your people. They don't all have to be brilliant - some of our greatest people are the base-level cleaners that look after Flemington Racecourse on Melbourne Cup day." The race that stops a nation is a perfect outlet for Lovett to explore another one of his business passions: networking. "I've spent 19 years absolutely networking the death out of the business and it's something I enjoy," he says. "For me Melbourne Cup day isn't just a social day where I'm drinking a few glasses of champagne. It's an opportunity to continue to build the network." Like all successful entrepreneurs, Lovett has not always pulled the right reins. He advises wannabe business leaders to find the right financial advisers. "I spent too many years in our early time not wanting to pay the right money for the right financial advice inside the business. In my last five or six years of business, it's always been, especially with financial people, find the right body then over-hire." The future looks bright for Cleanevent. It has secured about 80 per cent of the 2006 Melbourne Commonweath Games cleaning work. And following its success in the US and UK , the company is about to set its sights on Asia and the Arab Gulf . As he continues to expand, Lovett will continue to stick to his winning strategy:

  1. Work smart as well as hard.
  2. Treat others the way that you would want to be treated yourself.
  3. Reward creative thinking.
  4. Allow and encourage individuality.
  5. Never ask someone to do something that you haven't done, or wouldn't do yourself.
  6. Remember the way up, as you may need steps coming down.
  7. Consider active and passive mentors, and make an effort to model their successes.

Lovett's confidence in tackling new markets is underscored by his organisation's custom-built software and systems that manage all the venues and events it services in different parts of the world. It is a crucial part of the approach that sets Cleanevent apart from its competitors. "I don't regard us as a regular cleaning company," he says. "I never have."