VII. It takes all the running you can do, to keep in the same place. Efficiency.

From my house in Fourways Gardens to the warehouse of my Distributor in Midrand is 20 minutes by car. Very quick drive. I agreed to meet with the owner Mlungizi around 6:20 in the morning next to the entrance to Fourways Gardens at the gas station. I’m there at 6:20 and see Mlungize or simply Mlu as we all call him waving me smiling from his Ford-Focus. This is my favorite time of the day few minutes before the sunrise. Infinite dark blue sky is full of stars yet and gigantic full moon is right under me. Road is almost empty and the only cars are mini buses taxies hurrying up to Joburg. Gloomy. Cool and chilly. Dew is on rocks, grass and trees. Dawn is coming fast. An anticipation of the rising sun hangs in the air. We are getting to Kalyami when the East behind my back is already in orange. Kalyami is on a high hill and overlooks the endless valley. The dusk down there in the valley seems even thicker and more concentrated. Smoke drifts across the lowlands, coal burning in the townships. People in the townships are burning coal for heating and cooking. It smells the trains in Siberia and the dawn just behind my back. In front of me, as far as my eye can see, the valley, the farms, the townships, the compounds. You can guess by the lights of the cars — somewhere there are big roads. And behind, far away, there are Sandton Towers. The dusk there seems to be even thicker and it seems that in Sandton it is still complete darkness, it is still quite night, so that the outlines of skyscrapers are only guessed in the distance. But the sun, invisible to me so far, has already touched their tops. Skyscrapers are made from glass and their tops are also from the glass and the sun is reflecting on them like in a mirror. Under its rays, three golden pyramids hang above the surface of the earth, flooding Sandton and the surrounding area with bright gold. For a fraction of a second I see myself in the ancient Egypt overlooking the pyramids. And then the sun rises very quickly and rolls out from behind me. Instantly the valley in front of me fills with orange. The golden tops flare up like three little suns and go out. The day begins.

I will come back to this story of Sandton Pyramids a bit lately, but now let’s spend some time thinking of efficiency and what does it mean for the human being and for the business.

Actually if you ask me to keep is simple I would say I see efficiency in two dimensions — 1) efficiency in technology or manufacturing efficiency aiming to reduce the cost of transaction, manufacturing, finished goods, you name it and 2) personal efficiency or ability to work productive on many subjects, create something new, generate new ideas, solutions, make a right choice and execute fast with passion.

Let’s start with the manufacturing efficiency and here few stories are coming to my mind.

One day I went to the tour to the mine Cullinan in the small South African town near Pretoria with the same name. The mine was established back in 1902 and it’s famous for the Cullinan Diamond — the largest rough diamond of gem quality ever found. Me and my friends are putting on a special uniform, handing out helmets, breathing equipment in case of an underground blockage, and bulbs with heavy batteries (hanged on my belt, it felt like 10 kilograms at least). Then the elevator (the elevator is designed for a shift of one hundred people) is taking us and going down and further down (quickly in four-five minutes) to the depth of 760–790 meters. The feelings are amazing, as if I found myself in the underworld of the gnomes. Ventilation is on all the time, the wind blows constantly, but there is no feeling of fresh air. And it’s hot. The guide says it is very hot in the coal and gold mines, it is still normal here. Rob, the guide, was working in this mine for 47 years, finished when he was a director of the mine and now he is in retirement and doing tours. I may tell you openly I couldn’t imagine myself working here for 47 years although everything is mechanized and rather clean. But the underworld itself … I don’t know how to describe it, maybe you just need to get used to it.

Prior to this tour I learned something about diamond mining technology. In short, this is a volcano’s mouth filled with kimberlite. Kimberlite is different, but all of its types contain diamonds. In Russian Yakutia diamonds are been mined by the open method, but here they are mined underground. People just dig, or rather blow up tunnels, the rock is poured down to a level below, where it is transported by trolleys to special crushers and then at the level below it is pulled upward by a conveyor. At the top, all the ore is grounded and diamonds are sifted out. Eighty percent — technical, the rest — jewelry. The average salary of a miner is about a thousand dollars, which is not bad at all here, and the mine also gives loans for housing and a car.

There are numerous tunnels underground, really a whole kingdom. Many industrial cars are going back and forth, trains pull trolleys. We were even shown a recreation room and a small pool full of fish. They are now developing a new even lower level at 1000 meters and in a few years Cullinan will be the deepest diamond mine in the world. We drove back with a hundred people in shift. Everyone is laughing, talking, joking — Friday, meaning there are two days off ahead.

On the surface, while changing back the uniform to our own cloth I asked Rob why the changing hall is so empty. There are so many lockers around and we see no people. My guess was that mine is old and due to the output decline the amount of workers was reduced. Rob’s answer chocked me — “in mid-50th when the hall was designed the amount of workers here was around 5 thousand, that’s why there are so many lockers. But with time technology improved significantly and now it’s only 500 people are working on the mine while the output grew 10 times since that”.

In our day to day life we don’t always realize the magnitude to which the progress hit manufacturing efficiency in the past 50 years. Cullinan tour was mind opening for me. I discovered than efficiency of one worker improved 100 times over the last 50 years. And with this discovery as it’s often happening more and more such kind of facts started to come to me. I still remember me visiting the detergents plant in Novomoskovsk 15 years ago. The whole manufacturing occupied not a big space with only few people working, probably 5–10 in one shift. Then I realized that technically speaking you may need just 100 people and 2–3 sites to cover the demand in detergents of the few countries with population 150–170 mln people.

Nothing may trigger the understanding of this topic better than watching the old machinery. Old machinery in the Durban next to the Indian Ocean.

I’m living on the ninth floor and below me is the embankment and the ocean. From my big glass window you can see very far. In the afternoon there is a business meeting. Six Indian Muslims are gathering in the meeting room. All the top management of my wholesaler. The conversation from discounts inevitably going into politics, elections, vodka and Russian women. “Women in Russia are very beautiful” — I have already heard this hundred of times, it is always difficult to respond somehow, but this time the answer is coming immediately. I’m saying:

- I really like your ocean

- ?????

- You, in Durban, have an amazingly beautiful ocean, but when was the last time you came to the beach to look at it?

My partners are laughing — good joke. They bring coffee, food — ice is broken and we are starting negotiations.

Lunch time and Ahmed, my colleague from Durban is asking me what I would prefer to eat. I prefer something light vegetarian today and Ahmed immediately smiling happily saying “Let’s go eat banicha.” We are parking in the city centre, making our way through hawkers, beggars, newspapermen, cyclists selling all sorts of things on the sidewalk, and finally finding ourselves in a small take away café. Five Indians behind the counter are scurrying around. Behind them there is a mountain of loaves of bread. In front of them there are ten pots of brownish something. This brownish something is a spicy-smelling curry made from a variety of beans and vegetables. We are ordering “two by half”. The guy is picking up a loaf from behind, cutting it in the middle, removing the crumb from the middle with his hand and pouring the curry inside with a ladle to the brim. Then he solemnly placing the crumb on top and wrapping everything in glossy white paper. Our banicha is ready. Spicy, tasty. Delicious.

The warehouse of my Distributor in Durban is close to downtown. It’s an old red bricks building, the space inside used to be a printing house, printery. There is not much space, everything is occupied with boxes of diapers (sold by Distributor) and all kinds of other stuff. In the middle there is a real treasury — three very old printing machines. They stay here like three large animals. One is really big. Black. With many handles, rollers, arrows. Everything smells oil. I’m testing the handles — all are turning. As I understand, this is a fully operational offset machine. I see the inscription “Heidelberg, 1970 release”. Not very old actually, almost the same age as I. Ebony handles. Tuning wheels. Paper tray. I even found where to adjust the ink level, but good 90% of the knobs and wheels remain of unknown purposes. Another machine is clearly a cutter. White. But, why does the cutter need so many levers and wheels? The third machine is green, similar to a sewing machine with a needle and a coil of wire in a spool on top. I spin the wheel, it starts to “sew”. Probably books were sewn here. Everything is working! They stay three together — black, white and green, like three big animals. The feelings as if it’s only yesterday the printers left the place. Machines are not needed to anyone. Almost alive.

Only 40 years ago, not so long time ago, those machines were highly capable, new, on the edge of technology. And how outdated they look today comparing to the modern printers and printing machines. We can only guess how the transactional cost of one printed page changed in the past 40 years… 10 times? 100 times?

Of course the point about manufacturing efficiency is quite obvious. We all see the technical progress happening literally everywhere. But when it comes to the business not all the time the magnitude of the importance of manufacturing efficiency is so clear. Dealing with the paper hygienic business in the past few years and staying close to manufacturing I was chocked by the difference in the cost of finished product of the machine producing 600 diapers per minute vs 1200 diapers per minute, machine reaching 1% scrap level vs the machine with 10% of scrap. And there are many other parameters like changeover time, energy consumption, raw materials consumption which may decrease or increase the cost of the product significantly. Not all the machines are the same. Not all the technologies are the same. To stay competitive “it takes all the running you can do”. The constant upgrade should be a norm. Otherwise you are loosing the pace and finally your product will end up on shelves simply more expensive than your competitors. And then even if you have brilliant marketing and sales teams it will not save you especially if you are selling FMCG (fast moving consumer goods).

I remember one of my store visits with the marketing team while I was working with one of the American bourbons Brand. We were having so called “shop along” study, when we were following the shopper, looking at how he is buying and then interviewing him. Our Brand had great (as we all believed) story behind, very strong equity and the character. And you can imagine how happy we all were when this shopper took our Brand from the shelf to buy it. Full of excitement we asked him, why did he choose our brand, probably because the brand character speaks to his identity?…. The man looked amazedly at us and just said “it was cheaper by 1 dollar than the other brands”… So, very trivial conclusion — never ever underestimate the role of the price and thus, the importance of manufacturing efficiency. If your manufacturing is expensive nothing will save you.

Now from manufacturing efficiency we are coming to personal efficiency and thus back to the very beginning of this chapter. Apart from the nice description of the sunrise and Sandton towers you probably noticed that my meeting with Mlu was arranged for 6:20 in the morning. The next logical question for anybody would be “are you crazy, guys, to meet at 6:20 AM?”, logical question for anybody, but for South Africans. In South Africa I found a new (for me) norm and understanding of efficiency and work-life balance.

How the typical working day is looking like let’s say somewhere in Moscow: 6:30 — you wake up, 7:00 — you take off to the office, 8:30 — you arrive to the office (through the traffic or changing few metro and bus lines), 8:30–20:30 — you are in the office, leaving late because of the workload and also you try to avoid traffic, 21:30 — you are back home, 22:00 — late dinner, family time, day is over… Moscow is very efficient city from “technical” point of view, meaning that the most of the shops and pharmacies, restaurants, cafes, fitness canters, malls, etc. are opened till late night if not 24/7. So you will not face any issues coming back from work at 22:00 and buying grocery in the neighboring convenience shop.

South Africa taught me completely different life style. The sunrise is at 5:30 in the summer and around 7:00 in the middle of the winter. So, firstly I got used to wake up with the sun. Most of the time it’s not cold, so coffee outside for breakfast is the norm. I was arriving to the office at around 7AM and had enough time for gym to be at my desk at 8:30 sharp. Most of the people were coming my 8:00 to leave around 4PM. I was working till 5–6PM and still had enough time to spend with my kids in the evening. Local South Africans with no exception have few hobbies (apart from braai of course) — cycling, fitness, yoga, dancing, of course soccer and rugby, sometime golf or cricket and also hiking, birds watching, game drives, safari I can’t name it all. For outsider this life style may be seen as a life in a leisure, calm, tranquil, laid-back and in general lacking the energy and personal efficiency. But for me personally these few years in South Africa became the most productive time of my life. Let’s understand why and what drives our personal efficiency.

The first immediate conclusion — for personal efficiency we can’t apply the same logic we do when discuss manufacturing efficiency. Indeed we may, but only to the certain extent. What do I mean? Of course if you have nice fast laptop and the car instead of typewriting machine and the horse you will simply be faster and you will have more “spare time”, but if efficiency for us means the ability to solve problems and generate new ideas, than the fact you have more time doesn’t necessary correlate with the result of your activity.

So, what are the key factors of my personal efficiency? At first, let me remind you the concept of “staying above the line” attributed to Robert Kiyosaki and perfectly explained by Conscious Leadership Group (see the link https://conscious.is/video/locating-yourself-a-key-to-conscious-leadership). In brief — imagine a blank piece of paper with a horizontal line drawn through the center of it. The line signifies a choice between how you thoughtfully respond to a situation or automatically react. Operating above the line is open and positive. It’s about ownership, accountability and responsibility. Operating below the line is closed and negative. It’s about denial, excuses, defensiveness and blame. Above the line thinking is about being open and curious. It’s being able to respond effectively and usefully in any given situation. It’s about starting with an intention and then working out how you can actually bring it into play, e.g. Meaning, in our terms above the line your personal efficiency is very high. When your thinking is below the line, you’re protecting and defending yourself either passively (not contributing at all), or aggressively (by attacking others). This type of thinking is about trying to avoid responsibility, criticism and loss of control, e.g. So, here you are not efficient at all.

Above the line you may feel an energy, passion and enthusiasm, so your brain is opened and easily generates new ideas, solutions, acting fast and accurate. The question is what drives us above the line what keeps us being there.

There is fog and rain in Altai mountains. Torn clouds are passing by the gorge where my hotel is, it is raining and there are no more any sounds but the whispering sound of raindrops. I’m staying right above Katun River, on a suspension bridge and then the noise of the river and the noise of the cars from Chuysky tract, which goes along the right bank to Mongolia, are merging with the sounds of the rain melting in one mystic melody. There are 500km from here to the border.

To come here we passed by two mountain passes. In the beginning the road went along the Katun, then we climbed 11km by serpentine type of road to the plateau. It’s cold and windy and on the desert plateau there is a lonely monument in a memory of unification of Altai land and Russia. The terrain is brownish, semi-desert with the large anti- snow fences protecting the pass from the snow to come soon. I feel uncomfortable and happy to descend down to the warm valley.

We are going down quickly and instead of stones I see the candles of pine trees and groups of birch trees. A local rarity is red deer, they are very rare to be found and suddenly in the distance at the foot of the mountain we noticed a whole herd. Or rather, not we, but our guide Lesha noticed. We turn onto a dirt road and to the mountain to get a better look at them. It turns out that these are not red deer, but simply a lot of snags scattered around. Suddenly we found ourselves in the center of a long time abandoned farm. The abandoned rusting equipment, destroyed decaying sheds and the buildings. On one ramshackle house there is a sign “ Nadezhda farm” meaning “Farm HOPE”

We are driving out of there meeting herds of horses, cows, sheep … The ascent to the second pass begins. It is much more picturesque, there is also a serpentine road and the slope goes up steeply. At the pass there is a group of tourists from France, Germany and the Netherlands. They are buying souvenirs, taking pictures. An unreal beauty view of the valley totally inhabitant opens up from above. A young German girl stands for several minutes on the edge of the cliff, looks into the valley and then shouts with all her might “aaaaaaaa”, then again and again. Her fellow travelers take her away from the cliff, she is crying. Around there are many small pyramids hand made from stones “for the luck”, this is a belief. And thousands of white ribbons are attached to all the trees, this is also a belief. Souvenirs are sold in the parking lot. An elderly Altai woman explains to me everything about her amulets, which she makes from felt and beads. In great detail about each. She has several dozen of them. She says that her purpose is to make amulets.

We go down again and again the temperature rises from +10C to a good +20C. There are many native Altaians here. Their households could be recognized by their “ailas” — round, or rather six-sided (wall) houses with a hole for smoke in the roof. In ails they cook, gather with the family, take important decisions, receive guests. We go down to the river, this is Katun, we stop here and go to the water. I’m staying and looking at tons of water rolling next to me. The smell of the river. Wet stones. The sound of the water drowns out all sounds. On the way back we meet the Altai traditional wedding arrived by three cars to be pictured on the riverside. The bride and the groom are dressed in national costumes. The bride is wearing a light purple silk dress that is straight to the floor with some kind of embroidery and headwear kind of “kokoshnik” on her head of the same color. The groom is also wearing a light purple-type silk caftan with numerous small buttons. Handsome.

We are leaving the wedding and driving further along the Katun, along a wide plain, along the Chui River. Finally we are reaching Kalbak-Tash (a stone spoon or a flat stone) place. Indeed there are many multi-layered rocks here. Not just rocks but several thousand rock paintings petroglyphs done many thousand years ago laying down here in the open air. The elderly Altaian Boris Ivanovich, who talks about all this splendor, smokes one cigarette after another. We follow our tour guide and walking around an hour along the route. Boris Ivanovich is telling us numerous stories starting with the pre-historic people who use to live here and finishing with some fantastic versions about aliens who probably came here thousands years ago and that’s why on that painting we may clearly see the images of spaceships, aliens in spacesuits, solar panels, etc. “There was a place where ancient people gathered together, prayed, negotiated and painted” — with this his statement I, perhaps, agree the most. Petroglyphs are impressive and drive you into a trance, there are a lot of them, really a lot, different in style, epochs and images. There are many deer, hunters, mountain goats and bulls, someone like an antelope and a rhinoceros. Some are obviously mythical animals maybe dragons. Silence is around us, wind is warm and silence, warm air is bringing the smell of burnt grass and herbs.

There is fog and rain in Altai mountains. Torn clouds are passing by the gorge where my hotel is, it is raining and there are no more any sounds but the whispering sound of raindrops.

I hope you liked this story from Altai and already got the idea what drives me above the line and boosts my energy level and creativity, thus making me more productive and efficient. Simply traveling, looking at different cultures, immersion in another reality gives me the awesome charge.

But not all the time I have Altai mountains next to me (unfortunately), so another “place of the force” for me became a coffee machine in the office. Apart from the fact that I simply love coffee I found it incredibly productive to meet people over there to have quick sharing chats. It’s an ideal spot to get to know people better, to share the ideas, to receive informal feedback and thus generate new ideas and re-charge the batteries.

Another my driver, which I should probably place at the beginning is my team, the diversity of my team to be precise. I remember my first meeting in Brown Forman when we all got together to solve some business issue. How amazed I was to hear from 7 different people the experience they had in 7 different companies with many different customers. With the team of such a diversity staying in one room you can easily travel across industries, categories, customers, time and space, trigger your problem solving ability, share and reapply the best experience ever.

Let me tell you just a few short stories here.

Harare is a very lovely city with just over 2mln of inhabitants. I love to come here in spring time, ideally in September when beautiful Jacarandas are blooming with the bright purple flowers all over the city. The city didn’t change much since the time it was Salisbury and you can still go to the Kopje Area and find The Queen’s Hotel building that was opened on 31 December 1899, former Synagogue (stays here since 1916), Guild Hall (opened in 1920), Vasan’s Footwear shop (has been built back in 1902) or India House (since 1903). But of course I’m coming to Harare not just for the city itself, but mostly for the people. Peter, my Distributor, lives here, he is Greek, the 4th generation of Greek farmers. Now the farming times are gone and he is producing sprays and distributing FMCG products. This time I came in the time of tough crisis. It was 2008 and the exchange rate of Zim dollar was rocketing multiplying daily. So the whole pre-sell business model of Peter just collapsed. Out of few hundred stores he was selling to previously only 12 Indians owned stores left and even those were operating semi-legally. All the open markets were closed as well as traditional trade. So I found the sales team of Peter just sitting and waiting for the better times. Peter asked me to give to the team some motivational speech to “bring them above the line”. I looked at the people waiting for some positive message… “guys, — I told them — do you think it can’t last longer? It can, I can reassure you! Do you think it can’t get worse than this? It can, I know it, I saw it. So, if you sit and do nothing, nothing will help you. I simply can’t believe that in 2 mln people city there are only 12 stores exist. Right now we will take a VAN and we go out to find places where people buy products. We do it now”. The speech wasn’t too positive, but it turned out to action and indeed we took a car and spent next few hours searching around Harare with no result. “You see, — Peter said — I told you, I know Harare, it’s ONLY 12 stores and that’s it!”. I left Harare with the sad mood indeed. But miracle happened 1 or 2 months later when Peter came to see me in Joburg for some business need or for the training (just do not remember what it was exactly). He picked up a minute when we could talk 1–1 and told me — “you know, Pavel, you triggered something in my team. They spent next week out of the office looking for the stores… and you know what… we found stores… now we are selling there for cash”. The best recognition to me, made my day.

Krasnodar in the south of Russia 20 year ago could compete with Harare in it’s beauty and calmness. Though it’s 100 years older than Harare the population is just around 1 mln people and it’s also full of nice stylish old building (at least it was the case back in 2002) along the Krasnaya street. My biggest customer Magnit now is one of the largest Russian retailers with more than 20 000 stores in 65 regions of Russia those days hardy had 100 stores in Krasnodar and surroundings. But it was growing very fast and I catch the moment when the customer’s management team decided to transform Magnit from the regular retailer to discounter format using German Aldi as a benchmark. So we simply were put in front of the fact that from day X our assortment will be decreased few times. I was lucky, I wasn’t along, my colleague and friend Misha was with me and we started to dig deeper into the issue and tried to find a solution. We simply physically went through all the value chain from our warehouse to the end consumer understanding the issues and asking numerous questions “why”. We came to the conclusion that issue is not the amount of articles in the assortment as such, but the amount of slots available in the new warehouse of Magnit. The solution came almost immediately — we decided to put few SKUs/articles in one case, in other words we proposed mixed cases. To understand the executional part we took the flight to Istanbul where we learnt the mixed cases execution at Bim discounter. To cut story short — we kept our assortment winning our competition by far.

Looking at those two stories — what were the drivers for personal efficiency, energy level and problem solving? Of course people around at first. Diversity of opinions. Then our ability to look around and reapply from the other geographies, industries, times.

We are coming to the end of the chapter and there are only two things I want to share left.

First concerning the solution. I was always an adept of Ockham’s razor principle. Ockham’s razor for those who may probably not know it is the problem-solving principle that “entities should not be multiplied without necessity”, or more simply, the simplest explanation/solution is usually the right one. The idea is attributed to English Franciscan friar William of Ockham (c. 1287–1347), a scholastic philosopher and theologian who used a preference for simplicity to defend the idea of divine miracles. My strong believe is that the more complex solution is the less chances it will work. So I’m all for simplification and clarity and the easiness of the steps we are going to undertake.

Second is referring back to the beginning of this chapter. It’s the balance between the manufacturing and personal efficiency. If you are trying to sell commodity product at a higher price vs your competition, good luck with it. No personal efficiency could help you. And vis a versa even if the price is good, but your team is below the line you can hardy be successful. So, stay calm and keep the balance!