SA needs no-nonsense leadership

Former mining CEO Bernard Swanepoel has led the turnaround of struggling gold mines. On the latest FixSA podcast, he shares how the leadership principles employed at Harmony Gold can be applied to address current issues in the country.

 

 

JEREMY MAGGS: Welcome to another episode of FixSA here on Moneyweb, where we look beyond the challenges facing South Africa to explore practical solutions and insights from some of the nation’s most influential thinkers.

 

In this episode I have Bernard Swanepoel, a leading figure in the South African mining industry, who has had a remarkable journey from a young graduate to chief executive officer of Harmony Gold Mining. And it’s a testament, I think, to the power of leadership, teamwork and strategic innovation.

 

 

So as we delve into his experiences I’m hoping that we’ll uncover some key lessons that can inspire South African leaders to navigate our country’s pressing challenges with what I also hope is renewed vision and determination.

 

 

Let’s get started. Bernard, a very warm welcome to you. It’s good to talk to you again. Are you more confident about the country’s trajectory right now post the election – or not?

 

 

BERNARD SWANEPOEL: Yes, I am. I do think we probably hit rock bottom some two or three years ago, but one would never know that before looking back.

 

 

I think if we look back 20 years, we may look back and say somewhere in 2020 or thereabouts things could just not get worse.

 

 

But of course, things can always go worse, and therefore we mustn’t sit back and hope; we must actually get off our backsides and help to fix the country.

 

 

JEREMY MAGGS: Do you think that there’s a reticence to do that – that we are getting tired of not getting up off our backsides?

 

 

BERNARD SWANEPOEL: I’m sort of hoping that the people who give up – it sounds harsh – find a better place for themselves and their families somewhere else.

 

 

Those of us who stay clearly have no choice but to help fix, to make a contribution, to offer our assistance, but also not to arrogantly think that we’ve got all the answers.

 

I clearly find this an intimidating topic, and yet I at the same time believe that I can in a small way contribute if I get asked to, if I get deployed.

 

 

JEREMY MAGGS: When you talk about South Africans ‘getting off their backsides’ – and I like that because it’s a real call to action – what do you think that actually means? What are you trying to say?

 

 

BERNARD SWANEPOEL: Nobody is without a sphere of influence at home, in your family, in your peer group, around the braai fires after we’ve celebrated the Springboks – just being positive there, just talking about what we can do to help fix.

 

 

I love the people who fill potholes. Yes, that’s fantastic, but we also need people who fix Eskom like we currently have, and we need large corporations to actually commit to the country, to invest, and we need our politicians to lose their arrogance.

 

They got a ‘snotklap’, all of them. Not one of them came out of the election with their egos intact. So now’s the time for us to say, okay, on our own, we didn’t succeed. Can we play together? I believe we can.

 

 

JEREMY MAGGS: I want to take you back to when you started out, Bernard, as a young graduate; you moved through the ranks to the chief executive officer of one of the most important gold operations in the country. In that journey, what are some of the key lessons that you learned along the way that are maybe applicable these days?

 

 

BERNARD SWANEPOEL: I was sort of privileged in that I could go to a university and get a BSc in Mining Engineering, and then I had to really work what I would claim quite hard for 10/12 years. I really put in the shifts, and I got fortunate with sort of lots of things that happened.

 

 

But when I was asked to become the CEO of Harmony, it was about to close. Its business plan was officially closure with dignity. What a silly way to bring 40 000 South Africans together to die slowly, to close with dignity. And so it was obvious that it needed a different dream.

 

 

I needed to paint a clear picture of what the company could be. I needed to help my team give our fellow employees hope again. And then of course you have to listen to the people, see where they are, take them along on the journey.

 

Now it just sounds like the stuff any smart politician should be doing anyway.

 

 

What happened with my generation of young people who got into senior positions – it was a different world. The period 1994/95 was so different from about 10 years earlier; there was no longer a premium for experience. Suddenly, real ‘snotkoppies’ like us brought boldness, we brought our youth, we brought lots of things; and the fact that we didn’t have all the experience of the 60-year-olds was actually a benefit, not a disadvantage.

 

 

Now all of these things make me think this is exactly where South Africa is.

 

 

We are so clearly repeating things that don’t work. We implement policies and when we see the results we don’t change. And so perhaps we need a new generation of younger, bolder leaders throughout politics and business.

 

JEREMY MAGGS: Bernard, as a metaphor for South Africa then, how in those difficult times did you keep going? Where did you find the courage, the strength and the fortitude to keep moving? And maybe other South Africans, those younger South Africans that you refer to, can take a leaf out of that book.

 

 

BERNARD SWANEPOEL: Obviously we can all say we were born in the country, or we are here by choice. I wasn’t born into mining; it was the only bursary I could get.

 

 

I became a mining engineer because that’s where I could get the bursary. But once you’re in an industry and you become passionate about it and you want to actually make a positive contribution, I think it is so simple – you focus on the few things.

 

 

You look at what hasn’t worked; the hierarchy of the past hasn’t worked. That segregation of black people from white people hasn’t worked. The approach to safety hasn’t worked. The way we mine to an average grade as opposed to for profitability didn’t work. The list is long, but that’s industry-specific.

 

 

I think there is a freshness of young people who look at things.

 

 

It’s especially in the earlier stages of one’s professional development that you still have the boldness to think: I see why they do it like this, but there must be another way; [let’s] explore the other way. Now there’s not a single industry in our country that can’t do with that. Our economic model can do with that. South Africa Inc can do with that.

 

 

JEREMY MAGGS: When you are making tough decisions you talk about boldness. How do you frame or articulate tough messages that are going to have potentially a negative impact on people’s lives? And if it’s not a negative impact, it’s certainly going to cause a degree of discomfort.

 

 

BERNARD SWANEPOEL: Yes, I’ve done a lot of those, I can tell you. If I add up the number of people who were retrenched in Harmony’s growth strategy, it must be 20/30/40 000. Of course, the flipside is that the current Harmony employs 50/60 000 people who may otherwise not have had jobs.

 

 

Yes, it’s the rainbow nation, but it’s the rainbow nation with detail. What would it look like? Because then, if tough times come, the gold price drops and the rand strengthens, those are the bad things in gold mining, as you know, for the business.

 

 

When those things happen you can almost go and stand in this future and say: ‘Guys, but this is the future we pursued. Let’s look back on the issues we face today.’ And we take the tough decisions almost with the benefit of hindsight, so you stand in this clear picture.

 

 

If we want to be a successful South Africa with inclusive growth, with growth the keyword, with an economy that is booming, creating jobs more than we can create, South Africa – if we keep that in mind – then any short-term crisis, any tough decision is like, yes, of course I have to amputate my little finger to prevent the cancer from killing the body. Yes, it’s a tough decision, but the big picture is clear.

 

 

So that has been a sort of a gimmicky mental model by which I have always survived.

 

 

JEREMY MAGGS: Bernard, how do you deal with the naysayers, the people who do not want to go along the path that you’re sketching out?

 

 

BERNARD SWANEPOEL: I’m sure in my earliest days I would’ve used words like ‘Then push off’ or ‘Then fly away’, but obviously there’s a bit of laziness in boldness sometimes – either you’re on the bus or you’re off the bus.

 

 

But real leaders don’t have that option. President Mandela didn’t have the option. He couldn’t get rid of parts of the country’s population that he may not have liked or may even have had issues with.

 

 

So again, paint us a clear picture, give the people hope, let them find their space.

 

 

Very few people set out to be destructive. When are we destructive? We are destructive when we are unsure, when we can’t see the future, when we feel threatened; that’s when we worry about whether she’s a South African or not a South African, that type of nonsense.

 

 

When we are a winning nation, there are very few naysayers about South African rugby. Ten years ago it was a different story. So let’s win together. As I say, as I got older I used the terminology of the past less and less.

 

 

I actually don’t want people to go away when they don’t fit in. I accept that, as a leader, part of your role is to help them see how they fit in.

 

 

JEREMY MAGGS: Not always easy to do though, hey?

 

 

BERNARD SWANEPOEL: No. If it was easy I suppose everybody would’ve done it. Quite frankly, if it was easy I probably still would’ve done that. It’s not easy. That’s why when we see real leadership now, leaders have followers. When we see people who get followed, sometimes we totally disagree with it. Politically there are people who’ve got real followers that I totally disagree with. But when you see that leadership component you wish the good people, the people who you perhaps relate to more, can also do so. Just give us a reason to believe, paint us a picture of a better future and let us see how we can contribute to that.

 

 

JEREMY MAGGS: Part of articulating the message and getting people to follow you, I would imagine, is in the tone. You’ve mentioned the importance of communicating what you’ve termed a ‘compelling story’ within an organisation. So I want you to explain that to me, and then how this approach can be used to maybe unify and inspire South Africans across different sectors as we continue to grapple with this fix.

 

 

BERNARD SWANEPOEL: Well, I do think it is never a ‘slide deck’. I don’t think it is those famous McKinsey blue slides of the perfect corporate strategy in whatever blue space, white space.

 

 

I think it’s much more real. I think it says that we as this team can achieve almost anything if we align. Now, what do we align with? In gold mining that’s simple, you need to produce safely and do so profitably. Growth is such an energiser. We all want to celebrate progress, make progress. So that will obviously be specific to whatever you are leading.

 

 

I don’t think it’s hard. I think it’s actually in sounding like your people. I think the more you are speaking into the issues of the people, the more you sound like the people.

 

In South Africa, apart from you, all the rest of us are bad second-language English speakers. That’s okay, so let’s speak badly, second-language English – that’s not what sets us apart. Let’s talk to the issues that face us as a group, as a team, as a company and obviously right now as a country.

 

 

I think it’ll be extremely easy for a leader to rise up now and say we can be better together. As South Africa we can be better together and start to put a bit of flesh on today.

 

 

As I said earlier, the rainbow nation is phenomenal concept, but it was a bit late. Let’s just go a little beyond that. What would that mean – the economy will grow. At what rate? Well at 5%. And what will we do to do that?

 

 

Then you get to actual implementable things and suddenly I can see where I fit into that. You can see where you fit into that. Everybody can find their own place in that story.

 

 

JEREMY MAGGS: So what do you think are the immediate priorities that we need to tackle, using your approach in fixing South Africa?

 

 

BERNARD SWANEPOEL: When I was having fun, I was supposedly a ‘turnaround’ manager. I think our country needs turnaround. How can you turn something around? Well, you start off by acknowledging that, regardless of our past, glorious or disgusting, [it is not the present]. The things of the past are not going to work for us in the future.

 

 

Now, if you acknowledge that, if you say South Africa needs to be turned around, in the business context what does turnaround do? What can we do on the revenue side? Well, it’s simple. Some American politician said, ‘It’s the economy, grow the economy to reduce the cost.’ The things of the past are not going to work for us in the future.

 

 

Now of course you can fire 25 of the cabinet ministers, but our cost is much too deeply embedded – it is the inefficiency of our economy, it is a state-owned enterprise that’s not working, it is taxes that have been too high.

 

And between fixing the revenue and fixing the cost, you then look for easy ones.

 

 

Right now our country is busy with a phenomenally easy one. We actually have electricity for most of the day. That’s an easy one. It’s not fixed. The people who know say it’s not behind us – but what an easy one.

 

 

That alone changes conversations I participate in. We don’t start off by talking about Eskom. We talk about what is next.

 

 

So I really think [we need] a turnaround approach, admitting that what we’ve done up to now hasn’t worked well, and starting to do the few things. The trick is really to focus on a few key levers. The problem with 34 or 43 or 86 ministers, whatever we have, is we have 86×10 important things. You can’t fix anything like that.

 

 

Give me the three things that will fix the country, and I promise you, I will volunteer 15 hours a day today. That’s how you turn something around. We are a classic turnaround opportunity that is waiting to happen.

 

 

JEREMY MAGGS: What I’m also hearing you say is that we are perhaps just a little bloated in our thinking sometimes and that, instead of setting those two or three key priorities, we try to focus on too much and get nothing done at all. In other words, we become our own worst enemies. Because of that we start blaming each other.

 

 

BERNARD SWANEPOEL: Yes, it’s inevitable. I do think we are very bloated as a nation.

 

 

We officially are quite bloated. I think our approach to business and government is very bloated, and I do think there’s a lean, mean version of us that can actually move a lot faster.

 

 

And I do think this is really the generational challenge.

 

 

I don’t know if the 60-year-old me could have been as bold as the 35-year-old me.

 

 

So I’m a big fan of younger people stepping up and challenging those things that are so embedded in our way of looking at things.

 

 

It plays out in every aspect of life. When big business comes together, it come together with big government, with big labour. I’ve spent many years in the small business space. There’s no space left for small business in all of that.

 

 

So the bloatedness is the incumbent bloatedness; ‘I am in, and therefore I just need to protect what I have’. That hasn’t served the country well.

 

 

JEREMY MAGGS: I want to come back to small business in just a moment. But if I’ve read this correctly, you were also a proponent of something called the ‘Harmony way’, which focused on two things – simplicity and innovation.

 

 

I think you’ve explained the simplicity side to me, but the innovation is important. How can we start inculcating and developing principles of innovation in South Africa, because we’re not stupid people.

 

 

BERNARD SWANEPOEL: No, of course not. I think right now the world wonders whether Rassie Erasmus is the smartest person, whether he is the greatest innovator ever in rugby. I don’t know.

 

 

But sometimes you can really just look at what the rest of the world is doing.

 

 

So innovation can also be relative to best practice. What is currently world practice when it comes to local development? What is currently best practice when it comes to stimulating economic growth? We are not there. We try to focus on too much and get nothing done at all.

 

 

So the innovation gap can also be filled to just catch up with what is already there. Of course, innovation goes into artificial intelligence and all the other stuff.

 

 

My passion has always been in the stuff we already have. Who are we? Who are we as South Africans, and how do we play rugby with that, to go back to that analogy. Who are we as South Africans with a mining economy? We’ve got agriculture and we should have more tourism. Now, how do we innovate in that space?

 

 

It’s quite simple, man.

 

 

Make it easy for a tourist to come to the country; make it easy for a farmer to produce on scale so that he can export; create an enabling environment for mining companies so that they can take on bigger companies throughout the world.

 

I don’t think it’s so hard to be innovative, especially if you look at it relative to what is current best practice in the world.

 

 

JEREMY MAGGS: Bernard, it’s very clear that you are a rugby fan and you’ve used the sports analogy on a couple of occasions; but let me come at it from a different way.

 

 

If you are going to look at rugby as the metaphor, a lot of rugby players also have to deal with injuries. So I think what we’ve also got to realise is that as we are trying to fix South Africa it’s going to be painful, and that people in pursuit of that cup or whatever it is are eventually going to get hurt sometimes.

 

 

BERNARD SWANEPOEL: Now you take this analogy to a painful place. [Jeremy chuckles] But that’s true. I was born and bred for the mining industry. I’ve worked on gold mines. At some time we must have employed 500 000 people; today we are down to a 100 000.

 

 

There was never a ‘just transition’ away from gold. It was tough, it was tough out there.

 

 

Gold and the gold industry today are in good hands. The remaining Harmony and one or two other players are looking [good] after the last 30 years of our gold mining, [and] for the next 30 years. But there is obviously relocation, and an economy that invents itself.

 

 

I don’t think we can look after every individual coal miner but if we had a growing economy, if the rest of the mining industry was growing, then the coal miner who may or may not lose their job could relocate and become an iron-ore miner, or could work in a different sort of industry.

 

So again, of course, if at an individual level somebody breaks a bone, at a national level the team wins.

 

 

JEREMY MAGGS: You are someone – again, if I’ve done my reading correctly – who has transitioned from a corporate life to entrepreneurship. What do you think the biggest barriers are to entrepreneurship in South Africa and how they can be overcome – given what you’ve just told me about the importance of small business in South Africa and fixing the economy?

 

 

BERNARD SWANEPOEL: I think the first challenge is one’s own underestimation of how hard entrepreneurship is. You’re the CEO of a company and after 12 years you think this is easy, I can do this. You almost can’t see how you’re part of an ecosystem, a team. So one’s ego gets a big, big knockdown.

 

 

But structurally it is very difficult, really, because of red tape and overregulation.

 

 

When I did my first mining-related venture outside of corporate Harmony, I was told by auditors that there are 218 pieces of legislation that I need to comply with as a junior miner. What an admin!

 

 

Where will the next Sanlam or Old Mutual come from? Today I’m guessing the Sanlams and the Old Mutuals employ over 100 ‘compliance’ people. These are expensive people with high degrees and lots of experience.

 

 

Now, how [would] the startup Old Mutual or Sanlam start with 100 people in the compliance department?

 

 

This is where there is red tape and overregulation – which we do in the belief that we actually protect current incumbents. They participate willingly, but we actually prevent the very job-creation engine of an economy, which is always small and medium enterprises. Big companies per definition drive efficiency. Even if they grow through acquisition, 1+1 becomes 1.8 in terms of jobs.

 

 

A small company’s growth is directly related to employment. So we want small businesses that grow. We don’t want only a few big businesses is my strong contention.

 

 

I’ve found it very hard in the smaller business space, the entrepreneurial space. Now obviously there are entrepreneurs who love high barriers to entry, and they play in the shade of the high walls of big businesses; they play outside the law. But if we talk about proper entrepreneurs who build businesses, who in time will grow up, I think we must make it a lot easier. We must drop the unnecessary red tape and not over-regulate.

 

 

JEREMY MAGGS: Let me ask you one final question. It’s the philosophical question.

 

 

You’ve identified problems, you’ve given us myriad solutions. Bernard Swanepoel, how do we know when South Africa is fixed?

 

 

BERNARD SWANEPOEL: I think it’s when we know that when South Africans feel there’s a South African dream – like the American dream.

 

 

The South African dream to my mind has to be simple, like ‘Tomorrow can be better than today for me, and for my kids and my grandchildren’.

 

 

It doesn’t have to be perfect, but it can be better just for me and the people I really, really care for.

 

 

If it’s true for me and it’s true for everybody else, then I think we’ve defined a winning nation.

 

 

JEREMY MAGGS: Bernard Swanepoel, it’s been a pleasure talking to you. Thank you.

 

 

 

Source: MoneyWeb – Jeremy Maggs 

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