Book review – A business full of beans

2013-04-21 14:00

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A Good African Story, by Andrew Rugasira, and Onward, by Howard Schultz, provide unique lessons.

Both men have succeeded in business, and both began their journeys with a dream to enrich the lives of people in starkly different ways and in vastly different economies.

Rugasira describes the formation of the Good African Coffee Company, which sells Ugandan coffee internationally. Profits are shared between growers, processors and marketers. Elsewhere in the coffee industry, growers are still being exploited.

Schultz founded Starbucks in 1982 with the aim of offering good coffee in a friendly, warm environment. Here patrons meet friends, pause to think, or just buy a customised cup of coffee on their way to or from work.

Starbucks grew to 16?000 shops in 54 countries, with more than 200?000 employees. The company distinguished itself as a caring place to work, including for part-timers.

Starbucks returned superb profits year on year until they did not. Schultz moved from chairperson back to CEO to rescue his company.

These books flank the two ends of coffee’s journey – the genesis on the farm in one country, to the cup in the coffee shop of another.

The desire to help his countrymen rise from poor farmers to proud producers of first-rate coffee was the motivator for Rugasira, a Ugandan with a law and economics degree from the University of London.

To achieve this, Rugasira would need to assist coffee farmers to improve the quality of their crop and have large Western markets accept Ugandan coffee.

Entrepreneurs everywhere must formulate winning ideas and overcome multiple obstacles to achieve their goals, but African entrepreneurs face even more formidable obstacles.

Ugandan farmers grow coffee in areas that are almost inaccessible. Rugasira’s vision of raising the coffee grown to internationally acceptable standards is a great challenge, as finding companies willing to risk ordering roasted coffee beans from a failed African state seems impossible.

This especially when considering the costs involved with training farmers, purchasing their goods, transportation to large markets as well as marketing.

Rugasira’s account is a story of tenacity tested in every way and at every stage.

No start-up is like any other, so there are no direct lessons to be drawn from Rugasira’s account, only general lessons and inspiration.

An example is when British supermarket giant Sainsbury’s informed Rugasira they had decided not to stock his products.

But Sainsbury’s was an essential component of the business’ success. Without it, the project would have to end, with awful consequences.

After praying in desperation, Rugasira appealed directly to the company CEO to overturn the decision. His grounds were the moral imperative of giving the coffee growers of Uganda a chance Sainsbury’s relented.

The support Rugasira received from his family is another valuable lesson for the overworked entrepreneur of what actually matters.

In sharp contrast to the struggle of an African entrepreneur is the enormous task the American, Schultz, faced when the iconic company he started was losing its way.

For Schultz, Starbucks was a people business that sold coffee. The CEOs who succeeded him focused instead on growth and returns. Schultz saw these signs of an erosion of values from the non-executive chairperson’s office.

Eventually, he took the drastic step of returning to run the company he had started.

The return of the entrepreneur to revive a massive company requires skill, focus and energy quite different to that of starting up a company.

Companies that do not perform are harshly punished by shareholders, and Starbucks was not performing.

The share price dropped 44% in a year to below $9 (R83 at the current exchange rate). To add to Schultz’s challenge, he took control during an economic crisis – and his shops sell luxury products.

The turnabout required a balancing act. The company was committed to a set of values: the integrity of its product, and integrity in its dealings with staff and with the market.

Hundreds of stores would have to close. People would lose their livelihood. Shareholders were seeing their wealth eroded by a company they had trusted. New and unproven business models had to be introduced, with no guarantee they would work, and with a steep downside if they did not.

This was no time for timidity or vacillation, and the decisions to be taken were harsh. But the end of the story is one of stores that exude friendliness and warmth, and a share price surge to $60.

Both books show how entrepreneurship can challenge one’s values, character and will. They are inspiring and enriching because of their candour.

»?Mann is a business strategist who consults internationally

Bones are Forever by Kathy Reichs

William Heinemann,

304 pages, R225

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