(The below was obtained from publicly available sources and discussion with a previous executive present during the various changes of ownership and restructuring)
The Central News Agency (CNA) was established more than 125 years ago selling newspapers on the streets of Johannesburg. From humble beginnings – the company expanded from newspaper distribution to becoming a one-stop shop for all forms of media and entertainment and subsequently degraded to a minor player within the market.
CNA once dominated the South African market space, was listed on the Johannesburg Stock Exchange and ballooned to a peak of 350 retail outlets, situated across every region of South Africa. Once a house hold name, it subsequently contracted and imploded. At the time of writing this article, CNA has yet again entered business rescue.
Contrary to publicly available information – the company’s decline was not solely due to a difficult retail market for books and stationery. The near collapse was also attributable to poor leadership, the purge of its original ethos and a critical loss of key staff. The following article was created to reflect on the mistakes of previous management. Although the environment in which business operates has changed significantly over the past two decades, the style of management and leadership will always remain constant.
This article will focus on the management and ingenuity of the company between startup and its peak in 1994. The company subsequently declined into a shadow of its former self.
The seed, growth and maturity as a news agency
CNA originated in 1896 when two entrepreneurs combined forces to sell newspapers in Johannesburg. By coordinating teams of newsboys who delivered papers by foot and bicycle, the Central News Agency was founded. The first newspapers sold were The Star, The Standard and Diggers News.
Attempting to continually increase street sales, the two entrepreneurs soon moved into the sale of books, periodicals and stationery, however newspaper and distribution was their core business. By 1899, CNA had outgrown its street base and established offices.
In 1901, bookstores at railway stations across the Cape were opened. In 1902 the business secured a massive deal with the Argus and the Cape Times who placed their entire publishing contracts with CNA. The company experienced incredible growth and in 1903 was listed as a public company on the Johannesburg Stock Exchange (an initial public offering of R6 billion in today’s value).
By 1904, the company was now nationwide. CNA became the sole agency in South Africa for a number of important and popular overseas newspapers and periodicals.
By the time the first world war had begun, CNA was perfectly positioned to publish and distribute news to the South African market regarding the progression of the war –a time when news distribution was limited to radio and newspaper.
The company expanded, ballooned and absorbed its most profitable period in history (most profitable for traditional news media). The company continued collecting from this space until the Second World War. Subsequent to this the wide adoption of television and radio, this resulted in the substitution of newspapers for other forms of news media.
Although the company’s market began to decline, its entrepreneurial spirit navigated through these difficult times – to distribute newspapers, the company developed other skills, resources and infrastructure. The company now owned a national grid of warehousing and distribution. The company was an experienced publisher and still ultimately controlled other aspects of media within the South African market place. The company held interests in wholesale and resale – however much smaller in comparison to news distribution. Utilizing resources it readily had available, it pivoted off this power base and expanded into retail.
By 1980, it was decided that CNA’s focus would solely relate to retail. It subsequently sold off its newspaper and wholesaling divisions to Allied Publishing (a member of the Argus Group). Although “news” is what the company was founded upon (It’s middle name) – it remained flexible to adapt to a dynamic marketplace. In retrospect the company made a brave decision to leave its comfort zone, a market which defined its history for more than 80 years – it exited a decreasing market. Subsequent to this, traditional news media carried on declining until it was ultimately disrupted by the invention of the internet and social media.
CNA thereafter focused entirely on retail – more specifically Stationery, Books, Paperbacks, Greeting Cards, Magazines, Toys and Music.
By 1983, CNA merged with Gallo Africa – the largest and oldest record label in South Africa. CNA became the one-stop shop for all forms of media and entertainment. From this point onwards, CNA dominated retailed stationery, books, music and digital media.
Renewal, growth and maturity into Retail
Subsequent to the creation of the CNA Gallo group, the business was originally managed by senior executives from Gallo – however their focus and interests remained in the entertainment side of the business. Leadership changed a few times between 1983 and 1987 without any consistent direction. During 1987 the group decided to elect a managing director who was experienced with and focused solely on CNA and its retail activities.
The focus leader elected as managing director was Ian Outram. The election of Ian as head of the company was ordinary for the time however peculiar in modern days – he did not hold any formal qualifications nor held any external experience, he was internally groomed within the company and advanced through the ranks from years of experience and various roles within CNA (Internal growth is far less frequent within top level management in the 21st century).
Based on discussions held with those employed within the company during his tenure – the following characteristics made Ian, his knowledge, skills and foresight unique and to the progression of the company:
- He joined CNA at the age of 17 years old in the position of a sales assistant – originally selling shoe polish in the company’s wholesale division. He joined the company from humble beginnings.
- After demonstrating a positive attitude, continuous learning, development and a level of intelligence – he was selected for internal training and growth. Ian would usually excel at new roles within a short amount of time, however each position required a minimum amount of time to be worked
- He started from the lowest level of the company and could relate to employees at every level and treated each equally – from store assistants to board directors. He was involved in all aspects of the organisation from administrative to operational. He was a man that was not only humble but open to the opinion and ideas of those below him – he expressed grave concern over their wellbeing.
- He ensured to always upskill in order to be proficient at his day-to-day tasks, obtaining more than just mandatory training. Ian was a dedicated life-long learner, although he never held a formal degree, he studied short courses at reputable universities in topics such as finance, strategy, marketing, psychology and project management
Key: He followed his intuition, broadened his knowledge and would practically implement theoretical knowledge
- From the opinion of his peers – Ian was incredibly talented strategically. He viewed the business as a living organism. Through experience within the company, Ian understood the company from the inside-out.
- He understood the company’s place within the market and held a strong vision of what he wanted for the company – he would actively consult both internally and externally.
- Through his internal consultations, he effectively “held his finger on the pulse”. As top management, a view of underlying operations can become distorted – however through communication and the formation of strong relationships, those around him were open and honest regarding the health of the company
- The reason internal consultations worked incredibly well was because he was an empowering leader. Those around him did not fear him, he encouraged the flow of knowledge and ideas. He did not overstep boundaries or micro manage, he allowed executives autonomy and provided close, whole-hearted and passionate mentorship.
- Something that was evident in his leadership abilities was that not only did he believe in people, he invested in them. Human resources were one of the company’s greatest assets and he meticulously worked to empower those below him to generate the great returns.
- He utilised external consultation to obtain an understanding of market participants, understand where the market was going and presented these findings to the rest of the board. He remained informed of the happenings within the market and planned years in advance.
- He built a senior management team of highly skilled, highly experienced and highly trained individuals who were internally grown within CNA. On top of this, he highly motivated those around him to maximise their abilities – directors felt part of something greater, something they could never achieve individually, however goals which could only be obtained collectively
- He encouraged and chose to work with problem solvers, however he always made himself available to consult and was a sounding board for those around him. Ian was a problem solver – he would not delegate something he could not solve personally.
- He embraced open communication and would often make department heads sit with one another in person – direct communication was encouraged above any other form. Problems were faced head on.
- During his tenure, management was in harmony. Management concentrated on external problems and the company was unison – it did not have nor allow for politics within the work place.
- When planning for the year ahead, he ensured that directors set time aside in order to visit stores personally. He expected those around him to be in touch with the lowest level of staff. Information and communication flowed upwards during this time.
- Budgeting and sales always remained flexible. Ian would provide each director with financial analysis of their performance with included input from the CFO. Based on the feedback of performance – management were required to structure a plan on how they would meet targets. Meetings were constructive, management was held accountable for performance pledged to achieve.
- He actively looked for people within the company that held great potential and grew them into position which they were interested in. He ensured management would undertake tailored short courses to improve their skillset.
- Management was required to attend trade shows on an annual basis to keep up to date with all business happenings and to secure, maintain and acquire new relationships with suppliers
- He would always provide recommendations to fellow board members regarding their roles – but never enforced them. He would allow members of management to act in their own capacity, however provided guidance. Its clear that they had to be autonomous and make their own decisions.
- Ian was involved in the implementation of the Adam Ant campaign. This campaign was the comparison of the organisation to an ant hill, whereby all workers within the colony were not only considered equal, but whose actions were vitally important to the continuation of the company as a whole.
In summary, Ian’s greatest leadership style was to be an authoritative (visionary) leader. Inspiring and moving people toward a common goal. Authoritative leaders tell their teams where they’re going, but not how they’re going to get there –he actively mixed his leadership style with a blend of coaching, democratic and affiliative techniques –mentoring those around him, allowing for the input of others and bringing harmony amongst the team.
Some of his key quotes were:
- “Knowledge is learned by making mistakes (never break yourself or others down about it) – however don’t make the same mistake twice”
- “As a member of management – you are here to serve those below you.”
A period of decline
Ian departed the company in 1994 and at the time of his departure, the company had grown to its peak of 350+ retail outlets. Through his efforts, the company had established an unrivalled stop for stationery, books and media.
Up until this point in time, management carried the Ethos of the company – the values, qualities and characteristics instilled by those who had come before. The foundation of a company which managed to adapt and grow over a period of 100+ years. In retrospective analysis, the internal policies and characteristics that allowed the company to grow for such a period was due to the following:
- Always remaining entrepreneurial / flexible. The market is always changing, a company must change with it
- Focus on maximising resources – especially human capital. Hold a strong commitment to internal growth, mentorship and training. Grow people into positions and quickly identify candidates which fit your culture.
- Focusing on keeping problems outside the company – internal conflict can only be eliminated if the company is in harmony. Politics are BAD for business.
- Understand YOUR company, your position within the market place and know how to leverage it effectively. Know your limitations as well as your strengths and pivot off of this.
- Do not under estimate the value of internally generated knowledge and intrinsic actions (Internally grown knowledge, practices and culture is highly valuable)
- Open and honest communication allows not only accurate information to pass upwards and downwards – the lack of fear allows for the contribution of ideas and information.
- Management must service those below them, not the other way around. Management must be involved with those below them. Information must flow upwards, management must have the humility to listen – how can I help things go right?
- Remain up to date with technology and always keep an open mind to take advantage of changes before others. Implement on a small scale, begin to roll-out if initial success takes place.
- Specific consultation and advisory – I know my business incredibly well, but I need to know trends in the market / changes in competitors / technology I can adapt. Consulting internally does not bode well for business – if you’re getting someone else to run your business – why are you employed?
After Ian Outram warranted his intention to retire, a problem arose. Who will be appointed as the successor? Unfortunately the successor was appointed by the parent – Gallo Africa. Until this point, succession planning was not adequately prepared for. No individual had been selected or groomed in order to take over the position. A retail director was appointed by Gallo to take over the position of managing director – Andries Smith.
Andries was mentored for a few months prior to Ian’sdeparture. Ian left the company in 1994, where after the decline within the organisation began. Andries exhibited a Coercive (Commanding) Leadership style. This style often depends on orders, the (often unspoken) threat of punishment, and tight control. Management in CNA were accustomed to having a level of control over their lives and their work, and this approach deprived this. They were no longer treated as professional or competent.
Andries immediately formed close relationships with other heads within CNA Gallo. This newly formed group know as “the fishing club” by other members of management as they would regularly meet privately on fishing trips to “strategize”. This effectively created a division between these heads and the rest of the board.
Previously Andries was on the same level as other board directors in terms of authority, however he was appointed by the group – management did not democratically elect him as a leader. This created friction on the board of directors. As he isolated himself and excluded management from discussions regarding the future of the company, management did not perceive him in a positive light. Further upon this, he attempted to exert direct control over fellow members of the board and perceived himself to be better trained and knowledgeable than those around him.
Andries preferred subservience over any other quality – he quickly sought to dispatch director’s whom would act independently and challenge his authority. This subsequently resulted in an exodus of senior management – merchandise directors, the financial director, store planning and retail director. Directors were replaced from Mass Stores and the CFO was replaced with the partner from CNA’s auditor.
When management of the company was terminated – not only get did the company lose 20+ years of direct experience from each employee in the company, the company purged 100 years of culture, habits, learnings and routines passed down through generations of leadership.
Subsequent to this – Andries endeavoured on cost cutting strategies within the organisation in order to maximise profitability. The change in strategy was quickly and radically implemented across the organisation.
Previously the company allowed for the specialisation of product knowledge – for example a music merchandiser at head office would monitor and manage the range of products found in store. A specialised music sales assistant would be trained to be an expert on all merchandise held and would assist customers to make an informed purchase. This model was eliminated in favour of generalisation – fewer staff members with a wider range of knowledge.
After employees were retrenched, sales dropped dramatically.
The failure of this sales strategy can be attributed to the following factors:
- The strategy ultimately failed because at the time of this restructuring (1994), customers did not have access to information to keep themselves reasonably informed (ie the adoption of the internet). They relied upon the knowledge and expertise of sales assistants in order to make informed purchases.
- The nature, seasonality and demand between the different product lines differed radically. For example a generalised approach could not be taken to manage stationery in the same way that music was managed. Stationery was projectable and seasonal, music was based entirely on trends and current happenings within the market with short spurts of massive demand.
- Generalised merchandise managers didn’t have a passion for new areas of their portfolio regardless of much training they received.
As customers no longer received the product support they were looking for, they subsequently started moving to competitors within the market who offered these kinds of services.
Three years after the sacking of directors, the radical mutilation of specialists and the bleeding of sales, the Gallo group – which specialised in media and entertainment – neither had the patience nor expertise to resolve the problems within CNA. The decision was made to eject Andries Smith from the company and to subsequently dispose of its interest in CNA. A buyer was subsequently identified – the Wooltru group elected to takeover CNA.
The taxidermy of the Central New Agency
Subsequent to Wooltru, CNA was purchased by Gordan Kay, The Edcon group and finally Astoria Investments.
Despite consecutive new owners, the strategy and model remained the same. All remaining management which may have survived the tenure of the previous CEO were subsequently eradicated from the company. A new board of directors would be elected by the new owners and the new owner’s business model would be forced upon the company.
Wooltru and Edcon never achieved the original success of the company.
Lessons to be learned:
- Although knowledge and human resources are not recorded as assets per traditional accounting standards, intrinsic value goes often unseen
- If it ain’t broke, don’t fix it. Radical changes within an organisation should be avoided at all costs. Only a company in turmoil should have radical changes implemented.
- One must always remain flexible in relation to the market in which it serves – never be afraid to reinvent yourself
- A leader who promotes harmony, whole heartedly invests in those around him, remains open and honest, serves those below him and eliminates divides and politics between different levels will reap a bountiful of rewards
- A group of motivated and brilliant people can achieve phenomenal goals which could never be reached individually
Ultimately, employees and management who left CNA started competing stores. Exclusive books and PNA both have founders originating as Ex-CNA employees.
*The below is based on publicly available information and the views of a previous executive and do not necessarily represent the views of this site