With a background in financial management and business valuations, I have always been intrigued by ‘strategy’, the thing that ultimately sets a company apart from the next and probably, together with strong leadership, the main driver behind sustained value creation. In a series of interviews, I will be exploring the different approaches of different business leaders (all chartered accountants) to strategy.
Christiaan Vorster, a Regional Executive at SAICA had a virtual interview with David Green, CEO of the Victoria and Alfred Waterfront, to gain insights on what shapes the Waterfront’s strategic process.
The following items stood out for him during their conversation:
Think about your business as more than just the business model – it needs vision and purpose
Although the V&A Waterfront is in essence a property investment company, owning and managing 250 plus buildings with over a thousand tenants ranging from retail space, office accommodation, industrial buildings, and the fishing industry to residential properties (including residential and hotel accommodation with tourist attractions) David prefers to refer to the V&A Waterfront as a small neighbourhood of Cape Town where 23 000 people live, work, shop and play.
‘Our purpose is that we collectively create the world’s most inspiring waterfront neighbourhood, creating the platform to be able to thrive and flourish. It is as much about the space between the buildings, the activities, the vibe, and the buzz that makes it as it is about the buildings themselves. If you do not have a proper and meaningful relationship with your community or neighbourhood, you don’t have a right to survive and you will not survive.’
The advantage of the V&A Waterfront is that it owns and manages all the buildings. It is able to proactively curate how the whole precinct interacts, incorporating aspects like a restaurant and entertainment strategy, whereas other property companies are generally managing a portfolio of disparate buildings and are not necessarily able to influence the neighbourhood feel.
The Waterfront thrives on having diversity and even though privately owned, it is most people’s perception that only the buildings are privately owned. This is not the case: while the Waterfront is part of the city, they take care of all infrastructure themselves − power, water, sewage, landscaping and roads − making them very agile.
‘It is interesting − when you get under the skin, it is a unique scenario and great vision from the outset to set aside this piece of land and run it in that self-contained way,’ says David.
Being a socially responsible neighbourhood, greening for sustainability throughout the property became one of their biggest focal areas in everything they do, and they are doing it properly. Water, waste and energy efficiency are the hallmarks of the programme and the V&A recently won the Best Destination for Responsible Tourism award at the World Travel Market in London.
Create a shared value approach with all stakeholders
David has been the CEO for 10 years and advocates evolving the business into a purpose-driven business through the shared value approach. Early on in his tenure, they started engaging their people and stakeholders to try and understand what is important to the waterfront. Examples are being proud of the Waterfront, meaningful engagements with stakeholders, taking leadership positions in areas that are important to them, and embracing green sustainability. ‘I never want staff to think that their personal values are at odds with the business’s values.’
The leadership proactively engages with tenants through various forums such as the hotel industry forum and corporate office forum, informing them and encouraging them to participate in all initiatives, making the tenants feel that they are part of something bigger. They also publish a biennial economic impact report highlighting the Waterfront’s contribution to socio-economic aspects such as local and national GDP contribution and job creation, all focusing on the shared value achieved by the Waterfront. Another example is the great deal of effort that goes into the incubation and promotion of small businesses within the Waterfront precinct.
‘It is in the best interest of both tenants and our own that our values are aligned,’ stresses David.
Be prepared for continuous evolvement
‘We see the development as a continuum. People want fresh and new. As attitudes change, demand changes.’
The Waterfront has a development master plan which will take them up to 2040, with a substantial property development wing. Yearly development spend ranges between half a billion and a billion rand, which on face value appears that they will never finish developing. Says David: ‘That great American expression says the minute you think you are finished developing you are done. Development won’t stop so if you want to come and live and work in the waterfront you have to accept that − the plus about it is that it will be constantly evolving and changing.’
For the rest, they take a five-year view of what the different business segments will look like, what is coming down the line, and what kind of modifying and course-correcting is needed.
Feeding into the continuous evolvement is looking out for the big trends. Because the Waterfront is one of the top tourism destinations in the world, they are able to look around the world identifying trends and draw on best practices. For instance, with the COVID pandemic one of the main points of discussions relating to the tourism industry will be how to leverage the advantages of Cape Town (and the Waterfront) once business starts to pick up and concepts like ‘green visas’ become reality.
Implementation is directly linked to corporate culture
David emphasis that once you have the building blocks of your strategy in place, it becomes all about how you effectively implement your plans. He believes that the success of implementation is dependent on your corporate culture, people understanding what you want to achieve, and having the freedom to choose and exercise ‘discretionary effort’.
‘When values are aligned, discretionary effort is when a person that is leaving at 9 pm, sees something is wrong and chooses to go the extra mile and fix it with pride. The process to get there starts with a shared value strategy.’
To create the right culture, a lot of resources goes into leadership training, development, and building competencies. The 50-strong leadership team continuously goes through collaboration and group decision-making processes, asking questions such as: What does value mean in practice?, What will our approach be in different situation and scenarios?, and What do we mean by doing the right thing?.
‘We try to always have a mix of leadership development and strategy in all sessions.’
Implications of COVID-19 for their strategy
When the pandemic started, the Waterfront’s first reaction was to gather information on what they do know and what they do not know – what is speculation and what is not. The precinct typically receives 80 000 visitors a day, which dropped to 3 500 at the start of the country’s lockdown. Tourism tenants and small business were more vulnerable than protected industries and large corporate offices.
After evaluating and finding that their overall strategy was still applicable and that they had the necessary core safety nets in place, from asset-backed diversified income streams to access to liquidity if required, they made a conscious decision not to go with opportunistic gains but proceeded with:
- Re-prioritisation – Prioritising key focus area in the short term and postponing non-key projects such as tourism-focused projects.
- Focus on cash flow − One of the major priorities was cash flow, to see what they can and cannot do, implementing daily updates on cash flow.
- Giving staff peace of mind – They focused on ensuring that salaries will be protected, clear communication, and implementing health and safety protocols.
- Set principles of how to engage with tenants – Having a thousand tenants, they set principles for engagement. For instance, they have around 400 heavily effected small businesses that form the backbone of what makes the Waterfront unique, for example the businesses trading in the Watershed and Oranjezicht market. One of the principles was to extend credit relief in the form of a 100% waver on rental for this category for three months (thus living their vision).
- Corporate social responsibility – They doubled resources to assists SME to survive the pandemic and upped the neighbourhood shelter support as well as support for the likes of Ladles of Love food scheme, both in monetary and logistical support.
Currently they are already re-prioritising their development strategy in certain areas that will see major capital projects being rolled out as catalytic labour-intensive projects which will benefit the city and the country.
Advice to young professionals on strategy
The pandemic has shown us again to never underestimate what staff are going through. Anxiety is real. People who normally have clear, calm rational heads can catastrophise – there is no right or wrong. You need to acknowledge, understand and embrace the different emotional responses.
David ends off by recommending reading widely. His Top 5 strategy-related publications are:
- ME Porter and MR Kramer, Creating shared value, Harvard Business Review
- Gary Hamel and CK Prahalad, Competing for the future, Harvard Business School Press
- Yvon Chouinard, Let my people go surfing, Penguin
- Dror Poleg, Rethinking real estate [real estate disruption], Springer International
- Robert Iger, The ride of a lifetime [Disney disrupted], Bantam
AUTHOR | Christiaan Vorster CA(SA), SAICA Regional Executive