https://iframe.iono.fm/e/1507120" width="100%" height="126" frameborder="0
You can also listen to this podcast on iono.fm here.
ADVERTISEMENT
CONTINUE READING BELOW
JEREMY MAGGS: Hello everyone and welcome to FixSA, the podcast presented by Moneyweb, where we delve into innovative concepts and practical solutions aimed at tackling South Africa’s most urgent issues. Today, I have the pleasure of hosting Laurence Rapp, the Chief Executive Officer of Vukile Property Fund. Laurence is not only a prominent thought leader with over ten years in the real estate industry but also possesses a wide-ranging expertise beyond just property.
I’ve had the privilege of learning from him; our conversations have revealed his energetic and visionary approach. His knowledge of corporate governance, capital markets, and economic progress is impressive. He is recognized for his ability to navigate complex scenarios and generate effective results. I’m eager to hear the innovative ideas he has for transforming South Africa’s landscape. So, let’s get started and explore how Laurence Rapp can aid in fixing our nation.
Laurence, it’s great to have you. Let’s dive right in: what do you see as the biggest barriers holding back South Africa from achieving its true economic potential? What are your thoughts on this?
LAURENCE RAPP: Thank you, Jeremy, for the kind introduction. In my opinion, the main barrier is bureaucracy; it stifles action and delays progress. We need to foster a greater sense of urgency, stronger commitment to production, and empower citizens to take effective steps toward revitalizing our country. The political red tape is a major hindrance to our advancement.
JEREMY MAGGS: Laurence, I would suggest that urgency is a mindset while bureaucracy falls under procedural matters. Which element would you address first?
LAURENCE RAPP: I would prioritize addressing bureaucracy and improving procedural efficiencies. Urgency can be perceived as a mindset—which I appreciate your framing of—relying on individuals’ intrinsic motivation. South Africa has enormous potential. Imagine the opportunities available if we remove bureaucratic barriers… I believe that the inherent desire for a better life and to support our families will ignite that urgency. It exists within everyone; we just need to eliminate the obstacles to foster an enabling environment. Thus, I advocate for reducing bureaucracy. The drive for improvement and advancement is innate in all people; it will naturally surface.
JEREMY MAGGS: Let’s delve deeper, Laurence. If hypothetically, I appointed you as the acting minister of bureaucracy in South Africa for a week and granted you full authority, where would you start?
LAURENCE RAPP: That’s quite a challenging scenario! There are definitely labor-related factors to consider. Simplifying the processes for starting businesses and opening bank accounts is essential. I’m not suggesting we compromise on legal responsibilities and regulations, but we need to find ways to accelerate these processes. Take the immigration and visa issues—streamlining these would enhance travel opportunities within the country. You’ve pinpointed a crucial question, requiring careful thought on specific measures. Ultimately, we want to create an environment that allows entrepreneurs to establish and grow their businesses swiftly. This is vital for unlocking the country’s potential.
JEREMY MAGGS: Considering we now have a coalition government that aims to improve these processes, do you sense a positive shift in that direction?
LAURENCE RAPP: I can confidently share this: today’s climate feels significantly different from what it was in January. As you’ve mentioned, I’m actively involved in capital markets and engage with institutional investors locally and globally. I often wish politicians could attend my meetings to observe the contrasting sentiments firsthand. The optimism among capital allocators is striking, especially now that the load shedding issue is easing. There’s a burgeoning expectation for growth, prompting more investments in sectors like property, traditionally viewed as long-term plays. Before the elections, uncertainty led many to hold back their funds.
The influx of foreign interest in our sector and company is extraordinary, fueled by renewed hope and a sense of stability. My sincere hope is that politicians can rise above their party agendas and embrace the broader implications of what they’ve achieved—it’s been remarkable. This shift in the business landscape post-elections has been significant, although macroeconomic factors such as interest rate cuts play a large role. Furthermore, discussions have moved away from merely managing load shedding impacts toward opportunities in a post-load shedding world. The contrast is incredible and fulfilling; I commend the politicians for reaching this critical juncture. My hope is they can sustain this progress, as we finally seem to be moving in a hopeful direction after so many years.
JEREMY MAGGS: You would agree that investors prefer stability and certainty. It’s encouraging to witness these positive sentiments, yet action often lags behind sentiment. This loops back to your earlier point about urgency. Tasks remain to ensure we fully capitalize on the benefits of this shifting environment.
LAURENCE RAPP: Absolutely. Sentiment is merely the starting point. We need to see concrete delivery. The momentum generated by positive sentiment is vital, yet it must translate into action. We must ensure that there is clarity in policy to avoid self-imposed setbacks. Recently, I became aware of proposed legislation aimed at taxing transactions within collective investment schemes, which could hamper capital inflow and liquidity in the JSE. Such matters require thorough discussions at the right levels to assess their long-term impact on capital markets, local savings, and foreign investments. Ultimately, we must transition from enthusiastic ideas to effective execution.
Some progress is noticeable—evident in the resolution of load shedding issues—but I believe access to water is our next major challenge.
JEREMY MAGGS: The term “on-the-ground delivery” is compelling, as it leads me to my next question. We’ve touched on philosophy, sentiment, and barriers, but I presume infrastructure is critical to your business. If you could envision new strategies to address infrastructure challenges to attract investment and growth, where would you focus first? For instance, we haven’t addressed logistical issues, despite Transnet’s national recovery plan.
LAURENCE RAPP: Certainly. Infrastructure is a crucial driver of growth. Energy has been a focal point, but efficient ground-level implementation is essential. Our operations span South Africa and Spain. The time and resources our South African teams expend on problem-solving detract from growth initiatives and customer service—it’s a significant drain on resources.
For example, in energy, over the last decade, we’ve deployed solar systems in our shopping centers, generating nearly one-third of our portfolio’s power through photovoltaic systems. Most of our malls have dependable backup water systems, but the expenses and efforts involved in these installations—both in capital and management resources—underscore the shortcomings of local government services.
That energy should be redirected towards productive, growth-driven activities rather than remedial measures.
Water infrastructure presents a substantial challenge, potentially rivaling our electrical issues. While we can rely on solar energy, urgent action is needed on water supply. In certain regions housing our shopping centers, we’ve depended on borehole water for weeks when municipal supplies were disrupted, often tangled in billing disputes and bureaucratic obstacles.
A significant trend is the gap between the national government’s optimistic declarations and the more focused local government interests. Enhanced cooperation between national and local governments is crucial for effective execution on the ground. Rates and taxes are becoming increasingly burdensome, yet service delivery continues to deteriorate. As responsible ratepayers, we all deserve more.
JEREMY MAGGS: Laurence, you’re not the first CEO I’ve heard mention that their teams have become adept at troubleshooting. What specific qualities in leadership should we nurture within our public and private sectors to drive meaningful change? Is there a need to rethink our leadership philosophy?
LAURENCE RAPP: Absolutely. I genuinely believe that our leadership approach in South Africa tends to be overly functional. This inclination is also prevalent in the public sector. Each profession—accountants, lawyers, etc.—restricts individuals to their defined roles. We often overlook an individual’s inherent talents and how to diversify their application. For example, if you examine investment bankers in South Africa, many are trained as accountants or lawyers. Conversely, in London-based investment banks, you’ll find professionals with backgrounds in history, political science, philosophy, economics, and more. They prioritize recruiting talent for critical thinking and then provide the requisite training.
This functional mindset has always surprised me within the South African context.
To address your question: outstanding leaders are those capable of recognizing crises and think strategically from first principles to develop solutions.
ADVERTISEMENT:
CONTINUE READING BELOW
Remarkable leaders become notable especially in unpredictable business and global landscapes. Their distinction lies in navigating uncertainty, which hinges on confidence in one’s abilities, accumulated wisdom, and holistic education rather than just specialized expertise. Therefore, we should promote the cultivation of leadership thinking and education that produces well-rounded individuals well-versed in critical analysis and globally informed—even in universities.
JEREMY MAGGS: Laurence, am I misconstruing your perspective when I infer that you believe we should advocate for leadership embracing philosophy, poetry, history, and economics alongside traditional skill sets?
LAURENCE RAPP: Absolutely! We require visionaries capable of comprehensive situational analysis. Very few challenges I’ve faced in my career are straightforward. They tend to have multiple dimensions. How do we thoroughly assess these issues? And how do we resolve them effectively?
I’m not advocating for specific industries or skills; I’m suggesting we should promote broader perspectives within our leadership ranks. While this tendency appears to manifest organically among top leaders, how can we encourage this mindset on a larger scale?
Greater insight leads to informed perspectives helpful in navigating considerable challenges and crafting innovative solutions.
JEREMY MAGGS: I want to delve deeper into this captivating idea. Many years ago, at a former broadcasting company, I met Peter Matlare, who later became the CEO of Tiger Brands and sadly passed away during COVID. One day, he walked into my office and said, ‘Mr. Maggs, I pay you to stare out the window.’ It took years for me to comprehend his message about the importance of philosophical engagement and introspection, which aligns with what you’re suggesting.
So, Laurence, what is your leadership philosophy? How do you handle challenges?
LAURENCE RAPP: That’s a valuable insight you gleaned from Peter. Reflecting on my evolution to CEO, I initially adopted a “doing” mindset rather than a “being” perspective. Early in my leadership journey, my focus was solely on tangible results and products.
In the CEO position, striking a balance between time spent on contemplation versus action is crucial. I dedicate roughly an hour and a half to two hours each day to reading—covering various local and global publications, in addition to industry-related materials.
I keep a television on in my office—the background noise enhances my productivity, particularly when tuned into the news.
One of my strengths is drawing connections between disparate pieces of information. The greater the number of data points and inputs I gather, the better I can discern trends.
This ultimately shapes my vision for our business’s future. Moreover, leaders across all sectors must cultivate a forward-looking mentality.
It may surprise you to know that Vukile is celebrating its 20th anniversary, prompting me to contemplate our direction for the coming two decades. While I need to address immediate goals, like our results announcement next week, I also strategize for the long term.
Being proactive regarding the future is a critical element of my role, and I strive to gather as much information as possible. Creating space for reflection in my routine is essential. My extensive overseas travels provide invaluable insights.
My family and team often express concern when I return from vacation each January because I immediately acquire a new planner to jot down fresh ideas inspired by reflective downtime during the holidays—topics often discussed include AI and its implications for our business.
Staying informed about international developments, technological advancements, and industry trends is vital. Then, my focus shifts to connecting the dots; this ability varies among people.
This synthesis of information often differentiates one leader from another. Although it’s challenging to teach, it’s important to allow oneself time for contemplation.
It took me a while to realize that being physically present at the office by 07:30 is unnecessary. Instead, I leverage my mornings for productive work while enjoying breakfast and reviewing several publications—this time is invaluable.
I typically start my day this way and conclude with an evaluation of the evening news, capturing emerging ideas and trends to inform key decisions.
JEREMY MAGGS: That’s a significant takeaway; to paraphrase the late Pravin Gordhan, it’s also about connecting the dots. Laurence, addressing any issue requires courage because mistakes will inevitably occur. How do you recover from missteps along the way?
LAURENCE RAPP: I will cite two contrasting influences on my thinking: the eminent strategist Michael Porter from Harvard Business School and the beloved Dr. Seuss. My favorite book is *Oh, the Places You’ll Go.*
While that may sound whimsical, I assure you I’ll connect these two thoughts.
JEREMY MAGGS: Please do!
LAURENCE RAPP: During my time at Monitor Company, which was Michael Porter’s strategy consulting firm, we defined strategy as making choices. Recognizing early on that the decisions you make now may differ from those you’ll face in the future is crucial since the environment can shift.
For many, the common pitfall in shaping strategy is to cling to a decision without adapting it to changing contexts. Therefore, the first essential element is to maintain a dynamic mindset; we must respond to our shifting environment and avoid becoming entrapped in a rigid framework.
Moreover, having the courage to question if you’re making the best choices correlates with a crucial lesson from an executive coach I worked with years ago.
If we reflect on the pivotal decisions we’ve made over the past decade and evaluate them based on their consequences, we’ll often discover that most choices yielded favorable results.
This realization builds confidence in one’s judgment built on core principles. Dr. Seuss beautifully articulates this message in *Oh, the Places You’ll Go,* stating, ‘You have brains in your head, you have feet in your shoes; you can steer yourself in any direction you choose.’
In essence, it’s about trusting your instincts and understanding that once you develop self-assurance in assessing situations and making decisions, you can evaluate whether you’re achieving the desired results. If that’s not the case, consider why and adapt your approach.
Dr. Chris Argyris of Harvard introduced an insightful practice dubbed “triple loop learning.” To summarize, it implies that each action we take occurs within a context. Each context frames the issue, leading to actions that produce various outcomes.
If outcomes do not meet expectations, we must determine whether the context was flawed, the framing was off, or actions were misaligned. This allows for identifying failure points and readjustment when necessary.
Therefore, we must adopt a reflective mindset, inevitably acknowledging when we’ve erred or understanding that previous assumptions must evolve with current realities. Rigidity to preconceived notions is not an option.
Constantly challenge yourself and cultivate an environment where team members feel emboldened to do the same.
Often, people hesitate to question a superior’s opinions. Within our organization, we encourage employees to challenge decisions and share alternative views openly.
When we evaluate potential deals, I’ll assign a colleague the role of designated skeptic to foster constructive debate, ensuring we thoroughly assess proposals. This individual can voice concerns freely; this approach promotes empowerment, not opposition.
JEREMY MAGGS: This conversation has indeed illuminated the necessity of connecting various concepts meaningfully. I wish to conclude our discussion by expressing my gratitude. Laurence Rapp, thank you for being a guest on FixSA with Moneyweb. Your time and insights have been incredibly valuable.
LAURENCE RAPP: Thank you, Jeremy. This discussion has been both enlightening and stimulating.
Stay informed with Moneyweb’s comprehensive finance and business news via our WhatsApp channel.
