Good Business talks with Craig Winkler, founding director of "Mind your own Business", but known to you as MYOB.
GB: When you began MYOB, what characteristics did you want your business to have?
CW: MYOB has always had a flavour that is different to what you might expect of a business, specifically it has many of the hallmarks of a cause. We want to make a difference. We know how hard it is to create and grow your own business, and we want to make that experience a little easier and a lot more rewarding. That underpinning has meant that MYOB began, and continues to have, the best interests of its customers at heart. Delivering what our customers want and anticipating their future needs is what will ensure we deliver for the long-term.
The traditional business drivers flow on from there – we must run a great business ourselves, and be consistently profitable in order to be there for our customers, and to grow in our ability to offer them more. It’s essential that we have products and services that are reliable and cost-effective. Our team needs to operate with the right values, and understand their part in the cause so that we can enjoy the process of making a difference.
One of the keys for me is to keep an eye on the long term. Short term thinking makes businesses go for the fast buck, forget about the customer value equation, and skip important matters like integrity or environmental impact. If you want to build a long-term relationship of trust with customers, as MYOB does, you can’t afford to take chances with the truly important things. Even areas like environmental responsibility take on a different hue when viewed in this light.
First, all the many environmental initiatives that MYOB has undertaken have a financial payback over a varying number of years. They have been “right” in an ethical sense, but also right from a purely financial point of view. Second, these initiatives do us no harm in the public arena – they are an extension of the cause and demonstrate that MYOB has a heart. Third, sensible environmental management helps us as a team to see that we can pull together and make a positive difference in the communities in which we live. You simply don’t get these benefits if you indulge in short-term thinking. It has to embedded in who you are, not just skin deep.
GB: Many young people in the workplace think about their personal goals and development and of those that do, many consider starting up their own business. What were you looking for personally?
CW: When I was a child my father would take me to visit factories and business places of all kinds. As a result, I’ve had a fascination with the mechanics of ‘doing business’ and what makes a business successful. So, on a personal level, I embarked on the ultimate journey which was learning how to make a business really tick. The process of building a company from the ground-up has been an incredibly rewarding and challenging experience, one that continues to stretch me today just as much as it did when I first left my job to give it a go.
GB: What did you do to make those goals realities?
How did you resolve conflicts between these goals?
CW: There’s a great deal to be said for persistence, and perhaps even a slightly belligerent streak. There are plenty of people who will tell you it can’t work, and to press on I think there needs to be something inside of you that is convinced that you can do something different, achieve something in a way nobody has done before.
The downside of this can be a level of drive that does not allow you to have a healthy life. In my case I am quite sure that “success” is not so much about what I achieve as who I am. That means I need to decide that – in spite of the siren call – I cannot work all day every day. My personal commitment is to be home to share the evening meal with my family, and put my children to bed, as often as I possibly can. There is an ethical dilemma in drawing that line, and it is something where each individual needs to find their own balance. Even having made the commitment to be at home requires the integrity to follow through by really being present; paying attention to the everyday matters, turning off the mobile phone… being there in more than just body. You have to have boundaries and stick to them – that’s a goal in itself.
Helping people and businesses grow sometimes recognising your own limitations
GB: As the business grew, you must have experienced many crises to do with these characteristics. Do any stick out in your mind?
CW: I learned the hard way – at about 25 employees – that 300 possible lines of communication would be the undoing of the company if I didn’t step back, take the birds-eye view and really lead the team. I made a pledge to myself to only manage the company for as long as I was not holding it back. The company had a life of its own, and I had to recognise both my best skills and my limitations.
GB: The decision to go public must have been very significant. What steps did you take to arrive at the decision?
CW: As the business continued to grow, consuming the profits generated in the process, we recognised that at some point our own resources would be a limiting factor in our growth. In the end, there were three important factors. First, we had team members with whom we wanted to share the capital growth of the company. Although we have had a profit sharing scheme in place for many years, we had not found a workable solution to equity participation. Second, we were increasingly competing (both in an operating sense, and in acquisitions) with companies which had access to equity through the capital markets, and in that sense being privately owned was becoming a disadvantage. Third, as we looked at our long-term future as founders, we recognised that our success meant that finding a transition out of the business at some point had become complicated, since we could no longer afford to buy one another out. Our research indicated that only a public listing would meet these criteria, so we spent 18 months preparing for this significant transition.
GB: Did you have to modify the characteristics of the firm or how you preserved them?
CW: We did not modify the character of the firm, however there was and remains significant external pressure to make short-term decisions. This is disappointing.
GB: Many people say that a private company can be very ethical with its employees and clients and with its relationships with the community but it is much more difficult for a public company because it has to compete to attract shareholders. Is this your experience?
CW: I understand the point - but no – not in my experience. Since becoming a public company, MYOB has continued to put the customer first. The rationale being that if we continue to do what we do best as a business - which is delivering what our customers need – and running a smart company, then we will continue to be successful and our shareholders will be rewarded.
GB: What have been the major influences in your life that have guided you, your motivations, the decisions you have made?
CW: As a Christian I am inspired by the principles that Jesus Christ talked about. Regardless of an individual’s personal view of that source, the values I aim to live by are widely shared and have proved again and again to be a great approach to life and business.
GB: Does being ethical cost the business profits?
CW: If there are short-term costs, they are far outweighed by long-term gains. Not the least of which is the fact that I sleep well every night! I guess, for me, there is no other option than doing business ethically. It’s a given and always will be – like a stake in the ground on which MYOB operates.
Life is getting harder
GB: Most of us are aware of recent spectacular failures of businesses not only in being ethical but in obeying the law; there is no need to mention companies both here and overseas. These events have raised the bar where compliance demands and costs are concerned. In some ways your business exists to help others with their compliance burdens especially related to taxation. Where do you see the future going in this context? Are we going to see a growth in good governance or good government, both or neither?
CW: It’s certainly getting harder to run a business out there, and the burden is an ever increasing one. Take even the recent example of the forthcoming Superannuation Choice legislation. The fine points are still being locked down by Treasury but the proposed process would add risk and unnecessary burden to the payroll processes of particularly the smallest business operators.
I hope that some sanity might be brought to bear, but the fact that the present process is even under consideration flags a lack of genuine empathy for what it means to run a small business. So, let’s say my personal jury is out on the matter! MYOB will continue to provide a voice for these concerns and to use our scale to raise these issues where we can.
We seem to fail to operate using good principles. Whenever we see corporate excess or failure there is a tendency to add more rules, which simply adds an additional burden while opening opportunities for some to find the areas the rules don’t specifically excise. Perhaps areas like the ASX Listing Rules and the operation of the Takeovers Panel show a way forward where the principles are clear, meaning that there is no burden of minutiae, nor opportunities to avoid the specifics on technicalities.
GB: And your future personally, now that MYOB has become a significant software provider in Australia?
CW: Well, while the MYOB Australia success story is a fantastic one that buoys the whole team, we are also in seven other countries around the world, with a growing percentage of our revenue coming from our international operations. So the goal remains to serve our customers in the best way possible and to grow the global business as a consequence. There are still a lot of business owners out there for whom we can
GB: Thanks Craig.