161: Chris Strauss

Finance Executive, Chris Strauss, describes his career in the food and food service industry as a life-long passion, and he believes it’s critical to understand the intricacies of business if you want to play an influential role in guiding the business.

Today’s podcast is sponsored by Draftworx, which provides automated drafting and working paper financial software to more than 8000 accounting and auditing firms and corporations. CFO Talks is a brand of the South African Institute of Business Accountants.

CIARAN RYAN: What a great pleasure it is today to welcome Chris Strauss, who joined a company called BJK in May 2020, where his duties include managing a team across multiple locations. We’re going to find out in a minute exactly what BJK does but it’s a very interesting company. One of the things Chris did when he arrived at BJK was that he implemented zero-based budgeting and negotiated new long-term supplier agreements that increased plant throughput by an astonishing 60%, and that led to the restructure of the division, which led in turn to material savings resulting in zero revenue losses for the division. Chris is a CA with an MBA. He previously worked as finance director at Afrikelp Group and before that the Cape Town Fish Market Restaurant franchise, which is very well known to South Africans. He also spent time in Mozambique as group financial and operational manager at Bananaworld Southern Africa. So let’s get into it. Welcome, Chris. It seems that you’ve cut your teeth in the food and the food service industry, by which I include animal protein, so talk to us about the company that you are with, which is BJK, and give us a sense of the trading conditions in that segment of the market at the moment.

CHRIS STRAUSS: Ciaran, thank you very much, it’s a pleasure to be here and it’s been a great honour. I think the food industry and the food value chain is as diverse as any economy that we can think of. On the one hand, you have pure commodity markets, if we think about the grains and some of the vegetable industries and on the other side, it’s a niche and boutique speciality industry. So with that, you have various intricacies and the trading conditions vary dramatically. In my current environment at BJK Industries, we’re a predominantly protein provider to the pet food, feed and aquaculture industries, and the bulk of these products are imported from global markets, predominantly Brazil, the UK and Europe. But a few years ago, we also started our own manufacturing plant in South Africa where we produce these products as well. So on the one hand, we’re exposed to the supply chain constraints that we’re experiencing globally, container shortages, port congestion, that affects us dramatically. But on the other hand, we supply a critical part of the

food industry, specifically the pet food and feed industry for predominantly poultry. So on that side, it’s a secure and relatively stable market. So it has mixed, if I can say, complications towards it. But in general, it’s a stable industry.

CIARAN RYAN: Okay, so we’re talking about BJK, you have a manufacturing plant in South Africa and you’re also importing, I presume, the feedstock which you’re using to make the

the pet food. It’s an interesting market, is it related to general economic conditions? What would be the key drivers of a market like that?

CHRIS STRAUSS: So just a quick correction, Ciaran. We are not a pet food manufacturer. We import protein powders predominantly and fresh protein products, which then is used by all the major pet food manufacturers in the country. So our market is driven by local market conditions predominantly, but also the pet food market is a very stable market. If you look at your FMCG sector, it’s number four or number five on the priority purchases for most consumers. So while spending may change, they might downgrade from a premium to a house brand for their pet food if they’re under strain, the general consumption in the industry is very stable. So you can relate that to your staple foods such as your breads, your maize, your rice for human consumption. So in that sense, it’s a very stable industry. On market conditions, the prices of these products, which are generally deemed commodity products, are driven by global factors. So with the Covid crisis just as an example, the slaughter volumes of beef in Brazil during December last year was almost 50% lower than December 2019, and that just reduces the amount of available products in the market, which drives up the prices for these products.

CIARAN RYAN: Okay, I’m just trying to get a sense of…if you’ve got a 50% drop in Brazil from December to December, are people just not feeding their pets or what?

CHRIS STRAUSS: No, the source of these proteins comes from the waste from the slaughterhouses locally and internationally. So all the products that are not fit for human consumption are then put through a process that’s called rendering, which basically means you cook this product under pressure and then you dry it out and you get a protein powder that is somewhere, depending on the exact product, is between the texture of maize meal and talcum powder, and because the fast food, restaurant industries, the whole entertainment industry globally crashed because of Covid-19 the demand for human consumption for a lot of these products declined. Due to that decline, the availability of the product for the pet food and feed industries, which remained stable compared to your other demands, led to a massive increase in prices globally. You can see that on the shelves of the retailers in pet food.

I audited SOEs, I audited municipalities, but that was just a whole new level of complexity and scale at Mitsubishi.’

CIARAN RYAN: Okay, changing tack now, tell us a little bit about your career, where you grew up, where you went to school and how you ended up where you are now.

CHRIS STRAUSS: I was born in the Free State, but I grew up in the Somerset West area of the Western Cape. I went to school at Paul Roos Gymnasium in Stellenbosch, and after that I went to study accounting in Stellenbosch. I did my articles in Stellenbosch and I completed my CTA through Unisa. I then moved to auditing firm in Pretoria called Middel and Partners for a change of scenery, which was probably one of the better decisions in my career, as it exposed me to new industries, I worked on JSE listed firms, state owned entities, municipalities and the like. After that I moved into the corporate world and went to work for a firm, which was then known as Hitachi Power Africa, now Mitsubishi Hitachi Power Systems, and they’re the primary contractor on the Medupi and Kusile power stations. I audited SOEs, I audited municipalities, but that was just a whole new level of complexity and scale at Mitsubishi. After that, I was headhunted for a financial manager role in Mozambique at Bananaworld…

CIARAN RYAN: And where were you based in Mozambique?

CHRIS STRAUSS: In Mozambique I was based in a small town between Maputo and Swaziland, so very far south, the town is called [unclear], it’s where one of the farms was. The company actually owned five farms, it’s the largest single producer of bananas in Southern Africa. To put it into perspective, the Bananaworld Group supplies about 20% of all bananas consumed in South Africa. So I was appointed to be financial manager for their newly formed transport company and then to look after the local trading business in Mozambique. It was an exciting opportunity, it was challenging, to say the least. Somewhere between my first and second week in Mozambique I contracted malaria. For the first board meeting after I joined the company, I stood up from my sickbed to go and join the board meeting. So it was full of adventure and challenges.

CIARAN RYAN: You’re stuck in a small town, I guess not too far from South Africa, so you can cross the border and come home and visit family. Did you have your family with you?

CHRIS STRAUSS: No, at that stage I was single, which made the decision to go there a lot easier. It was relatively easy to head back to South Africa. It was an eight-hour drive to Pretoria, Johannesburg, and a two-and-a-half-hour drive to Nelspruit. Our South African offices were in Nelspruit, so I was in South Africa quite regularly. But the farm life was fun, it was a peaceful environment, open. My traffic was the chickens between the office and my house as I walked to the office. So in that sense, it was a wonderful environment. We were busy with exciting projects, and I got the opportunity to move into a more operational role after the COO resigned. So at that stage, just to put it into perspective, we exported about 50 reefer trucks of bananas to the South African market every week, just to put the scale into perspective. We had about two 2000 employees in South Africa, so it was quite a complicated operation and it taught me a lot. We went through a restructure at that time to just optimise the operations of the group. So it was a very, very interesting opportunity. We spent nights, the MD, the CFO and I, sitting in the office and working through the costings of our products. To this stage, I can tell you what a box cost, what our packaging cost was, transport and fertilizer. That’s where I learned that from a financial perspective, to understand the intricacies of the business is critical if you want to play an influential role in guiding the business.

CIARAN RYAN: Is Bananaworld a South African owned company or does it have international shareholders?

CHRIS STRAUSS: It’s owned by a single South African, it’s an interesting story. He’s a medical doctor and he was specifically working in the north of Namibia and when his kids were at the age that they had to go to school, his wife told him, now it’s time for us to settle. They settled in Nelspruit, and he started a very small banana farm in Mozambique and that grew to what is now a massive, massive company.

CIARAN RYAN: Interesting story, wow. What drew you to accounting? Was it a natural love of numbers or order? Give us that perspective.

CHRIS STRAUSS: I always enjoyed numbers and as a high school kid I remember sitting in my dad’s office with him pulling out monthly management accounts with twelve-month comparisons and he asked me what did I see, what looked different. He asked me to look at stock turnover ratios and he explained to me why you would sell products at cost and what the effects of rebates were and what it meant to capture customers. From a young age I was drawn to numbers and drawn to business, but to be honest, exactly what I was going to do, I was not sure. So I covered my bases in high school, I took what they used to call the big six, and then took additional maths and then later

I was roped into taking economics as an eighth subject late in grade level eleven. So I was not really sure what I wanted to do exactly but I knew it had to do with numbers and somehow involved with business. I did my career assessment and aptitude tests and then there were two things that stuck with me that the psychologist who administered the tests told me. The first thing she said is I shouldn’t

work directly with animals or plants, so skip the science field. The second thing she said is, I’m motivated, so choose a career where I can earn a decent salary. So based on that, I chose accounting over engineering or actuarial sciences just because of the diverse opportunities and the multiple fields between which I could switch. So I chose accounting for university, just applied to accounting and I never looked back.

I think the less number-focused subjects were the ones where I gained the most value in my MBA.’

CIARAN RYAN: Interesting. So you’re a CA and you’ve got an MBA, now what motivated that combination? Did you feel that with a CA qualification you lacked a little bit of a broader business knowledge, which would cover other disciplines like marketing and strategy and so on?

CHRIS STRAUSS: Ciaran, the plan was never really to do an MBA. It was October 2017 and I had just got back from honeymoon, and I was in Johannesburg at our Ascendis head office and at that stage Afrikelp was still owned by Ascendis Health, and I had arranged a meeting with our divisional MD, with whom I had a very good relationship, to discuss the next steps in my career and what would be the best way for me to grow. After an open and honest discussion in the morning in the office, we went for lunch and at lunch she just said, why don’t you do an MBA. At that stage, I’d never thought of doing an MBA because why, I have a CA. I came back home and discussed it with my wife and my parents, and I decided let’s do an MBA. For me, what it gave me was the opportunity, as you mentioned, to broaden my horizons, specifically to focus on the softer sciences, which is actually sometimes the more critical ones. The most enjoyable subjects in my MBA were leadership strategy and then the two surprising ones were part of my electives, for my international module I went overseas to Bentley University in Boston, and there I did a week-long course on innovation and creativity in business. Then the strategy and a small subject called Entrepreneurship in Africa, which was presented by Daniel Strauss. I think the less number-focused subjects were the ones where I gained the most value in my MBA.

CIARAN RYAN: Tell us a bit about the challenges you had, I want to now pivot back to BJK because we spoke in the intro about zero-based budgeting, and you introduced that when you first arrived at the company. What are some of the difficulties that you have? Now, just a little bit of background here, because even the government in South Africa is talking about introducing zero-based budgeting. I don’t see much move in that direction. But I imagine one of the difficulties you’ve got is overcoming legacy spending. How did you go about this and maybe give us a sense of how successful it’s been?

CHRIS STRAUSS: So just to put some context around it, I accepted the role at BJK on March 31 2020, so that’s about eight days after we went into the hard lockdown. So I started off my role at BJK literally from my office at home because at that stage our head office was closed. So the first hurdle to overcome for me was to get a complete understanding of the business and to connect to the different teams and the different departments to understand exactly what they were doing and why they were doing things. So my first task was to build a budget for the business, which was very difficult that first year, to say that it was a great budget would be a far stretch of the imagination, but at least it was something. After understanding the business and going through various processes in those first few months, it was easier to build a budget for what is now our FY22. So yes, legacy spending was a very difficult thing to come around with, especially for a business that had transformed from a traditional trading business, which it was, into a manufacturing business where the manufacturing side now contributed the same amount of profit as a trading business. So to get the focus right, to understand the spending, really was a difficult thing, but also to allocate money. Ultimately, the allocation of funds is what’s going to drive the budget and is what’s going to drive results. So it’s understanding the business and ensuring capital allocation, be it working capital funding or capital spend in terms of projects, was a very, very big part of this.

There’s an oversupply of candidates on the market, but it feels as if the competencies and capabilities of these candidates are just decreasing every year.’

CIARAN RYAN: Okay, Chris, let’s talk a little bit about the accounting profession. Is it in crisis? What’s your view on that? We’ve seen a lot of scandals coming out, misreporting of financial statements in companies like Steinhoff and Tongaat. If it isn’t crisis, what can we do to clean it up?

CHRIS STRAUSS: I think the accounting industry is in a crisis but the biggest crisis for me is not, as you mentioned, the numerous scandals of the last few years. For me, the bigger crisis relates to the new accountants and bookkeepers entering the workforce. From advertising roles recently, there’s an

oversupply of candidates on the market, but it feels as if the competencies and capabilities of these candidates are just decreasing every year. This is something I’ve experienced over the last three years, and friends and colleagues in similar roles share the same concerns. So for me, the crisis is that if the foundation education is not resolved and quality skills and critical thinking isn’t part of the education, we’re going to have a much bigger crisis than just irregular reporting because we’re going to have issues in small, medium and large enterprises just to get accounting work accurately done. So that for me is definitely a big concern. But on the same side, I think in addressing the scandals and everything that’s gone wrong, I think SAICA, IRBA and the prosecuting authorities need to take a much stronger stance on compliance, and this would have to be done on all levels, from enforcing stricter rules with board exams, how CPD is monitored, stricter and more frequent practice audits

for the auditing firms, independent reviews. I think in doing that and then actually enforcing and prosecuting the people who have broken the law is what’s needed to instill a culture of responsibility. Ultimately, it comes down to people taking responsibility and ownership and accountability for their roles.

CIARAN RYAN: One of the things that we are hearing a lot about these days is the evolving role of the senior finance executive or the chief financial officer. There’s a lot more compliance involved in those positions than was the case in years past. If you look at some of the research that’s coming out of the United States and out of Europe, where they’re looking at this evolving role, where a chief financial officer is no longer the number cruncher. They really are the stand in for the CEO, they’re expected to have a full grasp of the operational side of the business. They’re expected to be able to communicate the story in numbers and they’re also expected to be able to manage their team, particularly at this time, remotely. One of the things that the South African Institute of Business Accountants did was introduce a designation called CFO (SA), which is basically in recognition of these disciplines that are not taught in the schools, either on the CA programme or anywhere else. These are things that presumably you’re only going to learn through experience. Is this your experience that a lot of the really useful lessons, they’re not technical, it’s the softer skills that you have to learn through hard won experience?

CHRIS STRAUSS: I definitely agree that the role has changed. It does differ from organisation to organisation. I think especially in the larger listed organisations where the team below a CFO is often quite large, where you have a CA probably just focused on accounting compliance and you have specific people dedicated to reporting. I think there you would have a lot more support in terms of your compliance. Definitely the onerous side of compliance has just increased, but the role has changed. I think, as you said, the modern CFO is definitely the 2IC to the MD, and between the CFO and probably the COO, you would want either one of them to be able to step in to the shoes of the MD at any given moment, should something happen. For me, I think I learned a lot of my lessons hands on, not in the classroom. I think I was lucky to work with a bunch of diversified entrepreneurs, be it audit partners who were hands on, who were in the trenches with me getting the work done or driving the fields with the owner of Bananaworld and just being taught how it works, getting an understanding of it. I was sitting in an office, I just joined the business and in front of me were fertilizer reps explaining to me how fertilizer works. It does not matter what business you’re in, it’s critical as the head of finance that you have an in-depth understanding of the operations, because if you don’t understand your operations, how are you able to effectively manage the finances of the business and your ultimate responsibility and accountability to the stakeholders, be it the employees, the shareholders, you have an accountability to them. So it’s critical that as a CFO you understand the business.

CIARAN RYAN: All right. As your career progresses and you build up more of a track record, what would you like your legacy to be?

CHRIS STRAUSS: I would want my legacy to be one of fairness, growth, development and action.

Fair in the way I act towards others. I can very often be fierce and almost aggressively passionate at times. But I feel I always act fairly, and I protect those who I am responsible to protect. Then growth on a personal and a business level, for those who report to me and those who I lead, I feel it’s important that people should be able to grow in the roles, and you will hit a ceiling of growth in different roles and in different organisations. I think if as leaders and managers, we can make the mindset shift that if an employee comes to you to say, listen, I have this great opportunity, I’ve developed over the last two years and this is the next step in my career, and you can’t give them the same opportunity in the current organization, that to wish them well it means you played a hand in developing somebody and that for me is a very proud moment. So that development then aligns with strategy because a business needs to develop, people need to develop. Personal development is

just as strategic as corporate development and corporate growth. So I think development, growth, action and fairness, that’s what I want my legacy to be, that I’m part of that to those who I worked with, the organisations at which I work. So if I could leave that behind, I’d be very happy.

To think that leading people is easy and managing people is easy, you are fooling yourself.’

CIARAN RYAN: It is very heartening to hear that, that you take your team with you, the people under your wing, you want to see them grow, you want to nurture them, you want to make sure that they can realise their career ambitions as well. I think that’s the mark of a good leader is somebody

who is prepared to do that. Would you agree with that?

CHRIS STRAUSS: I definitely agree and that’s definitely not easy. To think that leading people is easy and managing people is easy, you are fooling yourself. Every day there are new challenges and in the end, we’re all human and we all make mistakes but I think if you act with the best interest of your people and the best interest of the company in the long term, then at least I believe you’re moving in the right direction.

CIARAN RYAN: Winding down here, a couple of quick personal questions, if we can. What do you do in your downtime? You said that between Bananaworld and now you got married, have you got children? Where are you living now?

CHRIS STRAUSS: I’m back in Somerset West, after Mozambique I came back to the Cape, it’s just where I want to be. While in Mozambique, I met my wife, we got married in Cape Town. I have a two-year-old daughter and I think these two ladies in my life have changed my life more than anything has, and the change has been for the better. I think I’ve learnt a lot of patience and a lot of compassion from them. The three of us love to spend time together, whether we go for a picnic on a wine farm or go and ride the model trains or go to the beach or just stay at home reading and playing puzzles. We love spending time together. Then making food, braaing, spending time with family and having a round of golf once every three months these days. You need to take time out for yourself, but also you need to be present in the time with the people who you care about. So it’s spending time with them that I do in my downtime.

CIARAN RYAN: Wonderful, okay, final question, are there any books that you would recommend,

something that really kind of tickled you and got you inspired?

CHRIS STRAUSS: I think my books fall into two clear categories. There are books I read just to switch off and relax, and on a fiction level, I truly enjoy the Lee Child books with Jack Reacher and then another author is Stephen Leather, he has a series of Dan “Spider” Shepherd books, they’re all these action books with a spy thriller in them. But I think on a business and on a personal level, there are a few books, which have stuck with me, the one is a book called Powerful: Building a Culture of Freedom and Responsibility by Patty McCord, she was the HR director at Netflix, and the book gives an interesting perspective with how they manage their teams and how they manage the remuneration of the teams. So I’m not going to spoil it for people, it’s a quick read, but that was great. Then a book called The Boys in the Boat by Daniel James Brown and it focuses on the American rowing team and their journey to the 1936 Olympics, and the individual struggles that the team members

faced, the environment from which they came. It was at the back of the Great Depression and a changing world environment. I think there’s a lot of lessons for all of us to learn from that. You also mentioned legacy earlier, there’s a book by James Kerr called Legacy. It’s a leadership book focused on the All Blacks rugby team and the way they transformed their culture when they realised that as a team, as an organisation, they were in trouble. Leadership and culture, I think that plays a very big role and I enjoyed those books, I got great insights from them. Then I travel a lot, so I listen to a lot of audio books and our future is changing, Ciaran, and the world we live in is changing, and two very insightful books of showing us what the future can look like is Homo Deus by Yuval Noah Harari, and then a book called The Inevitable by Kevin Kelly. Both books look at the future, how technology

will affect us and how we will interact with that technology. They approach the subject from two different angles, but both provide provocative and thoughtful insights. It’s a varied list but I enjoy reading and I believe everybody who wants to grow and develop should dedicate time to read for self development.

CIARAN RYAN: Yes, I think the sports analogy there is quite a good one. The All Blacks probably could use a little bit more of that introspection. They’re go through a rough patch at the moment, but I think in terms of consistency, the All Blacks are quite a phenomenon in world rugby. I’m not talking about two years; I’m talking about over twenty years.

CHRIS STRAUSS: But even just looking at New Zealand as a whole, I think the country has about four or five million people living in it, and just to think that you have a cricket team that just played in the T20 World Cup final, you have a rugby team, that if they haven’t been number one for the last 15 years, they were number two. When you look at the Olympics, they perform, it’s just a country with a great culture and a culture for success and how they support each other. But they focus on small things, they focus on their history, they focus on people. So I think there’s a lot that we can learn as a country and as organisations from them.

I think in South Africa we’ve accepted mediocrity and I think that’s where we fall short quite often.’

CIARAN RYAN: Yes, it is quite astonishing, really punching above its weight, as you say, in the Olympics as well. It also occurred to me while watching the Olympics, wow, whether it’s rowing or field events, these guys really have got something, and you wonder why in South Africa we’re not able to produce at that same standard. I think the Australians as well have also managed to bottle

that somehow and produce this culture of excellence and really figure out what it is that makes them a spectacular sports country.

CHRIS STRAUSS: You used the word their excellence and I think a focus for us as a nation and for the environments we move in is to instill a culture of excellence and accountability, excellence is never perfection, but it’s that strive towards it. I think in South Africa we’ve accepted mediocrity

and I think that’s where we fall short quite often. It’s good enough but is good enough, good enough

to take us forward. I think that’s the hard question we need to ask ourselves.

CIARAN RYAN: Okay, Chris, we’re going to leave it there. What a fascinating discussion. I really enjoyed it. I enjoyed your insights and I enjoyed you sharing your particular career journey. Also, a fascinating story in some remote places and some really interesting jobs that you had and making you into what you are today. To round that up, the legacy that you that you want to leave, fairness, these qualities which are so much needed in the accounting profession, building your team, nurturing your team. I think that’s just wonderful and thank you so much for coming on and sharing this. Please stay in touch and I’d love to get you back on again and see how things are going in a few months’ time now.

CHRIS STRAUSS: Definitely, Ciaran, it was an honour to be here and to be able to share my story

and I definitely will stay in touch. I look forward to all the other podcasts, I think it’s a great wealth of information and inspiration for all of us, and it’s a wonderful, wonderful project that you have going here.

Ciaran is a seasoned journalist and podcast host. He has a back-ground in finance and mining, having pre-viously headed up a gold mining operation in Ghana.
In this podcast he interviews various CFOs, getting more detail on the role of the CFO and their daily challenges and solutions.

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