“Inspect what you expect”

Peter Nduati is that guy! A free spirit. He is approachable and he is shrewd, always looking to make a business deal because opportunities abound. At one point he says he wanted to be a musician. But not the kind to be in the limelight. Maybe a ghost writer or a producer, a  role that would keep him behind the scenes. Fate would however have it a different way. He became a household name as an entrepreneur, with vast business interests. He is widely known as the founder of Resolution Group. If he is not at a corner office within corporate Nairobi, he is either speaking to entrepreneurs at a coaching session or on the rugby field kicking it back with Impala Saracens fans. The Inquisitor caught up with Peter Nduati at Trueblaq offices (where he is the board chairman) for an interview.

What do people not know about Peter Nduati?

My goodness! That is a very difficult question (laughs). I am such an open book. Is there anything that people do not know about me…? (looks out the window as though in deep thought) Maybe my new business. I have invested in the aviation industry: emergency aviation. I am now the CEO of Centric Air Ambulance.

This feeds into my next question. You are in insurance, manufacturing, finance, sports, music and now aviation. Your interests in business stretch far and wide. They are diverse.  Is this why you define yourself as an eclectic entrepreneur?

Yes, it is. I come from an entrepreneurial family and I always knew that I would eventually end up as an entrepreneur. As I grew older, there was an increasing desire to have an impact on the lives of people. I felt I could do this through entrepreneurship. My experience while starting out as an entrepreneur is not one, I would wish for anyone. I struggled hard with raising capital. For this reason, I felt that it was my duty to ensure other entrepreneurs do not struggle as I did. This explains why I have so many investments across different business fields.

Of the many hats you wear, that of a CEO, rugby enthusiast, business speaker and of course an entrepreneur, which one do you like being associated with the most?

An entrepreneur! The thing I do from good to great is entrepreneurship. I get frustrated by red tape because I lack the patience for that. I am an okay CEO, but I am a better entrepreneur.

You sit on the board of governors of Dagoretti High School. Any fond memories from Dagoretti High?

I went to school at Dagoretti High.  I cut my academic teeth there. However, the fondest memory of Dagoretti High I have is leadership and triumph in sports: basketball and rugby. That is what I am remembered for back there. One time I went back to the school and one of my teachers couldn’t remember teaching me chemistry. Her only recollection of me was from the playing field… And the arts, especially drama.

What insights on governance have you gathered over the years?

I am a student of governance. I started studying corporate governance early in my career while still at AAR. Part of the reason I lost my job at Metropolitan Health Group was issues within the organization that had to do with governance. By the time I was starting my first business thereafter, I was clear about what governance structures I wanted to have for my business. Governance goes beyond just having a board. It goes beyond the theoretical and mere ticking of a box in compliance.

Do you mind expounding further, with your experience early on as an entrepreneur?

I started my first business when I was thirty-one years of age. I was young and It was therefore important to have older individuals on the board, to gain from their experience and wisdom. The first experience I recall was when both the business and I were going through financial difficulties. I went to the board to negotiate my salary, but the board’s direction was to cut my salary by half. I would continue to be paid this salary, as recommended by the board, for a period of three years.

There was also the time when I was very eager to scale. We had opened an office in Mombasa, and we planned on opening another office in Nakuru and then Kisumu, all in intervals of six months. The board however decided against this scaling on the reasoning that the Mombasa office needed to generate enough cashflow to become self-sustainable. We are where we are now because of the guidance and interventions of the board. These two experiences were a clear manifestation of just how important governance is in business.

Do entrepreneurs share the same perspective when you speak and engage with them in different fora?

Many entrepreneurs remain oblivious as to why they need a board.  They fear having other people dictate to them how to run their own business, which is the actual reason why they need a board in the first place. People do not always make the best decisions for themselves.

There is the thought that having a board is expensive because directors will require compensation. What are your two cents on this?

I could not pay my board members when I started out and I currently serve on boards where I am not paid a dime. People are willing to serve, especially if they buy into your vision. People like to create. They like to build. It is innate. Whenever I approach potential directors, that is always my pitch. I tell them that we are bringing resources and talent together to build and create. It inspires them to become part of something memorable. It should concern you as an entrepreneur if the directors you approach to sit on your board require to be paid for their services.

At any one board meeting in any one of your businesses, you hold several titles. You are the CEO, a director and a major shareholder or the founder. How do you ensure an effective balance of power between your chairman and yourself in certain board dynamics such as decision making? It is still your business, is it not?

All these titles come with different interests and ambitions. In addition to all those titles, I am also an employee of the firm. I therefore must abide by the policies set by the board. I also must be conscious about which hat I am wearing every time. In a scaling scenario for instance, as a shareholder, I want to earn dividends and I would therefore not approve scaling. As a director I think about the value of the decision to scale. As a CEO, the decision has to be a strategic fit to the firm’s vision so that eventually I can earn some bonus, and lastly, as an employee, I must execute the decision as is. All these decisions are conflicts, because I am the same person. This is the reason why you need independence on a board. Especially the independence of the chairman of the board. While some of these interests and ambitions can be catered for, albeit in moderation, some must be quelled. Every year, I sit with the board to be evaluated based on the key performance indicators that we set. Whatever decision they make is final and I live with it.

A board is only as effective as its chairman and you have been quite instrumental in the exponential growth of Trueblaq in your position as chairman of the board. In your mind, what constitutes an effective board?

Having proper skills on the board and a sincere commitment to the established governance structures. These two fundamentals have allowed us to align and de-risk the business therefore allowing Trueblaq to live to its true potential.

Personally, I believe in the saying that goes, “inspect what you expect.” As board chairman, I hold candid discussions with the CEO on a weekly basis on how the business is performing and how it ought to perform. I hold discussions with the directors when I feel that they could do and offer more. I also have town hall discussions with the team at Trueblaq when the business is doing good or bad. Further, I see my role as board chairman as being not only supervisory in terms of oversight, but that of a coach as well.

You mentioned that entrepreneurship is the area you excel at easily. What do you attribute this to?

I am very good with people and I also have a knack for spotting and growing talent. The senior staff across the businesses I run are individuals who I personally identified. I love to help people grow and become the best versions of themselves. Some have grown to become entrepreneurs themselves.

Over the years however, I have realized that companies tend to work better when the CEO is away. This is because if you empower people, they would not want you, the CEO, to come back and find out that things have not worked because you were away. If you empower people, they’ll do better.

Is this how you ensure there is succession planning across your businesses?

That is correct. Employees need to have skin in the game. They need to know that they have a future in the company. As you might know, I am no longer the CEO of Resolution Group. The current CEO was identified three years prior her appointment. I had mentioned to the senior staff at Resolution that by the time I turn fifty years, I would be leaving my position as CEO. So, the senior staff had to compete for the position. A good leader worries about the future.

What lessons do you draw from the collapse of various established corporates such as Nakumatt, Chase bank, Uchumi and many more, partly because of corporate governance failures?

As I mentioned earlier, governance goes just beyond having a board for the company. It is also having an authority matrix with clear distinctions of roles and responsibilities. It is the understanding that there are roles that have powers and that there are also egos that need to be kept in leash. This way, the board will be composed of independent minds who are not beholden to anyone. Further, individual directors need to have engagement with the executives. Directors roles go beyond just sitting through board meetings just because they represent a shareholder.

Going into the future, what emerging trends do you feel business owners should be cognizant of as they seek to build sustainable businesses?

The trends are in the universities. I tell business owners to engage more with university students because those are the future consumers. In the coming few years, they will be the decision makers with money in their pockets. They will not consume products the way we do now. Further, entrepreneurs need to have a global outlook and perspective. Long gone are the days when a business would target a certain demographic, because the level of exposure of the current consumer is on a different level.

What would you tell your younger self if you were starting out as an entrepreneur?

Understand your craft and have passion.

Overcome fear.

Identify what you do not know and what you do not enjoy.

Hire well so that you have people to help you out in the areas you do not know and do not enjoy.

Have a strategy and ensure that everyone you work with understands it clearly.

Establish the right culture. The fish rots from the head and everyone always watches the leader.

Trueblaq offices are not far away from our offices. As I took the short road “home”, I couldn’t help but engage myself in thought of just how strong the correlation is between governance and sustainability. But there needs to be an emphasis there. Emphasis on proper governance, for as Peter said, governance goes beyond just having a board. Here is the Inquisitor’s take: Would Resolution Group be the brand it is today had Peter thought he knew best and scaled against the board’s recommendation? Maybe it would, but greater chances are that it would not.