When the CEO goes – how ADvTECH will deal with its leadership change
The departure of a sitting CEO is always a delicate moment. Recently, ADvTECH announced that CEO Frank Thompson will be stepping down at the end of 2014. After 11 years at the helm, Thompson is past ready to retire, and will be off the job come the end of next year. In this interview, he talks about the future of the company, how it will change once he's gone, and how best to handle leadership transitions in organisations. – FD
ALEC HOGG: ADvTECH has announced that Chief Executive Frank Thompson will be stepping down at the end of next year. He joins us now to discuss his decision and his future plans. There's a bit of a wave of this happening, Frank. We've had your counterpart at Spar deciding to – it was for personal reasons, family reasons. What's making you decide to go off into the sunset?
FRANK THOMPSON: Well, there's never really – in the life of a CEO – a good time to step down, if you think about it. The organic and continuing nature of the job means that there are always things starting, things in the middle, and things ending. Having looked at the situation, I've been in this job for 11 years and will have completed just over 12 I think – probably – by the time I step down. Looking forward, we spent five, six years building up an exciting investment strategy, that's going to take the company forward, for at least the next decade, or longer, which will put me past my 70th birthday. In light of that, my feeling was that it was time now for the company to look for a new person to take that strategy forward. I've always believed that the best time to do this sort of thing is when there's still a future ahead of you and not only the downhill. I believe in term limits and I believe you act to act out those you believe in.
ALEC HOGG: 11 years: do you think you might have stayed too long?
FRANK THOMPSON: No, in fact the reaction of the board was the opposite.
ALEC HOGG: How old are you now?
FRANK THOMPSON: I'm 58 and a bit.
ALEC HOGG: And what is your official retirement age?
FRANK THOMPSON: The official pensionable age would be 65, but we don't have an official retirement age as such.
ALEC HOGG: So you could have stuck around for another seven years.
FRANK THOMPSON: I could have – in theory – yes.
ALEC HOGG: But you feel you've had your innings…and off you go – elsewhere.
FRANK THOMPSON: At this point, I don't have plans to go elsewhere. I certainly hope to go fishing. The key point is that there is is still, at least, a year away. I plan to spend the time working hard, continuing to realise the strategy, and to the extent that the board wants to be part of making sure there's a solid and effective transition.
ALEC HOGG: How does that all work out? If 'the king is dead, long live the king' kind of thing: if you appoint a deputy, would people not automatically start deferring to him, knowing that you're not going to be there for a while?
FRANK THOMPSON: Well of course, managing the process of transition makes a difference. It means that some of the relationships will change and develop. We're in the fortunate position of having a very stable, strong, and long-serving team. The average tenure of the executive team, excluding myself, is over nine years already. We therefore have a solid strong team that I think will continue to work well together with this new situation.
ALEC HOGG: Your board…there've been some interesting developments there recently.
FRANK THOMPSON: Well, I think there are some very positive developments. I'm not sure which ones you refer to as interesting. Leslie Maasdorp – the chairman – has been in the position now for a number of years and we have some very good directors.
ALEC HOGG: So there was no pressure from them to say 'we need new blood. You've been around for 11 years'.
FRANK THOMPSON: I think it's probably fair to say that they were a little surprised and a little disappointed. Obviously, I discussed it with the chairman in particular, and with the other directors for some time before making the announcement at the board meeting on Friday.
ALEC HOGG: Is it likely that there's going to be a difference in the strategy, going forward? We've often had this discussion that ADvTECH has these wonderful education assets on the one side, but recruitment, which, for a while hasn't been a really great contributor.
FRANK THOMPSON: Alec, I don't think so. We have a very exciting strategy of consistent investment plan for the next decade. I think one must be careful though, about believing that there won't be any changes. I'd be disappointed, to be honest, if there weren't any in the next decade. This is a dynamic company, a dynamic environment, and some changes are going to be inevitable. One imagines that they are likely to be incremental and developmental. For example, a couple of interesting things we've been doing: during the last few years, a lot of our investment in the tertiary space has been led by and led with technology and developments in technology. That looks set to increase and continue. Certainly, the recently appointed COO of the tertiary division is very much focused on taking us into that space and into new markets in Africa.
ALEC HOGG: Opportunities are huge in a private education field. We've known that for many years, but you also have CURRO, your noisy neighbour driven by Jannie Mouton – huge share price premium relative to yours. Has that given you much irritation?
FRANK THOMPSON: No, we have not allowed ourselves to be distracted by that. As we know Jannie and Piet Mouton do, we watch what they're up to and take an interest in what they have to say. So far, there has been little evidence of much overlap and certainly, from an investment proposition point of view we stick to our message and our plan, which is one of growth, value, and consistent performance over time.
ALEC HOGG: Frank, what happened to EDUCOR? Remember, they were part of the Naspers Group and then they were spun out of that. Are they a serious competitor here?
FRANK THOMPSON: EDUCOR has of course been broken up. I don't know whether you remember this, but in fact, Naspers owned as part of the EDUCOR stable, 50 percent of CURRO, which subsequently went into PSG. The other big parts of EDUCOR were INTEC and Damelin, which were transferred from EDUCOR into private hands.
ALEC HOGG: So the one competitor has become split up and perhaps a little more aggressive in the PSG hands. Is ADvTECH (after Frank Thompson) a bit more aggressive or 'steady as she goes'?
FRANK THOMPSON: Well, I think 'aggressive' is a double-edged term. I prefer 'assertive and a consistent plan for growth, led by investment, exploration, and operation in new areas of education'. Quite an exciting example that we announced a few months ago, was that the initial investment in the Star Schools Group, which is a distance education, very exciting and in fact, with a rich heritage in the South African schooling scene. Star Schools today has over 6000 Matriculants, which is four times the number of ADvTECH's traditional model and a very exciting harbinger, we think, a very exciting and interesting way forward, is real low fee private education, that is completely different to 'trying to squeeze every last drop out' traditional model.
ALEC HOGG: Thank you Frank; we're going to be talking, no doubt, at least once more because you have another set of results coming before you leave. That was Frank Thompson – outgoing Chief Executive of ADvTECH.