Consistency key to Aggreko success says Soames
20 November 2012
The ability to “do everything the same everywhere” is central to Aggreko’s success in building a profitable global business, the company's chief executive Rupert Soames said at a London conference this week.
Speaking at the CBI’s annual conference – and following a speech by UK prime minister David Cameron – Mr Soames said ‘bigger is much better’ because it drives down unit costs; “But it is a common fallacy that operating globally brings efficiency; the benefits of global scale only come from doing everything the same everywhere.
“Most companies that claim to be global are in fact loose federations of national businesses doing roughly the same sort of thing. ‘Roughly the same’ does not buy lower costs. ‘Exactly the same’ does."
He said Aggreko kept things simple by keeping them the same; “In every market, we offer the same products, use the same IT platform, the same processes and procedures, the same training, the same health and safety regime, the same organisational structures, the same nuts, bolts, batteries and spanners."
This consistent approach also makes it easier to start operations in new territories. “There is an old army adage that ‘Time spent in reconnaissance is seldom wasted’. In our business it is time wasted, as we have a model that we know works...Within weeks of deciding to enter a country, we can be renting generators. This allows us to grow our reach much faster than most businesses could.”
Mr Soames said 65% of Aggreko’s £1.4 billion annual revenues come from emerging markets and that these markets are “replete with opportunity. For every door that is closed, there are three that are ajar.”
He contrasted these areas with the world’s rich countries, where business “is like the battle of the Somme: a grinding struggle from fixed positions to gain ground or market share a yard at a time.”
He said businesses wanting to move into global markets had to have products or services that offer a competitive advantage; “‘Me too’ does not work; ‘faster, better, cheaper’ does.”