Experience goes a long way in helping to shape business trajectory and outcomes. But it also can be vital during challenging times. As we come off the worst first half for the market in 50 years, the lessons needed to help guide investors through a Bear market become even more indispensable.
Niall Carroll is an investor with a substantial resume in both the investment banking and corporate advisory realms. Since 2012, the South African entrepreneur has been quietly building a successful portfolio of businesses that leverage technology to drive transformational change in traditional industries like construction and oil and gas.
CG Tech, the brainchild of Niall Carroll and Andrew Jackson, now operates globally in 13 locations and employs more than 3,000 people through 8 companies. During the pandemic, CG Tech was able to power through under the direction of its unique leadership team and owner-manager structure.
As the world deals with rising inflation, a cost-of-living crisis, a war in Ukraine and a $2 Trillion USD plunge in the crypto market, businesses are bracing themselves for tough times ahead.
For Niall Carroll these events follow a similar pattern to times throughout history, all bearing the hallmarks of another crash on the horizon. In a meeting, Carroll walked us through three points he believes can be used to help investors navigate this challenging time.
If we can take any lesson from history, it’s the cyclical nature of challenge. Challenge is always right around the corner and the importance of using history as a guide to contingency planning is vital to survival. The businesses that wait until challenge arrives on their doorstep will always find themselves on the back foot.
Just as what happened in the past, will likely happen again, Niall Carroll stresses that what has worked in the past, will also work in the future, but you need to act quickly.
"The issue for many leaders is that the right decisions are often the tough decisions. So, they waver on making them and sometimes miss the optimum window," explains Carroll.
Niall Carroll points to the current challenges being faced by central banks trying to curb inflation by driving up interest rates. In 2021 many of the central bankers tried to quell fears regarding spikes as short-term, but now are racing to control inflation rates that are reaching 50-year highs.
Criticisms that the banks were too slow to react are now getting louder, with Otmar Issing, president of the Center for Financial Studies writing in Politico, "Until the end of last year, the European Central Bank (ECB) even went so far as to communicate that, sooner rather than later, it would once again face a situation of too low inflation, projecting rates would fall below its target of 2 per cent — probably one of the biggest forecast errors made since the 1970s."
It’s a sentiment shared by Niall Carroll, who agrees that acting swiftly in the face of challenge is the only way to survive the next crash.
‘The one who plants trees, knowing that he or she will never sit in their shade, has at least started to understand the meaning of life.’ – Rabindranath Tagore
Sustainable business practices are something every leader needs to be thinking about in 2022. In fact, they should have been thinking about them long before 2022. Beyond social and environmental impact, companies that are able to successfully integrate sustainable business practices are poised to see an improvement in their bottom line thanks to a decrease in waste and energy usage.
ESG funds are also on the rise globally, making sustainable businesses more attractive to potential investors.
Morningstar Direct states that "the number of global ESG funds grew to 5,932 as of December 2021, up from 4,153 at the end of 2020."
But sustainability takes time. And according to Niall Carroll, the secret to overcoming the next crash is not to think about sustainable practices as something you implement at the time.
"The thing about sustainable business practices is that they take time to bear fruit. Therefore, you should always be thinking ahead and planning for how these practices will affect your people, your company and the community in which you operate in the future," says Carroll.
"Playing the long game," as Carroll refers to it, means investing with a long-term purpose. It’s the method behind the CG Tech model and has been used to successfully expand the portfolio into new areas and industries, whilst also helping their businesses to navigate times of challenge.
While Niall Carroll advocates for shareholder primacy, he is quick to point out that this should never come at the expense of longer-term sustainability.
"For me, it’s not about finding the next unicorn company. We operate with an ecosystem approach to investing that places value on the group as a whole," explains Carroll.
Within the CG Tech ecosystem, owner-operators of the sub-companies are shareholders in the group. This helps to create "skin in other people’s game," as Niall calls it.
"The approach we use at CG Tech naturally promotes an environment of openness and collaboration," says Carroll. "Our board of directors has an interest in all the companies, not just their own. When one of us wins, we all win."
In the new knowledge economy, it is increasingly apparent that people are not as replaceable as we once thought. For Niall Carroll, prioritising the welfare of employees and the larger communities in which CG Tech operates has become paramount to the group’s success.
During the pandemic Carroll and his leadership team made the decision that they would lead by example, taking pay cuts at the top, to help ensure the impact on employees was as little as possible. Reductions in pay were applied throughout the group but linked to pay grade. Those on a lower wage were exempt, with people on higher wages, up to the CEOs, taking the highest percentage reductions.
"Rather than carrots and sticks, we believe in a lot of carrots," laughs Carroll. "That means infusing an ethos within the organisation that ensures our people know we recognise their value. Your people are who will get you through the next crash. Without them, you have nothing."