WITH 29 brands currently under his belt, Graham 'Skroo' Turner knows a thing or two about running a company.
Speaking exclusively to Brisbane Business News, the founder and CEO of Flight Centre Travel Group (ASX: FLT) for the past 35 years shared his journey and shared a glimpse of his business acumen.
This comes off the back of another strong half year report for a company which has moved from strength to strength since launching on the ASX in 1995. FLT posted a $111 million net profit after tax in the half year to December 2013, up 19.7 per cent from the corresponding period. Its share price has also more than doubled in two years, standing today at $54 per share.
Turner has soared to the top from humble beginnings, raised in a small country town near Stanthorpe where his childhood was spent driving tractors, picking apples and pruning trees.
"Working on the farm was pretty boring for me and just about anything would have been better," says Turner. "I knew it wasn't what I was going to be doing when I got older, but what I was actually going to do wasn't so obvious back then."
Turner went on to study veterinary science in Brisbane after finishing school, before packing his bags and turning up in London in 1973. A £700 double-decker bus in Bristol caught his attention soon after, a step up from the tractors on his family's farm.
It became more than a standard double-decker bus, and grew into a symbol for Turner's first ride through his course of entrepreneurship. The Topdeck Travel story was born.
Returning to Australia in 1981, Turner's gears were still grinding with business ideas. 'Bucket shops' were becoming popular in London travel agencies specialising in providing cheap airfares, globally positioned on the fringes of the law.
Nevertheless, Turner detected opportunity. Just like most people wouldn't consider an abandoned double-decker a business venture, Turner looked past the haze of the law to a sharp new business idea. He took a risk and set up Flight Centre agencies in Australia.
"I don't think anyone went to jail for discounting airfares in Australia at the time, but travel agents were definitely fined. Luckily we only had a few shops then so flew under the radar," says Turner.
Airfares haven't risen for 25 years, owing to the advent of the internet and the deregulation of travel. Turner makes the comparison that business class now is the same price economy was in 1995.
While airfares have never been cheaper, costs have not been static and increasing global competitiveness remains a lingering challenge particularly for Brisbane.
"Unfortunately our costs have trebled or quadrupled during that time the only way to stay in business is to increase productivity and efficiency.
"It's a big question whether Australian tourism is doing enough considering how expensive we are for international tourists. Also, some markets traditionally don't travel much Americans will go to Europe and only the high-end will come out here.
"Most of these tourists will visit Australian landmarks, and Brisbane is lacking in that department. With that aside, I think a huge growth sector will be experiential retreats and lodges."
Turner and his wife own such a business, Spicers Retreat, which recently celebrated its 10th birthday. Other markets he highlights as promising include recreational, health and sporting. He credits Brisbane's Lorna Jane as an example of a company riding the lucrative health craze. Even closer to home, based in the large terminal that is FLT, is his son Matt's 99 Bikes. It's the largest wholly owned Australian bike chain and is forecasted to earn about $40-50 million in sales this year.
FLYING THE 'BRICKS AND CLICKS' FLAG
A big believer in the 'bricks and clicks' model, Turner isn't at all concerned about the future of Flight Centre. It's already a bricks and clicks agent, but Turner says the model will continue to become more seamless when all customers can start bookings in-store and finish them online, catering to the time-poor.
"As much as things change socially and technologically, many things stay the same. Travel agents have been here forever and those that adapt will continue to survive, and thrive.
"The problem is that most agents are either completely online-centric or bricks and mortar there is not much in-between. While the online players grow rapidly because of lower labour costs, research has shown that customers will spend more at a retailer if they can buy both online and in-store."
This trend is also fuelling the transition to hyperstores, where Flight Centre rents large properties in prime locations rather than small properties throughout the region.
"The rent may cost more, but it works out more cost-efficient when you consider the visibility gained from the location and the number of staff under one roof."
Turner says the store acts like a prime-time advertisement, and the staff form a village where six or seven teams are paying rent. There are already two Flight Centre hyperstores in Australia, in Perth's Hay Street Mall and Brisbane's Queen Street Mall, as well as five in the United Kingdom and two in the United States.
Turner looks past transaction and turns to transformation when managing the FLT organisational culture, which is shaped through a metaphoric hunter-gatherer structure. A management philosophy coined by Nigel Nicholson, a professor at the London School of Economics, it revolves around the simple fact that 99.9 per cent of human history has followed this structure and prospered by doing so.
"Our ancestors of the past five to 10 million years were hunters and gatherers, and the structure evidently worked, otherwise we wouldn't be here today," says Turner. "There were families of five to eight people living in villages of perhaps five to 10 families which then lived in a bigger tribe.
"If you examine the way most people live today, they imitate this with a small inner group of 30-40 people and a network of about 150 acquaintances.
"Part of the psychology Nicholson brought to my attention is that this is probably the way people like to work as well and how they work best."
FLT had unconsciously emulated hunter-gatherer tribes for some time, but learning of the science behind it in 1995 flicked the switch for good. It caused Turner to go full steam ahead with implementing the abstract idea.
He says the theory is about going with the grain and structuring business around it, rather than forcing people to fit a different mould.
The company's retail teams rarely exceed seven-people 'families' a tried and tested winning formula with sharp increases in productivity and profit. 'Villages' are restricted to three to five geographical teams supporting each other, and there are a maximum of 25 teams in a 'tribe'.
FLT continues to grow, but the structure ensures rhythm and regularity for employees. Too much bureaucracy and hierarchy signal turbulence at FLT, which fortunately the hunter-gatherer philosophy safeguards against.
"Bureaucracy and hierarchy come into play once you go beyond about 150 people in a tribe. You need to accept these in an organisation with 16,000 people but understand that's not where business hits the road.
"The real place where the money is made is in those 150 people teams and through the village structure where teams help each other."
And it seems be working considering FLT is being carried by 16,000 employees and profits keep rising. The structure has undoubtedly carried the company from strength to strength in a landscape where travel agents are increasingly struggling to compete with the internet.
TAKING THE HIGH ROAD
Despite his success, Turner doesn't seem far removed from the young man who stumbled upon the double-decker bus 41 years ago with little in his pocket but an ambitious dream. Admittedly, he has more knowledge under his belt and a bigger team, but still seems grounded while soaring with FLT.
He plays down his own personal achievements, saying Topdeck runs a lot better than it did when he was in charge, and casually lists some of his 29 brands like they are items on a shopping list. His communication style is rooted in humility, devoid of any boastfulness one could say the ultimate in management finesse.
Despite seeming to have a one-way ticket to success, Turner admits turbulence strikes now and then. He highlights starches with the Australian Competition and Consumer Commission (ACCC) and the failure of his Cross Australia Coastlines venture.
"Plenty of things go wrong, but you have to take some risks. It wouldn't be business without it there is risk involved in anything and everything worthwhile.
"There is always something to learn, and these lessons go hand-in-hand with taking risks. We aim to make no mistake more than four or five times."
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