From Aristotle to avocados – ZZ2’s business model

From humble beginnings ZZ2 has grown into a multi-million rand business. Nan Smith visited the company’s HQ to find out what lies
at the heart of ZZ2’s success.

From Aristotle to avocados – ZZ2’s business model

It’s a long drive to ZZ2’s Mooketsi farm, Boekenhoutbult, but as the road unwinds through the spectacular countryside north east of Polokwane irritation gives way to scenic seduction. Boekenhoutbult lies in the Mooketsi valley flanked by hills, low mountains and granite domes and outcrops. A magnificent, and some may say, appropriate setting for one of South Africa’s most successful farming operations.

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The farm is immaculate. There is no muck lying about, no broken fences, no idle machinery. People are productively engaged and there is an atmosphere of discipline and diligence, but no sense of resentment. ZZ2 has a network of farms in Limpopo, Eastern Cape, Western Cape and Namibia, and is the largest grower of tomatoes in the southern hemisphere.

The company is home to a Pinzgauer cattle stud with sought-after genetics, it provides employment to 8 000 people, has a well-equipped laboratory and boasts state-of-the-art packhouse automation and compost-making sites, where biomass is recycled and broken down using micro-organism technology. ZZ2 sponsors and supports students from all over Africa, it involves peripheral communities in a meaningful way and conserves buffer zones around its farms.

In short, it would be fair to say that the operation has a business model many farmers could learn from. CEO Tommie Van Zyl says that one of its aims is to farm sustainably. In line with this, farmers practise Natuurboerdery, a method of farming in harmony with natural biological systems while retaining the advantages of science and technology.

Project manager Piet Prinsloo explains that nature’s open system provides a model for the company’s business systems as well.

Humble beginnings
A quick look at the ZZ2 website reveals what many rural South Africans already know: the business was established by Bertie van Zyl, who left school in 1949 aged 16. The Van Zyls made ends meet by growing potatoes, but Bertie, enterprising, astute and driven, started planting tomatoes and harvested his first successful crop in 1953. He has been described as a visionary entrepreneur able to communicate his vision to others.

At the time of his death in 2005, when he was 72, ZZ2 was a multi-million-rand business. Bertie left a value-driven legacy for his family and his company to build on. ZZ2 is now fully corporatised but retains the family values. Bertie’s sons are part of the ZZ2 team and the company has expanded its interests in, and concern for, agriculture in South Africa.

Here’s the fact: ZZ2 is a highly successful agricultural business, well- organised and profitable. And here’s the question: what makes it so?

“When you join this company you become part of the ZZ2 family,” says Piet. Tommie adds that they aim to be the industry benchmark. Because of dedicated support teams, ZZ2 farmers can focus on the crop they are planting or, presumably, the cattle they are raising, said ZZ2’s marketing manager, Clive Garrett in the African Business Review. While the company promotes diversity it keeps its attention on the core business of farming.

Sound values and ethics
ZZ2’s value systems are driven by the four virtues first described by Plato, expanded by Aristotle and taken up by the medieval church: prudence, temperance, courage and justice. “Prudence embraces thoughtfulness and wisdom, justice includes honesty, impartiality, reasonableness and fairness,” he explains. “Prudence is pretty much the foundation of any business.

“Courage is the ability to persevere and focus, while temperance includes humility, self-control, the ability to compensate for others and a generous spirit that accepts diversity.”

Family businesses
In the Harvard Business Review of November 2012, Kachaner, Stalk and Bloch discuss the resilience and survivability of family businesses.Their research showed that family businesses are generally more frugal, no matter whether times are good or bad, and have longer-term vision than that of a non family-run business.

During economic upswings family-run businesses do not do quite as well as traditional public companies, possibly because of a more conservative approach, but during slumps and over a longer cycle they perform better. The family-owned business is ambitious about international expansion and retains talent better, with a lower staff turnover.

Family-run businesses generally have a policy of keeping capital expenditure within their means, tending not to spend money on swanky offices and other overt signs of financial success, noted Kachaner et al. In this light, we find what may be another clue to ZZ2’s success. Although it has a dedicated pilot and aircraft at its disposal, the aircraft are flown only to farms that are close enough to warrant the cost. For long hops, ZZ2 personnel use commercial airlines. “It’s too expensive to fly our own planes that far,” says Piet.

“ZZ2 is based on a flat, fractal network in which the autocratic, top-down approach has no place.” In this type of network, says Piet, the director and the grower interact as equals. Farmers are accountable for the management of their farms, but are given the authority that accompanies responsibility.

“Of course, they can’t work against policy, which must be respected and understood,” adds Piet. A culture of respect is encouraged across all sectors at ZZ2. According to ZZ2 consultant Prof Erik Holm, “the open-system organisation of the company is fundamental to its success through various growth phases”. Mimicking a living ecosystem, each ‘organ’ (production, marketing, maintenance) can communicate horizontally while subscribing to the same goals and ethics.

Organisation and planning
Common sense dictates that no system can function without a plan. Once a year, ZZ2 holds an annual strategy meeting. Key players, experts and analysts, the respected and the influential, attend to help the ZZ2 executive team map out a plan for the year ahead.

Aristotle distinguised four system drivers: the goal, the structure and plan, the work and processes and the physicalities or wherewithal. “ZZ2 has found these to be invaluable,” says Erik. Interactions, decision making and learning are the vital processes, the heartbeat of the business, while procedures bring order and the unique qualities of individuals bring cohesion to the system.

Piet compares it to the human face, where “the eye is part of the face, the face part of the head and the parts functionally organised so that images are processed and information relayed in a meaningful way”. “Any system with a linear progression is way off track,” he adds. “Change is part of our thinking and it is not linear. It jumps from five to 10 to a billion; it moves from zero to hero in one step – it’s just a discontinuous process.

“Nature does not employ straight line solutions.”

Integration
The business understands the need for goals, but the system at ZZ2 has the required flexibility to change direction.
“If farmers do what their fathers did, they would go out of business. They must be willing to accept change as a reality,” says Piet. The speed at which change can be implemented, and the technology to make the change, is what gives a business its competitive edge, he adds.

Because ZZ2 functions in an open system, individual weaknesses will be instantly pinpointed and dealt with.
“Sometimes I walk away from a meeting bleeding, but I have to listen and make changes, because I know it’s not tit for tat, it’s quid pro quo.

“In my accountant’s domain, for example, she has the authority to blast me if I’ve been out of line.” The strategy of putting the team ahead of the players makes it possible for positive use of individual strengths. “In the formation flight of geese the lead flier falls back when it gets tired and another bird takes that position.

“This is a feedback mechanism in operation in nature that allows for the best use of energy.”

Part of the business model is recognition of the need to integrate, which is the natural response of an open system.

“If we don’t integrate systematically, socially and environmentally, we’re doomed,” says Piet.
At a practical level, ZZ2 invests in education training and upliftment, and recognises innovation and creativity.

Brand ethos
“We understand that there is a worldwide premium on quality and recognise tangible and intangible aspects of a brand,” says Piet. Growing produce depends on many variables, he points out, but the brand is constant and must communicate its ethos.

“It’s important to us that people in Johannesburg wave when they see our yellow bakkies because it shows we’ve integrated,” he says. When a company becomes a legend it must remain humble and keep reinventing its relevance.

“The reality of power can be managed by maintaining a constancy of purpose,” says Piet.

For more information, phone 015 395 2040 or visit www.zz2.biz.

This article was originally published in the 2 May 2014 issue of Farmer’s Weekly.