Out with the old
How Mteto Nyati is recharging Altron
Independent CEO moves to recharge former family-run Altron
When 83-year-old Bill Venter stepped down as chairman of the company he founded more than 50 years ago and his son Robbie departed as CEO of Altron this year, it marked the final chapter in the family's operational control of what was once one of South Africa's biggest technology players.
Started by Bill when he was 33, the story of Altron moves from it being a manufacturer of battery chargers, inverters and electronic signal equipment to a company expanding globally, buying companies in the US and other jurisdictions.
The past decade, however, has not been kind to the family-controlled company, with the firm unable to keep up with fundamental changes in technology.
Analysts have lain some of the blame for its 77% slide in its valuation since its May 2007 peak squarely on the shoulders of the family, in particular the heirs to the Venter dynasty, sons Robbie and Craig, who have run the two arms of the business - Altron and its subsidiary, Altech.
Robbie, the more conservative of the brothers, had to clean up the mess left by his younger brother Craig, and the legacy of industrial assets in Powertech.
Craig, the more flamboyant of the two, was said to be difficult and made some decisions that cost Altron and its shareholders dearly.
There was the Altech Node disaster as well as rash acquisitions in East Africa.
Craig eventually resigned in what was probably the last major intervention by Bill.
"We have said for some time that our business was moving always from a historically very family-orientated business to a more independently managed business based on where the life cycle of the family was, and that was part of a natural progression," Robbie said this week.
Altron's struggle with transition reflects a common theme in family-owned companies, which battle to survive beyond a single generation, according to a 2016 report by Deloitte on next-generation family businesses.
While the children of Pick n Pay founder Raymond Ackerman did not take over the operational reins, it too has faced criticism from the market about the level of family control, which some say hampered its ability to ward off competition.
Family-run companies are perhaps at their most vulnerable in times of leadership transition because of the conflict between the desire to maintain and respect tradition and the need to adapt.
This is especially true when an outsider is brought in to change a company's fortunes.
It's what former MTN South Africa CEO Mteto Nyati faced when he took over from Robbie at Altron four months ago. "The space I have been getting from the family in fact it is like they are not around ... respecting the agreement that was made upfront," he said.
"Our company was built largely in silos and people are still behaving in a silo mentality, when in reality our customers expect us to operate as one Altron."
Nyati, who left the struggling South African arm of the large multinational that MTN has become over nearly two decades, said it was important to have clarity on the family's role before he signed the contract.
The group is transforming itself from its telecom roots into an information and communications technology company, something Robbie had started.
The week that Robbie resigned, shareholders voted in favour of a major shake-up, which ended the decades of absolute control by the family and made way for a new strategic shareholder, Value Capital Partners.
A former director, who did not want to be named, said the reason it took so long for the group to change was due to the nature of the family-controlled business and the protection of the family's stake being taken into consideration.
He said the group had great management but it might have been too big and too cumbersome as a "smoke and chimney" business, and transforming into a sleek tech business created too many contradictions.
Changing the culture of the 52-year-old group is something Nyati told Business Times he was still working on.
He has established new values for the culture of the group, which tied into who it hired and promoted internally.
"We are not going to discriminate, but the thing that is going to define who is in and out is people who live those values."
In his short time at the company, Nyati has reduced staff numbers at head office by 40%, making certain positions redundant.
He pointed to the values of the collaboration his team had established, which was meant to deal with a fundamental structural problem within the group.
In the past, the group's individual businesses had acted as separate entities, without interacting, whereas in today's environment interaction was crucial, he said.
An industry analyst, who did not want to be named in line with company policy, said Robbie and Craig ran the businesses quite independently, which was not what one needed when managing an IT business.
"To get the maximum benefit out of an IT business they needed to be run together, which is one of the strategic initiatives taken by the new CEO."
He said that if there was just a new CEO, without the change to the shareholding structure through the introduction of Value Capital Partners, Nyati would have found that the family would still have had too much influence.
Apart from the cultural changes that Altron's new CEO has had to bring in, he also has to manage the sale of decoder manufacturer Altech UEC and electrical business Powertech Transformers by February.
The analyst said that Nyati had the experience to take Altron where it needed to go, considering his background at MTN and before that at IBM.
Since his appointment was announced in March, Altron's share price has gained just under 20%, outperforming the JSE All Share in that time, which has climbed close to 10%.