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EOH case study… turnaround in play

Once a giant in the technology space and an icon in the South African corporate landscape, EOH became embroiled in a corruption scandal that led to its near demise.

The ICT services group’s failings are particularly poignant in a country where ethics and corruption have become endemic. When these corporate wrongdoings take place in an emerging economy such as South Africa’s, the destruction caused by corruption isn’t just a business issue, but one with strong social and ethical ramifications.

EOH was facing a triple threat of transparency, liquidity, corruption when Steven Van Coller stepped in as CEO in 2018. With these factors in play, turning EOH around was bound to be a complex, challenging undertaking.

Culture transformation

Since EOH failures weren’t purely technical but fuelled by a culture where unethical practices took root, the turnaround efforts had a huge emphasis on addressing the culture failures. Under Van Coller, there is a push to highlight the fact that not taking governance seriously carries a high business and social cost.

Van Coller’s view is that quality revenue, not revenue at any cost is what he is chasing. He has made great strides in rooting out corruption and fixing the enormous reputational damage the company had suffered. He has also taken massive hits and endure massive scrutiny as a leader, with his strategy of brutal transparency landing him a seat at the Zondo commission, where he shared the outcomes of the ENSAfrica investigation. He says, “The new EOH leadership team will continue to ensure any malfeasance uncovered in the past or future will be dealt with appropriately. As a result of all the work done and breaking with the past, I am comfortable that the EOH of today is a fundamentally transformed business, committed to the highest standard of good governance, business integrity and ethics.”

Courageous, decisive action

Previously MTN’s Vice President of Strategy and Mergers & Acquisitions, Van Coller’s experience, background in the African market and the technology space, paired with his outstanding financial acumen, put him good stead to lead the company.

In this case, and in most turnarounds, being an outsider has been a huge advantage because someone coming in from outside is more likely to identify areas where radical change is needed. Additionally, they may identify strategic opportunities that insiders can miss.

In September 2018, Van Coller walked into a group with 272 legal entities and around a fifth of revenue earned from public sector clients.

He took a courageous, decisive action in dealing with EOH’s financial and governance crises and was transparent about his route of action.

Van Coller replaced the executive team and board so he could forge ahead, unencumbered by engrained dynamics, attitudes and ideas, which would risk the transformation he was chasing.

The turnaround and growth

Now two years into its turnaround, the organisation’s fortunes are looking up. The group has made leaps towards building a sustainable organisation and the business has a tighter focus and less cumbersome internal structure. The turnaround has seen an improved cost and capital structure and positive cash generation.

Van Coller has not only implemented more stringent controls, but he also led reassessment of its strategy which led to certain businesses being classified as discontinued operations and assets held for sale. By December 1, 2020, 81 companies had been sold, raising R1.4bn. EOH continues to focus on cost control and efficiency measures across the Group having exited a further 7,034 square metres of property year-to-date resulting in savings of R3 million to date.

His eyes are firmly fixed on finding opportunities to optimise and fine-tune the business going forward. His next huge priority is executing on the company’s growth strategy and increasing the core business from a top-line and earnings perspective while providing globally competitive technology services and innovations to our customers. When looking at the company’s growth prospects, he has determined that people are looking for solutions, not products and that’s what the organization is focused on for future growth.

By: Maanda Tshifularo: CEO – SuperLead Advisory

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