The qualities that define exceptional businesses transcend time, industry, and geography. New Zealand's Mainfreight stands as a contemporary testament to their universality. Over the past two decades, this exceptional company has consistently grown investors' capital by nearly 25% per annum, showcasing the unwavering power of these foundational principles.
Mainfreight's narrative traces back over four decades to Bruce Plested, a bold New Zealand accountant who was let go from his role at New Zealand Freighters due to a momentary lapse of temper amid frustrations with mismanagement. His departure marked the genesis of an audacious idea—to challenge the inefficient and price-fixing monopoly freight conglomerate operating within the confines of anti-competitive regulations. Collaborating with a former operations manager from his previous employer, his business partner, and the owner of a forklift rental business, Plested emerged as the majority shareholder with 52% ownership, while the others held 16% each. When the opportunity arose to bring in Neil Graham, a skilled operator and ex-colleague, Plested generously relinquished nine percent of his own stake and orchestrated the transfer of the remaining 16% from the forklift owner. Graham secured a quarter ownership for a modest sum of six-thousand five hundred dollars. This marked the inception of an authentic partnership.
Right from the outset, Plested was committed to distributing profits among his ‘team.’ His unwavering work ethic, customer-centric approach, transparent sharing of financials, and genuine concern for employees set the company's tone from the upper echelons. The enduring culture crafted by Plested and Graham reverberates throughout the organization to this day. A steadfast dedication to a 100-year vision instilled a long-term perspective in decision-making.
Even today, Plested remains the chairman of the company he established in 1978, while Don Braid, a seasoned 29-year veteran of the firm, has held the mantle of CEO for more than two decades. Likewise, the tenures of senior management and the board can be measured in decades not years.
What began as a modest venture has blossomed into a global, multi-modal logistics powerhouse, expanding both organically and through strategic acquisitions. Amid this evolution, the core values, ingrained culture, and unwavering long-term outlook persist. It's worth noting the remarkable feat of listing all 11,311 employees in their annual reports—a testament to their commitment to each individual's contribution.
The captivating story of Mainfreight is eloquently recounted in Keith Davies' compelling book, "Ready, Fire, Aim." Within its pages, one discovers that the qualitative attributes that permeate Mainfreight align seamlessly with those of other legendary enterprises we've explored. Once again, the competitive edge emerges from the establishment of a robust foundational framework that empowers individuals to unleash their fullest potential. Below, I've curated some of my favourite quotes from this journey.
‘Mainfreight have taken a culture that began as a way of life and developed it into a strategic tool that gives them enormous competitive advantage. To understand Mainfreight it is necessary to delve deep into its culture.’ Keith Davies
Mainfreight v S&P500 vs Berkshire (1996-2023 normalised) [Source: Bloomberg]
Mainfreight Culture
‘Culture is a competitive advantage.’
‘A capitalist with a difference - Plested consciously and quite deliberately set out to make the company the (employee’s) family, to replace the union in their affections.’
‘Plested's carefully thought out objective had been to ensure the 'team', as he insisted his staff be referred to, would have every incentive to support their company rather than bow to destructive union pressure.’
‘What made Plested different was a burning desire to persuade his 'team' to come along for the ride and share in the profits.’
‘Mainfreight’s philosophy broke the conventional rules of the day. Bosses were bosses and workers were workers and nary the twain should meet.’
‘This was a company where the very words staff and management were banned. It was a team.’
‘This was a true family culture.’
‘There was a sense of caring, epitomised by (free) hot meals each day in the canteen. The uniforms were better, the boots were better. Their pride in themselves was better. Mainfreight cared for its team. Not its staff, its team.’
‘They talk a great deal about the Mainfreight culture. In reality, it's a passion. In short, Plested and Graham built a company in their own image. A company where mate looks after mate.’
‘Mainfreight had prided itself on having a team atmosphere where anyone could talk to anyone. The Mainfreight team worked together, played together, ate together and shared the benefits of each other's labours. Branch managers sat at the lunch table with drivers and loaders and typists. And the team knew their joint managing directors could drive trucks and sweep the floor. Because they did. Mainfreight was capitalism in its purest form. A very New Zealand experiment that produced extraordinary results. Join Mainfreight and you joined a family.’
‘Plested and Graham preached the three pillars of Mainfreight. A culture built on under-promise and over service as Mainfreight kept on reinventing itself by taking chances and learning from mistakes. A culture based on constantly tearing down any sign of bureaucracy, hierarchy and mediocrity. And the all-empowering philosophy that Mainfreight was there for a hundred years, driven by margin, not revenue.’
‘Our Unique Culture’ [Source: Mainfreight website]
‘Why don't we have job descriptions? Because it makes sense; we are a team. Give people a job description and that's all they do. In a team everyone does whatever it takes to get the job done. That is the culture.’
‘Never forget that the Mainfreight culture is your competitive advantage.’
People
‘In testing times Mainfreight’s ultimate strength lay in its people.’
‘People ask what keeps us awake at night. The answer is simple; it is finding people capable of running the business as we expand and into the future.’
‘Plested and Don Braid were determined that the unique Mainfreight culture would not be jeopardised or diluted by growth. They knew it was people who made the difference. Their competitors now had clean trucks and polite drivers and smart IT systems and even warehouses. What they did not have was the Mainfreight attitude.’
Share the Wealth
‘I have never seen capitalism as greedy. The more wealthy you can help make all the people in your establishment, the more money everyone will make with more satisfaction.’ Bruce Plested
‘Plested set out to make the company a family, a team, in which everyone would have a share in the riches.’
‘At the end of the year there would be a bonus, with ten percent of profits split equally amongst the team. The team, always the team. The remainder of the profits went back into the company for better buildings and carpet and later the lunch room where a canteen lady served storemen and drivers hot meals like their mums made. Meals they ate seated beside the managing director.’
‘… there was an extra week's pay at Christmas. And hams. And boxes of free apples. Unheard of.’
‘In a typical year each branch divides 10 percent of profit between all team members on an equal basis, and there is also discretion to pay more to those judged to have performed above and beyond.’
Profitable
‘A single startling fact perhaps demonstrates more than anything the impact they made on the freight forwarding scene. Mainfreight was making a profit within five weeks and didn't borrow money for three years.’
Tailwind
‘Mainfreight’s belief in managed warehousing was borne out of the facts. In the US 70% of all manufactured products were warehoused by third party contractors. In Australia, 30 percent were warehoused by third-part contractors. By contrast, in New Zealand only 11 percent of goods were warehoused under contract.’
Value, Respect and Empower Employees
‘The philosophy was simple enough. Turn your people into capitalists, have them think like capitalists. You don't go on strike for silly reasons and damage your income earning machinery when you have a car and a house to protect. If you're capitalists you virtually can't be unionists.’
“Plested was convinced that men who were treated with respect would return it in bucket-loads.’
‘Mainfreight wants people who are anti-bureaucratic and, critically, willing and able to make decisions. And that's not just the executive team and branch managers, it applies to everyone in the business. The message to everyone is simple. We need decisions made as close to the customers as possible. You decide: "Yes" or "No"?’
‘We want everyone thinking about what they are doing and what decisions have to be made. We want people making decisions as close to the customer as possible.'
Walk the Floors
‘Don Braid is a believer in management by walking about. The more you walk around the more you learn about your business. When you are on the floor with people they can't help but tell you what is going on. You don't get that in the corporate office. I don't understand what stops management doing this; it's the corporate bullshit thing. ‘I've got an office. I have a desk. I am too busy.’
‘The greater the promotion, the more you have to immerse yourself in the business; the more it has to become part of your daily life. Frankly, people who don't understand the logic of getting around more when they are at the top just shouldn't be there. They shouldn't want to employ or surround themselves with sycophants. That's when you have real trouble.'
‘Braid's management approach is reflected in his attitude toward ties, which follows the Don Rowlands path: I used to be a fan of the tie, an office, a car park, but that just divides us from the others. If you isolate yourself, you may as well sit in that office with your tie and hang yourself with it.'
Decentralised Decision Making
‘Mainfreight's decentralised management style allows its branch managers to take whatever decisions are necessary to maximise margin, and consequently increase profits.’
‘Mainfreight is largely decentralised in the belief that head office cannot be expected to understand the intricacies of individual branches.’
‘At Mainfreight we take every opportunity to decentralise the information, to decentralise the power and get people working together.'
‘If you make decisions then people will respect you for standing up and making them. We had to do that. To ensure everyone understood, Mainfreight added a new line to the philosophy column of their three pillars: Ready, Fire, Aim. What is means is we are taking steps forward; we are not sitting back strategically planning and waiting for an opportunity. It’s about energy and momentum. It doesn’t mean do it and worry about it later. It means make a decision. And if it’s the wrong decision we shape it up and get it right… If you have people in the business making decisions for you, taking responsibility, you have a healthy business.’
‘The more people making decisions and leaps of faith the better off we will be as a business.’
Quality Service, Customer-Focus & Value Add
‘When Mainfreight first started it was twenty to thirty percent cheaper than the competition but when the big four started to lower their prices, Mainfreight didn't. Service ruled. Service to the customer and extraordinary internal communication.’
‘Mainfreight were offering a service never seen before. Customers were suddenly the priority.’
‘The Plested/Graham passion: We don't work for Mainfreight. We work for the customer.'
There is a Mainfreight sign that neatly sums it all up. The success of this company is based on unshakeable beliefs:
The only way to keep ahead of our competitors is by the superior performance of our people.
The only measurement of that superior performance is how the customers perceive it.
We aim to delight our customers.’
‘It’s the little things that capture people's imagination. The service you don't expect is the service you remember. So began the tradition of sending birthday cards to customers followed up with a call on the day. How to be noticed and appreciated for little cost. Then came the Easter tradition of hot cross buns. Not sent anonymously in elegant boxes. They went the Mainfreight way, delivered by hand, then buttered and spread with jam on the spot. Do that in the middle of an office and you tend to get noticed.’
‘And there were apples: another tradition that continues to this day. Once a year everybody, team and customers, received a 9 litre bucket of apples. The impact of this seemingly innocuous gesture has to be seen to be believed.’
Source: Mainfreight website
‘Better systems and better handling gave Mainfreight the confidence to hold prices between eight and ten percent above their competitors. The results spoke for themselves. They offered better service than anyone else in the market and were paid accordingly.’
‘He who creates the most value wins. That's the business we're in, creating value.'
‘If your business is simply about making something the cheapest it can be then you are rooted, because that's very easy to imitate. Now, the complete logistics strategy, that's more difficult to copy. We help our customers make money because they have no need for warehouses, trucks, IT or an international network. We have a total package to make them more efficient, more profitable. Win-win.’
‘Mainfreight only wanted quality customers who valued their high-end product and being cared for with kid gloves, and who would pay on time.”
No Budgets & Transparency
’Rowlands (Chairman) sat in Plested's office that Monday night, as he had done many times before, and listened as the branch managers called in their crucial weekly returns, marvelling at the encouragement handed out. That was Plested's skill, getting people motivated. Those weekly returns were and remain the corner stone of Mainfreight's extraordinary success. Plested had concluded early on that budgets were 'bullshit. Far too much time was spent preparing budgets that were then invariably altered, requiring further precious time, due to unforeseen circumstances.
Source: Mainfreight 2023 Annual Report
Many companies consider themselves goalless if they don't have budgets while what mattered at Mainfreight was making more money than they did last year on a week by week and month by month basis. Mainfreight's policy of weekly returns allowed them to tell at a glance if they were ahead of or behind the game.’
‘Budgets are bullshit. We measure ourselves against last year. An actual figure of last year.' Wonderful. Simple.
And Mainfreight gets those figures every Monday night from all its branches.
The figures there for all to see and compare how they had fared that week compared to the previous week and the same week for the previous year. And not just for the accountants and directors to see but the cleaners, the canteen workers, loaders and drivers and the sales team. The company's innermost secrets, right down to how much they banked each day, posted on the canteen wall.
This was Mainfreight's simple solution to what many companies consider a complex problem. Give every member of the team the responsibility and the authority to make their own decisions and there was no need for budgets. Budgets are typically defended and justified as necessary to prevent expenditure blowouts.
Mainfreight just asks everyone to be sensible: If we do this, will it make the company money? If not, why are we doing it?
Souce: Mainfreight website
By studying weekly figures they could quickly identify where a problem had occurred and why. By the same token it was possible to identify where one branch manager might have introduced a profitable new innovation and quickly adapt it throughout the network. The effect of such transparency is electric. It instils a sense of responsibility. There is no time to be frivolous when people know everything they do has a direct impact on the success of the company.’
‘Plested's door was always open. He answered his own phone. Would talk to anyone about any problem.’
‘It was exciting because at the end of every week Mainfreight posted the results up on the canteen wall. Everyone could see how much money they had made, how good they had been at packing freight into containers and trucks.’
Hire Potential & Promote from Within
‘Hire people smarter than you.’
‘Mainfreight is not in the business of hiring people who come to work to be told what to do. They want the ‘right' people, not just people.’
‘Mainfreight had begun with a policy of never hiring anyone who did not have the potential to become a branch manager. Now they wanted thinkers with the potential to be not so much branch managers as managing director. The brief was simple enough: ‘Find people for the future – people who will fit into the team, have a cultural fit. Achievers who are going to be able to take the company to another level. People able to grow and develop themselves and Mainfreight.’
‘When graduates come into Mainfreight there is never a promise of a particular role. The understanding is that they come into the business for a career that will unfold as they learn and show their potential.’
‘Over the years, time spent on the floor has been reduced, but the theory remains the same; these are likely to be the men and women who will be running the company one day. They are encouraged to make both suggestions and decisions from day one, on the basis that they know the business from the floor up.’
‘Only employ people who shared the Plested ethic and work ethos.’
‘Mainfreight would hire business and law graduates and then have to explain to young men and women with a B Com/LLB, whose friends were sitting in plush high-rise offices with major law firms, that they would be spending the next two years driving a forklift truck and be expected to sweep the depot floor at day's end.
The theory is that these are the men and women who will be running the company one day and they can't make critical decisions unless they know how the engine room works.’
‘Plested’s philosophy of employment for Mainfreight is based on Theory Z, a Japanese hypothesis. Simply, you only employ young people. You treat them as if they're going to stay with the company for forty years. And you slow down promotion, rather than moving them every six months from job to job. The objective of this deliberate process is to develop absolute champions rather than 'once over lightly' merchants. The thinking behind Theory Z is that people who are really beneficial to a company are usually those who have been there for a long time with a real depth of understanding.’
‘Mainfreight looks for well-educated, energetic young people with the correct attitude. And always promotes from within.’
‘Promotion from within is deeply embedded in the business ethic of the company.’
Adapt & Think Small
‘We're reinventing ourselves all the time, which is what small businesses have to do. And if you keep thinking of yourself as a small business you can do that.’
‘I never tire of repeating, we are a collection of small businesses that are constantly looking to improve.’
‘Mainfreight’s approach to running a big business: Don’t. The principle was simple that each branch should operate as an independent unit.'
‘Much of what we do, our approach, can be seen as small-company thinking, and the challenge is to keep that as we grow bigger.’
Appearances
‘Mainfreight insisted on the cleanest, best-looking trucks and best kept buildings. Everything had to look one hundred percent every minute of the day.’
‘Everyone is encouraged to dress as if they were meeting a managing director. A positive attitude was the order of the day, every day, a positive attitude conveying a professional, caring image.’
‘Personal hygiene was constantly stressed, a novel notion in the transport industry of the day. Not only were Mainfreight people expected to be clean and tidy but also their trucks and cars. This, they were told, would reflect the company's pride and attention to detail.’
‘They were taught how to answer the phone and be courteous to customers and workmates alike. To question customers on the quality of Mainfreight service and encourage them to suggest improvements. Mainfreight people arrived early to appointments, were polite to the receptionist and thanked her on leaving. It was, they were told, the little gestures that left lasting impressions. Most importantly: 'You are your word. You are accountable for all your actions.'
Seperate Profit Centres
‘The Mainfreight way involved a great deal more than embracing workers to the notion of capitalism and ensuring quality service for quality clients. Each branch, each operation was encouraged to think of itself as an island of profitability. For this to have any credibility it was essential to ensure no branch suffered as a consequence of working for another. Hence a system of inter-branch allowances that ensured administration was subservient to the operation. Not visa versa.
Freight sent from Auckland for delivery in Hamilton would be charged at a rate sufficient to allow Hamilton to unload, deliver and make a thirty percent margin. Hence smaller branches were rewarded for their place in the food chain, all the more so if they kept costs down.’
Source: 2023 Mainfreight Annual Report
‘All 306 branches are run as separate businesses, with no shared functions. Each has its own profit and loss statement that is reported weekly to head office and posted on the wall of every branch’s lunchroom, so all staff can see how the branch is tracking versus last year.
‘We know how much money we’ve made and all lost in each one of those 306 branches. But more importantly, the branch manager knows,’ Braid explains. (And yes, the odd investor and consultant has suggested Mainfreight centralise the back-office functions of its branches, but Braid scoffs at the idea. ‘Listen, consultants are those that come out of the hills to kill the wounded after the war. If we can’t sort it out, some suit from the city isn’t going to sort it out for us.’) The branch manager’s autonomy is absolute, but Braid and Plested also strive to push decision-making down the ranks. ‘If you make a mistake, fix it – don’t push it upstairs,’ he says simply.’ [AFR]
Trust
‘The key to success is ensuring the entire group benefits from every aspect of our business. We do that by trusting each other. That's the key. Trust each other, believe in each other.'
‘Nothing happens until you sell something. And what we are selling is trust. That is our competitive advantage.’
Headquarters
‘The company has no headquarters, with the Auckland number-one branch the closest thing. The idea is that senior management should be on the road, visiting customers or visiting branches to ensure the culture is being looked after. On this front, little things matter: is the food in the cafeteria right, are the toilets clean, is there an energy about the place?’ [AFR]
Do the Right Thing & Word of Mouth
‘Mainfreight was renowned for breaking one of the forwarding industry's cardinal rules. They paid their creditors on time. This they considered to be their advertising and marketing budget. Word certainly got around and it's still the rule today.’
Incentives
‘Plested would pore over those crucial weekly returns seeking a new advantage. In March 1990 he spotted an interesting anomaly between Dunedin and Napier. The two branches were generating approximately the same amount of sales, with identical revenues.
The difference lay in the bottom line. Dunedin was losing NZ$300,000 a year, while Napier made that much. It was an intriguing comparison, as the two branches engaged the same number of people. The difference lay in how they were engaged. Napier employed five workers and had six owner-drivers, while Dunedin employed eleven in its team. Two months after Plested's discovery, with a little financial help from Mainfreight, and no resistance, the Dunedin drivers happily became owner-drivers.
In one year Mainfreight went from losing NZ$300,000 a year in Dunedin to making NZ$280,000. The logic was stunningly simple, as explained by Bruce Plested. `When we owned the trucks, if we had a light bulb go out the driver would come in and say, ‘Light bulb doesn't go in the truck.’ We would have to phone up the auto-electrician to come down and put in a new bulb and he would charge us NZ$70. Whereas an owner-driver always carries some bulbs in the glovebox; it's easy, he whips one out and screws it in. And you don't even know it's happened.
‘That is multiplied hundreds and hundreds of times every day throughout the country by using owner-drivers. The reason is simple. They will do whatever is needed to keep their trucks on the road. That's how they make their money.' From that moment on Mainfreight did everything it could to help its employees become owner-drivers. The impact was extraordinary. Suddenly, when a truck needed a grease and service it happened during downtime over a weekend, not when it was needed on the road. The owner-drivers were making more money and so was Mainfreight.
Solving one small problem had effectively changed the face of Mainfreight.’
Ideas
‘Mainfreight developed a 'branch buddy system' with branches of similar size constantly comparing notes and visiting each other to learn by the other's initiatives and mistakes.’
‘This is not a business of rocket science. It’s not as if we have to understand nuclear physics to do it. But we are significantly advantaged if we have a lot of well-educated people questioning the way we do things and coming up with smarter solutions than we might have come up with in the past.’
Open Plan Offices
‘Open plan (became) an integral part of Mainfreight culture the world over. As the office walls went so did the pockets of power that prevented people mixing, sharing information, working as a team.’
Margin not Revenue
‘Bruce Plested had developed a personal mantra that ‘margin is what matters, not revenue.’ He constantly hammered the message, ‘If you are undercharging customers, then you’re a busy fool. Each account must produce a satisfactory margin.’
‘Mainfreight's marketing policy had the simple objective of attracting only those customers who appreciated added value and were prepared to pay accordingly.’
Embrace Technology
‘Mainfreight would be the first New Zealand company to transmit data over a radio telephone, and later the first in Australia to download information from a vehicle in the field using cellular technology.’
Think Long Term (100 Years)
‘One memorable night, as Bruce Plested and Howard Smith, the original founding partners, were yet again discussing their needs and aims, Plested suggested they should adopt a twenty- or even 50-year vision. To which Smith, emboldened by the beer in his hand, replied, 'Why not think, ourselves as a 100-year company?' It was an empowering moment. In years to come, this philosophy would give them enormous freedom and flexibility in decision-making. Now they were no longer worried about this week or this month or even this year. They were a 100-year company.’
‘All decisions were based on that hundred-year vision. Buying terminals and building facilities specifically for expansion. Buying land next door, creating land banks to accommodate that future expansion. The future, always the future.
Source: Mainfreight 2021 Annual Report
Every decision a long term decision. Short term expediency didn't come into it. It was never an option.
Every decision challenged with the question: 'What's the long term benefit?' A philosophy geared to keeping Mainfreight on a sensible path. Later, as they made forays into North America and Australia, there would be critics who failed to grasp this willingness and ability to think long range.’
‘Mainfreight's investment strategy of buying land and building their own nationwide network of branches continued. Plested and Graham again and again warned their board not to expect short-term financial success. There were constant reminders of the long-term objective of completing a network of purpose-built freight and storage terminals. Always the same message. From growth came prosperity. The one hundred year vision that would take them beyond New Zealand and Australia into Asia and the United States. By now Mainfreight saw warehousing and distribution centres as the future. Branches everywhere were buying up adjacent land for future expansion into efficient freight terminals with the consistent view of converting existing premises into warehousing and distribution centres. Mainfreight was developing those 'land banks' in the strategic heart of every town and city it operated from. The vision that only a hundred year plan allows.’
‘Anyone looking to invest in Mainfreight would have been impressed by a network any competitor would struggle to replicate.’
‘We don’t have a policy of a short-term CEO or board member. The hundred year philosophy gives you that, as it encourages promotion from within.’
‘Long-term thinking has long-term returns.’
Humility & Hard Work
‘Plested remained concerned about not falling into the trap of big company syndrome. A syndrome he typified as being arrogant, using consultants, bringing in outside cleaners to sweep the depots, hiring pictures and plants and, a particular hatred, putting blue rinse in the toilets. He wanted none of that:
'We must stay lean and cost hungry, we must continue our 'do it ourselves' philosophies, and above all we must continue to work as long and as hard as ever.
To be successful as individuals and as a company, there has never been and never will be any substitute for working hard.'
Total Quality Management
‘Mainfreight had discovered and embraced Total Quality Measurement (TQM). Prior to that moment, Mainfreight meetings were run by the joint managing directors or branch managers with up to thirty people in attendance. Only a small fraction would have any input. Such meetings were often an excuse for those present to blame inefficiencies on outside influences such as lack of equipment or poor service. TQM changed all that with the insistence that branches form small teams that met on a regular basis to deal with issues directly related to the work those people did.
And there was a golden rule. No more than seven people attended such a meeting to ensure participation from every member of the team.
Crucially, they were not allowed to solve problems by requiring other people to change. These small internal teams had to solve problems by changing those factors they could directly influence. These became known as Positive Action Team (PAT) meetings that were significantly more effective than the big staff meetings of the past.’
Internal Competition
‘There was to be a deliberate policy of the Daily Freight and Mainfreight brands competing in the major markets. A dissatisfied customer could always leave and take their business to one or the other.’
Source: Mainfreight Annual Report 2019
Keep it Simple
‘It works because it is simple; Simple is best. If you want to change it, try to make it simpler. It’s not about making anything too difficult.’
Acquisitions
‘The trend was firmly established of buying sick companies for next to nothing, picking up the odd good executive on the way through, and then moving on. All the apparent benefits of the takeover paled into insignificance though compared to another lesson. They realised they could take the Mainfreight culture, the Mainfreight attitude, and plant those philosophies in a completely different company. Even a company as far removed, as directly opposite in many respects, as Daily Freightways.
Plested is of the view it was one of the most significant events of their history, if not the most significant, as it gave Mainfreight the springboard to go forward. The knowledge they could transplant such a unique culture gave enormous encouragement and confidence.’
‘Braid is emphatic that while Mainfreight is not a prolific acquirer of businesses, when it does step in to the ring it is for strategic purpose. They have to fit the jigsaw.’
‘Most crucially, [Mainfreight] discovered that companies that are for sale tend not to be in good shape; they tend to have terrible debtors, customers who expect, as of right, to pay in two or three months, customers who make life difficult. These were all lessons well learned.’
‘While the 'Mainfreight culture' is integral to the company's success, it made much of not imposing a culture on the US, rather, allowing an American version to emerge in its own time.’
‘With each acquisition Mainfreight made, local management were instructed to adapt the Mainfreight way to suit their own culture.’
‘As companies are prepared for sale the first thing they tend to stop spending on is IT. Operating and accounting systems are propped up for the short term - never for the future. Companies being readied for sale will do anything they can to improve the look of their books.’
‘The purchase of K&S Express and CaroTrans both involved acquiring distressed small businesses from inside larger companies. Both businesses were operating accounting systems that were part of the larger company's computer system. They did not inherit a stand-alone computer system.. Today Mainfreight is wary of buying a small part of a bigger business that does not have its own operating and accounting package.’
‘No matter what the acquisition, big or small, they all come with their own set of problems.’
‘10 Year Snapshot of Growth.’ Source: 2023 Annual Report
‘The policy now is to bring managers [from acquired overseas businesses] to New Zealand for an injection of ‘blue blood’ so they can return home and spread the gospel. There was an initial theory that may take two years, but experience has taught that that may not be long enough and that people should stay ‘for as long as it takes.’’
‘There have been other critical lessons on acquisition too. Take your time fixing them, and lift service levels before adjusting prices so customers stay with you. Be careful of changing the name of the business, especially if it has or has had a good reputation. This can cause destabilisation of customers and some team members. Beware the folly of equity-raising. Mainfreight raised funds for the Owens acquisition with an issue at NZ$1.30 a share, too little by far.
And remember, people don't sell well-managed, profitable companies. No matter what you are told, expect to find low prices, low service levels and long credit terms. Every time.’
Global Expansion
‘Many companies that go into China think the answer is to have their own management teams run their enterprise. Mainfreight was determined to make no such mistake. Lofaro would be the only non-Chinese member of the team. His first move was to hire only bright young locals; he wanted Chinese people calling on Chinese customers.’
Training
‘In what was an industry-first in New Zealand, in 2004 Mainfreight opened a training centre with an intensive five-day course that focused on skills but also on learning about the company's history, culture and expectations. Every new member of the Mainfreight family was expected to complete the course, as were all existing team members. Similar programmes would be run around the world as the company expanded. It was like an in-house university, right down to having a mock depot, where people learn why Mainfreight does things a certain way. Always there's the need to understand why.’
Continuous improvement
‘We need constant improvement; that incremental gain from continually striving to be better already delivers so much, particularly in terms of quality.’
Community
‘We want to be a good corporate citizen and look after the environment.’
‘Educating the poor is one of the most important things we can do. If we force education into them we'll get a bigger bang for our buck in terms of growing the economy than by developing any other sector of society.’
Summary
The distinctive qualities that define Mainfreight's essence resonate within many other esteemed businesses discussed in preceding posts. Be it the historic National Cash Register company from the late 1800s, the uniform industry leader Cintas, the Tractor Supply Company, or the renowned Enterprise Rent-A-Car, all share an unwavering commitment to excellence. Their management teams have embraced analogous approaches to orchestrating their operations. These very traits echo the hallmarks of the companies immortalized in seminal works such as 'Lessons from the Century Club Companies,' 'In Search of Excellence,' and 'Firms of Endearment.'
The fervor for their craft originates with the founders and permeates every facet of these enterprises. The practice of propagating business triumphs, perpetual learning, and employee empowerment plays a pivotal role in fostering enduring tenures, resulting in elevated customer service standards and augmented efficiency. Gazing beyond immediate horizons necessitates fortitude and furnishes an alternative vantage point for decision-making, thus securing an abiding competitive edge.
Mainfreight's journey, much like any narrative of business success, has been punctuated by challenges. Acquisitions took unforeseen trajectories, customers occasionally went into receivership or alliances shifted, economic downturns posed formidable trials, and missteps peppered the landscape. Nevertheless, throughout these trials, an unswerving dedication to unparalleled customer service, cultivated by a workforce that is empowered, impassioned, and motivated, coupled with an unwavering long-term vision, has forged a resilient organizational culture. This culture stands as the bedrock of Mainfreight's thriving legacy, a legacy that has endured and flourished across the passage of decades.
Sources:
‘Ready Fire Aim: The Mainfreight Story,’ Keith Davies, 2013. Penguin Books.
‘With Passion Anything is Possibe - Mainfreight - An Insight,’ Keith Davies, 2003. David Ling Publishing.
Further Reading:
‘Is this the best-run firm in Australasia? In Auckland’s industrial heartland lies a 40-year experiment in culture, radical transparency and long-term thinking that every leader can learn from.’ James Thompson, 2022. Australian Financial Review.
‘The IMportance of Culture,’ 2017, MastersInvest.
‘Culture Tutorial’ MatersInvest.
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