The pharmacy group CFO must feel comfortable he's delivering to the best of his abilities.
Rui Morais, CFO of Dis-Chem Pharmacies, took home three CFO Awards this year, his stamina and determination, incredible work ethic and tech-savvy approach to business wowing the judges, along with the significant role he played in the company’s listing.
“I hate disappointing myself and am my own harshest critic. To me, the most important person who needs to be comfortable that I have achieved, is me,” says Rui. “You are the most honest person with yourself. If you truly believe you could have done better, it’s only you who is going to know. No one else has as much context about yourself as yourself. I must be comfortable that I’m delivering to the best of my abilities. I think this is the best way to go about things.”
Rui certainly sets high standards for himself. In recognition of this, he walked away with three accolades at this year’s CFO of the Year Awards: Young CFO of the Year, Strategy Execution, and Finance & Technology.
“Winning these awards was affirmation for me of what I’ve done. A lot of what I’ve done is the output of many years of hard work. It was nice that this was acknowledged by the finance community.”
While all the awards mean something to him, he says the one that makes him proudest is the Strategy Execution Award. “Because it’s the bigger picture stuff that’s most appealing to me, and most meaningful in terms of generating long-term returns for the company.”
Rui’s receiving of the Strategy Execution Award was indeed well deserved, given the role he played in the listing of the company on the Johannesburg Stock Exchange in late 2016.
“The decision to go to market was tough. We debated it at length. The decision to list came with risks; we battled to stay entirely focused on the business and there were numerous balls in the air. But we unlocked a lot of value which is evident by the market cap of the business today.”
He says there were plenty of difficult decisions in the process:
“The operational shareholders needed to realise what it meant to us personally – that we would have independent non-execs sitting on our board understanding our strategy was not something we were accustomed to.”
Rui says that for him, the ultimate success was that the listing was very well received.
“In terms of price and how well it traded. It was a brand the market wanted. The listing created wealth and diversification for all the operational shareholders and placed the company on the exchange, which created its own set of accountability and responsibility for us as executive shareholders, ensuring we continue to drive our long-term strategy. Post the listing, it’s given us many opportunities. It’s been great to engage with investors who see numerous other businesses in other parts of the world. You can take incredible learnings from them.”
With the mammoth task of listing the company out of the way, the focus switched to acquisitions, and Rui says he is currently busy with several of these. “A lot of them are relatively small, independent pharmacy specific,” he says.
Another aspect of the company’s strategy occupying a lot of his time at the moment – and one which Rui says he finds very exciting – is the rolling out of a smaller store format. He explains:
“While we are generally first option in large malls – grocery store anchor tenants aside – we’ve always been second option in smaller retail centres. But the reality is that, with retail property developers increasingly moving away from larger malls and into smaller, neighbourhood convenience centres, around the 10,000 square metre size, we are seeing a lot of interest, because we’ve got a format that can fit that. This will give us the ability to take a greater share of the market where we deem it appropriate. So far we have eight smaller-format stores and will have an additional eight open by the end of 2018.”
The company is also making headway outside South Africa. “Dis-Chem already has four stores in Namibia and is opening its first one in Botswana later this year. We are moving into Africa territory by territory. We think Namibia could take another two and Botswana another one, then we will look at other SADC countries.
Dis-Chem is quite a different beast these days to what it was when Rui first joined the company in 2009.
“Back then we had about 35 stores, now we’ve got 140, with the aim of reaching 200 soon enough. We had an internal wholesaler but hadn’t done any significant acquisitions in terms of the wholesaling capability, and we didn’t have a model to acquire independents. Also, a lot of the support functions were still being developed, such as IT, finance, HR and marketing. These functions used to lie across individuals, and we’ve had to unlock the people away from these and ensure that from a succession perspective, there are professional managers in place to drive the output of the strategic decisions. I’d say that’s been a significant change for the business.”
Within all of this change, Rui says the company has had to ensure that the culture or core of what the team thinks differentiates it from competitors remains intact.
“We are a detailed company, but it has proven difficult to stay detailed because time is a limitation,” he says, and describes the company culture as “driven”.
“Things happen; they move. It’s busy, but rather busy than not. It’s a great atmosphere.”
As for his leadership qualities, Rui seems quite aware of his Achilles heel. “I’m very conscious of the fact that I’m detailed,” he says somewhat sheepishly, but he’s learning to let other people run with projects.
“I don’t want to do something for someone else or there would be no point in me giving it to them in the first place, so I generally let my team do a task, and then I get involved at the end. I’m getting better at this. I think you need to be aware of how you engage with your team and work to improve this.”
Small faults aside, Rui says he considers himself to be fair and honest. “I have a good relationship with each of my staff members and I’m able to be honest and transparent with them from both a good and bad perspective.”
He pauses before continuing: “I think I’m a natural leader, though I need to demonstrate to my team that I’m willing to change things about myself that need improving. I think you need to take a step back once a year and consider how you can improve yourself as an individual – not just in the workplace. To do this, you need to be honest with yourself.”
Rui is a pedantic recruiter and says he has taken time to carefully select his team.
“I’ve spent a lot of time doing this – more than I would imagine most people do. But to me, team selection is crucial. If you select the wrong person… I would rather go months and not find someone, and have my team carry the load, and then pick the right person when he or she does come along, than appoint the wrong person. I think my team appreciates this and applies this same logic to their teams and appointments.”
He also makes a point of giving people a hand up if it’s deserved:
“I’ve always believed in giving opportunities to people. I have a young team, but I believe it’s important for them to have an opportunity to succeed. I am where I am today because Ivan, Lynette and the original shareholders gave me the opportunity nine years ago.”
Asked to highlight the toughest lesson he has learnt in his career, Rui says people management, something which he “discounted” at the beginning of his career.
“This has been tough, especially as I’ve had a lot of responsibility from a young age. I’ve never felt out of my depth but in the beginning I had to work hard to appreciate that behind every person is a life and challenges they experience, and that this affects what they do day to day. You have to understand the people you are working with and what makes them tick. If you don’t, your expectation of what they can produce could potentially be very wrong.”
Asked what makes him – a young CFO – most excited about the future of the finance industry, Rui says he is excited to “see what future means”. Finance is a relatively traditional role, though there is a lot of overlap between IT and technology, he says.
“I’m quite keen to understand how the finance role will change considering the evolution of technology,” he comments, adding that Dis-Chem is looking at robotics as a leverageable finance function.
“I don’t want 10 people processing general ledger journals every month if a robot can do that. I want those people working to add real value.”
Tech is moving how you look at finance into another space, he continues:
“Finance tying in with tech and tech tying in with operations means you’re going to have a closer sync of these three functions. Finance, IT and operations will collectively sit in one space in the future. We already see this in our company – you can do very little in retail without engaging with IT. IT is not merely a support function where someone comes to fix your computer. I imagine this is going to get more in sync as things evolve, and this is very exciting to me.”
Asked how the job of CFO has changed him, Rui considers before answering:
“I’ve always thought a lot about people and how the team dynamic works and I’ve come to apply this in my own life. So, if you asked my wife, Rox, she’d probably say I’m over critical of people or I overthink things. But for me this has been a good thing; I’ve very sensitive to relationships and understanding people. As for the demands of the role on my time, I enjoy my work. I’m not disgruntled and don’t begrudge the time I spend at work. I try to blend it into my family life. For instance, I don’t have an issue going into a store on the weekend to have a look around while my family’s having breakfast.”
As for what the job has taught the young finance executive about himself, Rui laughs and says, “a lot!”
“I’ve realised that I’m more resilient than I thought I was. The listing was such a challenging period, I learnt that I’m a good problem-solver. I went through this experience where I had to solve problems on a daily basis and make decisions quickly, which taught me that I could do this – or that I had to when it was required. I grew a great deal out of the experience."
This article was originally published in the Q4 edition of CFO magazine, available now in airport lounges countrywide. Rui will be participating in a panel at the CFO Summit on 8 November, exploring the notion of the "entrepreneur CFO".