1. Confidence and self-belief are non-negotiable
“I am not as concerned about them as I am about myself,” says Gerry Harvey when asked what he is doing for people to believe that Gerry Harvey is going to succeed in the tough environment. “The minute I lose confidence in myself, I should put up my hand and say ‘here’s the badge and I’m out’.”
Harvey insists he’s still confident. “I’ve still got a high energy level, I’m not down and out by a fair way yet.”
2. When the going gets tough, the tough get going
In the challenging retail environment, Harvey says the company’s vast property portfolio continues to underpin the Harvey Norman business.
“To my mind, our ownership of real property is an absolute competitive strength when compared with the intangibles and goodwill that figure prominently on the balance sheets of many of our competitors,” he said, announcing the company’s most recent results.
A key strategy, Harvey shares, is looking at ways to add value to the property assets, which total $2.27 billion.
“We’ve just put a childcare centre in one and we’re in the process of getting approvals to build units or other types of retail – [to] enhance the value of the property by not just having a Harvey Norman there but other things [too]” he says.
Harvey highlights one of its properties in City West in Perth has the potential to be a billion dollar site once fully developed. “It’s next to the railway station and three minutes to town. It’s got a long way to go yet but we’ve got a Harvey Norman in there, a Domayne and a whole heap of other tenders. We’ve got lots of sites like that that you can value add to over a period of time.”
3. Monitor your market share
With rivals such as JB HiFi moving into products that Harvey Norman has traditionally dominated, the retailer insists he’s not daunted by the competition.
“We’ve always had competition!”
Every month, Harvey says the business reviews market share of its key products to analyse if it has dropped in any category.
“When we see our market share drop by 1% we go into panic mode,” Harvey admits. “So if we’ve got 28% market share on a product, say it’s a fridge, and that drops to 27%, we panic. We’re out there and we’re trying to increase, and when we see that drop we know we’ve got problems.
“We know what’s happening inside our business,” he adds. “We are not seeing market share dropping.”
4. Running a business is tough
The desire to open your own business is a wonderful ambition according to Harvey. But he warns it’s a lot harder than most people think.
“If you’re not prepared to work 80 to 100 hours a week in the first year or two or three, then I’d probably say to you don’t do it, it’s not worth it.”
Why? Because of the pain at the end, he says.
“You can work 100 hours a week for the first five years and be worth less than the day you started – it is not easy to run your own business.”
Of course, not everyone has this experience, but Harvey believes while some people are very good at what they do and they’re in the right businesses and are successful, there are those people who are very talented but in the wrong business.
“Then you’ve got about 6 out of 10 people,” he adds, “[who are] very nice people but they’re not talented enough and they’re working their guts out trying to make a go out of it but they’re just not smart enough.
“And I talk to them and I just see them going down – and it’s very sad.”
Harvey believes business nous is innate. So does he see the benefit in coaches or mentors to help people lacking those important business insights?
“You can train someone, but then there’s another guy you don’t train at all and he’s three times better than the one you train,” Harvey says.
“It’s inside of them. How do you pinpoint what that is? They’ve got some sort of inner strength and they’ve got some ability that the other guy hasn’t got. And so they don’t need that training, they just do it.”
5. Talented staff make all the difference
“As I tell my people ‘you’ve got to fish for people’. You’ve got to go to the right pond and get the right people. You’ve got to have the ability to think ‘that one’s got the right potential’ and not that one. And if you can do that, you build this team and you’ve got something that’s unbeatable,” Harvey stresses.
“The people who know how to develop a top quality team and operate at a high level – you can’t beat them.
“If I’ve got a shop in a town and I see the opposition’s got a shop and I see it’s doing better than our shop, what do you think I do? I want those people working for me, not you! You’re the wrong person. And they’ll have all the excuses in the world about how it’s not their fault or it’s someone’s else – it’s their fault!”
6. It’s not just what you know, it’s who you know
From a young age, Harvey says he has associated with people who are smart. It’s a strategy that has served him well to date.
“I worked out when I was 21 or 22, there’s no point hanging out with all these people who are not that smart – I want to hang out with those people that have got something.”
His friendship with ad guru and respected businessman John Singleton has been beneficial not just on a personal level.
“I hang out with Singleton because he’s got one of the best brains in the business – he’s different, he’s unique. He’s got a funny brain, but if you can pick the good things out of that funny brain in that two or three hour conversation, you’re a mile in front than sitting talking to the other three blokes that are never going to come up with anything ever.”
7. Keep your friends close, and the competition closer
While many business leaders believe in the value of independent advisers, or an objective set of eyes to help drive the business forward, Harvey says the best people he talks to are not outside advisers, they’re the ones inside the business or in another business.
“Because we’ve got something in common, we’ve got a common objective. We’re business people with similar problems and we’re both on the same wavelength.”
To that extent, Harvey also keeps tracks of the opposition, visiting the store owners and sharing open dialogue.
“I generally find if I let go and tell them a few things about my problems and the sort of problems Harvey Norman has got, they think ‘wow we’ve got some of those problems too’ and then they tell you.
“So we’ve got common things that an outsider doesn’t really get to. They have opinions but they don’t really work in the business. So the greatest benefit comes from sharing and learning and talking to people that are in the business and especially ones that are very successful.”
WORDS Peter Switzer