Issue No. 63 - 2015
Corporate Governance
in Maltese Businesses
• Four Social Psychology
Studies that Matter to Your Business: p.13 Calvin Cassar
• Innovating
within a Traditional Industry: p.23 Neville Cutajar
• The CHREOS
and the Future of Electric Cars: p.36 Johnaton Grech
Issue No. 63 - 2015
The Executive
Editor’s Letter
D
epartments of many of our micro enterprises are often completely run by a single person rather than by teams. These are the ‘lucky’ ones - yet other organisations’ units are conjointly managed and run by the same single person. And outsourcing isn’t always an option, as some industries’ vertical environments are mercenarial by nature. Thus, such departments not needing and not affording two entities will grind organisations to a halt whenever the individual running them becomes absent. Larger ventures too experience these circumstances in less dramatic proportions. But as our economies of scale constrain us, they also empower us in being effective all-rounders; our plan B’s, simply because we wouldn’t manage otherwise. The inherent core competences of Malta’s Executives are many, and they are tough to emulate. They are also tough to manage and control, and good corporate governance helps to no end in so doing. Good corporate governance, the Hon. Francis Zammit Dimech explains in his contribution carried in this issue, is to appoint non-executive directors. Good corporate governance also dictates that the best non-executive directors are those who are not direct internal stakeholders of the organisation in question. This must have been a key factor in determining 3a Malta’s enviable growth rate. Our interview with managing partner Neville Cutajar, also carried herewith, indeed highlights the matter. Enjoy your read. Jason Attard
editor@the-executive.biz
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The Executive 3
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Issue No. 63 - 2015
The Executive
CONTENTS
CORPORATE GOVERNANCE
PEOPLE
7.
13.
Corporate Governance in Maltese Businesses
Four Social Psychology Studies that Matter to Your Business
Francis Zammit Dimech
Calvin Cassar INTERVIEWS Johnaton Grech
Neville Cutajar
The CHREOS and the Future of Electric Vehicles
Innovating within a Traditional Industry
23.
36.
HIGHLIGHTS & EVENTS The Economist
Phoenicia Hotel
Allied Consultants Ltd
Pegasus’ Back to Business Lunches
Business Assistance for Business Success
pg. 21
pg. 33
The World in 2015 Gala Dinner: Malta pg. 11 www.the-executive.biz
The Executive 5
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Issue No. 63 - 2015
The Executive
Corporate Governance
Corporate Governance in Maltese Businesses Francis Zammit Dimech
During an information seminar held last March by The Executive Events, in association with the Malta Associate of Henley Business School (University of Reading), Dr Francis Zammit Dimech discussed The Code of Principles of Good Corporate Governance issued by the Malta Financial Services Authority (MFSA), which lays down the basic rules of good practice in ensuring proper corporate governance in registered companies. This article presents a summary of the key points mentioned by Dr Zammit Dimech during the seminar, which focused mainly on the importance of social corporate responsibility, as well as how well the code reflects the realities faced by small, private and family-run businesses in Malta. www.the-executive.biz
The Executive 7
Issue No. 63 - 2015
The Executive
Corporate Governance in Maltese Businesses
T
he first point Dr Zammit Dimech touched upon concerned the need for companies to ensure that they appoint people of high calibre in positions of responsibility and trust, and that people occupying these roles have the necessary skills and experience to contribute effectively to the decision-making processes of a company.
It is important to have a non-executive element as an integral part of the board of directors in a company.
Moreover, Zammit Dimech emphasised the importance of having a non-executive element as an integral part of the board of directors in a company. The role of this arm of the board is to ensure balance by serving an independent control on the executor of the company affairs. He also pointed out that a non-executive director should be someone who is not engaged in the daily management of the company. The board as a whole, comprised of its executive and non-executive elements, has a number of responsibilities which the MFSA clearly enumerates in its code under four key rules of proper corporate governance, namely: 1) accountability; 2) monitoring; 3) strategy formulation; and 4) policy development. Opening up to institutional shareholders
After briefly explaining the importance of abiding by the principles of meritocracy and transparency when appointing new directors to the board, as well as the usefulness of having a nomination committee that ensures that there is adequate information on the candidates involved, Zammit Dimech shifted the focus of the discussion on the role of institutional shareholders. Institutional shareholders represent an external component of control that interacts very closely with the board of directors within a company. Also commonly known as stakeholders, these include: custodians, banks, financial institu8 The Executive
A non-executive director should be someone who is not engaged in the daily management of the company.
tions, fund managers, stockbrokers and investment managers among others, all of which greatly influence the decision-making processes of a company. These stakeholders represent in the literal sense of the term the people who hold a stake in the company. Therefore, according to Zammit Dimech, any mention of these institutions should instantly bring to mind the concept of corporate social responsibility and what a company that operates in the contemporary socio-economic landscape ought to do to keep them satisfied. A misalignment between code and reality
Upon giving the floor to the attendees, a member of the audience raised the point that in many cases the clauses in the present code are specifically directed to listed companies and do not adequately cover the needs of the small, family-run businesses that are the predominant type of enterprise in Malta. In fact, these companies are of-
ten forced to be more selective in abiding by the code: tailoring certain aspects of it to their particular way of operating. This naturally raises legitimate questions about the usefulness of the code itself and whether it serves its purpose in encouraging good practice among companies in its present state. Additionally, this apparent misalignment between the clauses in the code and reality for most small to medium sized businesses in Malta challenges such enterprises to pick out the most critical components that help them grow, as well as develop a form of corporate governance which adapts to their needs. This, however, is a difficult task which unfortunately also undermines the ability of the code to create a common standard in corporate governance in Malta. More fine-tuning is necessary Zammit Dimech expressed his agreement with the points raised during the questions session, claiming that indeed the code in its present state is first and foremost addressed to listed companies. www.the-executive.biz
Issue No. 63 - 2015
Corporate Governance in Maltese Businesses
The Executive
Zammit Dimech defended the role of the MFSA by emphasising that the institution takes the Trust Act very seriously. He explained that in regards to the company registry section, the MFSA issues regular notices to companies when accounts filings are due unless they are exempt. Typically, companies have two filings a year: the first is the annual report and the second is the annual accounts.
Applying the provisions of the code to private and family companies would prove to be a difficult task, even though abiding with the clauses in it should ensure the best possibility of ensuring that directors do not abuse of their position of trust vis-à-vis shareholders. As the situation currently stands, the code actually allows for exceptions to be made in various instances as long as there is consent from the shareholders through a general meeting or through an extraordinary resolution of the general meeting. In the case of small companies, the ideal alternative for them is to discuss matters of governance with their bank. According to Zammit Dimech, the focus of the code will obviously need to be better aligned in order to distinguish the specific challenges faced by the type of businesses that are most commonly found in Malta. However, at present, trust matters for small companies are inherently linked to their reputation and branding, a situation which highlights the importance of social corporate responsibility regardless of the size of the company in question. www.the-executive.biz
Companies
bending
the
rules
A second member of the audience expanded on this issue by pointing out how confusing corporate practice guidelines lead several small companies to fail to distinguish the separation between their directors’ personal lives and income from the company’s identity and accounts. This anomaly ranges from the use of petty cash in groceries to buy personal items to much larger infringements that constitute misappropriation of funds. This situation can be attributed to the lack of sufficient education to help the involved parties understand that the separation of owners and the directors from the company is an essential aspect of corporate governance.
Companies that do not comply with this procedure risk severe penalties which include fines and, in very serious cases, the possibility of being struck off the company register. But as a matter of fact, small companies do tend to get by by adapting to the current regulations and coming up with solutions that enable them to operate in the current legal environment in a way that is advantageous to their specific situation. Conclusion The present code on good corporate governance is a solid stepping stone towards implementing balanced and proven business practices. But a concentrated effort to adapt aspects of the code to the specific needs of small, private and family-run businesses is indeed required. In so doing, the largest chunk of Malta’s business operations would benefit as much from proper corporate governance practices as do their larger counterparts.
Trust matters for small companies are inherently linked with their reputation and branding, a situation which highlights the importance of social corporate responsibility regardless of the size of the company in question.
The role of the MFSA in education and enforcement
Institutions like the MFSA should focus on enforcing more thoroughly those regulations pertaining to other aspects of a company, such as those ensuring that company accounts are kept updated and filed in a timely manner.
Hon. Francis Zammit Dimech carries vast experience in dealing with different Government entities, and has since 2008 been acting as Consultant to the private sector on various major projects. In 2009, he also set up the Law Firm: Francis Zammit Dimech Advocates, and is a Visiting Lecturer at the University of Law. The Executive 9
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Issue No. 63 - 2015
EVENTS: The Economist’s ‘The World in 2015’ Gala Dinner: Malta
The Executive
The World in 2015 Gala Dinner: Malta
ON the 28th of November, 2014, The Economist hosted an evening of intelligent entertainment - part of a unique global event series - at The Hilton Malta. The event was specially timed to coincide with the release of The Economist’s annual The World in... publication, and offered Malta’s business community and policy makers the chance to reflect on 2014 and prepare to seize new opportunities in 2015.
C
onsultant Editor John Andrews, former Mayor of London Ken Livingstone, and The Economist’s editorial cartoonist KAL provided their bold, unique, and thought-provoking predictions for the year ahead.
The Prime Minister Dr Joseph Muscat, who was a special guestspeaker, gave the attendees his insights on the importance of The Economist and shared his passion of the industry which stems from his youth’s experiences in journalism.
300 guests also enjoyed signature cocktails designed by Diageo’s Reserve Ambassador and lively predictions-based table quizzes. The attendees were edutained by these illustrious personalities whilst enjoying the Hilton’s typical high standards of dining cuisine.
John Andrews, Consultant Editor at The Economist, shared thoughts and statistics on current political and financial movements, and also his expectations therefrom for 2015.
Former Mayor of London, Ken Livingstone, presented the attendees with lessons learnt from his two terms as Mayor (during which time he helped win the 2012 Olympics for London and steered the city through the 7/7 terror attacks).
The evening closed with a drawing lesson from Kevin “KAL” Kallaugher, The Economist’s editorial cartoonist for over 30 years, who entertained the attendees with insights into which faces are the most interesting to convert into cartoons, using prominent politicians such as Presidents Vladimir Putin and Barack Obama as examples.
CP Events will bring its series of high-profile business events to Malta again in 2015. For listings and enquiries, visit: www.cp-events.co www.the-executive.biz
The Executive 11
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Issue No. 63 - 2015
PEOPLE
The Executive
Four Social Psychology Studies that Matter to Your Business Calvin Cassar
Psychologists have long recognised the influence groups exert on an individual’s behaviour and attempts have been made to measure and predict outcomes in quasi-experimental designs. In this article, the knowledge derived from a number of seminal studies is being extended to workplace characteristics.
www.the-executive.biz
The Executive 13
(HONS) NURSING TOP-UP INFORMATION TECHNOLOGY
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Issue No. 63 - 2015
The Executive
Four Social Psychology Studies that Matter to Your Business
W
hilst practitioners within the workplace base their business activities on empirical evidence and documented research, academics can and should frame their investigations directly within practical contexts to solve real-world issues. There is value for organisations when their capable people assume a dual academic/practitioner role in their undertakings, and significant advantage to be gained when engaging both roles. With this mind-set, four classic social psychology studies are reviewed in order to highlight how beauty, geriatrics, fortune telling and physical torture can help make a difference to a business operation. 1. Beauty is in the eye of the beholder Miller (1970) hypothesised that male and female evaluators would associate photos of attractive people with positive personality characteristics just by seeing the images. To investigate this hypothesis, the author asked 720 university students to review 12 out of 400 opposite-gender photos which had been formerly categorised on a nine-point scale for attractiveness. The participants were then also asked to rate the people in the photos on seventeen personality dimensions. Photos of physically attractive individuals were thus judged significantly more positively on the personality dimensions than unattractive people were, on no other basis than the first impression. This was shown to be the case for both male and female evaluators and for traits ranging from sense of humour, to confidence, flexibility and conscientiousness. Why this matters Miller’s (1970) study is one of a number of investigations linking physical attractiveness with preferential evaluation and outcomes, and there is documentation to show that attractive people tend to get promoted more, earn www.the-executive.biz
higher salaries and do better in selection interviews (Brehm, Kassin and Fein, 2005). If beauty was also linked to on the job performance, such evidence would not be problematic. But this does not appear to be the case. Such studies highlight the importance of setting up a structured interviewing and selection process as ultimately this can help avoid these biases. Behavioural interviewing in particular helps bring emphasis to measurable and tangible results, thereby limiting the influence that a person’s appearance might exert; on the positive or negative side. When selecting in interviews or carrying out appraisals in performance feedback sessions, emphasis should lie on metrics and measurables, as these will allow a business to run and grow effectively.
Synopsis Behavioural interviewing in particular helps bring emphasis to measurable and tangible results, thereby limiting the influence that a person’s appearance might exert. When selecting in interviews or carrying out appraisals in performance feedback sessions, emphasis should lie on metrics and measurables, as these will allow a business to run and grow effectively.
The Executive 15
Issue No. 63 - 2015
The Executive 2. Lessons from botany and geriatrics In what has become one of the classic studies in social psychology, Langer and Rodin (1976) carried out a field investigation within a nursing home. The researchers hypothesised that by empowering the elderly patients and involving them in decision making, the patients would perceive an improvement in their overall quality of life. Langer and Rodin divided participants from the same nursing home into two groups, with the experimental group having passed onto it communication emphasising their responsibility for themselves, while a control group was simultaneously told that the staff members would be taking care of them. The former was also invited to decide whether to participate in a movie group and to see if the members would be interested in taking care of a plant in their room (patients in the control group were not given the choice to do this).
www.the-executive.biz
Four Social Psychology Studies that Matter to Your Business
As could have been expected, the results of the study showed that participants in the experimental group presented a greater improvement than those in the control group in alertness, active participation and general well-being. What went beyond expectations in this research was that in a followup study 18 months later Rodin and Langer (1977) found that the improvements were maintained over time, and that additionally the intervention had also led to statistically significant differences between the groups with regards to mortality rates. It would seem that having the elderly take care of a plant had led them to live better and longer. Why this matters There is growing recognition that empowerment is an important contributor to the achievement of organisational goals, as well as for general employee well-being. What emerges from the Langer and Rodin study is that even in-
volvement in small issues can lead to improved outcomes - patients were not asked to take decisions on their medical regimen or the finances of the nursing home, and yet the responsibility for a simple potted plant led to these significant improvements. Empowering employees does not require making gargantuan strides or changes, but it does require an adapted mind set in management from “we know what to do” or worse still “we will take care of what needs to be done”, to “let us decide on the best way forward”. 3. Fortune Teller In a self-fulfilling prophecy one person’s prediction of another person’s behaviour somehow comes to be realised. Rosenthal and Jacobson (1968) went on to set up a self-fulfilling prophecy within a school environment. The researchers conducted their study in Oak School in the South San Francisco Unified School District
“
patients were not asked to take decisions on their medical regimen or the finances of the nursing home, and yet the responsibility for a simple potted plant led to these significant improvements
”
The Executive 17
Issue No. 63 - 2015
Four Social Psychology Studies that Matter to Your Business
The Executive the LMX theory presents arguments close to those posited by Rosenthal and Jacobson in that the in-group employees who are perceived by their superiors as having potential do in fact turn out to be successful employees, possibly through a mechanism linked to self-fulfilling prophecies.
“When you think about the long and gloomy history of man, you will find more crimes have ever been committed in the name of obedience than have ever been committed in the name of rebellion” Milgram, 1963
and at the beginning of the scholastic year they administered an assessment tool to students from kindergarten to grade five, letting the teachers believe that the test was useful in identifying high potential. Within each class, five students were singled out as presenting high potential. But in reality, they had been selected at random. At the end of year the students were administered an IQ test and in fact the students who had been identified as ‘high potential’ at random were the ones who made the most marked progress. Rosenthal and Jacobson went on to argue that teachers’ beliefs in their students were shaping up the way they were interacting with them. In fact, recordings showed that when dealing with the singled out students, they were more tolerant of errors, they tended to ask them questions more often and they gave them more attention throughout the school year. 18 The Executive
Why this matters Lay beliefs but also academic research will vouch that in-group employees will do better within an organisational context than out-group employees. Individuals close to managers typically present stronger commitment towards the organisation, a greater extent of citizenship behaviour, stronger on-the-job performance and a tendency to stay in the job even in the face of adversity. Persons in the ‘out-group’ will generally criticise the ‘in-group’ employees and the greater challenge appears to lie in the management of the former. Within the academic context, the arguments linked to in-group and out-group behaviour have been crystallised in an approach referred to as leader-member exchange theory (LMX) and this viewpoint has in fact stood up well to academic scrutiny. On analysis,
4. A shocking reality In 2013, The Psychologist celebrated the 50th anniversary from Stanley Milgram’s publication of his classic studies relating to power and authority by devoting a full edition to the implications and repercussions of his findings. Milgram was interested in understanding why Nazi soldiers during the second world war committed atrocities and obeyed unquestioningly superior instructions leading to crimes such as those of the holocaust. Snow (as quoted in Milgram 1963, p. 372) writes “when you think about the long and gloomy history of man, you will find more crimes have ever been committed in the name of obedience than have ever been committed in the name of rebellion”. To investigate the subject, Milgram invited participants to what they believed to be a study on memory and learning at Yale University. They were led to an interaction laboratory where they were introduced to an experimenter and who they believed to be another participant. He was, however, a confederate to the researcher. Rigged draws were made, and in each case, the actual participant ended up taking the role of a teacher, while the confederate took on the role of the learner. The teacher was asked to presents words for recall to the learner and to administer a shock when an error was made. The shock machine presented designations from 15 volts to 450 volts and corresponding labels were attached from ‘Slight Shock’ to ‘Danger XXX’. The learner deliberately made errors and as a result the teacher was prompted by the researcher to administer shocks (in reality www.the-executive.biz
Issue No. 63 - 2015
The Executive
Four Social Psychology Studies that Matter to Your Business
Within organisations it is easy for managers to fall into the trap of expecting unconditional obedience from their subordinates but this eventually only leads to creation of mindless automata. Brehm, S. S., Kassin, S., & Fein, S. F. (2005). Social Psychology. London: Houghton Mifflin.
Langer, E. J., & Rodin, J. (1976). The effects of choice and enhanced personal responsibility for the aged: A field experiment in an institutional setting. Journal of
Personality and Social
Psychology, 34, 191-198. no shocks were being given but the actors were feigning the pain). In the experiment no participant stopped before administering at least 300 volts, while 26 participants administered the full range of shocks even when the learner pretended to have fallen unconscious. Milgram argued that participants were administering painful treatment to others as they felt compelled to follow instructions being presented by the experimenter, who in his role was being seen as the source of responsibility for the outcomes. Why this matters It is easy to dismiss the Milgram studies as a product of the 60s or to consider the participants in the study as somewhat deviant, but Milgram had opportunity to repeat the investigation a number of times, including a run with Yale University students, and in each case the outcomes were unequivocally pointing towards the same direction. Incidentally these studies were ground to a halt on ethical grounds, as participants were being deceived on the true intentions of the study, and a good number of participants were experiencing significant distress in the process. But the outcomes are nonetheless fascinating, and call for an exertion of caution in the www.the-executive.biz
handling of power and authority. Within organisations it is easy for managers to fall into the trap of expecting unconditional obedience from their subordinates but this eventually only leads to creation of mindless automata. Automata will do what they have been told and will follow instructions but ultimately they will struggle in instances in which they need to take on responsibility themselves for work decisions and outcomes.
Langer, E. J., & Rodin, J. (1977). Long-term effects
Conclusion Research investigations are often carried out with the aim of extending knowledge but researchers tend to show interest in having their work see application and fruitful outcomes in the real world. From the practitioner’s side, it is important to keep an eye open on evidence resulting from academia, as this can allow them to carry out their own work from within a more grounded, empirical perspective.
Miller, A. G. (1970). Role of physical attractiveness
ol-relevant intervention with the institutionalized aged. Journal of Personality and Social Psychology, 35, 879-902.
Milgram, S. (1963). Behavioral study of obedience. Journal of Abnormal and Social Psychology, 67, 371-378.
in impression formation. Psychonomic Science, 19, 241-243.
Rosenthal, R., & Jacobson, L. F. (1968). Teacher expectations for the disadvantaged. Scientific American, 4, 218-232.
Calvin Cassar is Human Resources & Administration Manager at Mizzi Motors Limited. He holds particular interest and expertise in recruitment, assessment and quantitative analyses having gained exposure in these through academic as well as work experiences. The Executive 19
Issue No. 63 - 2015
HIGHLIGHT: Phoenicia Hotel - Back to Business (Lunches)
The Executive
Back to Business (Lunches) After the Christmas hiatus the business lunch scene swings back into full force. Malta’s business lunch is a time for chit-chat and building relationships, and definitely more than just a fuel stop. It’s also great for multi-tasking, meaning people eat well while continuing to talk business. The “working lunch” is an extension of the famous Maltese work ethic and is encapsulated by the tasty business lunch menus at Pegasus, one of Valletta’s time-honoured eateries.
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egasus is conveniently set just outside the ancient city walls, perfect for the 8 tumoli of kitchen gardens that supply the award-winning brigade of chefs with fresh vegetables and fruit all year round. Pegasus is the only restaurant in Valletta to have its own kitchen garden. A Pegasus business lunch features local ingredients prepared in a multitude of specials every week based on delicious Mediterranean cuisine. Food & Beverage Manager Francesco Perricone has structured the business lunch menu with the goal of providing cutting-edge, seasonally-appropriate food and drink at prix fixe, €25 for a 2-course and €28 for a 3-course lunch. “We would rather have people here twice a week, than once a month,” remarked Mr. Perricone. “This is obvious to the casual observer who recognises friendly locals each and every visit.” Pegasus serves its business lunches Monday through to Saturday from 12:30 until a generous last orders at 3:00pm which underlines its Mediterranean roots, lingering over great food to discuss complex business deals. Both the 2-course and 3-course prix fixe menus have a choice from a selection of 3 starters, 3 main courses and 3 desserts, as well as 2 daily specials which are cooked according to seasonal inspiration. The menus change weekly on a Monday and Mr. Perricone has developed a special selection of wines, available both by the glass and the bottle, to help ease the conversation. The signature a la carte menu is also available at all times, as is free wi-fi. International reviewers including prestige Italian journalists from Gambero Rosso, Ms Alessandra Colaci, Mr Gabriele Eschenazi and Ms Marilisa Bruno and Sarah Scarpone have been beating a path to the Pegasus. A select group of some of Britain’s top food writers such as Nick Harman, editor of leading UK food website Foodepedia together with David Blake from Planet Confidential, Salutations media’s Beverley Uddin-Khandakar, Sid Raghava from Kensington and Chelsea Review and stylist Emma Sleight all ate at Pegasus and follows on a spate of interest in Malta with Jamie Oliver’s team here recently lauding praise on the Maltese culinary scene. Mr. Harman assessed how the kitchen garden concept is translating into creativity at Pegasus, “Fine cooking with playful touches, as well as grand gestures.” www.the-executive.biz
The last word goes to Executive Chef Saul Halevi who says, “I believe fresh, natural food tastes better, like the world-class fish which our artisan fishermen deliver daily. Of course, we believe in supporting our local organic farmers and those practicing sustainable agriculture. Getting balance in life, nature and food is difficult but well worth the effort. I like to pay homage to the great Mediterranean dishes and styles of cooking that have evolved since the beginning of time and put our own little spin on them. We want Pegasus to be a positive force in the lives of the people who become involved with it and improve their lives as a result.” For further information see www.phoeniciamalta.com or www.facebook.com/ phoeniciahotel, or call 2122 5241 to make lunch your business. The Executive 21
Issue No. 63 - 2015
The Executive
Interview with an Entrepreneur: Neville Cutajar
Innovating
within a Traditional Industry When sitting down with Neville Cutajar, managing partner and one of the founders of 3a Malta as well as director of 3a Global, the conversation inevitably turns to the identity and positioning of the firm and the network as a fast-growing player in the professional services sector. Seeing that 3a Malta fulfils its mission to provide an innovative and comprehensive, yet personal service to local and international business is a matter very close to Mr. Cutajar’s heart. As he states early on in this interview, the focus of 3a is to act as a catalyst for enterprises in realising their business potential through the 3a trio of core competences that include accountancy, assurance and advisory services. It didn’t escape the founders’ attention that this particular convergence of services all started with the letter ‘A’, humorously capturing the coincidence in their brand name — 3a — which also provided the inspiration for their corporate tagline: ‘Your Aspirations, Your Achievements - Our Aim’. www.the-executive.biz
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Issue No. 63 - 2015
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S
Interview with an Entrepreneur: Neville Cutajar
ince being launched in February 2008, 3a has go Since being launched in February 2008, 3a Malta has gone from strength to strength. Led by team of dynamic professionals consisting of Neville Cutajar himself, Christian Vella and Clive Farrugia the organisation has more than tripled its initial complement of staff from 9 employees to 25 in just over seven years.
Neville points out the company’s track record of client retention as proof that their strategy works and ascribes this to the founders’ will from the get-go to invest heavily both in the human resources underpinning 3a’s operations, as well as in the technology that permits open and free sharing of the company’s knowledge in the business amongst employees and clients alike.
The firm has also created the first Maltese network providing accounting, auditing and advisory services- 3a Global which was launched in 2013 and which now already incorporated member firms in Cyprus, United Kingdom, Czech Republic and Italy a year later.
Perhaps unsurprisingly, the fact that 3a is a comparatively small outfit compared to larger and more pronounced organisations in the same industry does not lead Neville and his managing partners to underestimate their brand’s ability to be a major player in the market, at least from an innovation and client service point of view. The company is comfortable to punch above its weight, and this is particularly evident in its ability to attract talent as well as take on high profile clients and assignments.
But what accounts for 3a’s success? Neville is unequivocal in his reply. A firm belief in putting the values espoused by the company in practice, such as giving personalised attention to every individual client’s needs, an innovative and professional working environment for their employees; and a commitment to the organisation’s social responsibilities, contributed to the company’s continued growth. 3a’s business is in value-building, and every one of the themes above simply reflect the domains in which the brand exerts its efforts whilst practically conducting its business of maximising returns on the investment decisions being made by its clients. However, as Neville clarifies, the company straddles not only the monetary economy but also a knowledge one, which explains why since the very start, 3a has placed such a premium in creating a working environment which develops its employees’ potential and facilitates the sharing of knowledge. Punching above its weight
What does 3a offer that sets its apart from its larger, more influential, counterparts? In a word, creativity. As a smaller company, 3a depends on the ability of its employees to be able to apply their expertise to a wider range of related areas within their specialisation.
It is from their very start that 3a created a working environment which develops its employees’ potential and facilitates the sharing of knowledge.
Although working within a financial company involves a significant amount of number crunching, Neville stresses that 3a’s clients are not numbers, they are in fact people - entrepreneurs and established business people - who are best served when given individual attention to their particular set of needs and business goals. This is achieved by training employees to look at client’s problems from a multiplicity of perspectives and empowering them in being able to offer relevant and timely answers to their clients’ questions. In this regard, 3a’s strategy approach is to provide entrepreneurs with professionals who look at things from a Board of Directors perspective, thus providing real business solutions for strategic and investments decisions which need to be taken in real time. www.the-executive.biz
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Issue No. 63 - 2015
The Executive
Interview with an Entrepreneur: Neville Cutajar
Local company with a global outlook According to Neville, this expansion of the 3a brand reflects its sensitivity to the increased impact of global trading on local markets as well as to the fact that Malta has become an important jurisdiction for foreign businesses to enhance their growth and international business. Most organisations in Malta are frequently engaged in business transactions with businesses based in foreign countries, and this requires a thorough understanding of the differences in the jurisdictions of these countries for an optimal operation. As such, cultivating the right relationships plays a vital role in 3a’s work. Neville highlights the importance of forging alliances with professional advisers who specialise in every jurisdiction within which one intends conducting business, a requirement that becomes ever more critical for a company that cannot realistically be specialised in every single jurisdiction.
The experience that 3a’s clients are enjoying through its company in Malta is in the process of being replicated elsewhere. 3a already has a franchisee offering the same suite of services in Cyprus, with a second operation based in the Czech Republic in the pipeline.
An employee dealing with the company’s auditing services, for example, has to be able to conduct EU funding audits, internal audits, IT audits and more. The job description at a younger company is inevitably more open, as professionals have to implement their expertise in a wider range of scenarios which permits employees to meet the challenges faced by their clients with an eclectic approach that is capable of analysing it from a variety of perspectives. The constant exposure to a diversity of challenges enables the company to maintain a fresh perspective on their business. However, Neville is quick to point out, it does not preclude the necessity of specialisation and the company still stands on the threefold areas of accountancy, assurance and advisory services that represent each co-founder’s field of expertise. The experience that 3a’s clients are enjoying through its firm in Malta is in the process of being replicated elsewhere through the launch of 3a Global network last year, which has already gathered member firms in Cyprus, Czech Republic, Italy and UK within one year from its launch. www.the-executive.biz
In fact, professional service firms today are often required to team up with other firms and integrate their skills in order to provide a holistic service to their clients. Whilst in Malta such a practice may seem threatening from a competitive point of view, 3a has thrived by building strong relationships with such firms, thus enabling them to maximise such opportunities. Of particular importance is creating alliances with firms abroad. This not only gives a global competitive edge to 3a, but it has moreover enabled the brand to provide their clients seeking to do business in multiple jurisdictions with advice that is tailored to them and relevant to their circumstances. Dealing with the business socialscape This reality particularly affects Malta because the country has garnered such a reputation as an international economic hub for a wide variety of foreign companies, especially within the IT industry. For this reason, a professional services firm such as 3a is often placed in a position where it has to oversee business being conducted abroad; and often via electronic means. However, even local companies are either selling or buying from abroad; a fact with makes this field very complex to administer and reinforces the need to tailor advisory services to the specific circumstances faced by the client. According to Neville, no company today is immune to the emergence of globalisation. The realities of contemporary business requires solid relationships as much as solid strategies. He explains in great length the benefits of being part of an international network of firms, correlating them to the network which 3a has established. The Executive 27
Issue No. 63 - 2015
The Executive
Interview with an Entrepreneur: Neville Cutajar
One of the main benefits of being part of a larger web of companies is that the basic infrastructure needed by the client is already in place and is the result of extensive testing processes by different franchisees that ultimately contributed to setting up a system which is running in line with rigorous standards. Knowledge at its basis This is something 3a takes very seriously, but Neville says that the company has gone a step further than that. Not content with providing clients the basic necessities, they expanded their focus to include also essential (but sadly often overlooked) factors like customer relationship management, documentation and other factors that contribute to the running of a successful company.
Franchising the future Neville has previously described the ideal person to run a franchise as somebody with a ‘capped entrepreneurial spirit’ - somebody willing to take on a more disciplined approach in running a firm. But this doesn’t demean the disruptive energy of an entrepreneur ready to push the envelope. 3a itself has a number of unconventional decisions under its belt that shaped the kind of company it is today. Rather, the franchise environment 3a has set up is one that permits a level playing field for franchisees with different risk tolerances, whilst banking on the experience and lessons learnt from dealing with franchises themselves.
The argument presented by Neville dovetails perfectly with his opinion that creating such a network isn’t for everyone. By necessity, the conditions set will restrict the way another member firm operates the business in order to assure brand consistency. It will furthermore establish a standard level of service and, ultimately; customer satisfaction which is derived by ensuring a service offering and an experience which is consistent wherever it is received from. In keeping with their vision of how 3a Global has been set-up, the network has established clear rules of play; simple but effective rules of thumb, a flexible network providing access to resources, as well as an infrastructure and knowledge which is impossible to invest in and obtain as a small firm, but which will be economically viable as part of a network where costs are spread and resources diversified. 28 The Executive
This regulated workflow serves to ensure that customers dealing with any branch of their operations, no matter where in they are located in the world, are given the same level of service. A web of information 3a’s commitment to outdo the typical offering of a network accountancy is evidenced by how keenly Neville explains the group’s efforts to set up a state-of-the-art IT infrastructure that can support the management practises outlined above.
Neville has previously described the ideal person to run a franchise as somebody with a ‘capped entrepreneurial spirit’ - somebody willing to take on a more disciplined approach in running a firm. But this doesn’t demean the disruptive energy of an entrepreneur ready to push the envelope.
The IT system in question is owned by 3a. In a bold move, however, the group decided to outsource its management in order to give itself the benefit of a flexible and cost-effective solution that does not burden the company with investing resources on an easily outdated infrastructure. This has permitted 3a to allocate more resources on pursuing its goal to becoming a globally recognised brand. www.the-executive.biz
Issue No. 63 - 2015
The Executive
Interview with an Entrepreneur: Neville Cutajar
As part of 3a’s commitment to giving added value, both to clients and franchisees, Neville highlights that the system allows a lot of interaction for clients looking for opportunities to do business with 3a and to learn more about the advantages and disadvantages of operating in different jurisdictions. This international sharing of knowledge could benefit also the employees of future 3a franchises since the exchange of information can eventually lead to actual sharing of human resources between the locally-based parent company and its satellites abroad. Challenges faced
3a’s regulated workflow serves to ensure that customers dealing with any branch of their operations, no matter where in they are located in the world, are given the same level of service.
Another plus of the IT system developed by 3a is that it allows its employees to work completely online while still being able to provide the kind of seamless operation to clients that 3a takes great pride in giving. The system that is in place acknowledges professionals as they log onto it - even from home - and permits rapid sharing of information between 3a, its employees and their clients. Another technical innovation that 3a developed is a depository of the knowledge learnt throughout its six years of operation that is freely accessible to its staff. This customised database has been modelled on Wikipedia and is known as the 3a Knowledge Share; a concept which will eventually connect all 3a franchises on a single web of information sharing. Neville explains that 3a Knowledge Share is not meant to be a static storehouse of information, but a dynamic resources that is developed collaboratively by all the staff while dealing with clients and conducting research. Any change effected by one member on the network will be automatically transmitted across the infrastructure, allowing employees to conduct realtime searches for items even while they are being updated. 3a Knowledge Share has both private and public components, with the latter being freely accessible by clients as well. www.the-executive.biz
Being part of an innovative, and fairly disruptive, professional services firm does have its fair share of challenges. Neville pins this down primarily to the fact that unfortunately many companies in Malta neglect to spend time to create a properly defined management layer onto their business, as well as a realistic business strategy that helps them assess objectively their current performance and pinpoint their strengths and growing edges. One of most common requests that 3a has to field concern strategies and how to better use of company resources - something which Neville believes should have been determined at the earliest stages of company development in order to have a benchmark that companies like 3a can use to collaborate better with potential customers and give them more structured and actionable advice. This situation requires the employees at 3a have to regularly put themselves in their clients’ shoes and look at the circumstances faced by the clients from a businessman’s perspective and understanding in order to enhance collaboration with them. This also involves being able to capitalise on the client’s products and human resources and figuring out the best way to improve performance. Nevertheless, Neville says that 3a is in a position to widen its scope from a local company to one with an international perspective. He explains that the process that lead to this point was an organic one. In the first few years of business, the company was mainly focused on putting in place the systems and nurturing the human resources necessary to put 3a on par with its bigger competitors. Forging stronger ties with other firms Neville affirms that the company’s emphasis on a high calibre of competence and continuous investment in its people’s development means that now the brand is manned by a highly professional staff, most of The Executive 29
Issue No. 63 - 2015
The Executive
Interview with an Entrepreneur: Neville Cutajar
Learning from Neville’s Experiences In our interview with 3A’s Neville Cutajar, one of the company’s managing partners, director, and co-founder, we delved deep into the critical factors that shaped the success of the company from its startup years to its present position in the market. In this column, we list five of the most salient learning points that emerged from the experiences Neville shared in our interview.
1. Put the values espoused by company in practice. Though the values that every organisation embodies will differ according to its founders’ and target customers’ agendas, Neville pinpoints certain universal qualities that should be valued by companies and put in practice, including ‘giving personalised attention to individual client’s needs’, fostering ‘an innovative and professional working environment for [the] employees’ and ‘a commitment to the organisation’s social responsibilities’.
2. Develop employees’ potential and facilitate the sharing of knowledge. Another key learning point from 3A’s experience is that time and money invested in developing your human resources will always yield the best return-on-investment for the company. In fact, Neville advocates in favour of ‘training employees to look at client’s problems from a multiplicity of perspectives’. When this is done in addition to investing in technology that facilitates the sharing of employee experiences, then the company can truly benefit from the combined knowledge of all its members.
3. Contemporary business requires solid relationships as much as it does solid strategies. This point can be capitalised upon by investing heavily in your own and your employees’
30 The Executive
abilities to ‘put [your]selves in [the] clients’ shoes’ in order to enhance collaboration with them. Neville emphases that this also involves having a thorough understanding of the client’s products and resources and finding a way to serve their specific needs beyond their expectations.
4. Listen to the opinion of the employees while taking the responsibility for making the final decision Again, 3A’s focus on tapping the skills and experiences of its personnel is clearly conveyed in this learning point. Managers should help their employees to develop a proactive mindset and make it easier for them to contribute feedback on how to help their company ‘perform better and adopt more effective business strategies’. Mr Cutajar suggests that any final decision has to be taken ‘in full cognisance of the body of experiences and skills available in one’s team.’
5. Know, and collaborate with, competition. Finally, Neville recommends studying your competition diligently. He complements this classic business advice with a further suggestion to ‘[put] excellent customer experience above all else’ and encourages local companies to be daring enough to explore the opportunities that lie beyond our shores. As in the case of 3A, this step needn’t be taken alone, but under the wings of alliances forged with international organisations working within the same industries.
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Issue No. 63 - 2015
The Executive
Interview with an Entrepreneur: Neville Cutajar
whom possess postgraduate qualifications in their area of specialisation. Several employees also have experience working with much bigger firms than 3a, including major foreign institutions. 3a has always attached a great deal of importance to the relationships formed between the company and its clients, and Neville explains that the same level of care has been dedicated to forging strong ties with larger firms located mainly in Europe. The group has been involved in setting up companies in countries such as Cyprus and the UK and has worked handin-hand with its worldwide partners for a number of years.
Management should be humble enough to listen to the opinion of the employees while taking the responsibility for making the final decision.
Neville readily acknowledges the importance of these international bonds and admits that in creating these links and embedding 3a within a strong network of like-minded firms, the group has a solid foundation on which to build 3a Global. As stated earlier, Cyprus was the first partner firm of the group with new member firms coming on board in recent months. These changes are consistent with 3a’s vision for the future. Neville reiterates that being different from the competitors - carving out a unique niche in the sector - is what ensures 3a of its success. But this is not the only ingredient. Words of advice At the end of the day, Neville believes that it all boils down to good communication and sense of engagement in all parties involved in making 3a’s vision a reality. He recommends that management should be humble enough to listen to the opinion of the employees while taking the responsibility for making the final decision. This decision has to be made in full cognisance of the body of experiences and skills available in one’s team. 3a’s rapid growth over the years is a strong testament to the leadership of the co-founders and the dedication of their employees. Neville is very clear about the conditions necessary to create a brand that is powerful enough to become a game-changer in the industry. His advice to entrepreneurs seeking to do this is simple. Study your competition diligently, and find out what core benefits your company’s products and services truly offer, before taking the plunge. Neville believes that the internet has made it easier for prospective business owners to set up shop and recommends a gradual approach to growing one’s brand in the market. True to 3a’s stance, he advocates putting excellent customer experience above all else, as well as having www.the-executive.biz
the daring to expand one’s horizons beyond these shores and explore the world of opportunities in that are available in foreign markets. On the other hand, for those who are more comfortable within a preordained structure as opposed to the unknown elements of self-employment, Neville suggests that they have a crucial role to play in their company’s growth. He believes they should not simply consider themselves as employees, but as partners or consultants that can give valid, field-tested feedback on how to help their company perform better and adopt more effective business strategies. Achieving their aspirations 3a’s aim is clearly to achieve their aspirations in promoting a business model which extends its reach to an international client base while delivering a constant level of experience that is based upon the cumulative expertise earned over their years of doing business. As described by Neville, meeting this goal involves a blend of human resources, networking and a sound IT infrastructure to facilitate communication between the former two. The path taken by 3a reflects the complexity of doing business in the modern world, and echoes the same challenges that are faced by the clients supported by 3a. If their track record is anything to go by, then one can safely say that 3a does indeed live up to what they declare in their mission statement, namely that ‘each business encounter [is] a learning experience in itself.’ The Executive 31
Issue No. 63 - 2015
The Executive
HIGHLIGHT: Allied Consultants
Allied Consultants: Business Assistance for Business Success – From Training to Market Research and Consulting Allied Consultants Ltd is a knowledge-oriented organisation operating three core services, each having its own division within the Company: Business and Management Training through its own brand Malta Business School, Market Research, and Business Consulting. The firm’s underlying philosophy is that of tailoring its services to the needs of its clients and delivering exceptional quality so as to surpass expectations. Outstanding service delivery is what Allied Consultants Ltd is known for.
O
ver the years, the firm has been a service provider to an array of companies both in the public and private sector; locally and overseas; large and small. Apart from its service promise of excellence, the company prides itself of a high level of returning customers. Consisting of a young and dynamic team of people Allied Consultants is innovative in its services and products. Being an SME, the company benefits from the advantages of its size through its flexibility, intuition and most often anticipating the required change. Malta Business School Training and Development are at the core of this established higher education institution. The School delivers accredited qualification programmes as well as corporate training projects from its premises in centrally located Birkirkara. Malta Business School is the proud representative of various providers of high-level, sought after accredited programmes such as Henley Business School and The City Law School. Programmes vary from the prestigious Henley Flexible Executive MBA, to the City Law School’s LLM in International Business, Diploma programmes in Business which can lead to accredited Bachelor degrees, as well as a range of Certificate courses. Malta Business School has also successfully achieved home-grown accreditation: a sure indication of a professional attitude towards adult training. The School carries out both in-house training for companies and mixed industry training. Typically such training services are customised to the client’s requirements so as to ensure maximum benefit. Furthermore delivery and interventions are not just classroom based, but are also coupled with mentoring and coaching prior and following the training as the need may be. www.the-executive.biz
Market Research Allied Consultants is the local preferred partner of GfK – one of the leading global market research firms - and carries out a number of research services. Whether qualitative or quantitative research, the firm provides a solid base for decision-making, by ensuring the most effective and reliable gathering of data. The firm’s experience ranges from nationwide surveys using face-toface or telephone-based interviews, to focus group discussions, indepth interviews and mystery shopping. Using the latest methodologies, technologies and appropriate statistical analysis tools for intelligence gathering, the firm carries out client research in a number of areas, such as brand loyalty, customer trends and attitudes, pricing, advertising tracking and more. Business Consulting In the third area of business services, Allied Consultants aims to be a partner to its clients by ensuring that their potential is maximised in order to achieve their business goals. Hence this tailored service encapsulates areas such as business strategy, innovation, business planning, marketing, finance, HR and operations management. Clients’ needs have ranged from hands-on retainer-based consulting on the premises, to strategic or industry level research and reporting for start-ups, internationalisation or other marketentry efforts, and the writing of business plans. The firm’s client base and portfolio has grown to include both large and small private enterprises, and governmental organisations, assisting them and exceeding expectations throughout its more than ten years of service. For further information visit www.alliedconsultants.com.mt, www.mbs.edu.mt, or call on 21311326. The Executive 33
Find us on
Issue No. 63 - 2015
The Executive
Executive Humour
Executive
HUMOUR
“Don’t mind me. I thought I’d use these boring office meetings to do my exercising.”
“Just keep an eye on the wind, OK?”
“The one thing on your resume that concerns me is you mispelt your last name.”
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“Upset at you for breaching the noncompete? Of course not.”
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Issue No. 63 - 2015
The Executive
Interview with an Entrepreneur - Johnaton Grech
the CHREOS
and the future of Electric Vehicles by Mark Debono
Sitting down for a chat with Johnaton Grech, during a rare break in his busy schedule, reveals a man who is determined to stretch the limits of the current standards in the electric vehicle (EV) industry. At 39, Mr Grech, CEO of Silex Power, an alternative energy firm based in Nadur, Gozo, has already amassed many years of experience working in green energy and electronics. It is therefore quite natural that given this background, combined with a passion for cars, he would be the mind behind Chreos -- a luxury electric car which was announced to the world in February 2013. Johnaton Grech talks about Chreos and the future of electric vehicles.
36 The Executive
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Issue No. 63 - 2015
Interview with an Entrepeneur - Johnaton Grech
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he concept designs of the Chreos, which is slated to roll out of production in 2015, caught the attention of both the local and international media. It is going to be constructed out of lightweight carbon fibre which will be modelled into the sleek, sweeping curves that grace the exterior of this four-door sedan; a design executed by Maltese stylist Reuben Zammit. Its sporty appearance contrasts heavily with the bulky proportions of a typical EV, but what excited people the most is what lay inside. The interior of the Chreos is an elegant and opulent space, characterised by leather and wood fittings, that seats up to four people. Its design reflects the soft lines that characterise its exterior, but the centrepiece here is the on-board computer system. Unlike most cars, Chreos dispenses with a cluttered dashboard full of knobs and buttons. Instead it presents a clean panel, at the centre of which is a large display which gives the driver a host of options and instant updates about the vehicle and the road conditions. But the Chreos isn’t just about the aesthetics. Johnaton www.the-executive.biz
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claims that this car will be fitted with 640 bhp, goes from zero to 100 km/h in under 3 seconds, and can cover a 1000 km range at an average cruising speed of 125 km/h after only 10 minutes of charge using special hypercharging technology. No wonder that many international media outlets, including Fox News, which picked up the story, initially dubbed the project as ‘far-fetched’ and ‘unrealistic’. Johnaton doesn’t let this resistance faze him however and is unapologetic when it comes to defending his ambitious plans. He explains that Silex is simply utilising and improving on existing technologies, and incorporating them in a project which will revolutionise the lifestyle of consumers. He readily admits that announcing Chreos was a bold move, especially given that the local EV market is a very small one and doesn’t have an established reputation for car production as other countries do. Yet, he insists that venturing into the EV industry was a calculated pathway; that its full implications had been thoroughly studied before electric mobility was added to Silex’s portfolio. The Executive 37
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Issue No. 63 - 2015
The Executive
Interview with an Entrepreneur: Johnaton Grech
A long road Although Johnaton did a brief stint with a company involved in exhaust systems in the past, his foray into electric mobility presented him with new and bigger challenges. However, he could count on his previous experiences in electronic systems to provide him with a fresh perspective on electric vehicles that went beyond the usual expectations. One of the distinguishing features of his views on electric mobility is seen in the paradigm shift he put as his basis for designing Chreos; the vehicle isn’t simply a motor with four wheels attached and specific mechanics, but more so an advanced computer system that can be consistently experienced by the driver irrespective of its outer trappings. Johnaton takes this new perspective on motoring very seriously. He is adamant that given today’s technology, vehicles are defined more by their functionality -- the quality of the driver’s experience behind the wheel -- rather than their form. As such, he believes that Silex is really in the business of building advanced IT systems that can be adapted to an automotive purpose: a business which he is most familiar with.
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T he IT connection : how software drives cars Johnaton finds it easy and logical to explain the changing realities of the EV industry by comparing it to the evolution of computers over the decades, beginning from the 1990s. Back then, the major defining feature of computers was their hardware. Their physical component dictated what they could or couldn’t do; software was fully dependent on the underlying hardware for it to run properly.
Though vehicles are today defined more by function than by form, much attention has evidently even been given to the latter.
The tide turned in the new millennium, as software development became more powerful and sophisticated, and had the potential to radically affect the underlying functionality of the device it was installed on.
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Within a decade EVs will exert a more prominent force in the automotive market due to technical breakthroughs as well as an increase in general awareness of EVs as an environmentally-friendly alternative.
Johnaton believes that this shift had its parallel in the automotive field. Whereas previously most advancements were based on manufacturers developing better physical components to improve upon their latest models, nowadays software management plays the major role in the automotive innovation. He is keen to point out that software enhancements can dictate the control and feel of a vehicle and that we have now reached a point where cars are based around how their creators envision the driving experience, rather than when the vision is based upon engineering better physical components. The complexity of the computer systems that support the functioning of today’s vehicles means that it is undesirable to build a particular system around specific hardware since this would greatly limit the usefulness of the system. Silex aims to develop a cutting-edge IT platform that can be implemented in other EVs, thus greatly expanding its utility and relevance to the industry. Rock-solid idea There is a common thread in Johnaton’ business ventures which is nicely summed by the symbolism in the name of his company, Silex. He explains that this name came about from the Greek word for ‘rock’. The reason why it is this word which was adopted was initially due to his involvement in real estate projects and development. Silex was therefore a tongue-in-cheek reference to his original line of business, but the name would also fit presciently to later endeavours in green technology. From stone to silicon chips, Johnaton’s company expanded on its involvement in renewable energy and technology and thus entered into the field of EVs. www.the-executive.biz
Interview with an Entrepreneur: Johnaton Grech
Not content with being simply another competitor in the industry, his aim was to implement almost a decade’s worth of progress in the software driving electric cars into a vehicle which could match, and in some cases exceed, the standards that are normally only expected out of conventional luxury cars. It took nearly two years of intense planning before Silex could finally reveal the actual images of the car and trigger the wave of expectation that surrounded the announcement of Chreos. From the start, Johnaton’s entrepreneurial ambitions could only be satisfied by introducing a game-changer to the EV market. The idea of a luxury green vehicle had been lurking in his mind for a long time, but it was only after he was given the opportunity to modify and distribute cars for other automotive brands that he finally decided to design and build his very own vehicle. EV is a relatively young industry which is still burdened with the unfavourable image of bulky, unseemly cars that go slow and need to be frequently charged. The idea of ‘electric car’ is still largely seen in contrast to that of a ‘real car’; he admits that so far only vehicles from the likes of Tesla Motors and BMW have managed to bridge that gap, with other manufacturers still at a very early stage in development. For this reason, he believes that the EV industry is in a very fluid state and a startup like Silex enjoys the possibility of leapfrogging ahead over more established brands if Chreos proves to be a viable and attractive offer. The relative lack of experience in the automotive field doesn’t daunt him. He stands firmly by his belief that, fundamentally, an electric car is a computer on wheels and calls upon his experience in controlled robotics as his main source of inspiration instead. As an entrepreneur, Johnaton is aware of the risks that are involved whenever venturing into pristine fields, however he is optimistic that within a decade EVs will exert a more prominent force in the automotive market due to technical breakthroughs that will improve their efficiency and maintenance needs, as well as an increase in general awareness of EVs as an environmentally-friendly alternative. Ups and downs of a bumpy ride Although future prospects may look bright for EVs, the current situation suggests a very different picture. Hefty price tags, low distance ranges and lengthy charging times are the biggest holdback factors hampering the sales of electric cars. Money-wise, even the most basic of EV models compete in a price range which includes conventional cars that are far more luxurious and offer better performance to the buyer. Moreover, many EVs only manage a driving distance in the 100-120 km range before their battery needs recharging. And high-end models like the Tesla retail at prices that are prohibitive to the The Executive 41
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Interview with an Entrepreneur: Johnaton Grech
Electric cars are easier to drive than their conventional counterparts, simpler to maintain, quieter, safer, and do not damage the environment.
average consumer and severely restricts their market. Long charging times is another reason why EVs are shunned in favour of less environmentally-friendly alternatives. The convenience of filling up a conventional car in a few seconds is no comparison with waiting hours at a time for an EV to be fully charged. These three factors: price, range and charging times, fuel most of the criticism that is levelled at EVs by sceptics. As technology advances and more competitors enter the market, electric cars will become progressively more affordable due to cheaper components and price will not be such a sticking point for consumers. However, range and charging times will require more extensive innovation to be made before drivers will be confident enough to switch to driving an EV. Although the barrage of criticism that is directed at EVs would discourage anyone, Johnaton is intent on pointing out that most of it is in fact fuelled by inaccurate impressions of EVs that have been perpetuated by the media and people who have never driven an EV. He claims it is actually very easy to change one’s mind about EVs once you’ve driven one and better understand the differences in technology. Electric cars are easier to drive than their conventional counterparts, simpler to maintain, quieter, safer, and do not damage the environment. These benefits are often fully appreciated only after the consumer builds the courage to switch. A few months after Silex released its press release announcing the Chreos, Tesla unveiled its own luxury electric car, the Model S, in the United States. This has inevitably drawn many to compare the Chreos to the Model S. He readily acknowledges that the US-based company is a direct competitor of Silex at the moment and actually uses Tesla to illustrate his belief about the power of startups in kickstarting the EV industry and raising its standards. www.the-executive.biz
Although larger motor companies are now experimenting with producing their own electric models, he believes that their legacy and heavy investments in promoting conventional technology is weighing them down and making it harder for them to switch and adjust to an alternative technology overnight. Meanwhile, smaller, more ‘agile’ companies like Tesla and Silex are born out of the desire to innovate in this area and consequently they are in a better position to lead the industry’s efforts with their rapid technological advancements. An electric market The world of alternative fuel cars was rocked a while back by the decision of motoring-giant Toyota to back Lexus technology and move towards producing hydrogen-powered vehicles instead of electric or hybrid ones. In the face of this decision, Johnaton sticks to his guns and states that by virtue of it being the simplest technology, hybrid is still the most probable choice that will fuel tomorrow’s generation of environmentally-friendly cars. He points out the biggest drawback of hydrogen technology, namely the difficulty to distribute it efficiently even in the most developed countries. He completely rules out hydrogen as being a viable option for Malta: the investment needed to upgrade petrol stations in order to store hydrogen would be enormous and would also possible a huge safety risk. Even a heavily industrialised region like California would only manage a basic hydrogen distribution structure at best. Hybrid technology requires the installation of electrical charging stations and pillars, which are easier to install and more cost-effective. For these reasons he firmly believes that EVs and their hybrid variants will be the next generation of alternative cars to dominate the market. The Executive 43
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Interview with an Entrepreneur: Johnaton Grech
Changing gears This vision of a luxury electric car that will be as good, if not better, than high-end conventional cars is built around his desire to innovate and address the two major pitfalls of EVs, namely being lengthy charging times and short distance range.
Silex has significantly contributed to technology in on-board software and in battery management, charging and capacity.
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Silex has developed the technology required to create very high-density batteries which can store about three times the energy that a Tesla battery can, in spite of weighing about a third of its weight. He claims that Silex is currently working on hypercharging technology that will enable these batteries to be fully charged in less than 10 minutes, a fraction of what normally is a lengthy and tedious process. The Model S - considered to be the current market leader - needs at least one hour to completely charge.
The Executive Thanks to its innovative technology, Johnaton suggests that it will be possible to plug in and charge your Chreos at special hypercharging platforms at petrol stations, putting an end to fears of being left stranded on the road. The car’s intelligent on-board computer will be able to detect nearby charging stations and give you directions to charge your vehicle when energy levels are low. When not in use, you will be able to plug in your Chreos while it’s in the garage and automatically charge it at a slower rate through solar panels installed outside. We are thus told that there is far more at stake in the Chreos project than successfully producing the first Maltese-made luxury electric car.; a successful convergence between the experiences he obtained while working in IT and the green energy fields is what Johnaton seeks. The two together can result in an economically viable electric car that is good for business as well as for the environment. There have already been numerous encouraging signs in the market due to Tesla’s success with their own luxury EV. When news about the Chreos broke out, the market was massively sceptic and reactions from both sides of the Atlantic were largely negative.
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Issue No. 63 - 2015
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Interview with an Entrepreneur: Johnaton Grech
However, recent developments in next-generation vehicles indicate that the market is all set to accept long-range, fast-charging EVs, confirming that the car developed by Silex is a sound model of what the future will hold. Johnaton boldly states that the Chreos triggered a shift in the mindset that characterised the EV industry, and that Tesla’s success amply confirms that the direction that Silex has taken was a trend-setter for the industry. Driving the extra mile Despite the encouraging signs about the market’s reception to high-standard luxury EVs, he still has to confront the fact that although Chreos will be hand-crafted in Malta, its target buyers will be mainly located in foreign markets. There is already strong interest by buyers in Russia and China for the Chreos and the limited first batch of 300 models will be mainly exported to these countries. This was a decision which was taken after assessing the cost of producing a vehicle which truly embodies the advanced automotive technology of a green era. A less sophisticated, entry-level vehicle would be cheaper and more suited to the local market, but its impact would be nothing in comparison to the revolution which the Chreos is expected to unleash upon the EV industry. Johnaton justifies the hefty price-tag of the Chreos by explaining that the only way Silex could reasonably produce a vehicle with such an advanced on-board technology was by creating a luxury offering that would be targeted to higher price ranges. However, he doesn’t exclude the possibility of constructing cheaper versions of the Chreos for the European and North American markets once sales pick up. The focal points of Silex’s advances in electric mobility are its contributions in on-board software and in battery management, charging and capacity. The luxury aspect of the Chreos was a business decision that could sustain the development costs of these technological advances. The costs faced by the company to engineer all the cutting-edge technology that is packed inside the Chreos could be recouped by packaging it within a high-end luxury car that would look as exceptional from the hardware aspect as it does from the software one. This strategy isn’t unique to Silex. we are keenly informed that Tesla went down the same road with the Model S and that its success only confirms how his vision is coherent with the market’s direction. Silex needs to keep an edge on their competition in order to tap into this emerging market and Johnaton thinks that their major asset is that as a small company, Silex is not constrained by legacy and consumer expectations, unlike bigger companies. They are free to innovate and push the boundaries by designing innovative interiors and tapping into the full potential that software-centred electric cars hold. Owners take great pride in caring for their cars, so won’t an electric car come across as a bit dull due to the lack of human involvement? No, says he: an electric car can actually be more exciting than a conventional car since you can programme it and personalise the driving experience to your style. www.the-executive.biz
Hydrogen is a most efficient means of fuel provision. An apt example of the power of hydrogen as a means of propulsion is the Space Shuttle Main Engine, which burnt hydrogen with oxygen.
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The Executive IT and Green Energy can together provide humanity with an economically-viable electric car that is good for business as well as the environment.
Interview with an Entrepreneur: Johnaton Grech
The software responds and adapts the car to the person behind the wheel. A driver who enjoys driving in a sporty way can optimise the car for a more daring style of driving, whereas somebody more cautious can adjust the same car to a more restrained experience. The beauty of the advanced software is that it affords a lot of customisability features that make the car simpler, safer and more enjoyable to drive. It also cuts down on maintenance costs, so if you’re not handy around cars you won’t have to worry about changing the oil. Fasten your seatbelts Johnaton is well aware that the EV industry has been characterised by numerous ambitious companies who promised that they will radically change the market but then failed to deliver. A recent case in point is the Zap-X, an electric car whose concept designs were of very similar specifications to the Chreos but which never saw the light of day. The risk of investing heavily in new technology and then never seeing it pay off is substantial in this line of business, so what makes Silex different from its predecessors? A well-structured business model and a careful reading of the signs in the market are the defining characteristics, according to Johnaton. He is unequivocal about his company’s intention to make the Chreos a success and believes that the timing is right for this to become a reality. However, a good dose of criticism also helps to keep him in touch with the realities of the situation. He acknowledges that Silex used the varied feedback it received after unveiling the Chreos to creatively adjust its strategy and push harder in its bid to make the concept a reality. And thus, the Chreos must be a vehicle unlike any other; one that distinguishes itself from its competition in both the electric and conventional luxury car ranges. The Chreos will be a testament to Silex’s and Malta’s ability to produce high-tech, ecofriendly vehicles. He is confident that once people will have the opportunity to test the Chreos and experience its advanced technology, they will immediately note the difference in performance and quality when compared to other electric cars and even to conventional vehicles. This unique combination of aesthetic and technological innovation will put the Chreos in a market of its own, a market which has been giving out strong positive signals that it is ready to cause a shift in automotive habits. No secret is made of the fact that the Chreos is not a car for everyone. However, Johnaton believes that such a unique and innovative concept can succeed in attracting early adopters and develop a strong niche client base due to the high demand that characterises the rapidly-growing EV market. With the backing of a strong team, he is certain that when the Chreos finally hits the market as is shortly due, it will offer drivers a ride to remember. I certainly won’t forget to give him a call and ask about that test drive I was promised.
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