Tom Epley

December 13, 2011

BOV Member Tom Epley Applies Turnaround Practices in Africa

Says aid efforts must be rooted in the local culture

Tom Epley is a "Turnaround CEO." Since starting his career as a young MBA graduate in the management training program at FMC Corporation, Epley has led more than a dozen companies with revenues ranging from $50 million to $1 billion. His friendship with Bob Klitgaard, an acclaimed expert on undeveloped countries and then dean of the Rand Public Policy graduate school, brought a rare opportunity for an extensive visit throughout the area that has since become South Sudan. That led to a three-year research and writing project, resulting in The Plague of Good Intentions - We Broke Africa, Here's How to Fix It. In the book, Epley applies principles from his corporate experience to issues such as food production and infrastructure development in central Africa. His conclusion is surprising. Years of study convinced him that most aid efforts in the area do far more harm than good.

Epley's background as a turnaround specialist provides a context for his view of Africa. He had a string of successes managing diverse businesses at FMC. Then he joined investor Irwin Jacobs who owned the Bekins Company and stakes in many other companies. "We acquired firms, quickly assessed where the values were and rapidly generated returns for investors," he says. Epley moved to California to revitalize Bekins and then went on to do the same with one holding after another.

"Cultural change is the fundamental thing I do when turning around a company," he says. "You have to line up the dynamics of the people in a company - like a magnet lining up particles." One of his axioms is, 'Go northwest.' If north is the perfect strategy, Epley does not spend six months figuring out where true north is. He points a firm in a northerly direction, gets everybody pulling the oars together and gradually adjusts course to get to true north.

But Epley's life changed in 2005 when the opportunity in Southern Sudan arose. "Klitgaard told me he had a contract from The United States Agency for International Development (USAID) to spend three weeks visiting local communities all over Southern Sudan, and also engaging with the military leadership and asked if I'd like to go along," recalls Epley. "I said, 'Yes,' before he finished his sentence."

Despite an ongoing civil war, the duo traveled throughout South Sudan and met tribal, village and military leaders. "I went over there thinking, 'I'm an engineer and I'm pretty smart. I bet I can find opportunities for constructive development even though there's a huge history of failure.'" But he discovered a glaring cultural rift between the Sudanese and outsiders. The Sudanese had learned to talk in 21st century language with governments and organizations about modernizing healthcare, education and agriculture. Some of their language was even scripted by outsiders like the United Nations. But he observed a huge gap between their words and their actual commitment.

"The single most important thing I found during three weeks in Sudan was the veneer of 21st Century conversation among the people we talked to," he recalls. "If an NGO asks a village council if they would like to have a hospital, they say, 'Yes, yes.' But if you ask any deeper questions like, 'If the hospital was built and your mother went there for her illness and she died, would anyone in your family ever go there again?' The answer was 'No.' The underlying cultural realities are radically different from the veneer."

Epley concluded that aid initiatives in undeveloped countries can only succeed if they are rooted in the local culture. Otherwise, they will be temporary improvements with potential for a negative longterm effect. In his book, he generalizes this conclusion to the rest of Central Africa. "My feeling was that I couldn't achieve anything constructive with lasting values -- no matter how smart I am or how good my ideas are."

Back in the U.S., Epley read everything he could find about Africa and began putting his experience into writing. "It was the hardest thing I've ever done," he says. "I had no idea how it should be organized or where it was going to come out. After working on it full-time for two years, I concluded both the nuances and the basic organization needed a complete overhaul." So he re-wrote nearly every sentence.

The book starts with historical and cultural background on Central Africa, and South Sudan in particular. Then he discusses the legacy of damage done through what he calls "interference" by outsiders. Through the remaining chapters, Epley develops a concept he calls, "indigenicity."

One example of indigenicity is an AIDS Campaign promoted by Uganda president Yoweri Museveni in the 1990s. "Museveni did something that really solidified the indigenous ideation and drive," he says. "He created a set of people, almost missionaries, who went out to all the towns and villages with an ABC program. That stands for Abstinence, Be faithful and use Condoms. It was clearly an indigenous program, created internally, driven internally, it grew and it worked. Almost alone in the world, Uganda took their HIV incidence rates down significantly, more than ten percent, over the course of six years or so."

Epley also describes when author Jacqueline Novogratz helped a group of women create an orphanage in their village. "They got an old building that needed paint," he says, "so the women asked Jacqueline what color they should paint it. This was a very small thing, but she left it to the women to decide. They wouldn't make a decision for weeks and weeks until finally they came and said, 'We think we should paint it blue.' So she said, 'Okay, let's paint it blue.' Total ownership was achieved by this patient step. It's a wonderful story and I'll bet that orphanage is still going well because the idea, authority and drive came from those women."

Along the way, Epley shows how some of the principles of turnaround management could be applied in areas such as food production, healthcare and infrastructure development. But he insists that every initiative must be indigenous.

Concerning farming in South Sudan, Epley says, "What a country like South Sudan should do is create an indigenous approach to improving agriculture. Many people still farm with sticks. They should create a council with some of the best people to develop a message that farmers will understand. Then send emissaries to the towns and villages."

Epley says it's not just the old adage of teaching someone to fish rather than giving them a fish. He explains that, "If they decide they need to have fish in order to survive, and if they've been trying to get fish out of a pond for generations but can't figure out how to do it, and they say, 'Help us, we need to do this,' and you can give them a one dollar fishing pole for ten cents, and they've earned the ten cents, then you'll get some lasting value. The ideation and drive have to be indigenous."

Epley concludes that one key to bringing about long term positive change is to train the best students in Africa to be future leaders. The African Leadership Academy, founded by Fred Swaniker, a native of Ghana who went to college in the United States, is a pioneer in this effort. Swaniker serves as CEO of the academy, which is based in Soweto, South Africa. The academy identifies top performers when they are juniors or seniors in high school, trains them in academics and leadership, and provides loans for them to attend top universities around the world. When students graduate and return to Africa, their loans are forgiven.

"That's absolutely the right thing to do," says Epley who has contributed to the academy and brought it to the attention of other investors. The program has participants from every country in Africa and is about to have its first graduating class. Every student in the program was placed in one of the world's leading universities.

Epley notes that the African Leadership Academy is a longterm solution and concedes that there are no quick fixes for Africa's problems. But he is hopeful the program will eventually produce a new generation of leaders. "Leadership may be the single most important challenge facing Africa," he says.

In July, 2011, South Sudan became the world's newest country. Many of the warlords and village chieftains Epley visited in 2004 were now running the country. "In November, I had the opportunity to go back to South Sudan for five days and re-engage with many of those same individuals," he says. "This visit provided an amazing insight into the issues and problems of this embryonic country."

"I'd like to say that there's hope," he continues, "but the issues are daunting. A significant portion of the oil revenues, virtually the only commercial enterprise in South Sudan, are already committed to the salaries of a huge government infrastructure. While the factions in South Sudan were united during their struggle for independence from the Sudan, there are new signs of internal strife and the probability of wholesale corruption is high."

On the other hand, Epley notes that South Sudan has great agricultural potential and untapped resources such as gold, diamonds and copper. "We'll see whether they truly want to use these asserts to build roads, schools and hospitals," he says.

"Visiting South Sudan and writing the book comprised an amazing chapter in my life," he concludes. "It had huge impact -- but now it's done." Epley has since resumed his turnaround career as a partner at Vance Street Capital where he works with partners Richard Crowell and Richard Roeder to manage a portfolio of firms. "I enjoy working with companies from a cultural, organizational and tactical standpoint. We take a thoughtful approach and it's invigorating. Now that I'm in my seventies, I can't imagine doing anything else."

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Media Relations