Jacob Kajavala – Brave Heart

Date published: June 29, 2013 at 10:16 am | Comments

Jacob Kajavala isn’t what you’d expect from Central North Island’s hard logging stock. Sure, he’s fit and he’s Maori (half Tuhoe and half Finnish), but he’s wearing a pink flowery shirt and he’s talking about values as if he’s seen the light. “I look at my firm now, and it’s…” He pauses, sips his beer and laughs loudly. “It’s lovely.”

Kajavala is the first to admit that when he first tried to introduce better values into his Kawerau forestry company KFL, his employees thought he’d been sampling something a lot stronger than better business practices at a business retreat in Nepal. He’d gone to Nepal to learn more about changing a business’s culture after first learning about branding and values on an owner-manager course run by Auckland business growth centre the ICEHOUSE.

“It changed my life,” says Kajavala. “Even when I employed 170 people and we were the biggest forestry company in the country, I was never proud of my company. It just felt rough even though I was driving it. And then I realised my company was a product of myself and my whole driver was vengeance, which gave me a lot of drive, but it was a very negative driver.”

Kajavala took over KFL from his Finnish born dad Tapio when he was in his late 20’s, but that had never been the plan. He’d wanted to be a pro windsurfer and was on his way to Hawaii to pursue that dream, after completing a degree in industrial chemistry and computing at Auckland University, when he decided to put his plans on hold for a few months and earn some extra bucks working in his dad’s logging company – something he’d been doing since he was 11.

He was young and full of bravado, so when his dad gave him the chance to lead the newer of his two forestry operations and get its volumes up to profitable levels, Kajavala jumped at it. But a rash decision ended up with Kajavala being knocked to the ground by a huge tree he’d just felled. The tree pummelled over him, leaving his feet by his ears. He had massive internal damage, broken hips and all manner of other injuries including a nasty blow to the head. His kidneys packed up and his doctors told his parents it was unlikely he’d survive.

Kajavala puts his survival down to being young and fit. After months of hospital care he started to come right. His kidneys started working; he even learnt to walk again – contrary to all forecasts. But it was a beautiful young student nurse who Kajavala credits with changing his life – and he barely said two words to her.

“She was gorgeous. I’m paralysed from the waist down and weak, but I was damned if I was going to let her wipe my arse. That’s no way to impress a girl.” Kajavala says it took all the strength he had and more to lift himself up and clean his own bum. But when he handed the bedpan back to the nurse and told her he was fine and didn’t need her help, it was, and still is, one of the proudest moments of his life. The whole experience gave him a courage he’d never had before, he says. “It makes you re-evaluate what’s important; what actually matters.

Ever since then, whenever I’ve been intimidated by things in business or in life, I just think of the moment with that nurse and that keeps it all in perspective.” But the accident also made him hard. “The forest almost killed me. So I wanted to be as good as I possibly could be: that would be vengeance.”

Kajavala’s rehabilitation became his cause. He trained six hours a day. “I became a machine,” he says. In between he did the books for his dad’s firm and took an ACC-paid-for course on business and administration.

The course wasn’t that useful, but it did increase his confidence because suddenly he’d read a lot of the same books other business people had and he found he could talk finance better than most. It also instilled one vital business law, he says: to be successful, you have to have a point of difference.

“We were just a common garden variety logging company. There were hundreds of us throughout the country. So I said to dad, ‘We have to differentiate ourselves. We’re as good at big yellow machines as any other man, but I’m good at computers and none of these other guys know anything about that’.”

The opportunity to combine his two skills came when Fletcher Challenge asked for expressions of interest in a new logging optimisation technology called Timber Tech. Given his background in computing, it was no contest, says Kajavala. But the technology was rough and Kajavala ended up employing two computer programmers full time just to get it working.

“I loved the challenge. I loved being the only forestry contractor with an IT division,” he laughs.

In 1998 he made the technology stick; his dad handed over the reins of the company saying: “there can only be one boss and you’re it”; the tool made Fletcher Challenge many millions of dollars; and KFL went from 25 staff to 170 in less than three years.

But the success was short-lived. In 2003 Fletcher Challenge’s forestry business – then called Fletcher Challenge Forests – went bust and sold up all its forests at a loss.

Kajavala was left several million dollars in debt. “I lost 68 percent of my turnover within weeks. So I had 68 percent of my fleet parked up and it’s all 100 percent financed. How can you service the debt when it’s all parked up?”

Kajavala says he felt worse than after his logging accident. “The accident was an accident. But through action or inaction I’d created this situation. I’d put all our eggs in one basket.” He withdrew: spent a week panicking and then another week with few constructive thoughts, let alone any action. Finally his main financier, GE Capital – which had financed all KFL’s new machines – rung him up and told him to snap out of it.

“GE was amazing. They became really engaged with me. They made me focus on why I was in the shit; to work out how deeply I was in the shit; and to start thinking about how I’m going to get out of the shit.” Unfortunately Westpac, who he owed about $2 million too, was far less understanding, and they controlled the cash.

Overnight Westpac stopped talking to him, he says. They reverted to pen and paper, telling him in a letter they were going to drop his overdraft by quarter of a million dollars every month until it was zero. “It wasn’t possible. I was losing quarter of a million a month,” says Kajavala.

Backed by GE, Kajavala went on the offensive. Westpac wouldn’t take his calls or emails so he turned up in Auckland and said, politely, that he would stay there until they saw him. They did and he laid out his plan, all carefully written in figures – or “financier-speak” as he calls it – so they would have confidence in what he proposed.

It worked. Kajavala was given two years to get himself out of trouble. Everything he could cut, he cut. Staff numbers were slashed to 50. His beloved IT division was axed. Excess machinery sold at a loss. The business was scaled back to just the profitable stem optimisation; the central processing work. It was tough, but Kajavala made the targets he’d promised Westpac. Two more quarters and he’d be on top of his debt.

But Westpac, seeing they could break even, tried to pull the plug, he says. Yet again GE came into bat for him. Neither is forgotten. Kajavala made his targets and ended his 35-year banking history with Westpac the same week, moving his business to BNZ, while GE remains a favoured financier integral in his now successful and growing business plans.

Nearly going bust was a big lesson – he learnt more about business through this than he’d ever done before, he says. “Confidence in yourself and the trust of others is the real currency of business. But your relationship with someone is only really as good as their relationship with their organisation.”

Kajavala spent the next few years working his way out of debt and building his Kawerau forestry business up to healthy and stable profitability. Little would have changed except his BNZ adviser suggested he attend an ICEHOUSE course to get some idea of where to go next.

“The course helped me untangle and compartmentalise certain business challenges. I thought I was a logger or forestry person, but the truth is I’m just a business person like any other business person. It completely changed my perspective on everything; it helped me work out what the components of a good business are and how to work on them.”

Before the course, Kajavala says he’d never really thought or cared about branding or marketing, but the course made him realise KFL meant something to people. “I realised that your brand is your reputation and your reputation is all about trust.

“One thing my father said to me, that always stuck with me, is ‘that where there is trust, business is easy. Where there is no trust, business is hard’.

Money is fluid. You can always make more of it: you lose it, make it, it has no memory; whereas trust lasts a long time. So if you have to make a decision always invest in trust because money is an inevitable consequence of trust. And your brand is part of the trust.”

But behind your brand; what makes your company and the people within it trustworthy, are your company values, your culture, says Kajavala, and that’s where KFL was lacking.

“The firm was doing well, but it was mercenary. It didn’t feel nice from the inside. There was always some degree of hassle somewhere and staff turnover was very high.”

The idea of values and creating a positive culture and what it meant in terms of productivity and work enjoyment resonated so strongly with Kajavala he sought out others to help him transform his company – this led to the Second Base leadership course in Nepal.

When he returned Kajavala went to work on his people, coming up with values they could all relate to and transforming himself into the “values police.” He also got to grips with what his staff really wanted – skills; experience; change; and career advancement – to ensure they stayed motivated and committed to the company and their colleagues. And just when his staff thought he was through messing with their heads, he came up with his ultimate culture shock: bravery training.

“It’s super-important; probably the most significant thing we do,” he says.

In a nutshell, bravery training means people at KFL have to deal with a problem (perceived or actual) when it occurs and not let it fester. If you think someone’s being unfair, rude, whatever, you have to tackle them straight away, says Kajavala, otherwise people stew and it rots away their motivation and productivity and ultimately damages the positive culture you’re trying to create.

Kajavala also hires in from the bottom to get around what he calls ‘the prima donna logger syndrome’. At KFL everyone is trained up to do a multitude of tasks, he says. “Business success is inversely proportionate to ego. When you hire into the bottom, other people have to move up, so everyone moves up.” It doesn’t matter if the new recruits have no experience as long as they have ambition and a good attitude.

Kajavala calls it “heartiness.” “I can’t turn an arsehole into a nice person, but I can turn an untrained person into a trained person; an inexperienced person into an experienced person.”

But the one thing that really stops people doing their jobs well is values, says Kajavala. “When they are fighting with each other, lying to each other, backstabbing each other – call it what you will – but rather than working on their job they are too busy looking over their shoulder, watching out for the politics to get anything done.

“The thing about culture is it doesn’t cost you anything, compared to the millions of dollars you spend on payroll and diesel and other things. Yet if you’re working with say ten percent to 12 percent margins, that can disappear instantly if your people become ten percent to 12 percent less efficient, because they are spending their whole time dissing each other. Plus it ruins our lives.”

Today KFL has by far the lowest staff turnover of any forestry company. Whenever someone leaves – which inevitably some of the new recruits do to gain outside experience – everyone else in the firm jokes that they’ll see them soon, because 75 percent eventually return to KFL, says Kajavala.

Kajavala is now sought after as a speaker and a consultant. He’s even advised the local council about changing its culture. He’s handed over all his KFL operational roles (excluding values and finance) to others in the firm, giving him more time to work on the company, not in the company – as dictated by the ICEHOUSE course. The course also gave him the courage to try his hand at other businesses. “I wasn’t sure if I was good at forestry or business so I wanted to see if I could do something totally different.”

With his design-orientated brother Daniel (nicknamed the cool police at KFL for his natty uniform suggestions) and Tauranga based industrial engineer Ralph Von Brause, Kajavala set up online kitesurfing company Switch Kites at the end of 2010. The company’s point of difference? It’s the only one in the world that manufactures and sells direct to consumers cutting out the middle men mark-ups, he says.

In two years the company’s gone from zero to three percent of the world’s kitesurfing market. It’s on target to break even by the middle of this year and its brand is now known throughout the world.

“I love this company. I love it, I love it, I love it,” says Kajavala, beaming. “What fascinates me is creating a brand that has meaning to people, down which we can pump other things: wetsuits, boards, whatever. We haven’t really got a clue what we’re doing but we just give it a crack and see if it works.”

Kajavala’s got fingers in other pies too. All the fees from his consultancy work get tipped into a charitable trust that he uses to help fund and organise community initiatives. “I don’t mind charging for things I do, but I still feel like a wanker charging for my time.”

So perhaps there’s still a bit of typical Central North Island logging stock hanging on in there after all.

Source: Lesley Springall - Auckland-based freelance business journalist.