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Name Costas PetropoulosCompany Petros PetropoulosPosition Chairman of the Board of DirectorsHQ Athens, GreeceEmployees 110

EXECUTIVE INTERVIEW

Automotive giant Petros Petropoulos’ offering is broad. In its ninety-four-year history, it has been involved in virtually every part of the supply chain, from design and manufacturing to imports and distribution. Chairman Costas Petropoulos explains that, in Greece, the automotive industry is also broad. “The word auto,

which is Greek, means any machine that moves by itself — that is our definition of automotive,” he says. “We deal not only in cars, but also trucks, buses, agricultural tractors, materials handling equipment, forklift trucks, pickups, and also some associated things, for example lubricants, automotive batteries and generators.”

Costas joined the business in 1970 when he and his brother were asked to come back and rescue the family business, as it was facing bankruptcy. Costas had saved a little over the years and poured all of his money into getting the business back in the black. “Together with fifteen colleagues from the old company, we rolled up our sleeves and with a lot of faith, optimism, and not much more, we began — so that was a big landmark, that was the re-birth.”

Another key date that changed the course of the business came in 1992. “We did two things which completely transformed the company,” Costas says. “The first one was we adopted EVA [Economic Value Added] as a metric. EVA is unlike profit. It recognises not only your operating profit, but also how many assets you used in order to produce that profit. In one number you can see the

A diverse business model and strong relationships has helped Petros Petropoulos survive in times of crisis.

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EXECUTIVE INTERVIEWEXECUTIVE INTERVIEW

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whole picture: the P&L and the balance sheet together. The adoption of that metric, which took a long time to implement, created a new culture of total accountability where the managers are accountable for everything.

“The adoption of that allowed us to do the second step, which was to organise into truly autonomous business units. If you have a good metric, it means that you can hand over a lot of authority and power. If you don’t, you have to watch over the other guys all the time. We have autonomous business unit managers who are equivalent to the CEO of the company, and without that metric we would not have been able to achieve that.

“The second thing that I remember about 1992,” he says, “along with restructuring into autonomous business units, was the adoption of the Adizes method of management. The EVA metric and the autonomous business units allow us to successfully operate in many sectors of automotive that are seemingly unrelated to each other. We have Scania trucks, in motorcars we have Jaguar and Land Rover, we have Shell lubricants, and so on. If you don’t have this kind of structure you cannot achieve clear focus on anything. You just have one guy at the top going crazy with so many things to juggle, switching from one to the other, but by having this structure of truly autonomous units you achieve focus,” says Costas.

“We are very successful in everything we do. In all of the sectors where we do business we are either number one, two,

or three in the market — and profitable in all of them, too.

“The other great benefit is that you achieve economies of scale because all of these autonomous, independent automotive units are supported by the same infrastructure, which means all the finance, logistics, accounting, administration, and so forth. So every time you add a new business, the cost of these support functions becomes less for everyone and the whole company achieves economies of scale.”

It is precisely these economies of scale that have allowed Petros Petropoulos to weather some huge financial storms

that have struck the Greek economy. Where other businesses have closed down, it has managed to go from strength to strength. “The first one that comes to mind is the mid 80s. In Greece, that period was characterised by huge and repeated devaluations of the currency,” says Costas. “And that is a real nightmare because if you have a big devaluation, suddenly you see all of your foreign liabilities skyrocket — if you have a 40-per-cent devaluation, it means that suddenly you owe, in foreign currency, 40 per cent more. At the same time all of your imported products become much more expensive and you see the market collapse because your

competitors, who are in dire straits and dying for cash, are selling their inventories for nothing so that they don’t go bankrupt — so competition becomes fierce. It was a nightmare, and how we survived that I don’t know.

“Of course, when things are getting really bad, that’s when internal strife in the company emerges. Those were the days when we had our first and only strike in our history, so it was a very difficult time. The second challenging time is very recent actually — it’s this present crisis, which started in 2010. To give you an idea of the magnitude of the crisis, in between 2008 and 2015 the markets that we serve in Greece

dropped by 80 per cent. So you can imagine that was very challenging. But I am very pleased to say that we came out of it. We lost money in two of those years — 2011 and 2012 — but we have been profitable since 2013 and we have seen increasing profits.”

Even in the midst of a financial crisis, last year the business achieved a turnover of €80 million. Costas credits this to its unique ability to work effectively and efficiently in many sectors. It knows that, for example, the market in Greece is too small to sustain a business that purely imports and distributes Scania trucks. It has to diversify. “And we know how to do that, better than anybody else in the world,” Costas says. “Our competitors in Greece have had a very tough time with this crisis and most of them are going bankrupt, or have gone bankrupt, but we have not. We have done well, because we can add product lines to fill in the losses we have had from the market collapse.”

In his forty-six years in the business, Costas has nurtured some very long-term relationships and it is these, as well as the challenges that he’s faced, that have taught him his most valuable lesson. “We are living in a time of accelerating change — it comes faster now than at any time in the history of mankind and the change is not only rapid but sometimes abrupt. Sometimes — as we have seen in Greece — the change is also a crisis.

In order for your organisation to survive, you must be able to adapt to these changes.

“I remember from Darwin’s theory that whoever survives is not the strongest, but the most adaptive, so adaptability is key to survival in our times. I think the most important tool for being able to adapt is to develop mutual trust and respect within your organisation. If you don’t have mutual trust and respect, every time you want to change something in the company you are delayed by having to discuss everything and persuade people.

“However, if you have mutual trust and respect inside the company, you don’t have to spend so much energy selling changes within and you can concentrate your energy on meeting the external challenges. If I wanted to describe the role of a CEO in one phrase, I would say it is to maintain and increase the capital. Not the money, but the capital that isn’t shown on the balance sheet and yet is the most important one — the capital of mutual trust and respect within your organisation. That is my advice — that is what I have learned.”

“We are very successful in everything we do. In all of the sectors where we do business we are either, number one, two, or three in the market — and profitable in all of them, too.” – Costas Petropoulos