With the Springboks having successfully kicked off their Rugby World Cup title defence campaign in France, Braam Visser draws some interesting parallels between success in rugby and investing.
A good investment decision is underpinned by a tried-and-tested investment philosophy, a rigorous investment process and people who can implement and execute on these. As I reflect on what it would take for the Springboks to repeat their 2019 success this year and lift the William Webb Ellis trophy in the Stade de France, the similarities between a good investment decision and an effective World Cup campaign become apparent: Alignment and clarity between your Philosophy (strategy and approach), Process (the game plan) and People (players) greatly increases your odds of success in either discipline.
Philosophy
In the context of rugby, Philosophy refers to how a team traditionally plays and approaches the game. The Springbok team has a long and proud history on the rugby field: Players are known for their physicality, strong set pieces (scrums and lineouts) and solid defence. They have a reputation for being tough and uncompromising.
Before Rassie Erasmus and Jacques Nienaber were appointed as coaches at the end of 2017, the Springboks were trying to play an expansive game that was not suited to the strengths of the players; they were trying to implement someone else’s philosophy. Erasmus and Nienaber took the team back to basics and reverted to the Springbok way of playing, as described above. These changes paid dividends as the Springboks reverted to their old strengths to win the 2019 World Cup and to beat the British and Irish Lions in 2021.
To be successful at the 2023 World Cup, the Springboks should not stray from their tried-and-tested philosophy that has served them well these past six years.
Process (or game plan)
The Process refers to how you implement your philosophy – the game plan. In 2019, the Springboks took the other teams by surprise by evolving their game plan and introducing “the bomb squad”.
The starting forwards would give their all for the first 50-60% of the game – playing with ferocious intensity and physicality, tiring out the opposition. When the starting pack of forwards started to tire, the coaching staff would bring on the bomb squad to replace them – essentially a second pack of forwards. They would then use their fresh legs and energy to close out the game. This played to the Springboks’ traditional strengths of having large forwards playing a physical, high-intensity game for the full 80 minutes, while most other teams would only bring on their substitutes much later in the game.
In 2019, this seemingly simple adjustment made a big impact and the other teams had no answer to the power and intensity of the Springbok game plan.
In the time since the previous World Cup the game has evolved, the other teams have had time to prepare for the bomb squad and work out strategies to counter it, thus the playing field has been levelled again. Knowing Nienaber and Erasmus, they will have new tactics up their sleeves to give the Springboks the edge they require to outperform in France. They recognise that it is important to continue to refine and improve your process, while remaining true to your philosophy.
People (or players)
A tried-and-tested philosophy and a great process are nothing if you do not have the people to implement and execute them. Throughout their coaching tenure, Nienaber and Erasmus have identified and selected players that best fit the Springboks’ philosophy and game plan, so-called “rugby warriors”: players who play with all their heart. These are not necessarily the most skilled, the biggest or the fastest, but players who the coaches can depend on. They also emphasise that the best 23 players are not necessarily the best team of 23.
Once the coaches had picked their rugby warriors for the 2023 World Cup, it was important for the players to gain experience by practising and playing together leading up to the tournament. This approach was aimed at ensuring that the whole squad has the skills and expertise to do the job in France when called upon, whether they start the game or come off the bench as part of the bomb squad. This gives the team the depth needed for the gruelling campaign that lies ahead.
Your investments and the 3Ps
Having clarity and alignment on their Philosophy, Process and People helped the Springboks to achieve optimal performance at the 2019 World Cup and remain crucial for success in the weeks ahead – and beyond.
At Allan Gray, when it comes to your investments, we approach things in a similar way.
We stick to the same investment philosophy that we have used since 1973 – identifying and then buying assets that we believe are trading below their intrinsic value in the market and then selling them once they reach our estimate of fair value. Sticking to our philosophy means performance is replicable over time. This has contributed to our 50-year track record, and we believe it will continue to serve us in the decades to come.
We focus intently on implementing our investment process (our game plan) to ensure our clients get the best investment outcomes. We perform our own in-depth analysis, spending time understanding the business model, interrogating the financials, and assessing environmental, social and governance risks of each company along with a host of external factors as well. Despite relying on the joint research and peer review effort of the entire Investment team, our portfolio managers are individually accountable for the performance of their portfolios. We have great faith in the power of the individual to make an impact and encourage our people to be independent minded and accountable for their decisions. While our investment philosophy has remained the same since inception, how we implement our investment process has evolved, responding to advances in technology and benefiting from us reflecting on past decisions and experiences.
We work hard to appoint and retain the best people (our players) to make all this possible. We train our own investment professionals and upskill our future portfolio managers. Our approach to succession planning ensures depth in the Investment team and means that, like the Springboks, we also have a strong bench to draw from.
At Allan Gray, our goal is to build long-term wealth for our clients. We believe that clarity and alignment between the 3Ps are key in achieving this.
To Jacques, Rassie, and the Springboks, we wish you all the best for the remainder of the 2023 World Cup!