A poor PR image in the public's eyes or just too much navel-gazing? Director asked 10 business leaders to respond to the results of our Good Director research and discovered that the profit motive and low-key leadership are still the marks of a good director for many
Director: What struck you about the research?
Alex Pratt: One of the differences between directors and other employees is that directors step up to the plate and take responsibility and the research shows that we see ourselves as unloved: we are not getting the recognition for stepping up to the plate.
Jo Owen: This survey resonated with all my well formed prejudices. Directors aren't loved—but do we care and does it matter? I'm not sure directors need to be inspirational as long as we're effective. Who needs an inspirational VAT return? Most of the good leaders I've met have not been hugely charismatic. You can't train it and there aren't inspiration or charisma transplants available.
Doug Richard: I'm less concerned with what directors think about directors and more concerned with what everyone else thinks. It's the public perception that matters. I'm not perturbed that directors think society doesn't rate them.
Martin McCourt: I agree. I thought these results were entirely predictable. Perhaps it's reassuring that the fabric of society is intact and we listen more to what our doctors, judges and teachers have to say. I'm not bothered what directors think other people think. I am very concerned what customers and consumers think.
Howard Kendall: I am fascinated by the perception that I am clearly greedy. I think this is weird, seeing as some Premiership footballers earn in a week what I earn in a year and I do more for wealth creation and putting back into society than they do. Clearly, there is a very distorted perception of what small business owners do for the economy.
Geoff Armstrong: We are a bit like Millwall Football Club, except their chant is: "no-one likes us and we don't care" and we're saying, "no-one likes us and we do care".
John Rider: I think it is interesting that we bothered to find out what directors think.
Michael Smith: That's right. As a founder and director of several businesses, I've never stopped to think about what that means. It might not be important what directors think of directors, but it does matter what the general public thinks. Kids leaving school need to see setting up a business as an exciting option.
Tom Delay: One part missing from this research—and something I've experienced moving from Shell to the Carbon Trust—is how the perception of you changes. I had the same mindset at Shell as today, I don't think I've changed. But there has been a shift [in how others perceive me]. This survey looks at directors in an abstract sense and doesn't look at the companies they are in.
Penny Newman: I'm not surprised by the research. Business is seen in one dimension and what's expected of you as a business leader is also one dimensional. People coming out of business schools think more widely and want more than just a profit focus.
Director: There appears to be a difference between how entrepreneurs and directors are perceived. Does this matter?
Doug Richard: Ironically, being an entrepreneur is [seen as] a fantastic thing, being a director is not. That's awkward because it's very tough to be one without the other. Entrepreneurialism is the acceptable face of capitalism.
John Rider: The difference between entrepreneurs and directors is that as an entrepreneur you are allowed to fail from time to time, but you can't fail as a director, especially in this country.
Michael Smith: The idea of entrepreneurs as risk-taking, swash-buckling mavericks is why the media love us. But the entrepreneur can be about delivering steady, safe growth.
Jo Owen: It's interesting that there is this concept of directors in the abstract versus lots of individual exceptions. It's the same as if you ask people what they think of Americans—you'll get a negative reply, but if you ask them about the last American they met, they'll say he was fine. It's the same with directors.
Howard Kendall: Entrepreneurs are seen as aspirational but there is no real kudos in being a director. It's all about image. It's fine to be Richard Branson, who people don't perceive as a director. The image is acceptable because he is a hip sort of guy. But I am grey, middle-aged, balding and it's a very unsexy image.
Jo Owen: So, we've all got to get hip?
Howard Kendall: No, but we've got to "hip-up" the image in some way. Maybe we need to be seen more as entrepreneurs and less as directors.
Alex Pratt: I sit on a number of different boards, some in the public sector. My approach to risk varies [on each one]. In my business I am an entrepreneur and a risk taker. But as a director of a publicly funded body my approach to risk is different.
Geoff Armstrong: [Organisations have] to meet customers' changing needs. You have to create an organisational agility. We are failing to get it across, whether that's entrepreneurial or creative. We don't see it as part of our job to make it sound attractive and exciting—we should.
John Rider: There's something about steady businesses that creates a certain style of UK director—a torpor. But the same people often respond and perform really well in a turnaround situation or a crisis.
Director: So what should the role of directors be?
Geoff Armstrong: Too many businesses are still working to the model of the past,the Max Weber bureaucracy, with directors as the all-knowing person at the top, whose job was to plan everything. This model is very inhuman as far as the public or customers are concerned.
Jo Owen: It's not all about charismatic leadership. When you ask people to name charismatic leaders they'll say Richard Branson and James Dyson. But an organisation full of Bransons would be an unmitigated nightmare.
Alex Pratt: You don't have to be inspirational, but it helps and can inspire those working for you.
Martin McCourt: Certain individuals have a responsibility to influence and inspire others. My team at Dyson wouldn't work if they were all inspirational types, but it needs a few to keep the thing going.
Tom Delay: Leadership is about understanding your different audiences. For the external bit, you've got to get certain messages across. But there are different classes of leadership.
Geoff Armstrong: We're not just talking about a single person—leadership is a collective activity and takes place through organisations in different contexts. Leadership has to accomplish a whole collection of tasks: it might be that you are very persuasive and charismatic, it might be that you are very dull and boring but it's a combination of those skills that are required.
Howard Kendall: You are advocating strong teams who in turn have strong leaders.
Doug Richard: In the US, directors are the shareholder's representative, distinct from the executive team. I was confused when I took my first role over here as a non-executive director, [it was] a term I'd never needed before.
Tom Delay: If entrepreneurs are all about the executive side, the doing part, then who fulfils the role of NED? I doubt you can find me an entrepreneur who hasn't benefited from a mentor who was brought in as a NED for their expertise.
Director: We've talked about directors and education. Does the opinion of the future generation matter and why?
Alex Pratt: I was the only one of my group at university who wanted to do my own thing and be an entrepreneur. The rest all wanted to get "proper jobs". Why are we scared to set up and become entrepreneurs at a younger age?
Martin McCourt: It's because kids have a different language. Director, entrepreneur and business are not concepts children understand. If charisma and style aren't the identifier of a great leader and it's more about attitudes and behaviour, how do we take that and put it into the education system? I think it's about ideas and creativity.
Michael Smith: We need more campaigns like "Make Your Mark for a Tenner", where £100,000 was split between 10,000 students. Some just took the money and spent it, [but others] clubbed together and came up with amazing ideas.
John Rider: The enterprise challenge at a college near me is similar. Year 10 students work in teams on business and enterprise—the activities have a clear beginning, middle and end. It's inspiring, but it demonstrates that they don't know much about the outside world.
Alex Pratt: The UK has not got to grips with exploiting intellectual property. We need more activities—ideas and entrepreneurial skill are two different things.
Doug Richard: We don't have to reinvent the wheel. We need to celebrate entrepreneurial successes and inculcate younger people with the spirit of enterprise. There have been positive shifts in the attitudes to being an entrepreneur in this country, but there is still some distance to go.
Jo Owen: Working with 14 to 15-year-olds, when you ask them what they aspire to be they say footballers, models, or rock stars. It's totally divorced from the reality of what they might become.
Alex Pratt: If you look at the careers that attract the kids and where today's heroes are, they are all charismatic—footballers are cited as role models. If you have charismatic leaders, it is bound to help.
John Rider: It's down to the leadership in each school. It does make a difference, even if the teachers are held back by the national curriculum.
Penny Newman: I've just come from judging a competition where kids have four weeks to set up a social enterprise. They got a real buzz out of it. They selected their own job titles, and all opted for traditional roles such as managing director and accountant. One group put on a concert for 110 people within three weeks. They ended up not spending any of the available budget. In fact, they made money. But where do they go now? Who is picking them up?
Director: Should business be concerned with more than making a profit?
Geoff Armstrong: We shouldn't be ashamed of making a profit. We make money and pay some of it in taxes. The story we're not getting across is the good stuff that comes out of making money. We often seem to hide away. We do good things in the day-to-day running of our businesses.
Doug Richard: It's a matter of being prepared to stand up and be counted. If you do well and accomplish things in your business then lots of good follows from that.
Alex Pratt: Profit gets a bad rap. It's seen as a bad thing even though it pays for everything we hold dear, including education and healthcare.
John Rider: For a small business, cashflow is even more important than profit.
Howard Kendall: Making a big profit is not seen as a good thing because we don't explain the risks we've taken to get there.
Jo Owen: There is a lack of an explicit link between performance and reward. Footballers might earn vast amounts, but they are perceived to earn it. People are lining their pockets through re-pricing stock options—which is legal—right through to the corruption scandals such as Enron. When firms, such as the banks, make excessive profits, it becomes harder to justify.
Doug Richard: Excessive profit is a term that I'd never heard before coming here. It isn't something you'd hear in the US. In a monopoly situation, you might find someone making uncommonly large profits. But that's what anti-trust laws are there to prevent.
Jo Owen: But a monopoly is also an opportunity. It was this approach that lead me to launch HBOS Business Banking—there was an uncompetitive market. Entrepreneurs, in that situation, need to be only slightly less idle than the existing players to succeed.
John Rider: It was the same during the internet boom—we were looking at these young businesses and wondering how on earth they were going to make money.
Doug Richard: Business hasn't changed. People that didn't make money didn't survive. Was that true for your business, Michael?
Michael Smith: We raised venture capital and teetered on the brink at one point. But it's the same with any disruptive technology. There is always an irrational exuberance. But [the internet] is coming back now. I think we are at the start of a very long boom. There can be no hard and fast rules because no two businesses are the same. But it's essential not to forget the fundamentals of running a business.
Geoff Armstrong: We have talked about small entrepreneurial businesses. But we also need to remember directors in the bigger organisations—the BPs and Vodafones. We want them to make money and be profitable. Especially if your pension is in one of these firms.
Michael Smith: The communication issue is at the heart of this. We're not very good at getting the point out that business is important and a useful skill to have.
Director: Is the social enterprise model affecting other companies?
Jo Owen: No, it's the other way. The not-for-profit sector has to get the fundamentals right. You get really interested in the metrics, because if you don't get it right and you go out of business, the consequences [are so bad].
Tom Delay: We need to have the metrics in place to know at the end of each period whether we are performing well. As some of our money is from government, the idea of profit can upset some people. But it's so easy to go off on a tangent—we are even more obsessive about the metrics.
Doug Richard: The question is, what constitutes charitable activity? There's a responsibility to shareholders to make a profit first and then give what you can where you can.
Director: Is the UK enterprising enough?
Penny Newman: Organisations are risk-averse—we've done this for years and therefore we should carry on. Businesses of all sizes need to know that innovation is the whole deal. The rest of the business relies on that spirit of creation and innovation.
Howard Kendall: We're a little inhibited because we're comfortable and life is easy. There isn't the same hunger or drive that you see in the developing world.
Alex Pratt: I used to work for the DTI's Innovation Unit and we'd travel the world looking for examples of where this stuff was being done well. One of the outcomes was that we're creative, but not good at exploiting those ideas.
Doug Richard: I'm not sure that I agree. It's more to do with attitudes to failure. Plenty of other places with a comparable wealth and standard of living have a different attitude to risk. In other places I've lived—notably the US—there are lots of people taking that jump into the unknown. If they fail, they stand up and do it again. It's not the fault of our living standards. What's the price I pay if I fail? I'd much rather invest in someone who has tried and failed before.
John Rider: Our attitudes to risk and failure do need to change. Failure is not a bad thing as long as you manage it properly. But for some reason we are risk-averse as a nation.
