Episode 6 The Bottom Line

Ahmadinejad. Now, it is time for The Bottom Line.

You know the feeling. Just when you think everything is sorted out, the

world has an annoying habit of delivering a nasty shock, forcing

you to sort it out. As it is in business, especially for my three

guests. They each run companies that have had to reinvent

themselves. They live to tell us the tale to thought they will tell

us what our children should learn in school.

Influential business leaders gather for the BBC Radio 4 programme The

Bottom Line and now you can see it We will start by taking a few

minutes to meet each of my guest. First is Rooney Anand who was chief

executive of the pub retailer Greene King. Main grounds? Greene

King IPA, Speckled Hen, Hungry Horse, Old English Inn, Loch Fyne

and the pubs? Dog and Duck. One of our destination sites. Hungry Horse.

If I said to you, what is your business? What portion is beer?

We started in -- as a brewer in Suffolk. In the last 20 years we

have accelerated towards being a pub retailer. There is a huge

debate about a minimum pricing for our core. To that effect you or are

you over the minimum price range? would hope that we are. I know we

are. It is 40p per a colicky net. It would help you? I don't think it

would wipe out... There has been a profound change in the use of

alcohol in the UK. The subject of binge drinking has been widely

reported. It is a threat to society. It is a threat to administer if --

administrative cost in terms of health and safety. I took my father

to a pub last DN was stunned at 4am to see security guards protecting

the staff. -- at the hospital. It is a society issue. The price of

alcohol in supermarkets and convenience stores has become

perilously low end is accelerating the advent of binge drinking. We

are very much against it. We are in favour of setting a minimum price.

Also with us is Rupert Gavin who is chief executive of Odeon and UCI

Cinemas Group.. Describe to worse you business. It is substantially

UK. In increasingly, we are across the whole of Europe. We are the

largest cinema chain in the UK. Also the largest in Spain and Italy.

Substantial in Ireland, Germany, Portugal. We are the largest cinema

chain in Europe. The fifth largest in the world. You are owned by

private equity. The founder of terra firma had one of my favourite

ever quotes in business. He was fed up by the number of cinema managers

who are flying to LA fought movie premieres. He said, my managers

think they are in the movie business. I have had to explain to

them they are in the popcorn business. We have always known we

are in the customer service business. We are providing films

and good-quality films as well as an increasing range of food and

beverage. We have just started our first in screen dining cinema where

someone can have a gourmet meal while watching a film. That is an

idea of the scope of the journey. We have gone from popcorn.

manager of an individual cinema, day job... To they have any say

whatsoever about what films happen in the cinema? They have a lot of

views. They have local knowledge. That is fed into the system. But it

is essentially determined and we have relationships with the studios

which we also have to work with. It is an interesting interactive

process. When we had the Iron Lady plane, our manager of the Liverpool

cinema was pretty clear that within Liverpool, whatever it was going to

do nationally, it was not going to play well in Liverpool. A film

called The Goon outsold the Iron Lady in Liverpool. Every film has

its own particular characteristic. You have got to understand your

demographic. As a manager, you have to understand your audience. It is

very rapid. The first weekend, then it can be off if it is not working.

The life cycles... It is the most Darwinian market I have ever worked

in. Somebody works for years, spent hundreds of millions, you start on

a Friday and if by Monday morning it is not working, it is over.

Beautiful, isn't it? Finally with us is Ian Livingstone who is the

chief executive of BT Group. I asked the others what the business

is, pubs or brewing, popcorn or movies. What is your business?

has changed. People know us as a company with the telephone in the

hall. We have changed a bit. 10% of our business is making voice calls.

The quarter of our business is outside the UK. Half of our

business serves multinational customers. That is a huge chunk. I

have read this so many times and I don't understand. What do you mean

when you say that? If you are somebody like Nestle, Fiat,

Phillips, you are around the world. You need somebody to connect your

network. To protect your data and manage your network. But your own

cables so you are selling cable space. A lot more. We have the

cables connecting but we also have to work to get the last mile in a

factory in Israel, or in South America. But you're not digging up

roads in Israel. Around the world, be provide network for the

Brazilian Post Office. We are putting satellite dishes around a

lot of Brazil. We do a bit of that. We also work with the local

partners who have got the services and make sure it is for our

customers. He talked about how BT Group has changed which gets us to

a discussion about reinventing businesses. Pubs, cinemas, telecoms

services, all very different. They say there are two approaches to

life. Change the world so it suits you, failing that, changes of to

suit the world. That is what you have all done with your businesses.

What is it that has changed that has driven the need to alter or? We

will start with you, Rooney Anand. The change has been operating at

two speeds. The long-term change has been going on for 30 years if

you think of how people in the UK behave and treat paths. The typical

vision would have been an industrial worker, factory worker,

coming in after work to a pop, the first three or four pints were

fluid replacement. The last few were enjoyed, and that few after

that were not remembered. That has changed in the last few years

profoundly. The number of people who are more concerned about their

diet... People who are concerned about drink driving, women working

instead of staying at home. shift pattern is changing as well.

Huge social changes. The pub industry has been trying to group

gently. The credit crunch in autumn and summer of 07 was as though

somebody put a big finger on the fast-forward button and bought

those dangers home to roost very early. It was very noticeable for

me in await, some of the high- street retailers were talking about

a real change. I was wondering what was going on, say we noticed those

they changes as early as autumn 07. When the images on breakfast TV of

people queuing on the pavement to get their money, p 4 felt scared.

They stayed instead -- stayed indoors and staggered home. A huge

change in customer taste. Food has become a huge part of your business.

Food you would think, people would say they would save money by eating

in, but they are eating out. When we went into the recession, food

was a 27% of our retail turnover, it is now 47%. In the course of a

few years. Another 20% of our turnover is food driven.

changes in your business card technology and customer, Rupert.

Yes. The brief history is that competition has to ramp up

exponentially. In the late 40s, there were 200 million visitors a

year but no commercial television. No video recorders. The Pit came in

the light -- the late 80s. It had gone up to 60 visits a year in the

whole of the UK. Everyone was then saying it was under the pressure of

commercial television. They were saying it was a war that is over.

It has ended. Since then, we are that close to 200 million visits.

It has more than tripled. We have been getting higher than inflation

rate increases in ticket prices. We have invested in seeds and screens

and IMAX technology. The three-day, we have taken the whole of our

business and made it digital. Every single one of our screens is a

wholly digital experience. That is what to us his reinvention. You

have got to understand the technology. What can it do? Then

what does the customer want? Hit rate between those two to get a

business model which keeps you alive. As a result of that, we now

do theatre life. We do opera life. 3D sport. A friend that, you get a

flavour of the different experiences. We are about out of

home leisure. We are not about film necessarily. We are about people

having an affordable evening out to enjoy themselves. We have got the

same comment about an infrastructure capability and using

it for a lot more things. It is about leisure rather than any

individual product. The leisure experience. Both of them have

obviously up credit the catering over the decades as people have

tended to buy more food out than in. But your business must have changed

the most. That figure of one-tenth of your business is what it really

all that is a voice calls. That is incredible. It has changed a lot.

When I was growing up as a kid, you would remember the phone bill

arriving with a time of fear and loathing. I was banned from using

the phone for the rest of my life. You could not call before 6pm

unless someone in the family had died. Even then you would need a

medical certificate to prove it. Things have moved on. Are you

comfortable with where BT Group is now? Fixed-line calls, broadband,

for retail in the UK. We have got a lot more to go. What we are doing

in the UK, we are up rolling it out across 100,000 homes per week. That

is pretty quick. 200,000 people are employed to do that. That will open

up a whole new lot of things. There will be opportunities coming from

that. We are a very early stage of seeing what, for instance,

broadband Kent do for people. We have started a journey but there is

a long way to go. Everyone will get very excited about a video to PC.

They will be able to watch I player. That is great. But bringing

interactivity to your TV, you will be able to do a lot of things. We

will start a revolution. It is early days yet. The future is very

exciting. Any business for a moment which says, I have done it, and now

I can go to bed... That is why they end up bankrupt. I was at BT Group

when they finished changing everything from analogue to digital.

That was a five-year programme. At the end of it, we regret to the

supplier. It became the marketing department. That was the big

cultural change. We went from being a supplier to people demanding

things to an organisation that was going to have to market things. You

have to just keep... And other three vintages. The 200 different

competitors. Just to finish this segment, Kenya over to the change

think? Can you jump too soon? I can imagine cold pubs that chug along

perfectly well. The traditional work are still going to them in

large numbers. Some fancy person with a suit and clipboard says it

is time to move on... Actually, it's sometimes the best thing to do

Probably not. It is the change in the environment and it may seem

impossible to move in the right direction. As a result, it would

not give a rate of return that we're happy with. The right

decision in that scenario is every time to set. But your question is a

good one. You can move ahead of your customer sometimes. You could

be changing too quickly. The timing of the change is as critical as the

nature of the change itself. Businesses are behind their

customers tend to face extinction. But you can be ahead. We have tried

to move ahead of the customer in terms of the speed in which we have

converted a pub of from what we call is wet lead to very food

eccentric. We have lost customers. The traditional view is the back

have a pub which is food orientated or when that is much more male and

sport orientated. What we have found that is helpful is being able

to do both under the same roof. And had a type of manager that can run

that business. A lot of it is about how to keep your traditional

customers. Many have gone wrong because the traditional did not get

the new. Don't lose your old. If Take a break from growing your

companies. Imagine you are in charge of something far more

important. A school. Even better - all our schools. You are in charge

of the national curriculum. What would you like our children to be

taught? Business tends to have a view that education has gone to

hell. What would you like to be taught in schools? I would be

slightly contentious. I would make quite dramatic changes. I would

reduce the obsession with testing and examining children every week.

We have a whole educational system focused on getting results as

opposed to teaching people. Then we have to ask what do we wish to

teach our children for. It is for life but it is also for the health,

success of the country. I cannot see anywhere - a strategic decision

of what this country should be good at. And what we should be packed --

prioritising - training and teaching our children. It is a very

broad education a week give. It is ever focused on numeracy and

literacy. Over focus? I had never heard anyone argue that.

Unsuccessfully at -- over focused. Failing to produce the creative,

the financial services focus on what our country's strengths are. I

am not saying anything that has not been said before. The last

government looked over these. They had a wonderful team of educational

and visionary mines, they submitted a report in 1999 and it was

immediately thrown away. It was too difficult to think about. I am not

quite with him. I think maths and English have to be at the core. If

we are ever focusing on it, we're not doing it very successfully.

We're looking for 500 applicants and we had over 20,000 applicants.

About one-quarter of the people could not fill out the form. But

the people we recruited, we are looking for grade C in maths and

English. We had to change a significant portion it in maths and

English when they joined us. What age is this? 16 to 18? Yes. 16 to

20 probably. We got some great people who just needed some help.

Our apprentices are absolutely Fabulous. We need to get the call

and then get people to see what they wanted to. My wife was in

business for many years like me. Then she became a teacher. IDG

about opinions on this subject with alarming regularity. -- I get to

hear about. The debate in this has been too political. There is a

basic question - I had this idea met with my wife Pre's friends and

is a French teacher and has spent the last 24 years teaching - she

compare and contrast to the French education. My basic question is

what is the point of education? Is there to ensure you have been

crying minds? I like to think it was both. You might think it is

this about equipping business. can't have an either or.

problem is, you really do not know. To setback caused at 11, 13, 15 or

even 18 is tough. We have over 20,000 employees and over one third

of them are under 25. The basics and a good enough. The quality of

the basics in terms of numeracy and literacy are to know. There we are

good again in test scores. That is but we're getting the polarity of

what we're hearing which is we are getting better results but when we

are looking abroad intakes, they cannot do it. Under tested, under

port. That is what I fear. We're becoming world exports at hitting

test scores. That is very different are being educated. Let's talk

about how the way you would structure education. Is there an

analogy about what you're talking about. How much power would you

give to the locals to run the businesses they want and how much

the bring into the centre? Is there a teaching issue? The most

important thing is the manager in business. It is the same as the

teaching. Giving power to the teachers is very important. Great

teachers are the most important thing for any kid in the classroom.

Studies showed that is the biggest variable. You want to give them

more power. But to give them more power you need to make sure you

have a really good people. This is similar to business. We have to

give more priority to teachers. And Barry teachers are a lot more, it

is the same as business. But now we have gone through this road of and

list test. -- endless. Great teachers make the difference.

Empowering them is the border been. Lead straw the end to this

conversation. Time to thank our guest. I will be back with more