Episode 8 The Bottom Line

in the capital, Damascus. Now on BBC News it is time for The

Bottom Line. Can you turn a mediocre manager

into a brilliant boss? Self-help books may try. Good leaders are

still hard to come by. I will ask my three guests what leadership

skills consist of and if they have them? How would we cope to use 20%

less of everything. Each week we have guests on The Bottom Line. Now

As always, we start by spending a few minutes meeting each of my

three guests. First up, Martin Gilbert, chief executive and co-

founder of Aberdeen Asset Management. It is Scotland's

largest money manager, Martin? is. Not that that's much

competition. We're still number two to Schroeders. I would love to be

bigger than them. That is my ambition. You ae had a good year?

It' -- You've had a good year? been fantastic. We have been in the

right place at the right time. We are one of the leading asset market

managers. The world is putting money into emerging markets and

especially Asia. So, if someone in America or the UK or Europe decides

to put money in there they will usually come to us and give us the

money. Our problem is we have too much money to invest, which is a

fantastic problem to have. OK, ten years ago, I mean the company did

sink, didn't it. I think people wondered whether it would survive.

There was some kind of mis-selling scandal. We were the leading market

leader in trusts. I did two Treasury Select Committees and an

investigation by the regulator. Our share price went down 95%. It was

really quite a difficult period. We almost, most of the world didn't

think we would make it through, but we did and recovered strongly.

Most CEOs don't survive a 90 fall. I survived a 95% fall. So, it's

been a remarkable recovery. Just last week, we got in the FTSE-100.

So it has been quite a turn around actually. Were you running the

company when it got into this mess? Sadly. I offered my resignation,

hoping the board wouldn't accept it and they didn't, thank goodness. So,

they told me, look you got us into this mess, you sort it out. With us

also is Allan Leighton, chair of the set-top box maker Pace. Allan,

you have been a non-executive director on so many boards we would

fill the programme listing them. Pace makes set-top boxes hofplt is

the biggest mer? Most of our -- Boxes. Who is the biggest mer?

is based up in Yorkshire. It is the biggest set-top box producer in the

world we are proud of the fact that we have some great engineers.

People talk about engineering and things like that. It is all around

the world. We think that up in Yorkshire we have some of the best

engineers in the world. It's had a difficult year. I would have

thought it's - conditions are good for set-top boxes, in contrast to

Aberdeen Asset Management. You've had the good year and you've had

the bad year. Set-top boxes is an industry which continues to grow.

Pay TV around the world is growing. And will continue to grow. We've

had a difficult year, for a number of reasons. I think we,

unfortunately, had this tsunami in Japan, which affected the parts.

Even worse was they land, because the drives are made in Thailand.

Most of ours were under 30 foot of water. They are reasons, but not

all the reasons. I think the business needed a sort of different

direction. I sort of came in the middle of year. We did a strategic

review. Everybody talks that business will die, over the top

will make a difference. It's all complimentary. If you go to the US

and see how it works, that's how it works. We are confident about the

industry. We just need to use our engineers in a better way. We need

to be a bit more, not just the set- top boxes, but what is described as

the middle way, user interface, which make it easier in people's

homes to do things. You do manufacture in Britain as well?

All our manufacturing is done overseas. All of the engineering

work, which is.... I am going to simplify it, the manufacturing, in

a strange way, is the easy bit. We have people, up in Yorkshire, in

India, in the US. It's a pretty global business. Talking of

manufacturing and engineering, my final guest is Nigel Whitehead, who

runs the operations BAE Systems, the defence contractor here in the

Nigel, why don't you spell out the range of things that BAE Systems

does? Across the world we are a preemyeer player in defence and

security. In -- premier player in the defence and security. In the UK

we have ship building, military aircraft, principally in the north-

west of England. We provide siber security to customers. We have �7

billion Port of business in our UK facilities, of which just over half

goes into the UK Government and the rest into export markets. The US is

not actually the biggest market for BAE Systems? In fact our biggest

market is the United States, where we have 50,000 employees and

deriver half our profit. We have other markets in Saudi Arabia,

India, Sweden. It feels like it has been a difficult few months for BAE

Systems. The big decision to close the Brough factory.

Governments cancel contracts and you are left with factories that

you cannot run. What has been happening? Everybody would say it

is a difficult industry to be in, full stop. If you look at what has

happened over the last couple of months, it does appear there is a

lot on the list. The reality is that we are responding to changes

in our marketplace. Our customers are deTyneing what it is they want

to spend money on. They are putting money into cybersecurity. Spending

less on some traditional defence methods that have been used in the

past. We are responding to that, matching supply to demand. Yes, we

announced some potential job losses back in September last year, which

included the cessation of manufacturing in Brough and we have

been in consultation in that industry. For something in this

industry, it hurts. I am having to deal with the size and the shape of

the industry I have grown up in, from that point of view, well

positioned, to actually understand what the consequences and make sure

we have a long-term viable future, not just aircraft, but in

submarines, warships. All right. Let's move to our first

main topic, which is leadership. Now a huge number of books have

been written on this, including two by you All arc n. Tough Calls and

On Leadership. I confess to being sceptical about all this talk. It

is a topic that if you need it explained to you, you probably

don't have it. High don't you set out your thesis of leadership.

sceptical as you are. The reason I wrote the books, other than to

raise money for Breast Cancer Care. I had read and seen so many booblgs

about leadership, written by -- books about leadership, written by

people who have not done it. The idea in it was to take people who

do it. I was, I learnt how to lead by watching other people. I mean,

there's no magic. You have some skills. You get training and then

you develop. And so my whole thing on leadership is, look at the

people who are good at it. See what they do and learn from them. One of

your presents is that good leaders keep it simbl. They strip out the

complexity and get to the essence rather than being bogged down in

the detail of it all. Absolutely. We talked before about jargon. It

is just terrible. You know, the art of leadership is

to create follow-ship. It is about making it clear what people need to

do and talking with them, not at them, in a way in which they can

understand what you are putting out. So, I am very anti-all the talk.

is EQ rather than IQ. Emotional? Emotional intelligence, especially

in the business I am in, the fund management business, where you are

dealing with people. There are no assets. All we have

are these top fund managers. They are not these sort of confident

figures everyone thinks they are. They are like, they are like normal

people. When they go through a bad time, that is when you have to the

old arm around them. I always think fund management is a bit like

football. Sir Alex Ferguson is my hero, you see. Alex Ferguson, to me

epitd tommiezs man management. At about der dean he had a team of 21

-- Aberdeen, he had a team of 21. He developed this skill and learned

how to handle it. That is what leadership is about. It's about

having that ability to handle people differently from, so you

don't have one formula. Each person needs to be handled very

differently. EQ is something you cannot teach. You can teach other

skills. One thing I have learnt over the years and we probably all

have is delegation. When you first start you do everything yourself.

Then you quickly realise if you continue to do that you'll be dead.

How about it? I violently agree with everything they have said.

He's also from Aberdeen. Surrounded!

In particular to the issue of can you learn from a book? I think that

most of the leadership skills are innate. There is a lot you can do

to improve your leadership skills. But seldom is that done from the

book directly. Our experience is that if you give people experience

in leadership roles, give them exposure to big leadership

conundrums and learn from those who have led in different circumstances

then a lot will rub off. People will concentrate then on some of

the key things we have talked about, such as clarity, as something which

is important for role of leader to. The issue of fellowship, I think

that is essential. If you have the list of all the courses you have

been on, all the opportunities you have had to learn, but if people

don't follow you, you are not a leader. One thing you have to do is

recognise people will judge your motives or try and work out who you

are, what you are likely to do next. If you communicate naturally. If

you are somebody who is relatively straightforward in dealings, the

chances are that you improve your chances of being a leader. I want

to ask whether you think you are good leaders? Allan you set out the

distinction of being a good manager to being a good leader.

I think the Aberdeen guys are really good.

I am a good communicator. I do have some glaring weak mixers, I am lazy

and so on, but I am a good delegate to. And the clarity, you can stand

back and be clear? I am not as clear as some of the people who

work for me. Sometimes you have to temper the real clarity because it

can be brutal. Sometimes you have to temper that a message. Give

people different messages, because you have got to treat everyone

different leaf. Nigel, are you a good leader? I find that difficult.

A good leader has to be modest. recognise some people think I have

a positive effect. But I wrestle with issues all of the time. And

wrestle with being on top of your game all of the time, been way you

need to be all the time. Seeing those leadership decisions,

wandering why people think you don't always take them. It is a

real struggle. It would be wrong for me to say I am a great leader.

I think I am somebody in a leadership role that has a lot of

expectation on me. You write about it obviously? I say to everybody, I

am not cheap executive officer anymore. It is probably the best

job in the world, but it is the hardest job. It is 247. And anybody

who does not do that, cannot do it. I say to people, even the best

leaders I know I'll write 70% of the time. And that is a good strike

rate. You have to realise, which is pretty good, because you are wrong

a third of the time, and it is a liberating. It makes it easy for

years. Often you have to change your mind. I put myself in the pack.

I'm probably right 70% of the time, and I am probably wrong 30% of the

time. And it is when I am wrong and how quickly you fix that which is

probably the test. Martin, you are on the board of BSkyB, and non-

executive member? A recent edition. I took over from Alan. You have got

both of us here. While we have got you here, we should ask you about

BSkyB because it has a leadership headache at the moment, because it

is chaired by James Murdoch who is entangled in the affairs of News

International. What is happening? Jeremy Darroch is one of the most

outstanding people. The chief executive? The chief executive and

as the lead it is outstanding. have had him as a guest on the

programme. Top guy and you wouldn't think it when you first meet him

and speak to him. He is an incredible leader and spends his

time motivating people in the business. It is an incredible

company. What about the issue of the chairmanship? James Murdoch has

not noticed, apparently, a major scandal? James was a very, very

good chief executive officer. He transformed the business. It was

entirely right that he step up to chairman. Take Jeremy, who he

recruited, he recruited the whole top team running Sky at the moment.

Obviously there is a lot of publicity at the moment over the

whole thing. If is particularly over the management skills, who was

apparently unaware in his own company... I am not sure I read

every e-mail to the bottom. I feel for him. He is a good chairman and

he got active by the majority of shareholders. We will have to wait

until the select committee reports. Do you think his company would be

strong if it was not linked to News Corp, the global operation led by

Rupert Murdoch? Would it be a stronger company? We did beat a

strong company? It wouldn't be as strong as it is today if it wasn't

for the amount of effort the Murdoch empire had put in and

supported it. If Ofcom came along and said in order to remain a fit

and proper licence holder, you shouldn't be connected? It is a

stand-alone company, with its own management team with James as

chairman. But no management influence. It is a superb

management team. I know I keep saying that, but they do run it for

the benefit of all shareholders. was on the board for 13 years. I

remember when the business lost a billion pound. The transformation,

I go back to a half-empty, half full, the transformation of that

company has been tremendous. What is the most important thing is the

company, how it as chrome and the value it has generated for what it

shareholders. -- groaned. We have to remember news is a minority

shareholder in the company. Two thirds of the company is owned by

institutions. And the vast majority over a period of time, the running

of the company and the performance of the company and value for them

has been first class. We will have to see how things develop. But it

is... Remember the lead in the company is always the chief

executive officer, it is not the chairman. A new exhibition at

London's Design Museum it asks us to think about how products would

look if we use 20% less material in making them. Could we survive?, how

would it affect your business if it would -- if you were presented by

that challenge? We have a manufacturer, a service company in

asset management. Could you reduce the amount of material you used in

products? Energy costs in terms of running factories, huge

consideration. The site on the North West of England has a �7

million electricity bill. There is a business incentive to reduce it.

Anything we can do their reduces that energy consumption makes a

material difference to the efficiency of the business.

Recently I builds a new building at Salisbury. It replace 38 old

buildings and the energy costs of the old buildings which dated back

to the 50s and 60s, is wiped out. What we saved on the energy costs

paid for the new building which houses 1,600 people, pays for

itself in two years. We should be pulling old buildings down all over

the place. I have some 70 sites around the UK. Not particularly

nice office accommodation but cheaper to run. Even I can

understand the economics. It is not a green agenda, just good business

economics. When I first started in the industry, you can imagine the

heat generated by the screens. Now every screen is switching off at

7pm at night. But 10 years the paper that was delivered from

brokers' research, was up to here. Now it is all electronic so there

has been a massive reduction in waist. Ken Morrison of Morrison's

supermarket. When I started in the supermarket business, he was a hero,

in a strange way. I went to see him in Bradford and we were walking

round his office, and he said to me, have you notice something? I said,

what is it? He said have you noticed how few photocopiers I have

got? I said, I don't think I have. He said when you go back to your

office, count how many photocopiers you have got, and how much paper is

on the bottom. If you cut them by heart you'll save yourselves

millions of pounds. He was right. - - cut them by half. In the back of

supermarkets, things are racked with string. There is a lot of it,

and it can get in the way of the Compaq does and block them up. He

had all of his string made in that you could never use more than a 12

inch piece of string. And so, before you get to packing, there

are so many things that really are the nuts and bolts that make a

difference. He was the leading expert. He did get down to the

detail. It was amazing. We could make the programme 20% shorter, but

it is already compact enough. To my guests, thanks for coming. I will