Episode 8 The Bottom Line


Episode 8

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

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Bottom Line. Can you turn a mediocre manager

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

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

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

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

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

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

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founder of Aberdeen Asset Management. It is Scotland's

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

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

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

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

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

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managers. The world is putting money into emerging markets and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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All our manufacturing is done overseas. All of the engineering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Systems. The big decision to close the Brough factory.

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Governments cancel contracts and you are left with factories that

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

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

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

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

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

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

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

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

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

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included the cessation of manufacturing in Brough and we have

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been in consultation in that industry. For something in this

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

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

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positioned, to actually understand what the consequences and make sure

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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having that ability to handle people differently from, so you

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

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

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

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

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

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

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He's also from Aberdeen. Surrounded!

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

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

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

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

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in leadership roles, give them exposure to big leadership

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conundrums and learn from those who have led in different circumstances

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

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

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

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

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

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

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

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

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you are somebody who is relatively straightforward in dealings, the

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

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

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

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I think the Aberdeen guys are really good.

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

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

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

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

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

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people different messages, because you have got to treat everyone

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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outstanding people. The chief executive? The chief executive and

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

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

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

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time motivating people in the business. It is an incredible

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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chairman. But no management influence. It is a superb

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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products? Energy costs in terms of running factories, huge

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

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

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Anything we can do their reduces that energy consumption makes a

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material difference to the efficiency of the business.

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

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

:21:11.:21:16.

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

:21:16.:21:22.

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

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

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

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nice office accommodation but cheaper to run. Even I can

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

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

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

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

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

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

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

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

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

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

:22:51.:22:56.

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

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

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

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

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

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

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

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

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

:23:42.:23:50.

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

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

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

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