Transcript - Robert Walker, Chairman, Travis Perkins plc
Nicholas O’Regan, Professor of Strategy and Innovation, talks to Robert Walker, Chairman of Travis Perkins plc, about the recent takeover of BSS Group and his extraordinary journey in leading some of the U.K's most recognisable brands, including Proctor & Gamble and PepsiCo.
Nicholas: First of all, last week Travis Perkins reported group revenues up by 8% and adjusted profit before tax up by 20%. What in your view is your contribution to that success?
Robert: Principally two things.: firstly, the market. The market place for building materials improved quite markedly from about April onwards last year. I’m talking about the calendar year 2010. Between January - and the weather last year as you recall was pretty poor - and March the building materials sector was suffering generally. From about April onwards we saw an uptake in demand. More about building customers, doing more on what we call repair and remodelling work, rather than new house building, and with that merchants like Travis tend to do well, and we did well. We outperformed the market by quite some measure.
So it was really the market in the first place, but then from a Travis point of view in our main businesses we put in a number of what we call self help initiatives. We redesign your supply chain, your procurement, your sourcing policies. You improve your customer service. So a number of self help initiatives in the business helped, and it was a comprehensively good result last week with all of our businesses.
We’ve got about 11 separate businesses in the group, responding to those self help initiatives and the improvement in the market, and all outperformed their markets, all built market share, built profit, and built revenues, so it was comprehensively a good result.
Nicholas: What are the key challenges faced by Travis Perkins?
Robert: Well, we’re assuming that the market won’t get markedly better during the course of 2011 with all the squeeze on consumers, and the squeeze on the building sector. The building sector right now is about 20% below its peak level in 2007/ 2008, so there’s a lot of spare capacity in that sector. We don’t expect the building sector to pick up markedly in the next year or two years, so the challenges we face are to continually chip away at our business model and each of our businesses, improving our IT, improving our delivery capability, our customer service levels. I would say that’s not exactly a strategic challenge, but it is very much all about chipping away at a model we know is successful.
Nicholas: What are the key growth opportunities for Travis Perkins?
Robert: There’s one very important growth opportunity for us. It wasn’t in last year’s numbers because we completed the acquisition two weeks before the end of the financial year. We bought an excellent business called The BSS Group, which is an industrial supplier of materials to the trade and it was the second largest plumbing and heating merchant in the UK.
Putting that together with our business created in the combined businesses the largest plumbing and heating merchant in the UK, bigger than Walsley plumb centre so the challenge really is to integrate that business quickly into the group, incorporating our IT systems on top of our procurement initiatives, so that we get some real synergies out of the combination of the two businesses.
The business we bought, the BSS Group, was actually a really good business with quality management. We got it at a fair price, because we got it at a good point in the cycle, when the cycle was still depressed.
So the real challenge going forward is to integrate that business but at the same time continue to work away at these various organic initiatives that I referred to earlier. Those are the main challenges over the next year or so.
Nicolas: What do you see as Travis Perkin’s distinctive competencies?
Robert: We’re very good operators. There's a tradition of Travis: we’ve got a lot of long serving employees, who tend to know their localities, know their building, know their professional builder customers, and they keep coming back. We get a lot of repeat business. They are generally very, very good operators out there in the market.
The city regards Travis as a class operator in this sector, and my view is, having worked on the board of a competitor for about nine years, that it is the case. It is fully justified.
It's supported secondly by some very good IT systems. One thing that I’ve really learned over the last 10-15 years is the quality of IT. Good companies have first class cutting edge IT systems, and Travis has that, because we have our own IT department. We’ve never outsourced our IT development; it’s always been managed inside. So it is good operational skill supported by really good quality IT information systems.
Nicholas: There’s a great deal about effective leadership in the private sector right now: what are the attributes of good leadership in your view?
Robert: I think a good leader provides a clear direction and culture to an organisation. That’s often very much his mark on the organisation. But at the same time I think a good leader provides a climate in which his people can make the best of themselves. It isn’t just talking about the direction, this is where we're heading, these are my cultures and values, but it's about providing a climate for people to get the best out of themselves, their colleagues in the team and throughout the organisation.
Nicholas: Moving on to the Robert Walker journey, your industrial journey is a pretty impressive one, focusing on leading a variety of organisations. How do you view your various leadership roles?
Robert: Well by background I'm a marketer at Procter and Gamble. I think that the two most influential companies that I’ve worked for in terms of how they develop me as an individual where P&G, where I learned how to write, I learned numeracy, and I learned how to think, coming out of it with a history degree. I learned my marketing skills at P&G. At PepsiCo I learned my management skills. I had my first piece of business to run in PepsiCo, when I ran the Middle East for about four or five years in the late 70’s and early 80’s, after having got the hard skills at P&G and the little bit of MBA gloss from being at Mckinsey. Mckinsey wasn’t that helpful compared to PepsiCo and P&G in my career.
It was at PepsiCo where I learned the soft management skills, how to negotiate, how to influence your peers, your subordinates, your superiors, how to get the best out of people, how to get the best out of business situations, how to create a team ethic around the people in the business you’re running. I think working at PepsiCo was probably the most single important influence in fact from my year.
I think what you do, I’ll talk about the age of 40, you learn. And if you can find the kinds of companies to work for, that will give you the best for that learning, it’s a great advantage. After 40 you learn from your own mistakes. I think you learn from what you do well but you become a lot more self aware after 40 as you get bigger and bigger responsibilities. I think really good leaders and executives have made a few mistakes along the way, picked themselves up, learned from it and carried on. I think that's a huge part of it. But having the grounding in your early years, the really good grounding, is very important.
Nicholas: Thank you. The boardroom is a familiar setting for you. How would you view the role of the board?
Robert: The board and the role of the board in this country: I’m a great fan, a big supporter of UK corporate governance. I think UK corporate governance is probably amongst the best in the world, and it’s come a long way in the last 20 years. When I first sat on the board as non-executive in the mid-90’s there was a lot of, I wouldn’t say box-ticking, but there was a lot of monitoring of performance and the board's role in developing strategy in identifying risks in the business, in understanding the internal audit function.
The board is now much more involved in the direction of the internal workings of the company than it’s ever has been, and that’s come through the various governance codes that we have to face. It’s also made sitting on the board much more complex, much more time consuming and that’s absolutely correct. What has happened is that the non-executives 20 years ago could have come into a board meeting - not that I ever would or the colleagues I know of ever would - without having read the papers. It’s unacceptable now: he’ll be caught out. All of the non-execs on the board I know are highly committed, highly involved and spend a lot of time outside board meetings making sure they’re up to speed. The board is now much more important: it is the key, not decision maker, but it is much more involved in all aspects of the company’s business and everything than it ever was the case before.
Nicholas: When you look back on your career, do you feel you’ve achieved all you wanted too?
Robert: What I’ve done is more than I’ve ever expected to. I think I took it step by step. When I left university I knew I wanted to work for P&G. I actually wanted to go to Harvard Business School straight away after university, but couldn’t afford it so couldn’t do it. So P&G was a fabulous next choice in terms of training me. I never thought, "20 years from now, I’d be doing this, 10 years from now I’d be doing this". I did have a pretty good idea: a rough idea of Plan A, Plan B, Plan C of what I was likely to be doing in the next 3-5 years. Plan A was the best plan, Plan B if plan A didn’t work... My wife always accuses me of having too many plans and too many contingencies. I probably did do that in my early years but I think knowing where you are, being very self aware and self critical which I tend to be, I’ve always had a next objective - something I’d like to do next providing the job I’m currently doing works out well and I achieve what people expect of me, I should be doing that next. It’s generally worked out that way that I’ve ended up where I have 40 odd years later. I would never have expected that to happen. I just kept hacking away at it I suppose.
Nicholas: During that impressive career, what’s the most important thing you’ve discovered about yourself on this journey?
Robert: I think what I’ve discovered about myself is when you’re in business you’re dealing with people all the time. I think working internationally was a huge experience for me because working in different cultures, you learn that in a sense you are only as good as the people you work with. Coming from various cultures, I was asked to move from the Middle East to run Germany, and there’s no bigger constrast from running businesses in the Middle East to coming to the cold shower in Germany. In so doing you learn your own abilities to work with people of different cultures, accept their cultures, and work with them to get the best out of them.
I think what I learned most was - as I’ve gone through various challenges, and I worked in the US after that, I’ve worked in Africa, Eastern Europe and so on - the ability to understand, and try to get behind, the people you're working with and who are working for you, so that you can get the best out of them. You have to flex your approach and by some way you find yourself.
Nicholas: Thank you very much
Robert: Thank you