Magic Sponge Interview 1: Mike Clasper, CBE

Mike Clasper was one of the first ‘Magic Sponges’ that we conducted, back in 2010. 

At the time, Mike was the non-executive Chairman of Her Majesty's Revenue and Customs, a board member of ITV plc, and Chairman of the commercial branch of Which……..and frankly we felt bl**dy lucky as a small consultancy 'upstart' that he was willing to give up his time for us (and he has remained a firm friend of Q5 ever since)!

Mike has been awarded a CBE, as well as an honorary doctorate from Sunderland University. He is a Sunderland FC fan, which means he has been able to develop quite a thick skin over his life!

Mike worked for Proctor & Gamble for 23 years and, at the turn of the millennium was the CEO of British Airport Authority (BAA). In recent years, Mike has served as president of the Chartered Management Institute and is currently Chairman of Coats Group plc.

Given the financial climate at the time of our interview (early 2010), and his deep experience of both the public and private sectors, we wanted to ask Mike about running different types of businesses at a time of austerity - and the challenges this presented.

Mike Clasper, position at time of interview -- Chairman of Her Majesty’s Revenue & Customs, London, 2010

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What should business leaders do to drive performance in this economy (nb. we were in the midst of the Credit Crunch)?

The financial situation that we find ourselves in is, unquestionably, one of high stress. To some extent, the bland answer to this question is: ‘Do everything better’. However, I think there are a couple of areas that business leaders need to focus on.

First, many businesses are cash strapped. A relentless focus on managing cash, not profit, will put your business in a strong position for recovery.

Second, many customer segments are feeling the pain too. With the Government focusing on closing the deficit, consumers are feeling uncertain about the future. There are low returns on savings, tax increases, shorter working weeks, which means that they won’t spend as much. Business leaders, therefore, have to redouble their efforts for the customer segments that are most important to them. They need to focus on what their customers value, particularly in these tougher times, and generate even more value for them without adding cost.

What key business developments do you see in the year ahead?

It is unlikely that we are going to bounce back quickly, this is not a ‘V’ valley dip with a quick, sharp recovery. I foresee three developments:

Consolidation – well-known brand names, like Woolworths, have already disappeared and others will go the same way. Companies are struggling for market-share, particularly in sectors that are highly fragmented, so we will see more takeovers. Leaders will look for ways to add value through consolidation, driving out efficiencies and gaining as much market-share as possible.

Entrepreneurialism – there are many supremely talented people losing their jobs. There will be a natural tendency for entrepreneurship at a micro-level, with people using their severance packages to set up new business – either on their own or joining up with others.

Exports will hopefully increase – we have weak sterling. Our large fiscal deficit means lower exchange rates for the foreseeable future, which is a good thing for businesses that export their goods abroad.

Having worked in both sectors, what are the best things that you would take from the public sector and private sector to make a truly fabulous business?

The public sector has a very strong sense of purpose. People want to do the right thing, whether that is enabling children to gain better education or helping people to recover from illness and injury. Given the size, scale and complexity of public sector organisations, there are so many issues that could crop up that simply don’t due to the moral judgment of the people who work in them.

On the other hand, the private sector has a much stronger customer focus. They are demand-led so organisations must be adept at looking through the eyes of their customers and delivering the services and products customers want. This is an ethos that private sector leaders instil in the minds of all their employees, and public sector organisations lag well behind. Financial disciplines are also more rigorous in the private sector, with a focus on cost and value-for-money that is rarely matched in the public sector.

Business leaders in the private sector are highly skilled at using strategy to drive resource prioritisation. The next Government, whoever it is, will have to make very tough choices. Public sector leaders have been operating in a ‘field of plenty’ but will now have to make significant savings for several years. They will need to show the same ability; using strategy to determine resource allocation, which private sector leaders do year in, year out.

Who has inspired you most in your career?

My father ran a small contract building business. He developed strong, lasting working relationships with everyone connected to his business, from the carpenters to builders in the business, to the contracted plumbers and electricians. He made himself accessible to all and instilled in me a belief that it is the men and women working on the front-line who really count. I have been fortunate enough to work with many great people throughout my career, leaders who have shaped my views and influenced me in many ways, but it is my father who has inspired me the most.

What is your own personal business motto?

‘Be curious and be approachable.’ This was my father’s motto, but I have claimed it as my own!

Interview: OP, London