The MT Interview: Rupert Soames
By Matthew Gwyther and Andrew Saunders Friday, 23 December 2011
From playing cowboys and Indians with Churchill to DJing at Annabel's, Aggreko's CEO has had a colourful past. And the present is no less dramatic.
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One of Rupert Soames's early memories is that of indignation. He was six when his grandfather died but it wasn't deemed appropriate for the small boy to attend the funeral. The send-off was, after all, hardly a classic English affair with a few grieving relatives at the municipal crematorium. It was a state funeral after a total of 321,360 people had filed past his grandfather's catafalque, during the three days of lying in state. The progress of the gun carriage carrying the coffin to St Paul's, the flypast of 16 English Electric Lightnings, the voyage up the Thames to Waterloo station - all contributed to a landmark day in the growth of live television. And that's how Rupert, Winston Churchill's grandson, was forced to watch the Greatest English Leader make his final exit.
'I was furious,' recalls Soames. 'He'd enjoyed our company more as he grew older. We played cowboys and Indians together. So watching it on TV was a very poor substitute.'
Being a Churchill - Rupert is the son of Winston's youngest daughter, Mary - must have had its advantages and disadvantages. On the one hand, when he meets senior figures in business or politics in the developing world and elsewhere, it cannot do much harm that he is Winston's grandson. He has an accomplished social ease, as befits his class, when dealing with strangers. On the other hand, there must have been a weighty burden of expectation. Winston may not have been much cop at school, but Rupert didn't cover himself in glory either: attending Eton and Oxford, where he was president of the union, he was awarded a 'Douglas Hurd' (third), as they are known in the trade.
One thing is for sure: he decided relatively early that he would plough his own furrow in business rather than go into politics or journalism. As a student, he had a marked commercial streak: he would travel down thrice weekly from Oxford in his final year to run the disco at Annabel's nightclub in Mayfair. His business, which made him 10 grand profit, was called Touch of Class. 'I do regret not working hard at university,' he admits, 'but I did earn quite a lot of money. And it gave me a taste for doing business.' That taste has stayed with him and in Aggreko he runs a truly global British success story that turns over more than a billion pounds a year.
Where did that desire come from? Soames is the youngest of five children. His father was in Lady Thatcher's Cabinet and a European Commissioner. The business bug didn't infect his older brother, Nicholas, who become a highly colourful Tory MP about whom everyone has a story - not all of them for a family audience - and also worked as a PA to Sir James Goldsmith. His sister Emma became a successful journalist who once walked out with Martin Amis.
'From a very early age I liked being in charge,' he recalls. 'You're never more in the driving seat than being on the turntables at a party, making people dance faster or slower. I've always run things.'
So, with Oxford concluded, he watched as his 'ferociously bright' friends went off to become bankers. 'The trajectory in finance is far faster. In industry your maximum earning years are in your late 40s and 50s. In the City it's your 30s. But I thought the good news would be that if I ever made it big I could hire all those bankers. I certainly didn't wish to compete with them. And, anyway, the banks certainly didn't want someone as left-field as me.'
So off he went on his slightly lower trajectory and took a job with GEC, where he remained for 15 years, being moved from company to company, learning how to be a manager. The General Electric Company at that time was a British manufacturing behemoth and the largest private sector employer in the UK.
The business was run by the mercurial and fearsome Arnold Weinstock, who clearly took a shine to Soames and exerted a huge and lasting influence on the young man. 'Arnold had huge qualities and big faults and the former outweighed the latter enormously. He had a brain the size of a planet and really fast analytical skills. He could persuade really good people to work for him for nothing, because it was fun and he was willing to take huge risks with young people if he liked you.'
Pretty tough, though? Not one to suffer fools, as many found. 'He had an absolutely wicked sense of humour - although those who didn't know him well only saw the growly bits. In life, the type of people you want to work for are not necessarily nice. It helps if they are not shits. But what you want is to work for people who are good. Managers who take quick decisions, right decisions. That's what others find reassuring.'
Weinstock's management of GEC in his latter years was deeply flawed, which Soames admits. What young MBA student has heard of GEC now? So what went wrong? How did such a great British enterprise wind up in the shambles that was Marconi?
'Well, Arnold made some appalling cock-ups,' winces Soames, 'although most of the time he did know what he was doing. He tied up the biggest businesses in joint-ventures in order to make GEC unbuyable and stop any takeover. His reasoning was that it didn't matter because he was cleverer than the people on the other end of these JVs. But what really did for GEC was succession planning.' He is referring to the senior position given to Weinstock's son Simon. 'Arnold did have a problem: he thought that he and GEC were indivisible, that what was in his interests was in GEC's interests. He became the overmighty CEO - if you want to see why we need strong chairmen and governance to protect shareholders, then look at what happened to Arnold.'
Nevertheless, Weinstock's influence on Soames was considerable. Soames still uses the management reporting methods taught him by the old man and says his intolerance of flim-flam and twaddle came directly from his mentor. So he left GEC when Weinstock left - 'for which read I was fired. Been fired twice in my life. It's character-building.'
Following his GEC exit, Soames took a job with the software company Misys, eventually becoming chief executive of the banking and securities division as the century turned. But he fell out badly with Kevin Lomax, the company's founder, and found himself out of work. It was a grim hiatus.
'I was my usual, relentlessly optimistic self but I was on the street and literally whistling Dixie for a year. And my kids of 15, 13 and 11 were all at fee-paying schools. The truth is, I was desperate.' It must have been a test of his sunny character. Soames bagged the Aggreko job in the most tragic of circumstances. The company's CEO, Phil Harrower, a charismatic Scot, was killed in Louisiana when his car collided with a train. Harrower had built the company up over many years and by 2001 it had 860 staff and was turning over £163m.
Soames wrote to the headhunter Carolyn Eadie of Spencer Stuart to offer his services. For a lengthy period, he heard nothing. He suspects her primary targets for the job declined to take up her offer. He acknowledges he's never been a safe bet. Then, he was asked in to meet chairman Philip Rogerson. 'I didn't make him physically sick and he took a bet on me. He's been a brilliant chairman. He alternately scares the living daylights out of me or is very supportive.'
Soames has repaid that faith. He has expanded his company at an impressive pace. Shareholders saw a total return of 450% over five years and in 2010 Aggreko turned over £1.23bn, on which it made a very nice £304m pre-tax profit. In 2009, it entered the FTSE 100. And in 2011 it came fourth overall in the MT list of the UK's Most Admired Companies.
Aggreko is a world leader in temporary power and one sees its orange generators all over the globe. It provides electricity when the grid and the power stations either aren't there or have failed because of war, bankruptcy or natural disaster. This is a vast market as the world gets more and more power hungry.
The customer base is broad and varied. The Glastonbury festival - which Soames attends as one of the highlights of his year - is a long-standing customer. 'Michael Eavis is another god for me,' beams Soames. 'It comes to few to give as much pleasure to others as he does. Wasn't Beyonce fantastic last year? Like Diana Ross at the height of her powers or Obama in his first campaign.' Aggreko also assists the armed forces in Afghanistan, generating power for their bases. There were also the US jobs of powering the Superbowl and keeping everyone warm during the bitter cold of Obama's inauguration ceremony.
Aggreko stepped in to help the Japanese fill in the power gap after the 2011 tsunami and inundation of the Fukushima nuclear power plant last year. From its HQ in Glasgow, Aggreko won the contract to supply 200 megawatts of both gas and diesel power for the Tokyo Electric Power Company. Such quickly negotiated deals provide lucrative, high-margin business. There is little time or public appetite for customer haggling. Organisations like Tepco are hardly in a position to drive hard bargains when a nuclear reactor gets knocked out and Aggreko's shares jumped 3% when the news was announced.
Once he's won the gig, Soames prides himself on his customer service. His company needs to be able to drop everything and move very rapidly when disasters strike, as it did when Katrina devastated New Orleans. 'When a hurricane hits, we're rented out in three hours. There is nothing left in the yard. During Katrina we had our tankers being stopped by the police at gunpoint and told to take the fuel to a hospital. After the Brisbane flooding, our hub was under five feet of mud. But our guys are incredibly good at dealing with such situations.'
'Our culture is the most powerful competitive tool we possess,' he says. 'A quarter of our business is emergency related. Just this week, Scottish Power had a transformer blow up because someone tried to steal cable from a substation. It cut power to 55,000 houses in Glasgow. Helping in this sort of situation gives our people a strong sense that they're involved in something very important. They can say that when they get home. That's what I did today - I had a good day at the office and the lights amazingly are still on in the Yemen.'
Also bound up in his culture brief is a need to stop bonus-hungry line managers in far-flung places from squeezing the margins by reducing that high level of customer service. Soames is a keen watcher of his company's Satmetrix Net Promoter Scores, which measure consumer approval. 'We measure service, daily, weekly, monthly. It's on the front page of management accounts. We score higher in NPS than any other B2B business in the world. We're getting scores in the 60s and 70s - banks are minus 30, most companies are in the 10s and 20s, across 22,000 responses annually.'
Its bi-annual employee survey reveals that over 90% of Aggreko staff say they love working there, which the researcher Towers Perrin confirms is unusually high. Interestingly, the survey also reveals a very low tolerance of poor performance and a deep irritability with those Aggrekans who do not 'pull their weight'.
Preserving this culture is vital to Aggreko's continued success and one of Soames's biggest challenges. Rapid growth risks losing it and competitors lurk out there. Serial entrepreneur Hugh Osmond snapped up one called APR Energy recently, but Soames still estimates he has around 50% of the global market share. 'I'd rather remain small and preserve the culture than grow big and lose it. We won't go quietly into the night of bureaucracy and being slow. I'll fight that all the way. I think we can go to 25-30,000 people without losing our culture, provided that we are really determined to work at it and that we celebrate the people who stay up all night to look after our customers.'
He could go on for hours. At six foot three, Soames is a very big guy. He sits slumped in his chair with his yellow fraying braces, madly twiddling his very undesigner specs.
But he's engaged and engaging. The enthusiasm for what he does, day in, day out, is crystal clear. He is also possessed of a winning line in self-deprecation - actually a mark of strong self-confidence - which is common in people of his background. He's an aristocrat with a common touch, carrying a rucksack not a posh bag, a reflection of the huge amount of time he spends visiting customers all over the planet. After MT met him, he was off to Brazil, Australia and Aberdeen within the space of 10 days, before returning to collect his Most Admired gong at Claridge's, where he made more noise than the rest of the audience put together.
His greatest enthusiasm is for developing countries, an interest that pre-dates even his involvement with them while he was at GEC. One of his father's roles was as the last governor of Rhodesia before it elected Robert Mugabe and became Zimbabwe.
The irony is that having avoided the family trade of politics, much of what he does in the developing world is deeply political. Keeping the lights on is seen as an indicator of good government in many African countries, so it is frequently the case that when Aggreko negotiates contracts, prime ministers get involved.
'There is such remarkable potential in Africa, and in the past eight years it's really caught alight. There are now more mobile subscribers in sub-Saharan Africa than there are in the EU.'
Soames gets dewy-eyed when he sees what people can do with electricity. It is a direct catalyst for economic development and an exit from poverty. Tanzania has just contracted with Aggreko to provide 100 megawatts of power after 18-hour-a-day power cuts forced it to act. 'What people are realising is that the cost of not having power is much greater than the cost of having it.'
He doesn't shirk from realism or winding up greens when it comes to the continent's development problems, having noted in public before that for Africa, 'solar is about as much use as an ashtray on a motorbike'.
'It depresses me beyond belief that institutions seek to impose standards of emissions onto the poorest countries that the richest countries say they can't afford to do themselves.' Now he's really getting into his stride.
'Most countries between the tropics of Capricorn and Cancer have far lower carbon intensity per kWh because most electricity there comes from hydro.
But they just say no to Africans using the greatest free coal reserves. There is such gross unfairness in the world. There is nothing more regressive than energy bills.'
The World Bank estimates that we need to spend $48bn annually on new energy infrastructure so that by 2030 around 90% of the world's population would have electricity. The annual expenditure figure now is $7bn. That means plenty of contracts for Aggreko.
He is nevertheless a realist. Even if institutions in the west - and China - were willing to invest in power generation, this is very risky politically. In 2010, Bolivia nationalised an entire energy generation network. 'That government effectively stole a whole lot of assets. It'll make it very hard for it and others to get financing now.'
On the topic of theft, though, he won't have Africa done down. 'Do you know what? We have more of our kit stolen every year from within the M25 than we do in the whole of Africa. When it comes to the topic of cable theft you ain't seen nothing in the UK yet. The university for cable theft is Nigeria but for the masters degree they have to go to South Africa.'
In a troubled world where many managers are up against it, Soames is a rare happy bunny. 'I love my job and the buzz. Being a chief exec means being on permanent transmit - giving out energy, enthusiasm and love of the business. People watch me. It isn't acceptable to come off a 24-hour flight looking anything other than full of bounce.'
Being so hands-on is a huge strength but it may have limitations a few years down the line. In the meantime, off he booms and bounces, Tigger-like, to his next appointment. Let's hope his fizz never flattens.
FOUR CHALLENGES FACING SOAMES
SOAMES IN A MINUTE
|18 May 1959||Born in Croydon. Educated at Eton and Oxford, where he was president of the union.|
|1982||Joins GEC under Lord Weinstock, where he remains for 15 years, becoming managing director of Avery Berkel|
|1997||Joins software company Misys. Becomes CEO of the banking and securities division|
|June 2003||Appointed CEO of Aggreko, succeeding Philip Harrower, who was killed in a car accident in the US|
|2009||Aggreko joins the FTSE 100|
|2011||Aggreko wins fourth overall place in MT's Britain's Most Admired Companies list|