From building to broadcasting to banking - the breadth of the 3i chairman's achievements are remarkable. As Andrew Davidson discovers, he knows about football too - or at least, about Newcastle United.
Sir George Russell, bent over the coffee table in his 10th-floor office at 3i in Waterloo, is concentrating very hard. 'Let's see. Shmeichel, no, no, that's silly, what's his name? Srnicek, that's it. Venison, the new Swiss full back I can never pronounce - Hottiger? Then Albert, Sellars, Beardsley ...' At my request, the chairman of 3i is running through the current Newcastle United team. Never one to resist a challenge, Russell is keen to prove he has not lost his Geordie roots. You have to admire his tenacity. 'No, no, don't help me,' he says, halfway through, determined to finish. Most chairmen of his status and experience would have thought it a very cheeky question indeed.
But Russell, a Newcastle United fan who almost played for Sunderland, has made something of a speciality out of resolving awkward situations. Reviver of Marley, the massive building-products group, guider of commercial television through the Thatcherite onslaught of the 1991 ITV franchise round, impresario of the recent, much-delayed 3i flotation - the breadth and scale of his achievements, from building to broadcasting to banking, are now, if you think about it, rather remarkable.
Even so, as all who deal with him note, he remains the least affected and most likeably down-to-earth of corporate heavyweights. That, perhaps, is the key to his growing reputation as one of Britain's premier boardroom fixers: with Russell, the industrialist son of a Gateshead telephone engineer, there is no front, no flashiness. He gets in, puts people at ease, and methodically sorts out the mess without ever losing his ability to think laterally. He can also, let it be noted, name the whole of his beloved Newcastle team, and even gets to see them play once in a while.
'Phew, I could do with a coffee. It has been meetings all morning,' he says when we first meet, advancing with a grin and a hint of a Geordie accent and plonking himself on a sofa. The view behind him - Westminster, the South Bank, the City - seems to stretch the length of London. Russell himself, a deliberate man with a lugubrious slab of a face, looks a bit podgy and pasty, 'as usual', say his friends, who constantly worry that he pushes himself too hard. At 59 he says every year that he is going to cut down his workload, but there are no signs of it yet.
As chairman of 3i, Marley, the Independent Television Commission (ITC) and the Northern Development Board, director of Alcan, Taylor Woodrow and Northern Rock, he has enough board meetings to fill his diary to the end of 1996. It is a tough schedule: two days a week at Marley's headquarters in Kent, three days a week in London, and a lot of the time in between watching ITC videos in the back of his customised BMW, or attending endless functions of the 'great and the good'. Russell's is a face that pops up in a lot of places. 'Now I'm as broad as I used to be long,' he laughs.
Most recently it has been seen to good effect heading the successful flotation of 3i, the bank-owned venture capital group. It was something which had defeated two previous chairmen and which many thought could not be done. An odd role perhaps for a former ICI man?
'Not really,' he says. 'The strange thing about this organisation is that if you truly analyse it, 3i is much more a finance house than a bank, not just a venture capital business but an investment capital business.' That means his long experience of industrial investment fits it perfectly. 'Most of the deals this organisation gets involved in are identical to what I have done for 30 years. The new area is the raw material called money.' ussell is nothing if not adaptable. From his early days as a trainee at ICI, through jobs at Welland Chemical in Canada, Alcan in the north-east of England - where he set up the Lynemouth aluminium smelter - and Marley in the south-east, he has shown a talent for pushing through change without confrontation. At Marley, which he joined as chief executive in 1986, he has transformed the family-run outfit, revitalising the management and reinvesting heavily in the business to enable it to tough out the recession. (His achievement in changing company attitudes internally should not be under-estimated. One old Marley hand remembers a shareholders' meeting pre-Russell when a representative from the Prudential, a major investor, had filed six serious questions challenging company strategy. The chairman had read them out, frowned and then closed the meeting.) Yet at 3i Russell insists his intention is not to change things at all. The troubled venture capital group, wracked in the early '90s by its on-again/off-again flotation plans and the indecisiveness of its clearing bank shareholders, had been through no less than three chairmen in little over a year before Russell took the top slot. First Sir John Cuckney had gone, after a hack at the group's cost base. Then his replacement, Alan Wheatley, had resigned abruptly in April 1993 after the group's long-awaited flotation was postponed. Then deputy chairman Sir Max Williams had taken over as acting chairman, presumably while Russell was having his arm twisted. By the time he agreed, it was one of the hottest seats in town. Yet just over a year after taking it, the 3i flotation has been accomplished smoothly, the City is purring and the denizens of Lombard Street, Lothbury and Poultry all have an extra little jaunt in their step. How does Russell do it?
uite simply, in this case: he just altered the rules slightly. He didn't sell as much of it as had first been intended. 'My brief was to find out why flotations don't work in this company. When the structure was set up, its constitution was independent but it was owned by the banks, and there was a push-pull all the time. How can you be independent but controlled by the banks? I think the route we took, of a minority flotation, solved the problems. It allowed the banks to take the market price without giving their birthright away.' The real effects of the flotation have still to be worked out. Certainly 3i is an oddity - there is no organisation like it in Europe or the US, for example. Set up by the Bank of England in 1945 to bridge the 'Macmillan Gap' (the fancy economic term for the lack of long-term investment capital available to medium-sized companies), it had by the mid-'90s become a Frankenstein monster for its original backers, the banks. Although its dividends provided welcome cash flow, it had actually become something of a competitor. While some wanted the money a flotation would bring, others were worried that an independent 3i might prove even more fearsome in the marketplace. Now Russell, apparently, has soothed all those bankers' beetling brows.
But will it be the same 3i? Worries have already been voiced: the group will become more short-term, it will be less hands-off in its investment, it will be more interested in the big investments at the expense of the small ones, it will be keener to get a big profit ... Just like any other venture capital outfit, in fact. Rubbish, says Russell. Things will stay as they are. 'The biggest selling-point this organisation has got is that it offers minority investment, for the long term, without putting any of our people on your board.' Well, that's not quite true. 3i does appoint 'representatives', surely? 'Yes, but they are not our executives, they are people we appoint who have no allegiance to us whatsoever.' (Even so, you might surmise that getting on the 3i non-executive database, which is rather a desirable perk among senior businessmen in the regions, does inspire a certain loyalty to the group's Waterloo head office.) Nor, continues Russell, is there any likelihood that 3i will change the nature of its investments. 'I've been long-term wherever I've been and there is tremendous demand in this field,' he says. Which is what? He smiles. 'We will continue to deal with those that are bigger than small and smaller than large. In figures, that is companies from £1 million to £30 million in turnover, or from 15 to 500 employees. But there is nothing sacred about any of those numbers. We still make loans of £100,000.' The rise of Russell the banker, to put alongside Russell the industrialist and Russell the broadcasting chief, has surprised some, though not his colleagues who have long since given up wondering at the range of his abilities. 'He's becoming a remarkable man of his times,' says one of his oldest friends, John Bridgeman, managing director of Russell's old company, British Alcan Aluminium. That doesn't, of course, answer the obvious, rude question. Tin foil and tiles, Russell's home patch, are not exactly glamour items. So how on earth did he end up running the Independent Television Commission and then 3i?
Serendipity is Russell's answer. Somewhat disingenuously, he tends to describe his rise through the broadcasting establishment, for instance, as a series of lucky surprises. Others are not so sure, noting that as well as his undoubted managerial skills, he is also a shrewd networker who clearly felt stifled in a succession of big multinationals, and was ambitious enough to broaden his interests. 'Remember there is a bit of grit and determination about being a Geordie,' says Bridgeman. 'They have great familiarity with industrial matters, but the wise Geordie is also a good mixer. Look at all the Geordies in the media.' Perhaps it is just timing. More than once, Russell has been the right man in the right place. In 1979, when he was invited to join the old Independent Broadcasting Authority, seemingly as its token northerner (his directorship of the Northern Sinfonia had caught a civil servant's eye), ITV was pitched into a long industrial dispute. He was the only member with extensive experience of industrial relations. In 1988, when Margaret Thatcher was looking outside the media for a top businessman to usher ITV into a tougher, more commercial broadcasting environment, Russell again was pushed forward to head the new Independent Television Commission. His backers - principally Douglas Hurd, then Home Secretary, and Timothy Renton, then broadcasting minister - must have known that by temperament and inclination he was unlikely to champion the sort of radical change that Thatcher wanted, but that nevertheless his industrial background would impress her. With hindsight it appears to have been a very shrewd choice. Many believe that without Russell the whole 1991 franchise process would have collapsed into an embarrassing farrago.
r would it? It is a moot point whether the eventual hybrid of auction and beauty contest, which Russell helped create, was that much more logical than Thatcher's idea of a straight auction, which he loathed. What is undeniable, though, is that in the main he protected the system and that even though it now operates to more commercial priorities, it still produces some of the best television in the world. 'He was the first chairman of a commercial television regulatory authority to have a proper business background, and he really cares about the medium,' points out Michael Grade, chief executive of Channel 4 and a firm Russell fan. With the franchise round, Russell was given 'a pretty lousy hand of cards', adds Grade, 'and played them immaculately'.
It was not, however, an easy ride for the ITC chairman. Four ITV companies lost their licences, among them Thames, the biggest ITV company, and TV-am, the most profitable. Russell had worked closely with Richard Dunn, the Thames boss, and Bruce Gyngell, the TV-am chief executive, in helping the industry to lobby the Government over the 1990 Broadcasting Act. Both men were furious about the result, not least because hundreds of their staff lost their jobs in the changes that followed. More recently, the ITC had to admit that the companies chosen to replace them had performed poorly, which earned its chairman more flak.
'Sure, they felt they got kicked in the teeth,' he says now. 'But I don't think they were angry about my behaviour. They were angry with the situation they found themselves in. We had taken a stand which took us to where it did, and at the end of the day some people got badly hurt.' He pauses and looks thoughtful. The franchise process was, he admits, a 'stomach-churning' situation. 'You're put in the position of being the hangman, it is not an easy position. The ITC at that time should have been delighted to have got through what it had, but it was like a morgue. There was no joy in that place. But it was a fact that it had to be done.' The losers, of course, were swift to note that the biggest winner out of it all was Russell himself. It earned him a high profile, a knighthood, and a probable place in the House of Lords next to his regulatory predecessors when he stands down from the ITC. That won't be for a couple of years yet, as he is pledged to finding a new chief executive for the Commission first. But there is little doubt that his sang-froid under fire, and his adroit ability to pull a compromise out of a situation that could have backfired spectacularly for the politicians - in this country we like our television as it is - impressed many outside Westminster as well. It's fair to speculate that 3i probably isn't the only hot seat he has been offered since then.
e says he doesn't really bring anything different to his roles in broadcasting or finance than he does to industry. 'I used the same analytical processes on franchises as I do for this,' he says. Much of his experience and know-how is interchangeable. It was at Marley that he learned how to keep his head down and concentrate on priorities. The company, whose profits had slumped before he joined, was continually being touted as a takeover target.
'We had a chart at Marley, splitting each year into two-week periods, where we marked every press mention of Marley as a takeover target. There were only 25 periods in seven years when we didn't get a mention,' he says. 'It was very difficult to manage in those circumstances. But if we had spent money short-term on avoiding a takeover we'd never have reinvested in equipment. We reasoned if we don't get it right by getting the plant and cost base sorted out then someone else will take us over and do it anyway. It was the best defence.' Likewise in assessing the health of a company, Russell says there are some basic signs you look for, signs that are applicable in any kind of business. 'I suppose the best key you look for is lack of focus. I don't mean a mission statement on every wall but what the role of the company is, what it is doing. It is the same in industry except that you can also walk around the plant. Then you can soon see if it is run-down, and if the business is only viable because it is operating on clapped-out equipment and can never meet replacement costs.' It is perhaps this concentration on focus and motivation that has made Russell so successful. His friend John Bridgeman says that, apart from his obvious relish for complex challenges, Russell's main strength is that he is good with people. 'He is a very direct critic if people don't live up to his expectations, but what is fair about him is that when people do well, he will always say so, and at the right time and place and in front of the right people.' Grade adds that he is also a good listener and a wonderful, patient negotiator. 'He's not a man who likes pendulum arbitration but he is a great lateral thinker.' s for the future, Russell is adamant that he is going to reduce his workload, though no one really believes him. For a start, as an opera buff who likes the best seats ('about 10 rows from the front,' he says), he may miss the money. Last year he took home a £354,000 salary-and-pension package from Marley and £57,000 from the ITC, to which he can probably add around £90,000 from 3i, if the emoluments of past chairmen are anything to go by. He wants, however, to spend more time at his homes on Holy Island, in the North-East, and in Canada, where he has always kept a base since working there. He may even want to do some studying; his wife Dorothy, whom he first met while at Gateshead Grammar and by whom he has three grown-up daughters, has just been back to university and gained a first in fine arts.
Yet wouldn't he find it difficult, with all his honorary fellowships and companionships (the Royal Institute of British Architects, the Royal Society of Arts, the Institute of Directors, the Institute of Management, and so on), to extricate himself from the London circuit? Perhaps, he says. He still sees himself as a northerner - 'I was born there, brought up there, educated there. It has incredible emotional appeal' - but admits he is not sure if he will retire there. He has, incidentally, little time for the 'canny Geordie' tag that we softy southerners love. 'It's a cliche that doesn't fit,' he says curtly. 'Either you know how to analyse things carefully and take decisions or you don't. Just being canny or gritty or whatever doesn't do you much good.' So, for now, real home for Russell remains the rather more mundane Hampstead in north London, where he has just played his first game of tennis for many years. He wants to play more, he tells me, which may or may not please some of his friends who think he has been looking rather worn out lately. 'To be honest,' says one bluntly. 'I haven't seen him looking well for years.'
The irony is that Russell used to be a sportsman of some note. After leaving Durham University he had to choose between signing with Sunderland FC or joining ICI. The inside forward chose ICI. Why? 'I knew the game Sunderland saw was the best of my life. They didn't,' he says now. Such pragmatism has always marked him out. Had it been Newcastle, of course, it could have been very different ...
1935: Born Gateshead
1946-1957: Educated Gateshead Grammar and Durham University (politics and economics)
1966-72: Vice president and general manager, Welland Chemical, Canada
1972-86: Alcan Aluminium, Canada; later set up Lynemouth smelter in Northumberland, UK, before becoming chief executive in 1981 and merging company with British Aluminium
1986: Chief executive, later chairman (1989), Marley
1993: Chairman, 3i He is also a director of Northern Rock, Taylor Woodrow, and the Northern Development board. He is an Honorary Fellow of the Royal Institute of British Architects, a Fellow of the Royal Society of Arts, a Companion of the Institute of Management, and Fellow of the Institute of Directors.
WHAT PEOPLE SAY
'He is becoming a remarkable man of his times. He does so much. I'm not surprised he continues to exceed most people's expectations of what is possible' - John Bridgeman, MD of British Alcan Aluminium.
'He's enormously practical and down-to-earth; an excellent negotiator. The Government owes him a huge debt for making a pig's breakfast of a Broadcasting Bill actually work' - Michael Grade, chief executive of Channel 4.
'You weren't being quite straight when you launched the programme reviews, were you? You didn't let on that you were handed an opportunity to keep the 'quality' companies who were ousted by Carlton and GMTV - and you funked it' - Peter Gill, producer, after the ITC Performance Reviews, 1994.
'George doesn't believe in doing things by confrontation, either with his senior managers or with the outside world. But he still gets things done. He is loaded with experience in changing businesses' - An associate.