BEST OF ENEMIES: Osmond and Johnson, Galley and Mayall, Gordon and Tony ... The world is studded with examples of the deadly rivalry that can result when the sweet turns sour

BEST OF ENEMIES: Osmond and Johnson, Galley and Mayall, Gordon and Tony ... The world is studded with examples of the deadly rivalry that can result when the sweet turns sour - Healthy competition is one thing, but trying to get one over on the opposition

by CHRIS BLACKHURST
Last Updated: 31 Aug 2010

Healthy competition is one thing, but trying to get one over on the opposition can ruin your reputation. Chris Blackhurst reports.

If the gritting of teeth made much sound, then the noise from Luke Johnson's mouth would be truly deafening. 'We're the best of friends.

It must be true, I've read it in the papers,' says Johnson of his relationship with his erstwhile Oxford pal and business partner, Hugh Osmond. 'All business people are competitive and you're competitive with a variety of people, some of whom are friendly rivals and some of whom you've never met.'

By now, the decibel level would be excruciating. 'As Hugh once pointed out, the better people you know well do, the better you do.' Those were the days, when Johnson and Osmond actually spoke. Today, they are pitted against one another, rivals unable to bring themselves to praise the other, except in the most ambiguous terms. Worse, their animosity appears to have reached a point where it has determined their business strategy.

Famous in the City for their cool, sassy heads, Osmond and Johnson were a brilliant double act, the leaders of the brat pack, a group of young, thrusting entrepreneurs always on the lookout for fading companies on which they could work their magic. Pizza Express, My Kinda Town, Wembley and MGM cinemas all fell under the 'Hughie and Louie' spell. Their approach was summed up in a book they wrote, Betting to Win.

Then, in December 2000, the aura wore off. An internet business they were involved in, E-xcentric, was swept up in the fallout from the dot.com bubble bursting. Two months after that, in February, the unthinkable happened: Osmond was heading a bid for Whitbread's 3,000 pubs to add to the Punch Taverns group he already ran, when, without telling his long-time pal, Johnson emerged as a counter-bidder.

Osmond was inconsolable, muttering: 'He hates pubs. He never goes in them and doesn't drink alcohol. It's a bizarre thing for him to get into. You've got to like the things you get involved in.'

Lawyers were called for and Osmond forced his friend to back off, producing a 'no-competition' clause that Johnson had signed while a Punch shareholder.

Unable to forgive and forget, Osmond repaid the compliment in November when he disclosed he was behind a 2% stake in Johnson's Belgo restaurant chain.

The normally sensible Osmond was not buying into a booming concern: Belgo's mussels-and-beer custom is down because of the fall-off in tourist traffic, and analysts have cut profit forecasts by 20%. Such concerns did not influence Osmond's thinking, however. Possibly, Belgo was one of the businesses Osmond meant when he said he liked to 'have a go at companies that have been caught napping'. But there was no getting away from it: this was personal.

Now it was Johnson's turn to see red. Normally good for a quote, words failed him. At first, all he could say publicly was a terse 'no comment'.

He did speak to MT, though, which is where the clenched jaw comes in.

This is Britain, not America or southern Europe, where insults are traded in public. Here, we are much more reserved. Even in the depths of anger, Johnson retains his composure, preferring understatement to common abuse. To gauge the intensity of Johnson's feeling, read the following aloud, but do so in a state of tightly coiled, barely suppressed, fury. 'Hugh Osmond has invested in things I've done and vice versa ... Rivalry and competition are the very essence of capitalism ... Healthy rivalry is good ... The better he does, the better I do and vice versa ... Life goes on; I hope he has success and I hope I do, too ... Hugh Osmond has, and will continue to have, differences from me.'

Despite repeated requests from MT, Osmond would say nothing about Johnson.

His refusal said enough, really. Once he would talk in glowing terms of his partner. Now, silence.

Theirs is just the latest example of a purple mist that descends from time to time on even the most calculating of commercial minds: the head-to-head business rivalry.

At its worst, a type of madness takes over. Dispassionate, rational thought is suspended, while every waking moment is consumed with brooding hatred. It is like a cancer, gnawing away inside, diminishing your ability to function properly.

Gordon Brown has it, big time. Slights or broken promises are often found to be the origin of these rivalries. A senior Cabinet colleague says that such is the chancellor's conviction that Tony Blair has reneged on a promise to one day stand aside so that Brown could become leader, that he can think of nothing else. The latest face-off to hit the headlines is the 'Battle of the South Bank', where Nicholas Serota of the Tate and the art collector Charles Saatchi have been involved in a tussle for Damian Hirst's pickled shark.

The root of commercial rivalry must lie in the high street. The animosity between competing butchers or grocers with pitches scarcely a hundred yards apart, both fighting for the same custom, has often got way out of hand. Lord King had it with Richard Branson. In the case of the British Airways mogul, his loathing of his opposite number at tiny Virgin - which, let us not forget, possessed just eight aircraft at the time - tipped over into paranoia.

On one occasion, a van drove slowly twice around the square outside King's London office window. He became convinced it was listening in to his conversations.

Another day, King noticed that a model aircraft on a shelf had been moved and he was certain that the office had been broken into and was being bugged.

Another more recent example of a showdown between a pair of adversaries was the High Court battle waged by Unilever and Mercury Asset Management.

Here, the rivalry was between two powerful, successful and highly determined women - Carol Galley, the fund manager, and Wendy Mayall, the FMCG company's chief investment officer. In the courtroom the hostility between the two was palpable, and was probably made worse by the fact that one of them takes home pounds 5 million a year and the other pounds 60,000.

Unilever knows plenty about rivalry. Over decades, together with its arch-rival Procter & Gamble, the pair have devoted countless man-hours to worrying about one another. Their feud has reached ludicrous heights.

In the latest round, P&G has admitted to using outside investigators to steal sacks of rubbish in an attempt to glean information on Unilever's haircare range. As a result, P&G has agreed to pay Unilever a multi-million-dollar cash sum and fired three of its employees. 'We expect this agreement will bring this situation to an end so we can focus fully on serving customers and building our business,' said the P&G chairman, John Pepper.

Experience says that as long as the rival exists it will always be at the forefront of minds - a constant, immovable object. The idea, for instance, that Edward Bonham Carter can stop thinking about John Duffield and vice versa, say those who know the duo, is laughable. Duffield used to run Jupiter, the City investment managers. He sold Jupiter to Commerzbank, pocketing pounds 175 million, then had a row with the bank and left, collecting another pounds 5 million for unfair dismissal. Still smarting, Duffield set up New Star, a rival operation.

Bonham Carter stepped into his shoes at Jupiter, and a war began.

Their bruising battle has all the criteria for a long-running classic: rich, smarting, big-personality Duffield versus smooth, steely, quieter Bonham Carter. Journalists were sent unsolicited brown paper envelopes from Duffield's public relations advisers, containing a copy of Jupiter's 2000 accounts (which showed a pounds 47 million loss), two pages of analysis and a compliments slip. Why? Why do it? Why run the risk of ridicule and worse once the dirty trick is exposed, as it surely would be? For the sake of a few envelopes and stamps and a piece of research, both sides are locked in talks with lawyers, trying to sort out demands for public apologies. Better, surely, to have let the results do the talking.

Yet, companies all too often ignore common sense to be swept up in collective lunacy, with nobody able - or willing - to make the boss see sense. Lonrho spent pounds 100 million on legal fees trying to avenge the snub dealt to its chief, Tiny Rowland, by Mohamed Al Fayed. Not one executive or shareholder raised a voice in protest.

Once rivalries have reached such a tortured level, reason goes to the wall. According to Miranda Kennett, MT columnist and head of The Coaching House consultancy, what can occur is a failure of a company to see beyond its own sphere. 'They should look at other businesses in other areas, because if they don't they will end up being the tallest dwarf in town,' she says. Such short-sightedness leads to a small-minded, blinkered organisation.

'BA had an obsession with a rival that was much smaller, but by paying attention to it, interest in Virgin increased - which, in turn, made BA appear like a lumbering giant.'

Lord King and his colleagues would have been wiser, says Kennett, to have looked at other successful global, customer-oriented businesses not even in travel rather than concentrate on Branson and his niche airline. Businesses do need a rival, says Kennett, not least to focus minds and motivate staff. One of her regular training exercises is to invite clients to create a perceptual map of who's out there, the companies they admire, and so on. They prepare a map of the players and decide what the co-ordinates are and where they themselves fit in. They ask themselves: 'Where are we now? Where do we want to get to? What are the mannerisms of the businesses we most want to be like?'

Frank Dick, the British Olympic team coach, is fond of describing competition as 'telling you what you've got to do to win'.

It shows that something can be done; so if someone breaks a world record in the high jump and you're next, you know that height is achievable.

Often, firms flounder when they have no rival - witness Marks & Spencer.

The store chain, contends Kennett, would not be in the mess it is in today if there had been another direct opponent forcing the pace. Would Sebastian Coe have performed so successfully without Steve Ovett and vice versa, or Bjorn Borg without John McEnroe?

As Warren Bennis, the US business administration expert, puts it, companies always need an enemy.

Unfortunately, what frequently happens is that the kind of competition all businesses require can spill over into something approaching insanity.

Cary Cooper, the BUPA Professor of Organisational Psychology and Health at the Manchester School of Management, believes it is a peculiarly British condition. 'British companies do it a lot,' he says. 'Sometimes, top management will stoke up a rivalry to motivate people, to get them to play as a team, and that's fine. But if the rivalry is based on personalities not liking each other or a desire to destroy the opposition in order to be numero uno, that is dangerous.'

Classically, says Cooper, companies driven by an obsessive rivalry take decisions they would not otherwise have taken, buy other businesses they would not have bought, and pay far more than the market rate. Organic growth, once the company's policy, is forgotten as it embarks on an ego-driven acquisition binge. 'They're obsessed by beating a rival and it becomes personal,' says Cooper. 'They start to do things that are not in the interests of the business to do.'

If, as can be the case, the company is run by a towering figure, the ingredients are in place for creating a corporate psychopath. 'It is no longer rational, there is no longer any proper thinking,' says Cooper, 'but you're so powerful, nobody stamps on you.'

It may be mad, can stray into illegality and will usually cost a company dear, but such idiocy is the best example of a truism of commerce: that companies are run by people, that, in the end, for all the convoluted business school concepts and theories, human behaviour is the most important management science of all.

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