The MT Interview: John Makinson of Penguin

THE ANDREW DAVIDSON INTERVIEW: John Makinson - The head of Penguin is not your conventional manager-on-the-make. A financial journalist by training, he has switched easily between advertising, consultancy and corporate management without formal qualifications, and some mark him out as next boss of Pearson.

by Andrew Davidson
Last Updated: 31 Aug 2010

The head of Penguin is not your conventional manager-on-the-make. A financial journalist by training, he has switched easily between advertising, consultancy and corporate management without formal qualifications, and some mark him out as next boss of Pearson.

John Makinson strikes most people as a terribly nice, terribly bright man. Grey-haired, dark-eyebrowed, slightly scruffy, with a toothy smile and a little twinkle in his brown eyes as if he's savouring a joke you haven't quite got yet, he should, you feel, be running something weighty over which he could exercise a charactistically light touch - the Financial Times op-ed pages, perhaps, or the Aldeburgh music festival.

Well, Penguin will do, another step in a non-linear career that has seen Makinson take in Reuters, Pearson's FT (there you are), Saatchi & Saatchi, investor relations consultancy, the FT again and, before Penguin, the finance director slot at Pearson. 'Polymath', as one of his friends describes him, barely does him justice.

So, John, how did a former journalist manage to be a FTSE plc finance director with absolutely no relevant experience or training? He smiles.

'Ah yes, people used to ask me that. I comforted myself when I went to bed with the thought that at least my dad was an accountant. I was on the FT's Lex column for five or six years and I suppose I felt if you were numerate and confident enough you could pull it off.' He talks casually, calmly, as if running the books for a major publicly quoted company was no more demanding than a tough game of draughts. Then he adds: 'Actually, most FTSE finance directors aren't accountants by training.'

Aren't they? Well, a small majority, maybe, he concedes. But a surprisingly large minority are neither MBAs nor accountants.

'I felt I had experience consistent with MBA qualifications, and I didn't feel massively anxious.'

Not feeling anxious, you guess, must be a Makinson leitmotif. Now he is running one of the world's biggest and best-known publishers, the pounds 838 million-turnover Penguin, having never worked in book publishing before.

And last year he earned more (pounds 855,000) than anyone else in the Pearson group, even chief executive Marjorie Scardino. Crikey. How does he do it?

No wonder the unflappable Makinson, 48, is many observers' favourite to replace Scardino as Pearson boss over the next five years. Obviously, it is vulgar and embarrassing to discuss it, especially at Pearson, which is a rather well-mannered corporate leviathan - 'Actually, I am not embarrassed by the speculation,' corrects Makinson, 'I am flattered, and bemused' - but it does look as if the new Penguin boss is getting to know another bit of the empire before he ascends the throne.

And yet - and I am not being rude - he barely seems the chief executive type: too unstarry, too well-rounded, maybe too anonymous in part, as if, being so able, he has never really been that concerned with boosting his own profile. Even so, he is perfectly comfortable in interview and being photographed, and he is a formidable, gravelly-voiced presenter - a vestige, probably, of his university ambition to be an actor. Maybe it's just the way his suit doesn't seem to fit, or his slightly sardonic detachment. You could imagine him being offered the top slot and responding: Oh, do I really have to? But then again, perhaps Pearson, a decidedly idiosyncratic media group, would quite like that ...

Anyway, enough speculation. Makinson is bobbing up and down on a chair in front of me, a plate of Pret a Manger sandwiches between us, in his rather nice sixth-floor corner office overlooking Hungerford Rail Bridge on the Thames. The office, at Pearson's corporate HQ in the old Shell building on London's Strand, has a beautiful marble and glass entrance hall, the scent of lilies wafting out into the pot-lined courtyard. It's an oasis of calm after the grime of the traffic outside. Indeed, one might even say it's a bit posh for a publisher, these days.

'I guess there is a view that we should be out in Vauxhall,' smiles Makinson, 'where a lot of other publishers are, and it would be cheaper per square foot there, but we're able to pull everyone in here and have them all work together; it's pounds 41 per square foot, not terribly expensive, and Marjorie is of the view that people work better in nicer environments.'

The detail is telling. Makinson's ready grasp of economics - not bad for someone who read History then English at university - has provided the air-cushion under his buoyant career. But publishing is about more than just numbers; it's about a feel for the market, a bond with authors, an experience of what sells. Even Scardino says she suspects most people's reaction to Makinson's arrival at Penguin was probably 'Oh no, here's the finance guy ...'

Wasn't walking into the top slot of one of the best-known names in publishing without any hands-on experience of the trade rather daunting? Not really, shrugs Makinson. 'It is one of those businesses where having experience of the industry is helpful, but it's also problematical.' Coming in from outside means you can take a fresh view on the way things are done. And he had a pretty good idea of how things worked. He had, in his early days as Pearson finance director, had to help sort out a pounds 100 million 'accounting problem' at Penguin in America which was - savour the Makinson restraint - 'challenging for Marjorie and myself'.

In short, an employee had offered discounts on books in return for early payment, and the system had lost control of what was happening. 'Accounting in book publishing is very complicated,' says Makinson. 'There are so many different titles and orders and ways in which customers can claim deductions on delivery of books that unless it is very well managed and controlled, there is an opportunity for trouble. So I had, as finance director of Pearson, spent quite a lot of time with Penguin beforehand.'

And, it turns out, he had suggested himself for the job. 'Yes, it was my idea. I'd been finance director for five years, and I wanted to do something else.' And if he hadn't been able to slip smoothly into the top slot at Penguin? 'I don't know. I would have been sorry not to find a role in Pearson that was satisfying, but I have!'

Others suspect that Makinson would not have found it difficult to pick up another slot elsewhere. Despite his low profile, the broad range of his experience has long made him a headhunter's favourite. But quite what his own ambitions are has never been clear. Having dropped acting, he trained as a journalist, worked as a consultant and slipped smoothly into management and leadership - Makinson is not your conventional manager-on-the-make. Ask him for memorable moments and he cites, not achievements, but the people he has worked with, in particular the team at the top of Pearson with whom he clearly shares a bond.

He is particularly gracious in his praise of Scardino. 'I have always been encouraged by Marjorie and her famously supportive and motivating style of leadership,' he says. Scardino is equally lavish in her encomium for Makinson. 'John is immensely able,' she says, adding that she knew he would be a good fit at Penguin. 'He is very numerate but his soul is artistic.' He is also, she says, 'a great transaction person', who, as finance director, worked closely with her on reshaping the Pearson group.

This means that Makinson has done his fair share of problem-solving at Pearson. At his second stint at the FT, when he was managing director, he closed down the paper's uneconomic print plant, despite the fact that it was in a brand-new building that had just won architectural awards.

Not easy.

At Penguin, founded in 1935 and now one of the world's most ubiquitous English language publishing brands, he has taken on the task of binding in the American subsidiary and getting the most out of Dorling Kindersley, the illustrated publisher bought by Pearson in 2000 for a stonking pounds 318 million. First, he had to sort the delicate relationship between Penguin and its formidable publishing boss in America, Phyllis Grann. He did.

She left. 'The big issue was the relationship between Penguin US and the rest of the group,' he explains. 'The US side was run very successfully but very independently by Phyllis. The role I had taken on was not successful as a role in the last few years, as you couldn't manage the US. We agreed that Phyllis should move on and do something else. And the challenge there was to manage the US business into the group.'

And that's what he's doing. His role now, he says, is to oversee the different national chiefs but ensure it all meshes together. 'In most publishing houses, the boss is CEO of an individual company and also runs the group. I don't. I can be more neutral, thinking about the demands of the individual businesses.'

He wants to work out ways to make Pearson's size count. 'Combined with Pearson's education arm, we are by far the largest book publisher in the world by a factor of two. What we are trying to do is make that combination more productive.' And that means acquisitions are not the priority - it's about getting the numbers right, something Makinson is now a specialist at. 'We are focused in trying to manage capital in the business, and buying assets is not a good way to do that. Also, if there are economies and efficiencies of various kind to be made from the scale of publishing, we should try to achieve those through partnership with the education business rather than by buying businesses.'

That education business, which contributes a pounds 2.8 billion turnover to Pearson's bottom line, is run by Makinson's supposed rival for the Pearson top slot, Peter Jovanovich, former chair and CEO of Addison Wesley Longman.

That must make it interesting ...

Makinson ignores the dig. 'In certain markets we have simply merged the companies together and the businesses are run as Pearson Canada and Pearson Australia. In the UK, we don't want to combine the businesses but we're combining warehouses and the same systems for processing and the same applications for royalty management. Some things like buying paper and printing capacity can save you money from day one; others, like having better information and combining skills, take more.'

Hence, Penguin can learn from education's skills in production planning and processing, and education can derive value from what Dorling Kindersley brings to the design side of textbooks.

Running Penguin, says Makinson, is not dissimilar from running the FT, where he was MD for two years. 'It's really about getting the balance between the creative and the commercial side.'

It's a balance that he has been adept at controlling for much of his working life. Born the youngest son of a Staffordshire accountant, Makinson has always been ferociously bright. He attended Repton and Cambridge, and could have chosen a variety of career paths. He wanted to join the BBC, but was turned down. He nearly ended up on stage. He'd done a lot of acting at university and even been offered a summer season in Scarborough on graduating.

But, under the influence of his elder brother, a journalist on the Derby Evening Telegraph, he settled for Reuters, a safer route. He didn't want to be a business journalist, but had a bad interview with Reuters' world service division, consoled himself in the pub, then over-confidently sold himself to the editor of Reuters economic service. He was given a slot and started in London, then was moved to Paris and Frankfurt. There he met Martin Taylor, current chairman of WH Smith, who was about to leave Reuters for the FT. He quickly followed. 'Reuters had a reporting culture that was very much objective fact. The FT seemed to promise a lot more.'

He worked on the Lex column, inheriting the editorship from Taylor when he left to join Courtaulds as a manager. That showed him the way. 'Martin was a model for me, a key model as well as a mate, someone whose views on business I've always listened to.'

Yet when Makinson did make his move, colleagues were surprised at where he went: to Saatchi & Saatchi, then busy building the biggest advertising group in the world, and about to surprise a lot of people with its (eventually abandoned) plans for buying Midland Bank. Was that on his advice? No, he laughs.

How had he ended up at Saatchis? Partly serendipity. In 1986, he was offered a lucrative job at Goldman Sachs and asked Maurice Saatchi, an old Lex contact, for a reference. Then he changed his mind about the Goldmans offer - 'I wouldn't have stayed married if I had joined; it was huge amounts of money and stimulation but not how I wanted to spend the time.' And Saatchi had said: If you won't join them, what about us?

Saatchi offered Makinson pounds 150,000 a year to leave. He was earning pounds 31,000.

Hmm, tough choice. He remembers handing in his notice at the FT and being told: 'Well, perhaps we could stretch to pounds 33,000 ...' It was not hard to leave. But it was a big leap - 'the biggest career decision of my life', in more ways than one. Friends at the FT remember that he celebrated by taking 30 of them to the Manoir aux Quat' Saisons for lunch, as if to apologise for his good fortune. Then the Saatchi brothers sent him to America, and he realised just what a jump he had made. 'What people underestimate on leaving an organisation like the FT is what institutional security it provides. It was like leaving school. To go from there to Saatchis, which has many strengths but where the ethos is 'find a desk, set up a phone, get on with it, don't bother calling us' ... that could not have been a more dramatic change.'

He advised the brothers on acquisitions, but often felt out of the loop.

The first he knew about a possible Midland Bank bid was when he read about it in the papers. 'And I was supposed to be looking after strategy! You might have thought that would fall loosely under the term. But it was characteristic of the brothers. I was just completely horrified.'

He must have been uneasy at Saatchis and left once his contract was up - on lucrative terms. Yet he speaks affectionately of his employers' foibles: he still gets a Christmas card from Maurice Saatchi - 'You can always tell Maurice's, it's bigger than all the rest'. He also used his time there productively, finding out about consultancy before putting money into his own investor relations outfit, Makinson Cowell, with an ex-head of Hoare Govett. Observes one friend: 'John doesn't plan a long way down the line, but he does think very carefully about the next move or two.'

Makinson Cowell is still operating, although its co-founder has few links to it. The firm started well, partly through his connections and a generous contract from Taylor's Courtaulds, among others.

Five years later Makinson left to rejoin Pearson. Another surprise move?

No, he says, he never wanted to run the consultancy for more than that time, and he had a 'sentimental attachment' to his old employer. Pearson actually wanted him to be finance director, he wanted more experience inside the plc first, so he rejoined as managing director of the FT. It was, he says, a happy reunion.

'It was helpful to my credibility that I'd been a journalist and therefore understood what made the place tick.' He helped push hard on the paper's international development. He was lucky, he acknowledges, that he was operating in a 'pretty benign advertising and economic climate'. The business was profitable and able to fund investment out of cashflow. He makes it sound like a breeze.

But that's how he operates, making the complex casual and with a knack for making others feel smart for keeping up. And he plainly gelled with the new generation of top management coming into Pearson, bent on reforming what had been a rather illogical grouping of subsidiaries. 'Marjorie arrived the year after me, and we sat down and looked at the asset base of the company.' Things had to go. The theme park group Tussauds was one of the first - 'too capital hungry'. Then publishing had to be bumped up.

Makinson was instrumental in pulling off Pearson's biggest coup, buying Simon & Schuster's educational arm in 1998, which turned Pearson Education into the world's largest educational publishing company. He also launched an adventurous rights issue in the City, which investors tend to remember with less than affection, as the share price nosedived soon after.

Any regrets? No, shrugs Makinson. 'It was certainly consistent, as I had always argued on Lex that deeply discounted rights issues was the way to raise capital.' Will he miss the City? No, he shrugs again. Others wonder if Penguin is a step down in his ambitions, but his chairman Denys Stevenson - who says he used to relish Makinson's actorly presentations to analysts - points out that he has the perfect skill set for Penguin, as able to crit a book as analyse a balance sheet. 'And what John brings is passion,' says Stevenson. 'He is a passionate man about whatever he does.'

Yet quiz Makinson about the issues at Penguin and the analysis is typically cerebral. 'One of the things we try to think about a lot is how we allocate capital between the brands and categories where we have a high degree of ownership of the underlying intellectual property, and to some extent the channel through which that property is distributed, and the more conventional front-list publishing of bestselling authors who we are buying through agents and selling on. In time, we want to migrate more of Penguin's capital into those areas where we have a high degree of ownership.' Whether that means more Dorling Kindersley guides and less Jamie Oliver he is not specifying.

And does he expect to step up to the top slot in Pearson soon? He looks startled. 'I'm not approaching this job with any set time period at all,' he says. Both Stevenson and Scardino sigh when you put the question to them, and accuse rival media owners of stirring up the rumours. Yes, there is succession planning; no, Makinson is not the only contender; no, Scardino is not planning to leave any time soon, and really, they just all love each other to bits.

And what does Makinson do to relax? He plays the piano (superbly, says a friend). He cooks (brilliantly, of course). He tries to spend time with his children, something that becomes increasingly difficult, as he has to spend part of each month in America. He has a home in London's Islington, another in rural Essex, wedged between the manors of Christopher Foyle, bookshop owner, and Michael Hamlyn, publisher and philanthropist.

His wife runs a promotion business for classical musicians, so he spends a lot of time at concerts and festivals - yes, he is a regular attendee at Aldeburgh, a festival chaired (ho ho) by Stevenson.

And he gives up a chunk of his life to heading the International Rescue Committee.

Thunderbirds? He laughs. No, an American refugee charity.

Anyway, Harry Borden is waiting to take his photo. Harry, it turns out, also does the pictures for many of Penguin's celebrity-scribed covers: Jamie Oliver's latest, a new Griff Rhys Jones book. They chat about the Rhys Jones tome and Makinson explains about the part he played in persuading the comic, an old friend, to write it. He seems thoroughly absorbed.

Makinson could now go and be boss of any number of plcs, points out a friend, but he has chosen to stay at Pearson. It could be because they're all such chums, or because he's always wanted to run a publisher, or because they're paying him big wonga, or it could be something else. We'll have to wait and see.

< MAKINSON IN A MINUTE 1954: Born 10 October, Derby, England. Educated Repton and Cambridge 1976: Becomes a trainee at Reuters 1979: Joins Financial Times 1986: Joins Saatchi & Saatchi 1989: Sets up Makinson Cowell 1994: Appointed MD at the FT 1996: Made finance director, Pearson 2001: Appointed chairman of Penguin 2002: Appointed chairman and chief executive of Penguin

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