UK: Britain's new breed of risk taker - the nouveau risque. (3 of 3)

UK: Britain's new breed of risk taker - the nouveau risque. (3 of 3) - Those last few words could so easily have come from Michael Langdon, chief executive of Rutland Trust. At 43, the London-born accountant carries a dusting of grey in his thick dark ha

Last Updated: 31 Aug 2010

Those last few words could so easily have come from Michael Langdon, chief executive of Rutland Trust. At 43, the London-born accountant carries a dusting of grey in his thick dark hair, but this cost, next to the return, is small. Since late 1986 Langdon has built up a £40 million capitalised financial services group from next to nothing, and survived better than the most the expensive shakeout in the sector.

His first lesson in caution came in 1973 when he was about to change jobs and join a bank. It collapsed before he stepped through the door. He too picked a niche for his present business, after breaking away from a desk life at Price Waterhouse: medium-sized businesses. They were ignored by the big financiers and Langdon believed that they could use some "hands on" help. Unhappily, today many of them need crutches, not just a helping hand, but Langdon is pulling through.

"Business is ultimately about cash flow," he observes in his measured way from French-windowed offices near Hyde Park. "Fixed assets are a double-edged sword. An empty property geared is a drain. And in the boom when earnings become very important, the eye was taken off cash flow. We've always been cash positive."

Langdon used Rutland's paper to expand, but never taking more than 75% of an acquisition. "We always leave the management with a direct stake. That's an important ingredient - putting your money where your mouth is." He too believes in a small conglomerate with a tight central team. Growth at the centre is by acquisition; at the subsidiaries it is mainly organic. "The post-recession rationalisation will provide a lot of interesting opportunities," he says. "We are a trader by nature. You add value, realise your gain and move on."

Langdon minimises risk "by every means available". Sharing the risk, quality management and choosing a market with figures that add up are what count most. Gut feeling "comes in second". And how best to ensure one falls on the right side of a risk? "Never forget the downside," Langdon sums up chillingly. Coming from someone who climbed the Matterhorn in gale force winds, it is not bad advice.

If anyone is in for some unforgettable thrills in the next decade, it is John Carrington, managing director of Mercury PCN. Looking unforgivably still the sunny young graduate, seated at a boardroom table in the Docklands monolith housing Mercury PCN, Carrington is the man spearheading Mercury's move into pocket-sized portable telephones.

He has proved his mettle once already, taking British Telecom's Cellnet into the new world of portable business phones. That product was expected to have 100,000 takers by 1990. There were one million. The consumer market which he is aiming for now, alongside two competitors, Microtel and Unitel, will be tougher. One and maybe two of the three operators in it will not survive.

During the next few years Carrington will spend £800 million of parent Cable and Wireless's money. "More than 50% of the equation is marketing," he remarks. "I've gone for a mixed group of people: from communications and consumer goods." Keeping a team of 170 motivated and on course has proved an art form: printed strategy plans are circulated to all management so that "you can relate each individual's responsibilities through to the company targets."

Risk management involves constant monitoring, "rather like steering a boat", Carrington quips. There is a plan; there is a budget - and "one thing you can be sure of is that it's going to be wrong". His reaction? "You refocus and react to feedback. I try to map out the areas of uncertainty and get so far, and then take a decision. The worst thing is to waver. If you ask another 10 questions, by the time the answers get back to you, circumstances will have changed." Born out of the old GPO, Carrington is very fastidious about costs. Every manager knows the exact financial implications of his actions.

Carrington left the comfort of his laurels at Cellnet partly due to a disagreement, but even more, as he says blithely, "like Captain Kirk, to boldly go where no man has gone before".

If anything stands out in common about all of those above, it is that same trait, plus two: faith in themselves, ability and hard work. Their management techniques, too, are broadly parallel: keen attention to cash flow, costs and borrowings; encouragement of entrepreneurship in those below; teamwork and "walking the floor" communications; a flat, nimble management structure; an aim for stable returns rather than mere growth; and an emphasis on quality service.

Those who take the adventurous route will continue to come from the streets as much as from the universities. As Hill Samuel director Philip Williams comments, if anything, there may be an investor backlash against the business school "whizz kids" in favour of the experienced hands-on manager.

The best reason to give it a go will never be, as Mrs Thatcher liked to suggest, for the good of the nation. That last Messianic lust for growth was a disaster. But John Carrington quotes John Maynard Keynes: no one wants to wait too long for their returns in life, for "in the long term we're all dead".

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