Like the new broom that he is expected to be, the 'action-oriented' boss of W H Smith appears to be pushing all the correct buttons and saying all the right things. What he needs now, says Andrew Davidson, are results to back up the words.
The easy-going charm is what you notice first. Come in, says Bill Cockburn, would you like to sit here, or there? He has coffee, he has tea, he has a beautiful view of the side of St Etheldreda's church through the blinds in his second-floor Holborn office. He notes my tie, a Davidson tartan, he quickly searches for mutual points of contact - Scottishness, Edinburgh, where he was brought up - and builds on them, warm and relaxed, with good eye contact and positive gestures. You have to be careful: you can stretch out and relax in a Bill Cockburn interview, like soaking in a warm bath. Blink, and two hours will have flashed by.
Yet there is obviously so much more to the new boss of W H Smith Group than just a genial manner and a facility for language. Now 54, he spent over 30 years of his working life at the Post Office, starting as an 18-year-old trainee in Glasgow in 1960 and ending up as chief executive in 1992. During his stint at the top in the '80s and early '90s, he helped transform the service from an inefficient monolith into a highly profitable public corporation that, union problems notwithstanding, is still admired around the world. Eleven months ago he leapt into the private sector to help sort out W H Smith, another ancient pillar of the high street, badly in need of fresh vision and a boost to profits. Since then he has sold off the bits of the group he doesn't like, and instituted a series of reforms that has won guarded approval in the City, even though it pushed the venerable retailer into the red for the first time in 204 years. Now it is just a question of 'wait and see what happens to the bottom line'.
So, how has Cockburn found the leap from public to private sector? 'It has confirmed my own suspicions that managing in the two different sectors is very similar,' he says in his soft Scottish burr. 'Ownership is what's different.' There is, he says, much greater complexity on the public side about who you are answerable to. On the private side it is clear-cut: the shareholders and, in particular, what he describes as his 'new constituency', City analysts.
Some of whom were not that thrilled about Cockburn's appointment at W H Smith, perhaps because, working in the public sector, he was something of an unknown quantity, but also because there were doubts over his retail experience. Did that hurt? 'I hope that criticism has subsided a bit now,' he says with a smile. 'What the guys in the City want to see is action, energy, clarity and courage, all the things that go to make up the professional job of management.' And if that makes Cockburn sound a little like a pocket-sized Arnold Schwarzenegger, it is probably a more accurate reflection of his business style than his smooth-talking exterior.
Short, compact, bull-necked and with twinkling dark eyes, Cockburn - in the words of one of his former bosses - 'positively radiates energy' as a manager. Other colleagues describe him as loud, driven, resilient, terrier-like and brilliant at sorting out people problems. For many years he was a colonel in the Territorial Army and still holds an honorary position there, something not that uncommon for Post Office managers, as they help run the army's postal service, but indicative of his love for action and camaraderie nonetheless. He is, says another friend, the archetypal 'in-the-office-early/work-till-late' man, who likes to keep busy at weekends too.
So he is perfectly placed at W H Smith, where there is certainly plenty for him to do. The group, which has a £2.7 billion turnover and 33,000 staff (1,000 less than when Cockburn joined), runs 549 W H Smith shops and owns Waterstone's, Virgin Our Price (with a 75% share) and Britain's biggest newspaper and magazine distribution company as well. Despite its prominent position as one of the best known names in the high street, it is widely perceived to have lost its way in the fast-moving retail market of the '80s and '90s. A lack of focus on exactly what its W H Smith stores should be selling, incursions by competitors into its key markets, and a bad move into the DIY sector (through Do-It-All) all thoroughly undermined the group. Disaster loomed 18 months ago when it had to issue a profits warning after a lean spring. One analyst grumbled at the time: 'So far there have only been minor incursions into their market and the wheels at Smith have already started falling off'. The search to find a new group chief executive to replace Sir Malcolm Field, another long-server who had been with W H Smith for 33 years, started in earnest.
It ended in October 1995 with the announcement that Cockburn would leave the Post Office to take over in January. The move startled some in the City, who wanted a manager with high-profile plc retailing experience, but was applauded by others as an imaginative step. Since then, Cockburn appears to have pushed all the right buttons: he has instigated a strategic review; sold the worst-performing subsidiaries (Paperchase, Do-It-All, Heathcote Books, and W H Smith Business Supplies); outlined a new strategy; and appealed for patience. At the end of August he revealed that sorting it all out had cost the group a loss of £197 million in the year to June 1996. A combination of goodwill written off against reserves, staff redundancies, and fixed asset and stock write-offs had taken the exceptional losses to £283 million before tax credits. Indication, if it were needed, that Cockburn knows how to play the new-boy-manages-turnaround-game with the best of them.
No one doubts Cockburn's ability as a formidable re-organiser and cost-cutter. Within his first six months at W H Smith, he had decided that the group head office, previously in London's Sloane Square, had to go.
He sacked some staff, sent others to Swindon, and kept a tiny core in a new, more modest headquarters in Holborn. 'There is a natural tendency for headquarters to deteriorate in quality over time,' he says, explaining the action. 'They attract barnacles of inefficiency and maybe lose sight of their added-value role. It is quite good for a new brush to look at that again and, from a zero base, reinvent it.' It also, of course, emphasises who's boss, and at one fell swoop cuts through any old office cabals.
Smart psychology? Cockburn shrugs. He also packed up a lot of the group services which were run from headquarters and gave them back to the divisions to administer.
But what about economies of scale? 'I think economies of scale can be a trap used to keep empires intact. We have kept the property department, which is essential, but it is the only one; everything else can run its own services. The role of the centre then becomes much clearer: challenging the business to raise its sights and create a more exciting vision for the future and put in place strategies and targets for achieving them.
Instead of being a command and control type of creature, it really has much more the role of challenger, of counsellor, of supporter and provider of resource - a much more strategic role.'
The key to rejuvenating the company, though, will be sorting out just what it sells in its 400 W H Smith high-street stores (the other 149 are in airports and stations).
They provided the bulk of W H Smith Retail's £927 million turnover in the last financial year, but have recently suffered from falling profits (down 27% to just below £48 million in 1995/96) and a lack of direction.
The annual report announces that the strategic review 'prioritised the improvement of customer service, profitability, new margins and sales'.
Around 300 jobs have gone from the centre, and the new operational structure 'enables the business to focus on essentials, encourage enterprise and sharpen accountability'. But what will it sell?
Less, is the answer, apparently. 'We have a tremendous strength', says Cockburn, 'in that our high street sites are very well located. It is one of the things the company did very well. It all makes a contribution, our challenge is to make them more profitable. The way we are doing that is by editing out from the very extensive range of products that don't make a contribution but create too much of a choice for people wandering around.'
How profitable should they be? Cockburn, who is a great one for benchmarking, will only say that W H Smith's margins are poor. 'In so far as we can find external comparisons, if you look at the net margin generated by W H Smith Retail (5.1%), frankly it's not good enough. It's half the level of Boots, for instance. Now that may be because Boots produces its own pharmacy products but we have got to search for all opportunities whether on cost base or sales line to narrow the gap.'
But it is still hard to know what Smith's retail proposition is. Do you go there to buy newspapers? Books? Pens? Stationery? Videos? Music?
Toys? It sells all of them, leaving some commentators to conclude that it still doesn't really know what it wants to be, except a bit of everything - which is not very fashionable at the moment. The conflicts are obvious: it wants mums with kids to browse for premium-priced educational kit a few yards down from men in macs flicking through 'top-shelf' magazines.
In some chains it will stock, in Cockburn's own words, three different guides to Thailand, in others it will be hard to find any book other than those by Delia Smith. The stores are frequently cluttered, dirty and a bit of a mess. To be fair, the old management tried to address the problem with a revival programme, 'Project Enliven', but the sad glibness of its title rather summed up its chances of success. It's no wonder that 38% of the people who wander into Smith's wander out again without buying anything.
All that will change, promises Cockburn. He wants brighter, cleaner-looking stores selling less in a much more attractive way. Most importantly, he wants a new management attitude. He has brought in a whole new layer of fresh talent under Retail division head Peter Bamford: a new operations director from Boots, a new commercial director from Kingfisher and a new head of logistics from the Post Office. 'The team that support Bamford are heavy-hitting, high-calibre people,' says Cockburn.
The problem is that the mellifluous Cockburn talks such good business that it appears a rather easier proposition than it probably is in reality.
In his defence, W H Smith can run good retail businesses: it already does so with Waterstone's, which has 100 stores and a £169 million turnover, and Virgin Our Price, the £444 million-turnover subsidiary that manages the Virgin Megastore concept in Britain as well as Our Price outlets.
Both, of course, cost W H Smith a lot to buy into but already are showing considerable potential for expansion - rather more so than the core W H Smith chain itself.
Then there is the American subsidiary, W H Smith Inc, which runs 369 hotel and airport shops and has a $208 million (£140 million) turnover.
Add that to the news distribution cash cow (£895 million turnover with the potential for much better profits than its recent £27.9 million) and it's easy to see why the Jeremiahs predicting WH Smith's collapse last year were probably wide of the mark.
But time and again, you come back to the question: has a man from the public sector the right experience to sort it all out? Those who worked with Cockburn in the past have little doubt. 'My view is absolutely clear, I can't think of a better bloke to go in. He's a born leader and a very creative manager,' says Sir Michael Heron, Post Office chairman. 'He's perfectly suited,' agrees Sir Ron Dearing, the former Post Office boss who first brought Cockburn, then 38, onto the corporation's board. 'He is so full of energy and ideas, and the Post Office is in the high street in a big way.' They point out that Cockburn is from the same generation of bright Post Office managers as Sir Iain Vallance, chairman of BT, and Nigel Walmsley, chairman of Carlton UK Television, both of whom are close to the W H Smith boss. He also has a team of blue-chip, non-executive directors brought in by Jeremy Hardie, the W H Smith chairman. They include Martin Taylor, chief executive of Barclays, Marjorie Scardino, the new chief executive of Pearson, Patrick Lupo, chief executive of DHL, and Michael Orr, chairman of Molins. What more can people want?
The surprise for many of his old friends is that it has taken Cockburn so long to go into the private sector. According to those who have worked with him he has always been a driven man, keen to succeed and for that success to be acknowledged. Most ascribe his motivation to his background.
Brought up in a strict Catholic working-class family on a council estate in Edinburgh, the oldest of eight brothers and sisters, he attended Holy Cross Academy, the now-defunct grammar school which also nurtured Tom Farmer, the Kwik-Fit boss. Although keen to go to Edinburgh University, it was never an option because his family needed him to bring in some money. His father, a hospital porter at the Royal Infirmary, was out of work for long stretches. His mother, to whom he was very close, was the linchpin around which the family revolved. When he saw a starting salary of £618 pinned up above the Post Office stall at a careers fair in Waverley Market, he knew his mother would approve. After joining the Post Office he was swiftly made a trainee manager then put in charge of his first telephone exchange at only 20. Even at that stage, he acted older than his age and was used to being in charge.
They were the years of great expansion for the Post Office. Having started in Glasgow, Cockburn moved down to London to join the postal service at the age of only 24. Vallance, who became a great friend and rival, was on the same management course. In 1971 Cockburn was chosen to be personal assistant to the chairman, Sir William Ryland, an appointment that marked him out for stardom (Vallance was to follow him into the same job). By that time the Post Office had become a public corporation. In 1978 Cockburn moved to be director of postal finance (Vallance had moved into the telecoms division by this point) and in 1981 joined the Post Office board, alongside another friend, Nigel Walmsley. Attempts by Dearing to persuade the more cerebral Vallance to join Cockburn on the postal side had earlier come to nothing. Vallance remembers thinking it wise to stay in telecoms, away from Cockburn's empire. 'I think we would both have ended up wanting to run it,' he says drily.
In 1986 Cockburn became managing director of Royal Mail; six years later he was appointed Post Office chief executive when Sir Bryan Nicholson left. Nicholson, now chairman of BUPA, says he credits Cockburn with sorting out the first-class post service - the key to Post Office success - and changing the old working practices. Cockburn was, says Nicholson, the best negotiator with organised labour he has ever seen, 'a street-wise operator who knew how to play the poker hand'. He also garnered respect because union representatives knew he had come up the hard way.
However, Cockburn's vigorous approach to management has put some noses out of joint. One of his old colleagues says that if Cockburn has a weakness, it is that his aggressive style can frighten some of his managers, and that he is always looking to them to show the same outgoing drive that he has. 'Bill likes managers who shout and do things,' laughs one of his old chairmen. Sometimes that meant he found women managers, who often have a different style, rather more difficult to handle than men.
But his success in helping to turn round the Post Office, which in his last year there handled close to 70 million letters (50% up on a decade before) and reported profits of £472 million, meant he was never short of offers to go elsewhere. He almost left to head an ITV company in Scotland in the early '90s, according to colleagues, but finally decided that returning to Edinburgh would not be a good career move. Eventually his hand may have been forced by the Government's reluctance to privatise the Post Office, something which many believe he was keen on, not least because he had seen how well Vallance had done with BT. Cockburn says he didn't demand privatisation. He simply thought the Post Office needed greater commercial freedom - to enter joint ventures, to move into new services and to operate abroad. Much like BT, in fact. When he found that the Government was uneasy about privatising something that was already contributing very nicely to its annual income, he looked elsewhere. The irony is that, had the Post Office been more of a burden on the taxpayer, he would probably have got his way.
And then his name came up on the headhunters' list for W H Smith and Cockburn finally made the leap. He says he has no regrets. He loves the new work, gets in early, leaves late, the same as ever. He still has time to pootle round the Hampshire lanes in his open-top MG on Sundays, one of his great loves, and to play the odd round of golf 'very badly'. He's been married for 26 years, and has two daughters, both of whom have gone through Edinburgh University, something which he obviously feels completes the circle. He lives in the Home Counties but keeps a house in Edinburgh, and clearly still feels an affinity for Scotland. He doesn't plan to retire there, he says, but rather likes the idea of being 'peripatetic'.
Before then we will all know if he has managed to get W H Smith back on its feet again. Does he feel he is an instinctive retailer? 'I think a lot of retailing is good common sense and professionalism,' he says, 'asking the right questions, making sure you have around you people with flair and imagination and ability, making sure you are looking at what other people are doing and not being afraid to pinch other people's ideas.
I've had a lot of post offices and a lot of customers and sold them a lot of products. You might say, "That isn't selling party frocks" but ...'.
You get the impression that Cockburn could happily chat about business all day and all night. What he needs next at W H Smith is the results to back up the words.
Biographical Notes
1943
Born 28 February, Edinburgh
Educated Holy Cross Academy in Edinburgh
1961
Joins Post Office
1971
Personal assistant to chairman
1978
Director of postal finance
1979
Director of the London postal region
1981
Appointed to board
1986
Managing director, Royal Mail
1992
Chief executive, Post Office
1996
Chief executive, W H Smith
What People Say
'Bill is an action-oriented man who pursues his goals with vigour. He is also a demanding boss. Remember, he's a tough-minded Scot who has fought his way up from the bottom. You don't work your way through an organisation of 200,000 people by being a patsy.'
Sir Bryan Nicholson, chairman of Bupa
'He has great courage, enormous resilience, he's creative and imaginative as well. Some people at the Post Office might not have liked him for his ambition and his masterfulness, but he had to be like that. It was bloody in those days.'
Sir Ron Dearing, chairman of the School Curriculum and Assessment Authority
'He is a very creative man, a born leader who has a natural advantage because he speaks so well. I'm not surprised he joined the private sector.'
Sir Michael Heron, chairman of the Post Office
'What makes Bill a good manager are his energy, his instinct for people and his instinct for money.'
Sir Iain Vallance, chairman of BT
'He's done a few good things since joining Smith's but it's debatable whether they are good enough.'
A retail analyst
'He's a human tank. He's a cost-cutter, controller and rationaliser.'
A former colleague.
