UK: PROFILE - CLIVE THOMPSON. - Rentokil's chief executive is a rationalist, a man with a logical answer to everything, who regards commerce as an intellectual exercise.

by Matthew Lynn.
Last Updated: 31 Aug 2010

Rentokil's chief executive is a rationalist, a man with a logical answer to everything, who regards commerce as an intellectual exercise.

Businessmen, like politicians or generals, are frequently divided into two sorts: visionaries and logicians. The visionaries are leaders, men driven by grand plans, exhorting and cajoling their employees and customers, creating market through strength of will. Often they are unpleasant, cruel and tyrannical. But, usually through their ability to shape events to their desire, they have a certain stature. They inspire awe, if not admiration.

Logicians, by contrast, are a wilier breed. Cunning, tactics and plotting are their strengths. Logicians are driven by principles, universal rules, which they hold can be applied to each and every situation. Cold, ruthless, and often uncompromising, they are often less attractive, and inspire less loyalty than the visionary but they do at least have the virtue of being reasonable men.

Most businessmen are a blend of the two. Like most people they are a compromise between contrasting characteristics. But occasionally someone comes along who is without compromise, who is tuned into just one waveband, and who turns the dial to its extreme. Such extremes are rare, particularly in this country, where compromise is second nature. But, when they do appear, they are intriguing.

Clive Thompson, the chief executive of Rentokil, is as extreme an example of the businessman as logician as you will find in Britain: a total rationalist, for whom commerce is an intellectual puzzle, difficult perhaps, taxing even, but one where every problem can be solved by the application of cool reason.

He is also, and this may not be a coincidence, one of the most successful, youngish commercial leaders in the country, a role model for the generation of well-educated, smart, sharp, commercial tacticians taking control of many major companies. Rentokil, one of the newer recruits to the FT-SE 100, is by most measures, but most particularly by its own, a fabulously successful company.

In the last 11 years the company has grown by an average of 22% a year in terms of profits, and by more than 24% a year in terms of earnings per share, its chosen measure of success or failure. Profits have risen from just £14.2 million in 1981 to £122.4 million in 1992, and earnings per share over the same period have leapt from just 0.74p to 8.02p. The capitalisation has grown from £100 million to £2.2 billion, taking it into the top 60 companies in the UK and the top 200 in Europe, measured by market value. Of current FT-SE members, its shares have been the best performers since the crash of 1987, rising more than six-fold.

So much for the statistics. The company itself, according to its blurb, attributes its success to two factors: its 'concentration on environmental issues in the major world economies, and on its aggressive management style'.Which, in a roundabout way, is saying that it owes everything to its chief executive.

A conversation with Clive Thompson turns quickly into a dialogue on the nature of management. It may have something to do with his upbringing and education. Now 50, Thompson was born during the second world war and raised in Bristol in a comfortable, middle-class family. His father was chairman of Imperial Smelting, a subsidiary of the mining conglomerate, RTZ. He was educated at Clifton College, where he shared a house with John Cleese, with whom he practised silly walks as a boy. After school he went to Birmingham University, where he read chemistry. And from there, with thoughts only of an industrial career, he joined Shell as a trainee.

Thoughts of other careers never cluttered his mind. 'Whatever else there was,' he says with a dismissive shrug, 'I had decided by then that I wanted to go into sales and marketing, so that was the place to go to develop my skills.' He was in his early twenties when he worked at Shell and after a time decided that the company was not the place for him. The reasoning, naturally, was entirely logical. He realised that in an oil company, no matter how well run - and he singles Shell out for particular praise - the decisions that count are taken only by a very few people at the top: where to prospect for oil, for example, and how much to invest. Nothing that the sales and marketing people did ever made much difference in the end to the bottom line.

From Shell he went on to Boots, and was sent to Africa. He ended up running its business in East Africa. This was challenging for a time but when the company made it obvious that this would be a long-term appointment, he quit and joined Jeyes, the disinfectant company - which was bought soon after by Cadbury Schweppes. There he began to prosper. By 1978 he was group managing director of the company's health and hygiene division and a member of the main company board. Close to the top, but not quite there, Thompson began casting around for his first chief executive role.

The Rentokil job came up in 1982. It was by no means an obvious choice. Thompson had until then worked for big, well-known companies - companies with a track record of ambitious expansion. Rentokil, by contrast, was a strange old thing; a company known for killing bugs and treating wood. Solid stuff perhaps but hardly the place for an ambitious, aspirant tycoon to make his mark. There was no particular need to take the job. 'I was young,' he recalls. 'If I hadn't taken this one, other opportunities would have come along in due course. There are a lot of companies.' Nonetheless, Rentokil appealed to him. Peering into the future, crunching the numbers, Thompson had spotted an opportunity both for himself and the company. Along the way, working for large companies, he had formed his beliefs of how a company should be run. 'I had discovered a lot about how to do things and about how not to do things. Without that experience, I would not have been able to make the changes - certainly not with the conviction that I was right - that I have been able to make.' The attraction of Rentokil was that it was a service business, with a reasonable reputation, though in a narrow and seemingly low-growth area. 'I believed then, and I still believe now, that the opportunities for a service business are in essence the same opportunities that existed for a service business back in the 1930s. That is what attracted me to this company.' When he joined he found the company had very poor financial control, poor sales and marketing, and no real strategy for development.'Its strength was that it had a commitment to delivering a quality of service to customers, and it also had a great cost control ethos - deep in the organisation money was not easily spent. It had very much a small company attitude to costs. And perhaps the greatest strength it had was tremendous loyalty among its employees. The weaknesses were things you could put right relatively quickly. But it takes 10 years or more to build a culture in a company, and I am very lucky to have inherited a culture that already had a commitment to quality.' His task then was to concentrate on the strengths, and to find ways of developing them. To do that he had to work out what the essence of the company was and to find out where else that essence could be made to work. This was the intellectual challenge he inherited when he took on Rentokil.

'One could have determined a variety of strategies for Rentokil. Going back to the early '80s when over half the business was in property, there were a variety of advisers who were suggesting that what we should do was become a building materials group, or extend into estate agency. They would have been perfectly logical steps. Indeed there were people who believed when I came to Rentokil that the company would develop as a consumer products group. The Rentokil brand - for cleaners, disinfectants - could have been, and could still be, a great brand. Even estate agency would have been logical. Rentokil has a great reputation for integrity, so people could have had us in to survey their houses, for example, because there are very few people in that area who have a reputation for integrity.' Logical, perhaps, but only up to a point. Thompson rejected those moves because he did not like the look of the risk profile. 'I have a strong belief that you have the greatest chance to outperform when you can bring the greatest number of the variables in a business under management control,' he says. In consumer products, or building materials, or estate agents, he would have been uncomfortably exposed to the turn of the economic cycle.

Thompson's solution to this conundrum was to take the company firmly into business services. Since taking over at Rentokil, he has expanded the company by moving, slowly and carefully, into a host of related areas, both in this country and around the world. As well as pest control and timber preservation, his empire now includes property care, facilities maintenance, office machine maintenance, water and ventilation maintenance, hygiene, office and retail cleaning, medical services, healthcare, tropical plants, and, since Thompson's take-over of Securiguard this year, security services and car park management.

Of these, tropical plants is perhaps the best example of the strategy in action. Seeing how popular plants are in offices and shopping malls, the company moved into the tricky business of caring for the plants and maintaining them in peak condition. Esoteric it may be, but the division now has sales of £47 million worldwide and is growing fast. And though far from obvious, it is on reflection an entirely logical step from swatting cockroaches.

'What we have tried to do is bring as many of those variables under our control as possible, so that if we do run the business decently and we run it substantially better than our competitors, then we can perform successfully in the long-term. And that comes back to what we decided early on was the strength of this company - the ability to carry out quality service on other people's premises.' Which is, of course, a perfectly rational viewpoint. And, one that has made Rentokil a very successful performer; far more so than if he had followed the weaker logic of pushing into building materials or estate agency, which, most likely, would have led to disaster. Thompson believes that he can take the business much further: there is, he insists, the potential to build a Unilever out of a business services conglomerate. And that is his ambition. Other temptations come his way: there have, he says, been offers to run other companies, all of them rejected. Breaking for a rare moment into sentimental gobbledegook, he comments: 'I have a very strong emotional attachment to this company, to the people we have here, and to the culture we have built up.' But then, like one of those moments in Star Trek where Spock shows a brief flash of humanity, he brushes it aside, and returns to the remorseless logic of the marketplace. 'I think this is one of the best companies in the UK, so why should I want to go anywhere else?'.

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