Raising the bar

Posted on 7 May 2008 by The Manufacturer

From apprentice to Scotland’s 10th richest man and owner and CEO of global group Clyde Blowers, Jim McColl has refined the process of success. Industry needs a new generation of good leaders, he tells Gay Sutton, ones with ambition, hunger, and the ability to think big

One year ago, Jim McColl returned to the company where he had trained as an apprentice and bought it, adding Weir Pumps to his rapidly growing global business empire, Clyde Blowers.
McColl, who is renowned for his ability to turn around ailing companies and lead them to success, has followed an impressive career ladder: from engineering apprentice, through a BSc, MBA and MA to management. “Then I was head hunted by Coopers & Lybrand to go into what they called corporate care, which was a kind way of looking at companies in trouble financially.” From there, he became self employed as a consultant, “because I was really quite keen on buying into my own company. My model for doing that was to become self employed as a consultant, charge a very modest fee, but a share in the upside of the business I was looking to turn around. It was attractive to the people I was working for, and showed my faith in my ability to perform. If I didn’t do it, I didn’t get paid.”
In 1992 McColl achieved the first part of his ambition, acquiring 29.9 per cent of Clyde Blowers. He then proceeded to buy six of its seven global competitors, and then further grew the business by acquiring companies in a range of related business areas, and reshaping the entire group into four ‘platforms’ based around the market sectors they serve. “Now the combined turnover of our group is over £700 million, from a starting position in 1992 of £3 million. That’s good growth,” he said.
With this weight of knowledge and experience behind him, McColl has evolved a clear vision of what makes good management and leadership, and the elements that define the truly successful company. “You have to understand the market in which you’re operating. You have to understand what the customer is looking for, what their pains are and how you can help solve their problems. That is at the heart of it. Then the only thing that can hold you back is your own mind.
“I think the design of the organisation, interpersonal skills and culture are very important.
We operate a flat structure. We like to think of all our companies as a network of businesses – not a hierarchy – with a collaborative and communicative culture. Engineering knowledge and skill are important because of the type of business we’re within. And obviously our main goal is to be as profitable as possible, so you have to have an understanding of finance and business management. But I think there is one ingredient that overarches all of that, and that is having a very positive mental attitude, a can-do attitude that you have to spread within the business. So when challenges come up, as they do, it’s not that people say, ‘oh my God, we’ve got a problem’, but ‘how do we solve it?’ That’s probably been the biggest factor affecting our success.”
His recruitment policies reflect this, in that the company pays considerable attention to attitude as well as qualifications and experience. He has very firm views on the long term destructive effect of the old style of dictatorial management. “In some of the businesses that we have taken over, they still have this old style of British management where, because it’s a manufacturing business and it’s engineering, they feel they’ve got to be tough and they talk about kicking arses.
That sort of management style – the arrogance and the power – can work in the short term, but it’s unsustainable in the long term. It stifles the business and holds back further growth. I believe you have to unlock the capability within everyone and make them feel they are an equal part of the team. Allow them to contribute and be creative: that’s how you get real growth.”
McColl is very concerned by what he sees as a lack of good leadership in many areas of UK industry, and he defines this as a lack of ambition and hunger, and a reluctance to take risks.
“Businesses in places like India and China are growing, advancing at an incredible pace in terms of the knowledge and technology they are using. And many of those large businesses are out to buy American and British businesses. But,” he warned, “I believe if British industry doesn’t get up to speed, think bigger and think more positive, a lot of businesses are going to disappear under overseas ownership,” However, he was quick to point out that overseas ownership could be a very good thing. “I’m sure that Tata, for example, will provide Jaguar and Land Rover with the leadership that was lacking under Ford. They will be much more ambitious for the company. Ford has been about for a long time, and they weren’t as ambitious as they should have been because they were too big. We’re seeing the hungrier, more ambitious smaller players coming in and building big serious businesses.”
One of the things he believes we have to do is encourage young people to think big and set their sights high. We have to develop the leaders of the future. “A friend of mine, Tom Hunter, is working on an initiative with young people. He initially picked eight kids out of a range of public and private schools, who were selected as leaders by their peers. He’s put together a programme and is calling it, not a gap year after they leave school, but a bridge year.”
The programme includes working with the Clinton foundation in New York and working in rural African communities for a few months, and balances educational opportunities with leadership development and humanitarian activities.
The young people have access, for example, to Harvard and universities of that quality. “In the beginning some of those kids had set their sights on going to university in Scotland – and maybe not one of the better ones. They’ve all changed their aspirations six months into the bridge year.
Two of them have now selected Harvard as their choice. They’ve applied and they’ll get in. That’s
the kind of leadership that we need to get. We need to get the bright people at the top and bring them through as the leaders of tomorrow.”
Clyde Blowers operates around the globe, and I was curious to hear McColl’s views on the security of intellectual property (IP) within joint ventures in the far east. “You hear a lot of talk about it and we’ve seen it with companies that we have taken over. When we ask the management why they aren’t in China, we get: ‘well we don’t want to lose our IP’. Well, it’s an excuse for inaction, in my view. You have to operate in these countries and you have to take your IP and your technology there. “When we did our first joint venture in China… we shared the latest technology with our Chinese partners. Our competitors at the time were giving them the old technology and keeping the new technology to themselves for the very reason you suggested – they didn’t want it stolen. But if you go to steel mills or power plants in China they’ve got the best from around the world. And if they can’t get it locally, they’ll buy it, reverse engineer it, and then you’ll lose the IP anyway.”
McColl explained his strategy. “It’s mainly our hands-on management approach that protects our IP. In China we employ Chinese nationals… who look after our well being and our rights because their ambition is married up with the company.”
For example, he explained how in the first Chinese joint venture in 1995 the manager was paid the equivalent salary of someone working in the UK or America. In the selection process [we look for an] individual with a track record of being educated or living in the UK, Europe or America, so they have had exposure to western management and business experience. And then give them a good salary, incentivise them, and probably give them some share options in the company.”
Looking closer to home, the next few years are likely to see the skills crisis deepen in the UK as the ageing workforce comes to retirement age. To help combat the problem McColl has set up a Pump Academy at Weir Pumps. “I was told that when taking people on it would be two years before we could get added value out of them because of the time it takes them to learn the specific skills we need. When I looked into it, the reason it takes two years is that we were putting them into [busy] departments where they were given jobs to keep them out of peoples’ hair for 75 per cent of the time, and then for 25 per cent of the time they were shown something that added value to what they could do. So we’ve set up the pump academy to fast track them. We’ve taken 40 people on since we acquired the business last May.
It’s challenging work in a fast moving world. “I just thoroughly enjoy what I’m doing,” McColl said. “It’s fantastically exciting, and the satisfaction that you get from building these businesses and creating wealth – I can’t think of anything else I’d rather be doing.”