The Interview: Bookbag Talks To Gerry Brown

The Interview: Bookbag Talks To Gerry Brown

Summary: Sue thought that The Independent Director: The Non-Executive Director's Guide to Effective Board Presence was fascinating and certain to become the go-to book for anyone thinking about taking on an independent directorship. There were quite a few questions she wanted to ask when author Gerry brown popped into Bookbag Towers to chat to us.

Date: 25 June 2015

Interviewer: Sue Magee

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Sue thought that The Independent Director: The Non-Executive Director's Guide to Effective Board Presence was fascinating and certain to become the go-to book for anyone thinking about taking on an independent directorship. There were quite a few questions she wanted to ask when author Gerry brown popped into Bookbag Towers to chat to us.

• Bookbag: When you close your eyes and imagine your readers, who do you see?

Gerry Brown: When I close my eyes I imagine my readers to be men and women who are executive directors who are considering becoming independent directors and who want to know more about what is involved. I also see executives studying for MBA's and who are thinking about their future careers or who want to understand more about how boards of directors function, as readers.

• BB: I'm grateful that you did write The Independent Director, but what prompted you to put pen to paper?

GB: I put pen to paper because it had been suggested to me by a headhunter that I should write a book. His view was that because of the unusual breadth and diversity of my portfolio of directorships I could make an important contribution to the topic. When I started to investigate the suggestion I discovered that no one had written about this issue from the perspective of a practitioner.

• BB: You probably didn't leave university with the thought in mind that you would become an independent director. What did you see as your career path?

GB: I put pen to paper because it had been suggested to me by a headhunter that I should write a book. His view was that because of the unusual breadth and diversity of my portfolio of directorships I could make an important contribution to the topic. When I started to investigate the suggestion I discovered that no one had written about this issue from the perspective of a practitioner.

• BB: Which was the most intellectually demanding of your directorships? And were there any where you wished that you really hadn't got involved at all? You say that an independent director should enjoy what he is doing. Which directorship did you enjoy the most?

GB: One of the most intellectually demanding of my directorships has been at Quintiles, the global leader in clinical development and commercial outsourcing services to the bio pharmaceutical industry. Some of the challenges we faced were strategic - for example choosing the best way to globalise the business, or choosing which of our services to develop. Others were financial - for example how to grow the business faster than 10% per annum and how to continually improve margins. Others were operational - for example how to have better productivity levels in clinical trials than our customers. Personally I did not come from a career in the life sciences industry so there was an enormous amount to learn quickly in order to contribute to dealing with the challenges referred to earlier.

Looking back there were none of my portfolio of directorships that I regretted becoming involved with. Fortunately nine out of the 11 were successful, some highly successful. Of the other two there were lessons to be learnt from, for example the one that went into liquidation. The lesson was that no matter how profitable the business appears to be on paper it is cash that counts and running out of cash is fatal. One of the most enjoyable was Vantec, the first MBO in Japan. I had to learn how to be effective on the board of a Japanese company and to build strong relationships with the Japanese. I had to quickly understand the main cultural differences and ways of doing business as well as the main trends and opportunities for the business. Fortunately I was able to contribute to the strategy of the company, to help it to change from being an in house subsidiary to a free standing business and to be an effective link between the private equity investors and the company management. My greatest compliment was to be asked by the Chairman to lecture to the senior management of the company. Fortunately the company became very successful: after a great exit I was asked by the biggest bank in Japan (Mizuho) to be one of their investor directors on the Board of Vantec. In due course we floated the company on the main Japanese stock market, which gave a good return to all investors (including myself).

• BB: It was through reading The Independent Director that I clarified in my own mind the importance of the non-executive directors and I was surprised to find that many companies don't want/see the importance of having their input in areas such as strategy. Why do you think this is?

GB: The reasons that more Independent Directors are not fully involved in developing the strategies of companies include the closed minds of many Executive Directors who may not have experience of the contributions that can be made, or alternatively simply want to control the strategic process and avoid the challenge and debate. There are, too, Independent Directors who may not have the time, experience or skills, or who want an easy life and cannot be bothered to really be involved in reviewing strategic options and thinking and considering alternatives to those proposed by Executive Directors.

• BB: I was particularly impressed by what you had to say about risk and it brought home to me the part which independent directors should have played on the boards of those banks which failed or had to be rescued in 2008. Why do you think that they failed to act – and why was it spread across so many institutions?

GB: Some of the reasons for the failure of the banks and the onset of the financial crisis include the fact that many of the Independent Directors did not have the skills, sector experience or strength of character to effectively challenge or vote against the strategies which caused the problems which led to banks running out of cash. For example RBS paid far too much for some of the acquisitions and the Chief Executive was allowed to pursue his dream of becoming a global bank no matter what the cost and implications. Seven years after the biggest government bail out, the company is still losing money and investors have lost millions of pounds and thousands of employees have lost their jobs and there is no sign of taxpayers getting their money back. This is what happens when Independent Directors do not do their job.

• BB: In the USA we've seen independent directors jailed for what has gone wrong in their companies. Can you see this happening in the UK? And if so, how do you feel about it?

GB: Not withstanding the RBS and other company scandals, rather than go down the route of the USA on the enforcement of aspects of Corporate Governance I would prefer the government to legislate on the need for Company Directors to be properly qualified and trained to do the job as the Institute of Directors has proposed. After all if you want to use a chain saw or ride a motor bike for example you have to pass a test after being trained. Not so with Company Directors who can do enormous damage.

• BB: You've had an impressive portfolio of directorships. Are there any companies with which you would like to have been involved, but never had the opportunity?

GB: I would have liked to be an Independent Director of a global retailer because of the challenges which they face .The example of Tesco and its recent demise and announcement of a loss of £6.5 billion demonstrate the nature of these challenges.

• BB: You've got one wish. What's it to be?

GB: My wish is to see more publicity about my book and a genuine public debate about the great importance of the role of Independent Directors in business today and into the future. Unfortunately the level of public understanding and interest is very low as is that of the media with a few notable exceptions.

• BB: What's next for Gerry Brown?

GB: I would have liked to be an Independent Director of a global retailer because of the challenges which they face .The example of Tesco and its recent demise and announcement of a loss of £6.5 billion demonstrate the nature of these challenges.

• BB: Thanks for chatting to us, Gerry. You suggestions seem like sound common sense to us.

You can read more about Gerry Brown here.

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