The art of chairmanship
Former Next boss David Jones tells Martin Vander Weyer that the key to a well-run company is the relationship between chairman and chief executive ‘W e all have different ways of doing things,’ says David Jones, when I ask him what makes a good captain of a corporate ship. He certainly has his own way of preparing for a high-pressure day like the one he had last week at the annual general meeting of Wm Morrisons, the supermarket group where he is deputy chairman and troubleshooter-in-chief.
‘I generally wake up about 6 a.m. My body is stiff and I’m almost unable to move. If I’m at home, I ask my wife Ann to move my legs out of the bed and pull me up. If I’m away, I have developed a technique of rolling off the bed on to the floor, then getting on to my knees before making a supreme effort to stand up. This can take anything up to half an hour. I then take my first medication; depending on how stiff my body is, I either lie down to wait for the drugs to work, or check my emails or play patience. About 30 minutes later my right foot starts to clench, the first indication that the drugs are working. Dressing is a trial: I’m not bad at putting on a shirt or trousers, but socks are difficult, buttons are a nightmare and ties are such an impossible task that I rarely wear one.’ The demon that David Jones wrestles every morning is Parkinson’s disease, an incurable affliction which he kept secret for almost 20 years while he built a hugely successful career in mail order and retailing, culminating in the chairmanship of Next, the high street fashion chain, from which he retired last month. I last saw him a year ago, when I was editing his autobiography, Next to Me, from which this account of his morning routine is taken. Since then he has had operations on his neck, hip and spine, and his Parkinson’s has advanced. But despite new discomforts that were very obvious when I took coffee with him in the kitchen of his handsome house at Ilkley in Yorkshire just before the Morrisons showdown, he remains grimly focused on what he says will be his last boardroom task — overseeing a transfer of power from the autocratic chairman, Sir Ken Morrison, to a new chief executive, as yet unnamed. Jones, who is 63, regrets ever offering himself for the role — ‘I wish I’d never seen the place’ — and he had been hoping to step down soon, but Sir Ken’s intransigence and the pleas of board colleagues and institutional investors have persuaded Jones to stick it out a while longer. Sir Ken looks set to do likewise, even though he is 74 and has been running his Bradford-based business for half a century. He told the AGM that his ‘current intention’ is to retire by January 2008, but no one interprets that to mean he will take a back seat until then. The troubles at Morrisons arose from its £3 billion takeover of Safeway in 2004: the deal diluted family control, obliging Sir Ken reluctantly to conform to modern notions of how public companies should be run by appointing Jones and other outsiders on to his board. It also drove the combined group into losses, increasing the urgency of bringing in newbroom management. ‘He should either never have bought Safeway or he should have accepted that life had changed,’ Jones shrugs. ‘It can never go back to where it was.’ Jones’s quietly determined style has long won the admiration of higher-profile retailers such as his friend Philip Green and Marks & Spencer boss Stuart Rose, who calls him ‘one of the unsung greats’. A hallmark of his career has been his ability to contend with a long line of forceful chairmen, of whom Sir Ken is likely to be the last. The most difficult to handle was George Davies, founder of Next and celebrity-capitalist of the 1980s boom, whom Jones had a hand in ousting when boom turned to bust — a late-night boardroom assassination which Davies never forgave.
Long before that, as a mail-order clerk in the Great Universal Stores empire, Jones worked for the great Isaac Wolfson, whom he revered, and as an up-and-coming manager he worked for Isaac’s son Leonard (Lord Wolfson of Marylebone), whom it would be fair to say he did not revere. The Wolfsons always ran GUS as a private fiefdom, but Leonard was more than usually autocratic. On one occasion he asked his board to vote on a choice between IBM and Amdahl computers. They voted unanimously for Amdahl, to which he responded, ‘I have 12 casting votes. You’ll have IBM.’ In the 1990s, as Next gradually recovered and re-emerged as a high street leader, Jones was chief executive under yet another Wolfson chairman — Isaac’s nephew David, now (confusingly) Lord Wolfson of Sunningdale — whom he describes as ‘inspirational’. That does not mean he was easier to work for than his cousin, but the key to successful senior teamwork, says Jones, is that ‘the chairman and the chief executive have to sit down and work out what their relationship is going to be. The chief exec is there to run the business; the chairman is there to make the board do its job properly.’ That relationship can vary according to the personalities and the state of the business, but the ground rules have to be clear. Jones and David Wolfson, who had worked together off and on for 30 years and both knew the trade inside out, took decisions side by side at a time when Next was in a perilous state. Wolfson’s successor Sir Brian Pitman, by contrast, arrived from Lloyds TSB when Next was back on a steady course; he was less closely engaged, but was nevertheless ‘a model chairman, who gave us great credibility’. Finally, Jones handed over as chief executive in 2001 to the last of four Wolfsons in this story — David’s son Simon — and went against the corporate governance code by moving up (after a year as deputy to Pitman) to take the chair himself. ‘I totally disagree with the code on that,’ he says. ‘So long as you can make the transition, an ex-chief exec comes to the chair with a tremendous knowledge of the business. Of course, you have to take a step back, and for the first few months that was quite difficult; I had to discipline myself to do it. But my great advantage was that if the executives ever gave the board duff answers, I could immediately say, “Hang on a minute, that’s rubbish.”’ The one thing he believes you cannot do, however, is what George Davies did — combine both roles as chairman and chief executive. Concentrating power in one person was ‘a terrible mistake’ and, in Jones’s view, a major factor in Next’s near-collapse in 1988. He also has strong views on non-executive directors: he would pay them more and call them ‘independent’ rather than non-executive, but he would also insist that they devote enough time to give them a real understanding of the business, rather than merely serve as well-connected boardroom ornaments. He disagrees with the governance code guideline that non-execs should serve a maximum term of nine years; he was furious when one of Next’s most respected directors, the former investment banker Derek Netherton, received a 44 per cent vote from institutional shareholders against his re-election at Next’s AGM, simply because he had gone over the time limit.
Jones’s handover to Simon Wolfson as chief executive, and now to John Barton as chairman, were textbook examples of wellplanned transition. I asked whether he is glad to have got out at a time when trading is tough again, with challenges to Next from a resurgent M&S and from the likes of Asda, with its low-priced George clothing range designed by none other than George Davies. ‘No, I always said I’d do four years as chairman and then go. Anyway, tough times aren’t such a bad thing; they make us think about how to improve the business. Next still has everything going for it — in the high street, out-of-town, on the internet — and Simon will take it further forward than I could have done. He’s different from me in many ways, but we both believe in keeping it simple, using your common sense.’ If he had his career again — I asked as he walked me stiffly to the door — would he do all the same things? ‘No, not in big public companies; so much of what you have to do with the outside world and the City is a tedious waste of time.’ For now, he wants to concentrate on raising money for the Cure Parkinson’s Trust. And he will battle on in the Morrisons boardroom until he feels he can hand that task on in an orderly way. He looks to me like a man in urgent need of a holiday. ‘I’ve still got a job to do,’ he shrugs again. ‘It’s not in my nature to quit.’
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