Chris Blackhurst: Scallops and Sellotape? How not to lead, by Fred the Shred

Midweek View: The Gogarburn HQ is a great monument to Mr Goodwin's vanity. The detail here is frightening, and laughable
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The Independent Online

Businesses are about people. In the end, they succeed or fail because of the human beings that run them. The numbers, the bit that gets the markets and media excited, is merely the outcome of the deeds of the chief executives and their colleagues.

It's a sort of mantra that has sustained me in business journalism. It's too easy to get carried away by the figures, without paying enough attention to what is going on inside the boss's head. Having interviewed and met numerous chairmen and CEOs down the years, I am still fascinated by their foibles – and where their behaviour might take the business.

Greed, avarice, lust, hubris – they and more are all there, and they're more important than any management consultant positioning paper or broker's report.

To demur, to say that process can prevail, he said with more than a hint of arrogance, is plain wrong. You only have to look at those firms that sink when the CEO baton is passed, to realise it's the quality of the person that matters.

That point is brought home again in Iain Martin's excellent new book, Making It Happen, about RBS and the banking crisis. When Fred Goodwin was in his pomp, I was invited to meet him. It was a Friday afternoon, at RBS's offices in the City, just before a long, bank-holiday weekend. Already, workers were gathering on the pavements outside the bars. As we sat at the top of the RBS building, he became visibly irritated by the sound of the clinking of glasses and laughter from below. He started pacing the room, looking down from the window, and asking: "What's wrong with this town, why does no one do any work?"

I recall the room was incredibly ordered. Everything in it was just so. The air-conditioning was uncomfortably cold. He was brittle and not especially friendly – odd, I remember thinking, because the invitation was his. He exuded impatience and annoyance. Quite why, I could not fathom. It was clear he did not do small talk; but then he did not seem that keen to discuss world, or industry, issues either.

In Mr Martin's book, Mr Goodwin is referred to by a former RBS executive as a "sociopath". He was a control freak but, fatally, that control was only reserved for items that, in the context of a massive international bank, were minor. So, he fretted about the use of Sellotape to stick up notices in RBS's high street branches – he hated the stuff, thinking it scruffy. Likewise, it infuriated him that the area around cash machines was so untidy, with customers chucking receipts and cigarette ends on the floor.

Similarly, he immersed himself in sessions to choose colours for advertising campaigns, office interiors, even the company's fleet of Mercedes S-Class (they had to be Pantone 281, the same as RBS's corporate blue). The corporate jet was registered G-RBSG (Royal Bank of Scotland Goodwin).

This is before we even get to the great monument to Mr Goodwin's vanity that is Gogarburn, the new RBS headquarters he had built outside Edinburgh. The detail here is frightening, and laughable. Gogarburn was to have a "scallop kitchen". When The Sunday Times wrote that, and other tales about Gogarburn, he threatened to withdraw all RBS advertising from the paper and its sister News International titles. Eventually, the row was settled with Mr Goodwin giving an interview to The Sunday Times in which the scallop kitchen was described as being not just for the preparation of scallops, but other seafood as well.

It's wonderful stuff, scary and funny at the same time. Tellingly, what there is not is the sense of anyone overseeing Mr Goodwin. Senior executives at the bank were full of stories about his rudeness (he once invited a group of journalists to the Chelsea Flower Show, never even said hello to us, and spent the evening with Merrill Lynch in its marquee nearby) and pettiness, but no one was standing up to him.

As for the board, reading Mr Martin's account it's hard to fathom what they did, exactly. The directors must have known that Mr Goodwin was something of a monster but did not appear concerned. They could dismiss his traits as inconsequential, if they were happy about the condition of the banking business underneath him. Crucially, though, he does not appear to have been put on the spot in this regard.

Behind RBS's understated exterior was a dictator. No one could manage him. Those who should have done chose not to. If anyone doubts that businesses are not about the people who run them, all they have to reprise is the shocking story of Fred Goodwin and RBS.