'Mr Smith' gets a new identity
PROFILE : Bill Cockburn After 18 months at the helm of the high- street retailer he's off to BT. But why now? asks Richard Halstead
Sunday 29 June 1997
The man who did the tapping was British Telecom chief executive Sir Peter Bonfield. The job is to run the core UK telecoms business for BT while Sir Peter and BT chairman Sir Iain Vallance jet around the world trying to sew up a global telecoms company under the banner of Concert. Suddenly, just 18 months after joining WH Smith with the brief of blowing the cobwebs away from that sleepy retail giant, Cockburn is on his way again to an entirely different challenge.
"I suppose this proves you're never the master of your own destiny," he reflects. "I had not given any thought to leaving, but this job is an opportunity that does not come along very often."
This is not the first occasion that fate has intervened in his career. Born in 1943 and the eldest of eight children in a working-class Edinburgh family, Cockburn wanted to join Boots as a trainee but was advised by their personnel department to get a degree first. He thought of going to Heriot-Watt University, but when he went to visit the campus - so the story goes - he found the place closed and instead decided to go to a nearby careers fair. There he saw a recruiter for the Post Office, which was offering starting salaries of pounds 618. "A fortune in those days," says Cockburn.
With his appointment at BT, Cockburn will be returning to an organisation he last worked for in 1971, when telecoms was state-owned and part of the vast Post Office empire. Cockburn was plucked from post office management to become assistant to the then PO chairman Sir William Ryland, at the tender age of 28, to wrestle with the introduction of new technology to a highly bureaucratic organisation. Two years later he moved back to the postal side, rising inexorably through the finance department to become chief executive of the Post Office in 1992.
His time with Sir William had a profound effect on him. "That was a defining moment," he said recently. "There I was with this amazing workaholic at a time of turmoil and change. I learned how to take pressure and to work fast and hard." Ironically, his successor as PA to the chairman , flagged as a "fast track" job, was another Scot, Iain Vallance, who will now be his ultimate boss at BT.
The Ryland method - hard work combined with a disrespect for bureaucracy and the status quo - has been a feature of Cockburn's management style ever since. In his short tenure at WH Smith, Cockburn has torn into the "mediocrity" that he saw suffusing the corporate culture, and has tried to rally the organisation behind the idea that to compete on the high street one cannot just put stuff on shelves and expect punters to buy it.
His actions up until now have been mostly confined to reorganising the company's structure, selling off unwanted parts like the office products company Niceday and extricating Smiths from the disastrous Do-It-All joint venture with Boots at a cost of pounds 50m. He also chopped 14,000 items off the WH Smith stock list, a move designed to restore some retailing sanity to a chain that, unlike its specialist competitors on the high street, still tries to be an "everything" store.
At BT he will focus on making the basic telecoms operations more profitable in the face of increasing competition from other telecoms licence-holders, whom he estimates will number 200 within three years. "Telecoms is really a wonderful business. If you can increase the average utilisation of the phone by a residential customer by just one minute a day, that's pounds 350m on the bottom line of BT. At the moment we use the phone for about 10 minutes a day, about half that of the US. The potential here is amazing if you get the marketing right."
It would appear, then, that Smith's loss is BT's gain. But what becomes of the company he has left behind? According to Smith insiders, feelings are divided within the company over his departure. "There's an element, who I'll call the 'Civil Servants' who are glad to see the back of him, because he was shaking a lot of people out of their cosy little empires," says one senior employee. "And there are others, myself included, who feel a bit let down because the job here is only half-done."
Cockburn acknowledges that those two schools of thought will exist after he is gone, but believes that it will not stop his successor from seeing the WH Smith restructuring strategy through. "Managing change is never a popular thing to do," Cockburn says, "but there is no advantage in looking back. This company has to move forward, and my leaving makes no difference. My successor will have the task of implementing the strategy, particularly when it comes to the core retailing side."
So far no successor has been named, but company sources think it will be an internal candidate, probably finance director Keith Hamill. Cockburn has made his own recommendation, which he will not disclose. However he speaks highly of his newest recruit, Beverley Hodson, who joined the company just four weeks ago as head of retail for Smiths, with the mission of jazzing up the marketing in the core high street stores.
Whoever replaces Cockburn will have their work cut out. WH Smith is expected to report profits for the year just ended of around pounds 125m, in line with analysts' expectations and a far cry from the pounds 200m loss (including exceptional charges of pounds 283m) recorded for 1995. The question on analysts' lips will be whether Cockburn's successor can maintain an improved profits record now that the company has seen the benefits of the financial restructuring and now needs to show organic improvement in the newspapers-and-all retail side.
The other WH Smith divisions, Virgin/Our Price, Waterstones and the US hotels and airports retailing operations have been given much more autonomy and are thriving by all accounts. But sources familiar with the company paint a gloomy picture of the core retail division's prospects unless the marketing side receives some attention. "Smiths is like the Norma Desmond of retailing at the moment," says one retail expert. "It's as if they are living in the silent era when other retailers have moved on to talkies and technicolor. The attitude seems to be: we're still big, it's the high street that got small."
Analysts remain cautious about the company's prospects. "There does not seem to be a sales strategy as such within the main chain," says Tony Shiret, retail analyst at BZW. If anything, Shiret says, Smiths have had it too good for too long. "It still dominates the high street, and the margins are if anything too high for the types of products it sells. If it keeps on its current track, the only way is down."
For Cockburn, WH Smith will all soon be a memory, along with the feeling of running the show. The move to BT effectively puts him out of contention for the top slot there, since both his superiors are his contemporaries in age. But it will be mitigated by the fact that Cockburn is swapping a 36,000 employee company for one employing 120,000. "I enjoy getting involved, and I enjoy motivating people," says Cockburn. "Where better to do that than running a huge organisation like BT that is going to have to get its hands dirty responding to a changing market?"
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