"Borrowing that pounds 100,000 was the best thing I did," Lewinton recalls. "I knew I had to send a signal and this certainly got everyone's attention. It made a real impact because people began to think: we are going to make it we are going to survive."
James Roe, TI's director of strategic development, was one of the senior executives who was appropriately impressed not just by the financial commitment but also by the sense of conviction and certainty which is a hallmark of Lewinton's leadership.
"There was a lack of self-confidence on the part of the management," Roe explains. "But when he told us he had borrowed all that money it had a fundamental effect on us. We became believers."
Roe was to become one of Lewinton's firmest allies as he embarked on a remarkable transition which was to take TI from a dull Midlands metal basher with a market capitalisation of pounds 250m to the global engineering business worth pounds 2.5bn it is today. So dramatic has the transformation been that 97 per cent of TI's assets today are less than 10 years old.
Formed in 1919 as Tube Investments, it was for years Britain's second largest engineering company. By the early 1980s it had become disparagingly known as the "bikes-to-kettles group" reflecting ownership of the Raleigh bikes business and an appliances division taking in such famous names as Russell Hobbs, Creda and Glow Worm. Only the appliances business and the specialised engineering businesses were making money. A retrenchment which had seen the workforce halved between 1979 and 1983 to around 30,000 had not had a significant impact.
The TI which Lewinton was asked to join in 1986 was drifting aimlessly, threatened by takeover and demoralised. He was something of an unknown quantity to the board. He had emigrated to the US in 1959 at the age of 27 and a year later was President of Wilkinson Sword USA. He returned to the UK in 1970 as chief executive of Wilkinson Sword. With such a firm grounding in consumer goods it was something of a surprise that the first thing he asked his directors to support was the sale of the bikes and appliances businesses which provided two of three legs on which TI tottered.
"It was completely clear to me that TI did not understand consumer goods because it did not have a consumer goods culture," Lewinton explains. "It did not know how to manage a world appliance business and it did not know how to manage a world bike business."
Lewinton remains unstinting in his praise for a board which fully supported this bold change of direction. But while support from the board was essential he also knew that it was imperative that he changed the TI culture.
"The quickest way to change the culture of a company and make people recognise that this is not just more of the same is to close the headquarters," he says. "I announced that we were closing the Birmingham HQ within 90 days. That sent another clear signal to the company."
Speed was important. Lewinton reckoned he had 100 days to make an impact. "In the first 100 days you don't know what can't be done so you go and do it," he argues. "Beyond that you become tainted by association and you begin to understand the problems which can't be solved."
Speed was also important because, having taken the decision to sell a significant part of the group, Lewinton needed some blocks on which to build the strategy he had proudly enunciated in the form of what was then a relatively new phenomenon - the mission statement.
Cynics saw this as a bit of marketing hype. They were wrong. The strategy statement set out in the autumn of 1986 has guided TI ever since. It has been added to but it has not been changed.
"We said we wanted to build global businesses where we could have technological and market share leadership," Lewinton explains. "We then looked for the acorns which would grow into global businesses."
Lewinton found those acorns in the 50 per cent TI owned of a pounds 10m business called Bundy and the 50 per cent it owned in John Crane which was then a pounds 50m business. Both are now owned outright and are pounds 600m-plus businesses.
"These were the building blocks," Lewinton says. "We just single-mindedly concentrated on them. We said we would go global, we would feed these businesses, we would service our customers and do whatever it takes to make them global."
To the business-school-speak accustomed audience of today the global concept is entirely familiar. But in 1986 it was a foreign language. Lewinton is a natural internationalist and boasts dual US and British citizenship.When you ask him about politics he mentions the UN, the Group of 7, Gatt and CNN in that order. He is as likely to talk about Clinton and Dole as Blair and Major. He travels in order to maintain a global perspective and is extremely widely read.
"I have tried to create an international culture because I do not think it is discretionary. I think we have no choice," he insists. "I happen to thinks it's right anyway, but how can you deal with customers like Nissan, Boeing, Airbus and Hoechst and want to talk in domestic terms?"
This was the message he had to convey to his managers as the global businesses were being developed. Building a global management team was difficult enough but Lewinton had to do it during a period of great change, as well as deliver a financial performance which investors were happy with.
"It was difficult to penetrate TI in depth with what was happening at the top because it was happening so quickly," Lewinton recalls. "But the great thing you have to do when you make change is to have the courage to get on with it. If you dither then you create uncertainty and people do not like uncertainty. You need certainty of purpose."
Lewinton had that certainty and he invested a lot of time travelling around the world sharing his conviction with senior managers. He is still a great believer in communication and regards it as one of the key drivers of TI's fortunes in the future.
"You have to build trust and confidence," he explains. "You need a clear vision and you have to articulate and communicate it. People have to believe in you and believe you have enough courage to carry through what you say. If you work for someone who has courage and is certain, then you can be certain. It is contagious."
James Roe confirms the Lewinton philosophy. "Two things helped him build great trust among those around him. His communication to the management team spoke quite clearly of what we were doing and where we were going and then following through on what he said he would do."
By the time Lewinton unveiled TI's results for 1986 in March 1987 he had sold Russell Hobbs and Tower Housewares, sold Raleigh and made a small acquisition in Europe which was to be the first step towards the creation of Bundy. By the end of 1988 TI had made 17 separate divestments. Just as significant, it had taken control of Bundy and John Crane. By 1989 the new TI had emerged. He had alighted on those businesses because they demonstrated characteristics he believed essential for success. Both operated in markets which were difficult to enter, value could be added, there was a high knowledge and service content to products which were critical to the end-users who were risk-averse but global. The businesses were sufficiently specialised that they could dominate their niche and had enough of the core technology to maintain technology leadership.
It was the beginning of a virtuous circle. Technology leadership, market share leadership and price leadership, when put alongside cost control, gave improved margins which provided cash to fund future investment.
Between 1986 and 1989 TI's operating margin increased from 5.5 per cent to 11.4 per cent. At the same time the geographical spread of the business changed dramatically, leaving it less reliant on the domestic market.
"Looking back we adopted a simple three-word philosophy: shrink, concentrate and grow," Lewinton says.
The focus is clearly identified but more intriguing is the mixture of shrinkage and growth. "If all you do is concentrate on taking out costs you will not generate wealth, you will not generate growth, you will not generate job satisfaction, you will not generate well-being, you will not generate conviction and you will not be a winner. In a company you have to balance cost management with growth," Lewinton explains.
He is immensely proud of the fact that TI employs 25,000 people around the world and he genuinely cares about them. "I worry about the people who give their lives to the company. I worry about their families and about their education. It is a huge responsibility," Lewinton says. "I worry about the customers because if you don't take care of them, then you don't take care of the employees and you don't take care of the shareholders. I think we run a total company. We try and strike a balance between all these interests to create a quality company with a sense of responsibility and well-being."
The Lewinton vision has now cascaded down among the senior management and his culture is now very much the TI culture. There are plenty now to carry the torch. But despite his success and that of TI, Lewinton is untouched by complacency. He sees the future through eyes which see limitations and challenges which others are blind to.
He regards the quality of management as the biggest constraint on TI's growth. "It is relatively easy to borrow money. But there is no central bank of people," he points out. "It will be our ability to grow global managers who understand the company's culture, who have its trust and confidence and who have the ability to take acceptable risks which will drive our business over the next decade."
He is worried that the barrage of criticism levelled against company directors will deter the best talent from going into industry. The brains of Britain are attracted to the money that's on offer in the City, and he argues that unless industry is allowed access to those brains, we will move into a long-term self-destruct cycle. He worries too about a shortage of leadership. Although he thinks you can make moderate leaders better, he fears leadership cannot be taught. It is something he believes we as a nation need to devote more attention to. "Most people can be better than they think they are, given the chance. I believe there are no bad men, just bad officers."
If ever we do develop the corporate equivalent of an officer training college, Lewinton is eminently qualified to head it up.Reuse content