Martin Leuw is Founder of Growth4Good, which invests in highly-scalable digital businesses that have demonstrable social impact. He is also Chairman of Latimer Group and Non-executive Chairman of Leathwaite. He was previously Group Chief Executive of IRIS Software and Chairman of Clearswift — an international cybersecurity business.
What changes would you make to UK boardrooms to make boards more effective?
I’ve been a board director for 25 years in private companies and boards have changed a lot. Boards used to feel more like the Spanish inquisition, or University Challenge, with the executive leaving feeling exhausted, hoping they’d passed the test.
We need our boards to focus much more on strategy, reminding people of what the big picture is — what I call ‘the outrageous ambition’ — and then focusing on the execution of strategy. It’s crucial the execs get value out of a board meeting.
Boards often have too much information and they’re not very good at distilling that information into what it really means, and what action needs to be taken. I like to see a graphical dashboard, similar to if you were flying a plane, to make sure the most important things are kept on track and you don’t get lost in the detail. A good chairman knows the difference between air pockets and a tailspin!
What was your toughest experience as a CEO in a boardroom?
We had a software release in spring 2005 that went very badly wrong. It was quite a crisis for us. Our payroll software, which was provided to 30,000 businesses, had a glitch. It was the worst timing being the month end and the payroll year-end.
That was tough. It crept up on us. I knew there were some issues but nobody told me how serious they were until we got to a point of meltdown. I had to sit in the boardroom and explain how it happened and what we were doing about it. That was probably the most painful experience because as CEO I was responsible, and it was an early example of a social media backlash.
After that, I put in place a red/amber/green ‘risk radar’. I wanted the people who reported to me to tell me each month if there were any issues they were dealing with that — however minor they seemed — could be a major problem. It’s what I call an Eeyore approach. If I’m Tigger and I think the sun shines all of the time, I need us all to be Eeyore and point out the little black rain cloud on the horizon that might become a storm.
And what was your proudest achievement in a board meeting?
Very early on at IRIS I realised the importance of enabling every employee to become a shareholder. When I joined we had a team of 100, of which 30 or so were shareholders. By 2004 we had grown to over 200 people and I wanted to ensure every single employee had the opportunity to invest.
I was told by my private equity investors that this was not normal. But I just had this feeling that if all of the employees were aligned and felt like owners it would help us be even more successful. We eventually had 900 employee shareholders and it proved to be very successful. It’s something I’ve done wherever I can ever since.
What’s the key to a successful business?
I describe organisations like a temple — imagine the Parthenon. Start with the foundations. You don’t build on weak foundations. In business, your foundations are your people, your values, your culture and your clear sense of direction. Once those are in place you can start building.
The first thing you establish is your ‘outrageous ambition’ — the one thing that brings everybody together: the purpose of the business and why it needs to exist. You need to be able to focus on the dream.
Then you come to the columns that hold up the roof. These are your core competencies and there should be no more than six of these. If you have too many of them, you will dilute your effort away from the core.
The roof tiles are all your net promoters: customers, partners, etc. You want them to be so happy they stand on the roof shouting to the world about how they would recommend you to others.
These are the fundamentals. And, by and large, most business are not getting their priorities in the right order. Start with the inputs: employees, customers and your product/service — the outputs of revenue and profitability should follow.
Are boards out of touch with society?
I think organisations generally are too out of touch with society, particularly with the next generation of their customer base — youth.
If you look at the issues society has got — particularly as technology starts to massively change the world we live and work in — governments, NGOs and charities can’t deal with these on their own. Businesses are extremely well placed to do a lot more for society and it’s in their interest as it will stimulate brand loyalty. They can actually create a virtuous circle.
It’s about having purpose much more tightly integrated into what the business is all about and looking after all your stakeholders in a balanced way, not just shareholders.
If you do that, the chances are that your employees are going to be much more motivated and productive, your customers will love it because they’re buying from a company that actually means something and investors should do as well, if not better, as this will stimulate growth and profitability.
How can Government do more to help business?
I’d like to see the manifesto looking more like a business plan, rather than a set of promises that don’t get delivered. Politicians need to focus on a limited number of different things that are actually going to happen, rather than swing with short-term opinion. As voters, we’re backing a government to do something within a five-year term to benefit society… so, set out your vision, your outrageous ambition and your purpose and focus on getting a limited number of things done really well.
What book is on your bedside table right now?
I’ve just read Sapiens: A Brief History of Humankind by Yuval Noah Harari. It’s probably one of the best books I’ve read. It charts where Homo sapiens have come from over the last 300,000 years, and how we’ve ended up with the kind of society we have created. It sets out beautifully our achievements and the errors that have created the society we live in.
And, finally, what is your Golden Rule?
Only work with people that have good positive energy, and enjoy the journey.