Philip Green: Stick to what you know
 |  Philip Green: "I think I pick more winners than losers." |
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LONDON, England (CNN) -- CNN Financial Editor Todd Benjamin speaks to Philip Green, Britain's billionaire retail entrepreneur, who explains how the "stick to the business you know" strategy worked for him.
Benjamin: You've been highly successful at what you've done. Why do you think you're a better retailer than anybody else on the high street?
Green: I don't know whether I'm better, but I think I've got a different vision of how to get things done, of what can be done with the different businesses we've acquired, being able to motivate people and being multi-skilled enables me to get into different pockets or areas of the business that other people don't go to.
Benjamin: Do you think starting when you were 16 in the business, being in the trenches, made all the difference?
Green: Learning on your own is wholly different from working in a big corporation so you have to learn ... things come up as you're evolving your own business ethic. You learn as you go along. A lot of the executives that I've worked with may be skilled in a box but they haven't been in a round enough business right across the whole business.
Benjamin: And you think you have a good eye for fashion?
Green: I think I pick more winners than losers which is obviously the objective.
Benjamin: Where do you think that comes from?
Green: I think it is instinctive, I think you've got to know whether you like it or not, I think it's not something you can learn. You've got to have the feely-touchy, you've got to love it, you've got to like it, you' can look at it immediately, say it's the right print, it's the wrong print, I think we'll sell, I don't think we will, a lot of it is instinct.
Benjamin: How much do you think comes down to your instinct versus just the state of the economy?
Green: I always plan for it to be bad -- it's always been my strategy, it's always been that. I work on if it's bad how will we manage our business? In the good times we maybe do better. In the bad times, we won't do as badly. I'm always looking at basically running a fairly careful, considered approach.
Benjamin: Do you ever worry about failure?
Green: It's not on our menu ... we're in the solution business. Look, when you say worry the answer is I think we're close enough to every aspect of our business that if we fail, it's because of the marketplace's failure as opposed to us. Yes there'll always be part of our business, because we're multi-branded, that won't be doing as well as others, but we're close enough to the action that we may have a small blip, but I'd be very disappointed if it were any more than that.
Benjamin: People say you're great at spotting a business with potential, you're a great turnaround artist, great at squeezing your suppliers, is that a fair assessment?
Green: Wholly unfair. Every business that I've bought has been freely available in the market place. Principally the last three corporations that we bought, Sears, BHS and Arcadia, were public companies nobody else wanted to buy them, nobody else spotted that there may be an opportunity, nobody else spotted they could be good value, nobody else had either the guts to actually pick and buy them. Buying businesses that are doing badly is much tougher than buying businesses that are doing well, because you have to recreate the formula, the vision, the motivation of the people. So the answer is five years later we're making nearly £500 million ($952.3 million) cash generation at a business that nobody wanted to buy.
Benjamin: What do you think makes a great entrepreneur?
Green: What works for me is sticking to the business I know and understand. We do not invest and don't have a penny in the world invested outside the business that we own, don't invest in the stock markets, we don't invest in any side shows, no minority investments. We stick to business we know. That's worked for us.
Benjamin: Describe your management style.
 Todd Benjamin and Philip Green | |
Green: Contrary again to people thinking we squeeze, the answer is we've got a very well run disciplined organization, people are given the freedom to manage. They aren't interfered with on a daily basis because on the scale we have -- 2,200 locations, 40,000 people, you can't be everywhere. And I think we've got a very well disciplined process, we understand all the KPIs [key performance indicators], which of the leaders we need to pull, we understand which information is what I call "fixed" to assess," but in terms of the flair of the day-to-day running of the business, I give my people a lot of freedom, a lot of autonomy to run.
Benjamin: What do you look for in your key lieutenants?
Green: I like to try to develop them into the senior people. I like to try and develop their business skill, not just thinking about clothing. So all the people that manage our different brands actually have responsibility for managing and delivering profit and loss account at every level, so it's trying to teach people to be much more rounded in their approach , how to manage their business as if its their own company and we've got a close enough reporting strategy that we're on top of issues if things turn up.
Benjamin: You've had a lot of success and a lot of failures as well.
Green: You've got to have failure to have success.
Benjamin: Elaborate.
Green: I've been in business on my own since I was 21 years old, and I think part of the curve is risk taking, it's risk assessment as you go along. You've got to have a view of things going wrong to understand how to put them right and probably having had a couple of things that haven't gone exactly according to plan gives you that broader skill base to make sure those things don't happen as you're building up your business career; so the small things that we've had go wrong early on, we're talking 20 years ago, have actually, in the round of the learning curve, been good.
Benjamin: And of course the big failure you had, for the lack of a better word, you failed at winning M&S.
Green: Well I actually don't see that as a failure, I actually think that was common sense and good business. I have this discussion once a week, you can buy anything if you want to overpay. I think our decision not to want to go past a figure that we felt was the right number, was good business.
Benjamin: Will you make another bid?
Green: I couldn't discuss that with you.
Benjamin: Why not? I'm a nice guy!
Green: I think the answer is that at the moment we have plenty of things to do. I think the economy is a bit tougher, most of the people you talk to say 2005 looks like it might be a bit tougher, it's an election year. You know, when I bought the Sears group in the UK in 1999, I watched that company for 10 years.... I've got nothing to prove, I haven't got to rush to buy things. We will look at things in the right market economy , in the right time.
Benjamin: But if you had M&S what would you do differently?
Green: If I get it. I'll talk to you ... how's that!
Benjamin: You left school at 16, you didn't come from a poor background but you are very much a self-made man, you believe not everybody should go to university?
Green: Absolutely. We've got 2 or 3 programs within our organization, we run a graduate program where we take on 100 graduates I'm working on building a retail academy. Not everybody is academic and I think other areas of development are essential in terms of building a broader base for people to learn other skills, I don't think it's all about university, absolutely not.
Benjamin: Do you have any regrets?
Green: No.
Benjamin: What about spending more time with your family?
Green: Life is all about compromise.You never know how the path is going to work out for you. I always say if you have 20 people in this room and something turned up, 10 of them wouldn't know it was an opportunity, out of those 10, five wouldn't be able to make a decision. At the end of the day, I never know what tomorrow is going to bring so why have regrets.
Benjamin: But you have enough money to retire many times over, so why don't go spend more time with your family?
Green: I don't think retirement is on the menu.
Benjamin: Why not?
Green: I think part of my life is doing what I do, it's a balance, it's a combination. Everybody thinks I work 24 hours a day which I don't. I holiday 10 to 11 weeks a year. I'm out of the UK traveling quite a lot of the time and part of my life is my work, meeting people, working with people. I work with a very broad spectrum of people on a weekly basis right across the whole business and that's what I like doing.
Benjamin: Is there anything you couldn't live without?
Green: I haven't really thought about it to be honest, not really. I suppose what money does is that it gives you the freedom to do the things you want to do when you want to do them, that's what it really brings you. There's always things you can live with out but fundamentally I do the things I want to do when I want to do them.... I suppose that's the one luxury I have.
Benjamin: You strike me as very engaging, very approachable, very gentle ... but there's another part of you that I wouldn't want to run into?
Green: That's only what you're reading.
Benjamin: Well that's what I want to know!
Green: I think if you walk around this building with me, where there's 2,000 people, I don't actually think there's been a raised tempo anywhere in this building since we acquired this company in October 2002. If people are straight with me I'm straight with them. I'd like to think I've got a very good relationship with all my people.
Benjamin: What do you want your legacy to be?
Green: I opened my first shop in 1979, 25 years later we've got 2200 stores, and I hope my kids fundamentally will take this on to the next stage whatever that may be.
We don't invest in any side shows, no minority investments. We stick to business we know. That's worked for us.
