20 min read
Welcome to a new segment of ours here on the Chaser blog - CFO Stories. In CFO Stories we speak to finance heads who have achieved, or are achieving, great things within their businesses. We take a look at how they got to where they are and the lessons they learned along the way, so their keys to success can become yours.
Recently we spoke to Mark Poole, former Group Finance Director at Virgin. A twenty-year veteran of the group, Mark has had an incredible career, seeing it through enormous growth. Below he tells us about building open and honest relationships both internally and externally, the importance of managing cash flow, and the dynamic between his traditional accountancy-rooted risk-aversion and the large risk appetite of a hugely successful entrepreneur.
From cutting losses early through to hiring tactics, Mark delivers some incredibly valuable insights from a successful career in one of the world’s most well-known companies.
Hi Mark, thank you for making the time. I was hoping to start with you could tell us a little bit about yourself and your career.
Yeah, sure. Well first of all, my strength has always been in the area of mathematics. Having done the usual science and maths A-levels, I undertook a civil engineering degree at Bristol University. But after three years I decided it wasn’t what I wanted to do in the future. I continued the career for a year working as a site engineer, which I think was very useful to get away from a purely academic background. But during that period I decided that I wanted to get into business, and the easiest way for me to get into business, really finance, was to take up a chartered accountancy trainee position in London with a firm called Binder Hamlyn.
During my time there, I went through the three year cycle of the exams and then specialised for one year in corporate tax. I ended up getting married after that and decided to have a one year honeymoon, just to take a break as well. I don’t think a career in an accountancy practice was for me, but that one year honeymoon period really helped me come to the conclusion where I wanted to go.
When I was looking for jobs after returning to the UK, one came up with Virgin Group. I was interested in finance, commerce and travel so I thought why not? I took a role as a corporate tax consultant at Virgin.
I was there for 20 years, progressing from tax consultant to Group Tax Director to Group Finance Director. At the grand old age of 49, I decided to semi-retire and get away from executive work.
How big was Virgin as an organisation in terms of monetary size, and number of employees, when you joined?
I would say about 4,000 employees. Virgin Music was sold in my first two years in the Group, which obviously shrunk it quite significantly. We were investing in growing new businesses – it became much, much bigger particularly as Virgin Atlantic grew, as well as with the creation of new businesses like Virgin Media. We were in growth mode.
Over the 20 years I was there, I’d guess it probably got four or five times bigger. Turnover would have been four billion plus across the group.
Fantastic. Coming into the highlights first off, what would you say were the highlights of your career and time at Virgin?
Definitely working closely alongside a high-profile entrepreneur who has, by definition, a completely different attitude towards risk. Somebody like myself is trained to be more reserved and risk-averse, and then you’ve got an entrepreneur who is willing to take risks way beyond the scale I ever get to. That was very enlightening.
Another major highlight was ensuring the Group had sufficient liquidity during a lengthy period of significant growth; start-ups and new investments. You’re dealing with banks, you’re dealing with other third parties, and it’s not easy because it’s not always in your control. But as part of that, I was building these strong relationships. Building trust with the banks and with external third parties was an important part of our success really, because you can’t do it on your own. You need these people behind you.
In addition, I was involved in designing and implementing complex corporate structures, which my corporate tax background helped me to deliver. But as a consequence of that, I ended up moving my family abroad as a result of restructuring.
Probably the ultimate highlight actually, to me, was watching the new Virgin ventures grow into successful businesses. A bit like a baby, really. You’re seeing something go from birth to something that becomes a juggernaut. Watching the dynamics of that – how it works, the people involved – is amazing. When businesses are floated, it becomes a different game. I wouldn’t say the fun goes out of it, but I think the flexibility goes out of it because there are things you simply cannot do as a public company. But it was great.
And is there any one of those start-ups that sticks out particularly fondly in your mind?
A couple do. The two main ones that stick out in my mind would be Virgin Blue and Virgin Mobile UK.
Virgin Blue was an Australian airline that principally grew out of the demise of Ansett which unfortunately went bust shortly after the 9/11 tragedy. A business plan was developed before that without obviously realising their business failure was going to happen. So that was a start-up and a few years later it was floated.
Virgin Mobile UK, again, was a start-up for a prepaid mobile phone business. We eventually sold part of it, then it got subsequently floated, and eventually became part of Virgin Media. So that now exists… We don’t have anywhere near the shareholding that we had when we started. We’ve sold down over time, ending up with a small shareholding in Virgin Media, which has a trademark licence with the Virgin Group.
I want to pick up on your point about working alongside an entrepreneur who’s highly risk-comfortable, shall we say. You identified an accounting background as being training for risk-aversion – did you find that to complement someone who has such a risk orientation that you needed to heighten your risk-aversion or become more comfortable with risk?
One really clever thing that Richard did, and still does, is making sure he gets the right balance of people with the right skills. Sometimes he might not want to hear the word ‘no’ but he recognises the need for a diversity of skill sets and he puts people in positions to be able to do that. For me, I think I instinctively became more risk-averse because you’ve got someone who’s rowing against your tide.
I have moved a little bit over all those years but it never crept into my personal life – I’m still as risk averse as I ever was. So while I guess it hasn’t changed me, I think the balance for Richard has worked really well because he would listen to reasoned arguments and then reach consensus. But he would definitely take and process the points, and make better-informed judgements as a result of the advice we were giving.
I think it can sometimes be difficult for entrepreneurs to accept rejection or accept that some things involve lengthy processes, both internally and more to the point externally, which can be out of their control. By definition, they want to get things done and want to get them done quickly, but when there are third parties involved, you can’t dictate their processes and timetables. You can’t dictate to banks, for example, nor should you. It’s really about striking that balance, and I think Richard’s been very good at getting individuals with specific skill sets to manage that.
What would you say were the biggest challenges of your career?
Fundamentally, the number one challenge would be managing cash flow, especially during a phase of very capital-intensive investment in loss-making start-ups. You had to project forwards for several years. There isn’t a bottomless pit of cash there, and these businesses need to be kept funded. You have to find the money and balance the books, not just from external funders but by also generating internal funding ourselves from divestments.
It’s challenging because it’s predicated that these businesses will be successful but if and when they aren’t, the potential cash inflows may never materialise. Making sure you never run out of money is already common to a lot of businesses but when you’re in an entrepreneurial group that is very hungry for developing and creating new businesses, it’s easy to fail. So the fundamental challenge was making sure that day never came.
Another challenge was managing expectations and bridging that gap in risk appetite between risk-averse, prudent accountants like myself and a risk-taking entrepreneur owner. They’re like machines – the more successful risks they take, the greater their risk appetite becomes, which can heighten the risk. And you have to manage that as FD.
But as the years went by, external circumstances made that change. Once you have quoted companies, your level of responsibility changes because you have many, many external shareholders and reporting obligations of all sorts. So inevitably by bringing quoted vehicles into the Virgin empire, the risk profile had to and did change.
Personally I’ve always found the most valuable learnings you get are from mistakes that you make. What would you say were the biggest mistakes that you made, and what did you learn from them?
I think maybe as a group we probably didn’t accept defeat early enough in some businesses, which means you’re prolonging investments in unsustainable business models. For us, we had our brand over the door of a number of businesses and you don’t want them to fail because they’re public. It can be costly. I wished we were a little bit tougher earlier on with struggling businesses.
And often you get caught by technology changes. A lot of that happened during the nineties and the early part of this century where technology changes were so quick that you could get caught out and overtaken by a competitor who’s got a completely different model and different product or service. And you’re left behind with something that just isn’t sustainable.
We had a bit of a habit of taking our original customers for a long journey. All the music lovers that used to buy from Virgin Megastores in the early days, they became gym members, and so on. During that period of technological change, I think perhaps we lost a generation gap. We could have been offering stuff to the younger generation, taking advantage of social media and changing technology earlier on. I think a missed opportunity there, looking back, was probably that we just didn’t hire enough young people. Maybe we should have employed people who were young and living in that space. I think it’s key to introduce young blood.
That’s really interesting. Ensuring you have that diversity of voices within the team.
Yeah. Like with anything in life, you have to refresh. You have to refresh thoughts and processes and what’s happening in the market, particularly in a period of great change. And we’ve seen that. It has been a period of significant change. And that’s now affecting everything.
I would definitely recommend that anybody who’s in a business and trying to reach a younger customer, to have those people in your team so you can better ascertain what they want and deliver it.
On the Virgin experience, from the outside we have our perspective of what it’s like; an incredibly exciting and fast-moving organisation. The reality is we don’t know what it’s like on a day-to-day, week-to-week basis, to actually be a part of that. At that level, what was it like to get up and go to work in the roles you had at Virgin?
In a few words I’d say it was stressful and intensive, but exciting and really enjoyable. And by nature 24/7. There was never a day where something didn’t happen. The need to think and act quickly on your feet was constant but as a part of that there’s a real sense of teamwork with colleagues, who are all energetic, dedicated and focused individuals.
In terms of Finance, you couldn’t plan your week, really. Obviously you attended meetings but you’d never know what would happen one day to the next, and that’s great. Everybody wants to work in an environment that isn’t stale and this definitely wasn’t. You had to be completely flexible in your thinking because circumstances change around you. I loved it.
For me personally, once I’d run the course there was nowhere I could really go because you can’t replicate that experience. It’s very, very difficult to replicate that. And I’m not even sure it’s like that now. I think the beauty of it was that I joined the Group at a very young age and I watched it grow to a certain point where you can’t carry on in that manner. So it was really a 20-year phase of, not madness, but it was just frantic. And when you overlap that with the technology changes that were happening out there and such a diverse group of companies ranging from Virgin Bride selling wedding dresses, to mobile phones and train tickets, to… We were probably looking to do too much. But that was the desire of Richard – to try and shake up the marketplace and offer something different - be innovative. And we often did, and he did that with great success.
Moving more towards practical tips, what would you regard as the keys to your personal success and the most valuable things you did from the perspective of your own career?
I think there are probably two main things. I would say firstly creating a strong team around you with first class reporting. Cash flow management, to me, was paramount to the success in all this. It isn’t just about one individual, it’s about many, many individuals. And I think that having people with the right skill sets around you who can think in the same way and be trusted is critical.
Overlapping with that, building transparent and honest relationships, both internally and externally. Particularly with banks. I certainly learned that banks don’t like surprises, and I think if you’re not honest and open with them, then it will cost you dearly in the end. You need to tell the warts-and-all story to them. Everybody has good and bad news and I think if you just keep portraying the good news without weighing that up, then you could have a credibility issue pretty fast. Maintaining credibility and trust with those external parties is huge.
The other thing is ensuring you’re cutting your losses early. If you have struggling businesses that you don’t think are going to make it, prolonging the agony just becomes costly. You need to find a way of extracting yourself from that, however you do that. Ideally you’re trying to sell it or pack it up in some way, merge with somebody else or something. But you just can’t carry on with the status quo with something that isn’t going to be successful.
Is there anything that you look back on within your career and think, I wish I’d done that earlier?
Yeah. Certainly cutting back on those businesses that were struggling. I would have done that much earlier and preserved cash longer for different things.
I also think pushing for that younger generation customer. I wish we’d gone into fields that Apple went into and those kind of technological areas. It’s not through the lack of trying but I think we’d perhaps have done better if we’d just accepted that you need to have that generation of people within your business to actually encourage that and push that, and come up with a business model that works for them.
And from a personal perspective and with your own success, are there any things that made such a positive impact that you thought, ah, if only I’d done this earlier?
No, I don’t think so. I was very much in the right place at the right time. I started off in tax but didn’t really want to be in tax, but the Virgin Group and Richard in particular were very astute – you’re not typecast or held back by what knowledge you have. He’ll recognise your strengths and weaknesses, and position you accordingly.
So no, I don’t look back and think, would I have changed that? No. I was just very, very fortunate and grateful, I think.
In terms of today, what are the key skills you think a modern finance director needs to get ahead of the pack?
Getting ahead of the pack is very difficult in this day and age. It’s important to be very open-minded, honest, and transparent. I do find there are quite a lot of finance people who aren’t like that. It’s human nature to not want to own up to mistakes or deliver unwelcome news but I think that’s wrong – it’s better to be open and honest.
You also need to think out of the box much more than you used to. Similarly, with our qualifications now – university degrees, chartered accountancy stuff – are they really pragmatic enough? Practical enough? Are they fit for purpose in this job?
I think a lot of the knowledge you have to gain are through experiences. I don’t see you need an academic background. You’ve got to recruit the experience around you. That’s key for me as a finance director.
There’s a tendency for some FDs to undershoot on the quality of the person that they’re hiring. Obviously there’s a lot of pressure to keep costs down in organisations, but that can backfire quite badly. If you haven’t got somebody that can step up to the plate then that’s a mistake, because you end up moving people or having to replace. You’re better off hiring someone with better experience and a greater skill set to make sure you’ve got the right people around you the first time. The cost of getting that wrong far outweighs what you’re saving by undershooting on the quality of the hire.
That’s really interesting. You mention there and also earlier, in the context of success, the team you built around you at Virgin. Have you got any tips for how to hire the right finance team members?
The easiest way is through tips of other people. If you’re hiring fresh it’s difficult to know. Even in an interview you can’t really tell.
For me it’s word of mouth a lot, because you’ve already got an endorsement from somebody you trust and who knows your organisation. Not that I don’t trust recruitment consultants, but it’s difficult for them to know, to be fair.
The biggest thing is to make sure hiring is not just driven by lowering costs. Cost is important but there are so many mistakes made by doing that that you end up regretting it. I think hire who you think is the right person, then you consider what cost is after that.
Recruiting people who challenge is also a great thing. You shouldn’t feel threatened by challenge. That’s what I liked about Virgin, everyone challenged everybody else, and it doesn’t mean you should feel threatened and get agitated by it like some people do in some organisations. Once you start doing that, some organisations become very silo-like and cracks appear between various working groups. They don’t interact and they don’t challenge each other.
You don’t just want a yes-type person, you want somebody who says, “Why am I doing this? Isn’t there a better way of doing that?” And there often is, because anybody who’s been in an organisation for a long time is so used to existing processes. They don’t look at it and say, “Actually, yeah. There is a better way of doing it now. Things have changed.” So don’t fear challenge. You should recruit people who are willing to challenge.
How did you as finance director go about setting goals for yourself and your team?
Keeping the boss happy each day was the main goal. You know, there wasn’t really that many goals. Obviously you had reporting deadlines that are set in stone, but it was more… my goal was to make sure that we never run out of money and that we could at least carry on investing successfully. You have responsibility towards all the people in those various companies. It was automatic in the role, really.
I found for me that sharing information was a big part of getting everybody on board. People can have a tendency to keep things to themselves. Some things are confidential, so clearly you can’t say, but if you can explain what’s happening and why it’s happening to someone, they become much more engaged. They like their job much better because if you give them a little bit more information and insight, they latch onto it and it just adds to their interest level. They feel part of something that’s bigger.
Some people don’t want to offer that because it’s time-consuming, but I think it’s worth its weight in gold because people become far more engaging. They trust you more, and they’re more open and honest with you.
One question that springs to mind is, in contrast to Sales as a department where it’s more quantitative in measuring success – hitting targets or not – how did you measure your own success as a finance director and also for your team?
Virgin’s a complex group, and my role was as a group finance director – for the group as a whole. So I was on the board of numerous operating companies, which had their budgets and reporting. They were cast in stone.
As a head office function, it’s challenging, because the way those companies operate is slightly out of your control. But with your own team it was more… information. Timely information that was as accurate as possible was absolutely pivotal to making sure that, from a central point of view, we didn’t ever run out of money. Any potential issues on the horizon, we could see them, so I could then approach the banks if I needed to.
It’s all about predicting the future, really, and developing a cash flow that you can project out to see where there were any shortfalls, and then thinking about how you can fill those shortfalls. So for me out of my team, it was getting that information as early and as road tested as possible.
And then just finally, Mark, to close... If your son came to you and said, “I’m thinking of becoming an accountant,” what advice would you give? And are there any books or other resources that you’d recommend reading?
It’s strange you say that because my son just finished university and we’re having this exact conversation!
For me as an ACA, I think it’s a fantastic qualification because it has so many avenues you can go down. There are so many things you can do. Even if you’re slightly doubtful about what you want to do in life, the opportunities in terms of business and location are huge.
It gives you so many opportunities to travel abroad, work abroad, different aspects of finance you can go into. Having been a chartered accountant for over 30 years, I still think it’s fantastic.
I loathed the days of studying and sitting exams, those were painful, but it’s a great qualification to have because it gives you flexibility and freedom. You have a very transferable qualification and skills. You can work in conglomerates, start-ups, accountancy firms, venture capital, private equity, and banks, amongst others.
Brilliant. That’s all the questions I had. Thank you very much for sparing the time.
Not at all. That’s absolutely fine.
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