TO the victor, the spoils. For Ian Livingston, lean, eager and still only 43,
that meant celebrating with a double fried-egg sandwich at the café around
the corner from his office last Wednesday morning.
In fairness, it wasn’t much of a battle to be crowned the next chief executive
of BT, certainly not as tough as fighting for broadband customers, which
Livingston has had to do for the past three years as head of the company’s
retail arm. He was the white-hot favourite to replace Ben Verwaayen, the
Dutchman he has worked alongside for six years, so it was just a question of
when he took over.
“I am very pleased,” said Livingston with his distinctive Glasgow burr. “Until
these things are announced they feel a little bit intangible.”
Investors will welcome the change. Many were keen for a fresh pair of eyes –
and a details man – to pore over the company’s strategy. Verwaayen played a
leading role in paving the way for Broadband Britain – not least by striking
a deal to open up BT’s network fairly to competitors – but now the company
faces bumps in the road.
Outgoing chairman Sir Christopher Bland timed his exit to perfection. Since he
went in September, BT has disappointed at two quarterly-earnings reports and
its share price has tumbled 30%.
Livingston brings with him a salesman streak that was picked up at the
electrical retailer Dixons, where he learnt his trade under Lord (Stanley)
Kalms, first in corporate development, then as finance director from the age
of 32.
Kalms said: “He was a nice boy, but also a very talented boy. He has genuine
insight into a situation, whatever it is. He is a solution finder. It was
quite clear he was very upwardly mobile.”
Livingston was involved in the development of Freeserve, the first internet
service provider to offer unmetered web access. The company was something of
a hothouse for talent. Jeremy Darroch, now the boss of BSkyB, and John
Pluthero, his opposite number at Cable & Wireless, reported to
Livingston.
“Ian will increase the pace of execution of strategy, increase the agility of
the organisation,” said Sir Michael Rake, the former KPMG chairman who took
over as BT chairman. Finding a new chief executive was at the top of his
in-tray. He did not have to look far. Rival candidates were earmarked by
headhunter Anna Mann, but not actually interviewed.
Did Livingston, who joined as finance director in 2002, feel more pressure
because the promotion was so widely expected?
“A little bit,” he says. “But the timing made sense. It’s quite a good idea to
say that one year has ended and with the new [financial] year comes the new
guy.”
BT has long been shorn of its O2 mobile-phone arm and Yellow Pages, but it is
still a giant, making pretax profits of £2.5 billion last year on sales of
£20 billion. It has also gone global, with 20,000 of its 150,000 staff and
contractors working in India.
Livingston, who visits Silicon Valley at least twice a year, wants to play up
BT’s internationalism. “The best ideas for our business don’t all come out
of one place in Ipswich [BT’s research centre],” he says.
More than £9 billion of the company’s income comes from Global Services,
another of Verwaayen’s big bets. It networks together offices for customers
such as Reuters and the NHS, but profit margins need to rise.
“Global Services is genuinely a world leader,” says Livingston. “There is a
lot of opportunity to reinforce that advantage and you will see us adding to
our capability.” It bought a videoconferencing business in Denver last week.
Livingston must also address problems at BT’s wholesale arm, which is losing
revenue after rivals such as Carphone Warehouse installed their own
equipment in BT’s local telephone exchanges. On top of that, the company’s
21st-century network upgrade has fallen behind schedule by more than a year,
analysts say.
Sitting in his seventh-floor office near St Paul’s Cathedral, with sunlight
streaming in, Livingston sighs. “Throughout, there have always been four or
five issues where people have said this is a disaster for BT. We’re still in
that position. We knock them off as time goes on.”
Neatly turned out in shirt, tie and cufflinks, all in various shades of blue,
Livingston has developed into a company man through and through. At times
edgy, he is most at home when an answer can be parlayed into a sales pitch.
A shelf at one side of his office is covered with gadgets and awards. BT’s
press advertising campaigns line the wall. “There’s no better picture to
have in your office than your own advertising, what you’re telling your
customers,” he says.
In his six years, he has thought about leaving BT, but “not seriously for a
long while”. For a time, Livingston was the golden boy with the golden
handcuffs. When he was tapped up for rival roles, thought to have included
becoming chief executive of Marks & Spencer, before Sir Stuart Rose was
recruited, BT tied him in for three years with £1m in free shares.
“At the time, I wanted to move away from being chief financial officer, which
is what happened,” he says. He was promoted to head of BT Retail, then the
group’s largest division, responsible for 12.6m phone and internet
customers. He seemed to be on the escalator to the top.
The plot thickened a year ago, when Andy Green emerged as a rival to
Livingston after being promoted from head of Global Services to “chief
transformation officer” in charge of a reorganisation of designers and
engineers. However, when Green quit to run Logica, the IT services business,
succession turned into a waiting game.
For his part, Livingston clearly hates any suggestion of intrigue. “The
assumptions about the machinations of this whole process that existed in the
press didn’t exist here,” he says.
At Retail, he arrested profit decline in the business by repositioning BT in
the market. It was not the cheapest but tried to offer peace of mind and IT
security as part of the package. He says customer service must still be
worked on.
BT has 4.3m broadband customers, meaning it is still Britain’s largest
provider, despite inroads made by rivals such as Virgin Media and BSkyB. The
Home Hub, a white box designed to network together devices, is now in 2.5m
homes.
Not everything has been a roaring success, however. Fusion, a homephone that
switched to a mobile network when it was carried out of range, sticks out as
a flop.
“It’s fair to say Fusion hasn’t taken off,” says Livingston, “but there will
be converged devices and services that will be good for us.”
BT Vision, Livingston’s television service that pipes on-demand programmes
down the phone line, is still taking baby steps. It is thought to have
passed 200,000 customers last week, with a 2m-3m target by 2010.
And he won’t stop trying. BT picked up 200,000 customers in three weeks for a
service that lets gamers using Sony’s hand-held PSP console talk to each
other around the world.
“Maybe occasionally you make mistakes quickly, but the ability to change
things quickly as well is important. Making no decision is often the biggest
failure.”
All the while, Livingston has struggled to shake off his tag as a cost cutter.
It rankles. “I think it goes back to stereotypes,” he says. “Scottish
finance director, therefore what do we say? Ah, cost cutter.
“I hope the businesses I’ve been involved in have become more agile, quicker,
better. Frankly, if you are those things, then you will be a bit less
expensive.”
Before his spell at Dixons, Livingston trained at Arthur Andersen, the
accountancy firm that was broken up in 2002. One of his jobs was to be the
first chief accountant of The Independent newspaper, setting up a payroll in
the days before it had even chosen a name. Jobs at 3i and Bank of America
followed.
Perhaps his drive and work ethic are in his genes. Livingston’s family of
Polish-Lithuanian Jews arrived in Scotland 120 years ago. They owned a
factory that made flying jackets and police uniforms.
Four generations later, he was born the youngest of four children and attended
Glasgow’s well-regarded Kelvinside Academy.
Livingston’s father spent 40 years as a doctor, tending the sick in the east
end of Glasgow. “He was an archetypal community GP. I would go round with
him, and people would give him fruit, saying: ‘Dr Livingston, for you’.”
Despite his parents’ best efforts, Livingston steered clear of medicine,
although his sister has become a professor of psychiatry. His brothers were
also deaf to the call of the stethoscope. One is a partner in an accountancy
practice; the other is a sheriff in the Scottish courts.
They all look on as Livingston picks through the nitty-gritty of telecoms
regulation. Ofcom has raised the prospect of expensive fibre-optic networks
being laid to the home, replacing decades-old copper wires, to cope with
faster speeds and band-widths demanded by services such as the BBC’s iPlayer.
So is Britain facing a broadband crunch to rival the credit crunch, thanks to
the millions of episodes of EastEnders whizzing around in cyberspace?
Livingston says no.
“There are a lot of scare stories. The internet is unquestionably busier in
the evening but you can download EastEnders quite easily. You just have to
recognise that the money has to come from somewhere over time to pay for
infrastructure.”
He is prepared to invest, as long as BT can make a decent return.
More prosaically, Livingston has two months before he can move into
Verwaayen’s office. In that time he has to work out how to solve the problem
of his predecessor’s unappealing white sofa.
“It will be a close-run thing as to which wins – my meanness about spending
money or my dislike of the sofa,” says Livingston, wincing. “The answer
might be that I personally pay for a new one.”
IAN LIVINGSTON’S WORKING DAY
THE new BT chief executive gets up at his Elstree house at 5.15am and is
driven to his office close to St Paul’s, arriving at 6.35am. Why so early?
“I have a lot to do.” Breakfast is often something quick at home, and
sometimes another one in the office.
In his new role, Ian Livingston will have six people reporting to him
directly. His day is made up of meetings and presentations. He rarely eats
lunch out. “By 12 o’clock I’m usually ready to eat the table, so I pop
across the road and grab a sandwich.” He leaves the office at 7.30pm and
goes to functions – reluctantly – once or twice a week.
VITAL STATISTICS
Born: July 28, 1964
Marital status: married, one son and one daughter
School: Kelvinside Academy, Glasgow
University: Manchester
First job: trainee chartered accountant, Arthur Andersen
Salary package: £850,000
Home: Elstree, Hertfordshire
Car:Volkswagen Golf
Favourite book: Candide, by Voltaire (in English)
Favourite music: The Beautiful South
Favourite film: Cool Hand Luke, starring Paul Newman and George Kennedy
Favourite gadget: BT’s Office Anywhere
Last holiday: Israel
DOWNTIME
IAN LIVINGSTON unwinds by spending time with his family. His wife is a
Brownie leader, daughter Emma is 15 this week and his son, Alistair, has
passed his driving test “which makes me feel old”.
His main passion is Celtic football club. He sits on the board of the Glasgow
club as a nonexecutive director and flies north for games when time allows.
“With the exception of my wife not being there, this is my ideal picture,” he
says, brandishing a framed snap of the Livingstons at Celtic Park that sits
on his desk. He also enjoys going to the theatre.
BT's shareprice has been plummeting for about a year now.
Ian Livingstone's stewardship of BT has been less than spectacular. I would suggest BT's poor performance is due to the way it treats its customers; violating their privacy and ignoring their wishes is a great way lose their custom.
Michael Cassidy, Arlington, VA, USA
Let's hope this gentleman can bring this failing company in the 21st century.
Ofcom are now suggesting putting fibre optics into the sewers. Duh? This was old news 20 years ago. I believe that Ofcom also pointed out that Japan has up to 90MB internet and Korea 43MB, compared to the UK's 4MB. Well for me, and I suspect an awful lot of BT's customers, 4MB is a pipedream.
Instead of diverting a sizeable chunk of our cash to fund the infrastructure in Eastern Europe, it's about time we had some 21st century investment in our crumbling infrastructure, not least the broadband network.
I have no alternative to BT like millions of other customers and they are about as big a dinosaur of a company that you can get. I think there is a very good case for taking the quasi-monopoly of the physical broadband network away from BT on performance grounds alone.
Jonathan Spencer, London, Surrey