Disruption is an overused term these days: disruption by technology, disruption by changing consumer trends, the disruptive impact of new entrants to markets unfettered by high barriers of entry. And while to many disruption is something to guard against, for Coram Williams, CFO of Pearson, disruption has been embraced and exploited.
Having joined Pearson in 2003, Williams has held a number of senior positions including finance and operations director for the education/media/publishing conglomerate English Language Teaching business in Europe, Middle East & Africa, interim president of Pearson Education Italia and head of financial planning and analysis for Pearson before becoming CFO of The Penguin Group in 2008 and latterly CFO of Penguin Random House in 2013.
Since taking up residence in the CFO’s office February 2015, Williams has become a central – and visible – figure in a company that had spent the previous year being buffeted on all sides. Profits were on the slide, the once mighty publishing business was struggling, and the mixed portfolio that had once been a strength had become a millstone around Pearson’s neck.
Chief executive John Fallon recognized the problems in 2011 and began a simplification programme that will see the company shed around 4,000 through headcount reductions as well as widespread sell off of non-core assets.
But, for all that, coping with the turbulence is nothing new for Williams. “If I think about my career as a CFO, from the beginning I have operated within media and publishing businesses that have been through change. And so, this year in Pearson is no different, in that it requires a number of skills,” he reflects.
“And if I step back and look at the company, we’re in a stronger position than we were in the beginning of the year,” he says. “We’re building on many of the strengths that Pearson has – in particular our strong competitive positions – and we have a really strong culture, and focus which is mission-driven. So we’re on that journey to simplification by streamlining our systems and looking at our cost base.”
That process has seen the company aiming to refocus on its education business – with particular hopes for the US – and away from some of the various media and publishing ventures it pursued during the 1980s and 1990s.
Williams explains the restructuring, which has included selling off Pearson education businesses in the US as well as the sale of the Financial Times for nearly £900m in the summer of 2015, was a necessary response to unprecedented disruption: “The challenge we faced and I have too, is an external environment, especially in the US, which is tougher than its been for a long time,” he says.
It may be that Pearson is finally sailing into calmer waters after weathering an exceptionally choppy 2016. Profit warnings have followed on the heels of write-downs. Last July, Fallon committed to cutting costs by £350m over the next two years, with almost 3,500 redundancies announced shortly thereafter. Since then a fifth profit warning has appeared, and the company announced it would freeze its 2016 dividend. All challenging developments for a CFO well used to coping with uncertainty.
“A lot of my focus this year has been on understanding what’s happening in our key markets, managing our way through it, responding with cost cuts and repositioning the company so it’s able to take advantage of the great opportunities in 2017 and beyond,” he says.
So, looking back on a baptism of fire, does Williams feel he’s had to use CFO muscles that haven’t been used before? “I wouldn’t say it has forced me to use new muscles, but the muscles have definitely had more of a workout than they have had for a while!” he reflects.
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Williams says his primary focus has been to “closely and forensically – and in a data driven way – look at what is happening in our markets.”
“Having done that, you have to have that position clear as the CFO; and then you have to formulate the right response with your executive partners; and it then requires a focus on change management, cost management, execution and indeed resilience as you push that agenda through based on the analysis you’ve got.”
Indeed, Williams is keen to point out that the restructuring didn’t start with his appointment. “While I brought a simplification agenda to the job, that programme has been running since John Fallon came on board and so we’re on a continuum.”
Fallon’s determination to reshape Pearson’s portfolio has made demands on Williams that he admits were tough at first. “I’ve learned a few things during the process,” he says.
“Mainly, that change like this is hard: it’s expensive, it takes time, and it’s gritty and grimy to drive forward. Because sponsors like myself and the CTO have to be involved in the detail in order to help plan it and respond the challenges it presents. So it can at times feel like a thankless task
“So my advice to other CFOs would be to persevere: understand what you’re doing so you can get into the nitty gritty of it early on and brace yourself for the fact that although its worthwhile, it is tough and there are roadblocks along the way.
“It’s thankless when you’re doing it. But there’s a clear end position with these things which people appreciate when you get there. And, of course, in the interim you have to communicate clearly about why you’re doing it.”
With much of the heavy lifting now behind him – despite another profit warning at the end of January, there is a growing recognition that many of the changes are beginning to deliver for the company – Williams can now look ahead to a 2017 that looks set to be just as volatile as the year just gone. So will Brexit, Trump, and the rest derail the board’s plans for further recovery and retrenchment?
Williams is sanguine, predicting this year will be in large part like last, mainly for two reasons. “First, because the volatility and unpredictability we’ve had in 2016 is likely to continue: people are already focusing on the forthcoming European elections and there are questions around bond markets, so the external environment isn’t going to see much meaningful change.
“But second, 2017 will be similar because it’s important for a leader to be consistent, and remain focused on what they see as priorities. If I think about my priorities for next year they are settling the organisation after a significant, and at times painful, reorganization; continuing the drive towards single global systems (financial ad commercial) across the company; helping Pearson take further strides towards being a data driven analytical company.”
Clearly, even if the winds of change are blowing, they are unlikely to unsettle this CFO.