The recent dramatic demise of Marconi has tended to overshadow the fact that, in terms of its style of financial management, it was really quite a pioneering company in its heyday. The General Electric Company, as it used to be known, was a ramshackle business when Arnold Weinstock became managing director in 1963, taking up the role on the condition that he was allowed to appoint Kenneth Bond as his finance director.
Bond, who had worked with Weinstock at Radio & Allied, set about
introducing new management accounts systems that produced clear, accurate
data-enabling divisional managers – and Weinstock himself, of course – to see
exactly what was going on, and to be responsible for the results. Tough controls
were brought in: cash limits, annual budgets, monthly reporting and – worst of
all, for many – the prospect of a phone call at any time from Weinstock asking
detailed questions about the figures that Bond placed before him. For over a
hundred business units, a handful of simple statistics, ratios and key
performance indicators were produced each month and managers were left in no
doubt about the consequences if their explanations for underperformance failed
to convince. And as Bond screwed cash out of the businesses, it was up to the
managers to collect their debts from customers.
This was revolutionary in those days. Bond – who was knighted in 1977 – made
his role so integral to the success of GEC that he was made deputy managing
director a few years after joining the company – a role he retained until his
retirement in 1990. He and Weinstock rarely disagreed and were constantly in
each other’s offices. Bond was described by one contemporary as “an angel from
heaven – an accountant who could see things broadly”. Revolutionary, indeed.
Bond died in May at the age of 86 and his passing offers an opportunity to
reflect on what he achieved – and what the challenge is for today’s FDs. His
systems and controls provided easily comprehensible data that allowed managers
to see where their businesses stood and to take responsibility for their
performance. Arguably, in Weinstock’s hands, these systems engendered a
management culture that became too much based on fear; every aspect of the
company – from the headquarters to the smallest factory – could be described by
the word “stingy”; and despite the rapid growth in the company there was an
apparent reluctance to engage in real investment. At heart, however, Bond had a
clear, pioneering vision of the role of the FD – to enable the business to make
well informed decisions – a vision that is just as relevant today.
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