Marakon mourns the loss of Sir Brian Pitman

A Value Pioneer

Marakon commemorates the life of Sir Brian Pitman, who passed away on March 11, 2010 at the age of 78. Brian – the esteemed former Chief Executive and Chairman of Lloyds TSB – was a thought leader, business executive, and true "renaissance man."

He was a pioneer in demonstrating how a business could be managed for value, and was a great friend, supporter, client, and advisor to Marakon. He will be missed by many, and we would like to recall some of his words of wisdom on business management and the importance of value as he led Lloyds TSB to increase market capitalization 40-fold in his tenure as CEO.

• On what it takes to manage a company for value...
  
  "Value-based management involves much more than putting in place some faddish new performance metric or accounting method. Getting people to concentration on things that really create value for the company demands something else: the transformation of their beliefs"
  
  "I used to think that better management was a means to create shareholder value; I now believe that shareholder value is a means to create better management"
• On value as a governing objective of a company...
  
  "We could set a single, well-defined performance measurement to replace our existing array of implicit objectives: serve shareholders, serve customers, serve employees, service society in general. Such woolly goals get you nowhere because they aren’t specific enough to have an effect on people's performance."
  
  "Rather than representing an abrogation of our responsibilities to our other stakeholders, the goal of value maximization served to create value for everyone. Our customer satisfaction levels rose, our employees were better remunerated, and we contributed more to the communities in which we did business."
• On the difficult choices managing for value entail...
  
  "[Withdrawing from California] underscored the fact that managing for shareholder value inevitably entails difficult, even wrenching choices. But it also revealed that the discipline pays off. It gave us the mettle we needed to put the interests of the shareholders first"
  
  "Getting rid of unprofitable customers, getting out unprofitable markets are some of the most effective means of improving returns to shareholders – but they are also some of the most difficult things to get people to face up to"
• On growth...
  
  "Strategies which are focused on maximizing value will maximize "good growth". Strategies which are focused on maximizing growth will not maximize value"
  
  "Most companies perform at only about half of their potential to create shareholder value. The pursuit of growth as a company’s primary, or governing, objective is responsible for most of this underperformance. To achieve consistently superior returns for shareholders, companies need to change the way in which growth affects their goals, strategies and organizational capabilities"
• On his CEO agenda...
  
  1. Build a great team
  2. Abandon multiple objectives in favor of a single objective
  3. Focus on markets where you have, or can build, genuine competitive advantage
  4. Distinguish between good and bad growth
  5. Manage costs through strategy, not through brute force
  6. Insist on alternative strategies
  7. Link remuneration to value creation
  8. Change organization structure often – to meet changing conditions
  9. If world class means anything, it means world class in creating value