To build a great business, entrepreneurs need to have a purpose they believe in, says David Pitt-Watson, MBA ‘80.
Over the span of his career, David Pitt-Watson has played multiple roles: social entrepreneur, politician and financier. He has been a partner at Deloitte, Assistant General Secretary of the United Kingdom’s Labour Party, and Treasurer of Oxfam, Britain’s largest development charity. He is best-known as a shareholder activist and promoter of responsible investment practices. As the cofounder and CEO of Hermes Focus Asset Management, known as the Focus funds, Pitt-Watson promoted the idea that investment funds should act as if they are the owners of companies rather than the traders of shares of stock. Here, he discusses the value of tolerance, the difficulties of resilience and the downside of aid. Pitt-Watson received his MBA from Stanford Graduate School of Business in 1980.
In 10 words or fewer, what is the big idea behind your business?
Big companies are owned by millions of people; they should behave that way.
What is the best advice you’ve ever received?
My father (Reverend Ian Pitt-Watson) taught me that you should treat people as if they have value in themselves. In business it is easy to think of people as mechanisms by which you can achieve things. I don’t think that works well. Yet we are all guilty of doing that. My father was always deeply insistent on tolerance — allowing someone else’s point of view. In politics it is easy to see everyone in the other political party as the enemy who is always in the wrong. You are pressured into doing this. Ultimately it doesn’t work. It doesn’t describe the real world.
What was the most difficult lesson you have learned on the job?
Even when it looks like you will fail, you must never give in but keep pressing and pressing. In 1994, I failed to be nominated to be a member of [British] Parliament. It ended in a catastrophe that was bad for me and my family. Later, [then Prime Minister] Gordon Brown wanted me to be general secretary of the Labour Party, but for legal and financial reasons I couldn’t do it. These were both things I really wanted, and I didn’t get them. When that happens, you need to step back, talk to friends, stay cool, and not give in, but at the same time recognize and accept the situation you are in. It’s difficult because if you are entrepreneurial, you need to be quite determined.
Of course, the worst part, like the worst part of playing a game, is when it’s going wrong, when you are losing but you have not yet lost. You need to step back to see where you are and take stock. You are probably very difficult to live with at this point. I was very upset when I lost the M.P. nomination. I remember screaming in the car on the way home, and I had a bad two weeks afterwards. But you do come back from these things. You fight to the very last. And after you go through it, when it’s over, you start again. If you walk away every time you lose, you will not get very far.
What advice would you give other entrepreneurs on how to build a great business?
Have a purpose that you believe in. You need to know why you are doing it, because you will work hours and hours doing it and struggle away at it. If you create a business with no purpose, even if you are successful and you make money at it, what is the point? I think it is like being an athlete who takes performance-enhancing drugs: Even if you win the Olympics, what was the point? You only won because you took drugs.
What inspires you?
Seeing things that can be made better. I especially love it when I meet young people who have a similar fire in their belly.
How do you come up with your best ideas?
Chewing things over with people, thinking that there must be a better way.
What is your greatest achievement?
My kids by a country mile. The last one left home six weeks ago.
Most recently, this summer I finally climbed Mount Ararat. It is nearly 17,000 feet high. It is in Turkey, and on the border of Iran and Armenia, which was in the former Soviet Union. It was my third attempt. The first time, I nearly died, was nearly arrested and temporarily kidnapped, grabbed by a group of horsemen, and taken to their village. Our guide rushed in on horseback and rescued us. There was a great row, and he got us out. It was a great adventure! I went back again five years ago, and the guide ahead of us was struck by lightning, so we had to come down. This time around, I went with my son and my old friend. We made it to the top. Never give in!
What do you consider your biggest failure?
My biggest obvious failures were the political ones.
What values are important to you in business?
My father was a minister of the Church of Scotland. I’m not religious, but through him I learned that each individual is equally due respect; [people] are ends in themselves and not just means to ends. That is important in the way we think about business, as well as politics, for countries, towns, and nations, and individual relationships.
What impact would you like to have on the world?
To have used what skills I have to help address and maybe resolve important challenges. Perhaps the biggest challenge of the next 50 years is how we create a sustainable planet.
Why are you an entrepreneur?
I was always quite nervous about big companies and what they were for. I always had the sense that entrepreneurship gives freedom and a chance to express yourself. Entrepreneurship should be taught in high school. It’s a basic freedom everyone should have.
What was your first paying job?
I worked in a supermarket stocking shelves for 17 pence an hour. It was a terrible store. The cheese was moldy. The supermarket was in a middle-class suburb. I remember there was a young woman who worked there and commuted in from another town. She said there weren’t shops as nice as that one in her neighborhood. Yet the cheese was still moldy. You can always learn when you do different things.
Do you think there is such a thing as balance? How do you achieve balance in your life?
Some people do it really well. I’m not sure those are the most entrepreneurial people. They don’t leap out of bed with 20 things that need to be done before breakfast.
What is the best business book you have read?
Power and Accountability by Monks and Minow. Bob Monks was the first great shareholder activist in the U.S. I remember reading it and thinking, “Yeah, that’s what I was thinking, but these people are doing something about it.”
What businessperson do you most admire?
My first boss at Hermes was a guy named Alastair Ross Goobey. He was a Conservative, and I, of course, am Labour. He was always honest and open, and he was so ungreedy. He got cancer in his late 50s, and was treated through Britain’s universal health care system, of which the Labour Party is particularly proud. On his 60th birthday, he was still determinedly working, but ill. He made a speech and said, “My treatment cost hundreds of thousands of pounds and was all paid for by the National Health Service, so you were all taxed for it!” He said he hoped we thought it was a good value.
What is the most valuable thing you took away from your time at Stanford?
The ability and confidence to question things. There are some very good people in politics and in business, but often, as they hit new problems, the foundation of their knowledge is thin. When they don’t have an answer, they move on. I think I have the confidence and knowledge to ask the difficult questions, maybe even come up with better solutions, and I don’t think that would be possible without Stanford.
What do you think is the greatest innovation in the past decade?
It has to be in information and communications. Here is one example: mobile banking. I am Treasurer of Oxfam, and I was in Kenya last year on the border of South Sudan. People there are very poor and wonder where their next meal is coming from. You want to help, but the problem of giving aid is that if you drive down there with a food lorry, you bring down the price of food and put the local farmers out of business, so the economy never recovers. But what if we could give them a modest income so they can buy goats and look after themselves? When I was in Kenya, I witnessed something amazing. We were visiting a rural town that was built of straw and wood. Next to a little hut there was a queue of extraordinarily colorful women. In front was a crippled woman who was in a wheelbarrow, (no one could afford a wheelchair). A man sitting there had her put her finger on a reader on his phone and then he gave her $30 to live for the next few weeks. The funds were deducted from Oxfam’s bank in Nairobi. This may not solve all the world’s problems, but it literally saved that woman’s life, and her income would be spent locally. All of that would be impossible without modern ICT (information and communications technology).
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