Carr, Bentley, Laidlaw, Luff and now Weston. Chief Executive, Chairman, FD and Managing Director.
A short few years ago, Centrica, owners of British Gas Business were a model business in UK plc. Aggressive accumulators of business units and customers, unrivalled slick tactics to optimise profit and return and a teflon like ability to avoid sanction or even slow the pace of growth.
However recent times have seen an implosion, with rumours of internecine warfare between internal departments and senior management casualties, parachuting in displaced talent from the financial services industries, experiencing the ennui of review and procrastination, all set against an increasingly toxic social and political backdrop.
Arguably the rot began to set in when Phil Bentley left last year but issues had already arisen within the organisation under his stewardship with his jump out seen as well timed in hindsight. Since then things have gone from bad to worse.
Indeed one former senior employee said:
“Centrica was a company in transition, now it’s a company in turmoil.”
From derogatory Daily Mail headlines to Miliband’s madness, haemorrhaging customer numbers to confused strategy, now British Gas are contending with a seemingly endless supply of top executives running for the hills.
Two recent profit warnings, some very questionable outbursts, a huge fine from Ofgem and the Competition and Markets Authority Investigation just add to the travails.
Indeed, talking to the FT, Martin Brough, of Deutsche Bank, called for any new appointments to focus on a fundamental change in strategy for Centrica.
“Centrica is looking rudderless. This is dangerous in a world of increasingly choppy waters.”
“Centrica has been heading in the wrong strategic direction for some time, looking upstream to Norway and to North America for excitement and growth. We believe salvation could come from introspection and a resurrection of British Gas as its identity. The unique selling point of the company is not upstream development or US retailing but its British Gas heritage.”
“[British Gas could] engage more effectively with the British public on energy issues than the political parties” with “[a] trusted and growing British Gas” could be worth 100p per share more than a “failing one”.”
Peter Atherton, analyst at Liberum Capital cut right to the chase saying:
“[British Gas could be run] in a more politically astute way”
Alluding to the mitigating circumstances of Miliband’s moment of madness and the Competition and Markets Authority investigation, Angela Knight, Chief Executive of Energy UK, the trade body representing the major energy suppliers said:
“It’s a very difficult time to be the CEO of a major UK energy company. There’s constant pressure to deliver on investment and reduce consumer bills, and it’s getting harder and harder to achieve both.”
Indeed after the announcement of the CMA investigation and Laidlaw’s ‘blackmail’ outburst, Centrica lost £2bn off its market value.
The exodus has presented real problems for both the executive team and day-to-day business operations. Staff talk of uncertainty and unclear strategy as new recruits from the financial services industry are parachuted in with a more analytical and prudent approach than seen in the past, leading some to talk of a temporary stagnation in the business.
On an executive level, Luff bringing forward his departure, allegedly due to his upset at media intrusion, has meant serial bungler Laidlaw has remained in post, although neutered in his media presence. Coming so soon after the Chairman’s departure it is not difficult to paint a picture of a business in some crisis.
The former executive said:
“You couldn’t have the CEO, CFO and chairman all leave at the same time so Sam [Laidlaw] had to stay.”
“In three years’ time, it will be a completely different company and that’s precisely what’s needed.”
Weston’s departure, on top of Carr, Laidlaw, Luff and Bentley was attributed to his losing out on replacing Laidlaw with Centrica instead opting for an outside from BP, Iain Conn.
Roger Reynolds, Managing Director of Utilities at Exane BNP Paribas cautioned:
“For the incoming CEO it will be a massive task to recapture public confidence in the sector, convince customers the market is competitive and the margins British Gas is earning are fair, and manage the political sensitivities going into an election”
No-one would bet against the once great energy supplier from making a comeback but a calm, focused strategy is needed before we can talk of BGB as the innovator and market leader that it once was.