Dame Marjorie Scardino has spent her life confounding expectations.
The first female CEO of a FTSE 100 company smashed the glass ceiling barring women entry to the loftiest post in business, transformed a cumbersome, parochial conglomerate into a streamlined, international powerhouse, and engineered an upturn in its fortunes, defying not only a decline in traditional print media but also the worst economic downturn since the Second World War.
Amid awful trading conditions, the media and education group she heads, Pearson Plc, has just increased its dividend 7% after seeing profits rise 11% year-on-year in 2008 to £762m. And it’s not even the case that successful units are masking problems elsewhere in the portfolio; all the £4.22bn turnover media group’s units did, in Scardino’s words, “stupendously well” last year: Penguin Books’ profits were up 4%, the FT Group saw profits rise by 13%, and Pearson Education grew its bottom line 11%.
An impressive record for a relative ingénue whose first business, at least commercially, ultimately failed. However, that she would eventually become the 20th most powerful woman in the world, according to Forbes, wasn’t so hard to envisage.
Scardino’s refusal to cut costs in core investments has been vindicated. The FT is now performing well in an ailing sector and Pearson Education is the foremost education publisher in the world
For a start, founding the Georgia Gazette with her husband Albert in 1978 demonstrated great ambition, not to mention time management skills, given that she moonlighted as the managing partner at a law firm. Secondly, the newspaper was a critical success, with Albert even winning a Pulitzer Prize for exposing corruption.
And finally, failure is a great teacher. Scardino later insisted that the Gazette’s commercial failure – it folded shortly after she sold it with a paltry circulation – taught her more than success ever could have.
There have been more perceived mistakes since she took the reins at Pearson, whose education arm’s motto is Live and Learn, in 1997. However, many decisions turned out to be shrewd and overall her personal stock is well in the black.
Shares soared along with her reputation during the late 90s, but critics emerged when the dotcom gravy train came to a juddering halt in 2000 and US federal cutbacks hit its education division.
Reflecting feelings in some quarters in 2005, one investor angry at a 75% pay rise said: “There are some excellent businesses in there, which would certainly flourish if better run. If Scardino remains in charge it is going absolutely nowhere.”
Were the dissenting voices more strident and numerous because she was a woman? Did others, anxious for a trailblazer in her gender to succeed, overlook her shortcomings?
Either way, Scardino’s refusal to cut costs in core investments has been vindicated. The FT is now performing well in an ailing sector and Pearson Education is the foremost education publisher in the world.
Early days
Pearson in the mid 1990s was far from a typical organisation. Surely no surprise then that the First Lady of the FTSE should land there – except this was no forward-thinking, cosmopolitan company.
On the contrary, Pearson, founded in 1844, was actually the last organisation you’d expect to install a woman at the helm. Having started life as a construction company, it was by now an unwieldy assortment of assets, in industries as disparate as leisure, banking and even viticulture.
One fund manager derided the group as "effectively an investment trust, run like a gentleman's club by a board consisting of the Great and the Good. It had consistently disappointed, and growth was grinding to a halt. It was a stock we only held because we thought it was a takeover target."
The founding family had run Pearson for generations and Scardino was only the second ‘outsider’ to be hired as CEO after her predecessor Frank Barlow, and certainly the first ever American and woman. One can only imagine the reaction of the old guard when into the boardroom swept a Texas-born ingénue with an informal management style and contempt for protocol.
When she later hailed the “brave people who hired me and gave me a chance when I was an illogical choice for the job,” she was perhaps acknowledging not only that she was a relative novice, but also the potential for cultural clashes. Five years later, however, Scardino was very much accepted by the establishment when she was made a dame in recognition of services to media.
Some considered Scardino a lightweight when she took charge at the age of 50 – somewhat unfair given her record at the helm of the Economist, in which Pearson held a 50% stake. With her at the helm between 1992 and 1997, circulation trebled and profits soared 130 per cent.
Scardino, who is also non-executive director for Nokia, soon dispelled doubts with her charm and purposefulness. At the outset she boldly promised shareholders that share price would double within five years to more than £13; in fact it soared to £23 within two and a half.
She later recalled reading every statement on current strategy the company had: “They were really unbelievably boring. But as you read through them, you saw Pearson’s strengths emerge – and, sadly, they were not in fine wine or china – but in business information and data.”
So Scardino set about divesting what one senior director called "an investment trust without the tax advantages" of its non-core assets, regardless even of profitability, hence the sales of Madame Tussauds, Alton Towers, an 18% share in Lazard the investment bank, A 22% stake in European broadcaster RTL, and a 4.3% stake in BSkyB. Some wondered why successful businesses were being sold, but “Marj in Charge” was generally lauded for disposing of assets that had no synergies with Pearson’s core functions.
Less controversial was the disposal of Mindscape, a loss-making educational software business whose disastrous acquisition in 1994 sounded the death knell for her predecessor. What really symbolised the end of the dynastic era though was the sale of the Chateau Latour wine estate at Sotheby’s.
