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Ambition and Resilience: In conversation with Sir Nigel Wilson
07 March 2024
The former CEO of Legal and General, winners of Britain’s Most Admired Company in 2022, on believing and investing into community infrastructure.
In a special evening hosted by Echo Research at the London Stock Exchange at the close of 2023, Sir Nigel Wilson, joined by former Director of Levelling Up John Godfrey, explored the business strategy that helped crown Legal & General (L&G) as Britain’s Most Admired Company the previous year.
Fourteen years ago, the pair embarked on their mission when to drive successful economic growth in the UK through investment outside central London. Since then, they have progressed from presenting the plan to ‘three men and their dog in a pub’ to investing £30 billion in major regional cities outside of the capital.
Following a model of inclusive capitalism, they sought investments into projects that would ‘do good’, such as generate jobs, help to tackle climate change or increase housing, with the aim of tackling societal issues and providing an attractive return to shareholders.
From initial aspirations to be an academic, graduating with a degree in Economics from the University of Essex and subsequently a PhD from the Massachusetts Institute of Technology (MIT), early on, Sir Nigel envisioned a ‘purpose led business’ that was both ‘economically and socially useful at the same time’.
It was this concept that, on becoming L&G’s CEO in 2012, led to his commitment to invest millions into places like Cardiff, Salford, Newcastle, Sheffield, Sunderland and Walthamstow. Sir Nigel sought further inspiration from cities such as Berlin, Shenzhen in China and Austin Texas, that had higher per capita incomes than all UK cities driven by heavy investment in regeneration and delivering growth.
In the face of ‘significant scepticism’ from shareholders and regulators and the view that Government would not support for such projects, Sir Nigel and his team argued that there was more than enough money held by companies such as L&G to fund large regeneration investments successfully on their own.
Sir Nigel explains: “We can self-determine our own success. If capital is never the problem, then what matters is attitude. I know the UK is not short of capital. We have £6 trillion of long-term capital so plenty of capital, but we have chosen to systemically underinvest and invest in the wrong places. Changing this will drive economic growth”.
The key to achieving this, he says, was through applying the ease of use framework to establish a ‘common vision’. The success of this vision was seen quickly, as L&G funded the construction of one million square feet of new residential, office, retail space and a hotel in Cardiff.
Again, the L&G team faced significant initial local scepticism as the scheme was deemed too ambitious and unlikely to succeed. The sceptics were proved wrong however and by working in partnership with local communities and politicians the project became a resounding success. This is just one example, among hundreds, in which L&G has delivered what Sir Nigel calls ‘real changes’ through physical transformation rather than simply ‘writing a better algorithm’.
Ambition is the key message here. Sir Nigel states how the belief and support from his team attracted further interest and allowed L&G’s partners to ‘aim higher’ as confidence rose. He gives the example of Sunderland approaching the company and coming out with their newly constructed City Hall winning the ‘Best of the Best’ award for infrastructure over the likes of Goldman Sachs.
Resilience is a second driver of the success in L&G’s work, both with regards to its model and the economy itself. Again, Sir Nigel demonstrates his counter intuitive mindset as he explains that the amount of cash flow to debt ratio among the SME community is ‘the highest it has ever been’. Investment within SMEs will pick up, Sir Nigel predicts, due to the improved tax treatment they receive as a result of this economic strength.
‘Because we get in a bit of a doom loop in the UK, people then don't go away and dig up the data to see if it is supporting the facts’, Sir Nigel says.
Sir Nigel affirms that “success can be self determined”, specifically that there is a lack of this belief and a feeling that nothing can be done without financial support from the Government. “It’s this lack of confidence that is stopping the UK from delivering on its high standard of ‘intellectual leadership’ and ‘quality of research”.
Sir Nigel believes Society faces huge challenges, but these challenges represent opportunity at the same time. “Technological and scientific changes are the fastest and most exciting they have been since the 19th century. Sadly we have not used them to solve our global crisis in climate, health, water, housing and so many other inequalities” he states.
“However, we know we can. Look what we experienced in Covid when multiple vaccines were produced so quickly and one in a weekend. Or in the advances in renewables where we can now produce power at incredibly low prices. I am relentlessly optimistic because of our potential to deliver terrific societal outcomes.”
Personal resilience also plays a factor. Sir Nigel describes himself as a ‘resilient individual’, adding that this allows him to ‘compartmentalise’ issues and form a temporary ‘detachment’ from other matters at hand. While some, as Sir Nigel confesses, may see this as an ‘emotional failing’ on his part, he indicates that it allows him to completely focus on and resolve any issues that have arisen.
These investments from L&G, Sir Nigel says, allow not only for the development of infrastructure but for the upscaling of businesses too. He refers to entrepreneurs specifically, explaining that most often spend 50% of their time on fundraising (which he claims they are not very good at). Investment from L&G avoids business leaders ‘wasting time’ on fundraising and access to concentrate more on their business growth.
Sir Nigel cites housing company Cala who, since being under L&G ownership has seen revenues rise from £250 million to £1.4 billion. Sir Nigel adds that Pemberton, a private equity management firm, saw an increase of £15 billion Assets Under Management, after L&G acquired a 40% stake in 2014.
Perhaps the principle that encapsulates all of the above and was certainly a cause for the company winning Britain’s Most Admired Company award is what Godfrey refers to as the “corporate culture and purpose” at L&G. The former Director for Levelling up spoke on the difficulties of implementing a culture of “doing well by doing good”, but the rewards that it reaped once established among L&G employees.
Godfrey recalls an example of this that took place just the night before at a staff members leaving party. He explains how those receiving presents in recognition included not just the big players but the kitchen staff and receptionists too.
All L&G employees, Sir Nigel underlines, have “shared in the success of the business through share-option schemes that have allowed many to pay off their mortgage or send their kids to university. I’m thrilled for my colleagues many of whom have worked with me for over a decade and some for all 14 years.”
Sir Nigel adds to this by stressing the need for “inclusive…not exclusive capitalism” within the company through making an effort to “recognise the work of all” associated with success. “I would like more leaders to value collaboration, be intellectually honest and be more caring,” he states.
Ambition, resilience and inclusivity are at the heart of Sir Nigel’s business philosophy. Through counter intuitive thinking and a belief in self-determined success, this showcases the impact of focused leadership on delivering impactful and sustainable transformation to communities across the UK while maintaining a 20% return on equity. It is these ambitions, along with the dedicated work of his team at L&G, that has driven the business to success and recognition as Britain’s Most Admired Company.
