As companies grow, organically and by acquisition, the role of the leader begins to focus more on the strategic issues such as acquisitions, major diversifications and matters to do with the balance of the company in its marketplace and knowhow area. But success during this phase remains very dependent on the qualities we have considered above. The strategic role is an addition to, rather than a replacement of, the role models we have already discussed.
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MANGING KNOWHOW· The case of Oxford Instruments
Oxford Instruments is one of Britain's most conspicuously successful pro- fessional organisations. However, for the best part of a decade after its formation by Martin Wood in 1959 it had all the fragility of a young, under-managed knowhow company.
During its development into a quoted technology company with a market value of £210m by the spring of 1987 it underwent three generations of leader- ship.
Like many technology-driven companies Oxford Instruments (OI) is a spin- out from a university, in this case Oxford University's Clarendon laboratory.
Martin Wood was working at the Clarendon as an engineer, alongside the eminent physicist Rex Richards (now Sir Rex and one of OI's non-executive directors). Richards became very interested in the use of high powered magnets in spectroscopy.
Wood, in response to ever increasing demands from Richards for more powerful magnetic fields, began to make magnets exploiting the phenomenon of 'superconductivity' (the disappearance of the electrical resistance of some materials at very low temperatures) identified by the Dutch physicist Heike Kamerlingh-Onnes in 1908.
Wood became adept at applying three basic technologies: high-field magnet- ism, the high-vacuum technology needed to achieve ultra-low temperatures and cryogenics (the technology of low temperatures). He established a world lead in the design and manufacture of superconducting magnets. Soon scientists from all over the world were beating a path to the Clarendon's door.
Wood formed Oxford Instruments to satisfy the demand. The company pros- pered but by 1969 Wood felt it was getting too large for him to manage on his own and that if it was to survive it would have to become less dependent on magnets.
He hired Barrie Marson from a larger company, Kent Instruments, to assume some of the managerial load and to implement a change in the business idea.
Marson's brief was to acquire and develop new products and businesses which he did very successfully. Several of the new businesses failed to match the criteria Marson had established and were sold off, usually to their managements. Oxford Medical Systems and Oxford Analytical Instruments survive as the two main results of his diversification programme. Marson became chief executive and Wood was appointed non-executive chairman.
In the late 1970s a dramatic change occurred in OI's marketplace with the successful application of a phenomenon known as Nuclear Magnetic Resonance to medical diagnostics. It was a major improvement on the hitherto dominant technology of X-ray scanning. The technique became known as Magnetic Res- onance Imaging. It was immediately apparent to the manufacturers of MRI machines that OI was the only company in the world with the design, develop- ment and manufacturing knowhow needed to supply superconducting MRI scanning magnets in the volume the market required.
OI made a quantum jump in size. As MRI scanners swept all before them in
LEADERSHIP
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LEADERSHIP. 93 medical diagnostics profits soared from less than £1.3m before tax in 1981 to
£20m for the year to March 1987. Others, including some of its main customers, tried to compete in magnet making but 0I maintained its technological and cost leads and in 1987 still claimed over 80% of the world market for superconducting MRI magnets.
The company's academic culture, the exploitation of which was a feature of the Wood/Marson managerial knowhow, persisted during most of the Marson era while the new businesses were developed. The explosion in the MRI market and the flotation of OI on the stockmarket in October 1981 required a change of emphasis.
In 1983 a new managerial era was heralded by the arrival of Dr Peter Williams, formerly deputy managing director of VG Instruments. Within a year he was appointed group managing director and in August 1985 he became chief executive. Marson stepped down to become non-executive chairman in place of Martin Wood, the founder.
Williams set about the task of redefining the company's culture. He intro- duced a more coherent management structure and hired a new finance director.
He also managed to re-focus the group's objectives onto profit without losing key scientific professionals. In 1986 Williams was declared Guardian Young Businessman of the Year.
A potentially much larger market than MRI magnets awaits 0I in the form of compact, low-cost synchrotrons for use in research and, more importantly, in the manufacture of the next generation of Very Large Scale Integration (VLSI) microchips. Most experts believe a technique known as X-ray lithography will be a key element in the production of VLSI chips. OI has developed a 'mini- synchrotron' which looks set to become much the cheapest X-ray source avail- able.
Looking further ahead it is not wholly inconceivable that within a decade or so 0I will be making magnets for awesome weapons such as the 'rail gun' or the 'free electron laser' that scientists are investigating as possible ballistic missile killers in America's 'Star Wars' programme.
· Lessons to be learned
The story of Oxford Instruments is very much the story of the wisdom of Martin Wood. He was the typical entrepreneur of the 'I didn't mean to go into business' variety. What marked him out was an awareness of his limitations. The appointment of Marson was wise but wiser still was Wood's readiness to give Marson a free hand. Having found the right man he trusted him and in so doing established a precedent Marson was obliged to follow when it was his turn to hand over the reins.
OI was conceived and born within Oxford University. Its culture for most of its life has been uncompromisingly academic. The technology, OI's core knowhow, was everything. The business idea was, if not an afterthought, at least no more than a context for the development of the core knowhow.
Though the culture has changed, OI's core knowhow remains fundamental to
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MANGING KNOWHOWits business idea. This has not been fully understood by many City analysts who question OI's long-term growth prospects on the grounds that it is a one-product company which will run into serious problems when the market for MRI scanners starts to decline.
OI's core knowhow is NOT the design and manufacture of MRI magnets but rather the mastery of the product and process technologies associated with high- field magnetism, high-vacuum technology and cryogenics. The main application of this knowhow at present just happens to be MRI magnets. To-morrow it may be synchrotrons or free electron lasers.