TWO'S COMPANY: PETER DUGUID & GRAEME COUTTS OF STATS GROUPMay 2013 | Feature
I’ve been in oil and gas my whole working life . I started out working offshore on hook-up and commissioning projects before moving into the well intervention business during a downturn. That was my first step into junior management and I really got a taste for it. The business I was working for at the time had a dynamic very like STATS in that it was growing very quickly, and it was bringing in a lot of management in order to accommodate that growth. That was unfortunate for me because it blocked my progression into more senior levels, though now I can see they had no choice.
I ended up leaving that business and going to a very small oil services company – it had an annual turnover of about £250,000 when I started. It was a really interesting business that hadn’t really decided where it wanted to be and I ended up as the operations manager. I brought in a product that made us more sustainable and within two years we were doing sales of £3m a year. We started STATS in 1998 with very limited capital, some very restrictive covenants imposed on me by my previous employer and I was in poor health at the time. But we struggled on and eventually I bought the asset base from my previous company which gave us a product to sell.
Still, it was very seasonal and we spent the next few years trying to build an innovative engineering solutions business. The smart bit was to look at whether solutions delivered to individual clients could be taken to the broader market and eventually we ended up with a suite of products. From engineering came a need to manufacture those products, so we began doing that, and we really began to evolve.
I vividly remember my bank manager telling me I couldn’t build a business on enthusiasm alone. In truth, while there was always growth, we were constantly fighting working capital. That was fine in 2007 when the banks were offering very easy access to credit but then the financial crisis came along and the oil market collapsed.
Life wasn’t very good for a period and we had to fight to maintain what we’d built.
By the end of 2010, we’d stabilised but banking support had disappeared. I had to make a call – we knew we had to do something different and that’s when I began looking for outside investment. Then BGF came along with a remit to support growing British businesses and we were an ideal candidate.
As a business, we’re now ready to internationalise, to build an infrastructure in the regions in which we operate, and in those where we’d like to operate, so that we can become a global, sustainable business. But we realised we needed a more serious management team if we were to transition from one sort of business to another.
When BGF came on board, I was perceived as a very operational manager and it was suggested that I needed to create some space around myself and to have someone to talk to and bounce ideas off. I needed to be a chief executive who could delegate the day-to-day running of the business and I needed a chairman who could be that sounding board. We’re still looking for a chief operations officer, but we hired a new chief financial officer at the time of the BGF investment and, of course, Graeme arrived as non-executive chairman.
He wasn’t the only candidate, but I felt I could run rings around the first couple of guys I met; I knew I needed someone who would challenge me. Then Graeme’s name came up. I didn’t know him, and I was worried that with his background at Expro, he’d be too corporate for a fast-growing small business like ours, but I agreed to meet him.
I realised straight away that he’s incredibly grounded – he can look at the details but also see the bigger picture. Also, he tells it like it is which is important because I needed someone who would be able to work with me. I know I can be bloody-minded.
Graeme isn’t in the office full-time but I talk to him at least two or three times a week. It’s a very informal but dynamic relationship – he’s brought a structure and discipline that was probably missing from our management style when we were a younger company, without being overly forceful. It’s an easy relationship to be in.
I did have reservations about taking on an equity partner and a chairman. My concerns were all about whether I was working for a new master – about how the decision making process would work. I wanted to be sure that we could still be decisive about our direction. That seems to be working really well.
I’m an Aberdeen boy brought up with oil and gas from my earliest days, and I think the fact that we were both local lads helped when I first met Pete. I went straight from school into a job in banking which I hated, and I very quickly moved into engineering at Schlumberger the giant oil services group, with whom I travelled the world. Then I spent seven years at another company delivering a new product range before joining Expro in 1989, initially as a short-term consultant. I didn’t leave for 21 years.
I worked in all sorts of senior roles at Expro, culminating in a stint as chief executive of the public company. In 2008, we were just on the edge of FTSE 100 membership, when we were taken over by a private equity group which had fought a very tough and public scrap with Halliburton the US oil business to buy us. It was the most sought after brand in upstream oil services in the world at that time.
I stayed on at Expro as chairman for a couple of years to nurse the private equity guys but it was always my intention to retire once new management was in place, after I’d led a head-hunting exercise for a new chief executive. You should never have a former chief executive serving as chairman – it’s completely unfair on all concerned, because no-one really knows who is in charge and the chairman can’t stop himself from interfering in matters that should no longer be his concern.
When I retired, I said I wouldn’t do any work for a public company – just simply because the onerous governance was not my scene. I wanted to get back to having a bit of fun – fun for me is working with small private businesses and the more local the better. My strategy is to help local entrepreneurs try to realise their journey towards the creation of value. Having worked in oil in every continent of the world I thought I had something I could bring to the table for these guys, because they all face the same challenges and they all make the same mistakes.
It is a very small world up here, particularly in the oil business, and I knew some of the guys at BGF quite well. They asked me to take a look at STATS.
In these situations, it’s all about how you get on with the chief executive – even more so in this case because this is Pete’s business – and the chemistry has to be right. He’s the owner as well as the chief executive and in many ways he’s entitled to make the decisions. My approach is not to ram things down people’s throats – it’s to be on the end of a phone, to listen and to offer some experience, especially when the awkward things happen.
it is the job of the chairman to provide a counterpoint to the chief executive and to challenge his thinking. But I’m always trying to point Pete towards what I suspect is his end-game and that’s all about structuring things to make that happen. The relationship is very important – I’m not the sort of guy to bite his tongue but we never disagree and it’s not my role to do so. I’m here to point out some of the potential roadblocks when Pete has decided on a particular course of direction.
I also come with a pretty extensive list of contacts, both among my peer group and with clients and customers. The thing I’m most actively involved in with Pete right now is recruitment of talent – that can be very tough in Aberdeen, where the market is overheated.
It is crucial though. Pete is a highly dynamic guy and his challenge is that his ambition for the business is very high, including a great deal of international expansion where there are all sorts of pitfalls. He moves very quickly and it’s important that I spell out for him just how critical it is to have the right team of lieutenants around him that will take and translate his message into action.
Right now we’re at that point where we have to make sure we resource this business so that it is capable of delivering the ambition we have for it. As the business grows and internationalises, Pete won’t be able to do everything so the key is to have a foundation of very good and trusted individuals round about him who are like-minded, capable of good communication, and allowing him to do the things he’s good at and to keep away from the things he’s not so good at.
It’s all about being honest. Everyone has strengths and everyone has weaknesses. The collective approach of the team is what covers the weaknesses and allows the progress to be made. We’re working on those basics today.