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The mobility imperative

The mobility imperative

Values make the organisation as well as the men and women within the organisation. The founder of the Sutton Trust, Sir Peter Lampl, explains his passion for social mobility.

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Sir Peter Lampl’s office offers a stunning panorama of London. On the left are the Houses of Parliament and then, as the brown Thames bends to the north, the icons of the city soar into the distance. St Paul’s, the modern towers of the City of London, Canary Wharf.

Usually, he arrives early in the office and enjoys dawn rising over the city. Sir Peter Lampl is a man with a mission. He is a philanthropist in the field of education. “A strategic philanthropist,” he speedily corrects. “I’m much more hands-on than just handing out money. I get in before seven o’clock and don’t leave till six. I just love doing this. But every piece of research I do, every project, is strategic. It’s got to have a purpose — to influence public opinion, be evaluated, be scaled up.” However strategic it may be, the British have a curious perspective on philanthropy. The great Victorian philanthropists are still celebrated — people like Titus Salt who created Saltaire near Bradford; the Cadbury family and Bourneville; and Viscount Leverhulme who built the Utopian working ideal of Port Sunlight to house the workers of Lever Brothers. And yet, philanthropy is peripheral, indulgence rather than investment. In the 20th century British philanthropy slowly moved to concentrate on the arts rather than poverty or working conditions. Modern-day British philanthropists have art galleries or wings of galleries named after them — think of Charles Saatchi and the Saatchi Gallery; the Clore Gallery at Tate Britain funded by £6 million from the businessman Charles Clore; or John Madejski’s funding of a new garden at the Victoria & Albert Museum. In contrast, in the United States philanthropy is a way of life. It is understood that giving riches back is part of the deal. “If you make significant money in America, you are expected to do something. Most people do,” says Lampl. Largesse is celebrated rather than viewed with suspicion. Think of the Bill and Melinda Gates Foundation; Warren Buffett’s commitment to giving; George Kaiser giving approaching $3 billion to fight poverty in Oklahoma; or the Walton family giving much of the fortune generated by Wal-Mart to education reform and marine conservation.

The starting gun

Lampl spent a substantial portion of his working life in America. It is where he made his fortune. Having decided to return to the UK in 1994 he stumbled upon his philanthropic mission. The 1996 Dunblane massacre, when 16 children and their teacher were killed at a school in a small town in Scotland, was the catalyst. Lampl read that there was a campaign to ban handguns in the UK in the wake of Dunblane. He contacted the organisers and became involved. “I had lived most of my life in the States, and was very conscious of the gun culture in America. If someone breaks into your house in Britain, the chances of them having a gun are relatively small. In America, nine times out of ten they will have a gun,” he recalls. “So, I funded the campaign anonymously. It was unbelievable. There was a free vote in the House of Commons and we now have a legal ban on the private ownership of handguns in this country, which is fabulous.” For Lampl the experience was eye opening. For relatively small amounts of money — tens of thousands rather than the hundreds of millions he was used to dealing with — the campaign made a difference to the law of the land.

Soon after he returned to visit his old school, Reigate Grammar School. When he had attended the school all the places were free. (Indeed, the school traces its origins back to 1675 when an alderman of London bequeathed £150 towards the purchase of land for a “free school”.) Now none of the places were free. Shocked, Lampl realised that in 1994 he wouldn’t have been able to attend the school. Nor would most of his friends. He did some research and discovered that 175 of the best private schools which used to be part of the direct grant scheme were now all fee paying. Reigate provided the young Peter Lampl with the educational impetus which led him to Oxford University’s Corpus Christi College. Again he did some research. “When I was at Oxford, two-thirds of the student body were from state schools. And in 1997, it was down 46 per cent. I left the UK in 1973, came back in 1994, I was gone for 20 years. It was like Rip van Winkle — you wake up, it’s all changed, but we’d gone backwards big time. Social mobility had declined in the UK.”

Sutton seeds

Perplexed and outraged, Lampl decided to do something. He set up the Sutton Trust in 1997, just before Tony Blair came to power. He was assiduously courted by the new Labour government, but settled on independence — “I find politics distasteful, having to toe the party line and so on. I never gave a nickel to anything political.” In the 15 years since its formation the Sutton Trust has researched and campaigned passionately in an effort to give others the opportunities afforded to the young Lampl. He points to two major achievements. First, the Sutton Trust has invested heavily in research so that its arguments are based on hard facts. The decline in social mobility is no longer a vague impression but a proven fact.

Most notably, the Trust funded research into social mobility by the London School of Economics. “This has transformed the agenda in this country,” says Lampl. “Ten years ago, no one was talking about social mobility. But the LSE research looked at people born in the 1950s and the 1970s, and what the kids are doing 30 years on. It turns out if you were born in the 1970s, your earnings and social position are more closely tied to your parents than if you were born in the 1950s. So, in other words, if you were born in the 1950s, there was much more mobility. If you were from a low or middle income background, you had more opportunity to move up the ladder than you did in the 1970s. So, social mobility in Britain declined. LSE then looked at the level of social mobility in a number of other countries and basically we’re bottom, with the United States.” Other research studies by the Sutton Trust — it has now funded more than 100 — rammed home the point. For example, failing to improve low levels of social mobility will cost the UK economy up to £140 billion a year by 2050 — an additional four per cent of GDP.

The learning of Liverpool

Research is one thing, making change happen quite another. Sir Peter Lampl cites the Sutton Trust’s work with the Belvedere Academy in Liverpool. He had visited Harvard and other Ivy League colleges and noted their use of “need-blind admission”, which means effectively they take people solely on merit rather than basing selection on their ability to pay. This approach was taken at Belvedere as part of an Open Access Scheme which ran from 2000 until 2007. Thanks to extensive outreach and publicity, applications went from 130 to over 400 and the mix of pupils at the school was fundamentally changed with 30 per cent having free places; 40 per cent paying partial fees; and 30 per cent paying full fees. Academic standards went up. Because parents paid according to means and funded almost half the costs, overall it cost the sponsors, the Sutton Trust and the Girls’ Day School Trust, less than the cost of a state school place to support the pupils. “In other words, the government could step into our shoes and be running the best school in Liverpool for less than the cost of a state school place,” says Lampl. Another major success of the Sutton Trust is its summer school programme which has been running since 1997. The week-long schools are designed to give bright students from non-privileged homes a taste of life at a top university. Over 6,000 applications were received for over 1,000 places on the last programme.

Pushing water

Despite such successes, traction is hard won. There have been eight education secretaries since 1997 and positions are entrenched. There is no record of turkeys voting for Christmas.

“Mobility at the top end is unbelievably difficult to do anything about. There’s so much vested interest in not doing it, from everybody, because anyone who’s in a position to do anything about it is benefiting from the fact that their kids have a huge advantage,” says Lampl. He points to another piece of Sutton Trust research. A little under one per cent of British children are sent to boarding schools which cost around £30,000 a year. With 50 per cent income tax, this equates to a pretax salary of £60,000. This is more than double the median income in the UK. Sutton Trust research shows that the best state schools are dominated by the affluent and are effectively socially selective. “The average child is shut out of almost 20 per cent of schools. They can’t go to a boarding school; they can’t go to a private day school; they can’t go to a selective schools because they’re probably not near one, and even if they were, they’re not going to get all the tuition to get through the entrance exam; they can’t go to a good state school in a rich area because their parents can’t afford to live there; and they can’t get into a faith school because they socially select. So, the level of school you go to in this country depends on your parental income.”

Bush fires

And yet, for all this, Lampl remains undaunted. He is enthused enough to come into his office to see dawn rise. He recounts the latest research on teachers and laments the fact that “the best teachers teach in rich schools. Our research shows that if you took the bottom ten per cent of teachers in Britain, and you could make them average, our position in the PISA tables would go from 22nd to 5th in maths, and from about 22nd to 3rd in literacy over the next ten years. The leverage on improving your teacher workforce is enormous. The quickest way you can improve education in this country is by improving the 450,000 teachers who are teaching here now.” He recounts visiting Jeb Bush in Florida. “One thing they’ve done in Florida, which is really interesting, is they’ve recognised that improving teachers is the key. And they have instituted a scheme where every year teachers are graded according to four grades. Either you’re very good, good, adequate or inadequate. If you’re adequate and inadequate, you have to have compulsory teacher training and development, so you’re upgrading the below average group. And if you’re inadequate for two out of three years, you’re out. You’re fired.” Are such hire ’em, fire ’em sentiments the legacy of Lampl’s corporate and consulting experience? He did work for the famously fierce Bruce Henderson at Boston Consulting Group after all. He laughs. “Actually, I’m very optimistic. My experience of business is that most people, if properly motivated, led and incentivised, will do a good job. All the companies I bought were underperforming businesses, losing money or making poor returns. I didn’t go in and fire a bunch of people, because most people will do a good job. What I tried to do is to help them do a better job. And I think that’s what we’ve got to do with teachers.” One of the most positive — and perhaps surprising — achievements of the Sutton Trust is the creation of the Education Endowment Foundation with £125 million of government funding to help disadvantaged children in under-performing schools. The

Sutton Trust is the lead charity in the initiative — in partnership with the Impetus Trust (featured in the Winter 2011 issue). Says Lampl: “It’s what I would call a gigantic do tank. We’re going to trial things that we think make sense. We have £125 million, and aim to fundraise another £40 million, so that over 15 years we will end up spending more than £200 million. That’s enough to do a lot of very good pilot projects. However, the real prize will be if we can influence the way government spends its billions on these poor kids. That’s very exciting.” Lampl glances out of his office window. He wants to do something.

How I got here

Chain reactions

“I read Chemistry at Oxford. Then I got a job at Beechams in marketing, which was a good thing to do because brand management was a hot thing. I left Oxford, went on holiday and started working in September. I went straight on a sales training course with Beechams to sell pharmaceuticals. I did that for six weeks and then they put me out on the road as a salesman, selling to GPs and hospital doctors. You’re treated like a subhuman.

But it was great experience.”

MBA

“The summer I left Oxford, I was on one of those Greek boats going from one island to another. We were all sleeping overnight on the boat in sleeping bags, and there was this guy next to me, who was a London Business School graduate. He had just graduated and we were talking about salaries. I was getting paid £1,500 to start at Beechams, which was a good deal. And he was getting £4,300! So, I did one year at Beechams and then went to London Business School. I left on a salary of £8,000.”

The b school experience

“It was hugely useful for me because I’d done maths, physics and chemistry for six years and then I was doing economics, organisational behaviour, marketing, business policy. It completely broadened my experience, because I had been so focused on physical sciences.”

Market forces

“When I joined BCG, it was the best management consulting firm in the world. I was the first person to join BCG in Boston directly from a European business school. And I was treated like dirt! It had a total free market system. So, I arrived at BCG in 1973. I didn’t know anyone. They said, there’s your desk. And I said, well, what do I do? I was told that I had to find work,

I had to talk to managers and vice-presidents and get them to employ me. I had a pretty tough start.”

Stars and dogs

“The whole measure of performance at BCG was billability — how many hours you bill clients each week. That’s all that mattered. Bruce Henderson [BCG founder] had a chart up in the office where everyone’s monthly billability was listed, as well as their moving annual billability, so you could see every month how everybody was doing. If people were declining in billability, they would disappear. All of a sudden, they wouldn’t show up. There was a huge churn rate, a half-life of about two and a half years. I stayed nearly four and could have stayed much longer but my new English wife didn’t like living in Germany. Bruce believed in survival of the fittest. It was crazy, but unbelievably exciting. At that time BCG was leading the pack. We were developing portfolio strategy, the experience curve and so on. We had some wonderful assignments.”

Bruce Almighty

“Bruce Henderson hired the best people he could in the world and paid them extremely well. He paid about 50 per cent over the average starting salary from Harvard Business School. So, in my year, the average was about $17,000 or $18,000, and people got paid $26,000 or $27,000 at BCG, which was considered astronomic at that time. Bruce was smarter than everybody. I’ll never forget when he came over to Munich and we had all these Siemens guys who were technology experts and Bruce asked them ‘How is your spherical geometry?’ and proceeded to talk about it. He was remarkable.”

Back to realty

“I moved to New York with International Paper, who were a BCG client and then I ended up running a couple of businesses — International Paper Realty which was their real estate company and a division called Land Utilisation. At that stage I had management consulting experience in strategy; I had deal experience, buying and selling, the nitty gritty of legal contracts; and I had general management experience.”

Leveraging experience

“I sold a couple of businesses to some guys who didn’t have any money and they were borrowing it all from the bank. And that’s what got me interested in this new area that was just developing which became leveraged buyouts. I’d always wanted to do my own thing. So, I set up the Sutton Company. Early on, I very nearly went bankrupt. Then we bought a losing business and turned it around so that it was making a 30 to 35 per cent return on assets. And I bought another business in the same industry in Chicago, put the group together, sold it, and that was it. I made over $20 million in 1986 personally. That was a lot of money in 1986.”

Creating value

“In 14 years, we did four platform investments and a total of 13 investments. The whole game was to research a business incredibly well before buying it, and once you’ve bought it, figure out what to do with it and then make it happen. We took businesses that were not worth very much and made them valuable businesses. I made a lot of money, but after a while I got bored doing it. I didn’t really want to look at any more deals. A lot of people who make a lot of money just keep going. But for me, it was a demotivator. Why do I want to make more money? What’s the point?”.

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Stuart Crainer is a partner at CrainerDearlove and also editor of Business Strategy Review.

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