23 December 2013
The dapper head of PA Consulting is standing down after more than two decades in charge, writes Andrew Hill
Hunt for long enough on the web and you will find a picture of Jon Moynihan taken at Royal Ascot this summer, wearing top hat, tails, a cream waistcoat, and a frown like a Victorian factory owner. He points out that he was at the races to support his wife, the New York milliner Patricia Underwood, at what is one of the biggest hat-wearing events in the British social calendar. But is it fair to say he was uncomfortable in the garb of a grandee? “Very fair.”
One reason for his unhappiness about the image is that the dapper and argumentative executive chairman of PA Consulting is used to being in control, even online. Mr Moynihan’s comprehensive Wikipedia entry looks carefully cultivated, with links to abundant articles and letters in which, for example, the management consultant presciently took issue with “fat cat” executive pay (in 1993), argued telecoms operators were neglecting the mobile handset (in 2004, pre-iPhone), and called for the introduction of smart energy meters (in 2009).
Asked whether he is trying to secure his legacy, he refers to a PA leadership training course that underlines the importance of being modest and says: “You are indirectly accusing me, almost certainly correctly, of being immodest and, to the degree that I am, that should clearly be controlled.”
In fact, Mr Moynihan says, he would be “quite happy to fade away”. This seems an unlikely fate. Next week, aged 65, he will hand over as chairman to Marcus Agius, formerly of Barclays and Lazard, after more than two decades at the company. Mr Moynihan will remain a principal at Ipex Capital, the venture capital firm spun off from PA in 2008, but people who know him well wonder whether he will really be able to wind down.
One friend, Lady Judge, who has been a director of the management consultancy since 2005, says: “He is an executive chairman – and he is very executive.”
Mr Moynihan himself describes how he and his chief executive were excitedly examining projects in the PA pipeline when he realised “I wouldn’t see any of these things come to fruition”. It must be an unusual feeling for a man who has shaped PA since 1992, when it was close to collapse.
Mr Moynihan had an unlikely start in capitalism, managing the catalogue of bands such as The Who and T Rex for a record company before working for War on Want in India. By 1992, though, aged 43, he had made his fortune in the US as a partner at First Manhattan Consulting, which specialised in advising financial institutions, and was contemplating early retirement.
He was persuaded to come back to London as PA’s chief executive, but found that the consultancy, despite a good reputation with clients, was in a dysfunctional crisis.
The accounts were nine months out of date – “which was one of the reasons I was sucker enough to take the job because I didn’t know the firm was bankrupt” – staff numbers were unknown, and, “in an absurd early 1990s piece of gobbledegook, we had dispensed with titles”. Mr Moynihan had to work out who the important people were by asking colleagues to rate each other.
The experience confirmed Mr Moynihan, who had joined consulting with McKinsey in 1977, in his conviction that managing talented professionals is “bloody impossible”. Coming from Wall Street, the intense and entrepreneurial British-born consultant had a reputation for being a “damn American who had this American capitalist point of view”.
By laying out a basic principle that PA was there to serve its clients, and a second maxim that “profit is a good thing”, he turned the company round, losing in the process a few “incredibly brilliant people out of Oxbridge . . . who had drunk the anti-capitalist Kool-Aid and actually thought that profit was a dirty word”.
Echoing Marlon Brando in On The Waterfront, Mr Moynihan says that were it not for the internal crisis, PA “could have been a contender”, growing alongside big global consultancies such as McKinsey, Boston Consulting Group and Bain in the 1990s. But it was already evolving into a different type of firm: “McKinseys, BCGs, Bains tell you what to do – we do it.”
He reaches enthusiastically for his props: a model of an army Land Rover, an innovative new disposable kitchen towel (“With a square towel you never get the corners down. This is a circular towel so you are saving tons of paper . . . and you can lift it with one hand!”), and an iPad Mini on which to show videos of both.
The props are there because PA not only works in traditional areas of management consulting, such as strategy advice, but also develops products alongside clients. PA consultants designed and built the Ora towel-making machine for Better All Round, and took a stake in the company. For Britain’s Ministry of Defence, PA found a way to put obsolete Land Rovers in Afghanistan back into service as remote-controlled vehicles that could detect improvised explosive devices.
The public sector work is a lucrative paradox for PA’s chairman, an advocate of small government. An adviser to former UK prime minister John Major on economic matters in the 1990s, Mr Moynihan says the ideal outcome of selling advice to the public sector would be that it would no longer need consultants, “in as much as government was so small there was hardly anything to consult upon”. But for now, such work still accounts for half of PA’s revenue and has helped a £1 investment in the company when Mr Moynihan joined – buying more than 100,000 shares himself – to grow to £170, taking account of share splits and dividends.
Mr Moynihan says he would be “a hopeless failure at politics” because he is “not tremendously good at compromise”. He has proved a deft master of the internal politics of his own company, however. Having decided a “get-rich-quick scheme” to list the firm was out of the question, he told colleagues after he arrived: “‘We must become employee-owned, we must get rid of the trust [that owned the firm], we must own ourselves, we must have our destiny in our own hands’ – and people responded to that.”
In the process, he has already stepped down once – in 1997, when the trust was dragging its feet about employee ownership – only to “un-resign” a few months later when the trustees agreed to his plan: “It was a genuine resignation. I had just had enough. [But] you can do that probably just once in your career.”
This time, then, is it final? “I used to give speeches where I said the head of any company should leave after seven years because you have gone past your sell-by date of new ideas,” says PA’s reluctant grandee. “There was also the small problem that I promised my wife that this would be a three-year job – that was in 1992.”
- Born: June 21, 1948, Cambridge
- Education: Balliol College, Oxford; North London Polytechnic; MIT
- 1970-71 Track Records
- 1971-72 War on Want and Save the Children, India and Bangladesh
- 1972-76 Roche Products, London
- 1977-79 McKinsey and Company, Amsterdam
- 1979-81 Strategic Planning Associates, Washington
- 1981-92 First Manhattan Consulting Group, New York
- 1992-2013 CEO and then chairman of PA Consulting Group, London
- Family: Married for 33 years to Patricia Underwood, the hat designer; one stepdaughter, one grandchild
- Interests: Writing, lecturing, winter sports, travelling, building, investing