It is 8.15 on Monday morning but already the EasyJet headquarters at Hangar 89 Luton airport is bustling as some of the company’s 6,000-strong workforce start the week.
For Andrew Harrison, chief executive of the UK’s largest low-cost airline, the week promises to be busy.
The company’s annual results are due and Mr Harrison, 50, is resplendent in a bright orange shirt, the distinctive colour used by EasyJet in its branding.
His aim, he says, is to double the size of the company over the next five years and make more than £5 per seat profit. He would, so far, appear to be on track. Last year he says the company made £3.32 profit a seat and in 2007 this has increased to more than £4.
Mr Harrison has always paid attention to the bottom line and such considerations in part prompted him to study for an MBA.
After graduating with an economics degree from Cambridge in 1979, Mr Harrison joined an engineering group as a graduate trainee and quickly recognised shortcomings in his economic and business knowledge.
“I went through Cambridge and came out not knowing what is a P&L [profit and loss] account. No one talked to me about the basis of capitalism, which if you haven’t got means it’s much harder to become a successful capitalist.”
Moreover he saw immediately the people he worked alongside who had an MBA “were paid more money for doing the same job”.
Having only recently left further education, Mr Harrison could not countenance a further two years studying for an MBA and so opted for a one-year programme. He narrowed his choices to IMD in Lausanne, Switzerland, or Cranfield School of Management in the UK.
Although he would have preferred IMD for the international experience, the then £13,000 price-tag was too great. “It was about the size of my mortgage, it was a huge investment.” He also received the offer of a grant for much of the cost of the Cranfield MBA from what was then the Department of Education and Science.
Cranfield, he says, was extremely beneficial. He had always believed most business was common sense but he knew that if he was to be successful he would need to understand topics such as financial theory and accounting. Cranfield plugged these gaps.
“It gave me a very good grounding in finance and accounting, without which I could not have done any of my subsequent jobs.
“It also gave me a level of familiarity and confidence in the other disciplines which meant that I was much less likely to be bamboozled by jargon – by marketing or logistics for example.”
Furthermore, the qualification was an entry ticket into his subsequent role as a consultant at Bain and Company. “What I didn’t know when I left Cranfield and went to Bain was that management consultancy would pay so much.”
When he left the engineering company to study for an MBA Mr Harrison was earning just over £7,000 a year. After the MBA, his salary rocketed to £28,000.
“I believe that was the highest multiple of incoming and outgoing [earnings] in Cranfield’s history,” he says with a grin.
From Bain he moved to Courtaulds Textiles and subsequently became finance director at 33, something he feels would not have happened without the MBA. After a further spell at Courtaulds, running its international operation, in 1996 he joined Lex, the UK car retailer, as its chief executive at the age of 39.
The role was a big one. “I do remember when I first became a public company CEO at Lex there was a huge demand for communication. People inside the company were asking what is the new CEO going to do? To come in from outside the industry in your first CEO role, people expect you to have the answers.”
While his MBA was able to help him with the financial and accountancy nuts and bolts, Mr Harrison realised that he had very little, if any, training in communications.
“The challenge of communication is being able to say something relevant to most people but not so generic as to be meaningless.”
Since 1996, says Mr Harrison, he has been learning and honing his communication skills. He does not believe such skills could have been taught on an MBA programme. “How do you teach it?” he ruminates. “It has to be learnt on the job.”
Lex acquired the RAC in 1999 to be renamed RAC plc, and in 2005 Aviva the insurance group bought the group. Mr Harrison was looking for new challenges and quickly found them when he took over the helm of EasyJet in December 2005.
His greatest ambition now, he says, is “to make EasyJet a truly great company and there are not many great companies”.
Mr Harrison has five “pillars” on which he bases this ambition. Operational excellence, making EasyJet a great place to work, safety and customer satisfaction. These, he says, will deliver the fifth aim of a 15 per cent return on equity.
Without his MBA, Mr Harrison acknowledges his life would have taken a very different route, and he credits the qualification as an excellent tool and stepping stone into management consultancy.
But he believes an MBA has only a half-life of five to six years when it is of use. After that period he says “people look back on what you have done with it”.
Of 6,000 employees at EasyJet, he believes 1 to 2 per cent have an MBA. And as the benefit accrues most to the individual, it is not something he believes EasyJet should sponsor – even though he supports the MBA as a qualification.
“It remains true that understanding of finance and accounting – which is the common language of all business – is a great thing to do.”
