Turnaround King Jon Lewis on relaunching government contractor Capita
Vision: Jon Lewis turns Capita into a high-tech contractor
Jon Lewis looks pained as he describes the mess Capita was in when he joined five years ago. Dubbed the ‘King of Turnaround’, Lewis has been parachuted in to clean up the bloated government contractor who he says has spent too long buying other businesses indiscriminately and racking up debt while continuing to pay handsome dividends to shareholders.
He was very shocked by the toll that years of neglect and underinvestment had taken.
“We didn’t even have cybersecurity on some of our PCs,” says Lewis, 60, grimacing at the memory of his creaky infrastructure.
Audiences may grimace, too: Capita’s job includes everything from collecting BBC license fees and London congestion tax to managing army recruitment.
Many both in the city and in Whitehall were at the time convinced that Capita was a lost cause – as would rival Carillion later become. Lewis, who was then entering his fourth turnover and came on after a series of profit warnings, said he hadn’t fully realized the magnitude of the task.
He’s much more shredded now in his first interview since the “very, very difficult” restructuring that ended last year. His relief is palpable after admitting the outcome “could have been very different”.
“Let’s remember this is a business that is very much part of the fabric of the UK,” says the Welshman. “It may sound like a grand statement, but we engage with 50% of the population of this country in one way or another virtually every week.
“We, collectively as a board and as a management team, have saved the company so we can keep doing it and do it better than ever before.”
Since joining in late 2017, he has sold much of the business and worked to position Capita as a high-tech company. Away from staples like traditional call centers, and into artificial intelligence and running chatbots for companies like O2.
A recent Royal Navy contract gave Capita the task of modernizing all training systems which included simulation technology.
In the process, he reduced Capita’s workforce from 73,000 to 52,000 and reduced debt to more manageable levels.
But it is the culture change within the group that, for him, is the real transformation. Part of that stems from the creation of a consultancy division – which he now compares to firms such as Accenture.
He also overhauled the way Capita treats customers. He says, “In the past, we decided which [contracts we wanted to work on] then bid for them.
The group “would then deliver the contract and not an iota more”.
“We didn’t manage relationships with our clients like other companies or the big four professional services firms would, there was no partner who would own that relationship.” He insists things have moved on and wonders why Capita is still compared to Serco and Mitie rather than rival Deloitte Digital, Accenture and Infosys.
The reality seems to be that his reputation – and an unfortunately crude nickname, “Crapita” – may take longer to change.
Did they think about renaming and rebranding the band? Yes, he said. But that was quickly dismissed when their research revealed that customers had no problem with it.
“When we started this transformation five years ago, if you had done a Google search for ‘Crapita’ you would have gotten quite a few results. You get a lot less visits today,” he suggests.
But he adds: “The way to solve this problem is not to superficially change the name of the company. It’s just putting lipstick on it. Despite all Lewis’ enthusiasm, however, the share price remained stubbornly low – at 25p. The group is worth around £430m – a fraction of its previous value and significantly less than the 97p at the time of the £700m emergency rights issue in 2018 that Lewis launched to help stem the loss.
He simply replies that the period has been “very difficult” for investors.
But he draws up a list of things he still wants to do – grow the group’s business divisions in step with the markets they each serve and write off Capita’s debt. ‘At that point, you can stop and say, ‘Is it time to leave and do something else?’ But we are not there yet.
When do you think you will be? “Well, I can’t give a time frame for all of that.”
He is optimistic that his stock will reach the issue price before the rights within a year or two. Whether the market is convinced is another matter.
Lewis – perhaps unsurprisingly for someone rejuvenating the company as a consultant – is used to speaking in the jargon used by many bosses.
He uses the word “transformation” repeatedly and admits he’s more likely to be found saying the phrase “Are we making this customer happy?” around the office.
That, and his unfathomable enthusiasm, may be partly explained by the 20 years he spent working in America.
A geologist by training, he spent two decades with the American oil services giant Halliburton. His time there came to an abrupt end when he was dropped from the top job – a low point in his career, he says. “I was on the succession plan there for many years,” he says.
“We were six, then five, then three and then two. I got to both, didn’t get the first one, and spent years of my life believing that at some point I would be CEO of this company.
“When that kind of perspective hangs in front of you, you pretty much give your life to this business.”
Now he seems to have found peace at home as well as – relatively speaking at least – at work.
Raised in South Wales, Lewis went to a full local where he met his wife of 37 years. He arrived at Capita after a short stint with another oil services group, Amec Foster Wheeler.
His family now lives in a presbytery in the same village where he grew up and where he devotes much of his free time to renovating the garden.
“I meet people I was in kindergarten with, I meet people from my comprehensive school, and it’s good to still have those relationships – they don’t know what I’m doing. It’s a kind of grounding, actually.
“I came home, really, and I love it.”
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