#8 David Sproxton: Why Aardman Turned Down a Buyout and Gave the Studio to Its People

In this episode Barry speaks with David Sproxton, co-founder of Aardman Animations, the Bristol-based studio behind Wallace and Gromit, Shaun the Sheep, Morph, and Chicken Run. 

For more than 50 years, David and his co-founder Peter Lord built one of the most beloved creative companies in British history. In 2018, they had the opportunity to sell to a major studio. They chose not to. Instead, they transferred Aardman to an Employee Ownership Trust, handing control to the people who had built it.

In this conversation, David talks about what drove that decision, how a creative business holds onto its soul when the financial pressure to sell can be enormous, and what it actually feels like to say "you have control" after four decades at the helm.

What's covered in this episode

• How David and Peter met at school in the mid-1960s, discovered animation through a borrowed 16mm clockwork camera, and sold their first piece of work to the BBC's Vision On for £25.
• Why Aardman said no to Jeffrey Katzenberg when DreamWorks offered to buy the studio outright, and the deal structure they chose instead.
• What David observed watching the ad agency Gold Greenlees Trott get absorbed by a US conglomerate, and why that convinced him a trade sale would destroy the thing that made Aardman worth acquiring.
• The book ‘Beyond the Corporation’ by David Erdal, a 2011 EOA conference talk, and how they spent several years researching the EO model.
• The John Lewis trust model and why it suited Aardman better than direct shareholding.
• Monthly financial workshops, bimonthly town halls, and the challenge of communicating financial information.
• The games department closure, the announcement of forthcoming trading losses, and how transparency in difficult periods is managed.
• David's view on AI: a powerful tool for administration and search, but one that averages rather than imagines, and one whose generative output is already feeding on its own mediocrity.

Moments to listen out for

• David's account of that first wet Sunday afternoon when he and Peter pulled a clockwork Bolex out of a cupboard and played with paper cutouts, not yet knowing where it was headed.
• The moment Aardman announced its transition to employee ownership and received hundreds of emails from people inside Disney, DreamWorks, and Sony saying "if only."
• His description of the away days where he would take questions from the floor and the question that kept coming up: what happens when you and Peter retire?
• The phrase he used on transition day, borrowed from his time learning to fly gliders: "you have control," and what it cost him emotionally to mean it.
• His CEO confessional: the Tortoise and Hare feature film that had too many legs on it, that he believes could have been saved, and the goodwill with the crew that took a long time to rebuild after it was cancelled.

Quickfire highlights

• Employee ownership is: the only way forward.
• Biggest EO surprise: the reaction from people inside the big US studios. Hundreds of emails, all saying the same thing.
• Leadership insight: at a certain point, you have to stop being a backseat driver. Giving someone control means giving them control, not giving them control with an asterisk.
• Book recommendation: ‘Beyond the Corporation’: Humanity Working by David Erdal.

Disclaimer:

The following podcast is intended to be of a general nature, will not be suitable for everyone, and should not be treated as a specific recommendation. We recommend taking professional advice before entering into any obligation or transaction.

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Transcript

SPEAKER_01 0:00

Hi, my name is Barry Horner, and I'm your host on today's episode of Stake and Soul, the podcast that's dedicated to demystifying the world of employee ownership. Stake refers not just to the financial or beneficial ownership, but also to the vested interest, the sense of responsibility, and the feeling of belonging that comes with being an employee owner. Soul is all about company culture, the value, the shared purpose, and the human connection that are amplified and shaped by employee ownership. Seoul is the company's side of language. Join us for series one as we sit down with business leaders and CEOs who have successfully navigated their journey to employee ownership. Today we are joined by a titan of British storytelling. In 1972, two school friends with a camera and some plasticine started a journey that would lead to multiple Academy Awards, the creation of cultural icons like Wallace and Gromit, Sean the Sheep, and Morph, and established one of the most beloved animation houses. But perhaps another remarkable chapter of the Ardman story isn't on the screen, it's in the boardroom. In 2018, after 40 years at the helm, our guest and his co-founder, Feet Lord, made a choice that stunned the industry. Instead of selling to a Hollywood giant, they handed the keys to their team. They transitioned Ardman Animations into an employee ownership trust, ensuring that the culture and the soul of the studio would always belong to the artists and creators who'd built it. We are here today to talk about the courage it takes to say no to corporate buyouts, the responsibility of holding a 50-year legacy, and why the future of creativity now belongs to the partners. David, welcome to the show. Thank you for being with me. Thanks very much, Barry. Good to be here. So let's dive in at the start and understand perhaps a little bit about you. I think, Dave, you did a I think a geography degree by my research, and you met Pete back in your 20s. So let's go back to there because that feels like that's probably when the Ardman story started. And it'd be really interesting to know how you met, uh, what your respective roles were and you know what then led Ardman to becoming the amazing business that now we we know it to be.

SPEAKER_02 2:20

Well, actually, Barry, we Pete and I met at school. Uh we were I was I was at uh working catering grammar school for boys, a state-run grammar school in it would have been uh about 1966, 67, I suppose. I was actually in the second year at that school, and this guy came in with a very strong Australian accent. Uh he had he had come in late, he was about six or eight weeks late, because they'd just come back from Australia. His family had gone gone out to Australia because his father had been posted out there by the BBC as basically uh as head of sales uh in Australia for selling BBC productions to um Australian broadcasters uh and the broadcasting corporation. Um and to cut a long story short, you know, we we played together, we went around each other's houses, and Pete was drawing and writing a lot, and I said one wet Sunday afternoon, Oh, you know, we've got this wind-up clockwork Bolex 16mm Cine camera in the cupboard that dad uses occasionally. It's got this stop frame facility on it. Uh, why don't we get that down and have a bit of a play? So we did. We literally got it out of the cupboard, set it up on a kind of camera stand, and uh played with paper cutouts. It's just sort of literally very simple cover animation. And the joy of it was just seeing all that stuff come to life. And to jump ahead, we then got a break, actually through dad's connections, to be honest, with the guy that produced a show called Vision On, uh, which took on was basically designed for kind of uh deaf kids. So it was a very, very visual show. Each each week it had a theme, a kind of abstract theme, circle, signs, trees, it could be something like that. And the producer engaged a number of quite gifted amateurs to produce either film montages, uh abstract animation, bits and pieces. And he saw the little bits of stuff we'd been doing, and he said, Oh, look, well, have a crack at here the theme for some themes for the next series, here's some film, see what let's see what you can do. And so we we did uh over one summer, well, and actually we're still at school, it must have been between between the lower six and the upper six. That summer we kind of filled that hundred foot up with various techniques, one of which was a a bit of drawn animation in the in the traditional what we call cell animation, sort of Bugs Bunny type stuff. Not that it was Bugs Bunny, but it featured this this idiotic character we'd come up with called Ardman, who was a sort of man in a cape, but that's an idiot. So um, and that's a sequence that they bought. They bought that first, very first piece that we did, I don't know, for something like 25 quid. Um, and we opened a bank account, and of course, what do we call it? We should have probably called it Lord Sproxton Productions or something like that.

SPEAKER_03 5:09

Yeah.

SPEAKER_02 5:10

Um looking back, but we came up with this idiotic name, Ard Man. How many A's can you have in a word, Ard Arc, Ard Man? And so we opened a bank account in the name of Ardman Animation. I think in something, yeah, it was something like 1972, something like that. Or yeah. And you could and you could re you could register a you could register, it wasn't a company, it was a yeah, I it was a yeah, you well, you could register the name at Company's house, even though it wasn't a limited company, it was a kind of just a company. So we you could do that for like three and six or something. So that was a kind of schoolboy prank that we did. A little certificate registering a name way, way back. Yeah. And then that show. So during our summer, during the summers of our undergraduate years, we did little pieces for that show, kind of uh a one-minute piece kind of per show. That was kind of the thing we we did. Um, initially featuring Ardman 2D work. Uh, but that was quite hard work for two people drawn animation. So we we uh we gradually got into um basically doing stop frame model animation using using Classicine because it was fun, it's quick, it was easier in many ways, and certainly more fun, and addressed an issue which the producer had, which was you know, Tony Hart, lovely though he was, he wasn't a great comedian. They had other people who were kind of better actors um and more comic. And they wanted something to act as a foil for Tony, and we'd come up with some very simple classic characters, which sort of predated Morph. So when the show eventually evolved into Take Hart, featuring more that's only Tony Hart making pictures, um we invent they wanted that kind of same idea again. So we invented Morph to be the kind of comedy foil to play against Tony and kind of messed things up at his desk and that kind of stuff. So and then one thing led to another. Um we decided we left, we'd finished our degrees, we still had a kind, well, we kind of had a contract, but literally as we were that spring of our degree, the producer sent us a letter saying, actually, we're closing down Vision On, but we're thinking of something else, and that became Take Art. So we came down to Bristol, mainly because the show was actually recorded in Bristol. It was produced in London, but in their kind of in season, as it were, which was something like must have been September, October to March, when they did the recordings. They were here in Bristol every two weeks. And one of the reasons for that was, or two reasons, two reasons the producer said was one was to get out of the view of Big Brother in terms of the head of children's TV. They couldn't do what they wanted here more easily. And I think, secondly, and probably more importantly, was they got the same studio crew every recording session. There was only one studio in Bristol. Um, you had the same crew week after week, whereas in television centre, I think there were eight studios, and the crews were rotored around them. So there's no guarantee you would get the same crew every week. Um, and I can understand the way the show was put together. That was a great advantage to them, I think. So that's why we're in Bristol. It's it's Pete, I say Pete was okay. I think you know he had he still had family friends here, and but the BBC's facilities were what really drew us here, having uh access to a laboratory viewing facilities, the product you know, the producers were down here every couple of weeks. Um, that's kind of what what they what drew us here.

SPEAKER_01 8:38

Oh, and when did when did Nick appear on the scene? Because I guess um when people think of Ardman, they would you you you and Pete, I guess, were the the guys sort of running the business, but gradually Nick became a bit more sort of face of Ardman.

SPEAKER_02 8:53

I don't know if that's Yeah, so we had I mean, so we came down we came to Bristol in 76, so it's our 50th anniversary this this year. Um we did several series of Morph on uh Take Heart and indeed made the amazing adventures of Morph. Nick is about five or six years younger than we are, and um was got himself ready to national film school and he had seen Morph and you know you know within within his kind of student budget, he had the ability to bring in working professionals to advise and help and encourage, and he asked his tutors if if Pete and I could go and see him for a day as a kind of masterclass. Uh and I think I can't remember when that was. It must have been around about 82 or 83, I think. I think we'd made the Amazing Manchester Morph. We went up to see him. He was a like-minded spirit, and he was working on his student film, which actually became a Grande Out. That was his student film. And uh he had taken he had taken quite a while to get there. He was kind of working on his own at the film school. They didn't really have a big they were more focused on 2D animation, to be honest. Stop frame wasn't wasn't a speciality of theirs at that point, so he's having to having to do everything himself, so it took him forever. Um, and we eventually, we were, we were then, we were then starting to do work for channel four. I had quite, we had a 15-minute film to make for channel four, so we needed more animators. Oh, that chap Nick Park. I wonder what he's doing. So we did a deal with him and the film school whereby we said, Look, Nick, you come and join us, we'll pay you to make help us make this Channel 4 film. And we'll also help you finish your student film, your graduation, bring your set down, bring your camera down, I'll set you up in a corner, and that's kind of what happened. Right. So he actually joined us, I think, in you know, on the payroll in 1985.

SPEAKER_03 10:59

Okay.

SPEAKER_02 10:59

I think he'd done little bits. He'd come down, I think, in the summer for a couple of weeks to help shoot some stuff, um, bits of morph and other and tin pots and stuff like that. But he joined us full-time in 1985.

SPEAKER_01 11:12

And then fast forward, you've built a business with an amazing re worldwide reputation. Um, what was the catalyst sort of bringing us a bit more up to date to thinking around succession options? I guess you know, you'd you'd done um films with dreamworks and things. There must have been a number of larger international firms hovering, thinking Hartmann's reputation, um, wouldn't it be a great opportunity to acquire a an animation studio like that? And yet you decided to go down the route of becoming employee-owned. So what what was the sort of what led up to that? Was it was it was it led by you and Pete thinking about succession and thinking about ultimate retirement? Or what was the specialist for that? Even having those conversations initially.

SPEAKER_02 11:59

Yeah, I mean, I think um, well, you're you're right about DreamWorks. In fact, when we when we initially met Jeffrey Katzenberg, his his his take was, come on, guys, we'll just buy you and you'll be part of DreamWorks and everything will be tickety-boo. And we said, I, you know, thanks, but no, thanks, Jeffrey. We're very happy to work, do make films with you, work with you, use your all that kind of stuff. Um, and we ex, and I I think I probably explained, I think, you know, we're we're kind of independent. What we we don't want to be driven by a single agenda. We've got multiple streams. We obviously we'd established Wallace and Gromit by that point. Morphe was doing quite well. I think we had probably, I think we'd probably established Sean the Sheep. And so we had, in a way, multiple projects and multiple types of films. We were doing commercial work, children's TV work, and here was the opportunity to do features. And we did feel that if we were taken over by a big studio, you would be just doing, they would stop everything else, you're just going to work on features. And it's a pr it's quite a risky uh endeavor, to be honest, in the feature film business. And the Jeffrey was fine. He said, Okay, I get it, right? Let's let's just do a contract that will help you develop features, you know. Um to talk about that, but so rolling forward, you know, our countenance were saying, Well, guys, you know, you need to look at your retirement age, what what what what what do you want to do about succession? And I had been thinking about it, and I suppose I'd always felt I suppose it's that little bit of little bit of Marxist in me, that the traditional model of sort of Victorian capitalism, particularly in this business where it's very often external shareholders, um have a say so, and you're driven by quarterly profits, and the value of the company doesn't go really to the people that have made that value, that have created that value. I felt quite strongly there needs to be an alternative to that approach. Um, and I was I was sort of hunting around, um, you know, because what are the options? The options are a management buyout, which would have been quite hard for our executive board, I think. They'd have been mortgaging their houses. Um, a trade sale, which is what you're talking about, say, to a studio like DreamWorks, or indeed another, as we've seen, one of the big media conglomerates. And DreamWorks is quite an interesting example, but I'll go back a bit. One of the things I'd I one of the things I'd recognize and noticed was that we were doing in the 80s and 90s quite a lot of TV commercial work. I mean, that's really how we built up everything we've got. We were pouring those profits back into developing ideas, buying equipment to more people, and indeed space and buildings. And the ad industry in the UK was on a kind of golden wave from the mid-80s onwards. Well, once Channel 4 started in 1982, you had two channels putting out TV commercials. And um quite some very creative agencies got set up, um, or mostly London-based. And you'd see them being bought up very often by American agencies, and one that we worked with in particular, Gold Greenlee's Trott GGT, that we did a lot of the Lurpak commercials with, finally got bought up by a big American agency called Grays, and they kicked off their board the main driver of their creativity, a guy called Dave Trott, who was Gold Greenlee's Trott. And I thought, and of course, he took some of his creative teams with him, and I thought that's just such a dumb thing to do. They've killed at a stroke the whole reason why that agency was successful. And of course, you know, Greys just be they became amalgamated into Greys and kind of disappeared off the radar. And I thought, you don't want to do that. Uh you've kind of, you know, kill the turkey, the what's it, the golden goose. Golden Goose, yeah, kind of that. And and particularly in creative companies, you're it is so the creative industries are so people dependent. You know, yes, people are sort of broadly replaceable, but really imaginative talent isn't. And that's what's making the company valuable. And in the creative industries, you know, the corporates can come in, and we'll take all this, what have you got? And and my fear was if we did a trade sale, they would say, oh, well, we can make all this stuff a lot cheaper in the Philippines or in Belgium or wherever it is, one island. We're only going to concentrate on, say, Wallace and Gromit or features, the rest of it can go home. And by the way, we'll close down Bristol because we actually we can do it all elsewhere. That would be the focus and that very, very, very profit-based approach. Because what the the reason for that independence is you want to be able to develop, you know, the next jaw on the sheep. And that stuff is it's as you've seen in Hollywood, they've gone down the sequel avenue. Most of the big blockbusters are sequel after sequel after sequel. They've forgotten actually, you need to take risks on developing new ideas and new IP and new characters. But it it's a risky thing to do. And at the moment, there's nobody really commissioning very, very original work. Uh, either it's high high-level blockbuster stuff or it's it's relatively low budget stuff. Um, and so you because you never know whether that where that spark of imagination is going to come from. And it's, you know, it's one of your people may suddenly blossom on, you know. So that was part of it, was we didn't want to lose that, we didn't want to be taken over by a big corporate and go down that very, very corporate approach where you're driven by shareholder profit, and and the opportunity to aid to develop to develop newer ideas would be squashed. So I actually, oddly enough, I found myself going to a talk, actually, you might have heard of it. I mean, and it's this book, which we'll talk about later. Um, yes, yeah. This book was published. I think it came out in 2012, I think it was. Uh yeah, 2012. And I went to a talk about, and I thought that's really interesting. His approach, he had inherited his family's paper mill, I think, up in Dundee. And he talks about looking at all these people running around on the shop floor to kind of make him rich. And he thought there's got to be a better way. And that book was really quite fundamental to my thinking, particularly reading about Spanish cooperatives and that alternative model. Cooperative, I mean, some cooperatives work very well, they're often difficult, but I didn't, you know, we didn't want to run a cooperative, but we wanted, I think, that uh worker shareholder um philosophy. So that's what drove me to look more into this. And so from about 2014, I spent a fair bit of time talking to people at the EOA, uh, meeting others, going to the EO conferences. They were having regional meetings in those days, up until COVID, actually. So either Bristol or Exeter. So I used to go to those to really pick up the vibe.

SPEAKER_01 19:05

Yeah.

SPEAKER_02 19:06

We were very fortunate in that our lawyers, TLT, uh, had a guy called Ben Watson who was beginning to focus on the area of business in terms of the legal structures. Um, and so we we kind of got chatting and we thought, actually, this this could be this could be the solution, it could be a very good model. Um, because there aren't many alternatives, to be honest. Um, how you retain your independence, your um yeah, not be eaten up, um, and kind of keep your culture and your legacy intact. Um, so that's kind of where it came from. So it took, I say I did, I did, you know, it wasn't solid work by any stretch, but sporadically going to various things. And then I went to the EOA conference, and I think I met Jamie Gadd, Jamie Gadd associates um at that point, and we met two or three times to chat about the whole thing and started to kind of lay plans out. Um somewhere I've got a timeline here. Um and I think we we gave ourselves I think a year, so I think we've dropped the flag in um sorry, David, it's a David Eardle talk in Bristol in 2011, um, about the partnership day seven, day day session in November 2011, EOA 2011, you know, so there's a there's I've got a little timeline of things that I've gone to. Um and we engaged the GAD associates in I think October 2016 and TLT in in February of 2017 and kind of gave ourselves a year to go through to put everything into place. As you might imagine, we've got a lot of little companies, little IP companies.

SPEAKER_03 20:47

Yeah.

SPEAKER_02 20:47

Um, and so getting all that structure. And we were, we were, I think, I think we were like a a month over. Um, there was quite a lot to put in place, and uh we had a big shopping list of things to do, and we formed a little group with our head of HR, financial director, myself, Jeremy, uh, and one or two others. So I was I was driving it pretty much, and Pete Pete was happy with it, um, but he was you know off off um kind of making films, um, doing things like pilots' film and stuff out. So I was driving the process. Um and then on whatever it was on in yeah, 2018, November 2018, we did the final signing, a stack of documents be signed as you as effectively you changed ownership.

SPEAKER_01 21:30

Yeah, you you um you just preempted my question there because I was going to ask, uh clearly you were driving the conversation, but were your fellow directors equally supportive of the approach, or was there anyone that thought, you know, because I guess there would have been the DreamWorks and other large organizations hovering and stuff.

SPEAKER_02 21:49

Yes, well, that's yeah, that's interesting because by that time by that time DreamWorks had come and gone. I think Sony had come and gone. What was really interesting was that when we announced it and it kind of went Public. We got hundreds of emails from from people we knew at those big studios saying, Oh my god, well done. If only if only Disney or the workplace I'm working at do the same thing.

SPEAKER_01 22:10

Interesting.

SPEAKER_02 22:10

Um, you know, and you know, Disney and and Sony, and Sony we we we did a deal with as well, made a couple of films of them. You know, that is a massive corporation. Um, DreamWorks was much less corporate, it was a uh a very expensive kind of hobby for for Jeffrey Katzenberg in many ways, very successful in many ways. Uh Sony was a big, big corporation, so that was a very different business culture. But it was interesting, the outpouring of congratulations, uh what really took us back, to be honest. Um I think we're all surprised, particularly from America, which isn't where you know it it is, you know, the capital of capitalism, isn't it? Really, the states. Although there is there is a kind of EO culture there in part, and it has been actually very successful, those companies that that drive it, but it's not the first thing on most people's shopping lists. Uh they accept the kind of the shareholder-driven culture there.

SPEAKER_01 23:03

So you you've you you made you made your decision at board level. How was that then communicated to the wider team? And how did the team respond? Because again, um my understanding of Aubman is that you've got a number of um in-house staff members, but also quite a lot of um consultants and and others that are not maybe on the payroll. How how did it land across the group of stakeholders that you have in the business? And was there any skepticism or any concern over the route you were pursuing?

SPEAKER_02 23:33

I think so. We had had uh probably over that period of my investigation, a couple of what they call creative away days.

SPEAKER_03 23:42

Right.

SPEAKER_02 23:42

At the end of those away days, there was a 15, 20 minute session where people uh, you know, bar people could ask Pete and me anything they liked. And the question which kept coming up was, you know, what's going to happen when you and Pete retire?

SPEAKER_03 23:55

Yeah.

SPEAKER_02 23:55

I say I used to say, well, I'm looking at the EO model, you know, a very quick explanation of this employee ownership thing, why it was it, why it was a good idea, why it might suit. So some track was laid. Whether I think that was a good thing to do because it meant that they had time to kind of think about this.

SPEAKER_03 24:11

Sure.

SPEAKER_02 24:12

A little later, you know, maybe a year or so later, when it became more formalized, and obviously with the exec board or senior management as they were then, I'd written a paper about explaining what the options were, what the work I'd done. And generally, I think there was a there was probably a sigh of relief, oh, we've got a kind of secure future. There was probably, oh my God, you know, we're gonna be in charge of this thing. Um I think, yeah, the sigh of relief is, oh great, that's we're not gonna be gobbled up by some media conglomerate, um, which I think which, you know, they say is the danger. Um, great, we can drive our own destiny. I think the skepticism may have been how the hell is this going to work? What's the model? And oh uh last year, so we had it, so and you're dead right. So one of the things we also managed to do, which Ben Watson managed to pull off, was we said, look, a lot of the wealth is created by large or teams of freelancers that are the craftspeople, particularly on the big films. We would like them to be recognized in terms of any bonuses as employee owners, uh, in terms of a tax-free element to any bonuses that we give them. We'd always had some bonus scheme in place, box office bonuses, trading bonus, we know, and we would share, we'd always had a bit of a profit share system in place. So that wasn't new. And indeed, Ben managed to get through the HMRC. Yes, we can recognise those. I'll still have to play NAFTA insurance, but that bit, that bit of any bonus we give them will be, will be tax-free. And I thought that's great. So we can kind of bring them into the fall. Now that freelance, because we did have freelancers that have been working on and off for 20, 25 years, many of them work for us on a big feature, they could well be with us for four or five years.

SPEAKER_03 26:03

Sure.

SPEAKER_02 26:03

Um, but they they are they are legitimately freelancers. Um, so you know, they are they're very, very valuable to us. Um, and initially we had set up uh a rep group where we had a rep and a deputy for very roughly about every 30 people, which became quite big rep groups, probably about 10 or 12 of them on it. And more recently, well I would last summer after, and this would be our probably our third iteration of reps, we said, right, let's shrink that down. We've now got, I think it's five. It is a more focused group and easier for people to know who's doing what. And they are pretty galvanized in what they're doing. So that's one of the shifts that we've said. And this is like jumping on a bit, one of the things that we've that I often reiterate is look, this is this is in a way, it's an experiment, guys. We nothing's locked down. There is no user manual for an EO company. There is there are some rules and guide guidelines and there's some tax law and stuff, but actually how we actually run that, run it is entirely up to us. So if that bit if that bit's not working, we'll change it. If it's too cumbersome, you know, the big the big fear was okay, all this employee ownership, we're in charge. How are we going to find the time to do that bit of work? And initially the reps. And I said, look, the first year sorting out a bundle of issues, there's going to be a pile of stuff coming in from people. A lot of it is trivial. And we had to say, look, no, that's a line management issue. Yeah. This is a rep and this is an exec board issue. You know, we don't worry about the colour of the toilet, sort of quality of the tea. What we're thinking about is is policy, strategy, and tactics in the market and how we make our films more efficiently, how we can generate more income. You know, you have that responsibility as uh co-owners, you are responsible for the business. And and I think that's the bit that's that's the hardest bit to land. When for many, many years these people haven't had that responsibility. I'll come in, I'll do my do my great work, I'll take my check. Thank you very much. Okay, guys, now this is your company. And I and I th and in part of that psychological thing, unlike the American model where you often have shares and you've got a bit of paper you can wave and say, I've got a share here. We we took the John Lewis model, and part of that was because of the freelancers who come and go. That that trust that uh EO trust model worked for us much better. And I think it I think it does work pretty well actually. Um, partially because the whole shareholding thing, you know, you're trading shares, people are leaving, money's going out of the company. It's quite a quite complicated thing to do. In fact, we had a small shareholding thing many, many years ago, and closing it down, uh A was quite costly, you know, and that extraordinary thing. Well, how come these guys that are left for good or bad reasons, you know, get a payout and and I don't and I'm still here, kind of thing. So we we we didn't go down that model. It's it is I often explained as the John Lewis model. Yeah, it's our executive board, partners, and everybody's called a partner, that's what they wanted to be called. We thought they might be called Ardites or Ards or something like that, but no, they want partners, so that's absolutely fine. And that's quite a good, it's it's a it's a sort of broadly understood model of employee ownership. Oh, you can see John Lewis. That's it, that's kind of how it works.

SPEAKER_01 29:26

Amazing. A couple of points there, uh Dave, that perhaps we could just dig into. So you talked about key person, and I think when you look at Ardman, I would look at you, um, Pete and Nick as the sort of key people in that business. How how did you go about, once you were explaining the process of what you were going through, um, what was the sort of leadership transition, recognizing that you know you'd been running those that business for a long time? How do you go about building a sort of thing?

SPEAKER_02 29:55

Well, I think I mean the inner workings are obviously more complicated than just the hands on the clock. I mean, you know, the the punters and the people and they see, as you say, those three hands, Pete, Dave, and Nick. Behind that facade are a whole bundle of other people running around like crazy. So we had built up uh a very good um basically what became the executive board.

SPEAKER_03 30:21

Right.

SPEAKER_02 30:22

Um producers in particular, um, you know, we had uh Kerry, who who actually left a couple of years ago to retire, extremely trustworthy financial director, people who've been with us a long time, were party to it. And I I you know I want to delegate quite a lot of responsibility in various departments. So you know, we had a quite a big marketing and merchandise department, licensing department. My my heart was more in the production side, uh, and and of course, from production itself is a massive team collaborative sport. It's huge. Yes, the director's there, but actually without everybody else, and without actually a very good producer, um they would come to nothing. So both both Pete and Nick both need organizing uh to get them to get their visions on the screen. So we, you know, Carlos Shelley, Sean Clark, uh Kerry Kerry, um, we had a guy called Mark Bullo who had been driving TV development stuff. So there was quite a big team. Um and when it came to, as it was my replacement, we said, okay, we'll do a we'll do a big search, um, great opportunity for somebody, and we employed uh basically headhunters, very good headhunters, and it was an international headhunt. Uh, we took our time on that. Um and he and in the end, we ended up employing one of our own. So Sean Clark, who'd headed um the marketing side, and actually he was the guy that did most of the business deals in the company with our in-house lawyers.

SPEAKER_03 31:51

Right.

SPEAKER_02 31:51

Certainly all the licensing and things like TV sales and DVD sales, all those deals kind of went through his desk. So, in terms of the business, he really understood that very, very well. Um our very senior producer Carla Shelley understood the production side. So this exec board is has you got you've got a lot of experience. In fact, of late, we've just we we've just brought in two or three very new people, all out of the media industry. So a new uh head of people and culture, uh, who's actually come out come from uh Mulberry, so a big brand, and they are semi-employee-owned, and um basically a Sean replacement, so uh his his replacement is ex-BBC. So you've got a few new heads, and actually one of the issues we have is getting those people uh engaged in EO as much as they as much as they can be. They have embraced it all, which is great. So they they understand, and actually obviously they came into the company knowing this is how it is, it's not a big corporate thing, it's not a big thing like the BBC. Uh it has this very different culture to it. So, you know, and I think it's just uh I mean I think going back to restructuring the company, you know, you take your time. My advice would be don't rush it, bring people with you, give them the information, answer all their questions, do your research, bring in an experienced uh uh body like GAD or Baxendale or one of those outfits that have gone through this and can learn from the other plants they've been working with. Talk to a lot of people, look at it um with wide eyes, what works, what doesn't work, don't over and don't overcomplicate it. And focus, I think, on creating or maintaining and generating that that culture of collaboration, I think, which is so important.

SPEAKER_01 33:39

Yeah, massively. Um I guess we're talking about uh owner mindset. You become um an employee-owned business, and and that's great. And and certainly for the vendors, there's a you know significant, historically a significant advantage in terms of legacy and also the tax advantages that are somewhat less these days. But for the actual team running the business now and leading the business, you call them partners as we do at Paradigm Norton. If I was to be if I was to chat and walk into your offices today, how much impact has employee ownership had with the people that are actually doing the day-to-day work? Would would would they feel genuinely empowered as a partner? Is this something you're working on or see as a sort of something that takes time? Um, but in terms of the sort of cultural changes that you need to bring about as a result of thinking like an owner thinking like a partner, it'd be I I think it's a question that I'm often asked about, you know, how different does it feel, especially in a business that probably has a lovely culture anyway, as Ardman has. Um yeah, what what what's how's that landed with with partners day to day? And do you think they genuinely, because they as you say, they don't have that share certificate, do they feel like partners, or is it sort of name-only?

SPEAKER_02 35:01

I think I I don't think that culturally, if you walk into the building, there would be a lot of difference initially in terms of what you felt about culture, because we were collaborative, warm, welcoming. You know, a lot of a lot of the cultural signals, as it were, yeah, were already in place for all sorts of reasons, just the way we worked. I think uh a lot of them would say, it's great, it's it's our company, you know, we're driving it in the way we want to drive it. Whether they would initially articulate that, you know, we've got a plaque up saying all that kind of stuff. And I would say um it's a constant, ongoing need to kind of keep that momentum out. Some people really buy into it. I said the partner rep group now is really fired up.

unknown 35:49

Right.

SPEAKER_02 35:50

They're all very fired up by it, understand what it's about, and understand that they need to keep those beacons burning, as it were. Um they will be kind of certainly freelancers who say, no, it's mine, I'm only here for six weeks, it doesn't make a difference to me. I and I think at the more senior level, they'll say, No, actually, this is our this is our company. We're not beholden to somebody outside, third party shareholders, whatever, private equity people. Um, it's on our own heads. And I think they could probably articulate that, I think, quite well. I think I think with some of these new people, quite senior level, um, there's probably one or two, maybe a little bit more work to do for that to become embedded. I think a couple of the others actually they understand that already very well. And I come from that background. Um we do, we have a sort of well, every year we do a kind of survey um about that as a kind of uh as a kind of dipstick test. Tomorrow, in fact, um, or on Thursday, we do, I think they're bi-monthly now. We do town halls, right? Which are on which are like this, you know, the kind of teams meetings which are recorded. So if you're on the shop floor, you can go and watch it at home. And they're about an hour and it's an update, and the rep group have a little slot in that. Um, so they run through all the departments to kind of say this is you know, this is this is what the company's doing. Um, and one of the things that Kerry started to do uh was um financial workshops and just, you know, maybe it only took maybe 15-20 minutes, uh kind of every month. Just this is how the finances look at the moment, and trying to explain to people how the money flows through the business because it's quite a complex business, you know, various income streams, how the money comes in, where the money goes out. So getting people, and that's a sort of, I think, a process of osmosis as much as anything else. You kind of have to kind of keep going through it before you kind of really understand it. You can show up spreadsheets and things, but it won't really land until you say, actually, you know, this is the marketing bit, this is the production fees, this is that, the other, this is the outgoings. Um, and that certainly helped because I think that's probably the the biggest recognizable shift is people understanding actually how to finance, how the business works, um, what supports what, and and kind of what we're what we're trying to do, what the strategy is um for growing the business, and indeed in these very turbulent times, how we're gonna kind of get through to the other side, as it were.

SPEAKER_01 38:19

Yeah. Um in terms of what sort of level of information is imparted at your um financial workshops, do they just do they go through the PL, talk about cash balances?

SPEAKER_02 38:29

How sort of transparent is the financial information that's that's um So you'll there'll be uh broad departmental um PLs, you know, our departments, and obviously the explanation, what things like in the development area, that's an investment area. You don't expect development to make money, but you're hoping shows will get green lit. Where are we with those shows? What's happening, say, with with the marketing department, what money's coming. They're quite broad. If people want to dig in deeper, they can. Right. Um, they can they can dig in deeper, but these monthly things are kind of a basically a kind of a broad picture running around the various departments and projected forecasts, uh, which I think is the is the key thing. So you can kind of you know see where the next road junction is as well, well ahead of time.

SPEAKER_01 39:15

Uh and when you go through more challenging financial times, um, again, I guess the nature of an employee business is you you you share information in the good times, but you also have to share information in the bad times. How has that landed? And how have you managed to communicate maybe times when the news hasn't been great, when they're thinking, great, we're an employee-owned business now, we're due a partner um profit share, and maybe that's forthcoming. How have you managed to navigate that and get the balance right? Because I think you know, there are a number of employee-owned businesses out there these days where you know it's it's challenging out there. And, you know, they may have paid their even up to their 3,600 tax-free profit share one year, but can't the next. And it's great, great for firms that are paying those profit shares. But how any advice to firms that are going through a more challenging time as to how you navigate that one?

SPEAKER_02 40:09

I think that's kind of laying the tracks, isn't it? Is I think anticipating and laying out the expectations. You know, we'll know partially because of the industry we're in, you know, a a future film project is about four or five years worth of work. The actual production of it is the last sort of 15, 18 months. So, you know, if a if a show's been green-lit, you can say, right, this this cash flow will now run through to how many months? Um and part of the the financial reporting is to say, look, this is how things are looking. Uh you know, there's money coming in or there's not money coming in, we're investing in this. And explaining, as I said earlier, you know, we're investing in, say, a Sean Sheep series. Uh, that means our cash flow is going to dip into a negative for a little while. Fret not, you know, we've got reserves, we've got this, that, and the other, we've got a good uh, you know, uh um overdraft facility at the bank, um, and we can back it up. You know, we've also got property to act as um um what do they call it, equity in it, as it were. So I think that's anticipating and and laying out the expectations. I mean, and we've already said, look, we're we're looking at two years of trading losses in the next couple of years because one, two, three, four things are happening.

SPEAKER_03 41:26

Right.

SPEAKER_02 41:26

The R industry is in in it is in a bit of free fall. Uh, we've got a very big, well, we've got a project which is very this Pokemon thing which has been announced, which we're working on at, and probably, hopefully, there'll be another series, or that's a big project that'll guide us through. There's other stuff coming through. Uh, so it's explaining all that. You know, we have had quite relatively recently, we we had some layoffs, you know. We said actually, we closed down, we had a kind of uh a games department doing kind of video games, and we were doing some work for third-party people as well, and we were trying to develop our own. And uh we actually realized we're never gonna make it's no, they're not not you know, not they're not gonna make the grade, but we're never it's never gonna be a a profit-level uh activity. Right. Simply because the big guys, a bit like Hollywood, you know, that the Grand Theft Auto guys absolutely dominate. And if you're not, if you haven't got you know five billion dollars to spend developing, you're not gonna make it. So we said, This is a reality. We've had a very good go with really lovely guys, bunch of people in there, very imaginative, very creative. And they said, We totally get this. We've seen what the market's doing, we've seen what's happening. We're not getting we you know, we haven't got, we're not really in that big game. So, okay, we'll finish what we're doing, and then we're kind of happy to go and find go and find something else to do. Um, and that, you know, so I think you know, laying those expectations and saying, look, this is this is a picture. Um, and hopefully you can bring people on side. Very sad to see people go. But you often will find actually we can but we can re-employ you in this arena. You know, you you've got a great skill set, it's highly transferable into other other areas. Um and it I think and it's just being honest with people, I think. As early as you can, look, guys, things are looking a little bit shaky. You know, let's just tighten up. Um, you're always tightening up on cash flow and expenditure, um, as every business in a way should be. You know, what and the whole bit the big thing at the moment about AI, people are obviously quite scared about that. So we're kind of looking at that. Um there's a lot of uncertainty. So, but I think I think just being honest, this is the state of play. Everybody else is in the same situation at the moment, you know, we can say in this industry, it it's it will resolve itself, yeah, um, but it'll take a little while for that to happen.

SPEAKER_01 43:35

Yeah, and I can imagine your financial workshops at the moment um in explaining all that are really invaluable because I think that's that's the challenge when you start imparting financial information, even for a firm like ours, where we're financial planners, depending on where you sit in the organization. For some, you know, going through a PL talking about eBit DAR or whatever it might be is is second nature, whereas for others it's much more of a challenge. So I can see the real value in those. I'm interested to Also in partner rep, your partner rep group, because you talk about that being fired up and the good stuff that that's uh delivering in the business. What's the sort of how has that come about? Who leads those? How do you, as you say, you've got to make sure that the subjects coming through partner rep group are really valuable to the business and the future of the business? Um, just maybe just talk a little bit about that. Um, for for those that don't have, we have a partner voice group, probably a very similar group, in terms of the sort of good that's come out of that and how regularly they meet and that sort of thing.

SPEAKER_02 44:33

So I think because it's now almost, well, almost seven years actually. Um, so you know, looking back, the experience that the first group got, um, and there was an issue about, I say, workload. So we've learned what stuff to bat away, what what can be line management or or facilities people, Lina can deal with, um, what you focus on. I think they are um they're all good communicators and quite very passionate about what they actually do for their day job and and and the company, which is great. Um I think they've got very good at filtering out, as it were, the chaff from the the real issues they want to deal with. Um I think they meet, they must, yeah, they meet they they'll meet monthly. Uh there's a call for concerns and issues, um, kind of what they call an agenda setting meeting. Um, and I need to pick up on the on the on the last set of notes, and then they'll feed stuff into the executive board. So I think I'm trying to think why well there's there's an exec board rep and a trustee board rep. So they both so they have people at both both tiers, as it were. So they can get a pretty good picture of the higher level big strategic stuff, the strategic and more tactical stuff at the uh executive board, so they can communicate what that is. Um, I mean, there are times also actually we're talking about this, don't don't distribute this information yet until we're actually sure of it. Sure. We're thinking this out and the other, that kind of stuff. So, and I think that that that openness um and being party to those two, you know, the highest board level, the trustees and then the exec board, um, helps them have um or helps the the partners have confidence that they are hearing, that there is um speaking truth to power, as they say, you know, that they're hearing this stuff, um, and they can report back.

SPEAKER_01 46:31

Thank you. That's really helpful. You you mentioned, I guess, the classic structure of an exec board and the trust board, and probably most businesses, um, yeah, businesses listening to this podcast would have a similar structure. One of the things that we've found um it's not a challenge, but something you need to be really on top of is making sure within the trust board, clearly there are reserve matters that have to be uh ratified and approved. And I chair the main board, and it's the in interplay, I guess, between the exec board and the trust board. And how do you always make sure that matters that are coming through the exec board then filter up to the trust board and getting the sort of cadence of meetings right? We've we've juggled around a little bit with that over time. I think we've we've now settled on a better pattern. But how does that work in your business? How do you make sure that there are things that are going through the exec board in terms of perhaps pre-EO would have just been decisions that would have been signed off where you're suddenly thinking, actually, no, that's an approval matter that needs to go to the trust board. Do they meet quite quickly after the exec board? Is there any advice you'd give in terms of to EO businesses in terms of making that work really efficiently and effectively?

SPEAKER_02 47:39

Yeah, I think I mean, so the trustees we meet quarterly. Right. Uh obviously the exec board meets much more often than that. Um and we get a pretty full set of minutes and reports, departments, often too much, there's often like 60 odd pages of stuff to go through. It's often too much. Um and it's a very good point because we live in a it's quite a fast-moving culture. Something will happen one day, you know, the whole bundle of stuff's happening. Phones, phones or in contracts come in. And I the trustees are obviously focusing on the biggest strategic issues. Um, there's a lot of day-to-day stuff which doesn't really concern them. Um, there's a lot more obviously forward planning, and for example, you know, the impact of AI, how we're going to deal with that, and you know, a working team that's been set up to look at that. Um we've got we've now got uh we replenished our board recently as people have done their terms. So we've now got um Caroline Norberry, who was running Creative England for a long time and is deeply embedded in kind of the media creative sector, guys like Lawrence Green, who came out of the advertising industry industry uh sector, uh, and a guy called um Um Sadiq Patel, who's uh uh um a creative writer storyteller was at the in the BBC for a long time. So we've we've now alongside David Pester, who was who was managing partner at TLT, he's about to hand over his about to hand over his chairmanship to Caroline, having done his stint. So you've got people that are very embedded in the industry at this point. Initially, when we set up the trustee board, we thought we need somebody that can carry, hold the hold the culture at that level. And we brought back a retired, she was a general manager, she was she was with us for a long, long time, and she basically drove, helped drive the culture of the company. She she her role was everything but production, parties and all that kind of stuff. Right. We had Jeremy Dad on it to hold the beacon for the Eoness and get that EO bit in place, and we had and we had David Pester, um and I think that was it, yeah, the three independents. So they've done their their kind of full two terms, and they've kind of okay, we've got that bit done. We are EO, we know the runes, let's bring in some more industry players, high-level industry players. Um, and they ask all the right questions. Uh obviously they they are personally invested in and and uh highly interested and curious about the company. They will also have their own individual conversations with exec board members in terms of their particular deep interest. Um but in a way that it's driven by their curiosity and their experience and their knowledge, which they can bring to bear. Um, and we are as as open as we can be, I think, uh, with that information. But every, you know, they they've all got day jobs to have um keeping up to speed and what what what they don't want to be bothered with and what they really do want to hear. That's sort of so in in a way you will probably to be honest, you probably overwhelm them with a bit too much information. Um, but they can read the headlines, but generally they will take it all on board to keep to keep them. And I think I think you know, one of the things when we were going through putting a structure into place, and I think it was one of the things that Jeremy said, you know, it is all about communication.

SPEAKER_03 51:13

Right.

SPEAKER_02 51:14

All your issues generally come down to how your communication is it is it coming through what you're communicating, and realizing that some people will will will read emails, some people will read WhatsApp, some people go to the internet, some people just need talking to. Yeah, you know, everybody has a slightly different way in which they will really absorb information. It's not we'll put it out of the internet and everybody will know about it. No, it doesn't work like that, sadly, if only that was true. Somebody they might clock it, but they may not actually take it in. So, and that's sort of, you know, I I think any good manager would understand that their team, they're all individuals, they all operate in slightly different ways, and it's not quite a one-size fits-all. So, and and Sean would say that's the biggest thing is that that communication, how you how you make that effective, kind of efficient and clear in the manifold ways in which people take in information. Um, and that's probably that's always going to be the case, I think. Yeah, I mean, one of the things we've done, obviously you've got a lot of people on the studio floor, you may not have access to laptops, how much stuff we can we can we give access to on their mobile phones, all that stuff. So the little apps that we've developed uh to inform them of stuff, you know, using all the modern technology that's available to kind of ease those communication issues. Sure. You know, you've you've got people who can work at home two or three days a week, you've got others that have to be in the studio every day of the week. So, you know, you've got as a lot of companies now have, you've got a kind of split, not everybody's in the in the building at the same time these days. It's a very different model these days.

SPEAKER_01 52:46

Yeah. You you've mentioned um AI a few times, and whilst not necessarily the topic for an EO podcast, I guess it it in a business like Artman, it very much goes to my mind to the sort of culture and the nature of what you do is that sort of tactile work. How how as a business are you looking to embrace AI whilst retaining the I guess the very essence of what Artman stands for in terms of that tactile.

SPEAKER_02 53:16

Yeah, that's right. And I think I think, I mean, it, you know, it's getting it's getting actually quite scary to be honest. This new um uh seed dance software that's come out from China. Um it's a tool. And I think what we'll see in the next year or so is people realizing it it is a tool, and it hasn't really got a great imagination. Um there are administrative aspects to it, which are brilliant, you know, searching databases, all that kind of stuff. It's great from from some points of view. The creative end of it, the generative AI bit, um, we are we so we've set up a working party to look at that, to kind of embrace it, okay, what what what can it do, what can't it do? Because it's always scraping stuff that's already out there. My take is until it really learns, you know, it'll it'll hallucinate, but it comes up with a lot of rubbish. And it's averaging. I often say to people, as somebody said to us, it's applied statistics, it's looking at data and basically averaging that data to come up with some result. It may not be the right result, it may not be truthful uh for a start, it may just be making stuff up. And the nuance, when when you look at, say, what a good actor brings you and what generative AI delivers, that actually pulls apart, you know. It hasn't got, you know, visually lighting and mood and that kind of you know, the stuff you you know, the stuff that you can take on board, but the performance stuff uh isn't in place yet, I think. And that may never happen. And obviously, coming up with original work, well, if it ain't already out there, yeah, it's not gonna find it. And I think that's sort of um my take on it. When you want really original, highly imaginative work, AI is not gonna cut the mustard for you. It is, I mean, it's a uh people some people people at work are very worried about it for all sorts of good reasons. Um, the industry is very worried about it, the stuff we're seeing, but I think that nuance, dealing with that nuance and originality, you know, it's gonna be a little while, a long time. And also, I'm one of the other things is people are using it to turn out an awful lot of rubbish, and of course it's then feeding on that rubbish. So effectively, that applied statistical thing, the rubbish begins to take precedent, and actually a lot of the stuff's gonna be even worse than it's putting out already, simply because it's looking at stuff which isn't great. And that's the weird thing, you know. Um I've got a friend who's who's deep going into it quite deeply, and it's very easy finding out about it. But you have to you have to go in it with your eyes wide open, I think. It have to be it's a bit like when CGI came out, oh, it's the end of the world. No, it's it's a fantastic tool. And there was a confusion between there was a confusion. And we were talking to a journalist the other day, and I realized she she doesn't quite understand the difference between powerful computing stuff and actually generative AI.

SPEAKER_01 56:08

Right.

SPEAKER_02 56:08

She said, well, then what's going to happen when you can put you know plasticine fingerprints on on CGI models? Now I I want to say to her, we've been doing that for years. You know, one of the first things we did when CGI became moderately successful or sophisticated in, well, it would have been in the late 90s, I suppose, a bit earlier, was can we reproduce the chicken run characters in CGI? And actually we did it very, very easily.

SPEAKER_03 56:33

Right.

SPEAKER_02 56:34

Um but that's not in CGI, but that's not AI, you know. No, sure. And that's where people get a bit confused.

SPEAKER_01 56:40

Yeah, I think. Uh in a in a minute, I would I want to sort of take us back to talk about you again in a minute and how how how you now feel how having sort of handed over the business. But is there anything else around the business that you think we should have talked about today, Dave, that we haven't already covered in terms of anything that makes uh just thinking of listeners to the podcast of something that you do in Ardman that you think other EO businesses should should do that, or practices that you've adopted? Or is this just yeah, any conversation that we've sort of missed around the business?

SPEAKER_02 57:16

I don't think I think I think we're still learning about how it all works and what works best. Um that it is, you know, it's an organic, the company's an organic body in many ways. Uh it grows and changes, and uh you kind of have to go with the flow. That flexibility, I think, is one of the things that we've learned. We've and we've always been quite feet of foot. Um in terms of EO structures, um there's always stuff to learn from other companies. And I think uh how again that communication thing, how you keep how you keep the fires burning. I think you know, one of the things we've often said is that those people are on big projects, their kind of loyalty is to that project. It's not actually at that moment in time, it's not necessarily to Argman, it's to we're making this feature film, that's where my head is. And I'm gonna say, yeah, but it's part of a bigger picture here. It's fantastic, you're so dedicated and commissioned, brilliant, it's exactly what we want. And above that is is the the bigger, the bigger um company and the studio and the the employee ownership nature of that. Um and that yeah, that in a way it's a constant drip feed, I think. And I think other people would say that I think any uh you'd hope that people are buying into it, but some will, and some will say it's fine, I'll just come in, do my job and go home again. You want you want them to feel part of it, but as everybody operates a slightly different way. I don't think there's anything that is sort of totally unique about any of our practices, you know, say town halls, everybody's doing those these days, groups, everybody's doing how you get the information, annual bi-annual surveys of how's it going, what are the issues. I mean, and you in a way, all these things that the well-run companies should be doing anyway.

SPEAKER_03 59:07

Yeah, yeah, yeah.

SPEAKER_02 59:08

EO m shines a light on them more than more than other forms of structure. But certainly, if you're a good company in many ways, you want and you want to keep your good people, that's really what it's about is can we keep our our good people and can you keep them happy and and and derive an income for them? Uh that's that's a key part of it, I suppose.

SPEAKER_01 59:29

Yeah. You you've mentioned partner surveys a couple of times and and we we do them as well. Have you noticed an increase in, for example, engagement as a metric since becoming employee-owned, or are there any other um observations in terms of metrics that have where you've seen a significant change as a result of that sort of, I'm now a partner, I'm I'm more an owner of this business?

SPEAKER_02 59:55

I think it's interesting because the the engagement with the survey, those numbers have often gone up and down a bit. Sometimes that's to do with if you've got big projects and you're a lot of freelancers, you know, oh, you know, it's not for me. I think what you will I think what we've observed is that the curiosity becomes deeper. It's you know, it's less about the colour of the laboratory doors, much more about what we know how's the company going to deal with so with AI, or um, are we going to be doing future films, this sort of stuff. So I think those that are engaged are engaged at a probably at a deeper level. Um and surveys are often quite odd in a sense, aren't they? Because they sort of are they truly representative? You have to have a survey and you have to have your ear close to the ground, and you have to listen to those what I call corridor conversations, what's the vibe, what's the real buzz. Um, and is the survey written in such a way that they can really have their voice, you know, all those things. So you have to take it, that's a survey, this is what I'm hearing, this is what I'm feeling. I think in the same way. But I hope, I would hope that that openness is is is the key to getting an honest assessment of are we doing are we doing the right thing for the partners? And that, and I, you know, initially I might remember going to an EOA conference and there was a uh there was a company there called U Union Industries, and it's up in Leeds. Um, lovely company, and they made quite a specialist kind of tarpaulin stuff, and it doesn't that sort of stuff. And when they announced many years ago that they're going employee-owned, the workforce didn't believe it because the tradition, you know, kind of actually said, kind of up in the north, was you've got owners and you've got workers, and that's right. He said, No, no, no, this is for real. Ah, no, that's not no mate. Actually, no, it is for real. We are going to hand over the company to you guys. And it was a very moving sort of presentation because they really, really took it on board. They were so, I suppose, partially shocked and delighted that this was an absolutely honest kind of transaction, and and you know, and the company blossomed. Um, and I thought that's that's a really interesting story. Something something hit the the owners, as it were. They they hadn't really expected uh a kind of pushback. No, no, we don't believe you. Interesting.

SPEAKER_04 1:02:07

Yeah.

SPEAKER_02 1:02:08

So I think there's always a certain amount of you know what's going on. So I think that honesty and openness kind of gets around that. And and that's has to be an ongoing thing, I think.

SPEAKER_01 1:02:19

Yeah. What's the biggest challenge facing Ardman at the moment around being employee-owned as opposed to the general challenges of operating in the current economic environment?

SPEAKER_02 1:02:32

Um, I think the hardest bit, I suppose, with any company is as you know, you go through these economic cycles, is you know, having to lay off people when you don't want to lay off people, and no company really wants to lay off people. Um and how can you mitigate that and how can you actually avoid it? Um, we're in a situation where for all sorts of reasons, COVID thing, finances, finances, uncertainty in America, for example, um, the commissioning of work has slowed down a lot, it's very risk averse. Um we want to push on with stuff, but actually, can we get it funded? So we're looking at a different model of funding again. Um so it's sort of I think that's probably the worst thing. Are we looking at are we looking at and the worst thing are we looking at more redundancies? I I we we we can, you know, we know we can always trade through a lot of c difficulties and complexities, and you know, the company will grow or shrink depending on that. Ideally, you wanted to be either either a steady state or it's gradually, gradually climbing. I think actually one of the things we I was concerned about with EO was this constant, you know, the the one, oh we've got to grow, we've got to grow. And I think actually there's a point where you've probably reached your optimal size, and that actually everybody should be really happy with that. We're in Ponce, we're people all getting a good wage, they're all very happy, brilliant. That's that's kind of what we can carry on at that level. Uh and I think part of this in at the moment is okay, where are we on that that kind of growth stability optimal size uh curve? Um and it probably moves. Your company's probably the same. You know, it goes comes up and down with the with the kind of the economy, really. What's the optimal size to be?

SPEAKER_01 1:04:17

Yeah, uh I guess uh that is one of the big pluses of being an employer and that you don't have Big Brother or a PE house breathing down your neck. And so you can control that pace uh and think about what levels of growth you want to achieve as a business. That's really uh incredibly helpful. Just want to take us almost back to where we started in the conversation and ask you how you feel about the journey you've been on and the letting go process. So this sort of first series of um stake and soul podcasts is really mainly, in the main, designed for leaders and CEOs who are who have who have been a founder of a business and then going through that letting-go process and passing on their baby. I have I have three boys, and and and often people have said to me, you know, how does it feel like when you transition the business and you become employee? And does it feel a bit like handing over your fourth child? I'm just really interested and intrigued to know how you feel now looking back in terms of um, you've been doing this for a lot longer than I've been running Paradigm Norton. Um, are you pleased with what you see? Do you feel it's a good decision? How have you navigated that challenge of probably being in the driving seat as the MD of the business for over 40 years? And suddenly that's not your role. Other people are doing that. I'm just interested in uh how you've coped with that, how you've navigated that, and whether there's any learning for others who have who are thinking, actually, within the next five years, I do want to transition the business. I do want to transition to become employee owned. How's all that going to work? So, just yeah, any any initial thoughts of your own and then tips for others?

SPEAKER_02 1:05:58

Yeah, I think, yeah, the the the trust. In a way, despite all the prep that you've done, and over the years uh preparing the country to be, you know, owned by its its workforce and indeed having to step back, despite all that, it's always a bit of a shock, isn't it? I suppose um I had always said, I remember saying this to a kind of presentation we did when we actually on kind of transition day. And it was a thing I'd learnt um when I was learning to fly gliders, was the um the phrase you have control. And the instructor would say, You have control to the pupil, and people would say, I have control. And it and I thought it's quite a powerful thing. He's trusting me, you have control, there's no doubt about it, it's your aircraft to fly. Um, if all goes wrong, I'm in the back or whatever, pick it up. But actually, you have control, you don't do what you're doing. And I said this at the at this at this gathering. I said, you know, I'll be saying to Sean, you have control, and he will have control. We are trustees in the back seat, and just saying, actually, just in case, we'll keep an eye on this. We're there to help, but actually, we'll trust you to take this. You got this far. We wouldn't be giving you this control unless we trusted you to have control. And that was sort of my my sort of mental state. Keep an eye on it from afar, be there as a trusted partner for advice, whatever. And I have a I still have a monthly update with Sean, um uh, I which I think he appreciates just as a sort of you know, somebody to talk things through. Um, and my own point of view, I think, right, you do have to, you do have to, and something we went through with actually with Jeremy, the clarity of saying it's your company now, I'm not gonna be a backseat driver telling people this and telling people that. You you know, you can keep an eye on you can keep an eye on it and you can make suggestions, but fundamentally it's their responsibility. Having said that, you know, emotionally it's quite difficult, I think. I think Pete's probably finding it probably harder than I am. And part of that, I remember somebody saying at the year of the conference, they said, you know, have something else to do. What you know, you've got to have something to fill your time. And and you know, I've I've been on, I'm I'm still on on various boards, I've been on various boards for a while. So there's something there that you can, you know, throw yourself into a bit more. Um, I'm involved with the I think on the Bristol Bike Project, which we see Rehomes Bikes, and that's that's and that's a co-op, and that's quite interesting in its own right. Um, so you know, and I've always sort of done other things. Uh I've thought, right, okay, I can now do this. And kind of hobbies and things. So having something to fill the time, I think, is is is critical. And I and I think just mentally preparing yourself for saying, right, you know, um, I'm I'm out of here. Watch from afar, give me a shout if you need some advice or chat. Um I go in sporadically. There are areas of it which are obviously of interest. I mean, for example, we've been dealing with the archive uh recently and and helping the Ardel archive team with sorting stuff out and exhibitions, you know, we've got quite a lot happening with the 50th anniversary coming up to Northeast party to all that. Um so you you you know, you can you know, I'm involved in uh areas which I like to be involved in, like some of the projects we've got which are reflecting the history of the company uh I'm involved in. But I think in terms of running running it in the business side of it, it's a different world now to the one I live in. Um in you know, you could see it changing, it's changed a lot over the four four well, it's changed massively over the last 50 years, and it is it's always going to evolve, all sorts of you know, as as as life does and technology evolves. Um and yes, you I it's a bit I suppose it's a bit like grief, isn't it? You never quite anticipate how it's gonna hit you. So you know there'll be times when you think, oh, if only I could do this, that now. And and the bit I miss, I mean to be honest, the bit I miss is being on the studio floor.

SPEAKER_03 1:10:06

Right.

SPEAKER_02 1:10:06

And I said I said to them when we transferred, I said, look, guys, you know, I can you can now bring me in as a freelance DOP if you want. I'm a freelance cameraman, I'm happy to be employed. What I don't want to do is put anybody else out of work. I, you know, I'm I'm kind of getting on a bit, kind of retired, I don't need the money, but if you're short, give me a shout, or project which has your charity project, I'm happy to happily come in um and do some more cinematography for you. Yeah, brilliant. So that's been fun.

SPEAKER_01 1:10:33

Right. You your your answers keep on stimulating additional questions, and you've mentioned that you meet with Sean regularly, I think you said monthly. Um that's a that's something that Philippa and I, when she took over as CEO, we we currently still meet weekly. What's what's the learning for others around that transition and and is there a best practice around frequency to make to make that transition work really effectively? Will you continue to meet Sean on a monthly?

SPEAKER_02 1:11:04

As long as it's helpful for Sean, I think that you know, if it if I'm you know getting stirred in the stage and not helpful, just getting in the way, we'll say forget it, you know, things have moved on. Um part of that is just kind of part of it is he I was much more production focused, he's much more sales focused. So it can help fill in those gaps and the dynamic of productions. You know, he was always a much better deal maker than I was. He cut a lot of those deals, which was which was really, really good. Um, and just I suppose that, you know, in the way that things repeat themselves, you know, there was a kind of pattern to the way the way history rolls out in a sense. Um, or things that we might have tried in the past that didn't work, things that we did try, and also just a sounding board for him. Uh but but my take is you know, I often say, you know, as long as it's helpful, Sean, I'm here. If it's not helpful, just getting in the way of being a pain in the arse. You know, we don't we don't need to do this. Um call me when, you know, call me when you need me. But I think he appreciates at the moment he still appreciates um that support. Apart from anything else, it's moral support, isn't it? Yeah, sure.

SPEAKER_01 1:12:12

Yeah. No, really important.

SPEAKER_02 1:12:14

Because I think what he's found, it's quite a lonely role being at the top, despite the fact you've got your executive board, and you know, I would say the same thing. Yes, it is. You it it's sort of it's not that you're on your own, but you've got a lot on your plate. Yeah, you've got all up there to help you. But actually, it's a curious it's a it's a curious expression, that sort of company loneliness, because they say you're surrounded by people, but actually in the way that people are looking to you to solve an awful lot of problems, um, and you'll find your your best way through it. Um but it but it but it is you know it's a sort of soulful role, I think, to play.

SPEAKER_01 1:12:54

Sure. We're coming towards the end of the podcast, and um there's a tradition on the Stake and Soul podcast that I just asked to ask a few quick fire rapid questions. So the first one is um finish this sentence. Um employee ownership is the only way forward. Excellent. Uh my biggest EO surprise was my biggest EO surprise.

SPEAKER_02 1:13:18

Uh what did I say? Um Oh, I think my big my biggest EO surprise was the reaction from the other studios put in the States on it. That that we didn't we really didn't anticipate that. And I thought that that was really both delightful and very, very surprising.

SPEAKER_01 1:13:34

Uh one book every um aspiring owner should read, typically a business book. You've already mentioned one.

SPEAKER_02 1:13:40

So this is a good one. I mean, there were others, but this one I think is it's just really interesting. Um just remind us of that one, Dave. It's called Beyond the Corporation by David Eerdle. Beyond the Corporation, Humanity Working. And I think because it's a very personal journey that David Eerdle went on, that's I think why it sort of hits home quite well. Yeah.

SPEAKER_01 1:14:01

Only on the first couple of chapters on that one, but very much enjoying it. So we'll put that in the show notes. And then we always feel uh finished with And of course the other one, more particularly, is this one. Okay. Oh yes.

SPEAKER_02 1:14:12

Which is sort of pot of history of hard man.

SPEAKER_01 1:14:14

Yes. Yeah. Absolutely right. Yeah. So just to finish off, we have a CEO confessional. Um, so that's where ideally you would share a moment of honesty. So that's a sort of a time when you made a significant mistake, a decision uh you regret, a moment of self-doubt. So that's the moment of honesty. Uh it could be an unfiltered story, um, different a difficult setback in the business, time when you had to fire someone, or a secret struggle. So that's something typically like and a sort of imposter syndrome or balancing work and family. So anything particularly spring to mind there, Dave?

SPEAKER_02 1:14:52

Oh God, how long have you got? Um, I think the one that came to mind, I think goes a long goes back a long, long time when we had uh we had made Chicken Run and First Chicken Run, and we were developing a film called Tortoise and Hair, and for all sorts of reasons, um we couldn't put it together. But we'd started shooting some stuff and built quite a lot of sets for it. And eventually we pulled the plug on it, and I think looking back, we should have been able to sort out that script. I think if I had been firmer with it and a little bit more on the case, I probably would have said let's let's clear up this sort of slightly muddled story, let's be very clear about what the stories we're trying to tell. It's a complicated story, but I think we should have been able to put it out of the fire. And what it did was I think this we were with DreamWorks at the time was disappointing DreamWorks, and obviously they put quite a chunk of money into it, and we had to lay off an awful lot of a crew after that, and it was it was a as a base sound rather disappointing period, and actually we lost a lot of goodwill with our crew, which took a while to pull back up simply because our development model of developing scripts wasn't really strong enough uh to see this project. It's it's it's I don't know, I don't know how to describe it. It was it it had too many legs on it, is how I describe it. It's just a bit too complicated. I think looking back, I think there was a way we could have cut through it, we should have been able to do it, and we could have done it, I think. That that's kind of kind of one of the big ones.

SPEAKER_01 1:16:37

Lovely. I've so enjoyed our conversation. Um thanks for all your wisdom. Um 50 or so years of accumulated knowledge culminating in you being able to um preserve that legacy, Hugh, Dave, and Nick, which I think is wonderful. So thank you for um sharing your story, the Ardman story too. Uh maybe we should just quickly mention your VA um exhibition, because I'm sure a lot of people listening to this podcast will be uh huge Ardman fans as I am. So, yeah, just quickly one minute on the VA.

SPEAKER_02 1:17:11

So it's a very it's a it's a child focused exhibition at the Young VA in in Bethnal Green, looking at how we make our work, um, how we come up with stories, and it's a very kind of hands-on thing. It's great fun, it's a lovely, it's a lovely uh museum. I wouldn't will you call it a museum? It's a kind of activity centre really for young people and kids. Um and the exhibition is is a delight to behold. It's just a lovely place. And I think it's time tickets, so you need to you need to buy tickets in advance, um, get in there quick, but I think uh you won't be disappointed.

SPEAKER_01 1:17:44

Amazing. Thank you so much for joining me today. Really appreciate your time. I hope you have enjoyed today's episode of State Consult. If I've piqued your interest and you'd like to hear more of our journey, or you're interested in finding out more about becoming an employee end, do reach out to me on LinkedIn.

SPEAKER_00 1:18:03

This podcast is intended to be of a general nature, will not be suitable for everyone, and should not be treated as a specific recommendation. We recommend taking professional advice before entering into any obligation or transaction. Paradigm Norton Financial Planning Limited is authorized and regulated by the Financial Conduct Authority.