Interview with Alan Donnelly, Executive Chairman of Sovereign Strategy

Alan Donnelly turned his back on his job as Leader of the Labour Party in the European Parliament to fulfil a dream to set up his own public affairs business. He told Public Affairs News editor Jolyon Kimble about starting a PA practice from nothing, turning away clients, and dealing with the dangerous beasts in the F1 jungle

The following is reproduced by kind permission from 
Public Affairs News

How did you get started in public affairs?

I announced I would be standing down as leader of the Labour MEPs in the European Parliament in December 1999. I was fed up of travelling to Strasbourg, which is a nightmare to reach, especially if you represent a constituency outside London. I’d always wanted to set up my own company, that was another big motivation to leave politics, and eventually I decided to bite the bullet and set up Sovereign Strategy. I’d been on the receiving end of lobbying for 11 years, I’d seen the good approaches and the bad ones, and over time I’d developed my own ideas about how I’d do it.

With Sovereign I wanted to put into practice some of my ideas about public affairs. For example, a large part of advising companies, whether those companies are dealing with regulators or governments, is working out what their message should be. A lot of public affairs lobbying presented a confused message that was inappropriate and badly timed. I’d also observed that it’s better to deal with someone from the company itself, rather than a lobbyist acting on their behalf. Not all my experiences were negative, and I’d dealt with some very able and professional organisations, but I thought that I had something to contribute to the practice of lobbying.

With Sovereign we tried to shape an offer that was based on direct experience. One of the things we do, whether it’s dealing with the FSA or the Malaysian government, is invest a lot of time in working out exactly what it is a client is trying to achieve. We work on the message very clearly, and we make sure we identify someone within an organisation who has the capacity to explain that to a regulator, civil servant, government minister or journalist. We train them up until they are well honed, and we often attend meetings with our clients, although they do the talking. It’s far more convincing if the representative of the company is putting the case. As a rule we try and make sure that happens, we try and build someone into the ‘face’ of an organisation. I think that’s a wider trend now.

We also have to be certain before we take a client that the board of a company is completely behind the project. The in-house government affairs people may have a particular expertise, but if you’re trying to work out a message you’ve got to make sure that there’s at least one person at board level directly involved. It can be very damaging when you’re working on behalf of an organisation, and then you find subsequently that the organisation has problems with what you’re trying to do. We wouldn’t do it or let it happen, but I’ve been on the receiving end of that as a politician. We always tell new clients that we want to have a relationship with the CEO and senior board members. You have to be sure the key decision makers completely support your efforts.

We don’t do traditional advertising, we’ve found that word of mouth is the best way to get new business. Virtually all of our clients are referrals from other people. The company has grown a lot over the previous five years, we started off with a £40,000 contract, operating from a converted bathroom in my house in South Shields, and now we’ve got offices in Brussels and Trafalgar Square, as well as one in the north east. We’re expanding our office in Brussels and we have a new affiliate in the USA.

What trends, apart from making sure the organisation has a voice and a face, have you noticed over the past five years?

At the high-value end of the public affairs spectrum people no longer want bog-standard lobbying. It’s quite a different service you have to offer now. Our work is largely based around reputation management. Often we’ll work with clients who believe that key decisions-makers have an erroneous impression of their business, and before we try and influence a particular policy issue, we have to invest a lot of time re-introducing those decision-makers to what the company really stands for. That’s grown over the last five years.

In Brussels there are a lot of law firms who are getting into public affairs. I’m not sure how successful that is going to be – Brussels is a very political environment, and law firms naturally tend to approach issues with a legal mindset. That’s why I think public affairs companies and individuals with political experience will continue to dominate the marketplace. It’s often said in Brussels that lawyers would prefer a dispute to continue because they get more money. I don’t know if that’s true but it’s a common perception.

I think niche businesses, and I imagine we would fall into that category, will find a lot of work out there. But you have to choose how you want to engage with the market. We generally get involved in longer term relationships with clients. When you look at some of the big PA companies some are obviously highly professional, but some have become very generic. Consequently those companies that have recognised this have tried to divest themselves of some of their capabilities.

What’s the size of your operation?

We have 20 full-time staff and a series of advisers. We’ve built up a group of experts who specialise in different fields. Then we have a series of associate directors who work with us on specific accounts. On top of that, we have our non-executive directors who bring their sage advice and demonstrate that the business is being run properly. It’s very important when you’re managing someone else’s reputation that you can show your reputation is pretty sound. We’re constantly looking for expertise that will apply to a particular client. Sport has been a very big sector for us.

Formula One, a client of yours, is embroiled in a row over the Melbourne Grand Prix, and at the same time you are helping Melbourne’s Commonwealth Games bid. Is that a conflict of interest?

You do have to be very sensitive to what you’re doing. There’s no conflict between the advice we give to the Chairman of the Commonwealth Games Committee in Melbourne and what we do for Formula One. However, there are situations, and I’m sure all PA companies have faced this, where you have to turn down clients. There are clients I would have loved to work for but once you choose to work for one client in a sector you can’t then begin to represent their competitors. Some companies say they can have Chinese walls, but we’re not big enough to go down that route.

Is this more challenging than politics?

I had a high profile, successful political career and some people couldn’t understand why I wanted to leave. But I was sure it was the right thing to do, even though I soon found that setting up a business is damned hard work. It’s enormously satisfying to make a success of it. Lots of politicians, and I used to be one of them, speak at Business Forum events and tell people how to run their businesses. Now when I see people I may have lectured I start by apologising to them. I think that politics can be a bit crass in telling businesses what is best for them.

If you’re an ex-politician and you want to set up your own business you can’t have any ego. It’s a privileged life to be an elected politician, and that all ends in an instant when you lose your seat or stand down. It’s a real challenge, and it totally opened my eyes. Working on German reunification in Europe in the 1990s was an incredible, historic experience, but this is just as rewarding. I went to the first Chinese grand prix last year, after being at the ground breaking ceremony on open fields just two years before. Formula One is a tremendously political environment, so I still get to use all my political acumen.

Formula One

What’s your official involvement with Bernie Ecclestone (Chief Executive, Formula One Management Ltd), and Max Mosley (President, Federation Internationale De l’Automobile), and how’s life at the centre of F1 politics?

I’m the official representative for Max to Formula One. I go to a lot of the grands prix, and basically my job is to brief Max on the politics in the paddock, and, as I say, that’s probably more political than most national parliaments. I also advise him on the politics in the host country and how that affects the races. The FIA President meets the top ministers from the countries where F1 lands. We also give the FIA a full government and European affairs service.

One of the issues that hasn’t been resolved is the European Arrest Warrant. When Ayrton Senna died in a Williams in 1994, a magistrate issued arrest warrants for Frank Williams and other senior figures in the Williams Grand Prix team. Those warrants were never executed in Britain, but with the European arrest warrant there could be fast-track arrests and deportations for team managers in the event of an accident. Because F1 is such a high-profile sport you do come across local magistrates looking to make a name for themselves.

What do you think about the future of F1 in this country? It’s an issue that has become increasingly politicised.

First of all I think the combination of Bernie Ecclestone and Max Mosley has put the sport where it is today. Bernie takes care of the commercial side and Max looks after the legislative side. They’ve made Formula One into the most watched sporting event in the world, behind the Olympic Games and the World Cup, but the difference is F1 stages a grand prix every two weeks. It’s a hugely attractive and rewarding sport, and new markets are opening up all the time, particularly in Asia. There’s a demand for grands prix in all parts of the world. Turkey will stage its first race later this year.

In terms of the British Grand Prix there was a feeling amongst the “old guard” in British motor racing that Formula One was a British sport and Britain automatically deserved a race. But when the grand prix teams are getting used to the fantastic facilities in Kuala Lumpar and Shanghai, should they still have to blast around dirty old second world war bases? There’s a question there. You wouldn’t expect the Olympic Games to be staged in a collapsing amphitheatre. The Olympics has a status, and the same is true of Formula One.

Do you think the main sticking point was how the British GP was run, and the updating of the pit complexes?

I think the BRDC (the British Racing Drivers’ Club) understands that now, and the facilities will be upgraded. Richard Caborn, the sports minister, has been fantastically supportive of the project. He spent a lot of time brokering agreements between different people. The East Midlands Development Agency has also been wonderful in terms of viewing Silverstone as a potential centre of excellence. We’re pretty hopeful that the message we’ve tried to put across, that Silverstone needs development, has been understood.

There’s nowhere else the race could be staged is there? Brands Hatch is too small and nowhere else in the UK is suitable is it?

There’s always the idea of a London Grand Prix. It would be magnificent to see 900bhp cars flying around Trafalgar Square. Bernie is the consummate ringmaster, and he’s got such an incredible vision for the sport, I’d say nothing is impossible when he puts his mind to it. I was in Albert Park recently (for the opening race of the Formula Once season in Melbourne, Australia) and for 49 weeks of the year that’s a public park. But for three weeks it looks just like a permanent circuit, not a temporary structure. It wouldn’t be impossible to stage a London Grand Prix but you can guarantee there would be resistance in some quarters.

It can be tough to get things done in F1. Last year Max pushed through rule changes to make the sport more affordable and avoid an F1 ‘arms race’. It’s difficult to impose changes while trying to preserve grand prix racing as a voluntary sport that is run as much by the teams as the governing bodies. But as long as Bernie and Max are together I think the equilibrium will continue.

Biography

Alan Donnelly was born on 16th July 1957 in Jarrow.

He was first elected to the European Parliament in 1989, representing the constituency of Tyne and Wear. He was re-elected to a second term in 1994 and finally elected to represent the North East of England in 1999. Until his retirement from the European Parliament in January 2000 he was Leader of the Labour Party in Europe, a post he held for two years.

He specialised in economic, monetary and industrial affairs throughout his parliamentary career, authoring many specialist reports on EMU, information technology and maritime policy. For five years he was the Parliament’s spokesperson on the automobile industry. For seven years, Alan chaired the European Parliament’s Committee for Relations with the United States Congress and was actively involved in creating the Transatlantic Business Dialogue. In this context, he organised and Chaired the Transatlantic Automobile Industry Forum on international regulatory harmonisation in Washington DC.

He led the European Parliamentary Delegation to the special G7 summit on the development of the global information society, sharing the platform with the US Vice-President, Al Gore. He is a founding member of the London School of Economics Observatory on the Information Society.

Following his retirement the British Prime Minister, the Rt Hon Tony Blair MP, praised his “talent and drive” and said he had been an “outstanding member of Labour’s team in Europe”.