WES: Ian Gorham on strategy, execution, and marginal gains

In Warwick Economics Summit’s second Presents Event of the year, Ian Gorham, the former chief executive of Hargreaves Lansdown, a FTSE-listed firm managing £100 billion, answered questions about his career, and advised university students.  

One of the most significant and interesting topics Gorham covered was the changes he made at Hargreaves Lansdown between 2010 and 2017. Before he was CEO, he was Chief Operating Officer (COO) and learned of his promotion six months beforehand. He had “never done anything” like being a CEO before, so he sat in and listened to every part of the business to truly understand its operations.   

Doing this allowed Gorham to develop a greater understanding and to determine whether employees were doing things “because they always had” or for a valid reason. For example, the finance department invested 20% in long-term bonds and 80% in short-term bonds. Gorham was unsure whether this was the optimal configuration, leading to further analysis in which the department began investing 56% in long-term bonds. This decision alone earned the company an additional £9 million per year. Gorham remarked that he felt like he earned his keep that day.  

Testing what actually works rather than relying on assumptions is essential for achieving marginal gains and more

However, he shared a distinctly different case in which he questioned the company’s policy on rewarding referrals. When a client referred a new customer, they received a pen. Gorham believed this to be underwhelming and tacky, believing something more formal and in line with being a financial firm would make greater sense. For example, rewarding referrals with monetary incentives. Yet the employees had already tried this and various other methods, only to find that a pen was somehow twice as likely to encourage referrals.  

To this day, Gorham isn’t quite sure why pens work so well. This is an example of business where things that may seem suboptimal are surprisingly effective. There is a reason why at every society fair, people always give society-branded pens.  

This provides a lesson in business: testing what actually works rather than relying on assumptions is essential for achieving marginal gains and more. A key technique for this is AB testing (or split testing), a method for comparing different versions of the same thing to see if there is a difference in performance. Gorham discussed how they showed different websites to customers, making minor adjustments to see how it changes key indicators. They moved the postcode box an inch closer to the middle of the site, which led to a 15% increase in ISA sign-ups alone. Such a small, seemingly minor change had a drastic effect on the business.   

Another example of this can be seen in the NHS, where they sent out letters detailing the ‘sunk cost’ of the appointments, explaining how the money has already been allocated and will be wasted if not used. This increased the number of people who attended their standard health check (offered every five years between the ages of 40 and 74) by 4.3% alone.  

There are many cases of CEOs driving change and companies embracing techniques like AB testing to boost performance. However, Ian Gorham also believes that “a lot of CEOs are incompetent”, even in some “really quite big businesses”. He said that many CEOs were good at talking to investors but struggled to “execute on the ground, making [the business] profitable”. He reminisced about a story in which a CEO questioned him about how Hargreaves Lansdown’s cost ratios were lower than theirs, ironically, in a massive, lavish, whole-floor office dedicated solely to the CEO.   

However, despite Gorham’s successes, “things do go wrong from time to time”. He claims that you can’t be successful without the bad days, as they teach you what to do, and what to avoid in the future.  

When he was an accountant, he had an important meeting with a client. On his journey there, a loose stone flew up from the road, smashing his windscreen. Luckily, he didn’t have to journey much more, but he described himself as “in shock”, which led to the clients leaving “terrible” feedback on the meeting. This mistake, or rather experience, made him promise himself he’d never go to a meeting when he was in a bad state, because it could seriously affect his performance. It was preferable to delay meetings than to deliver one poorly.  

Another word of advice from Ian Gorham was that the two keys to a successful business are ideas and execution. He said that Hargreaves Lansdown didn’t come up with any crazy new ideas but “did what we did really well”. Gorham described how Uber’s premise — essentially a taxi company — was nothing new. Yet, Uber executed their idea brilliantly, adding features which allowed customers to see the car on the map, and to pay before the ride is finished, ensuring people pay.  

He believes that business is like a great democracy. If you have skills, you can succeed in business.  

Gorham also described his career path. He has only ever applied for one job, earning his role as COO at Hargreaves Lansdown through a “row” with the then-CEO, Peter Hargreaves, in the building’s central atrium. Peter called him three years after the incident, claiming he was one of the few people willing to tell him something he didn’t want to hear. Before becoming COO, he was a chartered accountant, mainly because around 30-40% of those at the top of business had a background in it, and he didn’t know what else to do.  

Whilst he attributed much of his lack of application-sending to luck and circumstance, he believes that “business is like a great democracy”. If you have skills, you can succeed in business.  

Advising university students, he said that meeting people from many places with different perspectives was “way more valuable than anything” he learnt in a lecture theatre, as university opened his eyes to the wider world. This was especially the case as he lived on the Isle of Man when he was younger. He also said, “life becomes very busy,” which means university is a “great opportunity to think about yourself”. This includes what you want in life, and how you can be satisfied.  

What really stood out to me during the talk was how much impact careful decision-making, marginal gains, and attention to detail can have on a business. Learning how a CEO balances strategy, adaptability, and execution has made me rethink my ambitions. Rather than chasing the economics student’s holy grail of investment banking, I’ve realised that leading teams and shaping strategy is where real value, and real economies, are built.