In an earlier blog Neil Gibb reflected on the sacking of David Moyes as Manager for Manchester United and what that said about inadequate preparation in succession planning. Yesterday the Evening Standard here in London quoted a city analyst regarding the sacking of the Tesco boss who succeeded the vastly successful Terry Leahy: ‘Like David Moyes, Phil Clarke found following a highly respected, long serving chief executive a bit of a challenge..’
Tesco have just under a third of the UK groceries market with a turnover of £63.5bn and an operating profit of £2.6bn – nice business! But they have not only peaked but are now on the downward curve (two years ago operating profit was over £4bn).
Like Leahy, (and unlike most FTSE CEOs) Clarke worked his way up from the bottom, with a one company career. So at first sight it might seem that lack of a wider market perspective is what did for him? Yet Leahy with a similar experience made Tescos a successful behemoth, principally by knowing his customers really, really well – Tescos were ahead in the sector in using their clubcard and other data to tune their offering to what customers were wanting. So why wouldn’t that keep working?
I have no idea about Philip Clarke the person and whether he was a good leader or not from his people’s perspective, because Tescos situation points up two leadership challenges that are immense and require great leadership:
1. The moment you succeed is the moment to reinvent
Corporate history is strewn with Tescos – companies that grew very large and very successful and then proved very resistant to change and so, inevitably, declined. At least the new man is from Unilever – a business that is a global player that has reinvented itself several times over a long history of success. And there is the key – nothing less than root and branch re-thinking will do but that is really hard – after all you are dismantling success.
2. Things Change – Expect it
Post financial crash it had become evident that customers in this sector have become very choosy indeed with some opting for quality first with success for Waitrose and Marks and Spencer and others opting for price, benefitting the discounters Aldi and Lidl. Tesco is caught in the mid ground without a story that works as to why you should choose us first. This is particularly painful for a company that thrived by understanding customers. Again this points to a need for a fundamental re-think: what do Tescos want to be in this new future? What promise do they want to make and to whom? How will this result in financial success? Best wishes Dave Lewis – it can be done!
The leadership capability that you bring from your old experience to a new challenge is never all that is required: you will have to reinvent yourself, you will have to listen very carefully – for customers and for what your organisation says about them as a starter – and then create a new future with which you, your people, your board and your customers, can identify.
The leadership capability that you bring from your old experience to a new challenge is never all that is required: you will have to reinvent yourself, you will have to listen very carefully – for customers and for what your organisation says about them as a starter – and then create a new future with which you, your people, your board and your customers, can identify