Ethical Companies, M&S and Plan A

July 9, 2008

Despite its recent problems, M&S retains a reputation as a ‘green’ company. We evaluate this ahead of today’s general meeting

Leaders we deserve subscribers will remember its brilliant leadership statement of commitment to a green agenda: ‘There is no plan B’.

Katie Stafford, Sustainable Development Manager at Marks & Spencer outlined it to The Oxford-Achilles Working Group on Corporate Social Responsibility last year [11th May 2007].

Marks & Spencer has announced ‘Plan A’, a business-wide £200m ‘eco-plan’ which will have an impact on every part of M&S’ operations over the next five years. The 100-point plan means that by 2012 M&S will:

• become carbon neutral;
• send no waste to landfill;
• extend sustainable sourcing
• set new standards in ethical trading; and
• help customers and employees live a healthier lifestyle

The green agenda at M&S

Stuart Rose arrived as a major reinforcement in the company’s battle to fight off Philip Green’s bid. But the company was already being credited with (and profiting from) a green profile.

Marks & Spencer’s new chief executive took time out from fighting off takeover bids and accusations of insider share-dealing to pick up Business in the Community’s Company of the Year award from the Prince of Wales in London last night. The awards were judged by more than 100 assessors over 12 months and M&S impressed them with its integration of a set of values into its business practices.

It is not the retailer’s first such recognition. The company has been ranked No 1 by Greenpeace on its use of non-genetically-modified foods, ranked as the top food retailer by Friends of the Earth on pesticide reduction, and No 1 by the Marine Conservation Society on fish sourcing and by Accountability/Insight Investment on labour standards. These ratings have contributed to M&S being named as the Dow Jones Sustainability Index’s most sustainable retailer in the world for the past two years.

Mark Goyder, director of Tomorrow’s Company, said: “Corporate responsibility is one essential building block of enduring shareholder value. I hope M&S’s outstanding record as a responsible company will be properly valued as part of the overall decision shareholders now have to make about its future.”

Rowland Hill, M&S’s corporate social responsibility executive, said the current management was fully committed to corporate responsibility. He said: “We’re very comfortable with Stuart Rose’s approach to corporate responsibility. We’ve had a chance to re-assess where we are and this has resulted in the re-endorsement of many budgets. Philip Green’s record with other retailers would make us, in the CSR department, less confident about the future should his attempted bid succeed.”

Our financialization commentator suggested that longer-term this will sustain the company, telling Leaders we deserve

In the current bear market and the economic environment I do not think that the City expects spectacular shareholder value from the retailers. So, the initiatives with clear story lines that respond to the current trends- 100-point 5-year plan with £200 million spending to become a green leader in retailing- can go well with the stock market because they are full of purpose and intent. In a financialized economy the job of CEOs also involves creating convincing corporate narratives for the stock market to support the share price.


M&S shareholders resist Chairman Rose

July 8, 2008

Big Investors at M&S are upset over Stuart Rose being given combined roles of chief executive and executive chairman. Shares have plummeted after the retailer revealed a drop in annual like-for-like sales. Rose anticipates two tough years ahead

In advance of the general meeting [Wednesday, July 9th 2008] City rumours pointed to two big investment funds (Schroders and Legal & General) as leading a shareholder rebellion.

Stuart Rose

As a corporate leader Rose ticks all the boxes. He came in to M&S as a white knight to protect the decline in the company’s fortunes, which had attracted unwelcome advances from the buccaneering Philip Green. In a few years he has justified the rejection of Green’s offer, with a turnaround in trading figures, and climb in share-price.

He was increasingly noted as a role model of a dynamic business leader. A recent award from The World Leadership Forum was based on a poll of chief executives of nearly a thousand British businesses. The clear winner was Stuart Rose.

Malcolm Turner, President of the World Leadership Forum said:

“We are delighted to announce that Stuart Rose is the winner of our Business Leader of the Year Award. He is plainly Britain’s most admired businessman, having dramatically improved Marks & Spencer’s fortunes while operating in a notoriously competitive and fickle market. We organised this award because we think that recent television programmes such as ‘The Apprentice’, or ‘Trouble at the Top’, bear little relation to the reality of corporate life. Worse still they often give young people, at the outset of their careers, an image of business which is inaccurate and damaging. We believe that highlighting the work of the best business leaders, and the best management practice, will pay dividends to the wider business world and give young people a less distorted view of commerce.”

Appointed Chief Executive in May 2004, Stuart Rose first joined Marks & Spencer in 1972. He moved to the Burton Group in 1989, becoming Chief Executive of the Multiples Division in 1994. He joined Argos plc in 1997 as Chief Executive to defend the takeover bid from GUS. He then became Chief Executive of Booker plc, which merged with Iceland plc in 2000. He joined Arcadia Group plc as Chief Executive and left in 2002 following its acquisition.

I’ve blogged on Rose a bit, but not in detail. In general he has avoided the leadership pitfalls that have been examined in Leaders we deserve.

Robert Peston neatly skewers British business leaders for avoiding the risks of exposure in tough media interviews. Stuart Rose has been an exception to the general point being made by Peston. He projects calm, thoughtfulness, and a capacity to hold on the practicalities of a story while retaining a sense of long-term corporate objectives.

But then things started turning nasty

In April [2008] Leaders we deserve reported on the decision by M&S to appoint Sir Stuart to the dual roles of CEO and Chairman. We picked up the possible problems of governance involved. The message released by outgoing Chairman Lord Burns suggested that the company was anticipating problems from its shareholders.

He was to be proved right

The reactions were largely negative, although comments suggested that the institutional shareholders might want to find some way of expressing displeasure that fell short of censoring Lord Burns or Stuart Rose.

What’s going on?

My question as the company faces pressure from its shareholders is: what’s going on?

We could assume that the institutional shareholders are motivated by concerns over corporate social responsibilities. If the customary city mindset still holds, that only seems likely where CRS aligns with self-interest.

In other words, the real goals of the shareholders are wrapped up in the rhetoric of CSR.

In which case, this another game of strategic chess.

‘We like you as a leader, Sir Stuart, but not if you weaken our influence over decisions you might make which might damage our investment value in M&S in the short as well as the long term’.

Before the battle

A day before the battle, M&S shares had slumped and then rallied slightly in modest levels of trading.


Philip Hammond MP, Civil Servant Bonuses, and Glass Houses

July 6, 2008

Philip Hammond, MP attacks bonuses of senior civil servants. The News of the World attacks Mr Hammond for concealing bonuses. Stone throwing and glass houses comes to mind

Philip Hammond has been diligently pursuing his job as shadow Treasury secretary

He recently attacked the bonuses reported to have been paid to senior civil servants [July 5th 2008].

The BBC reported Mr Hammond as saying

“Many families who are finding themselves squeezed between stagnant earnings and soaring living costs will be horrified by the use of £128m of taxpayers’ money to pay bonuses to civil servants ..With government failing on so many fronts, this looks like a ‘something for nothing’ culture.”

The attack felt rather righteously indignant, so I delved more into Mr. Hammond’s political career and interests. A bright, youngish figure with an earlier career in industry. An enthusiastic seeker after truth via written questions.

Overall, a consistent picture of someone positioned on what used to be called the right-wing of the party. Which still gave something of a false note to his current foray into the headlines.

A hair-shirt figure?
His recorded expenses claimed were those of a parsimonious MP. I decided that here was a hair-shirt figure, careful to avoid inflated expense claims. Admirably suited to attack others in such matters.

That was my conclusion, until I came across another recent storyabout Philip Hammond. Two weeks ago, News of the World reporters Ian Kirby and Alex Clarke splashed with:

One of David Cameron’s most senior Shadow Cabinet colleagues has received nearly £3 million without declaring it to Parliament.
The News of the World can reveal how Shadow Chief Secretary to the Treasury Philip Hammond banked the massive sum from a property company he owns. But he failed to tell the official Register of Members’ Interests.

Hammond, who is Tory Chancellor George Osborne’s right-hand man, used a technical loophole to avoid making the payout public.
Yet only on Friday he accused Labour ministers of “living on a different planet from ordinary hard-working families struggling with soaring living costs.”

Meanwhile, Hammond has been quietly banking £2,741,788 without telling the Commons. And last night a Shadow Cabinet member admitted: “This is politically damaging for us. “Millionaires can’t preach about how poor ordinary people are. David Cameron needs this like a hole in the head—it brings back the whole idea of patronizing, millionaire Tories who are only out for themselves.”

Which just goes to show

Which just goes to show that Mr. Hammond might be better in another role, in which he would not risk his remarks being taking hostages to fortune. Shadow minister for enterprise perhaps?

Acknowledgements

Tom Watson MP, whose blog drew attention to less transparent aspects of Mr. Hammond’s activities.


International Conference Highlights Creative Leadership

July 3, 2008

An international conference has highlighted the importance of creative leadership for dealing with the most urgent problems of the age

Buffalo, New York State was the venue in May 2008 for a conference on Creativity and Innovation Management, Integrating Inquiry and Action.

Keynote speakers highlighted growing interest in creative leadership.

Two for One

The Conference brought together two overlapping networks of researchers and practitioners. The International Center for Studies in Creativity (ICSC), at State University of New York, Buffalo organized the main event, with main sponsors IBM and Fisher Price.

Prior to the main conference, Creativity and Innovation Management Journal (Wiley-Blackwell) held its second community meeting to award its best paper prizes for 2006 and 2007.

The expressed aim of the CIM journal is to

“bridge the gap between theory and practice of organizing imagination and innovation.”

The Best Paper Awards

The prizes for best papers were selected on votes cast by the members of the editorial board of the CIM journal, and awarded by co-founder Susan Moger of Manchester Business School.

The 2006 award went to a team of researchers from the conference host institute, ICSC. The paper traced the development of the Parnes-Osborn system of creative problem-solving to its recent format as a flexible and process-oriented system

The 2007 prize went to a team from the University of Berlin. In a carefully analysed study, the work explored innovation roles in successful highly innovative product-development projects.

Each prize-winning paper offered insights into the contribution of creative leadership in change processes.

Keynote Speakers Highlight Creative Leadership

Creative leadership was a recurrent theme within the meetings. In the overview presentation on Creativity Past Present and Future, Tudor Rickards of Manchester Business School explored the origins of creativity beliefs in cultural myths, and how they developed. Drawing on contemporary examples, he illustrated how visionary and political leadership has contributed to the emergence of the creativity industries, as well as to the transformation of cultural and political systems.

He drew attention to the EEC plans for making 2009 the year of creativity and innovation, and suggested that this might give impetus to a global creativity network.

Subsequent speakers also explored the theme of creative leadership. Michael Mumford warned against mystifying the concept. Professor Mumford pointed to empirical evidence that creative results are crucially influenced by the leader who defines a viable mission in clear terms, encourages developmental learning, assembling and building effective teams, and ensuring efficient planning and implementation.

The two invited business leaders were Casimir DeCusatis of IBM’s Systems and Technology Group, and Miriam Kelley, Vice President for Design from Fisher-Price Toys.

Dr DeCusatis reported on an innovation study conducted within IBM and in particular highlighted distinctions among different innovation teams. His paper appears in the June 2008 issue of CIM journal.

Miriam Kelley examined the strategies deployed at Fisher-Price Toys facilitate fresh ideas and innovation, such as benchmarking across industries, creating an executive position focused strictly on innovation, and introducing deliberate creative processes.

Leaders we deserve has drawn attention to the need for more studies of creative leaders and the processes of creative leadership.

This conference represents a step in the right direction.