Leadership succession: Tony Blair, Terry Leahy, Alex Ferguson, Lord Browne … and Steve Ballmer

October 7, 2013

Leaders hailed as the greatest by direct comparison with their contemporaries often leave a legacy that is tough for a successor to deal with

This point was examined recently by journalist Chris Blackhurst [October 3rd 2013] in The Independent. He chose four towering figures from recent years, from politics, business, and sport.

He takes as his thesis that succeeding an influential leader is tough. His point is that the departure may be made with more concern by the leader for legacy than for the organisation’s longer term well-being.

The trigger

The article was triggered by the departure of Sir Alex Ferguson of Manchester United football club which was followed by a poor start to the season for the new manager David Moyes. Moyes was very much Ferguson’s chosen successor, one of clearest examples available of a leader’s critical decision over succession.

At Old Trafford, David Moyes has succeeded Sir Alex Ferguson, only to find that last season’s Premiership champions are in poor shape, that the Manchester United squad requires urgent strengthening. As worrying for United’s fans and owners is that Moyes appears to have been put in charge of a team in torpor. They’re no longer playing with the same drive and hunger that so characterised the Ferguson reign.

Blackhurst makes the general point succinctly:

Beware the chieftain who has been in office for a lengthy period; who is used to getting their way, who only needs to snap their fingers and it will be done; who refuses to countenance stepping down, to the extent that no successor is properly groomed; and when they do finally decide to go, it is too late. Quitting while ahead – it’s the best management attribute of all.

He illustrates with the examples of Tony Blair, Sir Terry Leahy of Tesco, and Lord Browne of BP. He touched briefly on Margaret Thatcher, and might have added Steve Jobs of Apple, and [another very recent example] Steve Ballmer of Microsoft. A closer examination suggests that the situations and the leaders are too varied to provide a nice clean theoretical idea. Was internal selection possible or desirable? Did the leader leave without being forced out? Was the evidence of declining personal abilities to do the job?

Sir Alex Ferguson, for example, announced his retirement a few years earlier and the market value of Manchester United plummeted. The evidence is that he retracted and spent the next few years considering how his eventual retirement might be planned more successfully. He did not ‘refuse to countenance stepping down’, although Margaret Thatcher’s political demise was closer to the description offered by Blackhurst.

Tony Blair was successful in winning three elections for Labour, which he had reshaped as New Labour. His legacy is haunted by his military policy in Iraq. Blair tried but was unable to arrange a successor he wanted. Gordon Brown is seen as contributing to Labour’s defeat at his first election. Sir Alex a close confident of Tony Blair seems to have learned from his friend the art of personal retirement planning with an impressive and rapid entry into the lucrative celebrity circuit.

Terry Leahy at Tesco appears to have selected Philip Clarke or agreed with the decision. Mr Clarke found that the company was in near free fall.

Lord Browne, whom Blackhurst suggested stayed to long at BP, left after personal problems. His chosen successor Tony Hayward was engulfed by the greatest disaster to befall the company.

Steve Jobs left Apple for health grounds, but had some say in the appointment of his successor.

Lady Thatcher had no say in the matter, although her departure opened the way to Tony Blair’s successive election victories.

The dilemma of succession

Succession remains a dilemma for a leader, and for those considered candidates as a successor. The issue has been around for nearly as long as stories have been written about leaders. We should at least be aware of the possibility of the ‘hero to zero’ process, as an earlier and over-generous evaluation of a leader is rewritten.

An example of this can be found in an article in Business Week in 2006 hailing the succession planning in Microsoft when Steve Ballmer replaced Bill Gates. Mr Ballmer’s departure this month [Oct 2013] was told in a different way.


Tesco’s Richard Brasher goes because “you can’t have two leaders in a team”

March 17, 2012

Philip Clarke, CEO of of Tesco [right] created the post of UK chief executive in 2010 for Richard Brasher, who now leaves echoing a metaphor that “you can’t have two leaders in a team”. Does this suggest a command and control corporate culture at Tesco?

The official corporate statement gave the news as follows [synopsis by LWD]:

As a consequence of [group CEO] Philip Clarke’s decision to take a much closer involvement in the UK business, Tesco plc announces today [15th March 2012] that Richard Brasher has decided to step down from the Board with immediate effect and to leave the Company in July once he has effected a smooth transition of the UK business to Philip.

Philip Clarke said: “I have decided to assume responsibility as the CEO of our UK business at this very important time. This greater focus will allow me to oversee the improvements that are so important for customers. I completely understand why Richard has decided to leave and want to thank him for the great contribution he has made over many years. The depth of management at Tesco and the strong leadership team across the Group allow me to take a more active role in the UK whilst our other businesses continue to grow.

The one captain issue

The move was widely presented, as in this account from the Sun, as actions taken to deal with problems resulting from ‘two captains on the ship’.

In a letter to [Tesco] staff, seen by[The Sun’s City reporters] , Mr Brasher said he “respected” his colleague’s desire to be “more closely involved”. He then added: “However, if even the best of teams is to succeed, it must have only one captain.

…the article went on to suggest that Philip Clark had also used the same two-captains metaphor in an interview with them:

Speaking to The Sun yesterday, Mr Clarke said: “Richard has done an extraordinary set of things in his career but this decision to step aside so I can get close to the business is the top one. “There’s only room for one captain in the team. He feels the business is best served by giving me more space. I respect that. It’s a big and brave decision.”


What’s going on?

A BBC report suggested that there might have been ‘a clash of egos in the context of poor results and lack of success in a strategy of responding to changing retail conditions’. Other reports suggest that the departure seems to have been publically managed as smooth but privately was a bit more bloody (a bit of pushing and a bit of jumping?).

But a few days into the story [March 17th 2012], another BBC commentator with unrivalled business contacts, Robert Peston, reported on the story without suggestion of a boardroom battle.

Where did the idea of distributed leadership go?

Of increasing interest within leadership studies is the concept of distributed leadership. The metaphor of ‘one captain of the ship’ as reported here suggests that Tesco is more accustomed to a traditional command and control culture.


Tesco’s ‘near perfect succession plan’ coincides with period of business turbulence

January 15, 2012

Philip Clarke

When Philip Clarke replaced CEO Sir Terry Leahy in 2011, Tesco’s succession plan was described as ‘near perfect’. Within a year, serious profit warnings suggest it will be unlikely to deliver its strategic aims

The Guardian has followed the story closely, and analysed the succession plan in depth:

Leahy’s retirement has triggered a changing of the guard, including the departure of Andrew Higginson, its former finance and strategy director, who will step down as head of its retailing services arm in September [2012].

The Big Price Flop

The Big Price Flop, as some analysts now refer to it, also suggests the British arm is missing the influence of Tim Mason, the group’s deputy chief executive and Clubcard guru; he currently has his hands full with its heavily loss-making US chain Fresh & Easy.

The Terry, Tim and Andy show

One former executive argues the top team is depleted and weaker than when “Terry, Tim and Andy” ran the show, but adds: “Terry was always going to be a hard act to follow. He was a retail genius.”

When [Philip] Clarke, who first worked for Tesco in 1974 as a part-time shelf stacker while he was still at school in Liverpool, was appointed to succeed Leahy, their similar backgrounds and immersion in the business suggested they were cast from the same mould. Only time will tell if Clarke can have as much success.

So what went wrong?

If you consider the reported evidence, Tesco has had a tough time in the near recessionary conditions of 2010-11. Its failure to meet its financial targets was shared with most of its rivals. A few bucked the trend, notably Sainsbury, Morrisons, and the discounters Aldi and Netto.

Arguably, Clarke was too willing to accept the positive picture of a company requiring no major change of strategy. Forced to respond to market conditions, he and the respected top team appeared to have focused on an extensive price cutting plan of £500 million.

Black Thursday

As poor results at Christmas [2011] were unveiled, securities analyst Dave McCarthy talked of a Tesco ‘black Thursday’ as £5bn was wiped off the company’s stock market value and when the results showed that the UK chain, which generates more than 60% of group profits, was funding international losses.

“We suspect that when investors look back, they will view this day as the day the market recognised the fundamental changes that are taking and have taken place. A profit warning is the last sign of a company in trouble — and they usually come in threes.

Tesco admitted for the first time that it has long-standing problems around range, quality and service. It has slashed wage bills to try to preserve profits and that, like pushing prices up, is a short-term fix at the expense of future profits.”

Hero to zero again

Another Guardian story replays the hero to zero theme, comparing the rise and fall in reputation of Leahy’s leadership at Tesco with that of Philip Rose at Marks and Spencer.

More on Tesco’s succession plan

Tesco’s succession planning was covered in an earlier LWD post