Mike Coupe of Sainsburys shows how to deal with the media, avoids tricky questions

August 28, 2015

MIke CoupeMike Coupe, the CEO of Sainsburys, was on the BBC’s Wake up to money programme this week. His main objective was to present his company’s decision to pay employees a living wage.  He skilfully kept away from several potential pratfalls

It was an easy ride for the confident sounding CEO.  [I might recommend him for student study, I thought.]

Parson’s hand grenades

The interviewer, the thoroughly well-prepped Adam Parsons, had a few obligatory hand grenades to lob across the table.  The interviewee defused them skillfully.

The questions and answers

Basic wage payment? Part of a long term plan

Supermarkets screwing farmers over milk prices?  Some do, we don’t

Petrol prices at store are loss leaders.  Prices very competitive and (of course) good for the customers

Would your shareholders say you are paying out a lot of money?  [That’s an interesting question, I thought.]  I waited for a standard answer about Corporate Social Responsibility.  Instead, Mr Coupe briskly made his only obvious venture into Corporate speak territory.  He referred to the importance of maintaining the company’s reputation of having the highest level of customer satisfaction and the importance of motivated ‘inward facing staff’. In other words, the pay rise could be justified in financial terms in the long run.

Overall  impact of the interview

Mr Coupe would have been pleased to have kept away from contextual issues such as the tough trading conditions at Sainsburys, the recent laying off of nearly a thousand of those ‘inward facing’ employees as part of an efficiency drive, and pressures accompanying the decision to introduce the modest wage rise.

His answers were clear, coherent and confident.  If I had one concern, they seemed too well-prepared, too quickly delivered.  Getting leaders to sound empathetic  is harder than preparing them to deliver  a convincing rational set of answers in role playing  rehearsal. Terry Leahy when boss of Tesco managed it well, although Sir Terry’s style was more informal and a little warmer.

Student discussion questions

How would you evaluate the interview from the perspective of a media coach?

From Mike Coupe’s perspective?

From the interviewer’s  perspective?

Background materials

BBC’s summary of the interview

Management Today’s interview with Mike Coupe

Is the wage rise ‘a publicity stunt’?

 


A leader’s legacy: strong words on Tesco’s Sir Terry Leahy by former chairman Lord MacLaurin

July 6, 2013

Sir Terry Leahy’s reign as Tesco chief executive has been slammed by his predecessor and mentor, Lord MacLaurin, in a public attack at the supermarket giant’s annual general meeting. He later told the Guardian [June 28th 2013] that Leahy “lost the plot” and that the US venture was “disastrous”.

Lord McLaurin’s attack is the more surprising from someone who has been quoted as saying that his part in the appointment of Terry Leahy to replace himself as CEO of Tesco was the achievement he was most proud of [citation required, although it appears in his Wikipedia cite].

Applying the legacy test

Applying the legacy test to Lord McLaurin and Vodaphone, we find that the company was involved in a leadership battle with Lord McLaurin as its departing chairman in 2006. Vodaphone’s view of Lord McLaurin’s legacy may be inferred from the unexpectedly low compensation package he received at the time.


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


Tesco: Continuity in Leadership, but what about Strategy?

June 11, 2010


When the internal candidate Philip Clarke replaced Sir Terry Leahy [left] as head of Tesco, The first reports were almost exclusively focused on the departing leader rather than on the arriving one

The lament was understandable.

Profits, dividends and earnings per share doubled and then doubled again during Sir Terry Leahy’s 14‑year tenure. It works out at a compound annual growth rate of 10%. Very few large companies improve these measures at double-digit pace for a decade and a half without blowing up at some point.

Part of the secret, you suspect, is that long [leadership] reigns have always been part of Tesco’s culture. As every football follower knows, changing managers frequently is a losing strategy. Leahy is only the fifth chief executive of Tesco since the company was formed in 1929. He has seen four chief executives at both Sainsbury’s and at Asda [UK arm of Walmart] during his time at the top.

Praise from his predecessor

Within hours of the announcement, [June 8th 2010] Lord McLauren, Leahey’s predecessor, was on BBC’s Five Live lunchtime radio programme. He gave a glowing account of Leahy’s efforts and the merits of another internal appointment ‘from the Tesco family’. On being pressed, he added he had drawn up a private short-list of three internal candidates, and that Philip Clarke was ‘up there at the top’. He refused (naturally) to name the other two executives.

The endorsement ended abruptly when the interviewer suggested that Sir Terry may have eclipsed Lord McLauren’s leadership contributions.

“Didn’t eclipse me at all” he growled “he built on the successful company I established … and Phil will build on what Terry has accomplished” [quoted from memory].

Other BBC eulogies followed
:

Under Sir Terry, Tesco led the way in offering banking services and introducing the Clubcard, the store card that has been copied right across the High Street. He has also overseen the store’s expansion [overseas]. The company now employs almost half a million staff worldwide, with stores in China, the Czech Republic, Hungary, Japan, Malaysia, Poland, the Republic of Ireland, Slovakia, South Korea, Thailand, Turkey and the US.

Enter Philip Clarke

Philip Clarke said he was “honoured and delighted” to succeed Sir Terry. Mr Clarke has worked for Tesco for many years and joined the board in 1998. He had held responsibility for the supermarket’s Asian and European operations, as well as for IT.

The Guardian was quick to provide an informed account of Philip Clarke and the challenges he was facing:

Clarke, who has been on the Tesco board since 1998, was judged one of the frontrunners to replace Leahy. The son of a Tesco store manager in the Wirral he has reached the top rung 36 years after he did his first shelf-stacking shift for the supermarket as a schoolboy.
Analysts said that the biggest challenge in Clarke’s inbox come next year [2011] would be deciding what route to take with its loss-making US arm Fresh & Easy which is run by Tim Mason, who was also promoted to deputy chief executive. Fresh & Easy made a loss of £165m on sales of £354m last year and outgoing boss Sir Terry Leahy hinted at its annual results in April that its scope might be “hundreds” rather than the “thousands” of stores first envisaged when it was launched in 2007.

“Pile ‘em high ….?”

Tesco’s diversification both geographically and in product offerings has become a model for Business School study. Will the one-time local retailer get back to its original ambitions in America with the less than successful Fresh and Easy chain? Will it become more involved in the challenges of the financial sector? Will continuity in selection of a leader be followed by continuity of strategy? Whatever happens, the firm has come a long way from its original “pile ‘em high” philosophy.