Black Friday battles become a test of Corporate Social Responsibility

December 1, 2014

England’s leading retailers embraced America’s Black Friday sales strategy violently as November drew to a close

Images of mob-battles in search of bargains suggest this will be a test of how companies will respond to a challenge to their claimed code of ethical practices. As this was our first serious attempt in the UK to import this innovation, corporate planners may have assumed that it would be greeted by the tolerance always displayed by the English citizen queuing for services.

Hand to hand combat

What happened was a display of desperate consumerism. As the doors to the supermarkets opened, patient hours of waiting ended as hand-to-hand combat broke out in the battle for plasma televisions.

Like a desperate struggle for famine relief supplies

It was like a desperate struggle for relief supplies you see in famine relief films, one observer said.

Minor battle, few casualties

There were surprisingly few reported injuries, perhaps fewer than during a Manchester United training session. One shopper was reported as bombed by a television, and a few cars were damaged on the fringes of the battle, but the casualties were light.

Social media quickly showed not dissimilar scenes from America. No shoot-outs were reported in the struggles to secure the last iPad on sale. The first martyr celebrating Black Friday has yet to be chronicled.

For students of leadership

For students of leadership there are several matters for reflection. Will leaders show any convincing commitment to their claims of putting the customer first and displaying high ethical values? The social media storm seems to have caught them unprepared.

To be continued


Are managers sacked for breaking the rules and leaders sacked for not breaking them?

October 24, 2014


It’s a nice idea from a well-respected source, and indicates yet another take on an old question about the difference between leaders and managers

I came across the quote in a chapter on ethical change written recently by two business school authors, By and Burnes. By coincidence, this week Tesco was involved in a story of managers sacked for breaking the rules, and a leader (Richard Broadbent) who sacked himself for not breaking enough of them.

A long-running debate

There has been a long-running debate about the difference between leaders and managers which goes along the lines that ‘managers do things right’ and ‘leaders do the right things’. This was popularized, if not coined, by Warren Bennis in the 1980s, when it found resonance with the New Leadership movement, and the virtues of the transforming leader.

Burnes and By are not necessarily ‘Bying in’ to the Bennis distinction. They are offering a critical challenge to others think a little more carefully about leadership, business, and ethics.

Testing the difference between leaders and managers

In Dilemmas of Leadership I suggest that concepts such as leadership and management are social constructions. In use, the terms tell us what sense we make of leaders (observable) and leadership (social constructions). By examining or testing the maps dealing with the topics, and looking for important dilemmas we see more clearly what sense is being made by the authors. We also see more into the sense we make locally in our own leadership roles.

Bennis writes powerfully of leaders as being ‘made’ rather than being ‘born’. His map is very much influenced by (and perhaps exerted its influence on) the New Leadership movement and its transformational and visionary leaders.

So are managers and leaders sacked for different reasons?

One way of rethinking this is by turning the narrative on its head. If managers are sacked for sticking to the rules, we need to study specific examples. What sort of sticking to the rules? Doing what they are expected to do, maybe. If leaders are sacked for not breaking the rules, they have failed to do what they are expected to do, and failed to challenge the rules (strategies, culture, and so on) that the organization had developed.

In other words, the distinction helps us learn what sense we make of the functional roles and less formal obligations of business executives whom we label as leaders and managers.


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.


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 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


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.