This new book by the recently retired CEO of Tesco is worth reviewing because he is among the most successful CEOs of his generation. As he tells us early on, Tesco was struggling to compete with more successful retailers like Marks & Spencer and Sainsbury’s when Leahy joined the Board; now it is the third biggest retailer in the world and, despite recent hiccups, by far the most successful UK retail business over the last fifteen years.
Despite his justified claim to have been part of this success, this book is not an ego trip for its author; he is clearly a modest man who is almost surprised by his extraordinary achievements. He makes it clear that he is not writing a biography and almost apologetically provides a pocket biography in the introduction. In it he tells us how he was initially rejected by Tesco and only got the job as second choice; he has certainly made up for that since.
The book is about his view of management, as expressed in the ten words that are his chapter titles. He recounts many examples of his experience at Tesco to make his points and, while these are generally interesting, they are mainly about the business issues rather than his personal challenges within the unique Tesco culture. His few descriptions of the attitudes he faced when he tried to introduce change - the insults and the contempt for his ideas as shown by a bullying top management - made me want to hear more of this type of challenge. (I was particularly interested because I ran some finance seminars for the Tesco Board at around this time and experienced some of what he describes)
The structure of 10 words and chapters works well, even if you are moving from one time period to another and this is sometimes difficult to follow. The ten words are Truth (which he later suggests as number one on his list) Loyalty, Courage, Values, Act, Balance, Simple, Lean, Compete and Trust.
There is not space to comment on each chapter so I will just mention a few highlights to give an impression of his approach and the issues that arise:
TRUTH; his view is that organisations tend not to confront the truth and to continue with strategies that are clearly not working. As I read this I started thinking of Tesco’s American venture which, though Leahy claims it can still work out, is generally regarded by analysts as a major mistake that should have been divested years ago. After reading Leahy’s justification in a later chapter, I came to the conclusion that a failure to confront the truth and cut their losses was precisely the problem.
LOYALTY; I found it interesting that Leahy holds the view that the introduction of their loyalty card was the single biggest factor in their successful period starting in the mid-nineties, both for the information it provides and for the customer loyalty that it promotes and rewards. He also talks about employee loyalty but it is customer loyalty that is his obsession and which he sees as key to successful retailing.
BALANCE; It is nice to know that the concepts that we cover on our courses are sometimes implemented successfully. Though we were running courses for Tesco in the mid-nineties, I am not sure that our coverage of the Balanced Scorecard was the trigger but Leahy mentions this concept as the driving force of the ‘Tesco Steering Wheel’ which has become the basis of their strategic planning and performance management. This has now turned full circle as we currently cover the Steering Wheel framework on our courses for Tesco’s suppliers.
COMPETE; Leahy is a great believer in the free market economy and the positive forces of competition, rejecting the criticism that Tesco’s puts small firms out of business. He is also a great believer in learning from competitors, for instance the move into convenience stores was driven by information that well run small stores were still thriving, despite the competition of the big supermarkets. He also stresses the importance of assessing potential new competitors, quoting his forecasting of Amazon’s likely growth outside the book market as a big factor in the rapid enhancement of Tesco’s on-line sales facility.
TRUST; His view is that good leaders need trust and must show it to their teams. He is fond of quoting military heroes, Field Marshals Slim and Montgomery from the Second World War are among his favourites; he clearly sees leadership as transferrable from one organisational context to another, though I was not entirely convinced.
This book is worth reading, though not as entertaining as it might have been if it had been a more conventional biography. But we should be willing to learn from someone who is among the top few business leaders in this century so far.
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