Marks and Spencer: How the Rose fought off the Great Green Shark

January 4, 2007

Stuart Rose appears to have fought of the attacks of Philip Green in the battle for control of Marks and Spencer. Rose was brought in reluctantly in 2004 to counter the threat of a hostile takeover by the entrepreneurial retailer Philip Green. The build up to Rose’s arrival, and the subsequent board room battles provide a revealing picture of the dynamics of leadership succession.

In the late 1990s, Marks and Spencer, a great icon of British retailing appeared to be in serious decline. The Belgian Luc Vandevelde was parachuted in, together with his promise to turn the company around, or depart. At first he seemed to be succeeding, but by 2004 it was clear that the first option was no longer likely. As the Telegraph put it, Vandevelde jumped before he was pushed.

Stuart Rose, the UK’s best known retailer currently in want of a top job, is unlikely to be considered. He would love to go to M&S, but in a full-time, hands-on, executive capacity – which is not what the group will be looking for.

Maybe not, but the company was all too aware of their vulnerability to one of the most feared predators of the financial oceans, the billionaire entrepreneur, Philip Green.

The Big Green Shark makes a move

Green had earned public recognition for his success in turning around the fortunes of British Home Stores (Bhs) since its acquisition in 2000. He represented the classic entrepreneur, leaving School at fifteen, building retail assets estimated at a billion pounds sterling in intense hands-on fashion. Green likes to avoid intensive advertising spend, relying on the visibility of his stores, and value for money of the products. At Bhs, in two frenetic years since Green’s arrival, profits had soared from £12 million to £92 million. He had made no secret of his ambition to own M&S, and in the Spring of 2004, Philip Green became a very threatening predator indeed.

A crisis can be a good time for a powerful leader

Students of history recall how Churchill was too difficult to be considered as leader until there is a crisis. This was he case at M&S. Green’s attentions seemed to turn a corporate difficulty into a perceived crisis. This focused the board’s attention sharply. They decided that despite reservations, they needed someone with a reputation as a leader in times of trouble, and also an executive with extensive experience in retailing. While they knew he would exact demanding conditions, Stuart Rose fitted the bill.

Stuart Rose

Stuart Rose has earned a reputation as a corporate leader in retailing, with a track record of corporate rescues, often culminating in successful sales (successful to shareholders and to Rose). He served his apprenticeship with M&S, leaving for a faster track to top positions (as he was to do several times again).

He had a privileged boarding school education, but left school with no enthusiasm for further education, but with an appetite for the high-life. His track record has been as a corporate high-flier. This temperament helped Rose work his way up within the corporate environment of M&S, starting as a management trainee, and staying for seventeen years, eventually becoming a commercial director. He moved to Burtons, working for Ralph Halpern as a buying and merchandising director, but was passed over for a more senior role and left, with a golden handshake, growing reputation, and renewed determination to succeed elsewhere. This pattern was to be replicated at Argos, in his next post, his first as CEO. The company lost a hostile take-over, but Rose’s skills were again noted, and after a brief stay, he again made a well-remunerated departure, with enhanced reputation. A similar sequence followed his appointment to Arcadia as CEO

Philip Green

Philip Green has recently been rated Britain’s fourth richest man. Like Rose, he had a relatively privileged start in life. His parents ran established businesses, and sent their son to Carmel College, a prestigious Jewish School. Also like Rose, he was to leave school with few formal qualifications. From early days, he was a direct and pugnacious character. The outsider tag sits well with his ferociously independent ways of operating. As swiftly as possible he was to find opportunities of going it alone, with a skill at seeing financial opportunities. These are the hallmarks of the gifted trader – possessed by the mythical barrow-boy as well as the multi-millionaire trader. Business travel helped him learn of the opportunities of sourcing textiles from overseas.

Journalists Stewart Lansley and Andy Forrester have written a compelling biography of Philip Green. They point out that Green has tended to present himself as a self-made outsider in a rag trade to riches story, which blurs some aspects of his early days.

His skills are those of the intuitive trader. The pattern of his success is as the quick-witted entrepreneur who prefers to hunt alone, drawing on a network of allies to finance deals as unquoted companies. He has leveraged the scale of his deals, but as he repeatedly incorporated experiences to play with bigger and bigger stakes. The game remains largely the same – which is far easier to describe than to achieve in practice.

Rose and Green compared

Each enjoys playing out his chosen image. Green plays the indomitable ruthless outsider. Rose plays out a more stylish persona, seen as suave, measured, unruffled, a veritable corporate James Bond, according to Lansley and Forrester. Rose has mainly operated within the canon of large corporations. Green has operated from the outside.

But the stylistic differences conceal characteristics they share. Both attack business as if they expect to win each battle. The certainly present themselves as utterly confident of winning, even if they are often gambling, weighing and accepting risks that would deter most people. They conform to the stereotype of the heroic charismatic outsider, be it Bob Hoskins or James Bond.

Researchers have tired of searching for the right stuff of leadership. Charisma is increasingly seen as a being generated in collusion between myth makers, and the society which needs its heroes and its villains (the leaders we deserve). Where we can still make progress is through studying the specific circumstances of the heroic myths in action. In retailing, the circumstances seem to favour either the self-styled barrow boys or the Harrow boys.

The rag trade, famously, has been one of the areas of business in which business empires have been grown by outsiders from humble beginnings, often with little formal education. It is a natural home for ambitious entrepreneurs, often from immigrant stock. A similar pattern can be observed in successful tycoons in show business in general, and in Hollywood in particular.