Bank Holiday Quiz: Ten touching tales I never tackled

May 27, 2007

350px-thaivillageflood.jpgEvery day there are leadership stories full of triumphs and disasters. Here are ten recent ones set as a Bank Holiday quiz. Can you remember all ten recent headlines involving (1) Bertie Ahern, (2) Malcolm Glazer, (3) Steve McClaren &amp David Beckham, (4) Armani (5) Stuart Rose, (6) Tony Blair & George Bush, (7) Nicholas Sarcozy and an influential Doctor, (8) Freddy Shepherd, (9) Paul Wolfowitz, and (10) John Charman?

The weather is so bad over most of Europe that I’ve left you opportunity to pass the time on this as a Bank Holiday challenge. Meanwhile, I’m switching TV channels and watching the rain fall on two sporting events in England, a cricket test match in Headingley, Leeds, between England and The West Indies, and the golf at Wentworth.

Similar thoughts seem to have struck other bloggers such as an expat yank.

Here’s a quiz to pass the time away. If you know (really know) the ten tales, you are probably a Francophil Brit (yes, there are a few, honest) with anorak tendencies extending into sport, politics, and the world of business.

If you don’t know all ten, and it worries you, you are a wannabe anorak and a sad case.

Good luck

Hints for wannabe anoraks will be supplied in a future post …


Marks sparks ‘Nazi’ furore

April 19, 2007

_42827233_mands203.jpgStuart Rose faces a problem at M&S that will exercise his leadership skills. Bryan Ferry, who has been modelling clothes for the company, extols Nazi iconography. Calls are made for boycotts of Marks, and of Bryan Ferry

The glorious place held by M&S in the history of modern Jewish entrepreneurial achievements is under threat. The company has been promoting its gear through aging Rock idol Bryan Ferry. Ferry turns out to be an admirer of Nazi iconography. A recent interview for Welt am Sonntag has quickly turned into an international furore. According to the UK’s Daily Mail

The singer, 61, had angered Jewish groups by telling a German newspaper of his admiration for the Third Reich’s cultural achievements and admitting he named his recording studio after Hitler’s bunker .. But in a statement released on Ferry’s behalf, he now said the comments “were solely made from an art history perspective ..I, like every right-minded individual, find the Nazi regime, and all it stood for, evil and abhorrent.”

Ferry has also modelled for Burberry, another company which has hit a storm of adverse publicity recently as it reported increased profits and closure of a factory in a deprived area of South Wales.

Rights, wrongs, and Rose

Ferry is intelligent enough to discuss Germany’s cultural heritage. He has been naïve enough to ignore possible repercussions of remarks acknowledging any aesthetic merits in German art the era of the Third Reich. The story presents a leadership dilemma for Stuart Rose.

He is custodian of another icon, the Marks & Spencer brand. Ferry is visibly identified with that brand. Should Rose:

(a) ignore it, as a storm in a tea-cup

(b) intervene swiftly to say it is just a storm in a tea-cup

(c) intervene swiftly to say it was a major error of judgment by Bryan Ferry who has agreed to make some economic or symbolic gesture of his deep regret

(d) announce that Bryan Ferry has damaged the brand, and that M&S is terminating the contract

(e) do something else altogether

Put another way, what might be the rationale for justifying one of these courses of action over the others?

Labour peer Lord Janner is a former president of the Board of Deputies of British Jews and a campaigner on behalf of Holocaust survivors. He has indicated his preference for (d).

According to the Daily Telegraph

When asked about Ferry’s remarks and his subsequent apology, Marks & Spencer said it did not give its opinions on views that were expressed by people in other situations ..A spokesman for the company would not comment, when asked whether it planned to review Ferry’s contract.

Sainsburys: A good leader in a bad place?

March 19, 2007

Predators advance on UK retailer J Sainsbury. The Private Equity army is on the march again. Commentators are already comparing the coming battle to the famous Green/Rose contests for Marks & Spencers. But who is playing the Philip Green role? Will Justin King star as Stuart Rose? Will leaders be seen as making any difference, or will the financials decide the ultimate fate of the retailer?

The City is expecting imminent news of a takeover bid for the retailer Sainsbury’s. Trading levels in its shares have been at roughly triple last year’s average levels over the last six weeks. Names such as KKR (if not Kohlberg Kravis Roberts) are becoming more familiar, even to folk who are not regular readers of financial blogs or pink newspapers. The UK takeover watchdog has set a deadline of April 13th for a formal bid by a consortium of four such financial hunters including KKR.

The BBC’s business editor Robert Peston is blogger and super-sleuth. He was ahead of the journalistic pack over the proposed Cadburys split earlier this week. And he takes an interesting line of the current Sainsbury story, finding parallels with Philip Green’s abortive bid for Marks & Spencers.

He points out that Green’s bid was heavily influenced by the M&S pension funding arrangements. The same now applies to any bid for Sainsbury’s. Peston shows that the critical pre-battle negotiations may be between the Private Equity consortium and the company’s pension fund trustees. He shows that the figures involved could be enough to hike the offer price beyond acceptable risk-limits, within a bid which would load debt on the company against its realizable (‘strippable’) assets. The point is a cogent one.

The Sainsbury story

John James Sainsbury and his wife Mary Ann opened a grocery story in Drury Lane London in 1869, and founded a dynasty which was to become the UK’s leading grocers

For much of the twentieth century Sainsbury’s was the market leader. Much of the credit in the years of growth occurred under the leadership of John Sainsbury. Its subsequent misfortunes took place under subsequent leadership, including his nephew David, and Peter Davis. Lord David was to quit industry retaining his political and charitable interests.

The decline of the group in the 1990s was during the spectacular ascent of Tesco. Then in 2003 it also dropped behind the Walmart-backed Asda, a marker that probably contributed to the boardroom moves in 2004 which saw the arrival of CEO Justin King, and Chairman Philip Hampton. Since their arrival, the company has initiated a range of moves to reverse its decline,

Justifying Justin

Leadership theorists (there are a still a few around) still acknowledge that there are uncertainties over how, when and to what degree a leader makes a difference in any specific situation. This justifies interest in new leadership stories, and in the search for comparisons with earlier cases. In the battles for Marks and Spencers, the story was as much as a clash of leadership wills as of financial ratios. M&S acted by bringing in a leader to help the company fight off the bid.

Sainsbury’s acted to bring in a strong leadership team in 2004 (or anyway, to replace a team considered to have been off the pace). Comparisons between Justin King and Stuart Rose were, perhaps, inevitable. Terms such as dynamic, youthful, able, well-qualified, appear in press reports. He ticked his CV boxes even including time spent at M&S, in his previous appointment, where he had been Director of Food. Since arriving at Sainsbury’s he has been active and visible in efforts to strengthen the company’s market position.

You can look at the progress of the company in two different ways. The company has reported modest but repeated growth in quarterly sales. Significant improvements have been made in logistics. Customers appear to like the affirmation of the company’s interests in supporting a healthy and ethical lifestyle.

But the killer facts remain. The supermarket chain that had held the number one position in the UK has dropped far behind beyond the mighty Tesco, and has failed to close the gap on second place to Asda. Even on his appointment, there were takeover rumours surrounding Sainsbury’s future. Allan Leighton, the current Royal Mail chairman was particularly mentioned. Coincidentally, Leighton was King’s mentor during their time at Asda. The rumours resurfaced recently.

On being a good leader in a bad place

In a leadership story, the company can’t play the move of switching from Justin King. Indeed we can make the case that Justin King was already brought in to Sainsbury in 2004, in a Rose-type move to protect the company from predators. Nor is it obvious what he might do to change the course of events once a bid has been made.

The King may rest uneasy, but on this analysis, it may be seen as a case of a good leader being stuck in a bad place.

M&S changing rooms slammed: A small problem or a leadership priority for Rose?

February 6, 2007

A recent report has placed M&S changing rooms the worst of eight retailers examined. The way in which they are fixed may be an indicator of the company’s appetite for change.

A recent report by Retail Week on the state of the changing rooms at M&S, illustrates the dilemma for a corporate leader. Yet in the run up to Christmas, the improvement in the company’s appearance was attributed to around a $billion (£570 million) spend on changing rooms and fixtures.

The original report would have passed most web-based scanners looking for M&S stories. However, diligent reporters picked it up as a story of more general interest. The adverse publicity was continued in a radio broadcast yesterday (BBC five live).

According to The Mail,

Marks & Spencer was singled out for criticism for long queues, cattle market-like atmosphere and chaotic appearance. [Retail Week] said: “The cubicle was even worse, littered with used tissues, hangers and a carrier bag – hardly an incentive to stay and try on clothes. This was the worst experience by far.” Also getting one mark out of 10 was Dorothy Perkins in Oxford Street, whose fitting rooms were dubbed a “miserable experience”.

In our posts we have commented favorably on M&S and its leadership provided by Stuart Rose. Even its changing room problems can be explained (if not excused) as deriving from a company culture which offered unquestioning return of items of clothing to its customers. This was for years a world-of-mouth positive element in the company’s corporate reputation. It meant that many customers used their own bedrooms rather than become acquainted with changing rooms at M&S.

A defining incident?

However, the report seems to me to be a nice example of a defining incident for a corporate leader. Should he or she intervene, or leave what is an operational matter to operational executives? An initial statement to the press was left to Customer Services manager Jo Moran. What happens next? Will we see ‘proactive’ leadership from Mr. Rose, or will the company wait for the inevitable question to be posed in a future interview, or at one of those increasingly less cozy general meetings?
Thomas Carlyle noted that genius involves an infinite capacity for taking pains. Much the same might be said of leadership. But in practical terms that capacity has to be allied to judgement over which of the numerous challenges are relatively minor, and which will have longer term significance for a company.

Look out Marks, here comes Tesco

January 20, 2007

Earlier this week, Mark and Spencer announced its spectacular greening policy which propelled it into the lead position among top British retailers. Now Tesco announces its plans for becoming a greener and cleaner organisation. While the Marks’ Plan A may just shade it in coherence and specified targets, we are clearly witnessing a battle for corporate credibility on environmental policy. This may well produce a rising tide effect in such efforts in retailing which will impact throughout the distribution chain.

M&S chief Stuart Rose announced the company’s Plan A (‘there is no Plan B’) earlier this week. He would have been fully aware that he had done no more than steal a few days start over industry leader Tesco.

Today, Sir Terry Leahy CEO of Tesco responded. Leahy presents a more measured leadership style than the effervescent Rose, but he is developing into a formidable communicator for his organisation. He also has a tougher message to convey in shaping the public perception of Tesco’s stance as an environmental leader.

The communications battle: M&S 1 Tesco 0

In exploring behind the leaders’ pronouncements this week, I turned to the respective corporate web-sites. This is a simple if crude measure (but both companies are fully aware of the importance of first impressions). M&S had a clear lead in this particular battle. News of its new environmental policy had been clearly and highly visibly posted. In some contrast, the Tesco site has not been updated. The ‘latest press releases’ today had not been updated from the year end. The corporate responsibility pages were equally unforthcoming on Tesco’s new plans. If Marks appeared to have a launched a campaign after careful preparation, Tesco by contrast seems less ‘joined up’.

On this measure it’s M&S 1 Tesco 0

The likely environmental impact of the plans M&S 1 Tesco 1

Going beyond the economic: The impact of political leadership

What are the forces supporting these initiatives? The traditional economic rationale would look to explanations that gauge shifts in public opinion and attempt a cost-benefit analysis. Such analyses remain important as corporate leaders will continue to communicate with institutional stakeholders for whom the decision to support a company will depend on evaluation of its short-term profitability. Governments take a slightly longer time-scale around re-election consideration

But in an indirect way, the general public, influenced through pressure groups, can influence government, and government can influence corporate responsibility through various direct (legislative) and indirect (exhortative) measures.

For example, just over a month ago a Green Business Summit was hosted by the Government.

Executives from some of Britain’s biggest firms, with a combined total of 250 million customers, met at 10 Downing Street yesterday [11th Decemebr 2006] to work out a combined plan for a new range of “green” products, to be launched in the new year.

Companies such as Tesco, Marks & Spencer, HSBC, BSkyB, B&Q, O2 and The Carphone Warehouse have committed themselves to “accelerating the roll-out of practical, simple solutions” to help consumers reduce carbon emissions.

It would not be unreasonable to assume that such a meeting would accelerate the plans of participating organisations. In such ways, according to experts in transformational leadership, are self-seeking behaviours tempered with wider social considerations.

The Greening of Marks and Spencer: An example of creative leadership

January 15, 2007

Stuart Rose announces a policy document that will anchor Marks and Spencer’s green credentials. It commits the retailer to a range of specific actions at an estimated cost of some £200 million over the next five years. The plan has been welcomed by a range of commentators. Yet, closer inspection suggests it is a shrewd concession to corporate responsibility rather than a radical move that might frighten traditional commercial investors. It can also be seen as an example of creative leadership.

In a flurry of personal interviews, Stuart Rose today announced a hundred-point, five year plan for M&S that aims at re-engineering the companies activities to meet a range of socially responsible goals from carbon neutrality, ethical-trading, sustainable-sourcing, and health-promoting products and projects.

He told the BBC that the company has estimated five year-costs of the plan to be in the region of £200 million pounds. In one interview, Green in his ‘show and tell’ mode had brought along plastic bottles and a coat (purporting to ) incorporate the plastic from similar bottles after recycling.

Don’t frighten the City

‘Dont frighten the city’. It is no bad rule for corporate leaders. So how to balance customer demand for greater corporate responsibility with shareholder pressure fo returns on investment? I would argue that the way forward is though creative leadership. When Richard Branson wanted to show his ethical credentials recently, he announced a redirection of research effort in a search for profitable innovations which would reduce global warming. Green’s estimates for ‘doing good’
seem likely to add no more that 0.5% to sales at the till. He also judges that less directly the strategy will add to the company’s competitiveness through consumers seeking to support ethical corporations.

There is no plan B

The company has labelled this Plan A. ‘Because there is no Plan B’. Echoes for other charismatic leadership assertions from the past: ‘no going back’ (Tony Blair), or ‘This baby’s not for turning’..(modifed from one of Margaret Thatcher’s speeches). Understandable, plan A is not being left to chance. An extensive marketing campaign to explain and promote its virtues is planned for later this Spring.

Questions worth asking

Isn’t it all just rhetoric? Aren’t private companies, including M&S still out to maximize profits? Or have the perceived values of consumers helped shape a greener corporate landscape and indirectly are helping create the (created and creative) leaders we deserve?

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.