Book Review: Management in 10 Words – Terry Leahy

The first thing to point out with Terry Leahy’s book is that the title is a fib. If this is Management in 10 Words (buy online from Tesco), there are many thousands of words still to be removed from the book till he reaches his target. Nor would the loss of a fair few of them be that great a tragedy: while he has plainly grasped the trope of the leader as storyteller, the more sceptical members of his audience – the ones that a man looking for growth would need to win over – might be looking for a greater variety of narrative arc than ‘I had an insight, they were sceptical, I persisted, we tried it, we learned as we went along and it was a huge success’. Admittedly, I simplify a little, but then simplification is part of Sir Terry’s advice. And you can damage your fingers if you keep simplifying with a double-edged sword.

The second thing this reader wanted to point out was that the lessons I drew from it – although ‘saw in it’ would be more accurate – didn’t always seem to be the ones that I was being encouraged to. The 10 Words in the title are those chosen as chapter headings, adopting the single noun approach so beloved a decade or so ago by window dressers. This approach – in which café windows are typically etched with the like of ‘eat’, ‘relax’ and ‘friends’ – always reminds me of a wonderful spoof presented by a cider tent at a food festival that gently enticed visitors to ‘blather’, ‘scratch’, ‘belch’ and ‘fart’, so the immediate impact was unfortunate. The list also seemed like an incongruous stew where ‘values words’ like truth, loyalty and courage rubbed shoulders with MBA Flash Card words like ‘values’ itself, ‘lean’ and ‘balance’. Leahy’s book is a very English one in many ways, but I hadn’t anticipated it to be – in an unspoken homage to Humphrey Littleton – a case of One Book In The Style Of Another: under its very 21st century bonnet with its talk of values and emotional appeal and so on, I felt like the more concrete reasons for Tesco’s success were being smuggled out under the cover of lightly worded prose that skates the surface of business cliché at many a juncture.

Under Leahy’s command, Tesco was hugely successful, although this success was not built on his skills as an author any more than it was built on ten single nouns presented out of context. In reading any book, one of the reader’s first questions should be “Why did they write this?” In Leahy’s case, Tesco’s success during his period as CEO provides the most obvious answer: given the number of people who are going to want to emulate his – and its – success, he’s guaranteed to sell an awful lot of books. He was in retail, and he’s perfectly capable of doing the math. I have no reason to doubt his honourable intentions, but the options to write a detailed case study or start a business school were open to him. This isn’t a bad book, but it is of a genre already well-trodden by the likes of Sir Richard Branson, albeit with a greater pinch of self-effacement.

Shifting the emphasis of this question – making it more like “Why did they write this?” – makes it harder to answer. If there really was a simple formula for glittering success, surely no businessman or organisation would be daft enough to put it in print for their competitors to read? As with any writing, part of the decoding of the text is to try to figure out who the intended audience might be. Despite the plain English and storytelling approaches he deploys, this seems to be a book written for the shareholder, the MBA student or the aspiring business leader rather than the average Tesco shopper – for whom the sense that ‘every little helps’ might get a little dented here and there. As a Waitrose man responsible for a business blog, I was reading with at least two hats on and the effect was sometimes disconcerting. Writing admiringly of Nestle’s Nespresso venture, Leahy explains that the company:

[…] needed a completely new marketing channel to service the customer directly.”

There’s a problem with books in that you can’t control who reads them once they’re published. As a person who spends the majority of this life as a customer, I can’t remember ever feeling that what I’ve received from a marketing function could be described – other in vulgarly euphemistic terms – as ‘servicing’. In a book that talks frequently of putting the customer first, this is one of the times that the book appears to have forgotten that those same customers might be reading.

The main lesson that I acquired here was not about harnessing or recognising the role of emotion, or the power of either storytelling or customer focus. It was about data mining. Leahy’s defining moment appears to have been Clubcard, the loyalty/rewards card scheme that led where many others have subsequently followed. The wealth of data and meaning that can be wrung from compiling our purchasing patterns and locations has given the company advantageous insights at many stages of its rise. In return for giving a modest reward that equates to 25% of the profit margin, the company acquires data that, as Leahy explains in his Conclusion, ‘can improve operating margin by more than 60 per cent’. Reading as a shopper rather than an investor, I am reminded of the debate around Google and Facebook that casts me not as the customer but the product: that demarcation is more blurred here, but that 60% rise in margin, greater sales and strategic and competitive advantage seems to stack up pretty well against a quid off a bumper pack of nappies. Every little does help, but it doesn’t go amiss to ask who it helps most.

As this is a business book, other moments that provoked a similar reaction can perhaps be forgiven. For an expansionist retailer with global ambitions, food and drink probably are ‘the scraps of the high street’ as he refers to them at one point, rather than two of the most basic essentials of life. Yet Leahy can be unexpectedly mealy-mouthed in places. At one point he spends four pages exploring the issuing of answering “the big question ‘What is Tesco for?’”, via Field Marshal Viscount Slim – who gets what feels like inordinate airtime throughout – and the spiritual foundations of morale to arrive at “to create value for customers to earn their lifetime loyalty”. It might be a personal reaction, but this felt rather disappointing from a company that had already hit upon ‘Every little helps’, which expresses that vision perfectly from the customer’s viewpoint. I thought this was supposed to be about being customer-centric? Stood in Aisle 5 with my Bag For Life, my priority is my self-interest, not the store’s. It might not be standard Clubcard data, but I can relay for free that the track on my iPod is probably Aretha Franklin’s “Who’s Zoomin’ Who”. Or perhaps “Respect”. Message received?

At times, Leahy’s book reminded me strongly of Evan Davis’ Made In Britain, with which it shares an annoying tendency to assume that all will be well (as long we’re all disciplined, dynamic, optimistic etc.) rather than tackle issues that might embarrass its own arguments. Consider the following brief consideration of the implication of gathering such vast quantities of data on customer behaviour:

Yet this clearly raises big, ethical questions about the rise of an Orwellian ‘Big Brother’ state: who has access to this data, is it secure, how was it obtained and who owns it?

These changes clearly create new challenges but, as I wrote at the beginning, I am an optimist. Mankind is blessed with a creativity which has overcome such challenges before.”

Well, that’s alright then. I can reassure myself that Big Brother has been privatised and everything will now be just dandy.

There are other instances of a common ‘business book’ failing in that there is a sense that everything is, in the nicest possible way, being talked up. Leahy’s chapter on Courage largely focuses on Fresh and Easy, Tesco’s US groceries venture, where difficulties might be acknowledged but only in the context of eventual success. Yet Leahy’s assertions – “As the economic headwind slowly becomes a tailwind Fresh and Easy will be well placed to benefit” – sit in contract with recent news stories showing on-going difficulties with one of his biggest gambles. As the Guardian story suggests, an atypical lack of attention to detail seems to have played a part in these difficulties. Putting the bland into blandishment is not going to be sufficient.

Although it’s not one of his chosen ten words, one of Leahy’s strongest attributes could have been a chapter title: learn. One of his more interesting ideas – TWIST (where senior staff take on mundane roles for a week a year) – was largely about learning from fresh insights, or enabling senior staff to see details that their customary helicopter view would foreshorten. Tesco had to do many things to achieve its colossal rise, but learning what they were and how to do them had to come first. He also integrated HR into operational management, arguing it should be the responsibility of all managers and that its vitality is lost when it operates in isolation from the rest of the business. (HR was also removed from the board, according to the book, but the implications and the impact of – rather than the messages sent by – that move are not discussed.)

If the book is quirky or individual – and in some ways it is – it achieves its idiosyncracy in a very British way. Leahy’s poor family background in Catholic Liverpool gets many an airing, and there’s much praise of things like discipline, self-help and so on. (Tesco’s data-mines no doubt cover newspaper readership, which might explain the whiff of Daily Mail leader column that comes of some of the books pages. If that’s what they’re reading, give them more …) Despite the school fees that funded his escape from his roots being met by the council, the mandatory maintenance grant that he might not have gone to University without, and even the founding of Tesco with Jack Cohen’s gratuity from the Army, the State in general and the public sector in particular repeatedly get short shrift. (Ian Martin, swearing consultant on The Thick Of It, once referred to Tesco as ‘the provisional wing of the CBI’ on Twitter: Leahy’s book suggests he hit the nail on the head.) Leahy also seems oddly reluctant to take some of his own advice. In reviewing the FiReControl fiasco, he counsels as follows:

Business people should also beware of lecturing the public sector, which has different priorities, incentives and accountabilities from the private sector.”

Yet the failings of the FiReControl project were those of management and strategy – objectives and elements of organisation life that the private sector would no doubt champion. He is also oddly dismissive of the Co-op, his first employer. Having admitted early in the book that the inspiration for Clubcard and for data mining came from the marriage of the Co-op membership scheme with modern computing power, later in the book he is dismissive of the organisation as overly democratic and given impractically to noble intentions to the extent that:

No one was quite sure what the organisation was there to do. Was it to give work to people, or improve society, or win customers, or make a profit? A basic question, but one that was never answered.”

My own hunch, knowing a number of dedicated Co-op shoppers/members, is that it attempts to achieve all of these aims: indeed, it is this very sense of purpose and ethical intent that appeals to its own loyal audience. (Tesco may have pioneered many aspects of contemporary high street retailing – including providing services as well as products, supermarket banking and so on – but, like many others, it is following the lead of the likes of the Co-op when it comes to addressing customers’ ethical concerns. Readers might also like to compare and contrast the recent performance of Tesco and John Lewis.) It is odd, therefore, to read – tantalisingly briefly – of the concept of ‘natural capitalism’ with its emphasis on minimising impact on resources. It was not deemed important enough to be included in the book’s index, but it’s on page 245 if you’d like to dip into what I felt was the most interesting unexplored future possibility.

As with the difficulties that Tesco has encountered in the US (and possibly in Japan, judging by other recent news stories), extensive data gathering tells you what existing customers do but is comparatively blind to the desires and behaviours of others as the scheme cannot gather data on people who do not participate. If I don’t shop at Tesco (or don’t opt to have a Clubcard), the chain has no data about me to use in persuading me to change my behaviour.

The book also seems to contain many seeming contradictions that are left unaddressed. The Tesco that Sir Terry joined is described as ‘Competitive, aggressive and overly formal (many of the managers had been in the Army)’, yet a military figure – Field Marshal Viscount Slim – appears more often than any character other than the author, and seems a totemic figure. There is a rather unclear section about Liverpool Vision, where it remains unclear quite what the regeneration agency’s specific achievements were. While there is understandable pride in the comparative turnaround of the city’s fortunes, it’s higher than average growth rates in the late 90s and early 00s should not disguise its lingering deprivation. Even the partially restored Liverpool is heavily dependent on the public sector, and forthcoming budgetary cuts are likely to challenge its upwards curve. To refer in passing to ‘the financial crisis of 2008’ is to simplify broader social challenges – and suggest easier recovery – than is likely to be the case. The outbreaks of opposition to new store openings that have occurred in a number of locations – as Google can easily reveal – are neither mentioned not tackled.

Ultimately, if there are simple, straightforward secrets to the success that Tesco enjoyed under Leahy’s stewardship, the book does not readily reveal them. I couldn’t help but notice the introduction to The Evening Standard’s review of his book:

When Sir Terry Leahy ran Tesco, he could be the most frustrating of interview subjects. First of all, he rarely granted them, and when he did he said little of note. The hapless interviewer — myself, on more than one occasion — had to trek to Cheshunt, in Hertfordshire, home of Tesco HQ, to receive a string of platitudes. He would speak in monosyllabic, direct terms of Tesco’s success and the issues it faced.”

The book says more on a number of things than this paragraph suggests it will, although I felt the Standard’s review raised promises the book does not really deliver. The secrets of success are the golden egg, and even a golden goose that has since left the nest is unlikely to give them away. (Although the book does, perhaps, say rather more about Sir Terry than the protestations of personal modesty in the introduction suggest it will.) Any aspiring entrepreneur looking for answers will find hints and clues here, but they are those of a man describing the rise of an empire in circumstances that no longer prevail. Empires, once risen, must be maintained: a very different task, especially when the socio-economic wind has changed as a recent Telegraph article – Defeatist talk at Tesco points to a long, hard turnaround – points out.

Perhaps the company itself provides the final comment. At time of writing, it can sell you its former CEO’s book online at a 50.7% discount. Is it worth £9.86? As its genre goes, it’s probably par for the course: if you already have a laptop and a broadband connection – and no doubt the store can sell you these if you don’t – you might do better to search iPlayer for some of the BBC’s free business programming output, and may learn as many lessons. The book’s ultimate worth, however, may be determined by Tesco’s short-term fortunes. Watch the share prices, or – for those more interested in the emotional story – follow the comments on the TellYouGov leaderboard.

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