Tales of the unexpected.

Looking back over the last two weeks ago I was struck by how much can happen in a very short time and by how much of this was not really expected.  I suppose it is a big world with infinite numbers of things going on in it so by the law of averages quite a lot can happen that we don’t expect.  In spite of this most of us run our lives, relationships, work and businesses on the basis that nothing unexpected will happen.

Looking at some of the big events one thing that continued entirely as expected is the ongoing tragedy that is Gaza.  One side started shooting at the other a few weeks ago, predictably the other side shoots back and away we go again.  I find it heart rending to look into the eyes of the children of Gaza on the news knowing that there seems no hope at all of this ever stopping.  Inevitably many of those young children will be operating the rocket launchers in 5 years or so – unless something changes.  Yet most of the main players involved just keep on doing what they have always done and expect the result to be different.  It seems to come as a surprise when yet again civilians do most of the dying and nothing changes.

On the subject of mindless violence what was not expected was the shooting down of the Malaysian Airways airliner over Ukrainian airspace.  I suspect that what many, like me, didn’t expect was that airliners were still actually flying over this conflict zone at all.  If before passengers boarded the flight they had been told they would be flying over a war zone, just how many would still have boarded the flight I wonder?

This unexpected and tragic event has triggered another unexpected event, namely the EU agreeing to impose tough economic sanctions on the Russians.  When I say “agreed” I think they have agreed they will do this.  However what they will do, to whom and whether they will actually “do” something is, in the tradition of EU decision making on anything other than the standard length of a cucumber, still ongoing.

If meaningful and tough sanctions really are imposed then this will have unexpected and unpredictable consequences for business, energy supplies, financial markets etc.  Putin’s attitude, and his government’s complete disregard for the rule of law meant that this would inevitably blow up in someone’s face eventually.  But I wonder how many governments and business had factored this into their dealings with Russia.

Here’s a couple more surprises.  Philip Clarke the now outgoing CE of Tesco, said just a few weeks ago that “he wasn’t going anywhere”.  It would be reasonable to judge him a little optimistic about his job security, but to be replaced so soon by a man from Unilever who knows nothing about retail?  In cricket England Captain Alastair Cook, after a string of poor batting performances and test losses was universally judged to be not up to the job and needed to be replaced, both in the team and as its captain.  There was the little matter of a dearth of competent candidates to replace him but you couldn’t argue with the stats.  What happened next?  Cook scored 95 in his first innings, 70 not out in the second and England won the test convincingly, levelling the series with India.

So as the last two weeks demonstrates the unexpected happens all the time, yet we mostly base our own plans and schemes on what we expect will happen.  But can you really plan for something you don’t expect, for something you don’t know is going to happen?  Well you can think about what might happen and what you would do to cope with it if it does.  You can also “prepare” for the unexpected.  Not for a specific event or outcome but by having a mind-set that is ready to respond and to do this fast.  The most significant factor in this mind-set is the willingness to accept the new reality the unexpected has created and then to deal with it.  And that's easier said than done!

So what are you NOT expecting to happen in the next couple of weeks?

So that was some of the two weeks before this week. I hope you found some of the above thought provoking and useful for you and your business. I trust you had a good weekend and hope you have a great week this week.

Week ending 11th July 2014

The value of experience.

Looking back through the business news over the last two weeks I found myself thinking about “experience”.  This is generally perceived to be a “good thing”.  Even when things go wrong we comfort ourselves with the thought that we can “put it down to experience”.  However as I mentioned last week the FA have failed to win the World Cup in 15 out of 16 attempts, with 2014 being yet another opportunity to “put it down to experience”.  They must now be the most experienced (and well paid) supposedly top flight football governing body at NOT winning the World Cup that there has ever been!

For those of us with rather more grey hairs than we would like there is the comfort that these are the result of years of acquired experience.  We like to think that this experience is valuable because that means we too must be “valuable”.  So here are few of last week’s business stories where experience or the lack of it have played a part and from which we can perhaps learn how to really get value out of experience.

Pounding along

Poundland floated on the stock market earlier this year and unlike a number of recent IPO’s has proved successful.  The shares are up nearly 13pc on the IPO price with sales reaching almost £1bn in the year ending March 2014.  But it wasn’t always like this.  Poundland was founded in 1990 by Steve Smith but by 2006 its growth was stalling.  The current Chief Exec Jim McCarthy was brought in to turn things round.  McCarthy had been running Sainsbury’s convenience stores but had left the company to return home to the Midlands because of family illnesses.  He accepted an offer to become CE of Poundland because they were based in Wolverhampton.  So Poundland were able to attract a much more experienced leader than otherwise they might have.

However McCarthy did not solely rely on his own experience, being experienced enough to know he didn’t know everything.  He recruited directors with experience of working with other retailers and a new Chairman, Andrew Higginson, former finance and strategy director of Tesco.  He didn’t stop there.  He travelled to the US to learn from the experience of discount chain Dollar Tree.  Here he learned that Poundland had to learn to work with the biggest suppliers, rather than treating them as the enemy.  Today Poundland works with leading fast-moving consumer brands to develop unique pack sizes that it can sell for £1.

So experience, plus even more experience, plus a willingness to learn from other’s experience delivers success.

Safe pair of hands

Justin King has now left Sainsbury’s leaving the business in far better shape than he found it 10 years ago.  He is handing over to Mike Coupe the groups’ commercial director.  He was one of King’s first appointments when he joined Sainsbury’s in 2004 and has been his right hand man for nearly a decade.  So he certainly has plenty of experience and quite possibly the right experience.

However the times they are a’ changing!  Sainsbury’s has now had two consecutive quarters of falling sales so is feeling the effect of the intense competition.  In King’s own judgement growth in the sector will go largely if not entirely to online, convenience and the discounters.  Sainsbury’s is well positioned strategically in the first two and with the announcement of its joint venture with Netto appears to have created an opportunity in the discount sector.  So the pieces are in play but they will have to be played a little differently and at least one, Netto, is a new piece.

Succession at the top of well-established and currently successful business is a fine judgment.  Is it more of the same, which Mike Coupe’s appointment seems to be, or do you need something completely different?  I think his challenge will be can he do more of the same but differently enough to capture the growth that is not going to come from his supermarkets.  He will need his own and others’ experience to do this.

Slippering away?

M&S went through what is now becoming an annual festival of excuses for not quite hitting the targets it has set for itself.  This time its online business was down 8% due to “teething problems” with its revamped website, compared to double digit growth in retail as a whole.  Apparently customers had “taken time to establish how to use the new site”.  So this is all down to customers’ lack of experience it would seem and sales should rebound when customers make the effort to use the new website properly.

On the other hand just maybe a lack of experience in online retailing within M&S’ management is more the problem.  How else do you explain why existing online customers are required to re-register just because you have spent £150m revamping your website?

One interesting statistic slipped in by style director Belinda Earl was that one in five British men is wearing M&S slippers.  Now given that one of their key challenges is to get the fashion offer right I am not sure that boasting about how you are number one in men’s slippers exactly squares with that.  Is the experience of conquering the slipper market really what’s needed here?  Experience is all very well but it does need to be the right experience.

You have got to be Kiddiecaring!

Morrison’s is selling its Kiddiecare business taking £160m write off in the process.  It bought Kiddiecare in 2011 in an effort to boost its non-food and online offer.  In 2012 it announced the business would double in size as it bought a number of superstores from the failed electrical business BestBuy.  However less than two years later it is losing so much money, Morrison’s are having to offload it at a rock bottom price.

Quite rightly Morrison’s’ management recognised that it lacked “experience” in this sector and decided the way to solve this was to buy someone else’s (Kiddiecare’s) experience.  That is all very well but as this “experience” has shown to do this by buying into a sector where you have no experience at all is not the way to do it.  It is one thing to recognise you need experience, it is another to recognise what experience you actually need and how will you know it when you see it.

On that note

Here is a final thought from me.  I have a lot of experience in business from many years of getting things wrong in order to learn how to get them right.  That wasn’t necessarily the plan at the time but it seems to have worked out and some people have been kind enough to credit me with having a lot of experience.  However I always caution them not to think that all they have to do is to do what I did and they will get the same result.  The thing is that it is MY experience and it was THEN.  You are YOU and the time is NOW.  Some of what worked for me then will work for you now but not all of it.  So the final trick is to select what will work for you now from other people’s experience.  Something Jim McCarthy appears to be really good at.

Week ending 27th June 2014

It’s all over for England – again!

A lot happens over two weeks.  For example two weeks ago England were still in the World Cup, poised to achieve one of their shortest survival times in this competition for many years.  Much has and will be written and spoken about why England did not do better.  I am not much of a football fan and certainly not a football expert but a few points do occur to me.

First we have been trying to win the World Cup for 64 years and have only managed to do it once, back in 1966.  The FA have been in charge of the England World Cup campaigns throughout that time and have failed 15 out of 16 times, yet it is assumed they will continue to be in charge of future campaigns.  If there was a World Cup for doing the same thing over and over again but not getting a different result, then the FA wins hands down.

Second this was probably the most highly paid squad of England players we have ever sent to a World Cup.  As a group their combined earnings as professional footballers are higher than most if not all of the teams from the other countries in the competition.  Yet their skills, pace and all round footballing nous are clearly not matching the standards of many other countries’ teams.  Even though we see this demonstrated every four years no one in football will recognise that we need to address the problem of “not being good enough”. Top dollar does not guarantee top performance, in fact it is the other way round.  Consistent and continuously improving top performance will deliver top dollar.

Juncker Muncker

Talking of not being good enough this is what our Prime Minister has been saying about Jean-Claude Juncker, the ex-Prime Minister of Luxembourg who, in spite of Mr. Cameron’s efforts has been nominated as President of the EU Commission.  Juncker himself seems to think he was already elected but there you go.

Cameron saw him as an arch-federalist who believes that more integration and regulation from Brussels is the future for the EU.  As usual with this kind of appointment no one had ever heard of Juncker when he was proposed for this post.  He ought to be grateful to Cameron because at least we all know who he is now – he is the man in the grey suit with a drinking problem.

In the end only Cameron and the Hungarian PM voted against Juncker.  EU leaders are now so used to fudges and compromise that they appear incapable of any other kind of decision or is it non-decision.  They seem more upset that Cameron forced a vote on the matter thus requiring them to make a decision than by his actual objections to Juncker having the job.  Whilst Cameron has had his critics for the way he has handled this in my view he has actually started from the right place.  When something needs to change but no one is prepared to recognise this then you have to confront those people with the need for change.  This is the only way of getting people engaged, even if initially this engagement takes the form of resistance to change and being pretty upset with you.  This is exactly what happened so I think Cameron has done this right.  My concern is does he know he has and does he know what to do next?  Or was he just being a politician and playing to the Euro sceptic gallery in the Tory party?

Tesco and its officer corps

The Tesco story continued with an understandably fractious AGM last week. However what interested me more were two appointments made in the latest reshuffle of Tesco’s top management.  They now have a “Chief Customer Officer” and a “Chief Creative Officer”.  The latter position was filled by Matt Atkinson, previously Chief Marketing Officer.  I hadn’t realised that Tesco had so many “Chiefs” and that they were all officers.   So many Chief Officers implies there must be lots of other “officers” around who, whilst they may not be Chiefs must still be officers and jolly important they sound too.

On the other hand though when a business is losing market share because it is clearly losing touch with its customers and where all its other ranks/Indians are looking thoroughly miserable is this Chief Officer stuff just a manifestation of the problem?  I mean I ask you, “Chief Customer Officer”!  Does that sound like an answer to the problem?

Strong pound – last thing we need!

With the British economy growing faster than any other in the so called developed world and good news coming so fast and so often that it almost becoming boring, there had to be some bad news in the mix somewhere.  It is creeping up on us in the form of a strong pound.  With the economy performing well and the prospect of interest rates increasing the pound will strengthen, making our exports more expensive with the risk that this will choke off both the recovery and the rebalancing of the economy towards exports.

For some reason in this country we seem to think we need to have it both ways, strong economy and a weak currency.  The fact is that if you have a strong, vibrant economy then you are going to have a relatively strong currency to go with it.  If we can only export successfully on the back of a weak currency then the reality is that we are just not competitive enough to achieve the long term and sustained rebalancing of our economy towards exporting.

The key factor is our productivity.  GDP is only just back above the point it reached before the financial crisis.  Spare capacity in the economy has so far provided all the productive capacity to achieve this.  Whilst there is now some tightening in certain sectors, overall businesses are still saying that they have capacity to fill.  What does not seem to be kicking in is an improvement in our economy’s ability to produce – productivity.  Interestingly studies show that successful exporters are often amongst the top performers in their sector – because they have had to be.  Exporting is good for your business because it forces you to be a better business, to cope with challenges like a strengthening currency.  If a stronger pound makes our exports too expensive then the problem is not with the currency, it is because we just aren’t good enough, like the England football team.

So that was some of the two weeks before this week. I hope you found some of the above thought provoking and useful for you and your business. I trust you had a good weekend and hope you have a great week this week.