Britain Unleashed: Truth and courage can power an economic recovery

By Sir Terry Leahy

British business, take note. Bradley Wiggins’s victory in the Tour de France was more than just a personal achievement. It showed what it takes to win. Setting an ambitious goal; months of hard work; and, above all, drive and steely determination to defy the naysayers who claim success is unobtainable. The lesson of “Wiggo” is one every business should heed – but one that grates with British culture.

Being world class demands you embrace today’s world. That means change, something that has always been unsettling for a conservative country such as Britain. For those who have a romantic, misty-eyed view of an England of sleepy villages, whose silence is broken only by the whack of leather on willow, “globalisation” is as brash and uncivilised as a mobile phone going off in a gentleman’s club. The understatement and effortless ease of the gifted amateur, who muddles through while not breaking a sweat, is preferred to the professional who works flat out, sometimes 18 hours a day. And this, perhaps, reflects a sense that Britain’s decline is inevitable, and needs managing. Why bother sweating if you can glide graciously downhill?

These trends have now been compounded by the financial crisis. “Casino bankers” have turbo-charged people’s distrust in free markets and capitalism has become a 10-letter dirty word.

The challenge we face is cultural. Yes, our taxes – while coming down – are still too high. As a nation, even after the planned spending cuts, we will be spending too much. The state is often more of a hindrance than a help. Yet although low taxes give people the incentive to work hard and invest, and robust laws and simple regulations create peace of mind and the freedom to act, these things provide a framework for human endeavour. Laws and regulations do not create great companies, nor great nations. People do.

Think of entrepreneurs, explorers and inventors who, through the ages, have put the Great into Britain: their achievements were not thanks to politicians so much as their own individual characters. The following are traits that no politician can inject into our workforce: merely things that we, as a society, need to foster.

The first is courage. Although we might think of physical acts of valour as signs of courage, to me courage is really mental, spiritual and moral. In the face of the unknown, risks and opposition, courage means being certain that you are right – in terms of fact and values. You are sure, both in your head and heart, that you are doing the right thing. If you have that certainty, what you can achieve is limitless.

Courage is nourished by a society that does not frown on failure, but applauds success. If you never want to fail, then never take a risk – and your business will never grow. Our culture is increasingly risk-averse, thanks in part to our wish to pounce on mistakes and play the blame game. Likewise, rather than championing those who build businesses, we attack their wealth. What better way is there to deter hard work?

With courage goes an eagerness to compete. To any business that wants to grow, here’s a piece of simple advice: look at your strongest competitors’ websites, look at their products, and learn. Walmart, Aldi, Lidl taught me more than any management consultant ever did – and I learnt their lessons for free, simply by walking around their stores. In today’s global market, there is no excuse not to know one’s competitors. We need to compete more, not retreat.
Yet competition, like capitalism, has become a dirty word in some quarters, where the concept of a “winner” and “loser” is seen as unfair. We are happy to have an open elite on the football pitch but not, it seems, in life as a whole. That too must change, because the truth is that competition is a force for progress.

And that brings me to the importance of truth. Getting to the truth about the cause of a problem, and then not hiding it; the truthful answer to the question “what is the purpose of this organisation?”; being true to oneself and those around you. Seeking and speaking the truth is not merely morally right, but is the bedrock of successful management. Without the compass of truth, too many decisions are taken for the wrong reasons.

To applaud those who take risks, to cherish competition, and to seek out and live by the truth. That’s the way to win, and to become world class.
Sir Terry Leahy is the former chief executive of Tesco and the author of 'Management in Ten Words’

Why Tesco could teach No 10 a thing or two
Charles Moore reviews Management in 10 Words by Terry Leahy (Random House)
By Charles Moore

25 June 2012

Two days before reading this book, I walked into a Tesco Express and asked a young man stacking shelves where I might find elderflower cordial. He stood up, faced me, smiled and led me straight to it. Now that I have read Sir Terry Leahy’s work, I realise that I had unwittingly set him one of the key Tesco tests (which Sir Terry calls the “Where’s the ketchup?” test), and he had passed.

“Well,” you might respond, “so what? It is babyishly obvious that the staff should know where everything is, and tell customers who ask.” Sir Terry would agree: it is one of his main points that the task of business is essentially simple. But what is simple is not necessarily easy. This book sets out the key simplicities (the “10 words” of the title) which he tried to follow as chief executive of Tesco from 1997 to 2011. The company moved from being behind Sainsbury’s and Marks and Spencer to being six times larger than either and the third largest retailer in the entire world.

One’s heart usually sinks at management books by famous managers. They tend to be boastful, unilluminating and loaded with jargon and cliché. Leahy is conscious of these traps, and rarely falls into them. His prose is as simple as his precepts, and although he is clearly proud of what he has achieved, this really is a book about what a great business should be, rather than about what a great man its author is.

As it happens, I started work at The Daily Telegraph in the same year as young Terry (after a period with the Co-op) began at Tesco – 1979. Journalists see history in terms of news, politics, great events. It is fascinating to see the history of the period that I have covered in print emerging in a completely different way, through the life of a great shop.

In 1979, Tesco had only one computer, known as “The Computer”, taking up one whole floor. Today, it has the world’s biggest online food business. Through the firm’s Clubcard, designed to reward loyalty, it also has almost limitless amounts of computer data about its customers. There are 43 million Clubcard holders in the world.

In 1979, Tesco sold one tenth of the number of products it sells today. In roughly the same period, food prices in Britain have declined, in real terms, by a third. Sir Terry calculates that “Tesco saved the typical household almost £5,000 on its shopping bills in a decade”.

Compare such achievements with those of government. Tony Blair, who reached his highest office in the year that Sir Terry reached his, ordered the computerisation of all NHS patient records. After nine years the project was dropped, having wasted £12.7 billion. It drives me bananas (18p each at Tesco Express) when I hear people attack shops like Tesco. For sure, there are problems about the treatment of vulnerable suppliers and the effect on high streets (and Sir Terry is slightly evasive on these points). It is also true that, just recently, the Tesco model has begun to show signs of strain. But the overall effect is a huge emancipation. New Labour talked about “the many, not the few”, but it was Tesco that actually did something for them.

How did it do it? By making the customer central to everything. Leahy cites Field Marshal Slim’s idea that morale is based on “a great and noble objective”. Leahy asked, “What is Tesco for?” He ended up defining it as “to create value for customers to earn their lifetime loyalty” – products and profits were not mentioned, although the objective could not have been achieved without them. There is something risible, perhaps, in applying thoughts about generalship to shopkeeping, and yet the results show the benefit. If you stick to the “noble objective”, you cut out so much nonsense. The customer therefore trusts you, and stays with you.

This book advocates a formidable combination. On the one hand, it relentlessly favours change, in the form of technological and methodological improvement. On the other, with its emphasis on “values”, it is conservative. Concepts such as trust, punctuality, discipline and good manners are central. Leahy is wary when companies start to chase after a “new challenge” that claims to overthrow the past. “Most problems have been faced before,” he says. He is almost caustic about the phrase (much loved of politicians) “Doing nothing is not an option”: it is often the best course.

This book is presented as a work of business advice, and it will be very useful as such. But could it also apply to the way we are governed?
In one way, not. The task of shops is simpler than that of politics: it is to supply demands. Politics has to work out how to deal with demands when they cannot be supplied, or when one demand clashes with another. It cannot (and should not) always have solutions, which business must.
In another way, though, political leaders could profit greatly from this book. Leahy says that “the history of mankind is one of organisation”, but he also says that “organisations are terrible at confronting the truth”. The contrast between Tesco’s success since 1997, and government’s failure, shows the difference between organisations with a strong institutional memory and an ethic of service, and those that have thrown away both.

[top] [back]