Next week sees the presentation of Management Today magazine’s “Most Admired” awards.
On Tuesday evening this week, I was hosting the person who has won the “Most Admired Business Leader” honour a record-breaking eight times: Sir Terry Leahy. The former Tesco chief was taking part in a Business Connections session for The Independent’s sister paper, the Evening Standard.
Business Connections is aimed at small firms and start-ups. It allows them to hear from someone who has made it to the very top in business, absorbing tips and learning from mistakes. I admit to having been nervous about whether the ex-Tesco titan, who spent virtually his entire career at the supermarket group, would be able to relate to this audience.
My worries were misplaced – he had them eating out of his hand. Running Tesco, he said, was not much different to what they were going through, albeit on a smaller scale. The supermarket, he explained, was a collection of small businesses.
The two key lessons he passed on were to motivate staff and to listen to customers. “You must watch how people’s lives change – and change the experience they have with you to reflect that.”
On Tesco’s current woes, Sir Terry said he was “shocked” by what had happened since he left in 2011. “Retailing is about winning customers every day – and whatever the environment, you’ve got to be prepared to change and innovate and reposition your business… The industry in general – Tesco in particular – hasn’t been able to do that.”
He didn’t buy the argument that his old company is in an impossible place, stuck in the middle between the discounters, Aldi and Lidl, and the upmarket Waitrose. “If you’re strong from the middle, it’s the best place to be in the market because you can actually reach… the whole of the market in a way that focused niche players never can.”
He conceded: “Although it’s more difficult, because you’ve got to project an appeal that’s broad, if you can do it, it’s very powerful. So the key is be strong, be competitive, improve faster from the middle of the market than your competitors from the periphery… and that has a lot to do with your ability to sense changes that are taking place in society.”
B&M shapes up as Britain’s answer to Aldi
Since leaving Tesco, Sir Terry has maintained a low public profile. He gave the impression, however, of enjoying himself. He’s invested in 20 new businesses, many of them in online retailing. He’s advising a US private equity firm. And he’s chairing B&M, the fast-growing, quoted, Liverpool-based discount chain.
He could scarcely conceal his excitement about B&M. It’s now up to 400 stores and, with a market cap already of £2.6bn, at this rate it will soon be a contender to join the FTSE 100.
Could B&M emerge as the British challenger to Aldi and Lidl? Judging by Sir Terry’s mood, do not be surprised if it does.
Icap pays more than lip service to charity
The City comes in for an awful lot of flak these days. It’s widely seen as the embodiment of naked, aggressive greed – of red-in-claw capitalism at its worst.
Of course that perception is aided by the appalling, uncaring behaviour of some of its inhabitants – the forex-rigging scandal being but the latest example.
Next Wednesday, a more acceptable face will be to the fore as Icap hosts its annual charity day – when everything going into the dealer-broker’s coffers is instead given to good causes. The event has donated £110m and helped 1,600 charities since it was started in 1993. That year, £220,000 was collected; last year’s event raised £9.5m.
To put this in context, said Icap founder Michael Spencer, when I met him this week, “that’s 3 per cent of our annual profits”.
Celebrities give up their time to man the phones and terminals. Leading the merry band this year will be Prince Harry. To enter into the spirit, the staff also dress up.
“The atmosphere is fantastic,” said Mr Spencer. “It’s part of our culture and tradition. There genuinely is a feelgood factor; everyone feels very proud. There are no commissions, no profit shares and no bonuses that day. All the revenue we make from our trades goes to charity. The City has this image of only being out for itself, but you don’t feel that; handing over 3 per cent of your annual profits is a huge number.”
He’s right. It’s easy to be cynical, to think it’s just one day out of 250-plus. But how many other firms would be prepared to give that proportion of their profits to charity?
Will investors stand up and be counted on pay?
Simon Walker, the director-general of the Institute of Directors, yesterday denounced the proposed £25m pay package for the new BG Group boss, Helge Lund.
For the head of the IoD, surely one of the keenest advocates of the free market, to intervene in a remuneration award must be unprecedented. But such is the strength of feeling over the deal that Mr Walker has gone of the offensive. What riles him in particular is how BG has put the plan to shareholders, at an extraordinary general meeting. In effect, they’ve been put on the spot – they’re damned if they do and, because the shares will fall if they vote down Mr Lund’s pay, they’re damned if they don’t.
Mr Walker’s case is that this sets “an appalling precedent. If the pay deal is approved on 15 December, chief executives and other executive directors will be able to hold out for pay settlements beyond the remuneration policies agreed by shareholders, whether binding or not.”
But this is not new. Institutional investors have regularly weighed up whether to go against a company’s management. Too often, they’ve put their desire to protect the share price ahead of doing the right thing. Indeed, their refusal to act is one of the main reasons why big business has often seemed so out of kilter with the rest of society. It’s hard to see why they will take a different stance this time round.Reuse content