Ten management lessons you should apply in your practice

London-listed retail giant Tesco PLC reported £60.455 billion in turnover for FY2011. Although the comparison is largely meaningless that makes the company (based on respective turnovers and current exchange rates) some 11 times bigger than South Africa’s

It is impossible to compare a multi-billion pound corporation to your financial services practice… But you can learn from the management principles that helped Tesco to outperform its main competitors by 10 times over the past decade. Leahy shared ten management “gems” at the Discovery Invest Leadership Summit held at the Sandton Convention Centre, 30 August 2012. “Nobody would have predicted that Tesco would rise to the top of British and global retail,” said Leahy. “But it did”. The company now ranks as the third largest retailer in the world (behind Wal-Mart and Carrefour) and is among the Top 20 London-listed firms.

Simple steps to revolutionise your business

Leahy presented his management philosophy as 10 lessons or rules. The first among these is to find the truth. “It is incredibly difficult to get an honest common view of an organisation and to see yourself as others see you,” he said. The reason – particularly in large corporations – is that bad news is edited out and the good news amplified. He said that by the time the news reaches the

CEOs office it bears no relation to reality whatsoever. Your most reliable guide with regards your service and product offering is your customer… And that holds whether you are a small insurance brokerage or the largest retailer in the world. “Customers give you a strategy for improving your business,” said Leahy. “You must be willing to respond to you customers based on how their lives are changing and their specific needs”.

The second lesson is borrowed from author Jim Collins (of Good to Great fame). To succeed you must set audacious goals. “You must have a noble purpose that makes your employees want to come in to work each day,” he said. When Leahy took the reins at Tesco he set a handful of goals including to become the number one choice in UK retail, to grow the group’s non-food division to the same level as food, to invent service retailing and become a leader in global retailing. A snapshot of 1997 Tesco confirms that these goals more than met the “audacious” tagline. Your financial services practice should set audacious goals too… Setting seemingly “out of reach” turnover and service level targets is the first step on the way to achieving them!

An understanding of vision, value and culture is the third step to management greatness. Leahy firmly believes that the real quality of a business is in the trust, confidence and esteem held by the people who work there. By extension the trust, confidence and esteem your clients have in your ability as a financial intermediary are important too. Tesco built its business around serving its customers in a fair and ethical manner. The service and fair treatment you extend to your customers differentiates your business from that of your competitors’.

Business and the Age of Consumerism

Anyone subject to recent financial services regulation understands that the customer is king. As the age of consumerism dawns it makes sense that the fourth management lesson is to follow your customer. “All you can do as a business is stay as close as you possibly can to you customer,” said Leahy. “You have one chance to adapt to your customer’s changing needs before your competitor does. The fifth rule is that you steer your business in such a way that community, operations, human resources, finance and your customer receive sufficient attention. A business cannot succeed without balance, so it is critical that you treat each of these functions with similar veracity.

The sixth lesson in Leahy’s 10-point plan is to prioritise people, processes and systems to ensure your objectives are met. Since his was a presentation dominated by lists he offered a simple step-by-step solution to this requirement too: Make clear decisions, maintain discipline in your organisation to ensure those decisions are put into practice and hire the right people for the job. Make sure that your business processes “make sense” to your people – and that these processes evolve into systems.

Knowledge is power, data is priceless

One of the major advantages Tesco has over its competitors is its comprehensive database of client interactions with the chain. (This information is obtained via the retailer’s Club Card program). The realisation that data is priceless becomes the seventh component of this management strategy. As a financial intermediary or professional in the financial services space you have an inbuilt understanding of this concept, because your livelihood depends on knowing your clients and generating leads from client interactions.

The eighth truth is a bit counter intuitive. Leahy observed that competition is good for business. He said that competitors are the best teachers you will ever have… You need to look at their strengths and incorporate these aspects into your business. “We did not try to copy Wal-Mart – we always stayed true to the Tesco brand – but we certainly learned everything we could about their business model,” he said.

Leadership is the ninth truth and remains an essential component of modern business success. But the days of lording it over a company as its supreme ruler are long gone. “A leader will take you further than you will go on your own – and it is not only what you do, but what you inspire others to do,” said Leahy. He observed that businesses need hundreds (thousands in Tesco’s case, and probably a handful in yours) of leaders!

Understand the factors that drive business growth

The 10th and final component in this management master plan is to understand the growth drivers in your business. Leahy observed: “Even at the heart of a recession there are undercurrents and changes in society and consumer demand that do not go away”. If you can identify these opportunities you can drive your business through difficult conditions. He singled out trust, information, convenience, simplicity and loyalty as key ingredients in Tesco’s success recipe. These qualities will ensure success in your practice too.

Editor’s thoughts: It is difficult to develop a “one size fits all” strategy for business success. I believe Sir Terry Leahy’s 10-point presentation encapsulates the qualities a business leader needs to succeed regardless of industry and business size. Can you apply Leahy’s management ideals to your financial services practice? Please add your comment below, or send it to gareth@fanews.co.za