Business books quarterly;Book Review;
Terry Leahy's management;One to ten;
Management in 10 Words. By Terry Leahy.
Students of management theory have long debated what constitutes the worst kind of book—the CEO autobiogaphy or the management tome that promises to reveal the secrets of business in words of one syllable. But in “Management in 10 Words” Sir Terry Leahy, a former boss of Tesco, has performed a remarkable act of alchemy: combining two dismal forms to produce an excellent book—a veritable management page-turner that has interesting things to say about everything from the evolution of British society to the art of transforming huge organisations.
Sir Terry is an example of a type of Briton that is becoming increasingly rare: a working-class boy made good by dint of quick wits and hard work. His Irish father was one of ten children. He grew up on a Liverpool housing estate as one of four. A scholarship to a local public school and a taste for the grocery business provided him with a ladder up: he started his career stacking shelves at Tesco and ended up as CEO for 14 years.
When Sir Terry was appointed to the top job, Tesco was struggling in third place in Britain's supermarket hierarchy behind Sainsbury's and Marks & Spencer. Rumour had it that a tobacco company had toyed with buying the supermarket but dropped the idea believing it would be bad for the brand. Today Tesco is Britain's largest private employer and the third-largest supermarket in the world, operating in 14 countries and offering banking and insurance as well as fruit and vegetables.
Sir Terry argues that the secret has been constant innovation. Tesco introduced loyalty cards in order to gather information on its customers and encourage them to keep coming back. The picture that emerged, of a country that was changing very fast, surprised even the keenest trend-watchers. One innovation led to another. The trove of customer information provided by the loyalty card eased Tesco's entry into banking and e-commerce. And the growing cashflow provided by its expanded businesses eased its entry into foreign markets. Nevertheless, Sir Terry readily admits that there is no science to management: he got the idea for one of Tesco's most successful innovations—small stores in town centres—from visiting a wholesaler and noticing how much business it was doing selling to small shops.
Every British retailer in the 1990s prided itself on its enthusiasm for innovation. Why did Sir Terry's Tesco end up being as successful as it has done? One reason is that he notices things. His book is full of fascinating asides. He notes, for example, that South Korean retailers make no distinction between consumers and citizens, automatically setting aside a third of their space for organisers of local community activities. Another is that he knows what it is like to be poor. Having grown up in a Liverpudlian prefab, he is constantly amazed at business's power to improve people's lives.
Sir Terry repeatedly emphasises the importance of building a ladder of mobility from the shop floor to the CEO's suite. Of the eight executive directors on the board in 2011, the year he left Tesco, five had started their careers with the company. But that does not mean a ladder of escape: he required all managers (including himself) to spend at least a week a year as dogsbodies in local stores. He also often highlights his customers' “simple wish for a better life”. The cost of groceries fell by a third in real terms between 1975 and 2007. The range of products available increased more than tenfold over the same period. And the British diet improved beyond recognition. When Sir Terry joined Tesco, customers spent as much on butter as on fruit and vegetables. Now fruit and vegetables outsell butter by a factor of 40 to one.
“Management in 10 Words” is on prominent display in your local Tesco store. Add it to all those fruits and vegetables in your shopping basket—you certainly won't be disappointed.