Can we learn anything from the Tesco story?

When Tesco started life was simpler – it was about running shops, offering good service and selling products to customers that they wanted to buy, at a good price. The BBC Panorama programme on Monday 19th January showed how complicated life has now got for Tesco.

So what can other companies learn from Tesco? I think they can learn that now business has to be about more than profit. It’s not that Tesco don’t have a CSR policy offering vouchers to schools and supporting the local community with small donations but doing that has not stopped them getting the image of the “playground bully” particularly beating up their suppliers.

I share the Harvard Business School’s view of what it means to be a socially responsible business:

“We define corporate social responsibility strategically. Corporate social responsibility encompasses not only what companies do with their profits, but also how they make them. It goes beyond philanthropy and compliance and addresses how companies manage their economic, social, and environmental impacts, as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm.
Companies are facing new demands to engage in public-private partnerships and are under growing pressure to be accountable not only to shareholders, but also to stakeholders such as employees, consumers, suppliers, local communities, policymakers, and society-at-large.” Source: http://www.hks.harvard.edu/m-r... © 2008 The President and Fellows of Harvard University

The book I am currently writing identifies the five areas of focus for a business in the Responsible Organisation Charter(c).

The areas encompass the ‘why’ of your business, the ‘how’ you do it and the ‘what’ you do. Fundamental is to create a clear framework based on the ‘why’, which is a mix of the values that guide the company and the vision it has going forward. Once these foundations are in place then it is easy to develop the detail of how you operate within this framework.

Leadership – creating the why of your business and an action culture

There are many elements of leadership and many successful styles but I believe that its main role is to set the tone of the business so that everything else happens within clear guidelines

Behaviour driven by shared values
Values set priorities and ways of acting, even if you haven’t identified clear values your staff will guess at values for the company even if they are unspecified. Lack of clarity leads to confusion, how were the buyers at Tesco supposed to act? They are recruited because of their ability to drive a hard bargain and could argue that they were just doing their job, there was no value in place such as “fairness” to limit their behaviour – now Tesco is talking about partnership – it will interesting to see how that translates into behaviour?

The ranking of the values is also critical. I know that if I am flying with an airline which has safety and financial success as two of its values I want safety to be the top one, so that in the event of an emergency the pilot doesn’t think twice about ditching a place to maximise the safety of passengers even if a multi-million pound plane is destroyed. That certainty only comes when everyone knows what the main priority of the company is.

Clear Vision
Having a clear vision, mission and goals is fundamental. If you do not know where you are going how can you know when you have got there? A vision describes how the business will reach its fulfilment.

When many people start a business it often feels like the only goal is survival and at its most basic in simple terms like all living things a company exists, wants to stay alive and improve, fulfil its potential and become as great as it can be.

When you are setting up a business the scale of your vision will define the scale of your business, just survival will tend to limit your ambition and lead to a life style business, a vision like Bill Gates will lead to a company potentially of the scale of Microsoft. Read our ebook about how success can vary in scale.

Three of the largest companies that are relatively new have visions that are clear and simple:

• Amazon exists so that “people can find and discover anything they want to buy online,”
• Facebook wants “to give people the power to share and make the world more open and connected,”
• Google aims “to organize the world’s information and make it universally accessible and useful.”

Without a clear vision people will not be going in the same direction. The power of an inspirational shared vision has numerous examples throughout history from religions to leaders like Hitler, Churchill, Martin Luther King and Nelson Mandela. Martin Luther King did not inspire people with a speech “I have a plan” he inspired them with a clear vision of success “I have a dream”.

No organisation can be really successful without a vision of what that success is, so that everyone knows where they are going. A clear vision also gives people the opportunity to realise that the vision is not for them so they can find another vision to follow elsewhere. You need people who are inspired and excited by your vision and that means it needs to be clear and shared.

The vision of success is what helps people to keep going when it gets tough and its power is shown in charities where people who are volunteers with no financial or legal commitment put so much effort in. But businesses can be equally inspirational.

For Tesco when going got tough the vision and values were not strong enough to stop the business behaving in ways that are now under criminal investigation. Vision and values are critical and then how you translate them into strategy.

Action focused

Nothing happens if you don’t take action. A vision does not change the world until it is put into action. All the learning and adaptability is a waste of time if it doesn’t translate into action.

Many visionary leaders have had people around them to make the action happen Bill Gates had a vision of a world where computers could help us reach our potential but it was Paul Allen that built the company. Gates now has a vision of a world without malaria but it is charities that are implementing it. Steve Jobs had the vision for Apple, Steve Wozniak was the engineer putting it into action. Walt Disney had the vision, Roy his brother had the business know-how. “If it hadn’t been for my big brother, I’d have been in jail several times for checks bouncing. I never knew what was in the bank. He kept me on the straight and narrow” said Walt Disney in 1957. Source “Start with Why” by Simon Sinek 2009

The need for action is most clearly illustrated by the individuals that have ideas and then complain that someone else stole and started a successful business – ideas are dreams unless they are turned into reality by taking action.

Particularly in the digital era the need to act with a sense of urgency and respond to market needs is critical and the leadership of a business must embody that responsiveness – if decisions take a long time and the business feels like it is stuck then all the other elements of a successful 21st Century business are undermined.

Tesco is important to the UK economy so I hope it can regain its winning ways even though my personal preference is to use the local shops and smaller businesses. The impact of Tesco being ethical and Winning by Being Good will be profound on all its staff and suppliers and consequently on the wider community, I hope they can work out how to balance the factors of economic success with the broader issues businesses now have to address.

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