Retail Marketing
Magic Solutions
RetailLecture8RetailLeadership1022019.pptxLecture Retail Leadership
NBS-7030B
Retail Marketing & Management
Ratula Chakraborty
Professor of Business Management
Director MSc Programmes
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Lecture Outline
Strategy Making and Implementing
Strategists: Roles, Skills, and Interaction
Strategy Selling and Communication
Leadership Styles
Case Study: Leadership at M&S/Alibaba
Purpose: to help understand the role of business leaders and the relationship within the board of directors in shaping, developing and implementing strategy
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Strategy Making and Implementing
The practice of strategy involves choices about
who to involve in strategy
what to do in strategising activity
which strategising methodologies to use
These three choices are shown in the strategy pyramid
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The Pyramid of Strategy
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Source: Johnson, Whittington and Scholes, Exploring Corporate Strategy, 9th edition, 2011
Strategy Pyramid #1
Who to involve in strategy?
Chief executive officers, senior managers, non-executive directors, strategic planners, strategy consultants and middle managers are all involved in strategising.
Their degree of appropriate involvement should depend on the nature of strategic issues.
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Strategy Pyramid #2
What to do in strategising activity?
Strategising activity can involve analysing, issue-selling, decision-making and communicating.
Managers should not expect these activities to be fully rational or logical and can valuably appeal to the non-rational characteristics of the people they work with.
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Strategy Pyramid #3
Which strategising methodology to use?
Practical methodologies to guide strategising activity include strategy workshops, strategy projects, hypothesis testing and creating business cases and strategic plans.
Choice of method depends on the level of strategy (corporate, business or operation), degree of urgency and practical circumstances
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Strategising Methodologies
Five different strategising methodologies commonly used:
Strategy workshops (or strategy away-days) involve groups of executives working intensively for one or two days, often away from the office, on organisational strategy
Strategy projects involve teams of people assigned to work on particular strategic issues over a defined period of time
Hypothesis testing is a methodology used particularly in strategy projects for setting priorities in investigating issues and options
A business case provides the data and argument in support of a particular strategy proposal, e.g. investment in new equipment
A strategic plan provides the data and argument in support of a strategy for the whole organisation
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A Strategic Plan
In providing the data and argument in support of a strategy for the whole organisation, a strategic plan has the following elements:
Mission, goals and objectives statement
Environmental analysis
Capability analysis
Proposed strategy
Resources required
Required changes in structures, systems and culture
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The Strategists #1
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Top managers and directors
Chief Executive Officer
Top management team
Non-executive directors
Strategy Skills
Three qualities senior managers need to contribute to high-level strategy-making:
Mastery of analytical concepts and techniques
Social and influencing skills
Group acceptance as a player – “respect”
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The Strategists #2
Other key players in the strategy process:
Strategic planners / strategy directors – responsible for coordinating the strategy process
Middle managers – responsible for translating strategy at the operational or local level and championing new strategic ideas
Strategy consultants – responsible for analysing strategic options and supporting strategy implementation
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The Access/Execution Paradox
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Tendency for CEOs to rely more heavily on strategy consultants and strategic planners in devising strategy, rather than middle managers even though it is they who will largely execute strategy
Source: Johnson, Whittington and Scholes, Exploring Corporate Strategy, 9th edition, 2011
Who to include in strategy making
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Source: Johnson, Whittington and Scholes, Exploring Corporate Strategy, 9th edition, 2011
Strategy Selling
Strategic issue-selling is the process of gaining the attention and support of top management and other important stakeholders for strategic issues
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Four Aspects of Strategic Issue-Selling
Issue packaging
Formal or
informal channels
Sell alone
or in coalitions
Timing
Formal Channels for Strategic Issue-Selling
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Source: Johnson, Whittington and Scholes, Exploring Corporate Strategy, 9th edition, 2011
How to Manage Conflict
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Rulebook – establish clear boundaries, encourage dissent, keep debate professional.
Referees – the leader must be open to differing views and enforce the rules.
Playing field – each side must have a chance to win, there must be a clear basis for resolution.
Gaps to exploit – each group should have a specific objective.
Relationships – individuals must deliver on their commitments and behave with integrity.
Energy levels – Ensure sufficient tension to promote useful debate, but monitor this. Leaders must understand what people care about.
Outcomes – Ensure leader gives bad news without damaging relationships. Ensure dignity in losing and risk-taking is rewarded.
Source: Adapted from S.A. Joni and D. Beyer, ‘How to pick a good fight’, Harvard Business Review, Dec. 2009, 48–57.
Communicating Strategy
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Four Elements of a Communications Strategy
Focus
Impact
Media
Employee
engagement
Leadership
Leadership is the process of influencing an organisation (or group within an organisation) in its efforts towards achieving an aim or goal.
Three key roles in leading strategic change:
Envisioning future strategy
Aligning the organisation to deliver that strategy
Embodying change
N.B. Middle managers have a key role in leading change as
well as senior managers.
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Strategic Leadership
Strategy may be the deliberate intention of a leader, but can manifest itself in different ways:
Strategic leadership as command
Strategic leadership as vision
Strategic leadership as decision-making
Strategic leadership as symbolic
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Styles of Strategic Leadership
Situational leadership – successful strategic leaders are able to adjust their style of leadership to the context they face.
Two approaches:
Theory E: the pursuit of economic value:
top-down; ‘hard’ levers of change; emphasis on changes of structures and systems, financial incentives, portfolio changes, downsizing
Theory O: the development of organisational capability:
emphasis on culture change, learning, participation in change programmes and experimentation
A combination of the two approaches may be required and can be beneficial
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Some Legendary Retail Leaders
Sam Walton - values and vision behind Walmart (3 mins) - https :// www.youtube.com/watch?v=sg4iICHsOYc
Walmart milestones (5 mins) - https:// www.youtube.com/watch?v=XBATMIfIl-w
Jack Cohen - The man who built Tesco (4 mins) – http :// www.bbc.co.uk/news/magazine-23987626
Tesco milestones (3 min) - https:// www.youtube.com/watch?v=1LJROJ4SBlM
Anita Roddick - creator of Body Shop – (1:30 mins) – https :// www.youtube.com/watch?v=tm7T9zEBCRg
Body Shop instore (2 mins) - https://www.youtube.com/watch?v=_ IvwNpk4G-4
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Questions for Discussion #1
Name a retail leader that you admire. What characteristics does that person have that makes him/her a good leader?
“Great business leaders are born not made”. Do you agree?
“Retail success or failure is due more to the organisation and its circumstances than to its leadership”. Do you agree?
There is an old saying that “retail is detail” and knowing every aspect of the business operation from having worked in the business for a long time is essential to effective retail leadership”. Do you agree?
Is it ever sensible to bring in outsiders to run a retailer when they have little knowledge or experience of the business? What could they offer?
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Case Study: Leadership at Marks & Spencer
Marks & Spencer is an iconic British retailer, established in 1894
Over 1300 clothing and food stores worldwide
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M&S Chief Executives
In 1998, M&S became the first UK retailer to make a pre-tax profit of over £1 billion, but profits then fell substantially
M&S has seen a succession of CEOs over the last two decades:
1988-1998 – Richard Greenbury (internal)
1998-2000 – Peter Salsbury (internal)
2000-2002 – Luc Vandervelde (external)
2002-2004 – Roger Holmes (external)
2004-2010 – Stuart Rose (external)
2010-2016 – Marc Bolland (external)
2016-present – Steve Rowe (internal)
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CEO Succession Problems
Timeline of changeovers:
1998 - Richard Greenbury obliged to stand down as CEO in favour of Peter Salsbury in late 1998 after a boardroom battle
2000 - Salsbury replaced by Luc Vandevelde (ex Promodes Chairman) in 2000
2002 - Vandevelde replaced by Roger Holmes (ex Kingfisher group)
2004 - Holmes replaced by Stuart Rose (ex Arcadia CEO) to fight off takeover bid by Philip Green
2010 - Stuart Rose leads largely successful turnaround and hands over to Marc Bolland (ex Morrisons CEO)
2016 – Bolland becomes Chairman and Rowe becomes new CEO
M&S – How M&S lost its billions – introduction (1:36mins) -https://www.youtube.com/watch?v=hiGw4r0ixCc
How M&S lost its billions - summary (7 mins) - http://vimeo.com/25517197
Stuart Rose takes control in 2004 to begin turnaround process, achieving mixed success
Rose hands over to Bolland in 2010 – BBC News – Rose’s legacy - 4mins -http://news.bbc.co.uk/1/hi/business/8366635.stm
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M&S Power Struggles: 1998-2004
Profits peaked in 2008 at over £1.1bn but halved by 2013 while sales increased to £10bn
M&S Performance: 2002-present
Profits have continued to fall - half year profits to Oct 2016 down 88% compared to 2015
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M&S – Current Challenges
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Jan 2016 – Bolland hands over to Rowe – BBC News (2 min) - http:// www.bbc.co.uk/news/business-35254285
May 2016 – M&S to improve instore environment – BBC News (1 min) - http:// www.bbc.co.uk/news/business-36376814
Nov 2016 – M&S announces 30 store closures and challenging trading conditions – BBC News (2 min) - http :// www.bbc.co.uk/news/business-37909268
Key Facts 2016
Questions for Discussion #2
What caused M&S’s sharp decline in profitability after being the first UK retailer to achieve more than £1bn in annual profits in 1998?
Was the decline in profits inevitable or avoidable? Why?
To what extent is poor leadership the primary cause of M&S’s continuing disappointing performance?
What leadership style and background is best suited to running an iconic yet traditional retailer like M&S?
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Alibaba’s – ‘rags to riches’ story
Alibaba? https://www.usatoday.com/story/tech/2014/09/17/alibaba-jack-ma-profile/15406641 /
What do you know of Jack Ma? Why Alibaba?
Do you find him inspirational?
What leadership style does Jack Ma follow?
Will his empire last?
https:// www.youtube.com/watch?v=QOC61KFMFhU
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Alibaba’s – ‘rags to riches’ story
Jack Ma’s 10 rules for success: https:// www.youtube.com/watch?v=9e_mqibZc-Q
Jack Ma’s advice: https:// www.youtube.com/watch?v=lYGGpc2mMno
What leadership style does Jack Ma follow?
The Jack Ma Story - https:// www.youtube.com/watch?v=QOC61KFMFhU
Will his empire last?
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References
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Johnson, Whittington and Scholes, Exploring Corporate Strategy, 9th ed, 2011.
Dobson, Starkey and Richards, Strategic Management: Issues and Cases, 2004.
M&S Case Study & Alibaba
All references as in slides.
Thank You!
...see you next time for
Lecture 8 – Turnaround and Strategic Change in Retailing
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