A Warning from Terry Leahy


I was trundling along in the car the other day, wondering if I’d get to York before the next apocalyptic snowstorm, when Desert Island Discs came on the radio. I sighed; another opera singer I’d never heard of…

Actually, no. It was Sir Terry Leahy, the man who started off stacking shelves and then built Tesco into the global retailing giant it is today. A businessman and entrepreneur who I’d always admired. In fact, someone I’d admired more than entrepreneurs like Richard Branson and Alan Sugar – because coming from a corporate background I understood how difficult it must have been for Leahy to stamp his mark on what was essentially someone else’s company.

Suddenly my journey didn’t seem so pressing. In fact my appointment started as Leahy finished. Perfect. 45 minutes with one of my business heroes.

Three-quarters of an hour later I – like I suspect virtually everyone else who heard the interview – had lost a lot of respect for Leahy. PR disaster? You could say. I suspect the present board of Tesco were a long way from pleased.

There were two points that I picked up on. The first was when Terry Leahy said he tried to ban Waitrose products from the family home and “bribed my children to … inform on my wife Alison if she popped into Waitrose when she picked up the kids from school.” What? I’ve been wrestling with the concept of paying Dan and Rory to spy on Dav ever since, and still can’t think of an instance when it would be even remotely justified.

But the comment that really worried me was Terry Leahy’s casual acceptance of the damage supermarkets have done to our high streets. He described it as ‘progress.’ I’m all for competition – and of course people are free to shop wherever they want – but there’s a part of me that thinks it’s slightly wrong when I’m in a small market town, walk down the high street and see bookies/pound shop/charity shop/bookies/boarded up/bank/pound shop/boarded up…

And there my grumble might end, were it not for the wider implications the High Street has for all businesses. In the last couple of months we’ve seen the disappearance of Comet, Jessops, Blockbuster and a large slice of HMV. All of them have fallen victim to online competition – and at a time when the national high street is struggling, Amazon had their best ever Christmas and are now sitting on a cash pile of $12.4bn.

I can only see that figure increasing – after all, Amazon are now making money out of products that don’t exist. Need more warehouse space? Need a distribution network? Not for an e-book you don’t.

It seems to me there’s a fairly simple message: ‘If Amazon do what you do, you’re under threat.’

So are any of us safe? Well, if you make the nuts and bolts that hold bridges together, the answer (in the short term) is probably ‘yes.’ Despite the promise that we’ll soon be able to print a lot of products, makers of high tensile steel bolts can probably sleep easily tonight.

…Were it not for the threat from the Far East, Eastern Europe, Latin America, India and Africa. A recent report from the Boston Consulting Group highlighted the rise of what it termed, ‘Global Challenger Companies.’ These are the fast emerging companies in countries like Colombia, Chile, Egypt – plus India and China, of course – that are starting to threaten the established ‘first world’ giants. With far lower labour costs and far less red tape, companies in the developing world are going to be a danger to all UK manufacturers – and sooner rather than later.

Amazon on one flank, the emerging economies on the other: twin threats to your business that you have to watch. There’s an old saying: “Eternal vigilance is the price of liberty.” These days, eternal vigilance is also the price of staying in business.

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4 comments

  1. Sarah Shafi · February 8, 2013

    Lovely blog as ever Ed…

    When I think about my frustrations with the world and the ‘cartel’ we live in, i.e. this entity that governs the entire system that we have either bought into or been duped into, or both…something becomes apparent:
    ..The system has lost its soul.

    Most of these powerful giant businesses have lost their souls…and they are stamping on the souls of some very soulful businesses out there. All because of two things…money and power.

    …And this system has been shaped for the two to go hand in hand.

    So many of us have been caught up into not thinking deeply enough about doing what we love and really care about but instead get caught up following a route to ‘make money fast’, pay the bills and enhance our material lifestyle.

    …but how well does that feed our souls?

    Francis M. Cornford quotes “the soul sleeps while the limbs are active, but when one is sleeping, the soul is active and reveals a dream”

    So I guess in short… make sure your business is something you have dreamed of and it will connect with your soul. Giving your business a soul will keep your spirit alive, through thick and thin.

    ..and however it manifests, it will reveal a lot about you…

    I have learned so many lessons along my journey and have come to the conclusion that whatever I choose to dedicate myself to it must feed my soul…which is why I’m now writing children’s books, so I’m allowed to start sentences with the word And!!! 🙂

    Sarah

  2. Richard Shaw · February 8, 2013

    Last year I spent some time with Volker Sommer who is a professor of evolutionary anthropology at UCL. He devotes much of his time to trying to preserve endangered species of monkeys even though he knows he will fail. His opinion is that evolution is what makes species become extinct and evolution is continuous and relentless. The best he can hope for is that he delays the inevitable for a few years but he continues because he enjoys it. The parallel to your blog Ed, is that routes to market, technology and developing economies are things that will continue to evolve and as a result some things will become extinct. Our challenge is to evolve too, in order to survive. The lesson from Volker is to make sure we enjoy doing it.

  3. Andy Gambles (@andygambles) · February 8, 2013

    I do believe that Terry Leahy’s comments (who I briefly met for a handshake once) have been taken out of context.

    I do not think he meant that the demise of the high street due to supermarkets was progress in the sense that it was an active strategy by the supermarkets. I believe he means it is progress in the same way the motor car replaced the horse and cart style progress. Supermarkets have become good at giving customers what they want – cheap, easy and convenient shopping. It is customers that have deserted the high street not supermarkets.

    If the populous did not want what supermarkets offered they would be closing down within weeks.

  4. edreidyork · February 8, 2013

    As I’ve come to expect from my 3 commentators this week, wise words from all, even if not in complete agreement!

    Thanks as ever for your thoughts; here are my edited highlights as a response.

    Sarah – you’re completely right that more soul in our business worlds would be a great thing.

    Richard – to enjoy doing what we do is a key tenet of everything I stand for, as you know.

    Andy – consumers do vote with their feet (and their wallets), and Tesco have been very good at driving footfall and spend, so they absolutely must have been doing something right!

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