Changes at the top

A couple of recent new stories have got me thinking about the thorny problem of leadership succession.

First there was the surprising public criticism from Terry Leahy (former Chief Executive of Tesco) for the leadership provided by his successor Philip Clarke. We might wonder whether some of the failings that have recently come to light at Tesco might have their roots in the Leahy era; but even if his criticisms are justified, it’s clear that something must have been amiss with the succession process presumably overseen by Mr Leahy himself.

Ah, I hear you object – what about the recession and the intensifying competition for retail market share? Surely they are the real causes of the downturn in Tesco’s fortunes. This is where the second recent news item comes in: the triumphant announcement from Tim Cook (Steve Jobs’ successor at Apple) of the highest quarterly profits in corporate history. Cook too has had to steer his business through the global recession and fight off increasingly confident competitors like Samsung. He seems to be making a pretty good job of it, and I would argue that in large part this is down to the way he has made the transition from No.2 to No1.

Analysts looking at the position Clarke inherited at Tesco have pointed out how disjointed the company’s strategy was. With a price war in the UK, retrenchment in the US and expansion in the far east, this was a business waging very different campaigns on many fronts. With hindsight it would have been astonishing if profits had continued rise with such a fragmented policy.

So not only did Clarke take over at a difficult time, he also inherited a company with stretched resources and an incoherent strategy. Thanks for the hospital pass Terry – are you taking lessons from Alex Ferguson?

Compare this to Apple where there has been a consistent, relentless focus since the 1990s. Everything is about making the product as desirable as possible: from design and functionality through to the rigid control over sales and merchandising. Tim Cook didn’t need to change anything – he trusted that the core vision was robust enough to withstand the many challenges Apple faced. And there is a strong lesson here for all business leaders and their Number Twos. Succession is always a risky time for an organisation, but you can minimise the risk by providing continuity in strategy and culture.

Written by Alex Taskin – director of Passe-Partout Consulting