Your best consultants are free -- and nine other management truths

One of the UK's most successful CEOs shows where he gets his best business advice -- from employees, customers, and even competitors.
Written by Joe McKendrick, Contributing Writer

Sir Terry Leahy, chief executive of Tesco PLC, the UK's largest retailer, worked his way up the ranks of the company, and also grew the company to be the UK largest retailer -- disrupting what was once a very staid market dominated by two retailers just a few years ago.

How did he do it?  I had the opportunity to attend this week's National Retail Federation show in New York, where Leahy shared his 10 points for management success:

1) Find the truth: Decision makers tend to filter out bad news, and look for confirmation of their own success, Leahy says. "This is a difficult problem for everyone, to active find the truth of your situation," he relates. Where does the "truth" lie?  With your customers, he explains. "They've got no axe to grind, they'll tell you what's wrong with your business. And they'll tell you for free how to fix it." Customers are your best management consultants, he says.

2) Set audacious goals: Thinking big can "galvanize an organization," Leahy relates. For example, Tesco set several audacious goals for itself, which it is now realizing: to become the UK's number-one choice in retailing, and then to become a global leader in retailing.

3) Vision, values, and culture: "These matter more than plans, strategies, and marketing plans," Leahy says. In Tesco's case, it's core mission is to "create improvements in peoples' lives." This mission was developed by the employees, he adds.

4) Follow the customers: Businesses tend to change slowly, but customers can change in an instant," Leahy points out. "All you can do is stay very close to the customers, and be ready for their changes."

5) The "steering wheel": Employees in the organization have access to a balanced scorecard with measurable results pertaining to key aspects of the business, such as customers, financials, operations, and community.

6) Integrate people, process, systems: These three aspects of the business tend to be addressed separately, and thus stifles innovation, Leahy says. For example, people issues are handled by HR, processes are handled by workflow systems, and systems by IT. Tesco has put the three together into what he calls the "Tesco Operation Model." He notes that the best company at integrating and aligning the three to date is Wal-Mart. "They had an early understanding of the role of people, process, and systems in managing change."

7) Lean thinking: Borrow from the experiences of the manufacturing sector in Lean methodology -- do things better and cheaper.

8 ) Competition is good: Nobody welcomes having competitors stealing their business, but at the same time, a lot can be learned by watching their strengths. "Like customers, your competitors are the best management consultants you ever had -- and they're free as well. Learn more from them than they learn from you."

9) Simple beats complex: This is an age where we have massive amounts of data and systems. "You can only navigate complexity if you have a culture of simplicity," Leahy explains. Boil it down to an essential question: "What will make this better for the customer?"

10) Leadership: "A leader takes you farther than you would go on your own," Leahy states.

This post was originally published on Smartplanet.com

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