Sir Terry Leahy: Businesses must adopt a buccaneering mentality

Businesses must adopt a buccaneering mentality

Working with small organisations allows you to concentrate on business itself rather than the wider governance issues at larger companies

Former Tesco CEO Sir Terry Leahy is an ambassador for the International Festival for Business

By Sir Terry Leahy

9:30PM BST 13 Apr 2014

Businesses in the UK are facing more questions than ever before. Emerging from the wreckage brought on by the worst economic crisis in living memory, British companies have been forced to adapt to a new financial landscape – with varying degrees of success.

At the moment there can be no denying that all momentum is with Britain’s entrepreneur-led, fast-growth firms. Companies born at the height of the recession are now preparing for IPOs, growing at a rate that’s causing national unemployment figures to shrink by the day.

It’s a different story for many of our larger, more established firms who have been hit hard. Faith that their longevity will see them through or that the market will turn in their favour has proven ill-judged; instead, we hear of profit warnings, store closures and workforce reductions.

I expect this trend to continue unless more look to the UK’s burgeoning start-up community for inspiration and ape the entrepreneurial spirit that has been at the heart of economic recovery.

Innovation is king in business, but the trendsetters are almost always nimble organisations – those small enough to adapt quickly to the changing landscape. Business growth feeds on original thought and a willingness to try fresh approaches. But large corporations are notoriously slow at implementing new ideas, too often forced to play catch-up with smaller firms.

New businesses will always have the edge in this regard. Their very existence depends on being able to tackle new challenges and opportunities with an agility rarely seen in larger companies.

Take the e-commerce sector, which exploded with the onset of the internet. Companies that took advantage were not just established firms, but the previously unknown Amazon and Asos, which responded to opportunity with the pace and efficiency that was demanded. Their huge success illustrates the value of a quick response.

The internet proved to be a great leveller, providing a platform that gave even the smallest organisations an opportunity to reach out to the world. Overnight, it gave SMEs the chance to access markets overseas that would previously have demanded considerable budget and manpower. But it also rewarded good ideas, with many of the innovations introduced in the early days setting the gold standard for businesses the world over.

Size and logistics still play their part in achieving success, but it is also a question of having the right mindset – a buccaneering mentality that’s best embodied by the entrepreneur. Maintaining the start-up spirit is vital as organisations grow to become multi-nationals.

Since the recession, the UK has carved out a niche as Europe’s leading home for start-ups; Companies House figures reveal that well over 500,000 new businesses were registered in Britain last year. Some may prove to be non-starters, but the successful majority will share the same grain of determination and willingness to try something new. I’ve no doubt many of these new businesses will provide the answers to the problems that big business faces on a daily basis.

When I was director of marketing at Tesco in the 1990s, we were lagging Marks & Spencer and Sainsbury’s. Fast-forward to 1995 and we were both the UK’s No.1 supermarket and retailer. For all the talent and experience in our boardroom, it was a company no one had ever heard of that helped us get to the top.

If any business is to be successful it must be able to do one thing exceptionally well – listen to its customers. As any experienced retailer knows, it’s what the customer will do next, rather than what they are doing right now, that matters.

To catch up with our competitors, I knew we needed to get better at listening. When we wanted to implement the Clubcard we approached dunnhumby for help, a company that had begun life only a few years previously at the kitchen table of husband and wife entrepreneurs Clive Humby and Edwina Dunn.

Years ahead of their time, they recognised the true value of data and how it could be a gold mine for businesses looking to understand customers better. The resulting Clubcard proved to be the difference for Tesco, something others have since replicated.

For three years I have spent much of my time working alongside start-ups, advising those new to business how to set up and avoid making the mistakes that can prove fatal in a firm’s early days. Having been at the top of a very large corporate pyramid, I’m as aware that many challenges in the business world are unexpected.

Making the right decision is often a question of having the right experience, and this is where it helps to have someone who’s been there and done it. What start-ups need more than anything is practical advice and guidance – particularly when it comes to financing growth.

Business is supposed to be fun and working with small organisations allows you to concentrate on business itself rather than the wider governance issues at larger companies.

I recently joined Clive and Edwina at Starcount, a company that mines social media to develop analyses for companies in the same way we did at Tesco. I firmly believe that more companies could find their Clubcard if they looked to start-ups for solutions rather than solely looking for answers within.

Later this year, British corporations will get the chance to see what our small business community is made of at the International Festival for Business, for which I am an ambassador. Supported by the likes of UKTI, CBI and FSB, it will enable British businesses to start making the conversations and pursuing the deals that will significantly boost UK exports.

Last week’s ONS data showed exports of British goods are at their lowest for three years so there has never been a more crucial time for UK businesses to start thinking globally.

But, away from the international focus of the festival, it will also be an opportunity for British businesses to identify the as yet unknown companies with the potential to provide the final piece of the puzzle.

To get beyond the economic downturn, and the recessional mindset it has fuelled, we need to wring out every bit of the UK’s enterprising potential. Getting British businesses big and small to start thinking entrepreneurially is key.

Former Tesco CEO Sir Terry Leahy is an ambassador for the International Festival for Business (www.ifb2014.com)

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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