The City often has been a bit sniffy about marketing people who make the leap to chief executive. So Dave Lewis, who is embarking on his first day running Tesco, has one more prejudice to overcome as he seeks to turn around the grocer.
Over the past 20 years, a financial background has become the most common route to the top of plcs. The path from chartered accountant or management consultant to plc finance director and then chief executive is well trodden, well understood and well regarded.
Titivating Dove soap and flogging detergent to Argentinians — two of Mr Lewis’s career highlights — is a less orthodox journey to the top. Given the choice between product puffers and beancounters, fund managers instinctively favour the latter. Bosses with a background in finance are reassuring: they know the quaint ways of the share market; they’re naturally disciplined on costs; they speak the lingo.
They’re also boardroom savvy. The CFO automatically gets a place on most plc boards; the marketing chief — rarely. Mr Lewis never reached the boardroom of Unilever, his employer of 27 years, and has any listed board experience only because of two years as a non-exec at BSkyB.
Marketers have been regarded with suspicion. Far from being natural cost disciplinarians, they can have a disconcerting habit of wanting to spend money — on product launches and advertising and sponsorship.
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Yet times, perhaps, are changing. The emphasis is shifting from cost control and financial engineering to top-line sales growth and building lasting customer relationships. For that, a marketing background becomes more attractive.
Three twentysomethings arrived on Procter & Gamble’s trainee programme in Egham 20 years ago. One was given the task of boosting sales of Pantene shampoo, the second was put on the Oil of Ulay account and the third was given Pampers. Gavin Patterson, Lance Batchelor and Paul Geddes now run, respectively, BT, Saga and Direct Line.
Being given responsibility for a single product, however narrow or ephemeral, is more instructive in developing a future chief executive than the facility to juggle numbers and empathise with analysts. Mr Lewis carries the hopes, not only of Tesco shareholders (of whom I am one) but also of all ambitious youngsters clawing their way up the slippery pole in sales & marketing.
No quick answers
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The choreography from Tesco on Friday was interesting. Not only is Mr Lewis coming in a month earlier than planned, but he already has sanctioned the slashing of the dividend. It was a compelling way of signalling a sense of urgency to colleagues and suppliers, while giving him considerable financial flexibility. But some shareholders are unhappy. The chunky yield was one of Tesco’s attractions and to decimate it before explaining what is to be done with the cash it releases seems premature.
It may prove to be only the beginning of a somewhat choppy relationship with some in the City, especially those expecting quick results. Turning around a giant with 500,000 employees in 12 countries obviously is going to take years. Inevitably complacency, arrogance and bureaucracy have crept in and will take time to stamp out.
Don’t forget Mr Lewis is a protégé of Paul Polman, the Unilever chief, who has been a vocal critic of City short-termism, a scourge of hedge funds, a pooh-pooher of forward guidance and quarterly reporting.
Shareholders will need to be patient. Whether they will be is another matter. The rival Sainsbury’s enjoyed two golden eras — one under Lord Sainsbury of Preston Candover, the other under Justin King. Between them came 12 wilderness years — and no fewer than three chief executives, each of them sacked.
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Card sharp
It shouldn’t be all gloom at Cheshunt. Mr Lewis has two valuable advantages over his rivals and he should exploit them relentlessly. One is scale, at least in the UK. If he does choose to intensify the groceries price war, Tesco has the resources for a long siege. It also has more buying clout than anyone else to force suppliers to share the margin pain.
The other is Clubcard. Talk to Tesco shoppers and the loyalty card constantly comes up. It has proved a fabulous tool for fostering loyalty and recapturing defectors. But there is further it could go in tailoring offers and building a warmer, more lasting relationship with customers.
One mum who has been an online customer for ten years says she gets fed up because of the poor stock availability and often defects to Ocado, only to miss the Clubcard points (and the Finest sausages) and comes back to the fold. Yet, tellingly, after a decade (that’s roughly £100,000 of spending) she feels she has no real relationship with Tesco.
Every shopper has a different story. Tesco, through the Clubcard database, knows every page of that story. Harnessing that information more effectively and applying some warmth to the relationship may just take a marketing man. Tesco is too big and ugly to become a national treasure, but it doesn’t have to be quite so unloved.