In Australia we have a few great companies that have been successful over several recessionary periods – say 30 years – due to the leadership teams creating and then maintaining a strong culture of success.
Leading Initiatives Worldwide, a leadership consultancy that works with global organisations and governments, talks about a “legacy of leadership,” the term best used to describe, when done well, the orderly passing of a whole culture of success from one leadership team to another.
Sometimes this change is within a long established company, with large founder shareholding, PBL with the Packer legacy in its third generation. Sometimes it’s within a long established company where a more recent rhythm of success has been achieved, such as QANTAS with Dixon/Joyce or Woolworths with Corbett/Luscombe. Infrequently it’s within a relatively young company that has achieved truly stellar performance due almost solely to a very strong culture of performance harnessing assets, making more good and consistent decisions and making money. This would refer to Chaney/Goyder at Wesfarmers.
Well, within JB HiFi we are witnessing the passing of the baton within a company that, while many years older than the public face we know and love to shop at, is really only a very cool 10 years old. The baton is being passed from Richard Uechritz, who is the outgoing CEO and architect of the transformation of this small chain into a $2 billion-plus shopper mecca. The baton passes to Terry Smart, the current COO.
Terry, if not one of the architects, was the key building contractor in JB HiFi’s construction and the man who knows what’s in all the ducting, bricked up alcoves and basements within JB HiFi… because he and his team built it, brick by brick.
So what can we expect in the Legacy of Leadership where Terry Smart takes over the day to day executive responsibility for leading this fast growing and profitable retailer, coming from an operations background?
Let me give you a parallel from within my own business, CROSSMARK – the global business.
Similar in culture to JB HiFi in several ways, this business has also just undergone a baton passing, with our new CEO coming from within our ranks, and from the COO role. The similarities are that like JB HiFi, but 105 years old rather than 10, CROSSMARK only truly hit its straps 10 years ago when the current leadership team transformed the small regional company of 2,000 staff into an international company with over 30,000 staff.
The previous CEO, now Chairman, lead a process of significant and visionary change built on excellent and innovative service delivered via a class-leading operations and technology structure. When the time came to pass the baton, the COO, the building contractor who had built all of the systems that deliver the service, was appointed CEO. What did we see?
Well, contrary to popular preconceptions, we didn’t end up with a soulless and numbers driven culture, anymore than when Richard Goyder stepped up from CFO to CEO at Wesfarmers, or when Alan Joyce went from building an airline at Jetstar from scratch (now that’s seriously operational) to replacing Geoff Dixon as CEO at QANTAS, arguably one of Australia’s best marketers.
What we did see in all cases was a very successful entrepreneurial leadership style, morph gently into a more systematic and productive business rhythm. That great service and innovation that had been the bedrock of growth is now delivered with less financial cost, less time and less duplication or wastage.
What does that mean?
It means that the cost to provide great service or products drops more, the already compelling reasons to shop a company’s products or services becomes more compelling, business acquisition accelerates and it is all done with less noise and increasingly happier stakeholders.
So JB HiFi under Terry Smart by 2012? Probably around a $3.5 billion company with almost 200 stores.
So, a slowing of top line growth and store numbers when compared to the past five years, but the lowest shelf prices and highest gross margin return on inventory in the sector. Oh, and a non-exec director on the board who will continue to reap the residual benefits of having created a legacy of leadership.
In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
