The value of experience.
Looking back through the business news over the last two weeks I found myself thinking about “experience”. This is generally perceived to be a “good thing”. Even when things go wrong we comfort ourselves with the thought that we can “put it down to experience”. However as I mentioned last week the FA have failed to win the World Cup in 15 out of 16 attempts, with 2014 being yet another opportunity to “put it down to experience”. They must now be the most experienced (and well paid) supposedly top flight football governing body at NOT winning the World Cup that there has ever been!
For those of us with rather more grey hairs than we would like there is the comfort that these are the result of years of acquired experience. We like to think that this experience is valuable because that means we too must be “valuable”. So here are few of last week’s business stories where experience or the lack of it have played a part and from which we can perhaps learn how to really get value out of experience.
Poundland floated on the stock market earlier this year and unlike a number of recent IPO’s has proved successful. The shares are up nearly 13pc on the IPO price with sales reaching almost £1bn in the year ending March 2014. But it wasn’t always like this. Poundland was founded in 1990 by Steve Smith but by 2006 its growth was stalling. The current Chief Exec Jim McCarthy was brought in to turn things round. McCarthy had been running Sainsbury’s convenience stores but had left the company to return home to the Midlands because of family illnesses. He accepted an offer to become CE of Poundland because they were based in Wolverhampton. So Poundland were able to attract a much more experienced leader than otherwise they might have.
However McCarthy did not solely rely on his own experience, being experienced enough to know he didn’t know everything. He recruited directors with experience of working with other retailers and a new Chairman, Andrew Higginson, former finance and strategy director of Tesco. He didn’t stop there. He travelled to the US to learn from the experience of discount chain Dollar Tree. Here he learned that Poundland had to learn to work with the biggest suppliers, rather than treating them as the enemy. Today Poundland works with leading fast-moving consumer brands to develop unique pack sizes that it can sell for £1.
So experience, plus even more experience, plus a willingness to learn from other’s experience delivers success.
Safe pair of hands
Justin King has now left Sainsbury’s leaving the business in far better shape than he found it 10 years ago. He is handing over to Mike Coupe the groups’ commercial director. He was one of King’s first appointments when he joined Sainsbury’s in 2004 and has been his right hand man for nearly a decade. So he certainly has plenty of experience and quite possibly the right experience.
However the times they are a’ changing! Sainsbury’s has now had two consecutive quarters of falling sales so is feeling the effect of the intense competition. In King’s own judgement growth in the sector will go largely if not entirely to online, convenience and the discounters. Sainsbury’s is well positioned strategically in the first two and with the announcement of its joint venture with Netto appears to have created an opportunity in the discount sector. So the pieces are in play but they will have to be played a little differently and at least one, Netto, is a new piece.
Succession at the top of well-established and currently successful business is a fine judgment. Is it more of the same, which Mike Coupe’s appointment seems to be, or do you need something completely different? I think his challenge will be can he do more of the same but differently enough to capture the growth that is not going to come from his supermarkets. He will need his own and others’ experience to do this.
M&S went through what is now becoming an annual festival of excuses for not quite hitting the targets it has set for itself. This time its online business was down 8% due to “teething problems” with its revamped website, compared to double digit growth in retail as a whole. Apparently customers had “taken time to establish how to use the new site”. So this is all down to customers’ lack of experience it would seem and sales should rebound when customers make the effort to use the new website properly.
On the other hand just maybe a lack of experience in online retailing within M&S’ management is more the problem. How else do you explain why existing online customers are required to re-register just because you have spent £150m revamping your website?
One interesting statistic slipped in by style director Belinda Earl was that one in five British men is wearing M&S slippers. Now given that one of their key challenges is to get the fashion offer right I am not sure that boasting about how you are number one in men’s slippers exactly squares with that. Is the experience of conquering the slipper market really what’s needed here? Experience is all very well but it does need to be the right experience.
You have got to be Kiddiecaring!
Morrison’s is selling its Kiddiecare business taking £160m write off in the process. It bought Kiddiecare in 2011 in an effort to boost its non-food and online offer. In 2012 it announced the business would double in size as it bought a number of superstores from the failed electrical business BestBuy. However less than two years later it is losing so much money, Morrison’s are having to offload it at a rock bottom price.
Quite rightly Morrison’s’ management recognised that it lacked “experience” in this sector and decided the way to solve this was to buy someone else’s (Kiddiecare’s) experience. That is all very well but as this “experience” has shown to do this by buying into a sector where you have no experience at all is not the way to do it. It is one thing to recognise you need experience, it is another to recognise what experience you actually need and how will you know it when you see it.
On that note
Here is a final thought from me. I have a lot of experience in business from many years of getting things wrong in order to learn how to get them right. That wasn’t necessarily the plan at the time but it seems to have worked out and some people have been kind enough to credit me with having a lot of experience. However I always caution them not to think that all they have to do is to do what I did and they will get the same result. The thing is that it is MY experience and it was THEN. You are YOU and the time is NOW. Some of what worked for me then will work for you now but not all of it. So the final trick is to select what will work for you now from other people’s experience. Something Jim McCarthy appears to be really good at.