In the 1980s it was the shopfloor. In the 1990s it was the world of FMCG. Now management consultancy is fast becoming the finishing school of choice for retail chief executives. With new Kingfisher chief Ian Cheshire and DSGi’s John Browett both having begun their corporate careers at Boston Consulting, the new breed of bosses is making its presence felt at the very top of UK retail.
Cheshire and Browett certainly wouldn’t define themselves as management consultants. Quite the opposite. They have worked in retail for years. But those with consultancy experience are increasingly being placed at the helm of the UK’s retailers, so there is an irrefutable pattern emerging.
The question is, why? What are the skills they bring that are in demand? And how do they compare with a more traditional retail chief executive, who has clambered up the ladder since their days of grafting on the shopfloor or as a management trainee?
There is a certain irony in this perceived new trend – to be frank; many retailers can’t stand management consultants. Iceland founder Malcolm Walker, for one, doesn’t bite his tongue. “In my experience, management consultants – from the ones I’ve met – are generally super-intelligent theorists, but they couldn’t run a chip shop,” he says.
Despite such criticism – more on that later – there are definite advantages that someone with a consultancy background might bring to the retail boardroom.
HMV chief executive Simon Fox also started out as management consultant – albeit working as one for only two years. He considers himself a retailer through and through, but says his short spell in consultancy was nevertheless a formative part of his career. “It’s a fantastic grounding, because you’re exposed at a young age to a whole number of business problems and trained in the discipline of thinking through those problems,” he says.
Another skill is the ability to see the bigger picture. In the battle to win footfall, there is the risk of focusing too much on trading and not enough on building a sustainable growth strategy. As Moira Benigson, of Moira Benigson Executive Search, says: “You need strategic thinking and long-term planning, especially now, when you consider what’s happening in the market.”
Former Co-op chief executive Martin Beaumont, now chair of Skillsmart Retail, was at KPMG for 16 years, where he started out as an accountant before progressing to management consultant. Within only 18 months of joining the Co-op he was made chief executive of United Co-operatives and was promoted to group chief executive in 2002. At United there were, he recalls, “all sorts of issues” that needed sorting out. The strategic skills he learnt at KPMG made it easier for him to take an umbrella view of the whole business and identify core strengths and weaknesses.
“I’ve got huge respect for people that come up from the shopfloor, but coming from the outside I think I was well-suited to understanding the position of the business in the market and the steps that needed to be taken,” says Beaumont.
A management consultant’s life spent trawling around businesses in different sectors may be another advantage, because it can help hone analytical problem-solving skills. Berkeley Search & Selection chief executive Paul Meechan says he can see why those making the employment decisions are veering towards management consultants. “They’re dispassionate and will make wider business decisions based on that moment in time. Retail is a passionate business and some chief executives can tend to make some decisions based on purely a retail perspective,” he says.
However, there is potential flip side to employing someone with such strategic skills to run a retail business. Many retailers agree the business is not a science and consider being a good retailer often boils down to gut instinct. No amount of analytical acumen can compensate for an absence of trading instinct.
Walker reels off names of chief executives who have done the “long slog” – Sir Terry Leahy and Lord Kirkham being two in a long list. “They are down to earth, know their business inside out and their companies outperform year after year,” he says.
“Contrast them with the spiv who is parachuted in with a golden hello, generally sells a load of properties to bolster cash for expansion, usually issues a profit warning to lower expectations, takes a load of exceptional items to create a war chest and then usually ruins the company in a very short time. He is then paid a handsome severance package and moves on.”
In fact, a cartoon on Iceland’s web site – within a section entitled “Beware management consultants” – makes it quite clear that Walker thinks these consultants do little more than identify the blindingly obvious.
DFS chairman Lord Kirkham says starting out in retail is hugely beneficial. “There is no doubt that real-life experiences are in a different league to theory or pretend. In managing people, it gives credibility and respect.” He makes the comparison: “In order to save money today, airlines often let pilots add to their experience on a simulator. Would you rather fly with a pilot who learnt his trade pretending to fly or one who had real-life experience of storms, system failure and human error? Experience beats theory hands down every time. It just takes longer to get, but life has taught me there are seldom short cuts.”
He concludes: “Providing we analyse our experiences, identify what we are learning and apply the lessons, experience over a wide area of business beats theoretical learning every time.”
Chief executives such as Cheshire, Browett and Fox, though, all have finely honed retail skills. They are not new to the business and that is the crucial difference. It seems instead that their management consultancy grounding might have given them a deeper insight that recruiters feel puts them a cut above the competition.
So will we see more of this breed of chief executive? Heidrick & Struggles managing partner Fran Minogue believes so – not least because more people are opening their eyes to the benefits of management consultants in general. “Sir Geoff Mulcahy had a lot to do with bringing those kinds of people into retailing – he was also one of the first to start using McKinsey. He exposed retail to these sorts of people,” she says. And now that there are more people coming through university, Minogue believes that more people will consider this route to be a precursor to a successful corporate career.
There are others rising through the ranks, too; new Sainsbury’s convenience director Dido Harding spent two years at McKinsey before moving into retail roles at Thomas Cook and Woolworths, joining Tesco in 2001.
Exley Hervey Executive Search managing director Lesley Exley believes there is a definite trend. “Just like there was a trend a couple of years ago to recruit chief executives below the magic 40,” she says. But it also takes a special type of management consultant to pull it off. “They still have to understand what fundamentally makes retail tick,” Exley points out.
Minogue says the good management consultants turned chief executives are not afraid to balance their weaknesses with the strengths of others. “The key thing is to get board members who value both and recognise the strengths of both operational and strategic thinking,” she says.
Benigson agrees. “These people aren’t always the doers, but you can have trading operators who will underpin that. These people understand the bigger picture. While others are getting the product right, you need someone watching over new developments and formats and looking at what other markets are doing,” she says.
Notably, Beaumont, Fox, Cheshire and Browett were all appointed to businesses that are, or were, struggling or lacked focus in one way or another. Beaumont and Fox’s achievements certainly suggest that a fresh strategic vision can pay off and Benigson is convinced that under Browett, DSGi “will become an unrecognisable model”. One thing’s for certain: the pressure is on. This year, their cerebral skills will be tested like never before.
Sir Philip Green left school at 15 to work for a shoe importer and up his first jeans import business with a£20,000 loan. He turned around and sold the Jean Jeannie retail business, buying Bhs in 2000 and Arcadia in 2002.
Sir Stuart Rose first joined Marks & Spencer in 1972 as a management trainee, where he remained until 1989 when he joined Burton. After a role as Booker chief executive, he became Arcadia chief executive in 2000 and moved to M&S in 2004.
Lord Kirkham failed to get the required five O-levels to join the RAF, so got a job in a furniture store. He then rented a space where furniture was made and sold on site. He bought Direct Furnishing Supplies in 1983 and renamed it DFS.
Ian Cheshire studied economics and law at Christ’s College, Cambridge. He spent three years at Boston Consulting and then worked at Guinness, Pied a Terre and Sears before moving to Kingfisher in 1998. He became B&Q chief executive in 2005 and Kingfisher chief executive last month.
John Browett studied at Magdalene College, Cambridge and at the Wharton business school in the US for his MBA. After a spell at investment bank Kleinwort Benson and five years at Boston Consulting, he joined Tesco in 1998.
Simon Fox studied economics at Cambridge. He spent two years as a Bank of America international loan officer and then two at Boston Consulting. He founded Globus Office World in 1989, joined Comet in 1998 and moved to HMV in 2006.