Can Sainsbury’s and Asda merge to become a larger yet more agile business?

The news that Sainsbury's plans to merge with Asda, which has been confirmed today, has come as quite a shock. It is a striking example of two major retailers taking a very bold move to address the ongoing challenges of an intensely competitive industry.

If the merger goes ahead, the combined group will be led by Sainsbury's chief executive Mike Coupe, who has said that this is a “transformational opportunity to create a new force in UK retail, which will be more competitive and give customers more of what they want now and in the future.”  

This statement addresses the major challenges of competition and customer focus. Coupe has also recognised the need to create a business that is “more dynamic, more adaptable, more resilient” - better able to respond to its ever-changing, fast-moving marketplace.

Combining two well-established retailers will be a challenge.  Coupe and the new leadership team will need to manage the paradox of agile leadership: creating a new, connected organisation while at the same time disrupting that new organisation sufficiently to reinvent it in a way that can compete on a sustainable basis with competitors. What does this require? A major shift towards agile ways of working, with greater emphasis on simplicity, shorter planning cycles, ruthless prioritisation focused on what customers want, and embracing digital opportunities.

Couple has also said that the two supermarkets are "the best possible fit" and there is a widespread view from industry analysts that the two have complementary strengths on which they could collaborate. So, for example Sainsbury’s is stronger in e-commerce and convenience stores, Asda is more competitive on pricing and has a stronger clothing offer in George. 

The supermarket industry is notoriously cut-throat and has undergone great change in recent years as market leader Tesco has lost market share while discounters Aldi and Lidl have increased theirs. Industry disruption has become the norm, but in supermarket retailing that disruption has been coming from discounters or from Amazon’s recent foray into the grocery market. We are less used to disruption from large, long-established corporates.

If the merger goes ahead, can Sainsbury’s and Asda merge and become both bigger and more agile? It will be a monumental challenge, and will require a very strong leadership community in the new business, willing to embrace new ways of thinking, leading and working. The alternative is that the merger ends up being a defensive reaction to new market entrants with a different business model, which may delay but not stop their ongoing disruption of the sector.

Wenger leaves Arsenal with a lasting legacy rather than a leadership void

Arsene Wenger is to leave Arsenal after 22 years, three Premier League titles and seven FA Cups. 

Wenger introduced structure, rigour and discipline to a team once renowned for its drinking culture. He also instilled a great sense of loyalty and pride. In the modern world of football, there is often a focus on short-term results (and a tendency to sack managers pretty swiftly if they don’t achieve them). Although he has been criticised over the years for some of his decisions, Wenger always maintained a very clear sense of purpose and an unwavering long-term focus. 

Often when a longstanding leader leaves an organisation, it can leave a void which is difficult to fill. However, in Wenger’s case, the story has always been much more about the club than about him. Frequently described as a man of integrity, he leaves a lasting legacy which is much more about transforming Arsenal into a widely-admired, professional club than about any personal heroics of his own.

When Herbert Chapman managed Arsenal from 1925-1934 he became known as ‘The Great Innovator’ because he was concerned not only with winning trophies, but also with always looking for new ways to improve performance. Wenger helped to refocus Arsenal on this performance goal. He showed great commitment to the club and inspired others to do the same. His parting comment, "To all the Arsenal lovers, take care of the values of the club," demonstrates his desire for others to maintain this commitment.  

Thoughts on Holocaust Memorial Day

I remember when I visited Yad Vashem, Israel's official memorial to the victims of the Holocaust, in Jerusalem in 1980. I was 18, and it was a chilling experience, one that left a permanent impression in my mind about how humans can be so cruel to humans.
Friday was Holocaust Memorial Day and a chance to remember as well as to reaffirm the better side of human nature. At a time when bigotry and division are playing out on our television screens on a daily basis, I reflect that human nature is easily swayed towards cruelty. We need the leaders of our nation and of our organisations to act differently, drawing on our better nature and remaining connected, committed to peace and respect as a better way forward.

At times of unrest and uncertainty, we need purpose and direction

Watching the deaths last night in Berlin, Ankara and Zurich and the consequent cries for the West to change its mind from some leading politicians, I felt saddened.

As some of us react to these atrocities in our cities with an increasingly xenophobic view, we are accelerating the breakdown of the peace we seek at Christmas. We are in danger of handing power to those who favour isolationism and who believe that they are better than others who are not like them. I fear we are living in a simmering situation not dissimilar to Europe in the 1930s, where division and cruelty fed on dissatisfaction and the rise of right wing populism.

During periods of such uncertainty we have choices – to watch or to take responsibility, to follow or to lead. In organisations and countries right now I believe we need a stronger voice for the human values of respect for all, tolerance of those who don’t see the world in the same way as us, and the courage to be the best we can be. We also need leaders who can articulate a clear direction and a deeper sense of purpose, to engage with people from across the divisions of religion, politics and race in pursuit of a more peaceful and united future. Sadly we are witnessing the opposite in many cases, with populist leaders becoming more and more popular with their varying brands of intolerance. As Angela Merkel seeks to maintain the confidence of the German people in her vision of an open and generous society, I am willing her to succeed, and I hope other politicians will support her in her time of need.

I'm interested in what you think. If you’d like to share your views, please leave a comment below or tweet @SimonJHayward. 

Learning to lead through uncertainty: Business needs cohesion to deal with Brexit

In recent years, much has been written about our VUCA world, characterised by volatility, uncertainty, complexity and ambiguity. ‘Agility’ has become a buzzword as leaders learn to deal with unexpected situations as swiftly and successfully as possible.

Despite uncertainty becoming the norm in recent years, the UK’s vote to leave the European Union has presented many leaders with one of the most unexpected situations they have ever faced. Research conducted last month by Jelf Employee Benefits found that 63%of employers had not even considered the impact Brexit might have, and further research last week found that 83% had no formal plan in place to deal with it. Even amongst those who had planned for a ‘leave’ vote, many have been surprised by its impact.

The government has yet to trigger Article 50 of the Lisbon Treaty, Britain’s formal notice to leave the EU, which would give the UK two years to negotiate withdrawal. Uncertainty over how soon this might happen has led to a degree of nervousness among UK-based businesses. Nearly two thirds of Institute of Directors members think Brexit will be bad for business and director general Simon Walker suggested that leaders “will be busy working out how they are going to adapt and succeed after the referendum result.”

CBI director general Carolyn Fairbairn said we need “rapid clarity on who is making the decisions” and suggested the UK needs to get “calm and decisive leadership in place as soon as possible.” More calls for calm came from business secretary Sajid Javid, who warned companies not to panic.

Messages from prominent European leaders have been mixed. While German chancellor Angela Merkel said she would not push for an immediate withdrawal, International Monetary Fund chief Christine Lagarde has called for the UK and the EU to quell uncertainty over the implications of Britain’s vote by acting quickly and cohesively. Back home, Boris Johnson has asked Brexit voters to “build bridges” with Remain supporters who feel “loss and confusion”.

So, from confusion and uncertainty is emerging a desire for cohesion, connectedness – and clear leadership. What can business leaders do to engage and motivate employees with a future which, for many, is uncertain?   

I mentioned agility earlier. We often think of agility as important in responding to immediate, short-term challenges. However, it’s even more important to embed the long-term capability to identify and respond quickly to emerging threats and challenges in a world with high levels of complexity and uncertainty.

Even out of the EU, most organisations will continue to operate in the context of globalisation and international interdependency, either directly or through their customers.  More than ever, this highlights the need to be nimble.

Being nimble and agile is not compatible with a tightly-controlled command and control style of leadership. When faced with a difficult challenge, it’s tempting to take control back to a small group at the centre of the organisation. However, more sustainable success will come by developing a more ‘connected’, shared model of leadership across the business.  

The greater the complexity outside your business, the simpler it needs to be inside. The temptation is often to introduce a plethora of new systems and processes to deal with change. However, many successful organisations are choosing to simplify their ways of working as a way to increase agility and their ability to adapt to changing circumstances. Ruthless prioritisation is a good way to start this process of simplification.  It creates clarity for yourself and others on what to focus on and, perhaps more importantly, what not to focus on, in order to enable action in times of complexity and uncertainty. Set clear priorities for the business and for your leadership team, so that everyone can then focus on doing fewer things better.  As more clarity emerges over the weeks and months ahead, increased cohesion and connectedness can help us to reach a successful outcome.

Why great leaders are often great storytellers

This week is National Storytelling Week in the UK. Its mission is to promote the oral tradition of storytelling.

I have always been fascinated by storytelling in corporate life. At the heart of most successful organisations is a very strong sense of purpose and direction. Great leaders typically know how to create a solid sense of purpose by delivering the organisation’s narrative effectively and with genuine commitment. These leaders understand the power of communication and influence to connect colleagues to strategy.

Storytelling helps us make sense of what’s really important about our organisations. As leaders we can use the human desire to make sense as a helpful way to increase our people’s engagement and resulting discretionary effort.  I have written in previous blog posts about the American organisational theorist Karl Weick’s belief that sensemaking is, at least in part, grounded in what has already happened. Weick describes^[i] sensemaking as how people seek to understand the organisation in which they work as a social process of storytelling, discussion and simplifying complexity. Through this process we can help people to develop a shared understanding of what’s important and why, as part of the transition to becoming more connected.

We have worked with Shop Direct over several years. They have moved from being a traditional, paper-based catalogue retailer into a leading digital retailer. When I spoke to HR director Jacqui Humphries for my Connected Leadership book, she said that, “Storytelling is one of the most important types of communication in an organisation and I don’t think most businesses do enough of it. Most organisations ‘tell’ people what to do. Storytelling is all about increasing understanding and creating an emotional connection. It’s all about explaining why things are important and using real life examples. Storytelling is crucial.”

Jacqui will join me as a special guest panellist following a Connected Leadership masterclass at Manchester Metropolitan University Business School which will be co-hosted by the Chartered Management Institute on the evening of Wednesday 16 March. I am very much looking forward to the event, and know Jacqui will add a great deal of insight. If you’re interested in coming along, please let me know.

---

[i] Weick, K. The Social Psychology of Organising, 2nd edition, (McGraw-Hill, 1979).

Why I wrote my Connected Leadership book

I can’t quite believe that my first book, Connected Leadership: How to build a more agile, customer-driven business, is about to be published. I’m looking forward to actually holding it in my hands next week.

I’ve worked in the field of leadership development for over 25 years. During that time I’ve seen a great deal of change. When I first started working as a consultant, most organisations were still very hierarchical. There were a lot of ‘hero’ leaders around – people who single-handedly set the tone, and took all the decisions. Many created a great deal of dependency and stifled the people around them.

Then the world changed. Things started to become a lot more unpredictable. We had a digital revolution. The pace of change increased. Leaders had to change too.

Command-and-control leadership still prevails, but it is failing us. Rather than relying on people at the top of an organisation, we need to devolve decision making across the business. I became fascinated by this and decided to make it the focus of my doctoral research over five years at Alliance Manchester Business School. I also worked more and more with clients who were keen to develop agility in order to respond to rapidly changing markets and customer needs, and realised they needed to move decision-making closer to the customer.

The rigour of academic research enabled me to create a model of Connected Leadership. Working in partnership with clients, I was able to further develop the model and ensure it could be successfully applied in the real world.

I decided to write my book because I wanted to provide a clear and practical guide to Connected Leadership. I’ve included a series of tools and techniques to diagnose an organisation's current position and plot a successful course to a more connected way of working. I also hope the book will help individuals to change their leadership style.

I’m also very grateful to all the organisations who were happy for me to include their Connected Leadership stories. They really do help bring the book to life.

I found the whole process of writing the book very enjoyable – the research, interviewing clients, distilling concepts into useful tips, and working with the FT Publishing team, who were very supportive partners. It did of course take over my life at times. It’s nice to have weekends with family and friends again!

If you read the book, please let me know what you think. I’d love to hear from you.

Communities of practice

I spoke to a group of Jewish leaders in London  last week as part of the Lead development programme, and I was struck by the depth of value they derive from being part of such a well-established community. 

I worked in Israel on a kibbutz for six months before I went to university and back then I was impressed by how this secular community had come together to live and work in a cooperative and shared way.  Speaking to the leaders I met last week I noticed how they had a similar sense of being part of a wider community that was in many ways more important than their own personal wishes.  This sense of identity can be a powerful phenomenon in motivating us as human beings to put the wider good ahead of our own personal desires. I appreciate that there are political issues with this sense of community, and that there can be is a divisive nature to this sense of tribalism that leads to mistrust and sometimes to conflict.  As leaders we want to achieve a sense of community among our colleagues without it becoming a source of division (and conflict) with other communities.  It’s a fine and difficult balance to achieve.