GOOD NEWS AT M&S, SAINSBURY AND BOOTS!!
Dilbert Principle Vindicated, to Amazement of Pundits.

Scott Adams, author of 'The Dilbert Principle', one of the greatest management books of our time, was once asked about the secret of successful enterprises. He replied, "Left to their own devices, companies with effective employees and good products usually do well. Ta- daaaa!"

Confirmation of the wisdom of the great Dilbert has arrived in the form of excellent news from Marks and Spencer and Sainsbury.
Boots the Chemist, to give them their old name, also seems to be responding well to the Dilbert treatment, but already dark clouds loom in the form of a non-Dilbert deal that may derail the whole recovery effort.....
Julia Finch writes in the Guardian of April 12 2006: Like Sainsbury's chief executive, Justin King, and to a lesser extent Richard Baker at Boots, Mr Rose (M&S CEO) appears to be doing what some analysts not long ago believed was all but impossible. .... M&S, Sainsbury's and Boots were condemned as 'legacy retailers', dowagers of the high street whose time had passed......
While the rest of the High Street was enjoying boom years of spending, the legacy retailers were finding the going increasingly tough. Plenty of City analysts believed that there was no way back........ In recent weeks, however, there has been evidence of new momentum at Marks and Spencer and Sainsbury's as their sales and market shares have climbed......
Each has followed a similar strategy of refocusing on its core business, quality and value in fashion and food, and, at Boots, the pharmacy, health and beauty.
Prices have been cut to close the gap with cheaper rivals. Down-at-heel stores are being upgraded. They have axed time-consuming distractions and poured resources into customer service: longer opening hours at Boots, more shop floor workers at Sainsbury's and M&S staff are being sent off on motivational ra-ra days. Shareholders have seen the benefit.......
What Ms. Finch has omitted is that M&S, a little like the John Lewis Partnership, are sharing some of the spoils of success with the whole staff, rather than squirreling it all away for the directors (although Mr Rose is unlikely to starve).
Similar expressions of surprise were to be observed in the London 'Evening Standard': ....my local Marks and Spencer was packed..... I knew then what I'd suspected for a while: that Stuart Rose really is working a miracle at M&S.

The Amazing Simple Verities of Running a Business

This is all very puzzling. Are these recoveries all about fairy dust sprinkled by magic individuals or is there something even deeper and more mysterious?
Isn't business all about offering customers the products or services they want at good prices, delivered in a reliable and committed manner by well-trained staff, working in good conditions with appropriate motivation and rewards? Don't companies whose managers know the business, are committed to high standards and whose leadership is clear and visible to staff tend to do well in the long run? And don't companies that lose sight of these simple truths fail? But if the rot is caught in time and the leadership returns to the well-known (in some quarters at least) verities of running a business, won't things get better as long as the organisation is not jerked about by impatient deal-doers and financial engineers?
Not, it would seem, in the minds of many analysts and commentators, whose heads are filled with other ideas, like 'Superhero CEOs', 'legacy retailers' or 'break-up to focus on the core and realise value' and other intriguing notions.
However, before we get too excited, we should remember that M&S has had a false dawn before, when a recovery under Luc Vandevelde was prematurely heralded. Mr Rose and his compatriots need to keep going down the same path for some years yet to make the improvements really sustainable.

Now, the dark cloud at Boots.....

Imagine a fantasy board meeting of a large and troubled enterprise. The proceedings are opened by the Chief Operating Officer:
COO: "Gentlemen - I can report significant improvements in trading and margins as a result of manning checkout counters so that customers do not have to queue for hours and improving store layout and merchandising. We have also rationalised our product ranges, enhanced our customer offering and pricing, and closed some of our more outlandish new ventures, whilst improving manning, training and staff recruitment. The board will also be pleased to know that we have ironed out most of the supply chain problems, and the computer system seems to be........
Non-Executive Director (interrupting): "Mr Chairman, can we move on and talk about strategy? I believe that you have made contact with a potential merger partner. I hear that there are exciting synergy opportunities, with savings of over £100 million as a result of banging the two companies together. What are the prospects?"
Chair: "Now you mention it, there is a big deal opportunity. As we have finished with routine operational issues, perhaps we could get on to the next item on the agenda, entitled 'Merger proposal, Project Godzilla' in your board papers. And, with the board's permission, I will ask a team of advisers from our lawyers and investment bankers to join us......."

It is strongly rumoured that Boots is in deep discussions with Alliance Unichem, a retail and wholesale healthcare company, to put the two companies together, thus creating one of the biggest European companies in the sector. Surely a great opportunity? Some City folk are not so sure. What do you think?

Here is a second piece of Dilbert wisdom to accompany that at the beginning of this article: Any activity that is more than one (OK, we'll concede two) level from your people or your product will ultimately fail or have little benefit.
People should not be allowed to function as top managers, stock market analysts or financial journalists until they can repeat the two key Dilbert mantras and demonstrate a full understanding of what they mean in practice.
Or further reading about the M&S turnaround, please go to:
Leadership section index
Rose and Co. get going in the 'Investor and Manager Performance' Section.
This piece was written in 2004. You will also find material about previous false starts for M&S in the same section.