MARKS AND SPENCER

How Not To Manage a Turnaround, Part three

STUART ROSE AND COLLEAGUES GET STARTED.

Our first two pieces on the M&S turnaround have been highly critical. We believed that the first attempt, led by Luc Vandevelde, hardly scratched the surface of the massive organisational and cultural problems stored up over many years. Then, the abortive Green 'bid', which attracted speculators like flies to a jam-pot, did little to further the cause of constructive change.

Well, things have changed. Mr Green has retreated, muttering, to a respectable distance - but could return if it is judged that Mr Rose and his colleagues are not delivering the bacon. It is also certain that M&S will face stiffening competition from Bhs, Green's most effective vehicle for piling on pressure.

So, where are we now? Well, in our humble view, Mr Rose and his team are doing the right things so far. Marks and Spencer have announced that they are:

• throwing a bone to investors by way of a £2.3 billion share buy-back.
• selling their financial services business.
• purchasing the Per Una brand
• aiming to reduce costs and raise gross margins by a substantial margin

In addition, they aim to clarify accountabilities and simplify the workings of the organisation 'to get the business back to acting like one shop'. They are also going back to basics and simplifying their range of offerings. This has to be right, as a company with an organisational history like M&S's is only likely to be able to cope with a relatively small number of change and improvement initiatives. The new team sound to have focused on what is most important.

All of this seems like good sense. But it will only get them to the starting line. What Mr Rose and his colleagues are doing is 'clearing the ground' for the real change process, which is only just beginning.
One of the mistakes of the previous regime was to make a bright start, and after only two years or so, to take their eyes off the ball before the old M&S culture was really changed and a healthier one firmly established. As we have all seen, it looked for a bit as though Marks had turned the corner and then it all slipped back.

We referred to the turnaround of IBM led by Lou Gerstner as taking some 8 or 9 years. M&S is in a much simpler business and does not have real global scale to contend with. Nevertheless, changing norms and standards and the habits of half a lifetime in a large organisation facing a very competitive market with a thwarted tiger growling and snapping at your heels is no easy task.

Mr Rose and his colleagues have a transformation of considerable magnitude to lead, and such strategies take stamina, patience and lots of time.

We hope that investors will have the patience to enable sustainable change to happen, and also that Mr Rose has the stamina to stick with it for the 5 or more years that it take - there is a significant number of current and ex-customers who hope that he will.

Many people will want to hear from the M&S board about how they are progressing - investors, speculators and Mr Green will be deeply interested in what is happening.
What should they hear - nothing, not for a long time - as with Lou Gerstner, Mr Rose and his colleagues should be too busy working on their transformation to talk to outsiders. A progress report in a year should focus on how the process is going, not on results, as whilst progress may have been made, it will not be sustainable after only one year.

PS. To explore a little more of what is entailed in leading a business and organisational Transformation, see the Chapter on Change Leadership in the 'Good practise and cases' section of this website.