08 Jun With retail in free fall, along with the language used to describe its problems, is it Time for a Counter-revolution?
A few months ago, we wrote a blog about the need to communicate effectively with a younger audience. (‘Have you met the new boss?’) We said that informality, spontaneity, brevity, honesty, enthusiasm, and modesty were great values to embrace for any age group and at any age. All these values shone through in a recent presentation to graduates by Stephen Clarke, CEO of WH Smith.
As Clarke pointed out, “WH Smith has been doing the same thing for two and a quarter centuries”. But his own delivery could not be more contemporary. An open necked shirt and an openly gay senior manager, Clarke and his company might superficially seem an unlikely pairing. One has been around for a very long time indeed. The other, although doubtless he would hate even the suggestion, could be a poster boy for bleeding edge management techniques, including being the first large organisation to train and deploy mental health first aiders throughout the company. Yet Smiths, as it has been known to generations of customers, and its CEO are very much on the same page.
Both value clarity. Both know exactly what they are doing. And both take criticism with a pinch of salt that’s justified by their consistently positive performance, in a landscape Clarke describes as ‘economic anarchy’. Clarke recounts how in his first day in the job, a shoal of letters passed onto his desk all bemoaning the fact that “WH Smith isn’t what it used to be”. Yet the customers keep coming, in the UK and across the world in 27 countries.
In the midst of never ending market disruptions, marked by the weekly failures of other big brands, what makes this quintessentially British ‘traditional’ retailer a true counter-revolutionary? And how does the CEO’s communication style both reflect and drive the company’s sense of purpose?
Clarke sums up his role in life as leader of WH Smith with exemplary clarity: “my executive decisions need to be credible, deliverable and consistent with the market drivers”.
On the reasons why the company has not rushed to join so many others attempting to emulate Amazon, he is equally clear: “change or die is pointless if you get the change wrong and die faster”. He backs up this beautifully simple assertion with the story of Argos, whose market value had plummeted from GBP 4 billion to a hundred million by the time Sainsbury’s acquired parent company, Home Retail Group. The reason for this spectacular decline? Argos spent a fortune on a halfway house attempt to replicate the Amazon service offer. And it didn’t work.
On the future of retail, he is realistic but robust. It is unfair and yet a fact of life that the key disruptors of bricks and mortar shopping don’t pay business rates and rents and hire fewer people. Does it spell a terminal low for the High Street? Not if you are at the right end of it. That’s why WH Smith never sign leases longer than four and a half years, so they are not locked in to locations that no longer work for them.
Can you tell the future? No. But you can exploit the opportunity provided by predictions of 4 percent year-on-year growth in passenger numbers at airports. And you can take a tightly managed strategic decision to bear the steep cost of airport rents, while expecting to see return within two years on every investment made.
Clarke spoke for an hour, without notes. He laid out a corporate agenda that was clear, open, sensible and grounded in the realities of his marketplace without being crushed by them. His counter-revolutionary thinking has been to challenge the wisdom of crowds: in this case the hoards of analysts and experts who all advocate the race to an ecommerce model. As he says, “you don’t go onto Amazon to order a bottle of water at the airport”.
Is this counter-revolution against the idea of digital as unbeatable working? For sure it is commercially. The WH Smith stock market performance consistently grows value for shareholders and blocks attempts to profit from betting on the company’s decline. (One hedge fund gave up shorting the stock after losing 60 million dollars.)
It cannot be coincidence that the CEO’s mantra is “do what you are good at and what you enjoy” while the company he leads succeeds on the same terms. Right time, right place, right product and service thinking are all supported in the case of WH Smith with the right words. Short, simple, direct and confident. Success can be stated clearly. Equally, behind the words, success demands clarity of intention and action.
In stark contrast, complexity, complication and convoluted communication all favour and reflect failure. So keep it simple. It’s not the same as simplistic. And if you can’t say why you’re doing what you’re doing without resorting to management speak, you’re probably doing the wrong thing.