Sir Terry Leahy's 8 Management Lessons

Customer Relationship Management
Customer Experience
There are many management styles and advice available to business leaders today, but maybe none as pertinent as lessons from Sir Terry Leahy, former CEO of Tesco and author of <em>Management in Ten Words</em>.

There are many management styles and advice available to business leaders today, but maybe none as pertinent as lessons from Sir Terry Leahy, former CEO of Tesco and author of Management in 10 Words.

Leahy is credited with turning Tesco into the U.K.'s largest retailer through such strategies as implementing Clubcard, Tesco's loyalty program; monitoring the shopping habits of loyalty program members and acting on that data, and visiting one Tesco store per week during Leahy's tenure.

Last week, during IBM's Smarter Commerce Summit in Nashville, Leahy took the stage to share some of his management lessons to help transform the customer experience. In a nutshell: Data alone won't cut it.

1. Find the Truth. When we come together in organizations, it gets harder to form a clear consensus about the world around us - really hard. Data helps, but even with the best of data...the leadership team needs to have the courage to confront what they're doing well and what they're not doing so well. Even with good research, we have to use it in a common way. We have to design the decision-making on the basis of that data and not have it locked away in parts of the organization. Customers are the most reliable guide. Be prepared to really listen to customers, understand their lives, fears, hopes, aspirations, and what they think of you as a business. If you listen, they'll show you the way forward. If you keep listening, they'll even give you a strategy.... Once I determined that the answer was to follow the customer, I never had to look for growth.

2. Have audacious goals. If you do for the customer, they'll repay you. I wanted to become the number one choice for customers in the U.K. We had to be as strong. We wanted to also be strong in non-food items, invest in services retailing, and become a leader in global retailing. And one of those would have been seen as ambitious, but it galvanized. We built all of these new things around a community of our existing customers. It was the affinity with our customers that would give us the permission to go with them.

3. Vision, value and culture. These are the most important elements and they speak to the heart of the employee. Our brand is built on people. You can have great systems and data, but they're affected by how they're related to customers. How they come about is interesting. We got all of our staff and we only asked two questions: "What does Tesco stand for?" And they said, "No one tries harder for customers"; and also, "What would you like Tesco to stand for?" And they said, "To treat people as you'd want to be treated." We built our entire business around those two things. Serving the customer and motivating our staff through building trust and self esteem were very simple pillars, but they were what made the difference. What we were able to do is take those internal values around service and utility and make them part of our brand communication. Customers got that message and Tesco was on their side.

4. Follow the customer. Where does creativity come from? It's already out there. If you encourage you organization to be creative and curious, then it's out there. If you can be the first to spot it, recognize the skills, and come forward with new ideas... We had to do more than motivate staff. We enabled technology, put heat-seeking cameras at checkouts to call for new staff when lines form, and removed queuing.

5. The steering wheel. We used Kaplan & Norton's Balanced Scorecard. We looked at the customer, community, operations, people, finance.... Everybody knew the difference they made and how they were doing as a team.

6. Data is priceless. One thing that was going down in price every year was the power of data because cost of computing. That's why I launched Clubcard in 1995. We had to wait until we had enough computer power so that we could analyze shoppers' behaviors. Now, what I can really do with the data is tailor or target my responses to individual customers and that transformed the productivity of the marketing.... We turned data into useful insights.

7. Competition is good. We sorted out competition and it made us a better business. We always looked at the strength in those companies. That forced us to innovate and take risks. Finally, looking internationally, we couldn't be the same everywhere. Competitors were different, consumers were different.

8. Leadership. I found that the marketing officer can step forward and be the voice of the customer for the business. That's the basis for transforming the customer experience. You have to call the whole organization to the needs you know the customer has. Increasingly the chief technology officer can also give that leadership...and can even guide the board and CEO. A leader takes you further than where you would have gone. It's what you enable other people to do, how you empower teams, how you inspire, and the direction you can give them. You don't want one leader in an organization; you want thousands of leaders.