Never waste a good crisis

If any CEO knows about marketing’s contribution to success it is Tesco’s ex-marketing director, Sir Terry Leahy. Here, he urges marketers to take advantage of these difficult times

I was the first marketing director ever on the board of Tesco and the first marketing person to be CEO. But I’m no longer a marketing CEO, I’m now an investor and I think like an investor which now means I’ve not the first idea what marketing’s about. I assume, as an investor, that marketing should be left to the accountants.

So my first observation is that, as a profession, marketers need to do more to tell the world – investors and finance people – of the vital role that they play in modern commercial enterprise.

These are difficult times. We’re four years into a recession or at least slow growth. But my own feeling is that these can be the best of times for marketing. When times are good for everybody, it’s easy to do well. It’s in the difficult times that a brand and a person can make more relative progress.

But to do that you have to break out of the straightjacket that gets slowly wrapped around you within your organisation: the conventional, a comfortable way of how you see yourself, the business, your customers, your competitors and your products.

You’re framed by habit, by the budget, by comparisons with last year or last month or last week, and meeting sales targets. If you’re not careful, all these things can slowly suffocate you and your ability to see things fresh and new.

A crisis, when things may not be working as well as you hoped, is a great time for shaking all of that up. It’s a time for breaking away from it and starting out again with a clean sheet of paper and a really fresh look at the business, at yourself, and above all at the opportunity.

Making the most of it

Here are eight things you might want to write on that clean sheet of paper.

1. The first is finding the truth
It’s incredibly difficult for organisations to see themselves as others see them. There’s a whole mechanism for filtering out the truth from the outside world. We’re all part of it and research can be the worst in terms of giving you a version of the truth rather than the actual truth.

Research tools are very useful but research is like going into a dark room with a torch and all you see is what the torch beam lights up, you don’t see the whole room. So look at life. Look at what’s going on in the world, look at your customers, , the lives that they’re living, their problems, hopes and fears .It’s out of that empathy that the truth emerges.

I’ve never had to look for growth. I just listened to customers, listened to how they talk about how their lives were changing and the direction that they were going in. All I had to do was try to follow them and try to stay close and be first to respond when a new need emerged. That gave me all the growth that I ever needed in my time at Tesco.

2. My second piece of advice is think big
When the architect Daniel Burnham entered a competition for the rebuilding of Chicago which had burnt down at the beginning of the 19th century, he simply said make no little plans. We’re not on earth to make little plans and so if you’re going to do something, make sure the world notices it.

'Marketing is the best place in an organisation from which to lead because you’ve got the greatest power in the business – the voice of the customer. You have the moral authority'

And don’t let the right idea be diminished by going through a management process. The Club Card would never have been launched if it had gone as an idea through a budget process. But we believed it was the right thing to do. We’d secretly trialled it without telling the organisation. Customers told us they loved it even though we had no idea how to make it work or how to make it pay. But we knew if customers valued it we could push it though the business and to make it happen.

3. Take risks
All the things that I’m proudest of in my career would have got me fired if they’d turned out differently. You can draw much more from organisations than they think they’re capable of delivering and the marketing role is a terrific place from which to draw out that extra capability. But you have to take a personal risk and you have to encourage the organisation to follow you. There are only two limits I’d ever put on that – be true to your values and never bet the company.

4. Create
Marketers are creative people and should be turning the whole organisation into a marketing department. What you have is the voice of the customer, which is the most powerful thing in an organisation. You must make the whole company – even the accountants – serve the customer, not just the marketing department or the sales department.

A business is never happier than when it’s innovating and finding new solutions. People will follow you because they like to create and to make things better.

5. Communicate
We marketing people are not always good all-round communicators. We focus very much on narrow audiences. What I have in mind is not so much external communication to consumer but internal marketing within the organisation. If you gave more thought to that you’d find it much easier to take the organisation with you in the things that you want to do.

I’ve often come upon very frustrated marketing people complaining they can’t get support for something. But they haven’t used their own skills to communicate what it is they’re trying to achieve, why it’s good and what help they need from other people. We felt this was so important in Tesco that we used to bring journalists in to teach us how to communicate.

6. Teach
Marketing people are experts, but we’re not the best teachers; we’re too busy doing. Take time to pass on the skills that you’ve got. Take a day a week or a day a month, whatever you need. It depends on your circumstances, but take enough time – probably more time than you think that you’ve got – and start young.

I spotted Tim Mason, my marketing director for many years who now runs Fresh and Easy in the US, at the age of 23. Caroline Bradley, the UK marketing director was 22 when she first came to my notice. Richard Brasher who runs the UK business, he was 22; Phil Clarke who runs Tesco, was 25. Those graduate trainees are your future marketing directors and CEOs so pay attention to them from day one and pass on your skills.

7. Above all, lead
A definition of leadership that I like is this: a leader will take you further than you will go on your own. That gets to the heart of what leadership is about: not what you do as a person no matter how skilled you are, it’s what you cause other people to do. It’s the impact that your ideas have on other people. Furthermore, an organisation doesn’t want one leader, it wants thousands of leaders, people who feel good about the business and are prepared to step forward and take personal responsibility to get something done in any given situation.

Marketing is the best place in an organisation from which to lead because you’ve got the greatest power in the business – the voice of the customer. You have all the moral authority on your side.

8. And finally, act
You may know the truth, you may have an ambitious vision, you may have a great plan, but all of it amounts to nothing if you don’t act. And to act you need a process. A lot of marketing people fall down on process. They’ll say if I wanted to be good on process I’d become a management consultant. But the fact is if you’re going to turn an idea into something for customers that changes their life you need a process.

I’m actually optimistic looking forward, People have lost sight of the fact that the world’s economy grew last year by just short of 5% and I think this year it’s still expected in to grow at 4%. We obviously are slower in recovery than we expected but, what’s been missed is the extent of the oil shock that’s hit the consumer and hit the economy.

By some measures when the oil price doubles, an economy will shrink by 5%. In fact, the oil price has virtually doubled It went up to $140 which was the start of the recession in 2007/2008 but then collapsed down to $50 which was right in the depths of the recession and which fired the early recovery. Then it rushed up again in the UK to about $130 and that really is a big brake on consumer spending and consumer confidence. But as that is slowly embedded, or if the price subsides a little bit, I think you’ll see a stronger recovery coming through.

Drivers for growth

Underneath all of that and largely unaffected by the economic cycle, you can see drivers for growth. Tapping into them may not solve all your problems but they’ll give you a following wind. And the first of those is trust. In a very complicated world people increasingly navigate by institutions, people and brands that they trust and so it’s very important that you have a relationship with customers based in some way on trust. You can’t buy it, you can’t get it through advertising, it has to be earned through reliable performance day in day out. It needs complete transparency in how you go about business.

The second big driver for growth is information. We have more information than ever on our customers and they have more information than before on us. As I’ve stepped outside of Tesco and looked at businesses around the world, most business are nowhere near their full potential in terms of harnessing the data about their business and customers and really using it beneficially.

Also they’re nowhere near appreciating that you’ve got to really engage with customers and look for a much richer, deeper relationship based on the knowledge that they have about you. Those customers can be real advocates of your business they can actually be like employees. They can design your business and give you feedback on it. They can be champions of your business and give you early warning about your products, but you’ve got to engage them.

Health. It’s anthropological fact that everybody wants to look good and live forever. That’s what drives us and any business; any product or service that promises some help in that direction will see above-average growth.

Convenience. People feel that they’re busier than ever before. It’s a moot point whether or not they are actually busier than ever before but they unquestionably feel it. So a product that promises convenience will see above-average growth.

And it doesn’t have to be complicated. We created Tesco Express just from a simple observation years ago that people were too busy to get themselves organised for a weekly, one-stop shop. They wanted the store to come to them. And so we had to miniaturise it and put it right next to where they were and that simple observation turned into a business worth billions of pounds, it was a fast-growing format all over the world.

Simplicity. It’s a linked point but you’ll know that people almost have too much choice. They want you to understand what their needs are and solve those in a satisfying way. Technology is helping enormously. The one that always springs to mind is how the ATM machine not only transformed banking but also transformed people’s relationship with machines. And there’s another round of that coming with mobile commerce. Over the next few years it’s going to transform how people do business – including retailing. Loyalty. Far too much of marketing spend goes on chasing the promiscuous customer and that’s a very poor investment. Putting more of your marketing monies behind rewarding your existing customers and encouraging loyalty will give you a far better return on investment.

The final driver is sustainability, going green. People used to ask me if you can grow a business and be green. The question now is will you be able to grow if you’re not green? In the first case it’s because you’ll constantly be being rocked, by unexpected regulation, taxation, proscription from increasingly anxious politicians who are trying to address the issues around climate change and sustainability. So unless you see those things coming you’re going to get hit. I believe that, increasingly, customers will want to know more about the effect you’re having on the environment as you serve them and you’re going to need to reassure them that it’s beneficial.

'Customers will want to know more about the effect you’re having on the environment, and you’re going to need to reassure them that it’s beneficial'

A new generation of skills

The 20th century was a miracle of mass consumption in the West; it was a miracle of how marketing and supply chains came together to enable hundreds of millions of people to have a better material life. In the 21st century billions of people in Asia will demand that same right to a better life.

There’s no use asking them not to consume, that’s not going to happen.All we can hope to do is to create a new form of consumption that is not reliant on the planet, on fossil fuels, and we can grow and decouple from the depredation of the natural resources.

That needs a new generation of marketing skills. It can’t be done by regulation or by taxation or by prescription, it has to be done working with the grain of consumers aspirations. You have to make being green desirable, you have to make it affordable, you have to make it easy, convenient, all of those things that we spoke about earlier on and if you do that then you will play your part in creating a consumer revolution, a green revolution and that’s a wonderfully worthwhile role for the marketing profession.

Sir Terry Leahy is a former CEO of Tesco and will be speaking at our Annual Conference 2013.

Our Annual Conference is a day of three parts: helping you become more creative as an individual, more creative at work and more creative in the world at large. Led by our cast of inspirational speakers, from inventors to entrepreneurs, investors, brand guardians, business leaders and creative thinkers, this is an intensive one-day toolkit to boost your creativity.

For more information, or to book your tickets please view the event page.