Tesco's Leahy: My Work Here is Almost Done

If Sir Terry Leahy's announcement that he'd be retiring next March came as a surprise, the smoothness of Tesco's handover to IT and international director Phil Clarke didn't.

Succession is something Tesco is known to get right. Leahy's own appointment as CEO was perfectly executed by then Tesco boss Lord MacLaurin, credited with taking Tesco from a 'pile 'em high, sell 'em cheap' purveyor of basics to the 'darling of the sundried tomato classes'. Leahy has since grown it into the world's fourth largest retailer, with stores in 14 countries and a rapidly growing services offering.

And while Clarke's a relative unknown -- as Leahy was when taking over from MacLaurin -- he is a Tesco veteran with 29 years under his belt. Like recently appointed Asda boss Andy Clarke, he's a long-time employee of the supermarket and has operational and IT knowledge.

He also has invaluable Asian and European experience, essential for the Tesco Leahy leaves behind. Its ventures abroad haven't always been successful, but it's largely considered (one of) Sir Terry's legacies to the the business.

Is Clarke's IT background particularly significant? In a Telegraph interview in 2009, Leahy outlined a 10-year vision focusing on Tesco's services side (finance and telecoms), as well a building a business based around its loyalty Clubcard. This may be the next 'emerging market' opportunity for Clarke to take on.

Leahy's less obvious legacy is in the way Tesco measures management, using an adaptated version of Kaplan's 'Balanced Scorecard' called the 'Steering Wheel'. As the cycle that keeps the business generating new talent, it's unlikely that Clarke will meddle with this, at least in the short term.

But Tesco's wheel also represents the multinational's Achilles heel -- any business that generates its own talent by its own method runs the risk of becoming too introspective and self-reliant -- something Marks & Spencer suffered from as a result of Sir Richard Greenbury's low profile in the City.

Clarke may need to buck against Leahy's low-profile approach if Tesco's to remain 'approachable' to the City and customers alike, particularly if he's to carry on Tesco's aggressive push into emerging markets.