Tesco's Real Strategy Secret

Last Updated Sep 8, 2008 11:58 AM EDT

Sterling Performance's post on Tesco explains how the supermarket made the Balanced Scorecard central to its success. Yet I think it missed out a vital ingredient that I do not see in many other organisations. Persistence.

Tesco has not been using the Balanced Scorecard for just a year or two. It has been using it for over 15 years. It is not a flavour-of-the-month or additional management report, it is the core tool through which the business is managed.

Tesco's persistence isn't limited to the Balanced Scorecard either. Take the Tesco Express format: first outlined and tested in 1993, five years later the company still had little more than a dozen Express stores.

During that period the concept team continually fine-tuned the business model. The number of stores finally achieved lift-off in 1999, six years after the first trial, when a deal was struck with Esso. The rocket-boosters were then fired in 2003, 10 years after the concept was first announced, after Tesco acquired the T&S convenience store chain. The supermarket now has 735 Express stores in the UK alone.

So what are the drivers behind Tesco's persistence? Let me give you three factors.

  1. Separating strategy and tactics. Strategy is what you want to achieve, tactics are how you achieve it. Tesco's leaders established a strategic goal to develop a winning convenience store proposition. Focusing on the goal, it refined its tactics when the first trial stores didn't fully deliver, ultimately achieving their objective.
  2. Consistent management commitment. Tesco's management team stickz with something once committed to it. It is mix of discipline and a winning mentality that helps management overcome short-term obstacles and failures and keep their eyes on the bigger prize.
  3. Organisational consistency. Sir Terry Leahy has been on the board for 16 years and other key executives have been with the business for a long period. Rather than bringing in new people who, inevitably, want to do things their way, Tesco has created an organisational approach that everyone understands and can deliver.
Persistence is not a word that is used often in business. It is, however, a critical factor in Tesco's amazing growth over the past two decades.

( Photo: dbking,CC2.0 )

  • Stuart Cross

    Stuart Cross is a founder of Morgan Cross Consulting, which helps companies find new ways to drive substantial, profitable growth. His clients include Alliance Boots, Avon and PricewaterhouseCoopers.