Tesco's Real Strategy Secret
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.
- 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.
- 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.
- 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.