Goose, gander

The FT is full of comment this morning that Tesco now has a board with little or no experience of food retailing.

I am not sure what the surprise is about. It’s long been obvious that what happens at board level in most companies has little or nothing to do with what actually happens within the entity itself.

The business may (let’s be generous) be about meeting customer need and providing a valuable service.

The board is about extracting rents from that process by reshuffling the pack of entities that make up the whole, re-jigging the finance and minimising the tax bill.

These activities have remarkably little to do with each other. One is about business and what capitalism was (and should be) really about.

The other is about rent seeking and what the so called modern entrepreneur really thinks capitalism should now be about, which is extracting value from others.

Tesco has chosen a board of experienced rent seekers.

This is from the guy who sputtered in rage at the demand that the Co Op Bank board should include a person or two who knew anything about banking.

Ho hum.

30 thoughts on “Goose, gander”

  1. ‘The business may (let’s be generous) be about meeting customer need and providing a valuable service.’

    You are a very stupid man, Richard. It’s government which gets by with no regard for providing a valuable service.

  2. I see his deleting of comments lasted about a week – Noel Scoper made it through.

    Ritchie just can’t resist trying to appear smarter. It’s ended in disaster for him every time previously: any bets as to how long it will take this time?

  3. So Tim, are you seriously suggesting that a gay Elmer Gantry, off his face on crystal meth, wasn’t the ideal person to run the Co-op?

    Personally, if I was hosting an AGM populated by the likes of Richard Murphy and Owen Jones I’d make sure I was Rocket Man, halfway to Mars by the time I opened the meeting.

  4. GlenDorran

    There are only so many little red boxes showing you have had ZERO comments an ego like Ritchie’s can stand. I looked at that and wondered how long before he started letting them back in and then boasting again how popular his blog is.

    I honestly think we should all refuse, or rather not bother, to go it now.

  5. @Ironman

    “So Tim, are you seriously suggesting that a gay Elmer Gantry, off his face on crystal meth, wasn’t the ideal person to run the Co-op?”

    Noting your worthy anti-racism, may I ask why Paul Flowers’ homosexuality is relevant?

    #bigot, as I think the kids say.

  6. Interested

    I do apologise., you’re right to point it out. I should have rent – boy -seeking Elmer Gantry.

    P.S. Not commenting on my abuse of recreational drug users, you’re so judgemental!

    Andrew K

    I couldn’t help it.

  7. I’m gonna need a bigger boat
    I’ve decided to write only short comments on ASI. If you are genuinely interested in taking this particular point further then you can write to me ([email protected]) and we can discuss this further for as deeply and as long as you like. Of course, I’m talking of its ramifications in economic theory — not as regards the CoE which doesn’t interest me.

  8. Andrew K

    I followed one of those links. I’ve just spotted that the chap is 75? Aren’t you perhaps being a bit harsh?

    And I’m surprised he put up his e-mail address on a public blog for you, that’s generally asking for trouble (spam and the like).

    (btw, just curiosity, where was Ironman encouraging him?)

  9. bloke (not) in spain

    I made an observation, a while back; if you look at what the actual activities of large supermaket chains consist of, they’re primarily in the logistics business. The point of contact with the customer part, the bit you see, is just the tip of an iceberg.
    So no. Experience of being a grocer isn’t much use running Tesco. Army general might be…

  10. PF

    Yes, I am being a lot harsh, and have had the twinges of conscience about pillorying him.

    I have tried to ignore him and I have tried to tolerate him.

    But the air of certainty with which he presents his fact-free sub-Nietzschean pronouncements has broken my resistance.

  11. Can I say, seriously, that Keith shouldn’t have put his e-mail.address up and people absolutely should not take advantage of it.

    Indeed I think the ASI should take it down!

  12. “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”

  13. @b(n)is:

    The same can be said of a lot of large companies. A lot of what banks and insurers do is data management and IT systems. Get that wrong and it doesn’t matter how many qualified bankers you have.

  14. I’ve asked Tim to take down my comment with KH’s email address in it.
    I have also asked the ASI to do likewise, and remove one or two of my fiercer replies.

  15. To be honest I haven’t gone that far; there is an element of blood sport about Tim’s blogs and you just need to get on with it. I don’t think Andrew K has crossed the line or even come close. I am impressed though with what he has done.

  16. Andrew K

    I share your disdain for Hudson and his style of writing which does grate but let’s be fair, he is more misguided than a genuinely evil blogger/ columnist like Murphy or Owen Jones (for example) – Fair play to you for asking the ASI and TW to take down those comments, though….

  17. Apologies above if my comment came across as judgemental in any way? Not intended – it was slightly tongue in cheek, after I saw this quite old, wrinkled, smiley looking face on a web page!

    I totally agree, Ironman, “element of blood sport” describes this place perfectly – or as one of those poor sensitive young souls looking out from their campus today might say “a very unsafe place indeed”..:)

  18. @Ironman

    ‘P.S. Not commenting on my abuse of recreational drug users, you’re so judgemental!’

    As far as I believe anything, I believe recreational drug use to be a matter of choice and homosexuality to be a matter of fact.

    (I don’t regard either of them in others as my business, mind you. I suppose I’d be against the pilot taking me skiing next week being stoned within say 48hrs of sitting in the left hand seat.)

    Re Keith Hudson, I’ve sort of missed him a bit (see him mentioned here and there, but I don’t get about the net as much as some of you), but if he puts his email address up somewhere and asks people to contact him, he is literally asking for it isn’t he?

    It’s only a burner address anyway – if too many of you loons contact him with your free market neoliberal bile he can just take advantage of another email address provided free of charge by an evil corporation.

  19. Yes, Tesco and indeed every large company needs people able to make decisions on policy, direction of the company, new markets and where to invest.
    Knowing whats involved in stocking shelves or scanning stuff at the till really not of any use in a boardroom. As I recall Paul Flowers had worked in a bank at a low level. Perhaps not relevant experience.

    Being able to see problems, tear apart a presentation, find unsupported projections in a project, figure out what needs to change in the business overall – perhaps more relevant?

  20. @Martin

    I disagree. A lack of specialist knowledge means that the board spends time discussing issues that are either impossible to implement, irrelevant, have been tried before elsewhere or are just plain nuts.

    At the end of the day the devil is in the detail and so to with business plans. Unless the board can get educated, or has people with close enough skills, it has little practical benefit. Look at Lehman’s board. Mostly a group of know-nothings who could be dominated by Fuld (not that that caused the failure but they certainly did not help to prevent it).

    About all the board is capable of doing is engaging headhunters to find a new CEO and to forming a remuneration committee.

  21. I’ve sat on the board of an SME which was small enough that the executive directors knew how the day-to-day worked, and held relevant experience of doing or directly supervising it.

    A lot of our time was spent batting back daft suggestions from our non-execs (representatives of the private equity shareholders). The NED’s were experience and intelligent people, with experiences across a range of businesses, but they were still detached from what we were doing ‘on the ground’.

    It was the job of the NED’s to throw out suggestions and debate them through with us. They got it right as often as not. But they did, regularly, come up with suggestions that were batshit mental and which would have destroyed the business if allowed.

    Basically, you need both… you need people who know how the business works, and people who don’t. Without the former you do silly things, without the latter you risk stagnation.

    If Tesco can’t find a place in the boardroom for someone who’s actually worked in a supermarket during the last 10 years then, as a shareholder in that business, this bothers me. Because if all the rest of the board are doing is listening to the most competent blagger in the room, that’s probably bad.

  22. If Tesco get someone on the board who has worked in a supermarket in the past 10 years great. I’m sure their experience like everyone else’s experience will be useful in decision making. But will it be relevant?
    If manager of local 24 hour tesco gets on the board what does he know about checkout operation? About stacking shelves? About helping a customer find something?
    On the other hand will the tesco directors also be shoppers? Will they as shoppers know what they look for in a store, what service they expect, what they see when they are shopping?

    There are experts in various aspects of the business, whats wrong with calling them in for advice, help, explanation or training? Why must a decision maker be expert in relevant aspects of the particular type of business first?
    I’m thinking of a few companies I have known, do not recall CEO or board members being particularly experienced in any specialist field within those companies. Companies managed to expand anyway….

  23. The manager of a Tesco store should know enough about stacking shelves and running checkout operations to have managed a fucking Tesco store.

    I presume that their structure is pretty flat – so there won’t be more than a few ranks between store manager and operatives. I’d be very surprised if a store manager was not on first name terms with everyone at ‘supervisor’ level. The store manager should be directly involved in the implementation of ‘head office’ polices in their store.

    I’ve never managed a supermarket, so I don’t know for sure – but they are not so big that I would expect the manager not to know what’s going on. I’ve been on far bigger (and more heavily staffed) ‘work sites’ where the most senior people on site have an excellent grasp of how things work all the way down.

    I wouldn’t expect Tesco to just run a lottery that gives a token store manager a place on the Plc board. But I have no doubt that some very talented people become store managers, and progress onto careers higher up the organisation. Some of those people will, I have absolutely no doubt, be extremely well equipped to contribute effectively at board level.

    I know lots of good business leaders don’t have experience in the industry in which they do great things. I’ve worked for one. But he had people who did know it close to him, including ‘in the room’. Maybe the Tesco board have loads of people with direct supermarket experience in their inner-circles – and that’s great – but there IS something about actually being on the board and being part of the decisions being made, not just being asked for opinions/reports after the fact.

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