This month’s column is based on a particularly interesting meeting that I had recently with Alan Stewart, CFO at Marks & Spencer.
Marks & Spencer is an iconic British retailer headquartered in London, boasting over 700 stores in the UK and a growing global presence in more than 40 countries. In 1998, it became the first British retailer to make a pre-tax profit of over £1 billion. The company is renowned for leading the way in ethical and sustainable business – highlighted by projects such as Plan A, a collaboration with customers and suppliers to combat climate change, reduce waste, use sustainable raw materials and trade ethically, and “Look Behind the Label” – an effort to enhance transparency around how products are sourced and manufactured.
Alan joined Marks & Spencer in 2010 and has extensive experience of retail and other highly competitive industries, including travel and banking, having worked for HSBC Investment Bank, Thomas Cook and WH Smith. Alan’s focus on cost control and efficiency has made a strong contribution to the company’s performance, keeping 2011 profits in line with forecasts. His personal philosophy is simply to focus on the areas in which you can make a real difference.
Alan was very interested in the insights contained with the CGMA launch report, Rebooting Business: Valuing the Human Dimension. His own top tips to achieving long-term sustainable business success:
Stewart: It is vital to listen to your customers and respond to what they want. At Marks & Spencer we respond to customers’ evolving needs. We focus on standing back and looking at innovation from different angles. We look at what they are buying and how this should reflect on our business model; this is the ethos behind our “Count On Us” healthy food range, for example. We are also working closely with academics at Aberdeen University to further drive our innovation.
Responding to customers is indeed vital and at CIMA we regularly review our syllabus to ensure that it meets our employers’ needs. Our research and development team visit employers from all across the globe, and have recently met with more than 80 leading companies to discuss their views on best practice and areas that our qualification should focus on.
Stewart: Understand risk and don’t miss opportunities. Focus on what the outcomes might be and don’t get bogged down in process. Move from sterile assessment and engage in debate and discussion. Good business development teams should concentrate on what might happen without becoming too risk-averse.
In November we will be releasing a CGMA report that examines performance management at the board level. It is important that risk is considered an integral part of good performance management, and reinvention and the seizing of opportunities are vital to long-term survivability.
Stewart: Recognise the role of internal communications. Clarity is vital to success, particularly in large companies where good communication is essential. You need a clear strategy that is easily understandable; be consistent and clear with priorities.
Our recent CGMA report, The Fast Track to Leadership – The Challenges, Opportunities and Action Plan, highlighted that communication and collaboration are key. These interpersonal skills are particularly relevant for the management accountant, who is in the ideal position to help the board to connect the dots.
Stewart: Assess what technology can bring to your business. Technology provides excellent opportunities to manage data and undertake insightful analysis. But companies must review their processes first, and ensure that they are consistent with the business model. If you merely apply technology to your existing systems then you have a high risk of being locked into expensive and inflexible ways of doing business. When looking at IT business cases, I visit the relevant operations and ask “what are you doing”, “why are you doing it” and “how could it be improved?” The answers to these questions provide great insight into whether or not to support the business case.
It is clear that no organisation’s business model can afford to stand still in such a volatile and uncertain economic climate, but also that the potential impact of new technology must be carefully measured. We are currently planning for a CGMA innovation theme that will explore resilient business models and how they can be developed.
Charles Tilley is chief executive of the Chartered Institute of Management Accountants (CIMA).