Four insights from John Lewis Partnership’s Charlie Mayfield

The John Lewis Partnership is a visionary organisation. It is a great example of how to successfully do business, boldly putting the happiness of employees at the centre of everything that a company does.

All 84,700 employees at the UK retail powerhouse are partners, and jointly own 39 John Lewis shops across the UK, 290 Waitrose supermarkets, an impressive online and catalogue business, and even a production unit and farm.

It is perhaps the most successful employee-owned partnership, and the employees certainly do share in the benefits and profits of a business that puts them first — with annual gross sales of £9.54 billion (about $14.6 billion). Customer trust underpins this success. The slogan for John Lewis is “never knowingly undersold”, which highlights a real commitment to price matching. The organisation was named multichannel retailer of the year at the Oracle Retail Week Awards in March, largely due to its successful business model and multi-channel operation.

The partnership offers a market-leading apprenticeship programme that creates new jobs, and sustainable career paths, and a genuine alternative to university for young people — increasingly important as the costs of further education continue to spiral. A key point of difference is that the programme guarantees that all who enter it secure employment once their training is complete.

Charlie Mayfield became the partnership’s fifth chairman in the spring of 2007. He joined the organisation in 2000 as the head of business development, a role in which he was responsible for business strategy and development.

He was appointed to the company’s partnership board in 2001 as development director and won plaudits for developing the partnership’s online strategy, before becoming managing director of John Lewis in January 2005.

Mayfield began his career as an officer in the British army, and has previously worked at SmithKline Beecham and McKinsey & Co. He is chair of the UK Commission for Employment and Skills. In June 2011, he was named president of the Employee Ownership Association, a body that represents employee-owned companies.

His top tips for long-term business success include:

Value and reward your people. Your people are the last great competitive advantage and must be at the centre of everything you do. We never underestimate the value of relationships, advice and service. That is at the heart of our employee-ownership model. It allows us to build stronger relationships with quality suppliers, such as Heston Blumenthal and Delia Smith, as they know it will be a long-term relationship benefitting all involved. This helps us to keep ahead of our competitors.

The employee-ownership model fosters long-term thinking and accountability. We believe that the responsibility of ownership is to nurture and foster, rather than to look to sell off your assets. Our model ensures that we have committed, motivated staff that strives for continuous improvement, and we make sure our people are well rewarded. Whilst public limited companies may fluctuate, the growth at John Lewis Partnership has been steady. We keep ahead through continuous improvement. This is rooted in the dynamic between our partners, the customer and profit.

Ensure you understand and leverage new technology. The growth of online business has changed people’s lives and has had a massive impact on business models. Like the industrial revolution before it, the technological revolution has dramatically altered the way business is done. Retail and distribution are now characterised by increasing choice and more solutions for the customer. Traditionally retailers were constrained by the size of their premises, the square-footage, but they now have more options and can offer an unlimited choice. At John Lewis Partnership, we have recognised how service is transforming and have put the appropriate emphasis on our online platforms.

Innovation is the best route to success. In these changing times, with ever more choice and competition in the market, it is important to offer the best product. What can you offer that others can’t? That is the key question that all business leaders should ask. Innovation that supports the customer experience is what really adds value. Transparency is very important in retail. You must also offer an inspirational environment for the customer to enjoy, much like they would expect at a top restaurant. We are very proud of the range of new products that we bring to market and consistently review our research and development to keep us ahead of the game.

Make full use of your finance function. The finance function has evolved in recent times, and the very best companies will have the most involved finance teams. We have seen a steady shift from simply adding up the numbers to a more engaged finance function, which is responsible for helping to develop strategy. Our finance people are an essential business partner and drive growth and decision-support. An important part of the role is opening peoples’ eyes to potential risks and opportunities.

Mayfield’s comments are very much in tune with the CGMA work relating to risk and innovation. Risk and innovation are two sides of the same coin. The major challenge is for companies to promote a culture of innovation and renewal while bringing ideas to market efficiently and managing the risks of innovation.

The real impact of technology is rooted in how it disrupts business models, and companies must understand how their own models are being affected and what this means for the competition they will face. The John Lewis Partnership is a prime example of an organisation that has successfully adapted its business model in order to stay ahead, and secure sustainable success.

When talking about property value, the old adage is  “location, location, location.” When thinking about business, it should be “people, people, people.” Our CGMA survey on the talent pipeline showed that whilst most companies understand the importance of human capital, they do not have the right systems, processes and information in place to manage talent effectively.

This needs to change. Management accountants can support this change by analysing both financial and non-financial data and then putting the data to good use, for instance, by planning ahead to identify the skills and experience that will be needed in years to come and then ensuring that current recruitment and development programmes are fit for purpose.

Charles Tilley, FCMA, CGMA, is chief executive of the Chartered Institute of Management Accountants.