Mark & Spencer Staregic Insight
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MARK & SPENCER Strategy Insight
At the Marks & Spencer AGM, on the 11th July 2001, Luc Vandevelde, the Chairman and Chief Executive of Marks & Spencer, gave a key speech regarding the managements recovery plan for the company, which was launched earlier in the year. The speech and extracts from Marks & Spencer Press Releases, presented below, provide a valuable insight into the nature of strategic planning within large organisations, and the role of the Chairman and Chief Executive in this process.
Extracts from the Speech
Good morning. Welcome to the 2001 Annual General Meeting. I want to pick up exactly where we left off a year ago. In response to the very last question from the floor at the 2000 AGM, I made this statement: I am taking charge and I will create shareholder value in the future.
Id like you to keep that statement in mind. In everything we have done or are planning to do for your Company, we share with you the common objective of increasing the value of your investment by returning Marks & Spencer to its rightful, leading position in the marketplace.
As to taking charge, at the last AGM Id been with Marks & Spencer for less than five months – and I didnt take over as Chief Executive until two months after the AGM in September 2000.
At that point, a little over six months in, I came to certain conclusions about the Companys strategy and it took six months because Marks & Spencer is a very unique and very complex company.
My conclusion was that the recovery plan, then in place, was doing a lot of useful things getting us closer to our customers, improving our supply chain, and so on. But it still wasnt good enough to address the real problems of the Company which, as Ive already admitted, were more serious than I realised when I first took up this post.
The previous plan was like feeding a tree that was already overgrown and unhealthy. What it really needed was serious pruning back. It had unproductive limbs that were hampering its growth and a lot of its best characteristics were lost in the foliage.
It became clear that for M&S to grow productively, we had to get back to its core strengths – to those fundamentals that underpinned its success in the past – and begin our recovery from there.
Putting together the right team
Having reached this conclusion, my next step was to appoint a new team.
Peter Salsbury, as you know, resigned last September, having reached the conclusion that he was not the right person to take this Company forward. Not withstanding, I believe he did valuable service for Marks & Spencer. He inherited a difficult task and had the courage to take some tough but necessary decisions.
Along with Peter, Id like to thank the five other directors whove left the Board in the past year. We also say goodbye today to three of our Non-Executive Directors – Michael Perry, Ralph Robins and David Sieff. David spent his entire career at Marks & Spencer, 25 years as an Executive Director. My thanks go to Michael, Ralph and David for their tremendous contributions over the years.
This is perhaps also an appropriate moment to pay tribute to Davids father, Lord Sieff, our Honorary President, who died in February. When I speak of returning to fundamentals, Im referring in many ways to the values that he and the founding families instilled into this Company. The heritage of our founders remains profoundly influential in shaping our future and we should be grateful to them.
Apart from Robert Colvill, Alan McWalter and myself, its now a completely new Executive Board to the one you met a year ago. So let me introduce them David Norgrove, Roger Holmes and Alison Reed. Id also like to welcome the two Non-Executives whove joined us since the last AGM Kevin Lomax and Tony Ball.
So what we have is a virtually new team — because we had to accept that only a new team could take the radical measures needed to turn the Company round. Since we last met, weve effectively rebuilt Marks & Spencers management. Central to this is the Board of UK Retail where half the members – including its Managing Director, Roger Holmes – are new since a year ago.
This new talent complements the quality of our existing staff, many of whom have been with us for a long time and whose experience is immensely valuable. In the past, these excellent people often lacked the leadership to perform to their full abilities. Now I do believe they have it.
The Strategic Review and Selling the Plan
As soon as we had the executive team in place, we began a rigorous strategic review.
Its objectives will not surprise you. We wanted to return Marks & Spencer to its former position as the standard against which others are measured. We want M&S to be famous once again for its quality, value, service and innovation, drawing on strengths which still exist but which may have been overlooked. We want to inspire trust in our customers, and we want to reward you, our shareholders, for loyally standing by us.
This review clarified our future direction and resulted in the Group restructuring and UK Retail operating plan which we announced on 29th March this year. Its a radical plan. Some of the conclusions have been tough and controversial. But this is clearly what has to be done.
In recent weeks Ive visited investors representing more than 40 per cent of our shareholding. On the whole, they recognise the need to take this action. Theyre confident we have the right team and the right strategy, and theyre reacting positively to the plan.
In fact, the share price wouldnt now be at its highest point for 10 months if the institutions didnt believe were on the right track. The main question they have is about timing – not if, but when the recovery will come.
The plan has been well publicised, but let me briefly touch on the highlights.
The Plan : 1. Focus on the UK
The first element is to focus the entire organisation on our UK business, with a mission to make aspirational quality accessible to all. This is the heart of the Company, and its vital we get it right.
Were returning to our unique fundamental strengths — those things for which Marks & Spencer has always been famous.
From now on, well only sell our own brand. Weve tried selling other companys