Delivering Success: How Tesco makes it very clear that its philosophy, which

is captured in the phrase „Every Little Helps‟ is more

Tesco is Managing, than just words or a marketing slogan. On its
Measuring and Maximising website it states:
Every Little Helps is behind everything we
its Performance do. It's not just something we say, we really
Introduction do mean it Really.
Tesco has delivered impressive performance. Good Based around its Every Little Helps philosophy,
performance and business success is underpinned Tesco has created two key values which are seen
by the right strategic objectives, which have to be as their central code of conduct and the way it does
communicated to all staff. However, even more business. They are: „No one tries harder for
critical are: customers‟ and ‟Treat people how I like to be
1. Making sure everyone in the company is treated‟.
actively engaged in trying to improve company No one tries harder for customers2
performance – all the time. The aim of this value is to instil a customer focus in
2. Having the data and analytical skills to test everything people do. As part of this, Tesco aims to
ideas and turn insight into customer and understand customers better than anyone else and
business relevant actions. therefore deliver unbeatable value and service.
This case study outlines Tesco‟s performance Treat people how I like to be treated3
management journey, which so far has been an Tesco wants its people to be well managed and to
extremely successful one. work in an environment that is based on trust and
About Tesco respect. The company has learnt over the years that
Tesco is an impressive company. The British-based well motivated and managed staff will give
international grocery and general merchandising customers great service.
retail group operates 4331 stores across 14 The Performance Management
countries, employs 470,000 people, and in 2009 Framework
generated £59.4bn in sales. Tesco is the largest When Sir Terry Leahy joined Tesco as their chief
private sector employer in the United Kingdom, and executive he made it clear that in order to deliver on
is currently the third largest global retailer based on its strategy of growth the organisation needed a
revenue and the second largest based on profit. clear direction, a map and a compass. The
Over the years the company has been transformed management team decided to create a performance
from a „pile it high, sell it cheap‟ market trader to a management framework that would provide the map
world-leading retail group. While it originally and outline the key strategic objectives of the
specialised in food and drink, it now offers a wide company. Together with this it created key
range of products including clothing and consumer performance indicators to act as the compass
electronics and offers an increasing range of enabling the organisation to check whether it was
services such as telecoms, health, Internet, on track or not. The main purpose of the
insurance and financial services. In addition to its performance management approach was to help
stores, Tesco has created a very successful online steer the organisation to success. Tesco decided to
supermarket offering among other things groceries, appropriately name its performance framework the
home retailing, and music downloads. Even amidst Corporate Steering Wheel.
the current global recession Tesco is performing The Corporate Steering Wheel
extremely well with a 15.1% growth in annual sales Today, the Corporate Steering Wheel provides
and a 5.5% growth in profits. strategic focus by communicating what matters the
Drivers of Success most in a simple and easy to understand
What is leading to Tesco‟s global success is that it framework. It includes 20 corporate objectives
gives customers what they want. Sir Terry Leahy, across five perspectives. The perspectives are
Tesco‟s Chief Executive, puts it in simple terms arranged in a circle around the central philosophy of
when he says “Let me tell you a secret, the secret of „Every Little Helps‟ and the two values of „No one tries
successful retailing. It‟s this: never stop listening to harder for customers‟ and ‟Treat people how I
your customers and giving them what they want.”1 like to be treated‟.
Figure 1 shows the 2009 Corporate Steering Wheel conducted a number of „town hall‟ meetings to explain
with the following the strategy. The chief executive insisted on
Objectives: conducting these meetings himself which were seen
Financial Perspective: as a way to personally engage staff in the stores. It
• Grow Sales allowed Sir Terry Leahy to explain the strategy face-
• Maximise Profit to-face and gave staff the chance to ask questions in
• Manage our Investment an interactive way. Tesco also produced little notes
Customer Perspective: called „shopping lists‟ to highlight the key strategic
• Earn lifetime loyalty objectives for each perspective. These were handed
• The aisles are clear out and printed as posters for the stores. Similar to
• I can get what I want real shopping lists, they act as reminders about what
• The prices are good it important.
• I don‟t queue Today, every store and every company within the
• The staff are great Tesco group has their own Steering Wheel to
Community Perspective: manage performance. This puts the people on the
• Be responsible, fair and honest ground in control. The Steering Wheel has been
• Be a good neighbour translated into different languages to ensure it is
Operations Perspective: used to engage frontline staff in all countries Tesco
• We try to get it right first time is operating in.
• We deliver consistently every day .
• We make our jobs easier to do Evolving the Performance Framework
• We know how vital our jobs are In order to stay relevant any performance
• We always save time and money framework needs to evolve with the organisation
People Perspective: and reflect the shifting priorities. Tesco has been
• An opportunity to get on able to change its Steering Wheel in line with a shift
• An interesting job in strategic objectives. One of the more recent
• A manager who helps me major evolutions has been to add the community
• To be treated with respect perspective to the Steering Wheel. Tesco realised
Tesco‟s CEO says that „Having objectives that issues such as climate change and the impact
across these five perspectives allows Tesco its presence has on the local community are
to be balanced in its approach to important challenges. As part of its strategy it now
performance.‟ „Today, the Steering Wheel draws up an annual community plan for each area it
creates a shared language, a shared way of operates in. Figure 2 illustrates an earlier version of
thinking and a common blue print for Tesco‟s Corporate Steering Wheel without the
action‟ he continues. community perspective. The new community
Tesco maintains that “Throughout all our perspective has led to initiatives such as reducing
businesses across the world we measure the use of carrier bags by 50 percent, more locally
our performance through the Steering sourced products and a reduction in the carbon
Wheel, whether we work in distribution, footprint.
head office or in stores. This Making Strategy Everyone’s Job
helps maintain focus and balance in what Sir Terry Leahy not only pushed the implementation
counts to run each of our businesses of the performance management framework he also
successfully, be it wage costs or whether made another change which many would see as
customers can get everything they want.”4 controversial: He closed the strategy department.
Cascading and Communicating the His reason for this was that he didn‟t want only one
Strategy department or one leader who is seen as
Because the Steering Wheel captures the key responsible for strategy and performance; he
strategic objectives of the company in one easy to wanted thousands of leaders who live and
understand picture, it is a powerful way of understand strategy.
communicating strategy to all staff. When the Engaging People in Performance
Steering Wheel was first introduced the company Sir Terry Leahy has no doubt that implementation
matters, not just strategy. He maintains that training insights and evidence-based decision making.
and education is essential to ensure people They help to answer the „big‟ questions and put
understand how they can contribute. To that end performance data into context.
Tesco created a local Steering Wheel template for The Power of Analytics
stores to engage staff, facilitate a local discussion The ability to collect and analyse data has
and capture local challenges. The template (see transformed Tesco from a company that thinks it
Figure 3) asked what is good and not so good for knows what customers want to one that has the
each of the five perspectives and most importantly knowledge and insights into what customers prefer
how individuals can help to improve it. This simple and how these preferences keep shifting over time.
template engages people in performance and Sir Terry Leahy states “We don’t spend a pound
makes them think about how they can improve or dollar on a store without talking to our
performance. In addition to capturing the ideas of customers. They are the best management
front line staff it allows the store manager to write a consultants.”
message in the bottom field. From Customer Data to Insights
Creating a Performance Culture An essential component of Tesco‟s performance
Tesco wanted to establish a culture in which data is its customer knowledge. Back in 1994,
everybody feels responsible for performance. Tesco introduced its loyalty programme called
Where staff come up with new ideas and where Clubcard. However, while it was introduced as
they are allowed to challenge and improve aloyalty scheme, the main premise underpinning the
performance. Sir Terry Leahy says that „people Clubcard was to gain insights to help Tesco improve
mustn’t hold in knowledge and need to the way it runs its business. Experts agree that
share thoughts and information„; he adds loyalty schemes that are only used to target
„...we have to take risks to be successful. customers with discounts and offers are ultimately
This means we have to allow people to be self-defeating. However, it was the potential to
wrong. We are not about box ticking generate competitive advantage from the data that
and being wrong with everyone else.” made senior leaders in the company back the idea.
Measuring Performance – The Pragmatic Today, Tesco operates one of the most successful
Way loyalty programmes ever created. With over 14
Tesco has many performance indicators but as Sir million users the Clubcard scheme allows Tesco to
Terry Leahy says “The danger is to look at collect detailed transaction information on two thirds
them in isolation and out of context. We try of all shopping baskets processed at their tills.
to put them into context and pay a lot of For the scheme to remain useful, it was critical that
attention, regular attention, to the indicators Tesco was able to turn its data into customer
that matter the most to our business”. Tesco‟s knowledge it could act on.
philosophy is not to answer every conceivable Mastering the Data through Partnership
question with their performance data but only those Many of Tesco‟s competitors abandoned their
that help to answer the critical and most important loyalty card schemes and argued that analysing all
questions. the data would be madness. When Tesco started
Tesco always stressed it needed practical insights. with the clubcard scheme it decided to outsource
Instead of building the largest data base it could, the data analysis to Dunnhumby – a company that
pragmatism ruled and the goal was to build the specialises in data analysis. Tesco realised it didn‟t
smallest data storage that would give useful have the skills to systematically analyse mass data
information.5 When it comes to performance data, and therefore left it to Dunnhumby to develop the
managers talk about professionalism and not strategy for the data analysis. Later on Tesco
perfectionism. A good example is the fact that the decided to buy a 53% stake in this company.
company is happy to look at just a 10% sample of Developing In-House Analytical
the data to identify key issues and then investigate it Competencies
further using larger data sets for the questions that With the increasing realisation that analytics are an
actually matter to customers and the business. important driver of success, Tesco realised that it
Having the right performance data and the ability to needed to have in-house competencies to analyse
analyse that data are the keys to good management customer and performance data. It created an
internal team that was responsible for analysing experiments to understand whether new product
data and extracting insights. Tim Mason, Tesco‟s lines, innovative offers and price reductions have
marketing director and chairman of Tesco.com the desired effects. Using its customer data allows
explains: These people are geographers, Tesco to track the response immediately, which
statisticians who had spent a lot of time takes a lot of guess work out of business decisions.
applying those skills to understanding how Conclusion
customers would behave. They could Tesco has demonstrated that keeping it simple can
crunch through the stuff that came from the be a powerful approach to managing corporate
Clubcard, see the patterns in it and they performance. It has demonstrated three important
could start to help the management of the aspects:
business understand what was going on, 1. By keeping the performance framework simple
but also point towards what should be done and easy to understand it is able communicate
about it. They had to find the data, and what mattes the most to everyone in the
present it in a way that makes the decisions company.
stark, and clear.6 2. By creating simple tools such as the Local
Tesco ensures it maintains the ability to develop Steering Wheel Template and the Shopping
common sense responses. It aims to create Lists it is able to engage people in performance
processes which enable relevant insights to be used and delegate responsibility for performance
to improve the reality for customers. improvements to front line staff.
Experiments as a Way of Life 3. By not measuring everything it could and instead
In the same way Tesco is never making any focusing only on the data that will provide
changes unless talking to its customers, it also relevant insights Tesco is able to deliver
ensures it runs experiments to test ideas before improvements that benefit customers and its
implementing them on a wider scale. The business.www
performance data plays a vital role in this process
and has enabled Tesco to take new ideas and
offers to smaller groups of customers while using
the remaining customers as control groups. This
takes a lot of risk out of innovative ideas. In many
ways the performance and customer data has
become a powerful laboratory to test whether new
ideas work or not. Clive Humby, Terry Hunt, and
Tim Phillip recall that Tesco‟s performance
information, especially its Clubcard data, is not just
about passively observing trends, it is a massive
laboratory of customer behaviour:7 “When it was
doing something wrong, it knew about it in
days.
When it was doing something right, it could
implement it nationwide in weeks.”
Tesco‟s marketing director Simon Uwins says: “As a
company we have moved from being
intuitive to being analytical. This is a much
more complicated business than it used to
be. We don’t forget our intuition, but better
data lead to better thinking, and our data
give us the confidence to ask the right
questions. You can have all the data you
want, but the key is to use them to ask the
right questions.”
For example, Tesco is now able to conduct