Sep 02

Tesco’s ‘Steering Wheel’

The blunt truth, according to Terry Leahy in an article he penned for The Times, is that if public services were exposed to more competition, their performance would improve

He strongly believes in competition after spending 33 years at Tesco during which time it rose from being a bit of a joke to the third largest retailer in the world

Leahy says competition makes organisations accountable to those they serve – if a company takes its finger off the customer’s pulse, it will eventually fail

Competition has already been introduced to some extent into the public sector – provision of back-office services, choice between schools

People can also see that more competition there does not mean privatisation of the services – they still remain ‘free at the point of delivery’ which is all most customers are bothered about

However, much more is needed – in particular, the public sector should:

  • Develop a simple means to communicate goals to everyone in the organisation

  • Ensure those goals are met

To do this, Tesco developed a tool they called their “Steering Wheel” – it was divided into four segments:

  • Customers

  • Operations

  • People

  • Finance

  • a fifth segment, ‘Community’, was added later

Each one measured some four or five activities so, in total, the wheel comprised some 20 measures

As you drilled down, each of these measures went into still more detail and eventually link to individual store targets and performances – and then further down to individual teams within each store

Hence, corporate targets were linked to the day-to-day work of thousands – all could see at a glance how well their store or operation was performing – the information was clear and transparent – every team had targets and accountability – initiatives were encouraged, not stifled – and all was driven by what customers wanted

In addition to the wheel, managers were required to experience the problems their customers and troops had to deal with each day

Managers can become bogged down by their workload, whether imagined or real – they learn little from making fleeting visits to the shop floor, say, so they cannot truly understand what challenges teams on the ground face, or how any new initiative might be panning out in practice

Hence senior management, including Leahy himself when CEO, would spend one week every year as a general assistant doing every job in a store – check-outs, shelf-filling, back room work, pricing, customer queries, working on counters etc.

He concludes that, if those who run our public services did the same, they would soon see what needs to be done which would be better for the public, and for them and their staff too

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