Even the most rational, economically driven decisions can flounder if you don’t take into account what your people identify with and are passionate about. They are an immensely powerful energy source that can either destroy or unleash business performance. The Dixons and Currys saga proved just that. Gary Ashton reports
Remember the time back in the ’80s, when retail chain Dixons was a real bricks and mortar store, and Currys, stood nearby on the high street? How times have changed. Dixons, now known as DSGi, has become an on-line store. And Currys, having moved out of town back in the ’90s, is now back as Currys.digital.
As a longstanding employee of Dixons Stores Group many years ago, working in various head office roles, I experienced a series of reorganisations, some of which worked and others that did not. Here’s an account of some of those changes that impacted massively on the company’s energy, and as a consequence, on business performance.
Acquisition of Currys and the arrival of destructive energy
In 1984 Dixons acquired Currys. It wasn’t the friendliest nor the easiest of takeovers. But after the acquisition, the businesses were initially kept quite distinct and separate, with the objective of allowing competition in their overlapping product areas to continue to retain their edge in the marketplace. However, this had all the ingredients for the creation of destructive energy. Instead of a constructive, healthy competitive environment, the two stores battled vehemently against each other in the television and video space, with both discounting heavily to win over each others’ market share.
Dixons’ biggest competitor was Currys, and so it was an unseemly and embarrassing fight that was fought on the battleground of the Sun newspaper through discount vouchers from both businesses attempting to outbid each other. One could only marvel at the amount of energy taken up in effectively reducing each other’s margins.
Integration and the sapping of energy
Of course, such a destructive episode could not be allowed to continue, and so in 1988 we entered an era of integration, whereby the commercial departments of Dixons decamped from Edgware and moved into Currys’ bigger offices in Ealing. This restructure created a new functional business model whereby the marketing, buying, operations and property directorates each had responsibilities for both chains, with the aim of creating synergies between the businesses. This worked very well, especially for the buying department where the buyers in the overlapping product areas of television, video, hifi, electronics and computers could extract better terms from their common suppliers. Likewise, for retail operations, the new regional management oversaw both chains in the same towns, generating an ever-more efficient process of store management, with best practice being spread between the two chains.
However, it wasn’t long before the negative consequences of this approach started to surface. The very strategy of business integration that eliminated those destructive tendencies now began to sap people’s energy. The unintended consequence of this strategy was a blending of the two brands, reducing the distinctiveness between them in terms of store look, product range and shop-floor culture. The identity of being either a Currys or Dixons employee, with the passion to go that extra mile and make themselves distinctive, withered away. During this time, a new systems integration programme was also implemented. This focused a lot of management attention inward rather than externally, serving only to further sap the previously high levels of commercial energy. Market share drifted south, prompting (an ultimately failed) takeover bid from an unwelcome rival.
Balance, identity and the leap of positive energy
The journey that took us from destructive competition to dulled integration had to move on, and so in the mid-nineties came the next stage of evolution. By keeping some functions centralised, whilst creating separate sales and marketing retail brand businesses, we gained a healthy balance between the two former business models.
Once again each brand had its own managing director, whose remit was limited to marketing and retail sales operations. Within days of the move, the excitement amongst staff and managers was palpable. The potential energy that had been suppressed for the last few years was unleashed. The MDs with their distinctive styles generated a different feel in each brand. And the volume of initiatives planned between marketing and retail operations exploded, and although it was a nightmare for the corporate support functions, it turned out to be a very profitable period for both brands. Within weeks, Dixons and Currys had rediscovered themselves, and with a strong supporting back-office backbone from which to grow, the market shares of both businesses started to climb.
Of course, things move on. And in the past decade we’ve seen seismic shifts in the marketplace through the emergence of the internet and the opening up of Europe, as well as the acquisition and development of other retail brands, and so the business continues to evolve. But reflecting back on this particular era, what can we learn from the experience of these three organisational phases?
Lessons learned
Understanding how the configuration of a business can affect the identity and drive of individuals and teams, and how that can impact on business performance, is crucial. Such a powerful energy source can destroy, wither, or re-energise your business.
The secret is to discover where the value of the business that is created coincides with human passion and motivation. As in the case of the Currys and Dixons saga, what can be seen as a rational, economically driven decision, can flounder if your thinking does not take into account your people and what they identify with and are passionate about.
This is where ER Consultants can help. We work with top teams on two levels. On the rational level, we provide a methodology that enables you to translate your strategy into an organisation that differentiates you from your competitors and delivers value. On the emotional level, we work with teams to reveal what makes the organisation tick, what people identify with and what energises them. The trick is to find where the rational and emotional come together. The challenge arises when there is a tension between the two. Of course, there’s always a trade-off between the rational choices and the emotional options. Working through these trade-offs can help you determine what is right for your business today, while acknowledging that tomorrow’s world may require further changes as you continually adapt and grow.
Throughout the last decade, we’ve helped many clients in both the public and private sector (see case studies below) work through these trade-offs and successfully tap into the powerful energy source of their employees to achieve successful change.
Case Studies
Telecommunications – Converting latent energy into kinetic energy
Often, in technology-based businesses there is a disconnect between consumer-led pull innovation and technological-led push innovation, with the two approaches sometimes competing against each other. With one client we built a new service development unit that blended the two together in a constructive way. By understanding how each part of the business operated and working with them to build different options, we were able to devise a suitable solution that cleared the blockage. This resulted in an upsurge of service-innovation that the consumer wanted, with the technology that could deliver, resulting in greater product innovation.
Consumer Goods – Releasing the potential energy
In a multi-brand consumer goods company, where one mature brand dominated the business, the remaining brands with growth potential were being stifled. By working alongside the top team, we reorganised its sales and marketing functions, in order to maintain a strong sales capability whilst also allowing the growth categories more freedom. In doing this, the company released the potential energy of their growth categories, which helped to boost sales.
Retail – Refreshing and re-energising a successful business
How does an already successful business maintain its growth path? When a business has been in continual growth over a number of years, fatigue can set in, risking collapse in the growth trajectory. Working with the senior management team, ER Consultants undertook an organisation review of its structure, processes, people capability and information systems to identify what needed to stop, stay or start. A plan to re-energise the business is now being implemented to ensure the business can enter its next phase of growth.
For more information contact Gary.Ashton@erconsultants.co.uk
© er consultants Topics Issue 1, 2008
