Tesco boss Dave Lewis is to scrap the famous Steering Wheel philosophy that predecessor Sir Terry Leahy claimed was one of the driving forces behind its success, The Grocer can reveal.
The retailer said Leahy’s balanced scorecard, introduced nearly 20 years ago to measure performance, had become too complex for staff to handle, with more than 40 different metrics judging their success.
Instead Lewis is to launch what he has called the Big Six, a set of new principles he believes are more focused for staff.
It is thought the Big Six will feature new measures on availability, customer service and shopping experience, store productivity levels, store competitiveness (including price and shopping experience), customer complaints and supplier relations.
Lewis has consistently said Tesco’s business has become too distracted from its core priorities but scrapping the Wheel is a bold move not least because of the importance the former Tesco boss placed on it.
Leahy was inspired by a concept created by Harvard Business School professors Dr Robert Kaplan and David Norton, which aimed to change companies from purely financially driven to mission-driven organisations.
It was originally divided into four quadrants - customer, operations, people and finance - which in turn were divided into a set of KPIs across each involving targets for staff across the organisation. Later a fifth quadrant was added for community.
Writing about the strategy in his book, Management in 10 Words, Leahy wrote: “From the very first moment I could see the power of this simple device. As Kaplan and Norton promised, this tool helped us to clarify our vision and strategy, to communicate and link our strategic objectives and targets, to plan and set clear targets and to improve feedback and learning from the shop floor.”
Leahy went on to suggest such an approach, which underpinned Tesco’s Every Little Helps mantra, could even be used to sort out the NHS.
However, Tesco has not been performing well on all its KPIs under the Wheel of late. Its own figures show the proportion of suppliers who said they were treated with respect by Tesco had fallen steadily since 2010/11 when it was 82% to just 67% in 2013/14.
A former supermarket boss said: “The Wheel doesn’t get such a big tick when you are a business in transition, and instead of concentrating on 40 different indicators Lewis needs everyone to be focused. He has a huge job on his hands to get the key areas of the business, like customer service, firing on all cylinders again.”
A Tesco spokeswoman added: “Tesco has always been at its best when we’ve made customers our number one priority. We want to make it easier for all colleagues to focus on great service. That’s why we’re changing the way we measure performance, by bringing in six new, simple measures instead of the steering wheel. It’s a big change in our ways of working, and has been developed with our colleagues’ input, ideas and expertise.”
David Sables, chief executive of Sentinel Management Consultants, said the move was not just about distancing himself from the old regime: “It’s also about turning from complexity to simplicity, which is exactly what they need right across the piece.
“Leahy made the Steering Wheel a key part of Tesco’s success because at the time Tesco needed leadership and a vision in order to grow. Lewis is now looking to provide the same leadership and vision although I have to say against much more difficult circumstances.
“Sir Terry was doing this when the message was all about we’re going to get bigger and grow faster and open more shops and go get ’em.
“Dave Lewis is doing this at a time when it’s been closing stores, cutting suppliers, losing staff and looking to trim the business, which makes it much harder.”