Is it time for Ian Moir to go?
In November Ian Moir will have been CEO of Woolworths for eight years. His last three at the helm have been as rocky a period as any for the man, who at one stage could do no wrong. The retailer’s shares are now about 50% off their all-time high reached in March 2015 as the company prepares to report its first full-year loss in about 16 years after a bad expansion play in Australia. Now, managerial experts often speak of seven years as being the most opportune length of time for a CEO tenure; thereafter the pitfalls of incumbency may follow, pitfalls such as complacency and lack of innovation as a hardened attitude finds it difficult to entertain other people’s ideas. Boards can also become so used to the power slides of the CEO that they too soon overlook holes in their arguments, or they are too scared to take on an all too powerful leader of their own creation.
There are exceptions to the seven-year rule, of course, and some of the more colourful CEOs that strut their stuff among the listed giants on our bourse claim to be just that. But for me, a decade is about as long as a person can stay relevant as a leader, no matter how impressive their track record. As an Arsene Wenger fan I know this and understand that there aren’t many Alex Fergusons out there.
So, back to Moir’s fast-approaching seven-year anniversary and whether Woolworths’ board should be considering a change in leadership given the challenges the retailer now faces. Let’s look at his track record, which it is human instinct to trust. During his time, minus the Australian headaches over the past three years, Woolworths has certainly been among the standout performers in the retail segment, and as a share it has far outperformed the All Share. It has seen its food offering steal a march on rivals such as Pick n Pay, that for a time at least, had been wanting in innovation. On the fashion front,
Woolworths, like all retailers in this highly competitive place, has had its seasonal wins and losses. It’s certainly been the more volatile of its operations, with its fashion buyers under some serious pressure to hit the mark in this Instagram-inspired and very fast world of fashion.
This period of Moir’s life as head of the R55-billion retailer is what management scholars such as Manfred FR Kets de Vries call the “honeymoon” and “consolidation” period. In a piece published in the Harvard Business Review, he says this is a time when a CEO has an open playing field and is willing to learn, experiment and innovate. And for the most part, Moir continued on much the same lines as his predecessor and now chairman, Simon Susman.
After the honeymoon comes the “consolidation”, when the fruits of their exploits are harvested. I’ll call it the champagne period, bottles popping as stakeholders and executives commit to their cause.
I suspect this mark came soon into Moir’s reign, riding on his reputation in the company as being instrumental in turning around the fortunes of Country Road in the late ’90s.
What comes after the honeymoon and the champagne, according to De Vries, is the inevitable decline, when there aren’t many new products planned and no initiatives to find new growth markets.
Before heading into Australia, Moir was probably at this stage. It’s then that leaders bring large, institution-changing deals to the table to satisfy their need for new challenges. Woolworths’ expensive Australian play for David Jones, an ageing retailer in a fast-changing world, was certainly an exciting deal. The company’s shares climbed more than 38% in the year after telling markets of its intention. The less exciting prospect was building a route to a greater share of the African market.
And so off Woolworths went to Australia, and it turned out to be a flop. It’s now become a turnaround story, in which the board believes Moir is well versed, given his Country Road experience. But this is 20 years later, and instead of one asset to focus on, the risk is he’ll lose track of other arms of the business. So after more than 20 years at Woolworths, eight as its CEO, will Moir’s race be run in three months? It does seem so; the champagne has certainly long lost its fizz. His battle will be to bring that sparkle back.
A decade is as long as a person can stay relevant as a leader