Newspaper article The Evening Standard (London, England)

How the Bosses at Baker Street Botched It Up

Newspaper article The Evening Standard (London, England)

How the Bosses at Baker Street Botched It Up

Article excerpt


WHAT causes a great company to fail? What caused Marks & Spencer, regularly voted the most admired company in Britain, the subject of three Harvard Case Studies and regarded as a benchmark of retailing excellence around the world, to unravel at the speed of light? That is the question I have wrestled with in compiling my book over the past two years.

Ever since profits collapsed at Marks & Spencer in 1998, bringing down the share price and the reputation of the company, a litany of reasons have been put forward. The company was too arrogant, too complacent, too dull, too unfashionable, too out of touch. All these things may be true but they were symptoms of the more important point that M&S was badly managed by the people then at the top.

The executive directors of Marks & Spencer, most of them "lifers", knew how to manage things when they were going well, but none had ever known anything other than success.

Only two of the 16 main board executives in 1998 had any experience of commercial life outside the womb-like atmosphere of the Baker Street head office. Rather like the crew of the Titanic, which was presumed to be unsinkable, nobody knew what to do when trouble struck. Trouble was something that happened to other companies.

Managements start to fail when they get complacent, when they are diverted, or both. At M&S, directors were lulled into a sense of ease as they watched profits double between 1992 and 1996. They also became distracted from running the company by the race to succeed chairman and chief executive Sir Richard Greenbury. That ended in one of the most spectacular boardroom bust-ups in modern British corporate history and proved a catalyst for the firm's undoing.

The first major mistake came in 1994 when Greenbury made the ambitious Keith Oates, the eventual loser in the power struggle, his deputy chairman as well as managing director in charge of finance and international. …

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