The CEO Institute

Th CEO Institute Big Day Out

Had the pleasure of attending the CEO Institute annual get together on Thursday in Sydney, an excellent day indeed.

First up was Saul Estlake, his key points on the economy included:

• Expect more sovereign debt crisis in Europe
• The Floods may cause -ve GDP growth in March
• The Floods will help drive further growth in quarters that follow
• House prices should hold due to low unemployment and housing shortages
• The Australian economy now correlates more with the Chinese economy
• Australia is in a strong position the key challenge is now managing this prosperity
• Reserve bank expects growth with concern around labour and price expectations
• Should have dollar parity for at least 12 months
• Productivity remains a problem and is going backwards
• Expect interest rates to continue to rise

Next followed a panel discussions moderated very well by Ellen Fanning. The panel included Paul Cave (Bridgeclimb fame), Graham Bradley (Various Boards and Perpetual Trustees), Carla Zampatti and Kevin Rodney (HP). A great of mix of professional managers and entrepreneurs, from Graham Bradley concerned about risk and shareholder returns to Paul Cave, a true entrepreneur, driven by growth and new business models. Key points from this forum included the following:

• Entrepreneurs are not good managers and need to now when to move on
• In business, sometimes its better not to know.
  (Paul Cave talking about the fact that it took him 9 years to get permission to climb the bridge)
• Good people know that they don’t know it all and must know when to reach out
• Hard to find growth where there is no leverage, competitive advantage or innovation
• Deal with failure quickly
• Diversity, cashflows from different businesses reduce the impact of downturns
• Managers require decisiveness, being able to relate to people and communicate, humility, clarity of mind and direction and being able to paint this picture for others and motivate them toward this
• Competition never gets less, pressure on spending never goes away
• Set your direction and show conviction

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Guy Rosso, the ex MD of McDonalds, apparently he worked there for 33 years, which means he started when he was 14. Quite a career, and now the MD of Kmart, part of Wesfarmers and also involved with Half the Sky Foundation  in China which looks after orphaned kids. Hope I got all that right.

This was by far the most interesting and inspiring talk of the day. Guy is a humble, down to earth man, who is no doubt very smart and focussed when it comes to business. From the talk:

• Came into retailing with no retail experience
• Brief was “fix it” and “returns to shareholders”
• Many established ways of doing things in the business
• Low trust from customers due to discounting practices
• Stores were in a poor state
• Had had 4 CEO’s in 10 years

Spent the first 100 days listening and asking “Why?” Then chose his team from internal people.

Then modeled the business around the 6 P’s (Price, Profit, Product and Promotion) as well as 2 extra being Place and Customer. They then made a list of everything to do and prioritised the top 10 worth things they were doing and each had to fit under one of these. Always only had 10 things on the list and gt these done.

The outcomes were significant changes to the business, which was complex. Guy talked a lot about keeping things simple and the fact that he was a simple guy (no pun intended) Examples included reducing SKU’s removing certain brands, changing pricing strategy, supply chain, pricing etc etc. I wont go into detail, not sure how much of that should be in the public domain, but fascinating stuff.

Listening to this, there must have been some hard decisions made, which Guy could not have relied on past experience as to whether they were the right decisions. I asked him the question as to how he made these decisions and his answer was to keep on asking ”why?”. Why do we do this, why that and changing the model using I assume his past business experience and common sense. He mentioned a process of decision making, rather than 1 big decision.

Kmart now stands for families with the quality you would expect for the lowest possible price. Guy has also tried to ensure Kmart becomes true to the customer, giving them the lowest price, not trying to price high and then discount the items. Truthful to customers on price and product.

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Interesting lunchtime chat with Geoff Huegill and how he has turned his life around. One thing, business men know about business, they are interested in the sports side and the challenges, this is what is interesting, Geoff tried to relate to the business side too much at times, when I think people wanted to hear more about his challenges than his business acumen, Interesting talk, great comeback. Good luck at the Olympics.

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Excellent and informative day, thank you to the CEO Institute and Yvonne Howie and her team.

Tagged as: business, ceo