Why leaders make the difference

I’m not a big bridge player, but I’ve always been fascinated by ‘duplicate bridge’.

I’m not a big bridge player, but I’ve always been fascinated by ‘duplicate bridge’.

Here identical cards are dealt to two different tables and the games played. The results are – to my surprise anyway – almost always completely different. Same cards, totally different result.

In business, two companies can start in exactly the same market. One will be successful, going from strength to strength, while the other atrophies. Unlike in duplicate bridge, I can identify a reason behind this phenomenon: management. Or more specifically, the founder, leader or managing director of a business.

One of the best cases is the return of Steve Jobs to Apple. In a three-year period he transformed the business with the inspirational launch of the iPod and, latterly, the runaway success of the iPhone. Prior to the crash you would have made 20 times your money having backed him on his return.

This is also a classic case of a successful turnaround that won through because innovation, design and marketing skills were at the heart of the business – not merely cost cutting.

Indeed, I firmly believe that great leaders make all the difference and these people are united because they are almost always marketing and innovation led. This needs to be remembered because in tough times people tend to think that cost cutting is what it’s all about. Yes, you need be efficient, but increased sales have to be underlining the decisions you make if you’re seriously thinking long term.
 
Getting your business model right takes strong leadership. Take Hornby, the model train-maker as an example. If ever there was a business that seemed to have had its day, Hornby was it. What self respecting kid would buy a train set when you could get a computer game starring Angelina Jolie alias Lara Croft?

And yet Hornby has not only survived but thrived under new management. Production was moved to China to make products cheaper and get new models to market quicker. But the real coup was branding trains such as Thomas the Tank Engine, and the Hogwarts steam engine from Harry Potter combined with some real product innovation at Scalextric. This was all down to good, visionary management. We await the result from Corgi, their most recent acquisition.

From trains to Homebase, the ‘DIY’ store – or should I say that’s what it was described as when Sainsbury’s owned it. The supermarket chain then sold it to Permira, the private equity firm and the changes soon came. Although not flavour of the month, Permira did a great job. It established that Homebase’s market was not DIY fanatics but – surprise, surprise – the same profile as Sainsbury’s own customers: the middle class. Ergo soft furnishings and things to complement your home rather than hammers and planks to build your house. Twelve months later, Permira pocketed a multimillion pound gain by selling the company on to the Argos group.

So when you wake up tomorrow morning, don’t just think about how you are going to cope with this recession and immediately look at your employee payroll with a view to cutting people off it.

No, look at your business, your market and your business model. See how you can be smarter, innovative and think your way out of your problem.

Do this and you can rightly claim you are a real leader – and yes, it does make a difference.