Minding the store: Michael Luscombe on the Woolworths CEO role
Michael Luscombe - Woolworths
 
Michael Luscombe
Michael Luscombe
After almost 30 years working for the company, Michael Luscombe took over as CEO at Woolworths in October last year. Now almost a year into the role, CEO Forum asked him to reflect on his first year as CEO, what he sees as essential to the company’s current success, and where he wants to position the company in the near future.

ceoforum.com.au: In terms of how you spend your time at work, what has changed since you have become CEO? What activities do you spend more time on, and what activities do you have less time for?

Michael Luscombe: Since becoming CEO I have had to spend more time with external people – analysts, investors, journalists and so on – promoting the company. I’ve also found that, apparently, I’ve suddenly become much more interesting as a speaker – there are a lot more invitations to speak at conferences and so on. Whilst I could hardly satisfy all these different demands, it is inevitable that you will spend more of your time on those type of activities as a CEO.

"Running this business is really all about making us all better shopkeepers..."

What I’ve done less of when compared to my previous roles is spend time in stores. It’s always a challenge in senior management not to get too far away from our stores, as running this business is really all about making us all better shopkeepers. I find the time I do get to spend in stores particularly useful. Staff will give you good feedback on the things they are finding frustrating, and customers aren’t slow on expressing opinions to you either, both about what you are doing well and what you could be doing better.

ceoforum.com.au: What about your relationship with your board? Has that changed a lot?

ML: Not as much as you might think. We’ve always had a tradition at Woolworths of board members being very involved with the business, so a number of senior executives had regular exposure to the board, not just the CEO. Our board members, too, have often offered their advice in their particular areas of expertise, offers that have often been accepted. As a result, we have probably had board members more involved in our business than would be the case for some other public companies. By and large I think that’s been a good thing for the company, as we have had boards that know a lot more about the business: when an issue is presented for the board’s deliberation, they have a lot more background within which to understand the immediate proposal.

ceoforum.com.au: In dealing with the board, have you been surprised at the amount of time compliance and governance matters take up? This is something a number of CEOs have commented on recently.

ML: I guess as with many other public companies, we have found that the amount of time these matters require has been growing over the years. In our case, as we have acquired more interests in hotels and gaming there are special governance obligations that come with that, as well as broader social responsibilities. This is an area we take very seriously, and is an area where we will be wanting to stake out a leadership position.

ceoforum.com.au: Has your view of the business changed in any way since you became CEO?

ML: Not really. In fact, my view of the fundamentals of our business hasn’t probably changed too much for years! I’ve always thought we needed to get three things consistently right to be successful: the right products available and well-presented in our stores; a competitive price, and people who enjoyed interacting with customers. That’s still the view I operate with as CEO.

"The way you get the best out of yourself is to be yourself..."

ceoforum.com.au: Has your relationship with your colleagues changed since you became CEO?

ML: I would hope that, for my part, I haven’t changed how I relate to them. I guess from their point of view, they probably have changed in how they relate to me. They are probably more conscious of my time, for instance, than they were before, recognising the demands that go with the CEO role. Ultimately, however, I’d hope they would recognise that, whatever the role I have, I am still the same person, so they could come and talk to me just as they could before.

I’ve always believed that the way you get the best out of yourself is to be yourself, so in that sense I probably haven’t changed much at all.

ceoforum.com.au: Obviously the long period of success the company has enjoyed creates its own pressures and expectations. Where to you think the growth is going to come from in the future, and how do you avoid complacency setting in?

ML: I see our future growth coming from both organic growth and acquisitions, both locally and internationally. There are a number of adjacent businesses we could, at the right price, successfully incorporate under our brand – as always, the test is whether our core competencies in retailing add value to the businesses we would be acquiring. Internationally, for instance, we have been doing some interesting things with the Tata Group in India, so there may be more opportunities opening up for us in those markets in the future.

Our business is not a high-margin business, so we have a very strong sense that success can’t be taken for granted. The moment we start thinking we have won is the moment we have lost, and we very much believe that, in this business, we can be roosters one day and feather dusters the next!

ceoforum.com.au: What particular areas of the business do you think you can improve the most?

ML: We’ve always had a reputation for being a very efficient retailer – of being able to squeeze a lot of cost out of our business, and give customers very good prices. I would like us to be equally well-known for also providing the outstanding shopping experience. I think there is a lot we can do around how we present our products in the store – the general merchandising part of our business.

One thing I would also like to see happen at a broader community level is for more Australians to recognise that you can be both successful and responsible as a business – that is, you can add value for your shareholders, look after customers, and do the right thing by the community generally. We’ve achieved a lot of recognition and respect for our financial success, and it would be good to see similar respect for our contribution to the broader community.

Of course, traditionally there has been a degree of suspicion amongst some people about big business, but I do believe you can turn that around. Look at some of the banks, for instance – through their work in the broader community, they now enjoy higher levels of approval when compared to, say, ten years ago.

ceoforum.com.au: How important do you see it that your key executives come from a strong retailing background?

ML: I wouldn’t say that it is absolutely essential – after all, some people do make the grade even without that background – but I would say that it is an enormous advantage to have that deep understanding of the industry. In some roles it is particularly important – like our key product buyers, for instance. You just need that intuitive understanding of what products will sell and why, and you really need the passion for the product that often comes from years of experience.

ceoforum.com.au: Woolworths has had a tradition of promoting from within for many of its most important roles. What do you put that down to, and are there any dangers that the culture will become inward-looking if that is taken too far?

ML: We do have a good mix of people in the company – some long-standing employees, and others who have joined us from a variety of backgrounds : other local retailers, international retailers and other industries. We have no problem with at all to go outside the retailing industry when we need to, particularly when we need to source a particular competence, such as logistics.

When we do employ people, we do move them around quite a bit, both between our different businesses and across different functional roles. This process creates a very well-rounded executive, and that, together with our success over the years, has meant we have had a good pool of talent in the organisation.

We are a very outward-looking organisation – we are regularly sending teams of managers – buyers, operations managers, younger emerging talent, and others - overseas on study tours to study retailing over the world. All of this is simply about becoming us becoming better shopkeepers, which is really what our core business is all about.

ceoforum.com.au: What particular responsibilities as CEO do you have to maintain the culture and values of the organisation?

ML: Perhaps the biggest single responsibility you have as a leader is to “walk the talk” – that is, provide an example of the behaviours you want to reinforce in the organisation. When I walk around our office, or are in our stores, for instance, I always need to be making eye contact, greeting people, and being approachable generally. The moment I start wandering around in a pre-occupied or self-important state, and don’t acknowledge the people around me, that means we will have a problem.

One of our key values here is a kind of humility and down-to-earth quality – we don’t want anyone to start giving themselves airs around the organisation. If you look at our head office building, for instance, there are only 40 individual offices, all of which are the same size. None of them take up the best views in the building – that is all reserved for shared space. This type of thing can send important messages to the organisation about what we value.


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