In spite of some recent nervousness about the shareholder vote, the deal is done, and Wesfarmers will get the Coles’ door keys and the safe combinations on 23 November.

The business commentariat will continue to give gratuitous advice focussing on the strategy that the new owners should adopt. Much of it will be around reducing cost, waste and duplication. If that is all Wesfarmers does, it will not work. I think outgoing CEO John Fletcher might have seen retail as just another distribution channel that, if run efficiently, would be successful. However, this has clearly failed.

Fear, old mental models, competition, politics, performance measures and overwhelming helplessness and pessimism dominate Tooronga. People on the shop floor are crushed and defeated by years of being treated poorly.

So here are my five pieces of gratuitous advice.

  1. Build trust. Giving all your team real meaning and ownership is crucial. Let them know you understand that store team members are closest to the customers. Ask, listen, respond, challenge, and thank. Expect (not allow, tolerate or encourage – expect) the team to challenge the status quo.
  2. Develop a vision and values. Vision and values are not for a frame on the wall in Tooronga – they must be meaningful to someone in a store facing an unhappy customer at the returns desk. Involve all the team in its development, and ensure it is relevant to their role.
  3. Eschew command and control. Don’t define what the team is there to do – communicate what they are there to achieve. Vividly paint the picture of where the journey is heading; then train and equip them and give them the freedom to make a mistake. If you expect them to forever toe the line, nothing will improve. Giving orders doesn’t work anymore. Define excellence.
  4. Be effective rather than efficient. Woolworths has enjoyed Bradbury (Steven not Bevan) success as Coles fumbled. The accountants and analysts will want you to cut costs, waste and time to close the gap. They will speak of aggregation, efficiency and productivity. Instead, if you focus on effectiveness; lifting performance, service and innovation, you will develop speed and flexibility that Woolworths lacks – and in time you will pass them.
  5. Keep the good bits. There are many good things about Coles – and some wonderful people with unrealised potential. Seek out the values-driven insiders who demonstrate flexibility, fairness, openness, informality and passionate about the journey. Give them the freedom to infect their colleagues.

Great retailing is about engaging customers. By all means develop a strategy, but remember that the success of its execution will be almost totally dependant on the culture the new leaders manage to create. Organisations with great cultures will always outperform those with poor cultures.

The toughest challenge is not changing the organisation, but changing the mindsets of many of the troglodytes who have been running the place.

Wesfarmers need look no further than Bunnings for examples. It was the parallel execution of a strategy and uncompromising building of a culture that enabled Bunnings to grow to a $5bn retailer in little more than a decade.

DISCLOSURE: My company Orex has recruited hundreds of managers for Bunnings and my wife owns a few Coles shares.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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