Today’s stunning result from JB Hi-Fi is a great story about a company that has bucked the retail trend and found ways to turn a profit in difficult times. The company lifted profit by 70% on sales of flat screen televisions and video games in an environment where discretionary spending should be falling.

But the real story might be the mooted acquisition of JB Hi-Fi by Woolworths. That union would involve a significant cultural shift for one of them, and it probably would not be Woolies.

Woolworths is a highly controlled organisation. When faced with pretty much any contingency, a Woolworths manager can go into his or her office, take a manual off the shelf, and read how to handle the issue. The company is run by rules.

The governing culture was best evidenced when Woolworths recently sacked a manager for drinking two light beers with a colleague during a lunch break. The manager was trying to dissuade the colleague from resigning and was fired for breaching company policies. An organisation focussed on outcomes would have applauded the manager’s attempts, while perhaps suggesting that he not come back to work after drinking. But Woolworths has rules, and woe betide any who bend them.

On the other hand, JB has grown from a standing start to become a two billion dollar business by focussing on outcomes rather than rules. The JB culture has played a big part in producing a great result. The company knows where it is going and retains the flexibility to respond to changing markets.

Of the big retailers, the JB culture is most closely aligned with Wesfarmers, not Woolworths. But as WES is still digesting the Coles acquisition, it is far from ready to take on a new retail business.

Peter Fray

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