Moving out of phase 4

The well-known British store Marks and Spencer provides a good example of the above. Founded in 1884 by a Polish Jew, Michael Marks, it grew from market stall to a chain of penny bazaars in a matter of years. When Michael’s son Simon took over in 1907, a new period of development and growth followed, the stores multiplying to 135 in 1927, and 234 in 1939

In the fifties Simon Marks, sensing the threat to the firm from bureaucracy and complacency, introduced “Operation Simplification”, sending home 5000 of the 27.000 employees, and reducing the paperwork by 80 tons a year.

Simon Marks left behind a healthy company – however, even in the years directly following his demise, the symptoms of decay were becoming manifest. Since his influence had been so overwhelming, nobody dared change anything in the way things were done. It took till 1984 before a non-family member was admitted to the top executive ranks. New initiatives were not appreciated. On the contrary, the firm clung to old truths such as “Good products sell themselves”(while everyone else had good marketing departments) or “Buy British”(when all around shopped exclusively in low-cost production countries).. All top executives were dictators, decisions were made exclusively by the main office. Richard Greenbury, CEO in the nineties, personally approved the ‘fashion’ collection twice a year, changing details such as buttons and collars…Not surprisingly, the acquisitions effected by the firm during these years were definitely wrong choices.

Finally at the turn of the century, the disastrous developments resulting from the staid and protective organizational climate came to a head. A conflict at the top executive level combined with heavy losses, created the necessity of a complete turnaround. This resulted (among other things) in the closing down of all Marks & Spencer’s European ventures, the departure of Greenbury and his co-competitors, a complete transfusion of top management, among others with Belgian talent, and radical new policies, devised and implemented by new employees who had demonstrated their talents elsewhere. The autumn of 2001 saw a profit emerging again. It appears that Marks & Spencers have successfully negotiated their turnaround.