I popped into the ICSA conference at Olympia in London for a couple of hours this week, on a very kind invitation extended by CEO Simon Osborne (thank you Simon). The programme was filled with some interesting speakers. It would have been great to attend for the full day, but a teaching commitment at University of Winchester Business School during the morning put paid to that.
Anyway, to the conference. The two presentations following the mid-afternoon break were very interesting stories of failure. One concerned the Co-operative Bank and the other Manchester United. You don't often hear such stories at conferences, so when they are told it pays to listen, because lessons often abound. And so it was on Thursday afternoon.
Neil Gibb, of consulting firm SLP, talked about the appointment of David Moyes to succeed Sir Alec Ferguson. Gibb suggested that the appointment of Moyes was an abject failure. The outgoing Manager—a man not devoid of ego—anointed a successor, Moyes. Moyes was like Ferguson in many ways, except that he did not have a track record of success. Notwithstanding this, Ferguson's power (and aura?) prevailed and Moyes was appointed. Moyes coached and managed as he had done at Everton, and MU slid down the league tables. The resultant damage to the company has been conservatively estimated at £50.4m.
What went wrong? Gibb suggested the succession process was a failure of culture, in that culture trumps most things. That those that employed Moyes did not do their homework adequately. Moyes did not have the 'swagger' that characterised over the Ferguson era. The players probably did not respect him either. With hindsight, the outcome was probably a foregone conclusion. However, something that I found more interesting was that Gibb did not mention the board. Clearly, power rested with Sir Alec Ferguson. It should have rested with the board. After all, the board 'owned' the important task of employing a new manager, or it should have.
The case demonstrates the hard (financial) and soft (brand and reputation) damage that can readily occur with a 'bad' appointment. While the board can take suggestions, and culture is crucial as Gibb stressed, the board should never forfeit control over succession plans and recruitment process. However, in the Manchester United case it seems to have done so. Moyes was the face of the failure. He got the blame when the board was culpable. Thanks to Neil Gibb for telling the story, and for Simon Osborne for inviting me to hear it.
Thoughts on corporate governance, strategy and effective board practice; our place in the world; and, other things that catch my attention.