Just ask U.K.-based Kingfisher, one of the world’s largest home improvement retailers.
The bulk of Kingfisher’s sales come from the U.K. and France, where it operates the B&Q, Screwfix, Brico Depot and Castorama chains. However, it also has stores in China, Russia, Spain, Poland and Ireland, and is part of a 50-50 joint venture with Koctas in Turkey. Rounding out its portfolio, Kingfisher holds a 21 percent stake in Hornbach, a German company with 130 stores across Europe. All told, Kingfisher operates some 900 stores worldwide and had sales of about $16.6 billion in its most recent fiscal year.
In this environment, the top team’s challenge is to integrate the businesses while reining in complexity, especially concerning the number of products it offers and their sourcing. Chief among the team’s goals is to have 50 percent of products common to all stores (up from 1 percent today), and reduce 115 brand labels to nine group-owned labels.
Group Chief Executive Ian Cheshire has begun the process of knitting the businesses together — and his approach reveals how a nascent global leadership ensemble can get the job done.
For example, the executive team — which consists of the group CEO, the CEOs of each brand and heads of key functional groups including sourcing, R&D and finance — has been reoriented toward group-level goals to achieve greater clarity of focus. When operations in China needed to be refocused, for example, the executive group acted as a team. “We went [to China] as a group to review the strategy, and we collectively solved those issues,” Cheshire said.
Beyond the five group executives, other senior leaders come together in cross-functional teams to solve problems. Cheshire said the goal is to work through “collective and intelligent networks” on such issues as supply-chain optimization and Internet channel development, and that the networks have often arisen spontaneously — an example of structural agility.
These networks allow leaders to make decisions in a style that matches the problem at hand — for example, collaborating closely to reduce complexity in product assortment. The approach is having an effect at lower levels, such as when French regional managers came to visit the U.K. brand B&Q, many for the first time. “It was like they were discovering their long-lost cousin,” Cheshire said. “They created a community and brought practices from one place to another.”
Kingfisher is preparing for the future by creating new leaders from its operations around the world. Cheshire recognizes the potential benefits of this approach: “In the last three years, we have increasingly mixed up the team so that we can get not just the scale benefits from being international, but also the diversity benefits of different perspectives and experiences.”
As Kingfisher increasingly seeks new growth around the world, the focus on reducing complexity and developing next-generation leaders from beyond its traditional base of operations will be critical to its success.