ITV and M&S bosses can add long-term value
Last week two of the UK’s biggest companies named new leaders. The appointments added hundreds of millions of pounds to the value of the businesses. But how much long-term value can a new boss add?
Consider the pedigree of the men in question; both undoubtedly impressive. Marks & Spencer snared Marc Bolland as its new chief. After a stint in the 1970s with T.Rex (he must be so tired of that gag), Bolland was chief operating officer at Heineken, then lead the revival of supermarket chain Morrison to some acclaim.
Meanwhile ITV appointed Archie Norman as chairman. The former Tory MP (surprisingly that’s no joke, he really was a Tory MP) cut his teeth at Kingfisher and is accredited with turning around Asda enough to attract US-based retail behemoth Wal-Mart.
Outgoing M&S executive chairman Sir Stuart Rose is worshipped by the company’s many small investors. Trust me. I’ve been to the shareholder meetings, where the main topic of conversation for lady pensioners, over free sherry and M&S nibbles, is what a lovely young man he is (at 60.)
Bolland has a large pair of shoes, almost a personality cult, to fill. Leaving oneself open to criticism purely for the sin of not being the last fellow is a tough call for any new leader.
ITV’s news put an end to a long, messy recruitment process, which seriously threatened to damage what is the UK’s largest commercial broadcaster.
In fact, Norman’s appointment was well-received, because he’s considered a good egg, but frankly ITV was getting to the stage where anyone with experience of running a corner shop would do.
Investors hate uncertainty, so both appointments are good news. Lots of people can run a well-established business in happy times, but we’re in a recession. For M&S, competition in fashion and food is heating up. For ITV, media is changing fast.
Each man has a tough job and the opportunity to add, or erase, great value. And each should also bear in mind to plan his own demise. As proven by their very appointments — the most important job a leader can perform is to nurture his own successor.
Rebecca Meehan co-anchors Capital Connection and presents Squawk Box Europe, each weekday on CNBC. Investor reactions signals content with both choices, but a one day share price gain is easily reversed. Tackling long-term structural issues is the real test.