Stuart Cross: An interview by Bob Morris

Stuart Cross is a consultant, coach, and speaker who helps world-class companies dramatically accelerate profit growth. Since its launch in 2006 his firm, Morgan Cross Consulting, has attracted clients including Avon Cosmetics, Alliance Boots, PricewaterhouseCoopers and GSK plc. Stuart has helped these and other clients to identify and develop new growth opportunities, to maximize the returns from existing operations and to develop robust and compelling strategies for long-term profitable growth. As Ian Filly, the CEO of $1 billion UK retailer DFS, said, “Stuart is a scarce resource. He delivers rapid results but he also gains the trust and commitment of the executives he works with to ensure longer-term success.”

Prior to founding Morgan Cross, Stuart was Head of Strategy for Boots the Chemists, the UK’s largest health and beauty retailer, where he led a program that lowered operating costs by £100 million, and helped to plan and deliver the successful £7 billion merger with Alliance Unichem. His latest book, The CEO’s Strategy Handbook: How to Create, Sustain and Accelerate Profit Growth, was published by Global Professional Publishing in October 2011.

Here is my interview of him.

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Morris: Before discussing The CEO’s Strategy Handbook, a few general questions. First, who has had the biggest impact on your personal and professional growth?

Cross: There are three people that have had a major impact on my development. The first is my boss at Price Waterhouse, Paul Woolston. Paul encouraged me to be more creative, to find new solutions and to recognize the importance of building relationships to deliver success.

The second key influence has been Alan Weiss. Alan is a former independent consultant, based in Rhode Island, who now mentors a global community of consultants. Alan has taught me practical aspects of building a consulting business, but, more importantly, has helped me focus on developing the confidence to be more entrepreneurial, to believe in my own value and to share that value with as many people and businesses as possible.

The third – and most important! – influence has been my wife, Scythia. We met in high school over 25 years ago and she has constantly supported me ever since. Her support has been emotional as well as practical – she financed my year at business school, for example – and she has inspired me to make a real difference in the world.

Morris: When and where did you become so interested in the subject of business strategy?

Cross:  think it started when I was working for Price Waterhouse. When I left university I had no real career plan and I joined PW primarily because some of my friends were joining accounting firms and the fact they had an office in Newcastle upon Tyne, which was a city where I wanted to live. As I trained as an accountant and visited a wide variety of businesses, however, I became fascinated about how they could improve. At most of my clients there seemed so many opportunities for growth – some of which the company might be pursuing, and many they weren’t – and I wanted to better understand why and how managers made decisions about their companies’ direction and priorities.

My interest in these wider business issues led me to study for an MBA, after which I joined Boots the Chemists, the UK’s largest pharmacy and drugstore chain. Although I joined to lead a business process re-engineering program, after a couple of years I was appointed as the company’s Head of Strategy, and that was the first time that I had practical experience of influencing, developing and driving business strategy.

Morris: Which books have had the greatest influence on your own thoughts about what strategy is and does?

Cross: I have read many business and strategy books and have been influenced by writers including Michael Treacy, Clayton Christensen, as well as – unsurprisingly – Peter Drucker. Other non-fiction books have also influenced me. Team Of Rivals, a biography of Abraham Lincoln, by Doris Kearns Goodwin is a magnificent insight into leadership and strategy through uncertain, chaotic times, for instance.

Increasingly, I’m also influenced by fiction. I recently re-read Tinker, Tailor, Soldier, Spy by John Le Carré. In that book, which is a cold war spy thriller, the ‘hero’ George Smiley demonstrates many elements of effective strategy management: he uses data effectively; he involves trusted others in his work; he is willing to challenge; and he is doggedly determined. But, like many business leaders, Smiley also lets his personal emotions cloud his judgement and blind him to the obvious answer. Much of my consulting work is actually about helping CEOs and executive teams remove their pre-conceptions and focus on major opportunities that they were, perhaps, vaguely aware of, but had overlooked.

Morris: What about films? I think there are several films that brilliantly dramatize important lessons about major business subjects such as effective leadership. Many of them are from the UK, including The Bridge On The River Kwai, In Which We Serve, Lawrence Of Arabia and Zulu. Are there any films that you think highly of in terms of how well they portray important business issues?

Cross: A film that immediately comes to mind is Local Hero. This is a small-scale, Scottish film from the early 1980s, and is about a small Scottish village selling land and drilling rights to a US oil giant.

In one scene a hobo who just happens to own the beach he lives on tells the oil magnate (Burt Lancaster) that he will sell the beach to him if he is willing to pay a dollar for every grain of sand that he can hold in his hand. Lancaster doesn’t know how many grains of sand you can hold in your hand and so stays silent. The hobo tells him that he could have had the beach for as little as $15,000. The scene demonstrates the importance of two things: in any negotiation you need to know what is important to the other side; and, more fundamentally, you cannot run a company simply through numbers, you must also get out there and pick up the sand!

Morris: In your opinion what is most significant about who Steve Jobs was, what he did, and how he did it?

Cross: I’ve never worked with Apple and so only know about the company through my direct experience of the products and what I read in the media. What comes across to me is that Jobs was a true business genius, but he was also a very, very difficult boss and could be condescending, rude and highly erratic.

So what do you learn from that? Well, I think you learn two things. First, you have to focus and build on your strengths and not spend all your time correcting your weaknesses. And that’s as true for businesses as it is for business leaders. Second, the success of Jobs shows that there is no ‘best way’ to success, there are many ways to succeed, you just have to find out what your best way is.

Morris: Now please shift your attention to The CEO’s Strategy Handbook. When and why did you decide to write it?

Cross:  I decided to write the book in 2010. By then I had been running my consulting business for nearly four years and my experience told me that many highly effective business leaders are uncertain about how to lead and manage strategy. There are many strategy books out there, but they tend to focus on models, concepts and theories. There is precious little that focuses on how, practically, to go from a clean sheet of paper to delivering profits.

I wrote the book for these CEOs and executives, to give them some useful tools to help them set a compelling direction for their organization and to show them that setting strategy was not as hard – and was a lot more fun – than many academics and consultants would have you believe.

Morris: Were there any head-snapping revelations while writing it?

Cross: I don’t think I had any epiphanies, but as part of the book I interviewed ten CEOs. What struck me was that for each of these CEOs saw strategy development as one of their top two responsibilities (the other being the development and leadership of their team). I realized that without the ownership, commitment and drive of the CEO there can be no clear strategy for any organization. I know that this is obvious, but it’s also absolutely critical. Every CEO needs to understand that they need to explicitly own their company’s strategy and if they neglect it, can’t articulate it or delegate it their company will, over time, stagnate and decline.

Morris: In your opinion what are the drivers of a winning strategy?

Cross: I think that there are three key drivers. First, it must be built on real customer needs and deliver what I call “customer resonance”, that is sufficient numbers of customers must be interested in the value that you’re offering. Second, a successful strategy requires competitive superiority. Ideally, you want to create some kind of monopoly, but if that’s not feasible you need to ensure that you offer and deliver differential advantages that set you apart from your rivals – to some groups of customers at least. Finally, you need an effective business model, so that you can turn customer interest in to profits.

Morris: Are all of these three factors essential?

Cross: Absolutely. If you have ‘customer resonance’ and ‘competitive superiority’, but a poor business model you’ll never succeed. Equally, if you have a value proposition that customers like and a good business model, but no competitive superiority you’ll always end up competing on price and your margins will be thin at best. Finally, if you have a distinctive position in the market and an effective business model, but a lack of customer resonance then you’ll never drive the top line to create the success you’re after. When I worked at Boots, for instance, we developed a cosmetics store called Pure Beauty. Customers who shopped there loved it, but we were never able to get sufficient numbers of women through the door to make the business worthwhile.

Morris: I am intrigued by the title of Chapter 5, “Nothing Fails Like Success.” Please explain.

Cross: Well, as I see it, many companies don’t struggle or fail because they’re bad at what they do, they struggle because they’re great at what they do. Take Kodak, for example. It’s recently filed for bankruptcy protection, but its problems started 10 or 15 years ago. At that time Kodak’s film processing business was hugely strong and that strength prevented the company from fully embracing the move to digital technologies in the photo market. The company’s success in film process was the also the seed of its failure.

You seem the same in other markets and in other businesses. Once great businesses decline because their reliance on what has historically driven their success inhibits their ability to ride the next wave.

Overcoming this issue is not easy but it is fundamental to longevity and lasting success. Companies such as GE and Procter & Gamble have been able to constantly reach out and jump on new opportunities and not simply rely on past successes, but those companies are few and far between. Chapter 5 sets out some principles and ideas about how more companies can focus not just on improving their existing business but also developing and exploiting new growth opportunities.

Morris: What are the most significant early-warning signs that a strategy is – or at least maybe – in need of revision?

Cross: There are two answers to that question. The first is that, in my view, strategy should be an ongoing process, not a one-off annual or three-yearly event. Executives should be reviewing the success of their strategy on a regular, say monthly basis, and tweaking as they go. As we’ve discussed the pace of change is so great that you can’t timetable when you need to make major strategic decisions, so make sure it’s part of your regular ways of working.

The second answer is that there are some early signs that things aren’t working – signs that exist before you see a drop in profits and revenues, for example. These include:

• Your brand ratings – particularly for key customer issues such as being modern, innovative and customer focused – begin to fall;

• Key influencers – not the mass of customers or the very early adopters – but those forward thinking customers, start to buy more of their products/services from your competitors;

• Your level of NPD falls, as does the percentage of your sales from products and services that have been introduced in the last two or three years;

• New competitors with very different, much lower cost business models and technologies have entered the market and are seeing success.

• Some of your key people are starting to move to competitors, and you are finding it slightly more difficult to hire the people you want.

It is those kinds of signs that management need to focus on – as well as the detailed financial, customer and operational reports – if the leaders of a business are to revise the company’s strategy before it’s too late.

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Stuart cordially invites you to check out his free resources and ideas at these websites:

http://www.morgancross.co.uk

http://www.crosswiresblog.com


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