Leadership Matters

Perspectives on the key issues impacting senior leaders and their organizations
September 12, 2018

A Conversation with Dairy Farm CEO Ian McLeod

I had the opportunity to sit down with Ian McLeod, CEO of Dairy Farm, at the recent Global Summit of the Consumer Goods Forum in Singapore. Below are some highlights from our Q&A session:

Q: You’re now in your fifth CEO role. Has anything surprised you about your most recent transition? 
A: When you're transitioning from one organization to another, you have to understand that people maybe read about you or have a perception of what you might be like, so there's always a degree of wariness about what you're going to do. Trying to put people at ease early on is something that you want to do. I got a piece of advice about this from a very unusual source about 10 years ago: LL Cool J. 

I was at a hotel in Australia with my 15-year-old son and I suddenly see his face go pale and he said, "I think that's LL Cool J over there." At which point I said, "Who the heck is LL Cool J?" And he said he's a massively famous US rap artist. So we went over and had a bit of a chat. I told him I just arrived in Australia and that I was going to be the new CEO of Coles, one of the biggest supermarket chains there. He said, "Congratulations. You know, you only get one chance to make a good first impression." 

And that's something I've never forgotten. So when you go into a new place with new people, you have to think about what their impression is going to be of you and how you can engage them more effectively.

Q: Out of the words of international rappers comes great leadership advice. What makes a good leader in your view?
A: I have a philosophy that if you recruit well, people will want to do a good job. As a leader in the organization, you want to set people up to succeed and not fail. That means training them well, motivating them, engaging them, giving them a vision for what the future might look like, and giving them some hope that things can improve if you're in a tough time. Your job is to stay resolute and find ways to get some quick wins in order to deliver some change early and give people that additional hope that it's worth the effort.

I also got some great advice from Lee Scott, who was the global CEO of Walmart while I was with Walmart Germany. I ended up in a bizarre situation: I was leaving the company and becoming CEO of Celtic, but it got leaked to the press the day before I was due to resign. Lee was in Germany at that time, so we went on a full day of store visits knowing the other one knew about the whole situation. At the end of the day, Lee addressed the elephant in the room quite graciously and made me an offer to stay. And then he said: “Whichever way you go, whether you stay or whether you go, one word of advice is to always be humble. Make sure you take that humility with you because that will make you a great leader.” That was something I’ve never forgotten. 

Consumer Goods Forum
Dairy Farm CEO Ian McLeod and Sally Elliott of Spencer Stuart at the Consumer Goods Forum.

Q: What excites you most about the retail sector right now?
A: It's so immediate. You can make a decision today and it can influence your sales tomorrow, either good or bad. But you can see the impact of what you're making very, very quickly. 

Because retail is a dynamic business, you cannot stand still. If you stand still, you'll get killed. Over the years, I've actually seen it advance and the time between what was good today and what's better tomorrow is narrowing. 

Q: Do big technology players like Amazon and Alibaba mean the end for traditional retail?
A: I think the first time I'd heard that traditional retail was dying, it was about 1999 and we're still around. What's important is being relevant to the customer. For bricks retailers, we're going to have to adapt, we're going to have to change, and we're going to have to embrace the development and make sure that we're better at it than we previously had been.

Q: Are there common pitfalls that retailers fall into and how should you avoid or recover from them?
A: I think a lot of it is within the culture of the organization. If you have an organization that is dynamic, never complacent, and wants to improve and develop, then you have a good place to be. Where there is risk is if you've got an organization that actually has been successful for a number of years, and with that success comes complacency, arrogance and sometimes, ego. They're the things that get in the way. And then, when you find that retailer start to come under threat, they go into denial: “It worked for 30 years, it'll work for another 30.” Therefore, they don't move quickly enough.

Coles was struggling when we took it on. I had some great people working with me and we set about making some change, but it takes time to get things moving. One of the benefits we had was that our main competitor was complacent. They thought it couldn't be done. They thought that we couldn't turn this thing around. By the time we got momentum, after 18 months, they started to think, "Actually, these guys might be a threat." It was almost too late. Complacency is a death knell for successful retail in my view.

Q: Let’s imagine it’s five years from now. What are the things that we'll be talking about then?
A: The future is changing and adapting. And we as retailers have to grow and adapt with it. We've seen substantial changes and now it's all about the data. It's about how you can glean that data and then look for personalization. Understanding who your customer is with a great deal of detail will be key and some people are getting extremely good at that. There's also a lot of talk about artificial intelligence, but how many people are actually using it effectively? 
Technology is advancing significantly. The CEO of Alibaba said, "You're talking about mobile wallets. In the future, the eye will be the wallet." I thought that was a pretty good phrase to hang on to because that's where the future's going to go. 

Q: Is there one piece of advice that you have for retail leaders today?
A: If there is one piece of advice I can give anybody, it’s if you're going to work in an organization, surround yourself with great people because that can really make the difference between success and failure. Find people who are self-starters, who take what they do very seriously but don't take themselves too seriously. That’s the kind of person that I like in my organization because they're determined to make a difference. With those kind of people around you, it's amazing just how much you can achieve.

Sally Elliott works with quoted, private and private-equity backed companies, including grocery, general merchandise, specialty retail, retail services, online, fashion, luxury and lifestyle brands. She specializes in CEO, chair, non-executive director and key executive board assignments, CEO succession planning and leadership assessment in the UK and international retail sector. Reach her via email and follow her on LinkedIn.