The ‘L’ Word

Chief Executives are usually – understandably and appropriately – concerned with the legacy they leave when they retire. They want the storyboard, the narrative arc of their tenure, to have a beginning and a middle working up to a strong ending, which sees them leaving the company in a better condition than they found it.

But like a lot of things in business, legacy is something susceptible to being ‘gamed’.

I got an uncomfortable feeling watching the recent (BBC) Panorama documentary about what ails Tesco. Sir Terry Leahy, who of course presided over the company during the period in which it won Britain’s Most Admired Company five times, was earnestly sticking it to his successor Philip Clarke. The problems at Tesco, Sir Terry asserted, were the result of “a failure of leadership” (meaning Clarke’s leadership). Without saying it, the implication was clear: “Nothing to do with me, guv’.”

But do the decisions of a corporate leader in post cease to have any effect on the day they retire? Are we only to assess a leader’s legacy based on the results which materialised during the precise time they occupied the corner office? Is it not possible for people to take decisions – advertently or inadvertently – that flatter results in the short term while storing up trouble for the next incumbent? More specifically, aren’t the past-its-sell-by-date-but-hard-to-reverse footprint of Tesco, and the aggressive approach to suppliers which seems to have led to the accounting shenanigans, the results of a lot of concerted – albeit much-admired – effort during the time Sir Terry was the boss?

A leader thinking about the legacy they leave should be concerned with more than how much better the results looked during their last quarter versus their first one. They need to think about whether the business will have the strength and depth of talent, the strategic positioning, and the fundamental operational excellence required to continue successfully long after they have gone.