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Sir David Reid had an impressive 25-year career at Tesco, before he stepped down as chairman in 2011. When he joined as Finance Director Tesco was a down-market high street supermarket, piling it high and selling it cheap, only in the top five in the UK. When he retired as chairman, he departed from the number one retailer in the UK, and the third largest retailer in the world. A transformation achieved in partnership with successive chief executives Ian Maclaurin (now Lord Maclaurin), and Terry Leahy. Today, Sir David is chairman of FTSe 100 company Intertek, a senior non-executive director at Reed Elsevier, and one of David Cameron’s “business ambassadors”.
He attributes much of the success of Tesco, to the very good leadership of CEO Ian Maclaurin and managing director, David Malpas. He says that it took 10 years to implement, but that they had a strong plan throughout. It included the middle market, fresh food, young people, better stores in the right places, a modern supply chain, and above all investment in better skills, training and pay for staff, with a relentless focus on customer service. By 1994 Tesco had overtaken Sainsbury’s as number one in the UK. Sir David was quoted in the ‘The CA’ magazine in august 2012, ‘Don’t let anyone ever write you off. The people who write you off are commentators, journalists, and analysts. The only thing that determines your destiny is what your customers think of your shops. If you worry about that, you won’t go far wrong.’
One of Reid’s many achievements, was the transformation of the finance function which, when he first joined, was producing quarterly management accounts – and taking two to three months to do so. The necessary changes in systems, people and, above all, attitudes took about three or four years. During this time they moved finance into a real operating tool, and part of the business. As later head of international operations, Reid helped take the company overseas, to the point where it now has more retail space outside the UK than in – and is one of the world’s top three retailers, by sales.
He believes that finance people make good chairmen because they are brought up through the profession to think independently and objectively, and that it is a big advantage to know the company inside out. When giving his retirement speech, he held aloft his first set of accounts as FD of Tesco – about 20-30 pages. Now it’s more like 70-80.
Regarding Tesco’s demonisation amidst claims about its impact on town centre high streets, Reid does not mind the criticism or challenge, but believes it is necessary to be involved in the debate. He says that well-run, small shops do very well, but that their challenges are the Internet, double yellow lines outside their shops, increases in rates, and harsh health and safety stipulations. He believes if you add all that up, Tesco is not responsible.
His Chairmanship at Intertek has taken Reid into a company whose work is making a real contribution to society; encompassing auditing ethical behaviour throughout a supply chain, testing product safety, evaluating sustainability impact, with a huge expertise in many areas of industry from electric car batteries to oil refineries. He believes that in the corporate world today, that it is not enough to say that you’ve got a fantastic set of results, ten years of 10% EPS growth, and that your governance is good. He says that today you must govern with integrity, because society expects you to be a force for good.