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June 8, 2010

Tesco CIO makes it to the top – a feat we should all celebrate

The CIO-CEO leap has been a long time coming and is worth celebrating

By CBR Staff Writer

The news that the next CEO of one of the UK’s most important businesses is a landmark event that should be welcomed by all CIOs, whether they work in the private, public or third sectors. It’s been, after all, a very, very, long time coming.

The company is not just a bellwether FTSE 100 company – it’s one of the pillars of the UK retail sector. It is of course Tesco, a £63bn giant, leader in its field in the UK with 30% market share, and one of the best known brands in the whole national economy.

And the individual is current head of group IT for the supermarket giant, Philip Clarke, who also (interestingly) has a business role in the company, holding responsibility for Tesco’s international operations in Asia and Europe.

Clarke has been at Tesco employee for just under three decades, indeed also worked vacations for it throughout his school and university years. Clarke made it to the Board in 1998, and in 2003 went on to take on the role of director of logistics and IT, as well as director of distribution, supply chain and logistics.

In strict IT terms, Clarke can point to solid success on a range of fronts. Tesco’s online presence grew 14% sales-wise and 26% in profit last year. In 2009, the firm successfully deployed technology to support price matching on substitutions, which helped reduce calls to the service centre and implemented technology that improved driving and routing efficiency by its delivery trucks that will cut costs and CO2 emissions per order by more than a fifth over the next three years.

It also has to be said that this is a very tough gig. For a start, the legacy of the previous incumbent – Sir Terry Leahy, who has announced he is to retire next March – is far from inconsiderable. Just the news of his exit made the share price drop 3%, for instance. No wonder: since 1997, when he assumed leadership, profits have soared from £750m to £3bn, the number of employees more than tripled, from 153,000 to 472,000, while the number of stores shot up an astonishing five-fold, from 570 to 2,500.

The press has been falling over itself to praise the chap, with plaudits such as the outstanding businessman of our age” (Daily Mail), “Sir Terry, low-key yet formidable. His legacy of tenacious transformation will be long-lasting (FT) and Every little he did helped us, (The Sun), which thinks he should now be used by the new coalition government to sort out the national financial crisis.

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A couple of things to note here for our sector, as the huzzahs fade and Clarke gears up for his new role. One, this is really unusual. To my knowledge and 20 plus years experience covering enterprise IT, this is the first CIO to CEO progression in a Times Top 100 company. Ever. It may also be one of handful globally, to be honest (technology companies by definition don’t count).

Second, Clarke is plainly not a pure technologist; he has had considerable LOB experience and is deeply embedded in the Tesco business.

Third, he has been on the Board for some time, gaining trust and demonstrating both commitment and expertise in helping to run the firm.

I think we should as CIOs applaud Clarke’s achievement and see it as the high point for all serious business IT leaders to aspire to.

And let’s be honest – they wouldn’t have given him the job if he had a pony tail and went to work in IT conference T-shirts. Draw your own conclusions… and good luck if this CIO-CEO leap is also an ambition of yours, as I hope it is.

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