Do retail leaders need retail experience?

“Marc Bolland and I worked together for a couple of years, but I wasn’t too disappointed when he left - he patently wasn’t a retailer.”  

This attack by Sir Ken Morrison on a man he had picked and who led a revival in Morrisons’ fortunes, is as interesting for the fact that the life president of Morrisons could not get over his former chief executive not being a retailer as it is for the fact that it is unwarranted.

Bolland had joined Morrisons from Heineken in a move that had raised some eyebrows about his perceived lack of general retailer experience. The issue of taking on an ‘outsider’ to run your company, whether from within your sector or from a different one, touches business sensitivities about succession planning and talent. If you are not able to recruit your senior officers from within, it points to a lack of forward planning and/or an admission that you have not groomed talent successfully enough in time to effect a smooth handover of power.

Making the right appointment of chief executive is a crucial decision. Consequently, executive search briefs tend to be conservative: seeking a candidate from the same sector and a similar culture mitigates some of the risk.

But will this strategy attract the very best talent? There are clearly downsides to hiring someone from another sector. Any lack of knowledge on the part of a new chief executive about your industry and/or products can cause disruption to the incumbent management team. This can be healthy in some circumstances and disruptive in others.

Such a challenge can be especially relevant in extreme situations - either when a business is at the top of its game and seeking new ideas, or when it is in trouble and in need of change. In both cases, chairman and chief executive alike need to assess their and the organisation’s appetite for new thinking.

The case for hiring not just from within your sector but also from within one’s own company is illustrated by Sir Terry Leahy’s recent, textbook example of handing the baton to Philip Clarke. Tesco was spoilt for choice talent-wise and there was no good reason nor need to look outside, or cross-sector, for his successor.

However, the benefits that cross-sector hiring can bring, whether at chief executive level or a level or two below, are compelling.

Admitting that there might be leaders who are as talented and culturally appropriate, if not more so, outside one’s own sector, is the first step. When Archie Norman hired Allan Leighton from FMCG as his successor at Asda, he was not worried about Allan’s lack of retail experience. The Archie-Allan talent magnet gave birth to a new generation of leaders, all from outside the retail sector. In their case, calibre and cultural fit determined initial, and future, success.

Whatever you make of Sir Ken’s outburst, given we are soon, and for years to come, to be experiencing government-led austerity, is it time to think about recruiting from outside the usual channels? Perhaps even former politicians? How about Peter Mandelson to succeed Sir Stuart Rose as Marks & Spencer chairman?

Moira Benigson is managing partner of MBS group