Asos’ new chief executive is wise to want ‘refresh’ its culture – it is the foundation stone of commercial success, writes George MacDonald
It was good to see new Asos chief executive José Antonio Ramos Calamonte put company culture at the heart of his strategy as he seeks to turn the fashion etailer around.
Sometimes seen as an intangible, company culture – ‘the way we do things around here’ – cannot be overestimated as a contributor to success. If you look back at the great upheavals in retail history, one of the common signifiers of downward turns is a business losing touch with the culture that made it successful in the first place.
“Refreshing” Asos’ culture is one of four areas on which Ramos intends to focus over the next 12 months to put the retailer back on the right footing as it navigates immediate challenges and targets renewed success after its slump into a full-year loss.
It sits alongside more nuts-and-bolts business objectives such as an overhaul of the commercial model, cost efficiency and balance sheet enhancement – and it is just as important as any of those operational and financial considerations.
Good vibes
Asked about what refreshing the culture means, Ramos this week said: “Number one is we really want to push a culture of simplicity and transparency. I want to reinforce that because simplicity is very, very important in everything we’re trying to do.
“The second thing is that we’re pushing this idea of ownership and entrepreneurial spirit. We really want to get back to an Asos where people are continually trying new things and that should foster innovation.
“And last but not least is excellence: excellence in execution. I think it’s very difficult to be a successful retailer without excellence in execution.”
All good points. Asos was traditionally a business where something new was tried every day in a learn-fast, fail-fast, succeed-fast environment.
“Employees were given Friday afternoons off in the summer, long before that became common or the four-day week was a thing”
It was a preoccupation of Ramos’ predecessors, Nicks Roberston and Beighton, to nurture and maintain a start-up mentality of technological innovation, fashion nous and entrepreneurial mindset even as the etailer grew into a giant.
That approach to doing business relied on a wider company culture that was a foundation stone of commercial success.
If you walked into its offices, the vibe was perceptible. It was staffed by people who looked like and shared the interests of its customers; whether that was the latest styles or interest in issues such as sustainability and ethics, and reflected in Asos’ ‘fashion with integrity’ stance.
Asos worked hard but it also played hard. Years ago employees were given Friday afternoons off in the summer, long before that became more common as the pandemic disrupted work/home balance or the four-day week was a thing.
People power
While there is no evidence that Asos has entirely lost that culture, it clearly needs some TLC. If it can be built up and maintained, it can add immeasurably to the achievement of commercial objectives.
When Tesco lost its way during the Phil Clarke era, it reflected in part the loss of a culture that put customers and value for money first, while the interests of investors and the City were prioritised. Had Tesco retained the culture that made it UK retail’s top dog, perhaps it would not have found itself mired in the difficulties it did.
In Marks & Spencer’s 2019 annual report, cultural “flaws” such as overly complex structures and a loss of connection between the shop floor and head office were blamed for its difficulties. The report said: “This cultural failure has been the root cause of the underperformance of the business, and transforming the business and transforming the culture of Marks & Spencer are indivisible tasks.”
“Despite what some of its advocates think, data is not enough on its own. Plenty of businesses are swimming in data but finding life tough”
Today, many retailers – Asos among the foremost – increasingly rely on data to run their businesses. Data will be a field in which Asos continues to direct investment.
That is as it should be; well used, data opens up all sorts of opportunities to better understand and serve customers. But despite what some of its advocates think, it is not enough on its own. Plenty of businesses are swimming in data but finding life tough.
That is because, in the end, so much depends on people. In a world of data, the spirit of a company matters and it is still true, in management expert Peter Drucker’s words, that “culture eats strategy for breakfast”. That must be especially true now, in days of labour shortages, including in areas such as technology and data where expertise is in high demand.
Cultures change. They often need to. The challenge facing Ramos as he seeks to reinvigorate Asos is, to borrow from M&S, the need to “protect the magic and modernise the rest”.
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