24/03/2014 - 12:13

Russo’s take-away tips for success

24/03/2014 - 12:13

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Ears are for more than keeping your hat on – good CEOs use them to listen.

Russo’s take-away tips for success
HAPPY DAYS: Kmart boss Guy Russo turned around the Wesfarmers subsidiary within a year of his arrival. Photo: Grant Currall

Ears are for more than keeping your hat on – good CEOs use them to listen.

I really enjoyed hearing Guy Russo tell an event in Perth last week how he turned the Kmart business around.

Few CEOs can summarise something as complicated as masterminding a cultural shift in a vast retail business in such a short time.

However, as is the case with many successful CEOs, Mr Russo spent a long time listening to his staff and suppliers, winning their trust and wringing the truth from them, before embarking a simple strategy that honed the list of products to better suit the target market’s needs and price.

The retailer, who was recruited over a cup of coffee in Hong Kong by Perth-based Richard Goyder to be part of his Wesfarmers empire, explained his success at Kmart without hubris – a big tick for those who know the Wesfarmers model – and managed to be gracious about his competition, both inside and outside the group.

Obviously his career had the ingredients for success.

By way of background Mr Russo worked for McDonald’s for more than 30 years, graduating from flipping burgers to become head of the fast food company’s Australian operation from 1999 to 2005, after which time he ran the firm’s China unit.

His other interests are as president of Half the Sky Foundation for orphaned children in China, and as a 14 per cent stakeholder in Australian-based Mexican food chain Guzman y Gomez.

Apart from being amusing and informative, Mr Russo offered a humanist approach to dealing with the many trials business faces as new laws and regulations constantly force them to change the way they do things – often at great cost.

Do you fight regulation or embrace it? This was a rhetorical question from the retail king who explained that doing the right thing worked, be it at McDonald’s or Kmart. He explained how, at McDonald’s, they were debating whether or not to install disabled toilets when, after further research, they realised the issue was much broader than simply the need for greater wheelchair access.

Instead, it became clear that 20 per cent of the population has some form a disability and it was obvious that fast food outlets needed to cater for them.

However there was a contradiction here from Mr Russo. Clearly he doesn’t embrace everything the regulators see fit to impose on his business. He took the opportunity, subtle and understated as it was, to have a dig at Western Australia’s restrictions on trading hours, especially on Sundays, noting that three states don’t allow him to open his shops for 24 hours a day, seven days a week.

There were clearly no hugs for WA’s politicians and bureaucrats on that score.

Arts smarts

Moves by the federal government to strip away red tape include changes to the rules governing public-listed companies that allowed 100 shareholders to band together to call an extraordinary meeting.

Instead, dissenting shareholders will need to represent 5 per cent of a company’s stock, a far more difficult hurdle to jump and one that better represents real investor interest rather than a small collection of activists that want to make a point.

Personally I think this is a good move.

Too often I have seen businesses with perfectly lawful operations being disrupted by people who oppose their activities on an ideological basis. Companies are legally obliged to provide their shareholders with certain types of information and respond to their concerns in certain ways. Often activists hijack those channels for their purposes.

Generally speaking, law-abiding companies ought to be answerable to shareholders who have a true economic interest when these mechanisms are used.

If activists have an issue with a company’s activities they have myriad other avenues to pursue their agenda.

Of course, I don’t blame them for trying; sometimes I admire their creativity. But if they want to hijack rules put in place for another purpose then they ought to not be surprised that such loopholes will be closed. I just hope that real shareholders are not disadvantaged as a result.

In a similar vein, I was intrigued to see the Chamber of Arts and Culture WA caution against government interference in the wake of the Sydney Biennale debacle, where protests by several artists have led to the withdrawal of its long-standing sponsor, Transfield Holdings, and the resignation of the arts group’s chairman Luca Belgiorno-Nettis.

Mr Belgiorno-Nettis is also a director of Transfield, which artists objected to due to its connections to a government contract to run detention centres on Manus Island and Nauru.

As a result, Arts Minister George Brandis has threatened to withdraw government funding from arts organisations that reject corporate sponsorship.

The WA chamber, naturally, is concerned about this tit-for-tat fight and does not want to see the federal funding body, the Australia Council for the Arts, politicised. The end result is likely to be less funding from both the state and corporate sector.

Of course, it is always tough for governments to abstain from political activity, given that is what the people that compose them do, naturally.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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