John Lewis’ partnership model put it on a pedestal, now it joins the rest of us
John Lewis has had an easy ride because its almost mythical shared ownership structure, as it looks to dilute it, it joins every other businesses in Britain in facing a hostile environment, writes Simon Neville.
As soon as a business starts to believe it has a divine right to exist, you can be sure that company is heading for trouble.
No UK retailer has embodied that spirit more than the John Lewis Partnership in the past two decades and I’m amazed the laurels they’ve been resting on haven’t started to decay by now.
I understand why JLP has managed to rest up so easy for several years and a big part of that must stem from the fact that it has a partnership model.
The media has always placed JLP on a pedestal and given it a far easier time than many of its rivals. But JLP seem to have failed to grasp that the reason for that is because of its employee-owned structure. To consider changing that – even in small ways as the company seems to be suggesting – would lose so much of that goodwill.
The problem John Lewis now faces is how can it justify changing its ownership model?
It also brings up a bigger question on how partnership and member models can work at all in the UK. If JLP can’t make the model work, then who can?
One only needs to look at the hammering LV= faced when its previous management tried to demutualise via a private equity takeover by Bain Capital.
John Lewis is a far more well-known brand and I would be surprised if the media doesn’t go hell for leather to ensure no outside investors try to dilute such a heralded structure. It is also baffling to me that JLP didn’t see this coming.
Much has been said about the company’s boss Dame Sharon White – she is out of her depth, doesn’t understand retail and is just a career civil servant.
This is somewhat unfair and it is possible to detect the faintest whiff of racism, with a heavy dose of sexism. But as the former head of Ofcom, you would think she might know a thing or two about how the media industry she regulated operates and how best to get your message across.
She might also be a bit more clued into what is happening in Westminster and be following the ongoing debate on the future of mutuals set up in the wake of the LV= aborted deal.
The Co-operatives, Mutuals and Friendly Societies Bill is working its way through parliament and would be a good place for JLP to find its voice, if raising capital remains such an issue for the business.
Unfortunately for JLP, White seems to be the kind of person who struggles with listening and engaging. Like the media organisations she once regulated, it appears she prefers to only operate in broadcast mode.
This is a common issue for lots of businesses and something I keep telling firms when they seek my advice. Engaging with the media and the public must be a two-way experience. The days of big beasts of industry and retail talking at people has now gone.
Bosses must sell their story by building relationships, giving guidance and providing clarity so that everyone understands all sides of the point of view.
White has failed to do any of that since the day she arrived at JLP’s Victoria offices and from a glance at the communications since the plans to change the partnership first leaked, that position hasn’t changed.
We still don’t know who has been approached, how far along the process is, what is the next step, how will partners be impacted, what will any funds be used for – and from speaking to other journalists it sounds like even background information has been hard to come by.
Behind the scenes, there are now reports of a leak inquiry into how details of the plans to water down the partnership model ended up in the media.
The fact that details of the leak inquiry were themselves leaked shows just how utterly pointless a leak inquiry will be.
It also shows White has not learned from previous mistakes.
During the pandemic, I broke the news that JLP might not reopen all its department stores after lockdown. White subsequently recorded a video message to senior management describing her fury over the leak.
Naturally, that video was leaked to me. I occasionally watch it back to remind myself that even people at the top of their industry can struggle to see the wood from the trees.
But, if John Lewis is to ever emerge from the overgrown forest of its own making, it might want to start with being honest and open with the public. Otherwise, any remaining goodwill will be lost forever.