Apparel Sourcing Intelligence - Worldwide

Can clothing stores run countries better than governments?

Britain’s new government seems suddenly to have fallen in love with the men who run the country’s apparel chains. And the silliness of much reaction to this shows how limited the effect is going to be.

 

On August 12, it announced the appointment of Arcadia owner Sir Philip Green to lead an external Efficiency Review into government spending. The announcement followed its appointment of Next chief executive Simon Wolfson to the UK’s House of Lords, and widespread rumours that New Look chairman John Gildersleeve had been offered a role advising the government’s Cabinet Office, but had turned it down.

Of the three, the Green appointment caused by far the most extreme – and often inane – reaction. He’s been taken on (for nothing), according to the government release, to look carefully at all government spending over the past three years, identify inefficiencies where savings can be made and find lessons that can be learned for the future. In particular he’s supposed to assessing the value for money of government leases and contracts entered into since 2007 and review the government’s progress with the recommendations of an Operational Efficiency Programme the previous government launched in 2008.

Green is far from the only businessperson recently taken on to look at the British government’s efficiency. In June, it appointed three other businesspeople (including a director of Tesco) to join its Efficiency Board, which runs its Efficiency and Reform Group, to which most of its current central procurement agencies report. But he was the most immediately savaged.

  • Some of his critics clearly just didn’t get it. One political opponent said “It’s pretty rich…to appoint a man who has spent £5 mn on a birthday party to preach about waste”. But Green’s been appointed because his ability to control Arcadia’s costs, while persuading customers to spend more, means he’s rich enough to regard £5 mn spent on a party as small change. His argument has been that governments wouldn’t have to cut public services if they got better at paying suppliers less.
  • Mind you, his defenders didn’t help much either. The government minister responsible for the decision, Francis Maude, talked about Green’s “fantastic track record at managing large organisations”. Which doesn’t say much for Maude’s judgement: Green’s successes have been either running very small organisations, acquiring then selling off biggish organisations (like Owen Owen , Olympus and the UK’s Sears retail chain) –and successfully running just one large organisation, Arcadia, which he acquired in 2002. And even Arcadia is, by the standards of Britain’s government, pretty small: its retail network, for example amounts to just one-fifth the number of outlets operated by the country’s Post Office alone. Green differs from the legions of previous businesspeople who’ve tried to help make government more efficient in coming from a business small enough for his personal management style to show through in everything Arcadia does. Where previously people were taken on from businesses that understood the necessity in government of committees, well-informed debate and careful attention to what powers were delegated to whom, Green’s attraction to Maude is precisely in his being a genuine entrepreneur. Green, famously, dislikes running publicly-quoted companies – and his results show that, if they’re freed from having to talk to smart-ass stockbroker analysts every day, or get the kind of non-executive board members regulatory authorities feel comfortable with, CEOs have more time, and better colleagues, to make sure customers are constantly getting a better deal and no vendor’s getting paid a cent more than necessary.
  • But equally, Green seems not to have quite got the fact that making money’s not the same thing as developing policies that work in government. His personal tax affairs (the family fortune’s in his British wife’s name and she’s moved to Monaco to avoid being taxed on it) are legally above board, but create widespread public resentment. His reaction on August 12 to being asked about them by one journalist was apparently to call the journalist a “****ing tosser”: the following day, in a live radio interview he’d had ample time to prepare for and rehearse, he preposterously claimed “My wife’s not a tax exile: my family do not live in the United Kingdom”. Amateurish mismanagement of legitimate questions can make an entrepreneur appear an endearing rogue – but they make a government advisor appear an incompetent bully.


    Even in government, incompetent bullies can do things if they’ve got power. If they’re just advisors, they eventually join the long list of people whose good ideas get nowhere.

Which in Green’s case would be a pity. His essential insight – that running governments needs more people dedicated to providing better services for less – cuts right across most public servants’ most deeply held views. Our local railway station had half its lines removed forty years ago, for example, to generate some footling saving. Now that decision is costing the train operator a fortune: delays are mounting up, which turn potential passengers away. So the UK government’s spending nearly £100 mn to replace the lines pointlessly thrown away in the 1970s. If the lines had stayed, the government would be extracting more money than it currently does from the operators, rather than spending a fortune to meet demand – but public servants rarely understand that kind of logic. And those public servants are generally a lot more skilled at manipulating public opinion and politicians than people who make little secret of their contempt for the media (Senior public servants aren’t too in love with the media either: but they’re brilliant at keeping that quiet)

Injecting real commercial nous into how governments buy things would save taxpayers a fortune, and buying things is something clothes retailers know a lot about. Transferring those skills into infinitely bigger, more complicated, environments, though, is something clothes retailers are generally complete novices at – which is why the government minister for business, asked to comment on Green’s role, said “I’m tempted to comment but I think I’d better not”.

So will Britain’s clothing retailers transform its government? I’d love to see it: but the overwhelming likelihood has to be that Green will introduce a few bright ideas about how to stop landlords ripping you off – then go back to his real love, maybe pausing only to buy Gap or Inditex on the way.
Some love affairs look dangerously one way. This is one of them