Over the last 2 years what specific acitivities has Carphone Warehouse undertaken in response to the recession?

• Cost Cutting
• Organisational Restructure
• Launched new product or service
• Entered new market

All of those, not a new market but entered a Joint Venture with Best Buy.  Charles uses a quote “in good times fortunes are made, in bad times empires are built.”  It’s the time to be really bold and brave and not just cut costs forgetting what your core purpose is.   Yes we did take out 10% of costs across the whole organisation but we tried to use it as an opportunity to do that based on what are the things that are really fundamental to our business and what are the things that could be done cheaper, more effectively or someone else could do it on our behalf.  We also did some hard tough stuff like others have done so we had a pay freeze and we cancelled our ball which is quite an infamous party for Carphone Warehouse.  We tried to put other things in their place so we put in place a profit share that said if we hit our targets everyone will get an extra week’s salary at the end of the year.  One of the things we work hard at is running our business through a Balanced Scorecard – we work hard at measuring our people, our customer service and seeing how that affects the numbers and delivers our vision.

So was that new?
Relatively new, but not in response to the recession.  We introduced it in the last 2 years.

And is it throughout the organisation?
Yes.  We call it our Compass and whatever country you’re in or whatever part of Best Buy Europe you’re in you will know how you are managed and measured and rewarded in line with the Compass metrics.

So if I were talk to anyone in this office or in stores and ask them how their actions were impacting the Compass measures they would be able to tell me?
Yes, obviously we tailor the Compass depending on the part of the business … but yes, you would know.  In stores we have introduced a radically different approach to reward.  We removed commission and instead of which we have reward based on an overall pool of money generated on us hitting margin but they can double that pool, if they hit the customer metric which is part of that scorecard.  All of our branch managers have their bonus based on Compass. In fact this is a good testament to the recession piece – we actually managed to increase our overall engagement scores even though we took out over 500 jobs.

What do you think drove that?
I think generally it is an absolute clarity over why we were doing it, the need to communicate like we’ve never communicated, strong leadership, and we got the whole organisation involved by launching the “Every Penny Counts” campaign where everyone fed in their ideas on how to save money so lots of the things we did were things they suggested.  Obviously we worked really hard at doing what we had to do in the best possible way and we protected as much as possible the roles that were customer facing.  There’s no doubt that there are pockets of the organisation that were pretty badly affected and suffered and I wouldn’t like to pretend otherwise but overall the engagement scores went up.

Are you able to tell me which parts of the organisation did suffer?
Head Office, back of house where they had the most significant cuts.

Organisation restructures – I understand you’ve been doing quite of lot of restructuring recently – can you tell me a bit about how that has impacted the organisation?
Organisations are constantly changing so you have to flex accordingly.  It’s an organisation that has always been pretty fluid.

So it’s an organisation that is used to change?
Well, it didn’t exist 20 years ago and Talk Talk didn’t exist 5 years ago and now Talk Talk is about to be floated off as a FTSE 250 business so it’s always been an organisation able to transform itself and regenerate.  There is no doubt that there is a lot of organisation design stuff at the moment as we prepare for a demerger as the business prepares to separate formally in March.  That said, we have pretty much been operating as two separate businesses for a while now.

So how does your role work – are you currently working for both businesses?
My job now and going forward is to be group HR Director of the Joint Venture which is Carphone Warehouse and Best Buy, called Best Buy Europe.  Talk Talk will have its own HRD in a demerged world.  In the interim, I’m overseeing both but TalkTalk will be a standalone business with own structure, Board, Governance etc.

What have been your biggest challenges during the demerger?
To be honest it’s probably not the biggest thing we’ve been dealing with.  For a very small group of people it is – if you’re living and breathing it day in and day out it is so, for example, if you are responsible for refinancing, for the legality, for separating the IT systems this is a massive piece of work and clearly for HR there has been a big piece of work around culture and communication but a lot of that happened a while ago when we created the Joint Venture.  There are some complexities around shares, technical stuff, but I think in many ways the biggest challenge is being able to tell the story to explain the rationale and in this instance, it’s such an obvious story to tell, it isn’t too hard. 

What about Best Buy coming into the picture.  I assume they must have a very different culture?
Well, there are some differences in culture, there’s no doubt, but one of the reasons we created the Joint Venture with them is that there are an awful lot of similarities.  We describe it as being engaged for quite a long time because Carphone have been working with Best Buy for a number of years out in the States.  Carphone helped to introduce Best Buy mobile which has been hugely successful in the US and has gone to Canada too.  So there’s been a really successful relationship where we learnt how to work together and it was on the back of that we decided to go the whole hog and get married.  So I think there a lot of similarities, their founders are still in the organisations, both have a really strong people and customer centric approach to how they run business and both have a passion about bringing together the connected world – Carphone largely through mobile phones, Best Buy through PCs and TVs.  Those things are coming together, converging, so there was immense logic to it.  Our thinking is if you can really leverage the entrepreneurial style of Carphone and the innovation and put that with the structure and process and rigour of Best Buy then you’ve got a match made in heaven.

Have you done anything specific to launch a new product or service?
Every week we are launching new products but I guess the big strategic changes have been the launch of our “Wireless World” stores which has been the move away from just being a phone retailer to trying to bring the connected world to customers. .. Regarding content, last week we launched My Hub, a free service – our equivalent of trying to bring together all the different content – iPhone Apps, Facebook, Google etc  … to one place where you go and we can give you loads of hints and tips on how to use them. Then also, this time last year we didn’t sell laptops and now we sell lots of laptops.

And that must involve an awful lot of training of your staff?
Yes, so to support that we created wireless camp so all 7000 of our UK employees went to a wireless boot camp where they learned all about our wireless world products and this connected world and then went back to stores and assuming they then passed some accreditation, they all got a free laptop.  Not just as an incentive but because we genuinely want them to understand the product.

OK let’s move on to discuss the impact of all these initiatives on the organisation.  As a result of these activities do you consider your organisation to be a significantly different place to work?
Yes, it feels like we are growing up – we are still relatively young but it feels like it’s maturing and evolving and yet gone back to its core – to why it existed.  We are moving onto the next growth cycle but doing that by reminding us why Charles [Dunstone] set the business up 20 years ago.  I.e. based on giving simple impartial advice underpinned with five fundamental rules around really loving our customers and doing that with a really engaged workforce.

As HR Director, what has been your biggest contribution over the last couple of years?
I think the most significant piece is the introduction of the Balanced Scorecard way of working and thinking.  It’s been a helpful mechanism and changed the philosophy of how we run the business and has enabled other things to happen on the back of it like a new reward process and the way you have conversations in the business around performance.  My bosses would probably say that’s been the most significant thing I have brought.

Now we’re going to leave the recession and the past 2 years behind to move on to look at preparing for the future.  To start with, can you tell me on a scale of 1-10, how efficient and responsive would you consider CPW to be? (10 is extremely)
I think they’re two fundamentally different things.  So I think we’re a 12 on responsive and in fact …we probably lead.  In terms of efficient I’d say we are a 2 or 3.

What is stopping you from being more efficient?
I think having stronger core processes.  We have had rapid growth, we’re constantly reinventing.  One of the members of the team used this lovely analogy last week – so we’ve got an amazing sky scraper built on stilts and we are working hard to put in place some of the foundations and actually we’re a million times better than we were but there’s still a lot more to do.

When designing any significant changes to the way that you operate (e.g. changes to your operating model, your product mix, your organisation structure etc) how far ahead do you plan? Up to 2 years, 3-5 years, 5-10 years or 10 years plus?
I think it depends.  This is a sector that changes by the minute so on the one hand I think we’re exceptionally visionary so looking round corners that don’t exist.  For instance, Charles embarked on the mobile phone 20 years ago when no-one thought everyone would have a phone.  The concept of Talk Talk, an independent network, just didn’t exist and now it’s bigger than BT and again this whole convergence theme, the “Wireless World” I think we’re light years ahead on and I think that’s why Best Buy is so keen to work with us – they saw that vision.  Then again on a day to day planning basis we do things pretty rapidly so My Hub was probably an idea 6 months ago and now it’s launched so it’s not a structured long term planning environment.

So this is where you mentioned that Carphone is entrepreneurial compared to Best Buy rigour?
The whole sector is just not like that – you throw away your PC now after 6 months because it’s out of date so there’s no point having a long product planning cycle.  It’s a much faster business planning cycle in this industry – the vision is there but the steps that get us there are quite loose.

Do you have a specific team set up to look at the future?
No.  We would say it’s in the bones of the leaders and that for me it’s what differentiates.  I think it’s the kiss of death the minute you set up a strategic function to do blue sky thinking.  Being fast paced and entrepreneurial has its disadvantages, so Talk Talk was a massive success but was also a disaster at launch and again on some of the other things it’s quite painful – one of the things we’re really trying to learn from Best Buy is their fantastic ability to plan and to organise.  They go slow to go fast and when they’re ready they can ramp up and scale up in an extraordinary fashion.  I use the “ready aim fire” analogy. Best Buy spend a lot of time in the ready stage then they aim and then they fire amazingly whereas Carphone are – fire fire fire then say were we ready?  It’s trying to find the balance between both of those but knowing the aim is the same in both businesses is encouraging.

I am going to pursue this notion of how far you look ahead…
I’m making this distinction between how far do you see versus how far do you plan.  They are different.  You need to see really far out and around corners.  Best Buy does have a 5 year planning process and we are partaking in that but nobody knows really – nobody could have forecast what this recession would look like.  You have to have an end point but you have short term planning and long term visioning…I remember spending time with Val Gooding at Bupa and she said when she was on the board at BAA the same week they were presenting their 5 year plan, Ferrovia were making their bid for them.

In our recent client work, we have been asked to help organisations review their operating models based on a number of different things including a view of the world in the next decade.  Broadly there are 6 different factors which are influencing the changes coming in the next decade – which of these do you think are the most important for you in terms of planning ahead?

• Resource Constraints – fewer resources and more expensive
• Climate Change – floods and water scarcity
• Demographic Change – Europe becomes an old age people’s home
• Societal shifts – a third of us will live alone
• Technological Innovation – do more with less in a digital world
• Economic Discontinuities – the East continues its growth in the West

Obviously the societal shifts combined with technological innovation.  We’re all on social networking sites …when we’re not sleeping or eating we’re probably in front of 1 of the 3 screens, phone, PC, TV.

What, if anything, are you doing to prepare your organisation for these changes?
We hope that we are at the forefront of that and setting the pace of where we think those things are going to converge.  The fact that Carphone is the biggest phone retailer and Best Buy is the biggest TV and PC retailer in the world – that has to be good.  I’m not saying that we’ve got this all tapped up – Apple is doing a great job – but we’re doing our best to read the mood and understand it.  It’s an amazingly exciting place to be. 

You sound so enthusiastic about your role – I’d like to ask you what it is that you love about working here?
I think I like the innovation, the ability to feel like you’re leading rather than following, and it’s a really exciting and interesting sector.  I like the combination of being able to have all the benefits of an entrepreneurial organisation with the stability and security of a bigger organisation like Best Buy.  It’s a nice combination.

What would you say are the different challenges for an HRD of an entrepreneurial organisation versus somewhere with a more structured approach to business?
With entrepreneurial…it’s less structures, less rigour, tends to be younger, have less experienced managers.  Businesses like this don’t always value experienced leadership capability and don’t understand necessarily what’s made it so successful whereas more mature organisations tend to spend time writing it down and measuring it.  The charm of it is rather than measuring the hole, it’s all about how you get yourself out of the hole and up the next mountain whereas in more mature organisations, you spend a lot longer measuring the hole and have a much more systematic way of getting out of it.

What have been your biggest challenges in the last couple of years?
The biggest challenge is this hamster wheel that is constantly spinning and it’s having the stamina and capacity to hang on – to focus on the priorities and make sure you don’t lose sight of the basics  – getting the balance has been the hardest challenge. 

Is there anything else you would see as being challenge or a change for HR in next few years?
A broad challenge – less relevant for me but will be a factor – is how we think about incentivising, rewarding, dong the right thing in a world where greed is no longer an acceptable benchmark and I think HR could play a really strong leadership role in that and I don’t think we are.  We could use it to transform businesses and the type of people you attract.  If we can take away commission at stores and halve their salary in some cases where people were earning fantastic commission but it wasn’t right for our customers and was attracting the wrong type of employee, you can do it on a different scale elsewhere.
I think also doing strategic HR and the constraints of some of the governance stuff that senior HR have to spend time on is conflicting. A lot of time is spent managing remcos, audit committees and CSR where we want to be driving the strategic HR agenda.  It’s a difficult paradox because they are very different animals.

We’re almost done now – Is there a question you would like to pose to a fellow HRD? 
I would probably ask Angie Risley group HRD at Lloyds TSB how she survives!

If you could be granted 1 wish to improve the way work gets done in your organisation, what would it be?
I would sort the HR basics such as getting everyone paid properly on time.  The HR nitty gritty stuff that’s really hard to fix and really important.

What has been the most influential business book you have read and why?
Big fan of Good to Great.  There is also a lovely little book less well known – Orbiting the Giant Hairball by Gordon MacKenzie which is all about the mess organisations can create and how you can find your way out of it.

Are you reading a novel and at the moment and would you recommend it?
Absolutely hooked on Stephanie Myers vampire books but don’t quote me on that!  I read anything and everything.

Do you have an iPhone and what’s your favourite app?
It’s a bit sad but the one I think is the most fun is “do you have swine flu” – you can take your temperature on it.

Click on the following links to learn more about associated topics:  Balanced Scorecard, Change Management, Lean Continuous Improvement, Head Office of the Future.