Kingfisher: A case study of the effects of CEO bias

By Jo Whitehead *

(exechange) — April 1, 2019 — A common reason for CEO exit is failure when taking on a tough challenge.

While this challenge is often growth related (M&A or international growth), a recent example suggests an alternative — a tough operational challenge.

exechange’s newsletter of March 25, 2019, highlights Véronique Laury’s exit from Kingfisher, a U.K. company that owns several European DIY retail chains.

Laury attempted to drive up profits by centralizing purchasing.

In fact, Kingfisher’s profits declined.

Our research suggests two reasons for such failures.

The first is capabilities — but Laury seems qualified, having been in a French subsidiary of Kingfisher since 2003 and at Leroy Merlin before then.

The second is an inappropriate bias — and this appears to have been the problem.

Laury got the job on the basis of her purchasing plan, which she proposed prior to her appointment.

Having a plan before doing the proper analysis is very risky.

The Times states that it was based on “customer surveys showing that the whims of homeowners from Britain to France to Poland were more similar than they were different” — but her colleagues were skeptical and the organization was riven with national fiefdoms that resisted centralization.

Doing the analysis pays!

* The writer is a director of Ashridge Strategic Management Centre and currently researching why companies and CEOs stumble.

Editor’s note: This is a guest post.