Sir Terry Leahy: Tesco's master tactician

Sir Terry Leahy, Tesco's boss, is to quit after 14 years at the top, and in Philip Clarke he has appointed a 'mini-me' as his successor.

The puritan in Sir Terry Leahy seems to have relished the austere welcome dished out to visitors to his Cheshunt head quarters. After journeying into "the indeterminate hinterland" just outside London, you walk a few hundred yards to an industrial estate, which "announces itself with a garage offering MOT testing and repairs", says Dominic Lawson in The Independent. Just beyond looms Tesco's low-slung concrete block. "It's not exactly how you would expect to find the boss of the world's third largest retailer."

With a typical lack of fuss, Leahy has announced the end of a revolutionary 14-year stint leading Tesco, claiming that "my work is almost complete". It's hard to quibble with that, says the FT. A 341% increase in group operating profit and global sales of £62bn speak for themselves. But "the true measure of a successful succession will be if those who follow Sir Terry overshadow him".

In a retail sector not short of egos, Leahy born in 1956 and brought up in a prefab maisonette on a Liverpool council estate has always delighted in personal obscurity. "Every last strand of his DNA is Tesco," says Management Today. His other passion is Everton football club, to which he is an adviser. His mantra is: "one religion, one football team, one wife, one firm".

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A quiet and, at times, prickly character, Leahy's disciplined management strategy has always stressed the faceless, collegiate approach. But there may be an element of personal vanity in his choice of successor, Philip Clarke. In opting for a fellow scouser and Tesco "lifer" (who started out, like Leahy, as a shelf-stacker), Sir Terry "is all but anointing a 'mini-me'", notes the FT. The two men even live on the same street in the village of Cuffley in Hertfordshire.

Clarke's appointment seems a deliberate attempt not to scare the horses, says The Guardian. Like Sir Terry, he is a determined internationalist. But whether he can continue the 10% annual compound growth rate notched up during Leahy's reign is another matter. Tesco has already outgrown Britain: there's precious little new growth to be had at home. And there are signs the sprawling international business "is not as successful as Leahy had hoped". It may account for two-thirds of floor space, but it generates only one third of sales and 30% of profits.

The greatest threat to Tesco's self-confidence probably lies in America, where the Fresh & Easy chain "has had a difficult birth". Despite grandiose plans for 1,000 stores across the US, so far only 145 have opened. Given that cracking America was Leahy's most high-profile adventure, it seems "odd" that he is not staying long enough to witness the outcome of that gamble at first hand.

Gordon Brown observed that there are two types of chancellor: "those who fail, and those who get out in time". The same is true of CEOs. Few FTSE-100 chiefs "get to pick their departure date", says The Sunday Times but Leahy may have got his spot on. The ultimate corporate tactician has quit while he's still ahead.

A quiet retirement?

Sir Terry Leahy's reign as chief executive of Tesco almost exactly matches the period that New Labour occupied Downing Street, says Alex Brummer in the Daily Mail. "The contrast between his achievements and the wasted Blair-Brown years could not be greater." Tesco left its challengers behind not only because Leahy was obsessive about controlling costs, but also because he demonstrated "extraordinary imagination in delivering changes to the sector". No wonder Gordon Brown saw Leahy as the ideal candidate to pilot changes at the NHS. It's a great pity Sir Terry never took the bait. Imagine what he could have done with "the sclerotic, jobsworth public sector".

Leahy appears to have ruled out a similar role now, stating that he intends to concentrate on private investments, with the emphasis on the word "private". "I don't want to have a personality or a legacy outside Tesco," he told The Sunday Times in 2006. But he should be wary of allowing his obsession with the supermarket to continue into retirement, says Lucy Kellaway in the FT. "Don't interfere" is the cardinal rule for every outgoing CEO with a reputation to safeguard. As a general guide, Sir Terry should avoid saying the word "Tesco" ever again after he leaves in March.

Other traps to avoid include writing a book: most big CEOs allow themselves this indulgence, few pull it off and who cares anyway? Tiger By The Tail, the dreary tome penned by Leahy's predecessor, Lord MacLaurin, is currently number 630,110 on Amazon. It's also a good idea not to get divorced: General Electric's Jack Welch started to look "rather less wonderful" after the details of his penthouse, limousine and private jet came tumbling out. Finally, don't do anything rash in your final months like drilling for oil in the Gulf of Mexico, or trying to make a £24bn acquisition in Asia. "Recent history tells us that good reputations can turn to bad in no time at all."