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Can Sainsbury’s and Asda’s leaders make the merger work?

3 May 2018 By Dr Simon Hayward

The supermarkets’ leadership must come together to transform everyday ways of working if they are to make the deal a success, says Dr Simon Hayward

If the proposed merger goes ahead, both companies have pledged not to close stores or lay off store staff. This pledge has been challenged by some industry analysts, government ministers and unions but, whatever happens, the new organisation can only embrace this opportunity to transform if its leaders are prepared to adopt new ways of working.

Sainsbury’s and Asda plan to retain their individual brands. However, it is likely is that the companies will combine core functions such as purchasing and distribution, giving them the economy of scale to compete more effectively in the supermarket retailing arena.

Sainsbury’s CEO Mike Coupe has recognised the need to create a business that is “more dynamic, more adaptable, more resilient”, but if the new business is to become more adaptable its leaders need to develop a more adaptable and agile workforce – one that is better able to respond to its ever-changing, fast-moving marketplace.

The supermarket industry is notoriously cut-throat and has undergone great change in recent years, with market leader Tesco losing its dominance and increasing competition from discounters Aldi and Lidl. Industry disruption has become the norm, but we are used to that disruption coming from discounters, or from Amazon’s recent foray into the grocery market. We are less used to disruption from large, long-established corporates. 

Combining two well-established retailers will be a challenge. Coupe and the new leadership team will need to manage the paradox of agile leadership – creating a new, connected organisation while at the same time disrupting it sufficiently to reinvent it in a way that can compete on a sustainable basis.

What does this require? A major shift towards agile ways of working, with greater emphasis on simplicity, shorter planning cycles, ruthless prioritisation focused on what customers want and embracing digital opportunities. 

Can Sainsbury’s and Asda merge and become both bigger and more agile? This monumental challenge will require a very strong leadership community in the new business, willing to embrace new ways of thinking, leading and working. The alternative is that the merger ends up being a defensive reaction to new market entrants with a different business model, which may delay – but not stop – their ongoing disruption of the sector. 

Dr Simon Hayward is CEO of Cirrus and author of Connected Leadership and The Agile Leader

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