8 July 2010 | Rebecca Ellinor

A sure-footed approach to business and buying has made John Timpson a trusted source of management advice, finds Rebecca Ellinor

On my way to interview John Timpson, chairman of the family’s shoe repair chain, I pass two of the company’s 862 shops and a poster for his latest book. The strapline reads: “Common sense business tips from John Timpson” – and that is exactly what you get when you meet him.

Timpson is one of the keynote speakers at this year’s CIPS Conference on 23 September in London, where he will deliver a presentation on his “upside-down management” philosophy. He is a straight-talking businessman with two regular advice columns in the Daily Telegraph and Real Business magazine. He admits, however, to finding it “much easier to give advice than to take it”.

The Timpson family business was taken over in 1973, but 10 years later John led a £42 million management buyout. In 1987 he sold the shoe shops and focused on building the shoe repairing and key cutting business. The firm now has hundreds of branches nationwide, with a turnover of £150 million and profits of more than £10 million. It is a private business owned by him and his family and run by his eldest son, James.

What is ‘upside-down management’?

It’s my term for what people would call delegation and empowerment. Businesses such as ours, with lots of branches over the country, tend to be run by head office. We don’t do that. We give the people who work in our shops the freedom to run them the way they think is best. That’s the way this business has been run for 10 years. Some don’t believe us; others say they already do it. I’m not too sure they do it as passionately as we do, and you can’t do it if you’ve got loads of rules – the two are counter to each other.

Some companies say, “It’s all right for you because of the line of work you’re in and because it’s family-run. It doesn’t work for other things.” But that is not true. To some extent, or possibly to a large extent, you can have that degree of delegation in other businesses.

How do you think purchasing has changed since you were a buyer in the 1970s?

I was buying ladies’ fashion shoes, and we did everything up to getting the shoes into the warehouse. In fact we went beyond that. We decided on budget, styles, negotiated with suppliers, organised deliveries and so on. We didn’t use computers, because there weren’t any, and it worked. In our day it was much more about flair and intuition. You were almost placing bets, on styles and quantities. However, because you did the whole process, it worked quite well. I don’t think price was as big an element then as it is now. We certainly didn’t have the same level of e-auctions and things that are used now.

If you could go back 20 or 30 years, is there anything you would do differently?

Probably loads. You would cut out all the mistakes, wouldn’t you? But then you wouldn’t have learnt all the lessons from making them.

We have been very lucky, we have had a lot of opportunities we have been able to take and most things have worked. We have made several major acquisitions which have all so far worked as well, if not better, than expected. The business has grown enormously and we have been lucky that we have great people.

Do you do any low-cost country sourcing?

Some, but we don’t do any importing ourselves – well, one part of the business does, but it is very small – so we don’t get involved too much, other than to make sure that we are happy with the goods we get and the places they are made. We try to make sure there is an ethical element to it.

What do you make of stories about conditions at Foxconn that have been in the news?

I can understand the pressures but businesses should care about people – any people connected with it. It has been well published at times that there are difficult working conditions and low wages in a number of companies. It’s no defence to say you didn’t know. You should do everything possible to make sure your low prices are not achieved by exploiting people elsewhere.

Can csr be an add-on or does it have to be part of your general approach to business?

Certain things will eventually be forced upon you anyway, like where the source of supply is, recycling and energy saving. You can call it corporate social responsibility (CSR) but I think it is more likely to become the standard way everyone has to do business.

I never think in terms of “CSR”. The work we do through the prison workshops, things we do for ChildLine – we don’t do that because it is part of the national way of doing good business, we do it because we want to do it and because we can.

You should start getting involved only if you look after the people who work for you. Your responsibility is

first to your family, then your employees, and then you can look

to the outside world.

The relationship between a buyer and a supplier should have an ethical content to it too, and that doesn’t always happen. Make yourself available, don’t play telephone tennis. People play a lot of games that are a waste of time. I’m not involved in that world now, thank goodness, but you want to have a supplier-buyer relationship where there is trust on both sides.

How do you build mutual trust?

You have got to be polite, decent and to stick by your word. You also have to have an interest in each other’s business.

You can create a better business together if you get on as people. A straightforward “negotiate the best price and be tough” is probably a lot easier than the softer approach, which builds a relationship and develops products together, but doesn’t get away from the need for a tough line on prices.

If you seek out the right suppliers and get on with them, you are almost certainly going to end up with a better answer than someone who just goes around negotiating.

How do you develop that at Timpson?

We have had a lunch for our suppliers for the past 20 years. We have about 50 core suppliers and sometimes we ask them to bring along someone who works with them, someone from the warehouse or production, who they feel most identifies with us.

We give out awards, finishing with our supplier of the year, and I give a report on what is happening in

the business. I tell them pretty much everything: turnover, profit, future plans.

Those who do best not only understand our principles and what we do, but also the way we go about it. Those who understand how we deal with our employees are more likely to pop into our shops and that sort of relationship is very helpful. They feel like an associated member of the family business.

What would you do if you were in charge of uk public sector procurement?

Thank God I am not. It’s a daunting task they’re facing. Where on earth do you start?

The procurement process itself needs to be looked at. It is far too complicated and expensive; it’s almost a game for people in the know. Presumably they are trying to be fair to everybody, but the cost of bidding means you’re only going to get the big businesses doing it. It’s also very impersonal, it’s all online, against measured targets and key performance indicators.

So there are wasteful processes and things that don’t need to be done at all. As soon as you see the word “agency” you say: “What does it do?” A lot of these things were set up for a good reason but then they keep going after that role is fulfilled.

The fundamental change needs to be in the proportions of the economy which is public sector compared with private sector. The sector needs to be smaller in every respect.

We have got far too many people running around telling everyone else what to do. Too many rules, too much red tape, too much getting in the way of helping business.

If it was a company, you would shut down departments, close head offices, cut out functions and make things simple. But would I like to do it? Certainly not.

Are you part of any network for CEOs?

James is involved in one, and we are members of the British Retail Consortium. The best way to develop, and deal with problems and opportunities, is to talk to people in other businesses. And people are nearly always open to helping. If you ask if it’s okay to spend an hour with them, most people will say “yes”.

We just had one of our buyers spend a day with a purchasing department of a completely different business to widen her experience. They were very happy.

Mergers and acquisition transitions can be difficult, how have you incorporated people?

It takes time. Generally we have always bought businesses out of a situation where they have been doing quite badly.

So were they grateful?

No, it doesn’t work like that. Some are, but not straight away. They will have been doing badly because they have been poorly managed, so they haven’t got any faith in management. You’re not trusted until you do something to earn that trust, which you do by spending money on making the business better, and by sticking with the good people and saying goodbye to

those who weren’t good.

Is the company doing well in the recession?

It certainly doesn’t do worse. We had a good year last year because we made two acquisitions that brought in unexpected extra profit. We were able to acquire them because we had cash in the bank. Being in a strong financial position has been a big advantage.

But it’s quite tough to keep increasing the like-for-like figures on existing branches. Without being too arrogant, our existing stores, where we have got really good people, perform so well that it’s difficult to get them to do better so most of our growth comes out of opening more shops.

You’ve said when it comes to joint buying, informal collaboration is best...

We have gained by benchmarking common lines of purchase by asking others what they pay for a particular item and who they buy it from, but I don’t think there is ever quite such a thing as a joint venture.

There is always someone who runs it and comes out on top. Where does it end? One buyer for the whole country? Someone who buys something for the world? It’s not going to happen and nor should it.

What questions do you get asked repeatedly?

People ask what is going to happen to the business when I’m not around, but I’m well in the background now, James 100 per cent drives this thing.

They also don’t believe the things we do for staff, like giving them the day off for their birthday, access to loans and holiday homes.

You spend a day with James, something will happen and he will ring up someone at a shop to thank them for a fantastic performance and say: “Take your wife out for a meal and send me the bill and if it is less than £50 I will send you a warning letter.”

He does a scratch card now, an idea he pinched from ASDA. If someone has performed well – for example, had a record week or a great customer compliment – we give them a scratch card and depending on what it says they get £10, £50, a meal out or the next sale.

I also get asked: “How do you find so many good people?” The answer? We pick them on personality and look after them.

WHAT Words sum up your approach to business?

Good manners, mutual trust – and common sense ahead of red tape.

Beyond keys and shoes

John Timpson and his wife Alex live in Cheshire. They have five children and were foster carers for 31 years during which time they fostered 90 children.

In 2000 he wrote Dear James, which passes on to his son the lessons learnt in 25 years as a chief executive.

He describes his business philosophy in How to Ride a Giraffe and his latest book, Upside Down Management, was published in April.

In 2004 he was awarded the CBE in the Birthday Honours List for services to the retail sector.

☛ John Timpson will speak at the CIPS Conference and Exhibition 2010 on 23 September at Kings Place in London. Go to www.cipsannualconference.com for details and to book your place.