What Tesco knows and Woolies forgot


I do not think children should be taught that greed is the most powerful human motivation. The people who are most successful in business in the long run are people who are passionate about business, not money.

The cab driver was bemoaning the closure of the local Woolworths. “The problem, guv, is Tesco.” That company, he explained, offered better quality and value in the goods people used to buy at Woolworths.

I suggested this was a problem for Woolworths, but not for him. He would only repeat that Tesco was too powerful. I tried to respond that the failure of Woolworths demonstrated the opposite: that the power of a giant retailer lasted only as long as its customers wanted it to. Then we arrived at the station.

The abrupt end to the argument let me feel I was winning. I did not think I was winning when I talked to a group of health and education professionals, upset about recent reforms. They explained that what people wanted from medicine was good treatment, not choice of treatment. Having your appendix out was not like buying a dress, where some people wanted one thing and others another. All parents want to send their child to a good school, and choice just means that the best schools are oversubscribed.

I countered that this did not make choice a bad idea: it was evidence of failure to act on the very obvious signals that choice was giving. If there are queues at Tesco and the Woolworths stores are empty, then Tesco expands and Woolworths closes. But when some schools outperform others, nothing much happens. Choice is not an end in itself, but a means to the good services everyone seeks. Choice is working best when no one wants to exercise it.

But those who defend the market system are often the system’s worst enemies. I recently listened to a group of businessmen deploring the anti-capitalist tone of much of what is taught in schools. They had a point. But they spoiled it by promoting a description of capitalism that was at once repulsive and false.

They talked about “wealth creation”, although most of what they described seemed to be a diversion of wealth for the benefit of particular individuals rather than the creation of new wealth. They thought private sector activities – such as securities trading and automobile manufacture – created wealth; while public sector activities – such as health and education – used wealth up. They stressed that financial rewards were the mainspring of innovation, apparently unaware that material gain was not even at the back of the minds of those who invented computers, discovered antibiotics or created green revolution crops.

They explained that in addition to the considerable salaries senior managers receive, large financial incentives were needed to persuade them to perform the duties that were attached to their jobs. In contrast, people who worked in the public sector mostly did so because they were too lazy or ineffective to get jobs in large corporations. They professed surprise that teachers did not relay these opinions to their charges. I understood why, and was relieved they did not.

The complacent sense of personal entitlement these corporate politicians expressed was deeply unattractive: as unattractive as the similar sense of personal entitlement displayed by the lazy teacher who knows he will not be fired. I do not think children should be taught that greed is the most powerful human motivation, because it is not, and if children are taught that greed is the most powerful business motivation we should be pleased, not disappointed, when business does not attract them.

Young people looking towards the world of work should understand that the greatest reward from a job is the satisfaction of doing it well. The people who are most successful in business in the long run are people who are passionate about business – whose aspirations are to bring new products and services to market, to serve customers better, to motivate their staff to greater efforts. And, by the way, you can make a lot of money in the process. That is why Tesco is prospering and Woolworths has failed. That is the lesson we should teach our kids, and which our cabbies should have learnt. It is a lesson that is as relevant to the public sector as to the private.

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