Recent results on the field at Manchester United under new manager David Moyes have left much to be desired, but the club has maintained a focus on long term stability where others would resort to making dramatic short term tactical changes.
On the face of it, the football industry is at complete odds with a purist’s approach to business strategy, often failing to stick to long term plans. But perhaps the modern football manager is simply a tactical implementer rather than a key strategic leader. Certainly many Man Utd fans question whether Moyes is truly a leader, and argue that Sir Alex Ferguson was not really a manager.
It’s a funny old game
So far this season West Bromwich Albion, Sunderland, Fulham (twice), Crystal Palace, Tottenham, Swansea, and Cardiff have all parted company with their managers. That’s over a third of the Premier League.
So why did these clubs make those changes? Simply because the well- trodden path for club chairman is to sack the manager and then get a short term boost in results as previously disaffected players try to impress the new boss and appease the fans. It can work, indeed it has done at Crystal Palace, while Swansea won the South Wales derby in an immediate response to the departure of Michael Laudrup, who only a year ago won the League Cup for the club.
But this short-term approach may be outdated. Many clubs now operate a director of football hierarchy, whereby the manager reports to a director of football, not the board. It could simply be that sacking the manager is the quick PR win for embattled chairmen, but in business it would be like firing your sales manager, rather than your sales director. Accountability would usually fall on the senior manager, so for every manager who has lost his job this season, it seems there are other senior figures in the clubs who can count themselves lucky.
Does stability breed success in football?
Stability can lead to success, but not always, and that’s part of the problem. In recent years Chelsea have won the Champions League, Europa League and various domestic cups whilst changing manager almost every season.
Arsenal’s lack of recent success under Arsene Wenger, their long-standing manager of 18 years, suggests that stability doesn’t always deliver trophies.
Sir Alex Ferguson is of course the ultimate argument towards stability. He exercised total control over the club, made all the key decisions and Manchester United enjoyed unprecedented success over the majority of his 27 year tenure.
In looking at those three examples, you’d have to say the results are inconclusive and there are several routes to success.
Long term strategic thinking
The culture of Manchester United is to build for long term success, even the volatile British media seems to understand this, with no serious rumours about Moyes’ position doing the rounds. In fact, United recently announced a British record £53m a year shirt sponsorship deal with Chevrolet and Moyes has just spent a club record £37m on Juan Mata.
In your organisation could you imagine hiring an industry big-hitter only for the person responsible for the hire to be fired weeks afterwards?. It suggests the Manchester United brand is still largely intact and journalists are certainly aware of this.
One mediocre season is not going to undo the extensive promotional work done in Asian markets over the past decade, where United has an unrivalled following, and this is becoming increasingly central to the core strategy of the business.
Unwavering support… for now
United have backed their culture as a business to support their man effectively, and Moyes is less than 9 months into a five year deal.
United’s stakeholders; commercial partners, fans and players all understand the vision of the club, which has been communicated consistently since before Ferguson left.
Moyes also has history on his side with United going through similar growing pains when Ferguson first started. Since the start of the season, however, United’s share price has dipped 11%. Contrast this against a backdrop of general rises in the major indices and there can be no doubt that this stuttering season is having an impact on the value of the business. Moyes is unlikely to be granted the four year trophy-less honeymoon Ferguson survived.
What does research tell us?
Professor Xueming Luo of the University of Texas measured the value and volatility of stock returns and the strength of relationships for CEOs with two groups – employees and customers (read players and fans in this example). His sample size was 365 companies between 2000 and 2010. His work was featured in the Harvard Business Review last year.
He discovered that the optimal tenure for a CEO is 4.8 years. It is also pretty much the average tenure for a FTSE 100 CEO. Football managers last a lot less, only Arsene Wenger has been in charge for longer than five years in the Premier League.
Whilst this research seems to support Manchester United’s current position, it also begs the question as to whether a football manager is equivalent to a CEO or simply a head of department?
According to Luo, the reason why CEOs tend to have a five-year peak is revealing. The strength of the employee relationship continues to improve the longer the CEO stays around (Ferguson’s relationship with the likes of Ryan Giggs and Paul Scholes supports this). But as the CEO becomes more established, he or she relies increasingly on their colleagues for insight and market intelligence and so the ties with customers weaken. The consequence is a drop-off in performance.
He concluded that for company leaders to flourish beyond their “depose-by” date, they need to stop depending on loyal lieutenants and seek new knowledge. Ferguson continually sought new lieutenants, changing his back room staff a number of times over the years he was in charge. Conversely, Moyes brought his team with him from Everton. Was this the easy option? Businesses often fall into a similar trap of sentimentality. Top business leaders tend to have a ruthless streak.
What do we think?
Whitecap’s view on strategy is simple. We advocate that you should set your long term goals and then form a plan that enables you to work towards them. In doing so, have flexibility along the way, but stick to your principles. Have a look at our Strategy Series to read more about the fundamentals of strategy.
Football clubs don’t adhere to this logical approach because the short term price of failure can seriously endanger the long term strategic goals. In a world where short term thinking rules, English football’s most successful club is standing by its established strategy and should be applauded for doing so.
Expectations in football are stratospheric and magnified by the intense glare of the media in a way that simply doesn’t affect other businesses. Clubs sacking their managers need to be sure it is going to have a positive impact on the club as a whole for the medium and long term, rather than just the following Saturday afternoon.
Our opening question was whether an individual football manager is a core part of a club’s strategy, or simply a flexible component that can be changed along the way? Most clubs seem to operate in line with the latter view, and so would most businesses if a senior manager was not performing in line with expectations. Moyes is being given time to deliver results, but there’s no doubt that continued failure is not sustainable for any senior manager whether in sport or business.