Hubris has set Tesco on a course into perilous seas. (2014)

“Most companies do not collapse suddenly. It is a slow-motion train wreck but investors believe the nonsense that managers spout about their success long after the warning signs are there

John Gapper
Ft.com 26 September 2014

When Sir Terry Leahy stepped down as chief executive of Tesco three years ago, the world’s second-largest retailer seemed to be in excellent health.

This week, Tesco was in turmoil. Dave Lewis, the new chief executive .. disclosed that it had overstated its first-year profits forecast by £250m. Four executives have been suspended … It has shut down .. its ill-fated experiment in US retailing; its UK supermarkets are under attack not only from Sainsbury and Waitrose but also from the German discount chains Aldi and Lidl; … prosecutors in South Korea are investigating its local Homeplus chain

The truth is that Tesco’s fall was not unimaginable; it was not even unlikely.

“Most companies do not collapse suddenly. It is a slow-motion train wreck but investors believe the nonsense that managers spout about their success long after the warning signs are there,” says Terry Smith, founder of Fundsmith, the asset management group.

“No matter how much you’ve achieved, no matter how far you’ve gone, no matter how much power you’ve garnered, you are vulnerable to decline . . . Anyone can fall and most eventually do,” concluded Jim Collins, the US management writer, in How the Mighty Fall.

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