Extra Lessons from the John Lewis Partnership Remarkably, it is nearly 60 years since the publication of the last substantial research-based book on The John Lewis Partnership. That was the noted analysis of the democratic credentials of the partnership by Alan Flanders and colleagues published in 1968. It was a very different time: strikes, trades unions and industrial democracy were to the fore in everyday debate. And there was a Labour Government. In 2016, there are new and even more pressing reasons for returning to this case. Many things have gone wrong with conventional ways of business, so much so, that it has become self-defeating and unstable even in its own terms of pursuit of shareholder value. It is against this backcloth that the John Lewis case merits another close look. There is a widespread view that the JLP model is well-known already – a popular middle class retailer, quality goods, excellent customer service from owner-partners in full-assortment department stores and the Waitrose supermarkets. But, from our decades’ long engagement with the organisation, we conclude that the JLP phenomenon is more complex than this standard depiction and at the same time more fascinating. Operating within the fiercely competitive and volatile retail environment of the UK, JLP seeks to match and indeed exceed the commercial goals of its many rivals while simultaneously safeguarding and promoting the interests of its partners (employees). Indeed, the ‘ultimate purpose’ of the partnership as stipulated by the Founder, and adhered to ever since, is the ‘happiness of all its members through worthwhile and satisfying employment’ within the framework of a ‘successful business’. The organisation is not answerable to the City and can thus pursue longer-term objectives. It can and does use its own assets to invest and also borrows for the same reasons. The strategic choices around allocation of resources between investment for the future, rewards to Partners in the form of salaries and the annual bonus, the pension fund, and customer service, represent ongoing tensions. These are recognised and in some ways institutionalised – as for example, in the long-standing practice of encouraging and publishing anonymous, questioning, letters in the house magazine. Letters which the relevant director is expected to answer publicly. The dual objectives of partner happiness and a successful business are often seen as compatible on the grounds that the one drives the other. On this reckoning it is not a choice between ‘nicer or better’ but both - in an intertwined, mutually reinforcing, way. Such a formula echoes the idea of the customer-service-profit chain made famous by Sears in the USA. However, as revealed in our new book, A Better Way of Doing Business? Lessons from the John Lewis Partnership, practice is not so straightforward. The book traces and analyses business decision-making over 25 years focusing on responses to growth opportunities and to recession and redundancies. It finds that the model does not automatically deliver the goods. Indeed, in previous decades John Lewis was not always so successful or so celebrated. During the era of de-mutualisation, JLP was sometimes considered dated and dowdy with an air of complacency. Indeed, there is an academic theory going back to the Webbs, at the beginning of the last century, that worker cooperatives were destined to ‘degenerate’. The notion was that they would either indulge their members and seek to protect them from risk and exertion to such an extent that such organisations would fail commercially, or conversely that they would adopt surrounding commercial priorities to such a degree that the democratic element would suffer. That thesis may be regarded as rather over-deterministic. But it is a useful indicator of inherent tensions that need to be managed. We saw plenty of evidence of numerous attempts to ‘refresh’ the democratic structures and processes. This occurred at the top level with adjustments to the composition and workings of the Partnership Council, and at branch and regional levels to try to ensure healthy grassroots participation. Likewise, from 1999/2000 when we began our work with JLP, there was a sustained attempt to ‘modernise’ the commercial offer. At that time it should be recalled, the stores were closing at mid-day on a Saturday and not re-opening until Tuesday morning. There was no formal business planning, advertising was rarely used and significant investment in store refurbishment and the growth of the estate were matters for the future. There were allegations of complacency. The subsequent expansion and indeed the focus on growth both by acquisition and new build have not been without controversy. Some critics questioned the growth strategy. Why not simply protect the interest of current partners? This was one of the issues which raised the underlying question and debate in the Partnership about ‘Who is a member?’ (and by implication, whose interest are being advanced?). Expansion into new outlets such as petrol station convenience stores, motorway services, and overseas locations plus new choices about outsourcing and logistics including distribution centres and transport all raised the question as to whether in all cases these should be staffed by Partners. The lessons from the book extend beyond this organisation and indeed beyond employee-owned businesses in general. Anyone striving to make sense of the multiple objectives of commercial survival and ethical behaviour can learn from the actual practices of John Lewis managers, and Partners more broadly, over the past 25 years. John Storey is Professor of Management at The Open University Business School and a Fellow of the British Academy of Management. He was a former Chair of the IPA. He is currently leading a major study on service redesign in the NHS.