As a former retail executive, my colleague Kathy Gersch has a unique perspective. Here she details the lessons today’s retailers can learn from one established brand that recently rebounded with a successful corporate transformation – Burberry.
Recent headlines highlight the plight of established, well-known brands as they struggle to evolve, and the less sensational retail success stories are second-page news. There’s one story that caught my eye, not just because it’s a positive alternative to front-page news, but because it provides an exceptional example of an executive using great leadership to turn a company around. The company story that deserves highlighting is that of Burberry.
Regain Focus
When Angela Ahrendts took the helm as CEO of Burberry in 2006, she asked one question: Where were the trench coats? Burberry’s external focus on the competitive luxury clothing and leather goods space had led it to neglect the company’s core strength – its iconic outerwear. In fact, other brands had begun to delve into Burberry’s sanctum.
Organizations that lack focus commonly concentrate on the competition rather than nurturing their areas of strength. A historical lack of focus had left Burberry vulnerable to losing the lead in its category to newcomers. Ahrendts began a campaign to align the company around the iconic trench coat that had made Burberry famous. Over the next six years, it took factory closures, layoffs, leadership shake-ups, and a re-invention of the brand to make this happen.
Stand by Your Vision
As an American from the midwest, critics questioned Ahrendts’ ability to understand an established British brand. She faced opposition from outside as well as inside the company. But Ahrendts did not veer from her course. She established a clear vision, she aligned the leadership team and the organization around it, and she did what it took to deliver on the vision.
Some CEOs in this situation dangerously attempt to appease their critics. When a CEO bends to external forces (shareholders and boards of directors), they alleviate the pressures of today only to trade them for the long-term success of the vision – and subsequently the longevity of the company. Ahrendts’ vision met with great criticism and doubt, but she held her line. Even when questioned by Parliament for her highly-criticized decision to close the company’s Welsh factory, she stood by her decision as it was key to her vision to build a great brand.
Share, Engage, and Involve
It took not just Ahrendts, but all of Burberry to make this turnaround happen. She painted a clear picture of the opportunity for the company. She ensured everyone understood the vision. Then, she engaged the organization in helping to accomplish it. This is very unusual. Ask the sales clerk at many large clothing retailers today what his or her employer’s long-term vision is and you’ll most likely be met with silence – this is one reason why those companies are failing.
Ahrendts shared her vision with the entire company. She retrained her sales people by bringing multi-media re-education programs to each store. But she didn’t just direct them how to sell, she shared the “why” – the trench coat is unique to Burberry, it’s core to the brand, and the commission on one trench coat is higher than that of ten polo shirts. She empowered the sales staff to become a powerful force of brand advocates.
As several American brands are struggling to find a vision that does not receive criticism or even ridicule – and stick with it – they could all take a lesson from a midwestern transplant in the UK.
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Read Dr. Kotter's new article, “Accelerate!,” featured in the Harvard Business Review, in which he explains how organizations can develop the agility required to succeed in today’s rapidly changing world.
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