World Monitor Mag, Industrial Overview WM_November_2018_WEB_Version - Page 86

additional content production plants making customized athletic shoes, in Ansbach, Germany, and Atlanta. Its roster of celebrity partners includes musicians Kanye West (whose Adidas line has persisted through all of his public ups and downs) and Pharrell Williams, and designers Stella McCartney and Alexander Wang. Rørsted is also putting in place innovative management practices, including one of the few comprehensive employee stock ownership plans introduced by a major company in recent years. Adidas has long been known for innovation. Founder Adolf (Adi) Dassler was a cobbler and amateur athlete in Herzogenaurach, a small Bavarian town where Adidas headquarters is still located. Dassler invented some of the first specialized footwear — for example, lightweight spiked shoes for football (soccer) and other sports. actually executing according to what [was] needed? What were the three choices? RØRSTED: Open source innovation, cities, and speed. Open source innovation means that we look at all kinds of collaborative creation as valuable — not only within our company, but with external partners as well. This includes our branded relationships with well-known creative figures; our partnership with Parley for the Oceans, the environmental group, to create shoes from recovered ocean plastic; and [our partnership] with DaniëlleCathari, a 23-year-old designer who was a student at the Amsterdam Fashion Institute when we began working with her. How do you integrate that external innovation with your own internal R&D? When Adidas announced that the well-respected Rørsted was joining the company, its market cap gained about $1 billion. In conversation, the CEO is direct, matter-of-fact, and self- effacing. In August, he sat down with strategy+business at Adidas headquarters to talk about leadership in the digital age. Chief corporate communications officer Jan Runau also participated. RØRSTED: We see them as complementary. We are clear about the borders of our brand, because the brand is sacred to us. But we also recognize that if we have only the inspiration and creativity of people within our own organization, we miss a lot of what’s going on in the marketplace. Our thought was: How do we complement internal with external innovation to get the best products? When you arrived at Adidas, you inherited your predecessor’s strategy. Many CEOs would have been tempted to change direction. A few of our in-house designers needed to get used to the fact that they were not competing with outsiders; they were being complemented. We articulated this point by saying that we need to be consumer- obsessed and to create the best product for the consumer. If that is your endgame, then you have to be able to confront sacred cows, and open yourself up to ideas that you might not have been open to in the past. RØRSTED: I believe that you should change a company’s strategy only if there is a strong rationale for the change. From a numbers standpoint, our strategy was clearly successful. Instead of changing it, I tried to understand our approach to it more completely. We had made three strategic choices. Were we 84 world monitor Think Cities, Act Global What is the Adidas cities strategy? RØRSTED: The world has become much more open than it’s ever been. Trends with origins in the big cities have a fundamental global impact, fueled by the reach of digital devices. When something occurs in Shanghai or New York, kids all over the world see it immediately. This means that we can focus our marketing in just a few of the world’s major cities. We did not have that view before. Our perspective had been based on countries. In our company, every country had its own marketing strategy. Now we have become more prescriptive: We can launch all our key products in just a few cities and the countries will pick this up. We identified six key cities to start with: London, Paris, New York, Los Angeles, Shanghai, and Tokyo. We realized that if we can dominate those cities, not only in terms of market share and customer loyalty, but also by capturing creative ideas coming up in them, we can have a much greater impact on our global markets. Any trend coming out of these cities, whether it’s fashion or technology, will have global impact. And conversely, if we’re not where the trends originate, then we’re most certainly going to miss some of them. You recently opened a store in New York. RØRSTED: On Fifth Avenue. We’re about to open one in London, we’re developing one in Paris, and we just opened one in Shanghai. We use these stores as activation vehicles for product launches, to capture brand exposure more than commercial value. For instance, last year we created the largest basketball event we’ve ever held, called 747 Warehouse St., in Los Angeles. And in our physical store in New York we launched our 4D Carbon line, which is a shoe made through digital light synthesis. New York