 "<b>Book Extract:</b> Balancing act")
In 2006, the Decker Building became the latest Manhattan store of PUMA, itself a dominant lifestyle brand. Nobody was surprised to find PUMA in this trendy location. Seven-time Formula One world champion Michael Schumacher had all but lived on the winner's podium for the past decade, and Italy had just won the World Cup, each clad in PUMA. At the same time, DJs and hipsters had taken to PUMA, and while major competitors continued to bet on sports products as their main sales engine, PUMA had redefined its business to generate three-quarters of its revenues from lifestyle products. And along the way, the company had become a leader in sustainability.
But it had been a long road to get to this point. When Jochen became CEO of PUMA at age thirty, he took the helm of a company on the brink of bankruptcy. It was 1993, and in the three years since Jochen had joined the company to lead marketing for PUMA's shoes, he had seen as many CEOs come and go. He faced not only the internjkal challenges of a company that had lost its way but also the external ones symptomatic of a conservative business culture. Although in contrast to Mitch Seavey becoming the oldest person to win the Iditarod, Jochen was the youngest person in history to head a German public company, he similarly relied on a distinct and courageous strategy.
Reviving the balance sheet
Jochen had to stop the hemorrhaging of the business. PUMA had not turned a profit since the mid-1980s and many viewed Jochen as its designated undertaker. Having initially studied medicine as the son of a doctor before switching to economics, Jochen now found himself the doctor of an ailing business that badly needed a cure - and fast.
He went at it with gusto, consolidating distribution to simplify the company's footprint and merging departments to accelerate decision making. Although many of these changes revealed strategic insight, others were more tactical. Predictably, Jochen faced backlash when he drastically restructured the company and had to reduce the ranks of employees in Germany. Most important, however, Jochen created profit centers throughout PUMA to drive accountability. These measures resulted in PUMA's turning a profit less than a year into Jochen's tenure as CEO. And as soon as he had the breathing room, he initiated the second element of his strategy - revival of the PUMA brand.
Reviving the brand
Jochen stated in simple terms the opportunity he found: "PUMA had been a great brand in the past. It just had to be rejuvenated." Proving his indifference to the skepticism he himself faced about youth on the executive floor, in 1994 he recruited American hipster Tony Bertone, who was then twenty-two years old, to lead PUMA into the clubs and boutiques where trendsetters were hanging out. This hire was emblematic of Jochen's commitment to building a lifestyle brand, which required credible lifestyle ambassadors.
What Jochen wanted was results, not pedigree. Indeed, Tony, who did not go to college, rocketed from youth consultant to global director of brand management by the time he was twenty-five, ultimately becoming chief marketing officer. The kinds of things Tony did to win Jochen's trust were all about lifestyle. As an example, Tony dreamed up the concept of PUMA City, an award-winning modular space made of two dozen shipping containers, which, rather than being discarded, were repurposed to be set up at every stop of the around-the-world Volvo Ocean Race that PUMA sponsors. Although Jochen was clearly willing to bring on additional talent in his area of expertise-marketing-he all the while was not only CEO but also CEO of PUMA, because he wanted to personally manage the conflict between reducing costs and growing PUMA.
Reprinted with permission from the publisher. Copyright 2014 Christoph Lueneburger. All rights reserved
A CULTURE OF PURPOSE: HOW TO CHOOSE THE RIGHT PEOPLE AND MAKE THE RIGHT PEOPLE CHOOSE YOU
Author: Christoph Lueneburger
Publisher: Wiley
Price: Rs 599
Companies that are not driven by quarterly results have a substantial advantage in creating cultures of purpose, Christoph Luenburger tells Ankita Rai
What do you mean by 'a culture of purpose'? How can it benefit organisations?
Cultures of purpose are large groups of people that are inspired by a shared vision and committed to achieve it together.This can be found in companies and in other kinds of groups, such as non-profits, sports teams. Even some of history's famous armies were cultures of purpose. There are many benefits to such cultures, but there two in particular. First, they are very good at attracting talent and retaining it. This is because the smartest and most passionate people like to work in places that not only reflect their values but also are full of other smart and passionate people. Second, they create economic value. That's no surprise because people who are passionate are constantly looking for ways to express that passion, and they will do so with a drive and innovativeness that cannot be mandated in a job. Therefore, cultures of purpose are very hard to defeat.
How can 'A Culture Of Purpose' be instilled in an organisation? Companies are too often obsessed with chasing quarterly numbers and profits and in such a scenario creating a sustainable culture is the last thing on their mind.
You ask an important question. It is true that companies that are not driven by quarterly results have a substantial advantage in creating cultures of purpose. Indeed, the majority of cultures of purpose I have spent time with were privately-held companies that could afford to focus on the long term. Some of them were founded with a purpose at their core; others evolved over time. But in all cases the financial results - quarterly and otherwise - were results of pursuing that purpose, rather than a purpose itself. This distinction enables different behaviours. For instance, Patagonia, a California-based clothing company, focused mainly on high-end outdoor clothing, did a campaign called "Don't Buy This Jacket". It was conceived to minimise unnecessary consumption rather than maximising short-term profits. But the authenticity of that campaign attracted yet more clients to Patagonia's brand. The bottom line is that instilling a culture of purpose in an organisation is simple. But it's not easy.
But it had been a long road to get to this point. When Jochen became CEO of PUMA at age thirty, he took the helm of a company on the brink of bankruptcy. It was 1993, and in the three years since Jochen had joined the company to lead marketing for PUMA's shoes, he had seen as many CEOs come and go. He faced not only the internjkal challenges of a company that had lost its way but also the external ones symptomatic of a conservative business culture. Although in contrast to Mitch Seavey becoming the oldest person to win the Iditarod, Jochen was the youngest person in history to head a German public company, he similarly relied on a distinct and courageous strategy.
Reviving the balance sheet
Jochen had to stop the hemorrhaging of the business. PUMA had not turned a profit since the mid-1980s and many viewed Jochen as its designated undertaker. Having initially studied medicine as the son of a doctor before switching to economics, Jochen now found himself the doctor of an ailing business that badly needed a cure - and fast.
He went at it with gusto, consolidating distribution to simplify the company's footprint and merging departments to accelerate decision making. Although many of these changes revealed strategic insight, others were more tactical. Predictably, Jochen faced backlash when he drastically restructured the company and had to reduce the ranks of employees in Germany. Most important, however, Jochen created profit centers throughout PUMA to drive accountability. These measures resulted in PUMA's turning a profit less than a year into Jochen's tenure as CEO. And as soon as he had the breathing room, he initiated the second element of his strategy - revival of the PUMA brand.
Reviving the brand
Jochen stated in simple terms the opportunity he found: "PUMA had been a great brand in the past. It just had to be rejuvenated." Proving his indifference to the skepticism he himself faced about youth on the executive floor, in 1994 he recruited American hipster Tony Bertone, who was then twenty-two years old, to lead PUMA into the clubs and boutiques where trendsetters were hanging out. This hire was emblematic of Jochen's commitment to building a lifestyle brand, which required credible lifestyle ambassadors.
What Jochen wanted was results, not pedigree. Indeed, Tony, who did not go to college, rocketed from youth consultant to global director of brand management by the time he was twenty-five, ultimately becoming chief marketing officer. The kinds of things Tony did to win Jochen's trust were all about lifestyle. As an example, Tony dreamed up the concept of PUMA City, an award-winning modular space made of two dozen shipping containers, which, rather than being discarded, were repurposed to be set up at every stop of the around-the-world Volvo Ocean Race that PUMA sponsors. Although Jochen was clearly willing to bring on additional talent in his area of expertise-marketing-he all the while was not only CEO but also CEO of PUMA, because he wanted to personally manage the conflict between reducing costs and growing PUMA.
Reprinted with permission from the publisher. Copyright 2014 Christoph Lueneburger. All rights reserved
A CULTURE OF PURPOSE: HOW TO CHOOSE THE RIGHT PEOPLE AND MAKE THE RIGHT PEOPLE CHOOSE YOU
Author: Christoph Lueneburger
Publisher: Wiley
Price: Rs 599
| Instilling a culture of purpose in an organisation is simple. But it's not easy: Christoph Lueneburger |
| |
What do you mean by 'a culture of purpose'? How can it benefit organisations?
Cultures of purpose are large groups of people that are inspired by a shared vision and committed to achieve it together.This can be found in companies and in other kinds of groups, such as non-profits, sports teams. Even some of history's famous armies were cultures of purpose. There are many benefits to such cultures, but there two in particular. First, they are very good at attracting talent and retaining it. This is because the smartest and most passionate people like to work in places that not only reflect their values but also are full of other smart and passionate people. Second, they create economic value. That's no surprise because people who are passionate are constantly looking for ways to express that passion, and they will do so with a drive and innovativeness that cannot be mandated in a job. Therefore, cultures of purpose are very hard to defeat.
How can 'A Culture Of Purpose' be instilled in an organisation? Companies are too often obsessed with chasing quarterly numbers and profits and in such a scenario creating a sustainable culture is the last thing on their mind.
You ask an important question. It is true that companies that are not driven by quarterly results have a substantial advantage in creating cultures of purpose. Indeed, the majority of cultures of purpose I have spent time with were privately-held companies that could afford to focus on the long term. Some of them were founded with a purpose at their core; others evolved over time. But in all cases the financial results - quarterly and otherwise - were results of pursuing that purpose, rather than a purpose itself. This distinction enables different behaviours. For instance, Patagonia, a California-based clothing company, focused mainly on high-end outdoor clothing, did a campaign called "Don't Buy This Jacket". It was conceived to minimise unnecessary consumption rather than maximising short-term profits. But the authenticity of that campaign attracted yet more clients to Patagonia's brand. The bottom line is that instilling a culture of purpose in an organisation is simple. But it's not easy.
Christoph Lueneburger
Partner & head global private equity practice, Egon Zehnder
Partner & head global private equity practice, Egon Zehnder