Championing innovation, building a brand

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People wear jeans — but they “live in Levi’s.” It’s an expression that defines the iconic brand, summing up not just what the brand is about but also Levi Strauss & Co. President and CEO Chip Bergh’s approach to reenergizing and reinvigorating the company.

With a proclivity for decisive-decision making, a deep respect for data and customer insight and a commitment to authenticity, Bergh has successfully increased company revenue and profits, growing the brand by 9 percent in fiscal 2017. Levi’s has nearly 3,000 stores and rising global market share; Bergh is convinced Levi’s can grow beyond its historical peak of $7 billion and someday be a $10 billion brand.

This afternoon, Bergh will be part of a Main Stage session, “Company Conscience: Leading with conviction.” Later this evening during the annual NRF Foundation Gala, he will receive “The Visionary” award, presented to a retail executive with a proven track record of orchestrating change in the industry. Bergh will be recognized for the turnaround LS&Co. has experienced under his leadership and his commitment to identifying new opportunities for growth, pushing the envelope on sustainability, championing innovation and taking a stand on some of the most pressing issues facing society.

“Chip is one of those exceptional leaders who brings everything together seamlessly and succeeds by growing his business with the latest technologies,” NRF President and CEO Matthew Shay said when the announcement was made earlier this year. “Chip has stayed true to the culture, keeping a firm grip on the pulse of his customers but constantly seeking out new and better ways to meet the demands of next generation Levi loyalists.”

A visual and tactile representation of how the brand has evolved can be experienced at Levi’s new flagship store, which opened in mid-November in Times Square. The 17,000-square-foot shop has a heavy emphasis on customization, providing customers with options that include direct-to-garment printing capabilities, utilizing preloaded photos, images, logos and text designed by local artists. The store also houses the largest assortment of Levi’s product under one roof and the biggest Levi’s Tailor Shop, outfitted with four on-site tailors.

STORES Editor Susan Reda recently spoke with Chip Bergh about connecting with customers, company culture and the importance of leading with integrity.

As is the case for so many terrific leaders, your career began in the military. How did your military training and experience shape your business career?

The military made me the leader that I am today. I wrote an article many years ago, “Ten lessons from my military experience.” I’ve recapped five of the lessons below:

  1. Always eat last. The principle is simple: To be a good leader, you take care of your people first. Taking care of your “soldiers” means they will take care of you.
  2. It’s better to make the wrong decision than to make no decision at all. Indecision can paralyze an organization. Strong leaders are not afraid to make decisive decisions. They take a stand and remain visible during challenging times.
  3. Never “dig in” and defend. There is a military saying that when you “dig in,” you are only “digging your own grave.” It’s harder for the enemy to hit a moving target than a stationary one. When faced with a competitive threat, think attack. Same is true in business.
  4. Walk the track park. Want to find a military unit that is disciplined and prepared for combat? Walk the track park, where they keep their military vehicles. Disciplined units have vehicles parked in a perfect line, sparkling clean, fueled and ready to go to war at a moment’s notice. Find discipline in unexpected places, and you’ll find the units who likely deliver exceptional results all the time.
  5. Always have a “Plan B.” Every good leader always has at least one fallback plan (and often more than one), because things never go as planned. There is no time to create a Plan B in the heat of the battle. It’s not enough to plan for “best case.” We need to plan for things not going as planned and know ahead of time how we will respond.

You spent many years at Procter & Gamble — I’ve seen you quoted as saying “food and beverage is a great place to build a career.” Why is that?

It is a great place to build a marketing career. So many food and beverage brands play in highly commoditized categories, like coffee or peanut butter. Often, what separates winners from losers in these categories is great marketing, built on a deep consumer insight.

For example, most people drink coffee in the morning for the caffeine hit (e.g. to “wake themselves up”). Folgers understood that and developed marketing around the idea that “The best part of wakin’ up is Folgers in your cup.” With that game-changing idea, which allowed Folgers to own the category benefit of waking up, the brand went from No. 2 to No. 1 — to this day, probably 40 years later, the brand is still running with that big idea.

What are some of the skills you built at Procter & Gamble that you now routinely apply to your work at Levi’s?

I’ve always been a big believer in using data to make informed decisions, both quantitatively as well as qualitatively. Both are important. When I got to Levi’s, we pored through the business to understand what makes money and what doesn’t, where we’re growing and where we’re declining, where we are over-developed versus where we were under-developed, where we have the biggest opportunities for growth. We “racked and stacked” the business, which helped to inform our strategic choices.

But I also believe that qualitative research can also be very powerful. The selling idea that “You wear other jeans, but you ‘Live in Levi’s’” came from a consumer during an in-home visit in Bangalore, India, nearly seven years ago. That “big idea” of “Live in Levi’s” became the selling idea for our advertising and perfectly sums up what the Levi’s brand is all about.

Finally, I learned that speed of decision-making needs to be balanced with “getting perfect data” — I’ve seen “data” being used as a reason to not make a decision.

When you joined Levi’s, it was apparent that the brand had lost sight of the consumer. How did you regain that connection?

I started to role model what I expected from our employees. I did consumer in-home visits around the world, hearing from them how apparel fits in to their lives and what they think of the Levi’s brand. I asked lots of questions, internally: “What does the consumer want?” and “How do we know that to be true?”

We started to re-define what “being at the center of culture” meant in today’s world. This led us to get the naming rights to Levi’s Stadium, home of the San Francisco 49ers, and to putting a lot of emphasis around how we connect with consumers in an authentic way around the world.

How important is technology to your efforts to understand all aspects of the business?

Technology and innovation is paramount and in today’s environment, every company needs to think of itself as a technology company. One of the first investments I made as CEO was in our Eureka Innovation Lab because I saw the value of innovation to both our culture and our ability to lead for another 165 years. From our collaboration with Google on the connected trucker jacket to Project FLX, we are epitomizing “the 4th Industrial Revolution meets the centuries-old apparel industry.”

The numbers bear out the renewed and re-energized connection Levi’s has with women. Women can be difficult to get to know. How did you do it?

Our big “a-ha” moment was when we realized she was starting to choose yoga pants over jeans because she wanted soft, stretchy fabrics that were comfortable and fit her body. By listening to her needs and meeting her expectations in a way that only Levi’s could, we regained her trust and offered unparalleled innovation.

Our women’s business continues to go from strength to strength. In Q3 we reported our 13th consecutive quarter of growth for our women’s business, and it’s all credit to our teams around the world who worked together to win with women. Again, the magic here was deeply understanding what it was that women wanted — which on the surface seems so easy — and that we were able to design to delight her. That’s what has driven our success on that business over the last three years.

It’s been reported that improvements in the women’s business have had a ripple effect in the company. Can you share?

One of the big learnings we had with the relaunch of our women’s business was the importance of understanding our consumer. It sounds simple but the consumer is moving so fast that if you’re not keeping up, you’re being left behind — so you’ve got to stay focused on the consumer. This means innovating to meet their needs.

We had a number of breakthroughs in our quest to create the perfect pair of jeans for women and those have been applied to other parts of our business — whether it’s fabric and finish innovation or new approaches to marketing and merchandising. Our women’s business is more than $1 billion in sales today and has had steady growth since the relaunch. We know we can apply this same thinking and “expand for more” approach to other underpenetrated parts of our business.

The innovation lab speaks to Levi’s having a foot in the future. Can you share something they may be working on and why having the innovation lab is so important to the future of the brand?

The jeans-making process has largely stayed the same since the very first pair of jeans was created 145 years ago. A lot of it is manual and there isn’t a lot of technology or automation involved. But with Project F.L.X. we are changing that. We’re leveraging automation, advanced imaging and data science to transform the way jeans are designed, made and sold. We’ll continue to invest in innovation because it’s a key part of how we’ll stay at the center of culture.

Levi’s survived the “death of denim” narrative and the retail industry is surviving “retail apocalypse” stories. What can retailers learn from Levi’s?

Focus on what you can control and don’t get distracted by the noise. When so much disruption is happening around you, it’s important to really hunker down and focus. So often organizations get distracted by rumors and speculation. If they refocused that attention toward disciplined execution they would, more likely than not, be able to weather the storm and come out OK.

We’ve navigated a highly complex and tumultuous landscape and we’ve come out on top because we stayed focused on what we could control — and we had contingencies in place for things we had no control over.

Some say that to be relevant with today’s consumer there is a need for businesses to take a good look at their “sacred cows” — i.e. ways of doing business or certain products — and be willing to walk away from those. Levi’s has clung to the elements that made the brand historic and authentic. The 501 we all grew up with is still the great 501 today. How did you know that was the right direction for the company?

We invented the blue jean. The original 501 is a global icon and has been a staple for men and women around the world for decades. We’ve leaned into our heritage and authenticity because it’s what makes us unique and it’s what consumers love about the Levi’s brand.

At the same time, there were “sacred cows” around the type of denim that we would put in to a 501. But we slayed that dragon based on extensive consumer insight work when we were developing the 501 Skinny — and we now offer a 501 with stretch fabrication, something that would have historically never been allowed because of the “sacred cow” nature of our fabrics for the 501.

The Worker Well-being initiative is beyond powerful in today’s world. What have you personally learned from it and how is Levi’s working to encourage other large apparel brands to embrace this ethos?

Through the Worker Well-being program, we seek to improve the lives of the workers who make our products in factories around the world. I’ve been struck by the ripple effect of these programs, not only for the workers but for their communities. And although we’ve got a long way to go in educating our suppliers and their workers, we’re making progress. To date, WWB has reached more than 150,000 workers and is active in 12 countries, covering more than 80 factories, representing over 50 percent of our product volume.

We believe that a rising tide lifts all boats, which is why we’ve open-sourced this program so that others in the industry can adopt these same practices. Our goal is to spread financial literacy and women’s health education to communities where it’s needed most.

You’ve been adamant about the need for companies to take a stand on core issues. Which issues are you most passionate about and why?

I believe that as CEOs we have a moral obligation to do the harder right than the easier wrong — and to speak out when it comes to the most pressing issues facing society, even if that means taking an unpopular stand. As a company, we have never been afraid to take a stand to support a greater good. I’ve been outspoken on a number of key issues in recent months, from gun violence prevention and immigration to climate change and voter engagement.

How we do things is just as important as what we do, and so living the values is critical, especially as a CEO in today’s world. You can’t please everyone but I believe as a business leader you must stand for something or else you stand for nothing.

Your support for gun violence protection is consummate. Tell me about the three new areas you’re focusing on and why you feel it’s so critical to have a voice here.

We have a gun violence epidemic in America, and companies like ours — that operate in American communities —can no longer watch from the sidelines. As an iconic American company, what we say and do matters. Throughout our company’s long history, we’ve been a force for change, and we believe that the issue of gun violence is one of the most pressing issues of our time.

Although LS&Co. has taken some action to support gun violence prevention, we believe there is a bigger role that business can play in effectuating real change. Through our newly established Safer Tomorrow Fund, involvement in the Everytown Business Leaders for Gun Safety coalition and by enlisting support from concerned employees, we hope to catalyze others to join us and be part of stemming gun violence in this country.

How have you changed the culture at Levi’s?

Changing culture is one of the hardest things to do. There’s a saying that culture eats strategy for breakfast and it couldn’t be a truer statement. You can put a strategy in place and execute that strategy but changing a culture is an order of magnitude more challenging.

I basically changed the entire executive team in the first year of my tenure as CEO — because change starts at the top and if you want to change the culture you have to change the leadership.

The other big statement we made was moving the innovation lab to San Francisco. It was previously located in Turkey and now it’s just a few blocks away from our headquarters. The collective excitement and mindset shift that comes with prioritizing invention, failure and rapid prototyping has been a critical part of LS&Co.’s turnaround.

You’re optimistic about 2019. What drives your optimism?

Knowing that we’re part of shaping the future. We’re immensely excited about what’s next for our industry and for our company. When I joined as CEO in 2011 my noble cause was to bring the company back to the center of culture, because that’s when we’re at our best. Seeing the results of that hard work is truly fulfilling, but at the same time it challenges us to think about the new baseline and how we’ll grow in the future. I truly believe the best is yet to come.

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