World Monitor Mag, Industrial Overview WM_November_2018_WEB_Version | Page 86

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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
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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