Recently, I joined my friends at Adidas to witness a unique partnering at the United Nations HQ in New York. Parley For The Oceans, an organisation dedicated to the preservation of our beautiful oceans, hosted a moving and informative session in the UN’s main chamber, at which Adidas board-member Eric Liedtke revealed a beautiful and groundbreaking running shoe created from discarded ocean plastic (of which there’s 40m lbs in the North Pacific alone!). It’s a totally unique production concept, and much of the profit will go towards funding the ocean cleanup yet further. I caught up with Eric afterwards to dig a little deeper into the shoe, along with finding out how one of my favourite sporting companies is evolving into an exciting future! Click MORE to read my update interview…
At the UN event, there were a host of speeches from key partners of Parley, all of which all addressed the increasing issue of global pollution (especially the oceans) of a once-throwaway culture. Speakers ranged from artists, scientists, a Greenpeace founder, businesspeople, to actors… at times the subject matter was truly saddening, but actually I took away a hopeful message. The salvo of statistics was mind-bending, in terms of how humankind has cumulatively tarnished the planet; they painted a picture that we are the victors of this giant sphere yet much of our victory has caused destruction; worms were said to do more good than humanity.
Images seared in many attendees minds are of beautiful birds swept ashore, tortuously dying from ingested plastic waste shredding their insides. Giant man-made plastic islands collect in vast scummy vortices, slap bang in the middle of oceans, posing an existential threat to a critical ecosystem that sustains us all. What is hopeful is that a huge brand like Adidas are paving the way in creating an environmentally friendly solution; not just empty corporate waffle about CSR initiatives that never get implemented, but an actual, practical and sustainable solution. Yes we live in an industrialised world and companies need to generate growing profits, but with innovative clever thinking, both can be achieved. I for one really like that. Here’s my interview with Eric on this matter and far more…
FITNESS ON TOAST: Nice to see you again Eric. Parley for the Oceans is a truly fantastic cause; what attracted you to it, and how does Adidas plan to spread the word?
ERIC LIEDTKE: So first up, Adidas has always prided itself on being a good citizen – not just being a good business or company but also a good citizen of the world. We’ve always taken sustainable measures very seriously. We were announced as the 3rd ranked sustainable company in Davos this year according to Corporate Knights. We source about 20% of our polyester product from recycled polyester, we have a ‘better cotton’ initiative where we want to be 100% ‘better cotton’ sourced, in all instances. That means working with farmers to grow organically, to use less water treatment… we’ve been exclusive developers of dry-dye technology, where we’re making things with less water in dying the products. We have always been at the forefront, whether it be workers rights or environmental rights or what have you. We firmly believe that being good global citizens is just as important as being good businesspeople. Having said that we always look to accelerate, and within our new Strategic Business Plan around creating the new we very clearly pointed out we want to be more open-source, we want to be more collaborative so that leads us to a conversation with different environmental groups one of which was Parley. What we liked about Parley was what you saw last night [at the UN speeches] – Parley is a network of really intelligent thought-leading people, whether it’s based around scientists or filmmakers or producers or explorers. It gives you a very rich dynamic, and just spending the last 48 hours with those individuals has been an inspiration for me personally but also for the company, looking at new connection points. There’s the opportunity for us to do accelerated good, specifically starting with the oceans – but we don’t rest there! One of the things I’ve had in my mind is ‘how do we get to a less of a carbon foot print’. Dare I dream to be a zero carbon footprint DAX 30 company? There’s the kind of moonshot that we’re thinking about; how do we do more, accelerate and lead by example.
FOT: It’s a time of big change for Adidas; new strategy, new competitor challenges, new leadership… how do you keep the team motivated to meet the tough challenge ahead?
EL: We’re on a journey, and the journey is to be the best sports brand in the world. We have a very clear focus on what we are, and what we aren’t; we are really positioning ourselves as ‘the creator brand’. We’re talking about creating the new, making new rules, setting new standards; we’re not just looking for new creators to join us from an internal standpoint – we’re calling all creators to join us to create a movement. People like yourself, people like your readers, people like consumers, athletes, designers – we’re looking to create the new at all times – I think that’s a very powerful message. When we talk about keeping people motivated and engaged we need to celebrate that, celebrate who we are and in turn who we aren’t. As we really focus on being the best sports brand and being the creator brand, it positions us in a really cool place to win and employees than get excited about that. Everyone wants to be part of a movement that’s seeing results, and that’s how I focus on keeping our guys motivated for the future!
FOT: The Adidas shares are at the same level as when the strategy was delivered in March, so I guess people are waiting to see. What should we look for to know that things have genuinely progressed?
EL: That’s a great question; we have responsibilities to our shareholders, but ultimately the share price will start to show results when we start to sell through products at a higher rate so strategies are great, implementation takes a little longer than any of us would like. I would like for it to have happened yesterday, but the reason we came to New York to celebrate our association with Parley is to continue to carry the message to the consumer; let them know what kind of brand we are, let them know who we are from a personal and a positioning standpoint. Ultimately keep making great product that ultimately sells through at higher rates, and I think the share price will take care of itself!
FOT: Nike’s Free shoe platform is in it’s 11th year, and it’s a great product for them – nicely profitable, good momentum, even after all these years. How’s the Ultra Boost launch gone, and how can you make that product family as long-lived?
EL: All credit to the Free franchise, I think they’ve developed something pretty special there. We’ve developed our own franchises, and are more focussed than ever against our new strategy of developing franchise footwear. Within our Strategic Plan, we said we wanted our top ten franchise footwear programs to be 30% of our net sales by 2017, so Ultra Boost is the lead; it’s the best running shoe ever made – we talked about that at the launch event a few months ago and we continue to iterate it. The shoe I’m holding (the Boost with Ocean plastic) is an iteration of the Ultra Boost. The key with franchise management is to have a lifecycle in mind and constantly iterate and try new things, so I think we’ll see many more different silhouettes coming out. We have a collaboration in place right now, we’re looking to an uncaged version in the coming months, and the ocean plastic version is coming out – we continue to work on that and develop a following for it. It’s not a short term strategy it’s a long term strategy. We’ll talk in 11 years and we’ll talk again about the Ultra Boost success.
FOT: How’s the progress from your new US design studio – any promising signs from your recent high-profile hires?
EL: Yes, the guys are coming over from the competition in the near future, the studio in Brooklyn should open up by the end of the year, and from a US-focus standpoint, this is my fifth trip to New York this year and then I’m going to be working out of the Portland office for all of July and August so our commitment to the US is on unparalleled levels I would say. So I’m looking forward to being closer and getting into some of the details, specifically with our design communication community this summer.
FOT: You want to double the size of running by 2020; how do you do that, and what’s held the category back so far?
EL: Well, running is the greatest opportunity that we have so we’re very bullish about the category, we’re very bullish about the innovations, around Boost, around prime knit, we think there’s huge potential. Again we haven’t been batting to our weight yet. We need to continue to hammer that home. There’s a lot of opportunity and I would say doubling our running business is the minimum I’m looking for.
FOT: How do you think about the importance of Social Media as a company; how do you measure its impact, what sort of personalities do you look to enlist, and how do you think it develops in the future?
EL: I think social media is interesting because you can call it the Citizen Journalist; anybody can publish anything they want, whether it be Tweets or Instagram posts, Facebook, Snapchat – you name it, it’s no longer in the domain of the traditional media. Social media is exciting in that way, because everyone can publish. We look to make sure that we are the most accessible and open brand to allow that. That’s why we’re sat here today talking, and continue to put you on our invitation list, not because you represent The Wall Street Journal or Time Magazine, or Fast Companies but because you represent a reader base who tune in because you’re a great blogger and networker. The question is how do we give you more access, and the fact that we’re sitting here today is a reflection of how we’re trying to be more transparent. So our brand has always been very accessible and what we do in our new Plan, is to make it even more accessible and we call that open-source. How do we invite you in closer? How do we help you co-create, how do we help you not just create your stories but how do we help you with user-generated communications, where you can actually come in and help look for stories, within our brands. For me that’s true open-source. How do we open up our source codes, it’s why we’d bring you in last night to the UN and talk about the story of the gill nets – what are you going to do with that? I don’t want it to be my story, I want it to be your story. You’ve now got the information that can help us create something that maybe we can the publish on our networks as well. So what we provide is a network where we can take something that you like and put it into other channels and then help you have access to our 135 million followers on social media. We want to make that 250 million, but we want to do that by putting our brand in their hands and drawing people in deeper. Getting more people in our CRM database which we can then communicate with more regularly whether it be though sales opportunities or loyalty opportunities and ultimately producing sales results on our digital platforms as well. It’s a very interesting place to be right now.
FOT: Let’s talk about the US. You’re committed to turning it around, you’re doubling down on marketing spend, and you mentioned that giving up isn’t an option. What are you looking for to make sure you don’t end up burning cash year after year?
EL: I don’t focus on the competition, I’m aware of what the competition is doing, I’m focused on making sure we build the best game plan we can for ourselves and we execute that plan. We’re very clear that we want to win more and we’re going to do that in multiple areas – that means winning market share. Clearly we need to do better than we have been performing – we have a game plan to do that. We’re going to use American insights to drive German engineering decisions, and I think nobody in the industry can match that combination so we’re very bullish on where we can go in the States.
FOT: Nike margins are at 13%+ but Adidas’ seem to be held at 6-7%. What are they doing differently over there and can you match that in time?
EL: I can’t comment on what they’re doing, I can only speak about our drive to build a faster, more agile organisation, that really develops winning brands and takes market share. When you do that, it leads to real world class profitability. And only when you do the first piece – only when you get smaller, faster and more agile, and you start creating new opportunities for consumers to come into your brand – do you start winning with your brands, and therefore get to world-class profitability. You don’t cut your way to profitability, you win your way to profitability.
FOT: What are the biggest innovation trends hitting your products in 2015?
EL: Boost, Boost, Boost and Primeknit – those are the big pieces and then yesterday you saw us introduce another great new thing! We are going to continue to push the edge of innovation, to create the new. We’re going to do that whether it be innovations like Boost, Primeknit or developing new manufacturing techniques, with ocean plastics or whatever we can do to continue to push the envelope and drive innovation.
FOT: What does technology change do to the industry 5 years out?
EL: I would say that it’s not just about the product, I think it’s about how we work together with different partners, different artists, different designers, different consumers to create something that hasn’t been out there before, to continue to drive innovation based upon athletic needs. So how do we continue to make athletes be the best they can be – thats what drives us, that’s why we’re here, that’s why we’re the best sports brand in the world – and how do we help bring those partners to help us realise that future? Again I point to the shoe in front of you – the Boost with the ocean plastic – this manufacturing technique has never been tried; we invented it for this industry based upon the opportunity to bring ocean plastics to a product. We now need to refine this, but this could be a whole new construction that could take over the industry in coming times. That’s how Primeknit came to be, and now look at it today – I’m wearing the Yeezy Boost as we speak. That’s here to stay, and it’s a big part of our business; this could be the next. You can never predict the future, you can only help to craft it!
FOT: Final one – what’s the one change you’d want to make if you were CEO of the company?