Question

Lululemon case study

"Leadership, Culture, and Transition at Lululemon, Multimedia Case"

Question:
Imagine that you are Christine Day, newly appointed CEO of Lululemon in June 2008. In determining your initial steps as CEO, you ultimately have to decide what actions to take (and not take) to better execute Lululemon’s strategy, as well as how to engage both your senior management team and the larger organization.

Explain how you would follow the eight steps in Kotter’s model to implement your change plan to ensure Lululemon’s success into the future.

HARVARD|BUSINESS|SCHOOL 410-705 DECEMDERZE2010 Leadership, Culture, and Transition at lululemon Screen Text Version)1 Note: This is not a stand-alone document. It must be accompanied by the multimedia case by the same title, which contains 17 videos with a total running time of 56 minutes. Please contact your instructor for more information. CHAPTER 1. Introduction It was late in the afternoon in May 2008 on a rare sunny day in Vancouver, British Columbia. Incoming lululemon CEO Christine Day looked out at the Coast Mountain range from her office and, despite the blue skies, sensed a mammoth storm brewing. Day, who spent 20 years climbing the leadership ranks at Starbucks, joined lululemon as SVP of Retail in January 2008. It was a time of meteoric growth and expansion for lululemon, founded in 1998 as a specialty retailer that designs, manufactures, and sells "yoga-inspired athletic apparel." In 2005, lululemon was a privately held $40 million entrepreneurial startup with less than 20 stores in Canada. As Day prepared to step into the CEO role in mid 2008, lululemon was a publicly traded $350 million company with close to 100 stores, including 56 in the United States, and nearly 3000 employees The directive from the board was to continue the company's growth trajectory, by opening more stores and increasing sales to $1 billion. The company was also poised to launch an eCommerce operation. Video: "Build a billion dollar company." Among the challenges that Day would inherit were underperforming stores. According to Day mismanagement of the real estate strategy had resulted in high-cost locations in many of the new U.S markets with little to no demand. Moreover, poorly supervised construction at many sites caused escalating costs and quality concerns. Lululemon was struggling to implement new inventory systems to keep pace with the demands of its expanding marketplace. Day also observed that cross-functional barriers had eroded the sense of teamwork within the organization, resulting in an inability to achieve compromise. "The whole organization slowed down," said Day, "because people weren't aligned." 1 Thi숲 documert i“ túpy of the icreen test of the HBS multimedia casù าǐldrihip. Culture, and Transition at lululemon." Profesior Michael Tuihráh prepared this case in conjunction with the HBS Educational Technology Group. HBS cases are developed solely as the basis for clsss discussion. Cases are not intended to serve as endorsements, sources of primary data, or·lustrations of enecne or ineffective management. Copyright 2010 President and felows of Harvard College. This material is intended for uiù i ole, ai part of the HBS multimedia casù aLaadrship Culture and Transition at lululemor,"cursewara 뷰 410-705. No part of this publication may be reproduced. red ira retrievi'ystem, used rt a spreadsheet, or tranimitted in any for or by any means-elactronic, mechatical phetocopying, recording, or ocharwe-without the permission of Harvard Buines School

Answer 1

Imagine that you are Christine Day, newly appointed CEO of Lululemon in June 2008. In determining your initial steps as CEO, you ultimately have to decide what actions to take (and not take) to better execute Lululemon’s strategy, as well as how to engage both your senior management team and the larger organization.

As the new CEO for Lululemon Christine Day who is taking on a company on the verge of not making it if things don’t change. I would first use shared diagnosis from the sequential model, to get everyone from the Lululemon staff, especially the senior management team, to communicate to the team what the problems are with the way things have been going with Bob Meeds as the former CEO. I would discuss my ideas on how to fix the situation and into task alignment. I would then have meetings with everyone, especially my senior management team and get everyone motivated and committed to getting back the values that started Lululemon in the first place. To realign their vision of “Elevating the world from mediocrity to greatness”, and redesign the company. First by using informal design, assigning new roles and responsibilities and hire new managers internally. To build on the relationships through better communication, getting everyone involved in the decision making, getting the whole organization back into vertical retail, which will focus more on the quality Lululemon “guests” are accustomed to. To find a balance of differentiation and integration, so all the stores and employees will function at exceptional levels, with a new cross functional team. The next stage I would “help” the Lululemon locations by providing training and development for all the team members, to teach them what sets them apart from other companies, training to reaffirm the company values and encourage a new set of behaviors and beliefs that “the company is a family before a business”. I would encourage and empower all the managers, to have them develop and understand the importance of feedback, whether it’s positive or negative, and that it’s O.K. to make mistakes, it’s an opportunity to learn and grow. The next step would be to “people manage”, to do some removal and replacement and fire anyone who doesn’t have the same values as we encourage at Lululemon, to hire new staff and managers who do. To engage in talent management and find the right person-organization fit employees. I would get rid of any of the stores in the US that were just causing a financial burden on the company, and find new locations, in the urban affluent neighborhoods, that have our core “guests”. The next stage I would implement would be “systems and structures”, to reinforce the new behaviors, and training and development. To strategically make changes to the structure to reinforce change. I would keep the pay for individual performance, which encourages managers to be more productive and motivated. I would also encourage managers to focus more on intrinsic rewards, rather than extrinsic, intrinsic reward brings positive reinforcement and feedback, and better job autonomy.