Tip:
Highlight text to annotate it
X
>> SAL: Well I just wanted to introduce everyone to Angela Ahrendts, just on a little bit of
background on how all of this happened, you all know I was just in England two weeks ago
and as part of that, you came to the talk at London School of Economics and then the
next day we met at Heathrow Airport. I had my $6 Old Navy shirt feeling very insecure
the entire time, and both Esther and I were there and you inspired us. And so, when you
said you were going to be in this area we were like, we would love you to do the same
thing with the team, just talk about what you’re doing etc.
If you could talk a little about how you… so fashion, the world of fashion, it’s not
obvious to everyone how someone gets into it, and especially gets to the level that
you’ve gotten. How did you start and what, at least at the early stages, allowed you
to get here?
>> ANGELA: Honestly it’s not a dissimilar story to yours. My thing is, I think the greatest
thing anybody can do when they’re young is discover their passion, what they love.
And I know it sounds really, really terrible but I love stuff, and I love to shop and I
love fashion magazines and I love to sew and create, so it was the only industry I had
to get into.
I went to university and signed up for all these design classes and realized I wasn’t
that creative, but I had a really strong opinion on what everybody else was doing. So I had
a professor say that you’re what we call a merchant, so I signed up for a lot of merchandising
and marketing courses. So my University degree is Merchandising and Marketing. So, in the
world of what we do, we say I’m the monkey in the middle. We have Christopher Bailey
who is the Chief Creative Officer and he is so creative and so brilliant, and his whole
creative team does all those videos. So that’s on my right. And on my left we have the Chief
Financial Officer, we have the Chief Operating Officer, we have a number of our teams who
have just arrived as well, so you have this balance.
We say I’m a 50/50 – I am half left brain analytical and I am half right brain creative,
and that was actually one of the reasons I wanted to chat with Sal because I said some
day, as you guys start to take over the world, you’re going to have to start to introduce
some right brain curriculum. And the Burberry Foundation would be honored to help you start
creating some of those things, when you’re ready down the road.
>> SAL: And we’re already starting a little bit, we can talk more about that absolutely.
And you say you’re not creative, I think you’re really underselling yourself.
>> ANGELA: Yeah, I mean design creative.
>> SAL: You had a very strong aesthetic, you had a sense for what connects.
>> ANGELA: Yes, I am absolutely a merchant. And I’ll tell you, the reason Christopher
and I created the Foundation is we are both creative thinkers. And we feel very strongly
that curriculum, specifically in America, has become so left brain, so much of the arts
and things have been cut out, and I think for where the world is going we need creative
thinkers. Many times, they’re getting lost out of the system.
So we created the Burberry Foundation, we give 1% of our profits into the Burberry Foundation,
and what we do is we try and pick up the youth that is starting to fall out of the system
because they think they’re dumb. So hopefully we can start turning them onto you guys to
help them – if they’re still, just not left brain but they’re incredibly creative
thinking. We bring as many of them in as we can. We show them a whole other world, that
companies like us need, and that’s kind of been our calling.
>> SAL: It’s incredible. You yourself, you kind of said “I’ll be a merchant”, a
professor tells you this. And then you go to New York, and, you’re not even 30 and
you’re the President of Donna Karan. Is that right? How does that happen? Is that
normal? Are there lots of 20-somethings running major fashion houses in the world?
>> ANGELA: Probably not... and I will tell you, I’m really guilty because I am not
great talking about myself. I’m just not, because I’m only as good as the great teams
around me, no different than you guys. So yes, I think what happens always is when you
discover who you are, and you discover what’s your passion. Then it’s not work it’s
your life. And you just get into that zone, so I was so fortunate that I met the right
people, things fell into place. Absolutely worked my butt off because you know, I was
single, alone in New York and why not. It’s all I did. So I found my zone.
>> SAL: But was there a moment? If a member of my family says, hey I’m going to go to
New York and I’m going to work in fashion. I’m like, OK, I’ll see if I can support
you at some point – that’s the left brain side of me. But how did you break in? And
obviously left such a mark with people that before you were even 30 you were President
of a major fashion organization.
>> ANGELA: It’s funny, I don’t think of it as any different than a great athlete,
or a musician. I think what happens is, this is all that I’ve ever done. I’ve always
just stayed in my lane, and then you become – whether you’re a football player or
you know – I didn’t jump around, this is all that I’ve done, and I’ve always
been so passionate about it, and I think when you direct your energy you become so passionate
and you unite people, right? And you lead people all around believing in something.
And then, things just fall into place. And when I say things – the revenue, the profit.
I never went in saying “I’m going to do this”, I went in saying “what if we did
this”. I’ve always been a dreamer, my father always used to say take off your rose-colored
glasses and I would always say no! And now I don’t have to, I can keep dreaming, but
the important thing I’ve learned is I have to get enough people, I have to surround myself
with enough people that can help execute that dream now.
And that’s all that I’ve ever done, and I don’t want to over-simplify it – I have
found my zone, I absolutely love what I do, it’s not work at all, I have not once woken
up in the morning and thought oh God I gotta go to work – it’s not work, this is my
life. And everywhere that I’ve been, because it’s not work. And the mantra at Burberry
or anywhere that I’ve been - because the stronger companies get, the more they can
do and the bigger influence they have - so at Burberry we have always said, we have the
power to touch and transform lives through the power of our performance. And the bigger,
stronger we get – the more we can do. And that’s always been – I’m from the heart
of the Midwest, real strong family, faith upbringing, and I have been raised to give.
That’s how I was raised. And so why wouldn’t you apply that back in business.
>> SAL: You are underselling yourself a little bit, but I’ll give you a pass on that! The
interesting thing about these and why we video them, is the Khan Academy user base, there’s
a lot of young people out there thinking, how do I do that? Do you have advice for someone
who is 16 years old, or 20 years old, and they find this world intriguing. What should
they develop in themselves and how should they think about the world and what should
they do?
>> ANGELA: And I always say too, the fashion industry is deceiving because everybody always
thinks it is only this creative part. Where in a company like Burberry there are eighteen
different departments that comprise the company. So we need – and there a lot of great people
in Silicon Valley – there are 130 people just in the IT division of the company. People
don’t realize that. So we need extreme right and we need extreme left.
I think sometimes the fashion industry gets the short stick sometimes when people think,
oh it’s just fashion. So in order to create – and here’s my thing, what I always say
– what we’re doing is creating a great brand, and a great company, and we happen
to be in the business of fashion. We didn’t set out to create really great fashion, we
set out to create a great brand, and I say that, because there’s a part of me that
says that is your mission a well.
>> SAL: In your mind, what does a brand mean? I’ve heard multiple definitions of a brand,
and how would you view Burberry’s brand? And how would you view our brand? They’re
very similar… [laughs]
>> ANGELA: To me a great brand - and here’s my thing, think of yourself and when you interact
with products, what coffee do you drink every morning – you might walk into Starbucks.
Or you might have Apple products. How do you feel? You want to be a part of that brand,
right, because you’re proud of that brand, because it makes you feel a certain way. And
you trust that brand, and it’s authentic and it doesn’t ever let you down, it exceeds
your expectations. So you want to engage with it, right? Those are all of the attributes
of a great brand. Honesty, integrity, authenticity, quality. To have a great engagement, great
brand presence, there has to be a very trusting relationship with your constituency. And in
that way, we are absolutely alike – because your users they have to trust what you’re
telling them. If you’re wrong..!
>> SAL: Happens from time to time.
>> ANGELA: So for me that’s what a great brand is, and in Burberry’s case that’s
how we measure it.
>> SAL: How do you think about these things, you joined Burberry in 2006, in the previous
5-10 years Burberry had kind of been rejuvenated? So if you could talk a little bit about that
rejuvenation before you got there, and how you were going to steer the ship.
>> ANGELA: What I think happens, and again we are 158 years old, we have gone through
a lot. So we got the whole management team together and said, what is our core? What
is our core product proposition? And what is our core purpose? And so we realized, you
know, 158 years ago now, we were born from a coat. We had our own weaving facility in
the North of England, we had our own factory that produced those coats.
But it’s interesting; we were driving innovation everywhere else but in our core product. And
everyone talked about global warming, and gave us every reason why we couldn’t do
that. And we were like, no no, every great brand – what would Starbucks be without
coffee – every great brand has a core, and I think people get bored with that. But as
you grow bigger and bigger know what is your core product proposition, and don’t ever
lose it, and keep innovating that core because people get bored really easy. And also, what
is your core purpose. And I believe, people don’t want to just work, people always want
deeper meaning in their lives.
And it was hard for us – people don’t just want to make stuff. People want to make
stuff that has meaning, that has a purpose. So we created our core values, which are to
protect, explore and inspire. And we didn’t come up with those, we took those out of a
book that Thomas Burberry wrote 158 years ago when he was 21 years old and he founded
the company. And we always say that his spirit lives on, and it should because it was his
company, it was his vision. And he created that waterproof gabardine fabric to protect
the military in the trenches, that’s why he created the trench coat etc.
So we said, that is our core, that’s what he founded the company on, how do we make
the trench coat the most cool, relevant, hip thing in the world. It’s what we were born
from; nobody else can say that but us. And so to revitalize and transform the company
we simply went back to the basics, we went back and revitalized our core. And we took
that category, which was about 22% of the business 7/8 years ago, today it’s half
of the business. And when you watch a runway show, nearly every item that goes down has
some type of a trench coat. So the innovation we have driven in that core, has single-handedly
– you know, and Harvard Business Review did a great article on just that topic, revitalizing
the core.
SK: And how do you decide on it? Is that
just a gut instinct, or is there some data that you look at – all the brands that have
a core, vs don’t have a core. And then as you move, and continue to innovate and get
new products – every day, someone comes to you and says, hey we should have a line
of whatever – how much of it is analytically driven and how much of it is gut driven?
>> ANGELA: It’s a great question – I’m going to answer it three ways, one is we are
a creative thinking company, and everything we do is driven by intuition. And then, we
confuse ourselves with facts, but we always lead with intuition. Because we always say
we do value feeling over knowing. Because if we only focused on knowing, we would never
move forward. Because you can’t prove something that hasn’t been done before. And I forgot
my other two! I told you there were three!
>> SAL: Confuse yourself with facts, what does that mean? Do you feel – not just you,
collectively the whole organization, you feel like something is the direction but then someone
says “hey but look, everyone who has gone into this space before has failed, or there’s
800 other players already in that market and they get zero margin on what they’re doing,
it’s a commodity.” Do you ignore that? Do you sometimes ignore that? Or say no - I
still feel good about it and you move ahead?
>> ANGELA: Again, seven years ago, we came up with all the strategies – we call them
hard strategies, and those are the ones that are very fact-based right. So when we talked
about retail-led growth, we brought in a consultant company, I said tell me every key market in
the world where our peers have at least two stores and we have none. And then tell me
their productivity per square foot.
So we had a strategy, put all the hard metrics behind it, but our instincts were – we were
75% wholesale when we started, today we are 75% retail, our own stores direct to consumer
– so our instinct said we had to go direct to consumer, we had to control the brand,
environment, everything. Again we brought in the firm, we did that on every strategy
and they would re-affirm etc. So then I put them in front of the board, my very first,
been in six months - strategies are done, everything’s outlined and we know exactly
where we’re going and we said at the time, we would double the revenue and the profits
in five years. And they, the guy in the company, I won’t say who on the video, he stands
up and the Board says to him, well how do you feel about all this, can we do it? And
he says, there’s about a 5% probability.
>> SAL: Who’s this guy?
>> ANGELA: He works for a huge consulting firm, I’m not going to mention the firm.
We had them come in and for six months we had them working with us on validating this
strategy.
>> SAL: And so this strategy, it was a numbers strategy looking at the retail density in
different geographies and how productive those stores are. So that is what you use to decide
where you’re going to go?
>> ANGELA: Yeah, again there’s always both – and that was part of the thing I just
forgot, one was intuition and the other was balance. So we talk a lot about the right
and the left. A lot. So we had five hard strategies and we had five soft strategies. The Foundation
was a soft strategy, the culture, all of the compensation and benefits – free lunch.
All of these were the soft strategies and these will enable those. But just focusing
on these we may not get the job done.
But the consulting firm didn’t work with us on the soft things they only worked with
us on the hard, so when they told the board there was only a 5% probability the board
were kind of like, we’re nuts. But we actually achieved the plan, one year early.
>> SAL: And they thought there was a 5% probability – they actually advised you on a lot of
the fact part.
>> ANGELA: They thought we were being far too aggressive.
>> SAL: Aggressive, when you say you’re going to double your revenues?
>> ANGELA: And profit.
>> SAL: And profit, in 5 years. That’s the part they were giving you a 5% probability.
They were saying I’m sure you’ll grow etc… And the soft things were stuff that
just felt right?
>> ANGELA: The soft things were that we knew, I knew, that we would be as good as our people.
We had to build a team, we had to unite and connect this culture, and they had to believe
in the dream. And this is leadership. And they had to lead everybody.
We were 3200 people then, some of them, we had people who had been with us 30 years,
40 years, but how do you get everybody united around a new vision, a new dream. And the
thing is they have to believe, every single person has to believe you can do this. That’s
the positive energy that comes around something when you are breaking new ground, or trying
to do something transformative like you are, and they have to believe.
And I told them up front after that six months, if you do not believe we’re going to do
this, then maybe you should go now. We knew we wanted to do something really big and transformative.
So we used our instincts, we confused ourselves with facts and then we built a very balanced
strategy – hard and soft – very balanced teams.
You know, we need creatives, but we need operational excellence. And the strategies were built
that way. I always say, in every single store we have we need left brain and we need right,
in every country, every region. Because I don’t think you’ll build a great brand
that resonates and touches people without both. You need the engagement and you need
the reach, they’re very different.
>> SAL: And the projection for doubling – there was no precedent for this, that’s why they
were…
>> ANGELA: Well the precedent was they had done it before. And the possibility of a company
doing it twice was what really took the odds down.
>> SAL: Through that process were there moments where you yourself were like, gee I don’t
know if this is going to happen?
>> ANGELA: Never, never.
>> SAL: That’s the way I am too – never in doubt. No, I’m always doubting.
>> ANGELA: You are not! I think he is a bigger dreamer than I am.
>> SAL: Maybe, we can compete.
>> ANGELA: No, but you have to. You are disrupting a sector that is so overdue to be disrupted,
it is so overdue. And the next generation is in your hands and they need you to do this.
The country needs you to do what you’re doing. You gotta do it, and you gotta keep
going. And you gotta get your reach out there, and keep engaging. The fact that 30,000 teachers
are using your content in schools, it’s unbelievable. Get it to 100, get it to 200,
don’t stop.
>> SAL: Can you Skype into our company updates, it would be very emotive. I’m like yeh,
lets do this!
>> ANGELA: But that is how I feel, and it’s not going to be easy, but don’t stop.
>> SAL: That by itself is really powerful advice and feedback. What would you tell us
as we go. I mean you’re 158 years old, we’re 158 weeks old – any advice beyond the ultra-focus,
believe, power through?
>> ANGELA: Definitely focus. And we do the same thing, we always say, every year, we
only do three new things. That’s it. We call them big brand moments, whether it’s
launching Burberry.com – it took us a year to unite thousands of people around the world
– and we said, we had to do this, and we had one chance to change 150 years of perception.
And this year there will be 100 million people going onto Burberry.com, you guys have whatever,
but for a luxury brand that is a lot. And not all buying, but engaging, and spreading
what the brand is about etc. So, three things a year – and we still hold onto that.
>> SAL: And that’s not individual products, that’s new initiatives, like Burberry.com?
>> ANGELA: Exactly, three big brand things that we unite 10,000 around the world to do.
>> SAL: And what’s next in the queue, what are the three things you all are doing now?
>> ANGELA: It’s probably no surprise that we are aggressively working on increasing
our digital platforms, specifically when it comes to mobile. I mean, the whole world is
becoming mobile. It’s crazy all the metrics of consumers that are engaging. And that’s
probably a challenge for you guys too because that is where you’ll get your kids, on a
mobile device, not just a phone but any mobile device. So heavy investment going there, digital,
mobile etc.
And we always have operational or internal initiatives as well, as we get big areas get
sloppy, so we have to drive a lot of efficiencies in the business. We call it commercial procurement,
so we build tons of stores a year so we’ve hired some additional expertise to make sure
we’re doing that in the most efficient way.
So right now, if you ask any of our executives around the work, they know those are the three
things we are focused on this year. And if we do those right, we will put up the results
we have budgeted etc.
>> SAL: And you are growing fast, for a large company you grew 24-25% last year?
>> ANGELA: We just put up this year’s results, we had our trading update a few weeks ago,
our retail business was up 13% on a really big base.
>> SAL: That’s not what global retail is doing today?
>> ANGELA: No, our largest competitor put up a 3% retail business and they are the largest
in the sector. So we’re absolutely continuing to outperform, but I will tell you, it’s
because of the people. It’s because there are 10,000 people around the world that are
so passionate about this company, and are so passionate about our performance and creating,
again, a great brand a really great company.
But, they also know, every time we open a flagship store – because, again, it’s
kind of shallow – luxury, retail right? And that always bothered Christopher and I
because it’s not where we came from. We love what we’re doing with this company.
But every time we open a flagship store, we partner with a local institution. So in Chicago,
we partnered with Hive, and we gifted them a million dollars, and we created a program
that’s going to help the youth in the Chicago area, with our programs Burberry Beyond etc.
We’ve done it in New York, we’ve done it in Beijing, we’re getting ready to do
it in Shanghai. So every time we open this new luxury store, which could come across
a little elitist if you will, we always make sure that the company is – like in New York
we said we are lighting up Manhattan with the store and we are also going to light up
people’s lives as we gave the $1 million to the Robin Hood Foundation, and put our
program in place for the chartered schools etc. And that’s a big part of the balance
and that’s a part of being a great company.
>> SAL: So you look at the organization, you must be looking at people and thinking look
at him, look at her, she, he has got potential. That could be the next CEO. What are you looking
at, what are the traits you’re seeing in those people that are really striking in you,
those are the people that could one day step into your shoes?
>> ANGELA: It’s a great question, and we look at it honestly at all levels of the company.
And I would less look at it in my shoes, as that would be my direct reports etc. I would
tell you at every level of the company, and we hire for it as well, so – sounds terrible
– culturally compatible, we don’t want tissue rejection, it’s tough to bring people
into your culture.
People go through such rigor before we bring them into the company and we always say, are
they culturally compatible? Do we trust them? Do we like them, obviously, but do we trust
them, do we believe them? Do they believe in our mission and what we’re doing? We
can’t afford to make a mistake.
I would tell you with anybody going to the next level there is transparency, trust, our
core values. All of those soft things we talked about. Again, when they reach a certain level
it is a given they’re smart. It is a given they have high IQ, but we need high EQ. And
we say that everybody in the company needs a little right and left brain. Not too extreme,
because then they don’t feel. And we always say, we can teach people anything, but we
can’t teach them to care and we can’t teach them to feel. And when we’re in a
human business and they’re communicating like were communicating they have to be authentic.
We have a leadership council, which is the next generation talent, and we spend hours
just helping them understand who they are. Who are they? Because then only if they really
know who they are can they build really talented teams around them. And it’s a really self-reflective
phase that they go through, but they will become better leaders having peace and confidence
with you they are. To thyself be true.
So that is part of our talent plan, and I always say no different than me, I tell investors
you would be so surprised at every decision I don’t make every day. But you can’t!
You have to trust the people that you brought in, and you have to give them very clear,
simple messages. You know, the three things we’re going to do this year. And all of
the metrics behind it, and uniting everyone. But it is trust, intuition, great communication,
authenticity. People have to feel them, or they will never rise as a leader in the company.
>> SAL: Right, and is that something you can – you talk about personality fit and cultural
fit and that you trust them – but is there someway you can screen for that? That balance
of the whole brain – I’ve read the whole book now.
>> ANGELA: It’s great, isn’t it?
>> SAL: Fascinating.
>> ANGELA: Did you really read it?
>> SAL: I did on the plane, it was a long flight!
>> ANGELA: I gave him a copy of Daniel Pink’s book – called ‘The Whole Mind – Why
Right Brainers will rule the world’.
>> SAL: And one thing I will point out to you, one thing that I did think as I read
that book, it’s funny because in that book they say – oh we don’t need programmers
any more we need inventors. I said, what’s a programmer, it is an inventor, it is a fundamentally
right brain activity. So when people talk about Khan Academy, STEM – STEM is, it should
be, a right brain activity. In my mind, the learning to factor a polynomial, or to do
the basis of algorithms, that’s like a painter learning how to paint. But the real expression
is when you create something, I think we’re more similar than you think.
>> ANGELA: I think so too, and that’s what you’ve unlocked – that’s your unique
brand positioning.
>> SAL: The creative…
>> ANGELA: You’re taking what most people would take as a traditional left brain, and
you’re adding fun, you’re adding energy, your combining it and making it ore of a right-left
brain exercise. Not just an analytical exercise.
>> SAL: I will ask you again, it was so inspiring with the dopamine – we were talking about dopamine earlier and
it got us all very excited.
>> ANGELA: I won’t ask!
>> SAL: Parting words, advice for the people here, and the wider Khan Academy community.
Thoughts on what we should be doing, how we should approach life.
>> ANGELA: It’s funny because I had the honor, right before the Olympics, Mr Bill
Gates was in London and had a wonderful luncheon, and we’d met a couple of different times
and I had the honor of sitting next to him at the luncheon table. And he was talking
about all of his different philanthropic efforts etc. to the who’s who of the UK, and he
hadn’t mentioned the Khan Academy. And I was so excited, so at the end, he simply said
“is there anything else?” So I asked, what are your plans for the Khan Academy?
And he kind of looked at me like how did I know about this, nobody in the room knew about
it, and these were huge big executives running Glaxo, and other big companies in the UK.
And he went on to share with them what you were doing and why he felt strongly and that
his foundation was investing etc. And then the luncheon broke and he looked at me and
he asked, well what would you do? And I looked at him, and said, you created the greatest
brand in the world – Microsoft – and you were so laser and you had such a vision. And
I said it is absolutely no different with the Khan Academy, I believe you have the ability
to create one of the greatest brands and one of the greatest companies in the world.
I told him, when you did it, there was a need, you filled that need. There is a tremendous
need and you are filling that need – it is in a different way, but you are using and
you are leveraging that technology that exists today as he did. And he then sent a follow
up note afterwards saying could we continue the conversation, I found it fascinating etc.
I shared it with you because to have at this young age that you are, to have someone of
his vision and his caliber believe in you, you know you’re on the right track.
And I just think I am absolutely nothing in comparison to the people that are watching
you, the people that are following you. The lives that you’re impacting, you’re impacting
teachers lives, you’re impacting the next generation, you are actually impacting people
who didn’t finish their education, who are going on and learning now.
And so, you will create a phenomenal brand, you will create an amazing company, and you
are in the midst of disrupting a sector that is so desperately in need of being fixed.
And you’re doing it in such a modern way; leveraging everything that exists today. And
my counsel to you is just don’t stop. And don’t slow down. Stay focused, keep the
right pace. But do understand that what you’re doing has far greater meaning than anything
you’ve ever done in your lives before. And not just does America need you to do this,
the world needs you to do this. Education is the biggest thing inhibiting future economies
all over the world. So I am so honored to be here to chat with you and I am so thankful
for what you’re doing, I really am.
>> SAL: I feel like going back to work now! Thank you so much, this was – for me personally,
when we met in Heathrow with my $6 shirt on, that by itself was really powerful, I mean
Esther was there too and we were like she’s amazing! And Esther’s the number one search
result on Olympic attitude on Google. She has authority here! But we were transfixed
and blown away by meeting you then, and I think I can speak for everyone and say this
was incredibly inspiring and motivating for all of us so thank you.
>> ANGELA: No, you’re more than welcome - keep up the great work.