William L. McComb inadvertently tumbled into being a “turnaround leader” at Liz Claiborne Inc.
Two years after joining the apparel industry from Johnson & Johnson, McComb addressed his peers not about the $4 billion vendor’s painful repositioning, but rather the industry’s need for servant leadership.
“I was definitely thrust into an incredible turnaround at Liz Claiborne, and while I could be the circus freak here in the fashion industry by standing up and telling lots of stories about that turnaround, that’s not what I think I’ve been called here to do today,” said McComb. “I’m not going to postulate that you all are going to end up doing what I’m doing, standing in a position that can feel lonely at times, turning around a great company with great assets and great long-term potential, but as you brave into the waters ahead and think about what I’ve gone through turning around a company, you might find some parallels.… The tools of a turnaround leader might apply to those of you who are running successful businesses that in and of themselves have been chugging along at a successful clip and appearing to be in great shape.”
The University of Chicago MBA graduate said he wished he could increase the fashion industry’s familiarity with “servant leadership” and its axioms of authenticity, vulnerability and usefulness.
“I’ve been very surprised that the concept of servant leadership is foreign to big chunks of this industry, given what should be an emotionally intelligent group of people,” said McComb.
He built his experience as a turnaround leader — a term he said he doesn’t like — while at Johnson & Johnson, and is now honing it as he tries to reshape Liz Claiborne from a 46-brand portfolio based in the mainstream wholesale market to a company focused on its higher-potential direct-to-consumer brands.
“I’ve found that what happens with companies that have a great, great record of success, like Liz Claiborne, one of the most admired companies historically in the industry, is that you get very proud,” said McComb. “Pride can make a company very political. Servant leadership is about depoliticizing your company, getting the ego and the politics out.”
When McComb joined Claiborne two years ago, the company had enjoyed a decade of consistent growth, acquiring brands and positioning itself as a market leader with Paul Charron at the helm. But the tide turned almost as soon as McComb arrived, and he spent his first eight months on the job plotting a restructuring.
“I know with us for Liz, I didn’t walk in the door with the mandate from the board to tear the place apart,” said McComb. “That wasn’t the goal. This was a great company that had a great history. It was a significant earnings miss at the end of my first quarter that put us on a path of an accelerated set of actions.”
On July 11, 2007, McComb hosted “Investor Day” to present his plan of radical change, which included breaking the company in two between direct and partnered brands — where direct brands Juicy Couture, Lucky Brand, Mexx and Kate Spade were labeled as having higher growth potential and thus given more funding and attention — putting 16 of the portfolio’s 40-plus brands up for sale. Unfortunately for McComb, the restructuring has coincided with the macroeconomic downturn, offsetting the potential positive impact of major moves, such as hiring Isaac Mizrahi as creative director to relaunch the troubled flagship Liz Claiborne brand.
“When you’re turning around a company, you’re forced at maybe a pace you would not have set alone to rethink the priorities, the portfolio, to take a completely different look at the expenses of your company,” McComb said. “In times of a turnaround, we are forced to look at every element of the cost line and profit pools. The one I know everyone in this room has to grapple with is the cultural side, and it starts with the very difficult task of actually creating a case for change.”
Part of the change has involved eliminating a number of senior executives, several of whom filled the audience at the Oct. 28 summit, creating at times an awkward tension.
“Our turnaround — which seems to be more legendary by the hour — is incredibly more complex than what’s been reported: We went from a legitimate and successful strategy based on centralization and centers of excellence, to a strategy of a narrower portfolio built on brands,” McComb said. “It’s no secret that some of the most talented people in the industry have moved on to other positions as we’ve restructured, looking, frankly, for different competencies and skill sets in some of our leaders. Tough thing, but by being absolutely crystal clear and honest and answering questions along the way, you give the organization belief that what they are hearing and what they can expect is real.”
McComb has prided himself in that transparency, making himself readily available to the press and investor community. “In the spirit of being authentic, be vulnerable, admit your mistakes, apologize, concede defeat,” he said. “When people see that, it buys permission to operate and make risky tough decisions in the way the invulnerable leader never gets.”
McComb rated his company’s adoption of the servant leadership philosophy: “If the ceo sets a tone of authenticity, vulnerability, and usefulness, you will be shocked by how quickly an organization grafts to that DNA.…On a scale of 1 to 10 [on servant leadership], we’ve doubled to a 4 from a 2, but we still have a ways to go.…I’m positive we’re going to get to an 8 or 9.”
But even business school lessons may not prove sufficient for these challenging economic times.
“These are times when our willingness and ability to lead will be tested like never before,” McComb said. “The playbooks of how to run our businesses seem to be increasingly less relevant, and many who are running big companies are finding themselves in such uncertain and revolutionary times when it’s really hard for some leaders to characterize what they should be doing next.”
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