Each day when I read the latest news in Europe I get anxious. In the past year, political, social and economic events have created huge challenges for steadily managing a business and growing the top and bottom line. We’re managing events that businesses haven’t had to deal with in at least a decade. And the collective effect might be something we haven’t experienced in a generation.
Despite this marketplace turmoil, Levi Strauss & Co.’s business in Europe has been a major contributor to the company experiencing top- and bottom-line growth the last three years in a row, something we hadn’t done in more than two decades; and this year we’re off to an even better start. We’ve been able to grow in almost every major market in the region and further diversify our business by gender, channel, category and geography.
Recently, we’ve been asked how we’re defying the “marketplace gravity.” Despite the challenges of managing a business in these messy and uncertain times, I believe the best companies can actually “drive and thrive,” distancing themselves from competitors. The worst of times in the short term may actually be the best of times for the long term. So what has been our winning formula?
Stay focused on your leadership team
We have to step up and lead with a sense of urgency, creating the right balance between leveraging a long-term strategy and day-to-day firefighting. The leadership team is my first priority and I need to actively shape the organization to ensure I have the best people on the field at every position. Then we drive this attitude deep and aggressively into the organization. Since talent is more important than ever, growing it internally, improving engagement and recruiting from the outside are equally critical.
The attitude and communication style of your leaders have never been more important. It’s not a time to be overly optimistic or pessimistic. And swinging wildly back and forth between the two can create confusion or, potentially worse, paralysis within teams. Vision and priorities need to be grounded in reality. As leaders, we must align the organization against a finite set of priorities, be decisive and provide constant feedback. And we must evolve rapidly when we underperform but still find ways to pause and celebrate victories to build the confidence of our teams.
Pull all the available levers to create commercial fuel
Organizational engagement, gross margins and operating SG&A leverage are critical so that we can do more with less and create more fuel for commercial investments, especially in marketing. Competitors may cut marketing first before cutting heads or digging deep enough into their cost structures. If we work smart and move fast, this creates a major gap to exploit.
At Levi Strauss & Co., we’re in the midst of a multiyear project to streamline our organization and rebuild our processes for efficiency and effectiveness, to invest in areas like marketing, product innovation, direct-to-consumer channels, elevated brand experiences, and omnichannel capabilities. But this has required a lot of tough choices that many companies are not willing to make.
De-commoditize wherever possible
It’s easy to get drawn into price wars, thinking that it’s your only available option to recapture share. But the real opportunity lies in creating a compelling brand environment, superior consumer and customer experience, cutting-edge product innovation, and authentic stories that connect with your brand’s fans — all of which are differentiators. We’ve seen success by doing things like creating a more feminine shopping experience for women in our retail stores and leaning in to the customization trend by rolling out tailor shops across Europe. These are areas where competitors will retreat or fail to invest in the face of market pressure.
With marketing, we play high and low, creating large “360” campaigns that reach broader audiences and connect all of our consumer points of contact; and smaller, niche investments that keep the brand unpredictable, interesting and at the center of culture — like collaborations with top brands including Supreme and Gosha and our partnerships with key influencers like blogger Chiara Ferragni and model and socialite Poppy Delevingne, who designed exclusive patches for our pop-up tailor shop at Selfridges in London.
Find the right balance between strategy versus short-term firefighting and diversification versus focus
My team and I face challenges every day that may require immediate attention and adjustments based upon specific market, consumer and customer issues. But it’s critical that we keep returning to our multiyear strategy. Our strategy provides further diversification by gender, geography, product category, channel and price point; and diversification helps to de-risk the business. Balancing this day-to-day sense of urgency and agility with a commitment to the longer term strategy is where great companies and organizations really excel.
But diversification can also threaten focus. I realize bringing the word focus into this conversation looks a bit schizophrenic, but that’s where the balance is so critical — we call this “edit to amplify.” Diversification and focus can co-exist if you bundle, phase and, most importantly, decide what you’re going to stop doing.
Let your values and vision be your ultimate guide
Your company’s values, culture and staying true to your mission and vision are even more important as a rudder in stormy seas, yet companies routinely put these on hold while they fight for survival. Clearly articulating what you stand for, and walking that walk, is another differentiator that creates engagement and attracts the right talent.
And if you do these things well, as we’ve been able to do in Europe at Levi Strauss & Co., you may find that you can separate yourself from the rest of the field, turning a tough environment into the best of times for you and your company.
Seth Ellison is executive vice president and president of Europe at Levi Strauss & Co.