Bob's Gutsy Leadership Blog

How Burberry Faced Reality and Dealt With It

Burberry is a 157 year old British company that is famous for its high-end, classic beige trench coat with its signature check lining.  The brand is so much a part of British culture that the company earned a royal warrant, making it an official supplier to the royal family.

In 2006 with the business stagnating, a new CEO was hired, Angela Ahrendts, to pull the company out of its doldrums.  She quickly forced the organization to face reality.  They had strayed from their heritage of being very British, quite up-scale, and the quintessential provider of quality coats.  Here are the four problems she tackled and what she did about each.

1.) Each geographical area in the company was doing their own thing – For example, in Hong Kong they had their own design director and design team, focusing on polo shirts.   Within a year, the new CEO let these regional teams go and hired a global design director.  She issued a directive that all products would need to be approved by this person.

2.) Products were being made all over the world, even though the brand was supposed to be classic British – In response, regional manufacturing was shut down and manufacturing was centralized in Burberry’s ling-standing Castleford facility in Yorkshire.

3.) The Burberry website was broken into regional versions and managed regionally – This was generating a wide variety of portrayals of the brand, coupled with no real clarity of a Burberry image.  In response, that was all centralized to convey a clear brand image globally.

4.) In stores throughout the world, there was no emphasis on coats or the brand’s heritage – Instead, there was a wide variety of goods, including dog cover-ups, dog leashes, men’s kilts, a wide selection of shirts, etc. The new CEO’s solution was obvious; get back to coats and offer a wide variety, but all having the classic Burberry attributes of up-scale, very contemporary and very British, with the classic trench coat being the anchor item.

Since 2006 when the new CEO tackled this challenge, revenue and profits have increased every year, even in the face of the global recession.  2012 revenue was $3.0 billion and profits were $600 million, compared to $1.2 billion and $250 million respectively in 2006.

So what is the lesson we can take away from this impressive story?  It is simple:

Face reality and develop and implement an aggressive plan for significant improvement.

Business is not hard!  We make it hard by ignoring/avoiding/over-thinking/studying-to-death what is usually quite obvious.

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