Leadership, Culture and Transition at Lululemon: Case Analysis
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Course
MADM4652
Institution
MADM4652
The case analysis answers the following questions:
1. What advice do you have for Day as she begins her new role at lululemon? Are you generally happy for her in this current position? How would you deal with Chip?
2. What value does the company’s culture add to (or detract from) the company’...
When Christine took over Lululemon in 2008, the company was suffering many challenges, following
the rapid expansion as well as top-down management of the former CEO. Bob imposed a new way of
doing business, which was not in line with Lululemon’s manifesto, hired managers from the outside,
who were not onboarded properly, and pushed for heavy store investment, which resulted in sales
underperformance (exhibit 8). Therefore, as the CEO, Christine’s first step should be to restructure and
redesign the company in line with Lululemon’s core values. She should rehire the previous
management team and bring back the empowerment to that team. In terms of the poor-performing
stores, Christine should close down the locations that are not profitable. She should instead leverage
the local market’s knowledge of the store managers to focus on the target customers rather than being
just growth-driven. As for Chip, Christine should make sure that he is included in the decision-making
processes, however, she should not strive for his approval. Chip was very much in favor of Bob being
the CEO, who in the end proved unsuitable to lead Lululemon. Therefore, Chip’s endorsement of
Christine as a CEO is not necessarily the key factor for her and the company’s success.
Lululemon was built on a strong culture driven by entrepreneurship, quality product, and work-life
balance. The unique blend of values – Lululemon’s manifesto, not only assists in hiring the right people
but also makes a positive impact on the customers. Lululemon emphasizes the employees’ personal
development and goal setting; according to Chip, training people is more important than making
money (video: Stand in nothing). The new hires’ onboarding process involves ‘foundation training’,
which is directed to training people to be successful in their personal life, through which they ought to
be successful in their jobs. The core values, give the company a competitive advantage and add
significantly to its performance. Owing to the emphasis put on the high-quality products, as well as,
through the well-trained store ‘educators’, Lululemon effectively creates demand for its products,
despite being priced much higher than its competitors. Moreover, the core value ‘fun’ allows for some
extent of brazenness within for instance marketing campaigns, which seem to be successfully
attracting customers. The contribution of Lululemon’s culture to its performance was even further
emphasized when Bob began to lead the company without trying to understand or implement its core
values. As a consequence, the team experienced cross-functional barriers, communication issues, and
collaboration obstacles. “The whole organization slowed down because people weren’t aligned” (p. 1).
Still, there are some drawbacks of Lululemon’s culture and the autonomy associated with it, such as a
high risk of giving full authority to the store managers, as they could misuse their power and negatively
affect the profitability of the business.
Taking over a troubled company, while having an insider perspective and leading a successful
transformation, Christine reminds me of the successful turnaround at Microsoft. Additionally, the
decentralized organizational structure and the high degree of autonomy of each Lululemon store
resembles the model of the autonomous CBUs at Danone. Like the frontline managers at Danone, the
store managers at Lululemon have independent control over the store-fronts displays and the overall
store experience as well as the freedom to exercise their knowledge with regards to the local markets
(see appendix 1 for all similarities).
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