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Chapter 10

MGM102 Lecture Chapter 10- Corporate Culture & LuluLemon Case Study.docx

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Dave Swanston

Lecture Notes Chapter 10- Corporate Culture & LuluLemon Case Study • What is corporate culture?  A share set of norms that help guide behaviour • What does culture mean for managers? LuluLemon Case • Mid 2008, Christine Day takes over as CEO • 2005- 20 Canadian stores, $40M revenue, privately held • 2008- About 100 stores, 56 in U.S., $350M public firm • Underperforming stores, bad locations, escalating costs • Struggling with inventory management • Cross functional barriers preventing compromise • “People aren’t’ aligned”; • Directive from BOD- Open more stores and grown revenue to $1 Billion • Harvard Business School: Leadership, Culture, and Transition at LuluLemon: Introduction • Video 1- Build a billion dollar company  “Among the challenges that Day would inherit were underperforming stores. According to Day, mismanagement of the real estate strategy had resulted in high-cost locations in many of the new U.S. markets with little to no demand. Moreover, poorly supervised construction at many sites caused escalating costs and quality concerns. Lululemon was struggling to implement new inventory systems to keep pace with the demands of its expanding marketplace. Day also observed that cross-functional barriers had eroded the sense of teamwork within the organization, resulting in an inability to achieve compromise. ‘The whole organization slowed down,” said Day, “because people weren’t aligned.’” History • Video 2- I was never going to get on a plane as long as I lived  Vertical organizational structure  “Lululemon grew into a leading-edge sports apparel retailer from relatively humble aspirations. Chip Wilson founded the company after running a surf, skate, and snowboard apparel company for 20 years, an endeavor that had him crisscrossing Canada, Japan, and Europe. When Chip began taking yoga classes in the late 1990’s, he observed that the “cotton clothing being used for sweaty, stretchy power yoga seemed completely inappropriate.” Chip parlayed his passion for technical athletic fabrics into a small apparel design workshop that transformed into a yoga studio at night to help pay the rent. His goal was to run one store in the Vancouver neighborhood where he lived, with personal lifestyle considerations his primary motivation.” Value Proposition and Brand • Video 3- The Garment will sell itself  “Lululemon describes its vision as ‘Elevating the world from mediocrity to greatness." The company has developed a unique approach to selling athletic apparel, downplaying its role as retailer and defining its mission as creating “components for people to live longer, healthier, more fun lives.’ In fact, company officials say that the job of store employees is actually not to sell clothes.  The garments will sell itself • Video 4- They take pride in their feedback loops  “Lululemon stresses the “F” factor in its sportswear—emphasizing “fit” and “function,” but steering clear of the term “fashion.” While best known for women’s yoga apparel, lululemon creates technical wear for other sports such as running, tennis, golf, and general fitness. The company also offers an ever-expanding line of men’s clothes.” • Video 5- Function is Fashion  “Lululemon’s value proposition, its view of its customer, and its vertical retail model set it apart in an industry sector largely dominated by wholesalers.”  What’s functional is very cool • Video 6- There are two levels of competitors  First competitor is the sport competitor; wholesale model; customers define who they sell to Culture • Video 7- Core Values and Manifesto: A daily hit of athletic- induced endorphins  Gives you the power to make decisions; manifesto is also on the bag for customers  It links all employees to who Lululemon is as a company  When they look to hire people, they look at the manifesto; it means to speak to people  “While the company's core values stress entrepreneurship and the importance of making a quality product, they also encompass issues like integrity, work/life balance, and even the importance of having fun.” • Video 8- Training and Goal setting: Stand in nothing  “When employees reach one year of service, lululemon sponsors their attendance at a three-day session offered by Landmark Education, a personal training and development company connected to Werner Erhard, who founded the est phenomenon in the 1970’s. After three years of service, employees are given the opportunity to attend an advanced Landmark program.”  Training people is more important than making money • Video 9- People bring themselves to work  Landmark training is human effectiveness training and figuring out what your personal barriers are; creates an environment where people are accountable for themselves  It’s about taking responsibility for yo
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