Case | HBS Case Collection | December 2010

Leadership, Culture, and Transition at lululemon

by Michael Tushman, Ruth Page and Tom Ryder

Abstract

The case examines leadership and organizational change within a strong culture context through a multimedia study of lululemon, a specialty retailer of high-end athletic apparel. Video segments trace the company's history from its founding in 1998 as a single retail store in Vancouver, Canada, through its IPO and expansion across Canada and the United States. The case is set at a crossroads for the company, as incoming CEO Christine Day prepares to take the helm in mid 2008. At that time, lululemon was publicly traded $350 million company with close to 100 stores, including 56 in the United States, and nearly 3,000 employees. the mission from the board was to continue the company's growth trajectory by opening more stores and, ultimately, increasing sales to $1 billion. Among the challenges that Day would inherit were outperforming stores. According to Day, mismanagement of the real estate strategy had resulted in high-cost locations in many new U.S. markets with little to no demand. 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 what was originally a strong values-led organization, resulting in an inability to achieve compromise. "The whole organization slowed down." said Day, "because people weren't aligned. "Leadership, Culture, and Transition at Lululemon" highlights the fundamental tensions that entrepreneurial companies and their leaders face when going to scale: balancing rapid growth and the need to leverage their organization architecture (and associated cultures) as the firm evolves.

Keywords: Leading Change; Organizational Culture; Organizational Change and Adaptation; Change Management; Transition; Growth Management; Management Teams; Organizational Structure; Governing and Advisory Boards; Apparel and Accessories Industry; Retail Industry; Vancouver; United States;

Citation:

Tushman, Michael, Ruth Page, and Tom Ryder. "Leadership, Culture, and Transition at lululemon." Harvard Business School Video Case 410-705, December 2010.