Leadership, Culture, and Transition at lululemon

Michael   Tushman; Ruth  Page; Tom  Ryder

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;

Format: Multimedia

1 pages

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Citation:

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

Working Paper | HBS Working Paper Series | 2019

Managed Ecosystems and Translucent Institutional Logics: Engaging Communities

Elizabeth J. Altman, Frank Nagle and Michael Tushman

When organizations need input into their innovation or production process, they have traditionally faced the decision to make the input themselves or buy it through the market. However, rapidly decreasing information costs allow firms to harness external communities that are neither employees of the firm hierarchy, nor traditional contracted market participants such as supply chain partners. We introduce the managed ecosystem governance form in which a central organization engages external communities and also manages these communities by maintaining some degree of control over their activities. This model is evident in various organizational approaches including multi-sided platforms, crowdsourcing, and the gig economy. Building upon the knowledge-based view of the firm, we argue that these increasingly common governance models offer a wealth of opportunities but require organizations to adopt a translucent institutional logic that is in-between the traditional closed logic of the firm and the open logic of the market. To successfully employ this model, firms must learn to shepherd communities, leverage them without exploiting them, and share intellectual property rights.

Keywords: Managed Ecosystems; Open and User Innovation Strategy; Governance; Multi-Sided Platforms;

Citation:

Altman, Elizabeth J., Frank Nagle, and Michael Tushman. "Managed Ecosystems and Translucent Institutional Logics: Engaging Communities." Harvard Business School Working Paper, No. 19-096, February 2019. View Details

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It’s notoriously difficult for a business to manage two separate-but-equal goals—making money and creating social value at the same time, for example, or managing an existing business at the same time that you invent a new one. Most attempts at managing these ”strategic paradoxes” fail because they’re not managed carefully and consistently. (It’s easy to write a great purpose statement or to dream up a new business model but way more difficult to follow through when it’s time to make actual tradeoffs between the goals.) Three organizational mechanisms can help: guardrails that protect the weaker of the two goals, dynamic decision-making that treats high-level goals as sacrosanct but tactical decisions as provisional, and leaders dedicated to “both/and” thinking.

The Micro-Electronic Products Division of SMA has financial and organizational problems. Conflict and lack of coordination exist between functional groups. Employees do not have a sense of direction and morale is low. The cause of these problems is found in a change in business environment followed by change in organization and management. A rewritten version of an earlier case.

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Leadership, Culture, and Transition at lululemon

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