- (0:35) - lululemon vs. Under Armour: Anatomy of Success
- (4:45) - The 4 Disciplines of Execution
- (14:10) - Top 10 Decision Making Errors
- (25:05) - LULU's Recovery from Debacles: See-Through Quality?
- (30:15) - How Could Under Armour Lose at Shoes with Curry?
- (38:15) - lululemon’s 3-Prong Strategic Vision
- (45:00) - How Can Under Armour Drive Growth Going Forward?
- (55:25) - Episode Roundup: Mind Over Money Archive
Welcome back to Mind Over Money. I'm Kevin Cook, your field guide and story teller for the fascinating arena of behavioral economics.
In Part 1 of this series, I introduced my quest to explore great companies, and not-so-great ones, in search of the key drivers and practices which create their success, or not.
My primary goal is to give you a handful of working ideas, principles, and model examples to do at least 3 things better: run your own business, achieve your personal goals, and analyze companies you might want to invest in.
Yes, there's a lot to be said for having the right product or service for a business idea and getting rich quick. But even successful companies who hit it big with some luck eventually find themselves being challenged by new competitors and disruptive technologies. Luck, or even just being really smart, will not keep their success going.
The best don't rest and wait for their industry to decide their fate. Bezos, Musk, Branson, and Iger don't care about, much less want to rely on, Lady Luck. So they keep innovating not only in what they produce and sell, but in how they run their business for increased effectiveness.
That may sound like a B-school platitude, but when you see and hear about the innovative management ideas being used to get the most out of employees and new technologies, your brain will start humming with your own ideas about how you can apply them in your life, work, and investing.
That's what I hope to accomplish with this series.
For Part 2, I wanted to focus on the differences in success and execution between lululemon (LULU - Free Report) and Under Armour (UAA - Free Report) , two iconic "athleisure" brands that have been on very different trajectories lately.
I brought in Zacks analyst Ben Rains who has closely followed the fortunes of UA for some time. Our 20-minute discussion looks at several ups and downs for both companies in the past 5 years including LULU's "sheer-gate" and UA's fail in athletic shoes even with pro spokesmen Tom Brady and Steph Curry.
The 4 Disciplines of Execution
In Part 1, I introduced the 2012 book by Chris McChesney, Sean Covey, and Jim Huling. In this episode, I go into more detail describing the challenges and solutions of "4DX" by using various online resources like the book website and a 2012 interview of Jim by Skip Prichard, author of The Book of Mistakes: 9 Secrets to Creating a Successful Future.
I'll list the brief version the "4DX" formula here to whet your appetite and encourage you to listen to my full description with examples in the podcast...
Discipline 1: Focus on the Wildly Important
Discipline 2: Act on the Lead Measures
Discipline 3: Keep a Compelling Scorecard
Discipline 4: Create a Cadences of Accountability
Next in this episode, I share from another book that even fewer people have heard of, Decision Traps: The Ten Barriers to Brilliant Decision-Making and How to Overcome Them.
Coincidentally published the same year as Stephen R. Covey's classicThe 7 Habits of Highly Effective People, this 1989 book by J. Edward Russo and Paul J.H. Schoemaker is dedicated to Daniel Kahneman, Herbert Simon, and Amos Tversky "whose path-breaking research provided the intellectual foundation from which our bridge to practice was built."
I'll list 5 of Russo's and Schoemaker's ten most dangerous decision traps...
2. Frame Blindness
3. Lack of Frame Control
7. Group Failure
8. Fooling Yourself About Feedback
10. Failure to Audit Your Decision Process
You can hear the rest in the podcast and I plan to describe them in more detail in Part 3 of this series.
Be sure to listen to my full interview with Ben Rains where we break down the "athleisure" biz and discuss how and where Under Armour might be able to grow in markets dominated by Nike (NKE - Free Report) and Adidas (ADDYY - Free Report) , with $40 billion and $27 billion in sales, respectively.
Granted, those giants win with a global footprint dedicated to soccer, or futbol, where UA dares not tread. But Plank & Co. must be able to learn something from the trails blazed before. Tune in to hear why I always admired Plank's move into wearable technology for digital performance and bio-tracking, but Ben thinks it was a mistake.
Tough Crowd: Winning in the Fickle Apparel Markets
Clearly, the COVID-19 global healthcare crisis is doing no favors for most retail brands, but I purposely avoided discussing those impacts because I just wanted to focus on the "anatomy of success" for LULU and the debatable "autopsy of failure" for UA.
To be clear, LULU had its share of missteps too, including having to oust its founder for his crass off-brand statements. I also tell the story of how former CEO Potdevin made an awful prediction in 2016 that, had it been followed, would not have allowed sales to double from $2 billion to $4 billion.
Ben and I also dissect LULU's 3-prong global growth strategy called "Power of Three" unveiled last April. The 5-year growth plan aims to “double men’s, double digital, and quadruple international” revenues. And the smaller strategies and tactics within that vision are the ones that interest me most and that I'll be watching for execution, or not, over the next four years.
In a sense, LULU has the potential to build a brand as recognizable as Nike or even Apple (AAPL - Free Report) by focusing on the ecosystem of its customers' lifestyles.
Enjoy and I'll be back in a week or so with Part 3 of this series!
Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader and Healthcare Innovators portfolios. Click "Follow Author" above to receive his latest stock research and macro analysis.
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