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Lessons - The CEO Who Took Reebok From $13M to $3.5B in Sales | Bob Meers - Fmr CEO of Reebok & Lululemon · Success Story with Scott Clary

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  In this lessons episode, explorer-wise sustainability has evolved from a brand preference into a core business advantage.
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  Discover how shifting consumer expectations are reshaping product design and purchasing decisions.
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  Understand how strong brands justify premium pricing while scaling responsibly
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  and uncover why embracing innovation early creates a lasting competitive edge.
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  Say you're a business leader and what you're trying to do is you're trying to effectively
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  tap into this movement but also make a part of your core business. So it's not just
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  a nice to have but it's actually integral in how you build out your processes and you build
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  your product and you communicate with your customer. So for example, for a better for all,
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  you focus on sustainability as a key component of your business. How do you do that effectively?
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  Well, I mean, first of all, with sustainability, you don't have to look very far.
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  You've got the tip of the spear being the Gen Z population that is 88% of them, according to McKenzie,
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  just think companies are bowing smoke in terms of their trying to ease their way into sustainability
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  or trying to use solutions that already exist that really are not sustainable. You've got
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  40% of that same population would make decisions on what companies they purchase and what companies
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  they support based on that company's commitment to the climate, commitment to the planet
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  and commitment to sustainability. That to me is a business opportunity. And when you look at
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  what companies are pushing, they're pushing old solutions. There is no recycling. Let's be
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  candid. There's 5% or less of recycled product goes into recycling. And then the recycling
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  process in terms of sorting is so labor intensive that even a smaller portion of that gets recycled.
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  People are tired of single use. They really want reusable, but not reusable forever.
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  They're looking for reusable to they want to get rid of it. But when they want to get rid of it,
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  they want it to disappear in a reasonable amount of time. And then they look, what's this product
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  made of? Am I depleting the planet's natural resources? So from my standpoint in terms of
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  whether you're talking to an entrepreneur, why fight it? Consumer who has actually influenced
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  the generation above them, the generation below them, and actually is leading it is making a
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  demand that is not going to go away. Do you think they get out of the way and make it happen?
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  Do you think people fight it because they're concerned about it's complicated, it's expensive,
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  like all the regular pushback, like this is already difficult for me to figure out. I'm just
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  trying to build the basic business. I don't have to add layers of complexity onto it. Just to play
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  a devil's advocate, what are the reasons why somebody wouldn't do this? What availability?
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  I know we took a look when we first started the business packaging. Packaging is sitting right
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  there, but now you're the product, now you're the item that you tear away to get at the product
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  you bought. Now what do you do with it? The ideal thing is to have the product
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  disappear in a reasonable amount of time. But what we chose to do with better quality,
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  we make a cup. We make a variety of cups because one, it's universal, they used all over the world.
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  Number two, they normally use in a celebratory way either with a cup of coffee or a cold ring
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  or a dull beverage. And it's big, so there's a big opportunity. I was thinking I was looking
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  last week or recently at just the red cup. They're producing 7.4 billion a year,
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  units a year. I mean, they think to myself, if you can just take a percentage of that business,
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  you're going to have an impact on the planet. Not take them away from it, just have an impact.
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  So why would a company go against it? I've run into this myself. This will be a rebar story.
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  So we had enormous success bringing out a line of shoes designed for aerobics. And we expanded
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  around those items with soft garment leather white product. And they were very, very successful.
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  Your success becomes your anchor because you're so busy filling the demand,
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  you're not innovating behind that demand. And more importantly, you're not coming with the
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  car of the future. And so consequently, we peaked, we started to go down, and then we needed to come
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  out with something that fit consumer demand. So we came out with the pump. And the consumer was
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  saying, loud and clear, no differently than sustainability. I want a product that gives me
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  more support. I want a product that gives me protection. I want a product that gives me custom fit.
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  I go back to my days with the Porsche guy. And I take a look at the pump shoe. And I say,
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  does that shoe give you support protection and custom fit? And is it unique enough looking that
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  doesn't look like everything on the market? And that thing saved Reback's butt. So I look at
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  companies, why are they resisting it? Candidly, it might be because they don't have time to
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  look at something or it's not readily available in what they're doing. Or even worse than that,
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  that we're going to require them retooling. And I would say it's more expensive not to change
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  than it is to change. And that's not a euphemism. I've been in the seat where you held on and turn
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  the lights out on the industry. And that is not a fun thing to do. That's expensive.
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  You know, one thing that you've done very well across again, all the companies is, and you
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  mentioned this briefly at the beginning, it's never been a race to the bottom. You focus on
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  building a product that can command a price point in the market that allows you to create the
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  best possible product. And that gives you margin to allow you to conduct business in a different
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  way. So if, for example, a sustainability focus company, say, the product is in this cheap.
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  I'm assuming that the cogs on that product is slightly more than a non-sustainable product.
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  But you've built brands that support that business model effectively so that you can charge
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  for a product that's a little bit more expensive to make or produce. Even, and I don't even know,
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  I could be incorrect. It could be totally the same and happy to talk about conversation. But
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  the point I'm making is, as somebody who's done this repeatedly, how do you build that brand
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  that allows for that price point in the market, that allows for buyers to be okay spending a premium
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  premium amount of money on whatever you're selling? Well, I'm going to, I'm going to have to answer
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  on both sides of my mouth. Go for it. I think to answer your, I think to answer your question
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  and your short answer is, who influences the buyer? How do you influence the influencer so that
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  you get your trend setter, putting the product, taking the product, you get the early adopter,
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  taking the product, you get the general population to get the product and the pyramid builds?
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  And so you're always looking for, do I influence through my yoga instructor? Do I influence
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  through my coach? Do I influence through my school? Do I influence through my team? But how do I
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  influence somebody? The other one is coming out of the other side of my mouth. You can't price this
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  product based on cost because you look at the tech industry. They've taught us anything with
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  the Amazon and you take a look at Tesla. You've got a price to where you get, you can get the volume,
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  you can get the efficiency, you can get the raw material cost down, and you get the accesses
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  to cross at some time in reasonable future. But you're pricing the product at a slight premium,
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  not an obscene premium. And you keep your operating expenses at variable expense rather than fixed.
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  So you've got to, you've got to look at what business am I in? We've chosen to be in the
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  design development and marketing business. Now what we look for, do we have experts in source
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  in material? Do we have experts in manufacturing? Do we have experts in social media and marketing
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  and advertising and promotion that we can access so that our expenses are variable and we don't
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  make them fixed until we actually have the top line revenue and margins to be able to support
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  the company. So I'm not, I would advise people, don't bury a company in fixed expenses that are
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  not your core business. And, and, and walk me through because we've, you know, we've spoken
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  about all the benefits of sustainability and they're, they're, they're quite obvious and even from
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  a business lens, it seems like it's, it's a, it's a no brainer. But there's obviously challenges
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  or like, like significant challenges outside of just access. So what are some other challenges
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  that you experienced in, in better for all that maybe you wouldn't have experienced in, in any
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  of the other businesses that you've worked in? Well, everything, I would, I would have to say that
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  I am a newbie, I'm a newbie to sustainability. I, we, our lead product is a woman, they
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  Reagan Kelly. She has converted me. She is non-compromising. She studies the business. She lives
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  her breathes and sleeps and eats and drinks it and, and convinced me that, you know, this is the way
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  we want to go. We don't want to be what people tear off to get or what they buy. We want to be what
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  they buy. And so now, what are we, what are we have to do? We had to find a material, but, but
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  all the manufacturers who in the only way to make money in manufacturing is keep your machines
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  producing product. We had to find somebody who was willing to experiment with a material that
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  didn't operate like plastic, that required a different mold, that, that, you know, you couldn't
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  jam in there. We didn't even know if we could make it. And so we had to find a manufacturer that
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  was as committed to sustainability as we were and give us the time to experiment. I think
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  as a couple of years. And we refused to put in fillers. We refused to put in any kind of
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  contaminant. And we refused to put in anything that would contaminate the release of the product
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  from the from the mold. And, you know, candidly, it took us a couple of years to get about 70%
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  there. And then we were able to really get the attention. So we were able to get the attention
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  of a material called pH pH. And that is a product that is made from fermented vegetable oil.
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  And it was made for 20 years ago by a Japanese company called Conoco. It's fabulous. It has
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  a great range of heat tolerance. It's pure. It can compost commercially, at home,
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  it composts in the water, it composts in a landfill. It was just what we needed to do.
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  The factory that bought that now we work with is Westfield Tech Tech. And Westfield has 18 factories
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  around the United States. So we now are in a position where we can have the capacity of the
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  material and the capacity of the manufacturer. I don't want to say we begged, but it came close.
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  I think you have to take us seriously. And in thank God they looked at it and they said,
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  you know, women asked our company, our customers have been asking for 10 years for something like this.
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  We'll give you the ability to refine this. And damn it, we'll pull it off. And now we can make a
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  product that people would be proud to put on the shelf. Reuse, discard, no matter where they
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  discard it. And it'll disappear in a maximum six months.
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  Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you
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  never miss an episode. And if you want to dive deeper into this conversation, check out the links
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  in the description to watch the full episode. See you in the next one.