In Good Company with Nicolai Tangen - Bjørn Gulden CEO of Adidas: shoes, leadership, and fast decisions

Episode Date: September 13, 2023

The Norwegian Bjørn Gulden share unique insight into how it was to leave Puma for the main competitor Adidas. He also explains his plan to rebuild adidas, the relationship with Kanye West and why he makes quick decisions.The production team on this episode were PLAN-B’s Nikolai Ovenberg and Niklas Figenschau Johansen. Background research was done by Sigurd Brekke and portfolio manager John Santo Domingo.Links:Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi, everyone, and welcome to our podcast, In Good Company. I'm Nicolai Tangen, the CEO of the Norwegian Southern Wealth Fund, and your host today. In this podcast, I talk to the leaders of some of the largest companies we are invested in so that you can learn what we own and meet these impressive leaders. Today, I'm speaking to Bjørn Gulden, CEO of Adidas, the largest sportswear manufacturer in Europe and the second largest in the world. We own over 2% of Adidas, translating into 5 billion kroner, over 500 million dollars. Bjorn is a really impressive leader and a serious no-bullshit CEO.

He's also a previous professional footballer and very, very funny. You don't want to miss this one. Hello. Hi Bjørn. We should have taken this in Norwegian, but given that we have an international audience, we may want to switch to English or German. Can you speak German?

Not so much, but... Then we'll do it in German. Okay, all right. so björn great to have you on uh really really fantastic uh not so many um international norwegian ceos so uh really great now you guys make like 400 million pair of shoes a year what do you what do you wear today what what which ones have you gone on i have uh samba samba would you mind just taking it off and we can have a look at it but only the shoes i don't take any other things off shoes are fine shoes are fine we'll start with it we start with the shoes why with the shoes. So why do you wear Zamba? It's an accident now, but Zamba is actually the coolest shoe in the marketplace now. It's an old shoe that came out of soccer, football. And over the last six months, it's developed into probably the hottest street shoe around the world. So the demand is much bigger than supply and

you know i'm an old guy so i'm trying to get young so i dress like the kids do and that's why i'm wearing the summer yeah i'm uh i'm trying to say but it doesn't quite work so well for me but um so when you look at a shoe what do you look at what what makes a good shoe well that depends on what it's for i mean it's if it's a performance shoe, then I have to wear it and test it. And I'm testing a lot of shoes. And when it gets to the fashion side of it, I'm more mainstream. So I follow what I see the trendsetters are wearing and my trend people give me shoes. I wear what they tell me.

But on performance, if it's a running shoe or a soccer shoe, I test a lot of shoes to see what fits me. So let's say you do a running shoe. What kind of things do you look at? When you run with a running shoe, what are the things you are conscious about? Well, for me, I mean, being an old soccer player with an artificial knee, I need stability and cushioning. So it needs to be a shoe with a wide sole, a wide last, and with, I would say, extra nori cushioning. So I'm looking for a shoe that fits me. And then if I run a 5k and I try to be fast, which I do a couple of times a year, then I run with a

shoe that has a carbon plate, which is very light, that actually makes you run faster. So it depends on what I'm using it for. But I'm very particular when it gets to the footwear I wear for sport. Then I spend quite some time testing until I find out what is the best. Now, you have a background as a professional athlete. Tell us about that journey. Well, I'm born with a father that was a national player both in in football and in handball for those you know what that is so i grew up in a in a sports home and and had only one passion that was sports um so i also played both handball and and and football on the

on the premier league in in norway also the youth national teams. And then I turned professional and went to Nuremberg when I was 18 and then injured myself badly and had many surgeries. So I had to give up my career when I was 23. And that's why I had to move my skills from the legs into the head and started studying and then connecting to the sports industry. But I think you've said somewhere that you got a bachelor's, you got a master's, but the best education you have is your team sport.

What do you mean by that? Well, playing team sports at any level, but especially at the professional level, it's like it mirrors a little bit of life. You play with people that are better than you, worse than you, people you like, that you don't like. But you have to try to give the biggest impact that you can on a team, not only for yourself,

but the team as a total. And I think that mirrors what you're trying to do in a job. You know, and that's why from an education point of view, you know, being an athlete that played in different teams and then also going through the phase of being injured and how you deal with problems and not only wins, but also losses, has been the best lesson that I've taken with me in my professional career. The education only gives you a background to have kind of the knowledge theoretically, but real life experience is a thousand times better than education. Now in sports, to go from one club to another is a pretty big thing. And you went from Puma to Adidas now.

That's a big thing. Yeah. How did that shift come about? Well, first you have to remember that I spent 10 years with Audi in the 90s. So this is like coming home. So it's not as bad as only going from Puma to Adidas. I haven't been with Adidas before. But this time, after having been the CEO for Puma for 10 years,

I felt that extending another five years would not be right. I mean, 15 years on the helmet of Puma, in my opinion, would have been too long. And I think I was in a phase where head and heart was going in different directions on many decisions. And I felt it was time. I had decided to leave and go to a different company. And then suddenly Adi showed up with, CEO leaving and then asking me a couple of times if I could join. I thought I had a non-compete, so the answer in the beginning was no. But when we then checked the contract and figured out I didn't really have a non-compete, the door was open. And then I took the step.

Emotionally, a little bit difficult, but the right decision, I think, for everybody. I think for Puma, for Adi, and for me. Now, you wear only Adidas clothes for the moment. What have you done with all your Puma clothes? Well, it's not only mine. I have three sons who have been in Puma for 10 years. I have a wife and also extended family that has only worn Puma.

So I tell you you there was a lot of product but what we did is that we gave everything to different organizations and then to our kids who could give it to their friends so now when all the friends of my kids come to our house they all wear puma which i don't really like but I'm guilty of it. So I think we gave away, I would say, 90% of the product we had to people who needed it. Now, the story, the kind of the rivalry between Puma and Adidas is a pretty fascinating one, right? You're both in a small village. It came from two brothers who competed.

Just give us a quickie on that one. Well, it comes from the father. I mean, it was the Dussler, you know, back in the 40s who had a shoe factory. And then the two brothers, you know, started working for him. And then during and after the Second World War, they didn't find together as friends anymore and they separated. didn't find together as friends anymore and they separated so Puma was founded in 48 and are in 49 and since then they were big competitors And I think the interesting thing is that in this small little dwarf as you call it Hudson out of the Professional sports industry was actually born. So if you look back to everything that happened in the 50s, 60s, 70s, 80s, it was basically

Adi competing against Puma. And as you said, they were two brothers and very emotional and very, very many stories, of course, what that did to this Moldorf. Many actually funny stories, but also bad stories. And then only later, you know, the Americans with Nike and Reebok and other brands came on. But this is where the sports industry was founded. And I happen to be so lucky that I've been the boss of both. I'm not sure what the Dusslers think about me, but, you know, it's a big thing to have experienced.

And I'm actually very proud of that. So Dorf is a German word for for village right so do you do you kind of do the adidas people and the puma people go on different side of the streets or uh like how split is did you eat do you eat in the same restaurants or are you like how does it split the village it used to be very split so you know it was a river that split between puma and adi and it was as i said split between Puma and Adi, and it was, as I said, very serious. There's many bad stories about that, actually. I think today it's different. You know, we have about 5,500 people here.

I think Puma around 1,500. Ironically, many of those have partners working for the other brands. So it's not as tense as it used to be and and you know to be very honest with you i'll rather have a puma be successful than an american company so as as competitive as we are i think we are friendly competitor and and when i was at puma i was also very close friends with many people at audi so i i think the stories are better than reality to be honest. It's now kind of common sense and we all behave like people should be with respect.

And as I said, many of us are friends. Yeah, yeah. Well, if we look at the reality, Adidas, before you took over, had some difficult years. And actually, when you took the job, the share price went up by 30%. And I think some people call it the golden opportunity after your surname. So what happened during those years? Oh, it's a long story.

I think that Adi had everything going for them, you know, through the 17, 18, 19. And then I think, you know, COVID and a lot of things that changed, the world didn't really fit, I would say, the strategy. And I think ARRI was slow in reacting to these changes. You know, China going down, COVID, the Russian war, and the whole, what should I say, D2C going straight to the consumer on a very aggressive sales plan and also, I would say, aggressive profit plan didn't really fit the landscape. Then you lost the cooperation with Kanye West, the Yeezy business.

And so there were many things that happened at once that then took the company in a difficult path. And I think they lost focus. My job is to bring back the old RD DNA, which is, you know, to be the best sports brand, you know, to mirror performance with street culture and be very, very focused on product marketing and the consumer. And that's what we're trying.

And as you know uh on powerpoint everything is um is easy but you know we deal with people and it will take a little bit of time but i think we already now see that we're on the right track and i'm extremely optimistic about our midterm so let's advise to people who take over a company like that what's the first thing you do when you get a new job um i think i mean mean, by me, an art is a little bit different because, as you know, I've been here before and I've followed the industry my whole life. And I'm a sports romantic. So, you know, I think I knew the company from the outside very well and then, of course, the industry. But I think in general, you know, most businesses are people business. So when you look at all the numbers, which you, of course, have to do,

you also then need to look at the people and find out very quickly who the key people are that you can trust and then form your team and then together with the team start to attack the issues. I think that everything which is consumer oriented is extremely dependent on the people. And that's why I always say that my biggest role as a leader and coach is actually HR. I mean, to work with the people, that's the most important. Björn, what's the key to build a strong sports brand? Oh, I mean, first of all, you need to make sure you have the right product on the performance side so

you have the right you know technologies and the products that people can actually perform right now as you can see you know we had the right product coming out of the women's workup which we won with spain that's why i'm wearing the women's shirt for spain that's good um if you have running shoes you need to make sure that you have the best technology there and so forth. And then, of course, you need to have athletes and teams and federations who gives you the exposure.

And then to make money, you need to translate that into lifestyle. You know, the lifestyle market and the street market is much bigger than the sports markets. You need to combine both. And there you need to connect to what we call street culture, connect to whatever the, what should I say, young people around the world thinks is relevant,

both from a direction on the product, but also working with influencers and entertainers and people that are relevant for that consumer group. So it's like it mirrors a lot of what is relevant for people around the world, if you know what I mean. It's like you need to be visible, you need to have a message that is what's important and relevant, and then you need to be very close to consumer demand and changes in demand. So I always say that everything we do in sports and culture is relevant all over the world.

So we need to be on the, what should I say, the things that are happening around the world to be part of it. And that's why this industry is so interesting. How do you pick these ambassadors and athletes? Well, mostly by, of course, following the advice of the people in the markets um and and be very close to what is going on in sports is of course to try to pick the athletes female or male that are the best but also have a personality and when it gets to influences in general it is to find out who has an impact in the different markets that might

be very local I mean it might be a what should I say a pop brand in Korea or it might be a designer in Sweden and there are many many what should I say variables but the key of them is to listen to your people and listen to your consumer you cannot decide what is relevant for the consumer. You need to pick up trends and then commercialize it. So you need to be very, very close to the markets. But sometimes the disadvantage of going with the big names is that sometimes they become very dominant and you kind of had this issue with Kanye West.

So what happened there? Well, this is before my time. I think Kanye West is one of the most creative people in the world. And, you know, both in music and what I will call street culture. So he's extremely creative and has, together with Adi, you know, created a Yeezy line, which was very successful. And then as creative people, you know, he did some statements which wasn't that good. And that caused Adi to break the contract and withdraw the product. Very unfortunate because I don't think he meant what he said. And I don't think he's a bad person.

It just came across that way. And that meant we lost that business. One of the most successful collabs in the history. Very sad. But again, when you work with third parties, that could happen. And it's part of the game. That can happen with an athlete. It can happen with an entertainer.

So it's part of the business. Yeah, we are seeing it in many industries. We are seeing it in the spirits business with tequila vodka and so on as well no comparison i don't know um what are the technological trends that you're seeing which you're excited about in in your industry well the product side is, of course, on the running side, it's been lighter materials and it's been this famous carbon plate that you put in the midsole that actually triggers you to run forward. So the shoe itself has some energy.

That's why, you know, both on spike shoes and running shoes, you see that times are improving because of technology. Lighter materials. And then you will see, and I'm starting to see, a lot of sustainable materials. And then you will see, and I started to see a lot of sustainable materials, you know, materials that doesn't come out of oil or anything that damage the planet. So a lot of innovation on that side. And then when it gets to innovation in general,

you know, when it gets around those, then of course the whole digital space, you know, e-com from a channel, you know, which 15 years ago didn't exist, has been huge. And also digital tools like artificial intelligence and all kinds of simulation tools that we can use to help us run and improve the business. But in the core of it, it's everything that has to do with materials and the product itself that is mostly important for us to be honest. How do you use AI? Oh, it takes over a lot of functionalities where we used to have a lot of people.

I mean, writing product text, for example, making sure we optimize pages pages that we optimize marketing tools and that is also starting to what should i say be taking decision making product when it gets to product launches volumes but but but you can't use only artistic artificial intelligence then when you when you do that you also need to use a little bit your human intelligence. So it's a combination. It's a tool that can make yourself much more efficient and take subjectivity out of many decisions.

And it can also do a lot of, I would say, repetitive tasks in a better way and save both time and, of of course cost. Now in sports, but also in business, speed is a mindset. And you say that speed is becoming more and more important. Why is that important?

Well, first of all, because things change very quickly. As I said, over the last three years, we've had a pandemic, which none of us have experienced and none of us learned in school or in life how to deal with. So I think speed and flexibility was enormously important then. Then you had the freight crisis in the sense that both supply chains got 10 times more expensive and certain producing markets shut down. So your whole supply chain was changing.

And then you had markets that were shut down because of COVID or other reasons. So the speed to have an organization that see what's going on and then can react is more crucial than ever. And I always say that when the reality surpasses your plan, your plan is not relevant anymore. So it's extremely important with speed and having both people and processes that can take decisions based on facts and also a certain degree of intuition. And how do you get the speed up in an organization? People.

And how do you do that of course it's it's it's uh i i these are the many different opinions about this but i i believe in a more decentral organization because i think markets move in different phases the differences between china and the western world for example on consumer taste and and things has become much bigger the differences between us and europe has become bigger so you need to make sure that you work in a matrix that is more locally focused than the old what should i say hierarchical central organization and then give people the tools and the feeling that they can make decisions and and ironically with all the tools you have, people get even more important in a situation like that. So I look at the organization as an organic thing that changes all the time, that is multid people that are able to move in a matrix and

can actually, what should I say, make decisions or help in decisions without having a one-dimensional hierarchy. If you are a person that needs only one reporting line and very, very clear defined rules that you have in this industry. And I think consumer product in general is not where you should be. But Björn, isn't this slightly at odds with German corporate culture? No, I'm not joking, but you're talking about speed and agility. When I think about German corporate culture, I think about Ordnung Hierarchie Process Systems. Yeah, but you have to remember here, I think about Ordnung, hierarchy, process, systems.

Yeah. But you have to remember here, I'm sitting in Germany, but I have 120 nationalities on campus and I'm trading in 160 different countries. And I say that the office here in Germany, the office we have in LA and Portland in the US and in Shanghai, some of those four offices is headquarters. So I don't look upon this as being only one headquarter. And since the headquarter officially sits in Germany, we are a German company. We are a global company that happened to have roots in Germany, but we're not a German company. So I think that would be the answer. Do you make fast decisions?

Very. Is that good? Yes. It's not bad. decisions very is that good yes are you too fast sometimes yeah yeah i am so what's the what's the advantages and and disadvantages of being fast versus well i think the advantage is if you have a leader that is on on on par with the with what's going on and you have, you know, your people around you, you together can make fast decisions. Of course, the problem in the beginning is that if you have a leader like me who gets very much involved in the beginning, you could make people uncertain because you're pulling a lot of a decision to yourself. And that's always a balance. And when you make decisions, you're not always right, right? But I always say to people, I'd rather have you make a decision and be wrong than not

making a decision and only wait. I don't need people who wait. So I think that making decisions based on the facts that are there and certain intuition is better than asking for another meeting. I hate ending a meeting with another meeting. I don't like that. Yeah, no, I agree. When I met you in person, one of the things that really struck me

and which I really liked with you is the absence of bullshit. Very truth-seeking, very honest, very transparent. Why are these things important? I think that has to do with personality, but I think also experience. I've been in this industry so long and I've done many mistakes. I think I have certain confidence that I'm not afraid.

Being honest has to do with also having a certain confidence. I don't need to act or play something I'm not afraid. Being honest has to do with also having a certain confidence. I don't need to act or play something I'm not. I am the way I am. And that's why I'm never tired of my job because I can be myself. And I think that's a huge advantage that you don't have to act to be something you're not most people i know that gets into you know burnouts and having problems are people that think they have to act in a different way than their personality and i've been very conscious all the time that i am the way i am with the strengths and the weaknesses and and try to make you know people understand that that they can deal with me it doesn't matter if you are the lowest on the hierarchy or the highest.

I treat everybody the same and they can treat me as a colleague. The only time when hierarchy counts is when we disagree. Then I have to decide. The less decisions I take, the better it is because then it means that someone else has taken the decision that I agree with. Do you think this learning from mistakes and seeking the truth, is there a link to sports and to performance culture? Yeah.

I mean, if I can find an ex-athlete, male or female, that also has the education or is interested in the topic, then I love to hire them because athletes are used to pressure, are used to compete, and that is things that is very, very important also, at least in our industry. So I love to work with ex-athletes. I had never thought about what you said about the burnouts and it's maybe people who are pretending. Would you mind just elaborating a tiny bit here?

No, I think that, you know, to act like you are something that you are not, meaning that you go to work and you have to be a different person because you think you need to be that cost a lot of energy. And I think many people are led into different cultures by believing they have to be different than what they are. And that's why they get into burnouts. I think if you can act the way you are, of course, serious and also with the knowledge, but you don't need to play a different person i think you you save a lot of energy and and life is easier in our jobs at least in mine is like it's not really a job it's a lifestyle i mean i i am uh you know ceo of adidas 24 7 um and and i live that role you know and and and as long as i feel i can be that with my personality i will i will i will

do it and be that person um if i feel that i don't fit anymore or then then i will quit because uh i i think as a leader when you've done it for a while um changing your your way of doing business i don't think it works and i think your credibility in the organization, when they feel that they can treat you for who you are, makes things much easier. I heard something about you sharing your personal telephone number with all the employees in the beginning. Yeah. Is that right? Correct. Correct. Yeah. So how many people did you give it to? 60,000. you give it to her? 60,000. How many calls do you get? I mean, calls and text messages and WhatsApp, many. But I think this, I mean, my point is that they should have access to leadership. And if they have something which is important, they should be feeling comfortable going direct.

So I get, I would say, you know, a couple of hundred direct messages every week that I try to respond to in one shape or form. Or I take the topic that they raise and then addresses it in a town hall. And I try to, yeah, I mean, you see from the things that you get directly to yourself what is important for people. And I try to bake that into the messages that I give back. I also do town halls for all the 60,000 every month where we go through the previous month. When it gets to performance, we talk about what the issues are and at the same time then take some of those topics that comes up through the direct contact and bring them up. So it's a way of having people understand they can go straight to the boss without having to be afraid of someone else seeing it. I mean, you know how people are.

I love it. I love it. I love it. Now, when are you in the flow? When do you thrive the most? When do you feel, gee, I'm so lucky? I'm so happy. 24-7.

It's like, you know, to be honest, being the CEO in this company and in this industry is amazing. I just landed from Sydney yesterday having won with Spain the Women's World Cup. And I'm after this call flying to Budapest to see Carson, although he's in Puma winning the 400-meter hurdle. And that's part of my job, right? And being in the middle of sport, street culture, fashion, working with, as I said, 120 nationalities on headquarters,

50% men, 50% women. I don't think there's a better job, to be honest. So I don't know if that's calling the flow, but I'm very happy where I am. Well, I would slightly disagree with you. I actually think I have a better job, but hey. But it's true. When you have fun, it's not a job, right?

It's just a... but you know we are privileged because we've gotten there because we have done many things that um that we thought were fun i don't think you get to the top either in sports or business if you do things you don't like i always say that an athlete to our world class has to do 10 to 12 14 000 hours of practice and you can't do that if you don't think it's fun you know and the criticism on athletes because they only do it for money and all that that's not true because to get to get the money you have to love it you know and i think it's the same in work you know it's like i mean you smile and laugh a lot because you like what you do but you also done a lot of things to get there that you like, because if not, you wouldn't be there.

And I have all my career done things that I enjoyed. And I really believe that if you don't like your job, you should do something else, because life is too short to kind of work against your joy, if you know what I mean. You also like skiing. Yep. You just had an accident.

A couple of months ago. Skyvrenna. And I crashed and broke my shoulder. Correct. So what is your attitude to risk? Oh, that's a good one. Personal risk, high. good one. Personal risk, high. Business risk, I would say average in the sense that I would not gamble with a business that I don't own, if you know what I mean. I act as a CEO of

a public company, I act on behalf of the shareholders. So I tried to put myself in the role that I'm actually dealing with your money and that's why my my risk profile is less on on on my job than it is private what do you read very little um i have to be honest with you that i i'm not calm enough to sit and read a book um and and i much rather be with people traveling, being at different events, and getting, what should I say, my lesson and education by being with people than reading texts. Of course, when I studied, I had to read. But lately, I read articles, and of course, I follow media very closely on the industry

and sports, and I would say the world in general but i currently do not read books because i can't sit quiet for long enough time i really appreciate you've been sitting so long already no but now we're speaking so it's uh it's a dialogue but reading a book is like i i tend them to get on my phone or or watch a little bit what's happening somewhere else so i'm not calm enough what do you watch do you watch anything else in sports news sports and news nothing else why but i have to i have to tell you a book because it's it's um it's maybe old-fashioned but the book that um there's two things first of all in school the most important thing i learned is accounting because i think when you know accounting and you do understand

how to read a balance sheet or you know if something is expense or capex and what is cash flow and what is P&L when you do understand those things no one can bullshit you so the most important thing advice I say to my kids even if they're interested in marketing understand accounting because it's the base for everything if you don't understand accounting, it's difficult later to understand why things are the way they are. So that's advice number one. Advice number two is that I'm so old fashioned that the best book I read was, you know, Philip Kotler, The Basic Principle of Marketing, the four P's because they are as relevant as they were then. And the four P's is

always when I think about it, the most relevant things when I look at a business issue. We call it different things, but I think he boiled it down in the four pieces very well. I think it's interesting because we always ask people, what is your advice to young people? And learning accounting, it's the first time I heard that one. I know.

But it's because when you understand a balance sheet and you understand a P&L, every decision you're then making, you understand the consequence of those. So it's like, it's difficult to bullshit someone that understands the accounting principles. And there's many times that marketing or salespeople are getting manipulated by finance people because only the finance people know the consequences. And people are always surprised by me that I'm very quick when it gets to the accounting side of it because I learned that very, very properly. Well, Bjorn, it's been tremendous to have you on.

You are doing great things with Adidas. We very much look forward to tracking your progress. And big thanks for being on the podcast with us. Take care. You too.