Transformation Is an Era, Not an Event

When I arrived at Liz Claiborne, in 2006, I wasn’t expecting to lead a major transformation. The board had hired me to make sense of a swollen portfolio of mainly wholesale brands—more than 45 in all—and everything suggested a “realignment” opportunity. But in my sixth month on the job, the business teams came back with news so bad that we had to issue earnings guidance below consensus by 65%. Mere tweaks wouldn’t save us; transformation was the only course. Focused on that work for seven years, my team and I came to realize that we weren’t alone. The reinvent-or-die challenges that used to be rare catastrophes in business have practically become the new normal—but without much direction about how to meet them. So we started compiling what we found to be the truths of transformation. We’ve outlined at least 10 so far, but a number of them relate to one big lesson: Don’t think of transformation as a shocking but short-lived moment in a company’s history. It’s not an event—it’s a whole era. People view Steve Jobs’s second tour at Apple as a quick turnaround, and actually it was. But it played out from 1997 through 2006, and no single step was decisive. When you expect transformation to define an era, you manage it differently. First, you figure out how to sustain a vision, knowing that month-to-month realities will have you tacking this way and that. For us, the transformation consisted of off-loading 20 brands and concentrating on Kate Spade, Lucky Brand, and Juicy Couture—the three with the greatest potential to hit it really big. That entailed moving to a direct-to-consumer strategy for each of the three, building out stores, and developing a solid in-house e-commerce capability—all complex undertakings. Keeping our eyes on the prize meant reminding ourselves constantly that we were engaged in building a blockbuster. At the same time, you resist being an ideologue. The biggest transformation flops the business world has seen were the result of believing in fairy tales. Take JCPenney. In 2012 its managers embraced an ideology: Consumers prefer consistent pricing over constant promotions, and by deemphasizing house brands, JCPenney would attract higher-end consumers. A compelling philosophical argument can win people over in the short term, but in a long-haul initiative it eventually confronts reality. And reality always wins. Two other truths we discovered about embarking on an era of transformation: You should prepare people to see things get worse before they get better (especially because early moves—which will be assessed according to the metrics of the legacy model—will appear more mistaken than they are). And you must take a fresh look at the people you’re relying on. Accept that not everyone is cut out to thrive in conditions of ambiguity and adversity. Recast your team to be transformation-tough. Prepare people to see things get worse before they get better. And take a fresh look at the people you’re relying on. Now, if only you could do the same with your board! Directors, more than anyone else, tend to view a transformation as an event with tight boundaries that has been precipitated by a crisis (even if the trouble developed over years). The directors usually just want the pain to end. In this I was lucky. Our board held true even as the name of the company changed (it no longer owns the brand that started it all), and as a result we succeeded in building a true blockbuster in Kate Spade. Your board may need more instruction in the truths of transformation. But if you can all settle in to what is bound to be a long learning process, you’ll survive to ring in a new era.

Transformation Is an Era, Not an Event

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