How to Reinvent a Legacy Brand—and Win

In 1979, Lew Frankfort was working for the New York City government when he had the opportunity to join Coach, then a niche leather goods manufacturer. Despite knowing nothing about the fashion business when he joined, during his 35-year tenure at Coach he rose to CEO, grew the business from a $6 million organization to a $5 billion iconic brand, and learned how to value his personal health and wellbeing—all of which he chronicles in his upcoming book, Bag Man. In this HBR Executive Live event, Frankfort shares his story of building a customer-centric business and how Coach’s “magic plus logic” philosophy created the accessible luxury category that countless brands now chase. The transcript of this live conversation has been lightly edited for length and clarity. Today, I’m joined by Lew Frankfort, who, for nearly 30 years, was the CEO of Coach. Lew is also the author of the upcoming book, Bag Man: The Story Behind the Improbable Rise of Coach. When Lew stepped into Coach, knowing next to nothing about fashion, few could have predicted he would spend the next three decades basically redefining an entire industry. His journey from the son of a New York policeman to being one of the world’s most respected CEOs offers rare insights into the messy, exhilarating reality of building a legacy brand. So, Lew, thank you for joining us today. Glad to be with you. So, Lew, you often use the phrase “magic and logic,” the two aspects to put together to run a company successfully. How do you know when to trust the magic and when you have to stick to the numbers? It’s never one over the other. There’s logic in magic, and there’s magic in logic. You need to take a 360 view of the business, which includes consumer, product, brand, and understanding the marketplace. So when I talk about magic, I’m thinking of words like bold imagination. You need to be able to envision and design things that do not yet exist. You also need to have belief, a passion for the undertaking while honoring the past. Immersive curiosity is another key quality and, of course, instinct and the ability to hold antithetical views in your mind at the same time. And on the other hand, the science is the rigor, the collaboration, using data analytics, consumer research, adapting to changing circumstances, and also having a mindset that thinks about the greater good, beyond an individual area or a person. Coach, under your leadership, was prized for thriving on consumer insight. What was it that you understood about customers that your competitors just didn’t get? Well, I always believe that I was in service. So when I was in city government, I spent 10 years in social services, and in the last three-plus years, I ran Head Start and daycare child services. I felt that my clients were the children and family, and it was my responsibility to try to understand their needs and wants, and to what extent could we address them within the programs: educational support, nutrition, learning. And when I went to Coach, not having really an understanding of business, what became very evident to me was, when I had an interview, actually, on my way to joining Coach, I pretended to be a Businessweek reporter and I called a variety of buyers and merchants and asked them, “Tell me about this small brand called Coach.” At the time, the sales were $6 million, and we were largely a Northeastern brand. And what I heard was that people loved Coach, that people really felt an attachment to it. And what stuck with me was one comment that a shopkeeper made, saying that it had a cult following. What I took away from that was that Coach was beloved, and trying to understand what made it beloved was important. So listening to consumers is really the way I began my journey at Coach, being consumer centric. Consumers are smart. You never should be complacent. And one of the things I think about through today is that you really need to understand the consumer’s journey. You need to start by understanding where consumers were, where they are today, and where they’re traveling tomorrow. And wherever they’re traveling is the place where you want to meet them, whether it’s in one year, three years, or five years. We developed a variety of entry strategies into other markets, as well as growth initiatives based on consumer trends. Talk about how you figure out what the customer of today is going to be doing in the future. How did you glean the signals that allowed you to make fairly confident bets on where you needed to be one year, two years, five years down the road? Now, it varied based upon the market, on the persona of the consumer you were targeting. But in general, what we did was develop a baseline, in terms of attitudes and beliefs, as well as behavior. And then we would monitor changes. So as an example, when we decided that we were going to enter the Japanese market, we really focused on what we thought was considerable white space. And where the white space came from were young men and women, particularly women, who were really now focused on careers, rather than getting married right after college. They were joining the workplace. They wanted to travel. They wanted to understand the world better than, perhaps, their parents did. And there was an emerging professional class of young women, and they were not able to afford the European luxury brands. We offered them an alternative product that was excellent in its craftsmanship, materials, in a high-level service environment that was enhancing for the brand, superior customer service at 30% to 40% of the price of the European luxury brand. What that enabled a young woman to do in Japan, upon graduating from college, was buy a Coach bag. And with the savings, she could go to Korea or Taiwan for a weekend, cover the airfare and hotel. And we really built a multi-lane highway and became the second largest brand in Japan in accessories, which continues through today. I talked to the beginning about how you had come to Coach without extensive knowledge. You were, as you said, in city government, without extensive knowledge of the industry. And I said that almost as, how surprising. But there’s something to be said for that, where if you come in and you bring the kind of energy and curiosity that you’ve even described today, that maybe that’s a smart approach. Bring in people who are active learners, who are a clean slate, who don’t have any bias about the industry. On the other hand, there’s a steep learning curve, I’m sure. So how do you think about that? Was it a value to come into this business without deep knowledge, without preconceptions? Well, if evidence or if success is a measurement, the answer would be yes. I will say, I had no predispositions, and I saw it as a blank canvas. And I will say the founder of Coach was fanatical about building an excellent product and making it available to consumers at a price that would be perceived as value. And with that came my view, when I joined Coach. The best way to express that was by eliminating barriers between us and consumers. When I joined Coach, as an example, we sold virtually to anyone who paid their bills. And at the founder’s initiative, I started a consumer catalog business. And this was in 1980, and we did really well. A year later, we decided that we would open a Coach store, a full-price Coach store. And among American brands who were manufacturers, typically, they sold through third parties. And we were early, very early, and we opened a store in 1981 on Madison Avenue and 64th Street. And the short answer is that we had lines outside the door during Christmas, all the way down to the corner. And it was a remarkable moment for us, because we realized that there was a lot of unmet demand and a lot of interest in the brand, and that led to Coach becoming a truly multi-channel business. Today, they’re called omnichannel businesses. Lew, in your book—and HBR is the publisher of the book, full disclosure—you’re very frank about some of the personal challenges that you have endured. You admit that a fear of failure, animated, drove you, even after you had achieved what any of us would define as considerable success. How do leaders cope with those emotions, those fears, and do their jobs, without letting it eat them alive? Well, when we talk about fear, I was always driven by a drive for excellence and a fear of failure. And the fear of failure never allowed me to be complacent. So even when we reached milestones and had levels of success, I kept thinking about, how do we maintain that success and how do we reach the next level? If you only have fear, there’s only three things you can do. You can fight, you can freeze, or you can flee. And that’s why fear alone is a disabler. You cannot operate out of a sense of fear. Having a healthy dose of fear while driving for excellence, I think, is a very forceful combination. When we talk about, how do you handle fear, it depends on the individual. And what I learned over the years is to listen to my body. And when I was feeling stressed, I realized that it would manifest in different ways, backache, lack of sleeping, sometimes even a feeling of a loss of mojo, a loss of confidence. And what I developed was a series of things that would allow me to both reset myself during the day, as well as longer term, to renew myself. And while never perfect, because I did have depressive episodes starting in the ’90s, it enabled me to recover and understand that I really could recover. So things like exercise, absolutely critical. I engaged in meditation. I still do that, of course. I do also really believe in therapy. And way back, even in the late ’80s, we had executive coaches at Coach, and they exist there through today. And when we talk about executive coaches, generally speaking, they’re licensed psychologists, and they are able to really understand the human condition. And I went through a lot of 360 interviews, a lot of group work, individual work to help me become a better version of myself. And I think that helps. I think that’s fantastic. I think that still, some of these things you’re talking about are areas that people in the C-suite, the CEOs, aren’t necessarily comfortable in talking about. And yet when we do a session like this on wellness or happiness, it’s the most subscribed thing we have. So there is a need for this, I think, to have people like you just talking honestly about the path they’ve been on. It’s really helpful. So thank you sharing that. Life is not always a bowl of cherries. Exactly. So you led Coach when it was not publicly listed. Then you were there after the IPO. That must bring its own sort of tensions, right? Talk about how you had to adapt. You’re running a business. Suddenly, the emphasis on the short-term result is magnified, multifold. How did you handle that pressure and lead the company for the long term, the way you thought it needed to be led? That’s a great question. And I will say, one of the things that attracted me to Sara Lee, when we were owned by the founder, I participated in the process of selling the business. And Sara Lee was one of the companies interested in Coach. I was attracted to Sara Lee because they were a publicly traded conglomerate, very large, over 100 businesses. So they were very decentralized, and I felt that if we became part of Sara Lee, I would learn how to be rigorous, in terms of financials and analytics. They have a philosophy: What gets measured is much more likely to get done. And we got report cards every month and every quarter. So over the 15 years we were with Sara Lee, we developed a very strong set of disciplines to understand every key metric of the business and to anticipate things that could go wrong, based upon trendlines, even if we were beating plan, even if we were having same store growth that was significant. We looked at early indicators, middle indicators, and their like. So going to Wall Street was not something that was really strange to me. That is, being accountable based on a set of metrics that either are people’s expectations, investors’ expectations, or guidance of what we would provide which was the way in which we lived our life. In fact, when we went public, I said to my team, “This is a marathon, and we really need to treat each quarter as a lap, one mile on a marathon.” And after five years, we already had completed 20 laps. And I said, “Well, it looks like we’re in an ultra-marathon, and we need to predictably be deliver.” And fortunately, we were able to do that successfully, all but a few quarters during my 14-plus years as a public CEO. So I want to go to an audience question right now. I don’t think there’s a name attached to it or a place, but this viewer wants to more about how to build a customer-centric culture. To what extent did that exist before you came? And you’ve talked a little about this, but what’s your advice for, how do you create that kind of culture? First, it needs to be embedded in the leadership team. So, in very early days, I brought in a senior person to oversee consumer insights and research. This person was a direct report to me. And this person also participated directly with each of my individual leaders. It needs to start at the top. You need to be consistent. You need to have standards. And I do think you’re looking for people, also, on the leadership team who can hold two antithetical views in their mind and see the merit of both. You’re looking for staff that are curious, that are never complacent, that are really looking for the greater good, who are really open to changing their views, to the extent they have a position. You want to avoid recruiting or bringing in hard-wired narcissists, because that’s a real challenge, working with them, particularly for the staff below them and the staff around them. So here’s another anonymous question that’s come from our viewer, and this gets back to the conversation we just had about challenges and about mental health. And this person says, thank you for speaking so openly about all this. But the question is, did you discuss your mental health challenges with your leadership at the time, and do you recommend being open about mental health at work, with your colleagues, with your employees? That’s a great question. Let me break this into a few different parts. I developed cancer in 2003, when the business was really roaring, and I felt, naturally, a fiduciary responsibility to share that with my board, as well as my senior leadership team. With regard to my own mental health, it became part of our work with executive coaches. I did not, though, at the moment, during my depressive episodes, openly talk with my team about it, with the exception of my HR head and one or two other people who I confided in. I basically did not. However, in my later years at Coach and since Coach, I’ve been very open about it and believe that organizations can flourish better if they understand the human condition. No family, no individual is exempt from fear. Most people are aware, there’s ups and downs, and there’s a lot of things one can do to mitigate against that. Helping people understand that you’re not alone is really critical. And showing vulnerability, I always did. So people always knew I had a fear of failure. They got it, and I talked about it, and I talked about their own fears with them. I also provided guidance to people who I felt were in a bad place, or heading towards a bad place, or informed me that they lost their mojo. And I said, “Well, let’s talk about that, so that you can get it back.” And that would lead to a variety of recommendations that I would make, which would include, in many instances, to actually consider therapy, consider medication, in addition to self-help, like power naps, I mentioned exercise, meditation, massage, acupuncture, and the like. It’s hard to give advice. Different companies, different cultures would be more or less accepting of that kind of openness. I have to tell you that sharing is everything. You think you’re the only person with an issue. And if you’re able to raise it, suddenly, you realize, everybody’s got something, and there’s something very humanizing that helps build teams, that helps build understanding. It’s really liberating when someone can say, “I need help.” And they say it to someone who looks at them and they see the empathy and they care. And you give them a hug, if that’s what’s warranted. But you give them the level of support, and you leave them with a sense that there is hope and there is possibilities. And that’s really important. People cannot go at it alone. It seems like you surrounded yourself with good people and created cultures that were healthy. In the book, you talk about some of your hiring techniques. And I’d love to hear you talk a little bit about how you did it and what was behind your thinking. As you were thinking of hiring a key person, how did you go about the process of figuring out if they were right for the job? I was looking for—and I continue to be active in business, although I’m not 24/7, like I was at Coach. I’m more of an advisor and mentor in select companies, where we have investments, and I do some pro bono work, of course, in the not-for-profit world. I always focused on values and capabilities. And in order to understand someone’s values, you need to really do an immersive interview, and you really need to try to understand, within the course of 90 minutes, 60 minutes, two hours, or perhaps two or three interviews, who that person really is, what motivates them, what are their limitations, what is their vision for themselves? How would they work within an entity? So in terms of values, I look for, obviously, a strong work ethic, but I also look for optimism, a belief in possibilities, clearly, a sense of integrity. Curiosity is a huge, important—what I consider a magic quality. Everyone’s curious. Immersive curiosity or an unyielding curiosity. I also look for people who are purpose driven. And what I mean by purpose driven, well, motivated by belief, belief in something, belief in an idea, belief in a product, a belief in others. Through an interviewing screen that I used, I identified 60 or 70 different attributes, and I did a ranking of them, 1 to 10. And I would say to people, “I’m going to ask you a lot of different questions. And what I’d like you to do is, tell me as honestly as how you would rate yourself. And generally speaking, 10 would be the highest and 1 would be the lowest.” What I would look for would be clusters and outliers. And I would also look for inconsistencies. And I had a method of going back and checking through other parts of the interview. So if someone said to me that their financial acumen was an 8 and I was recruiting someone who was going to run a division of Coach, I would ask them, “What would it take to get to a 9?” And they would tell me. And sometimes, I would say, “I don’t really understand.” And then they would show me a vulnerability. In a different vein, obviously, many people are nervous during interviews. Many people, inherently, are very talkative. And if people are really talkative, it’s really hard sometimes for them to be good listeners. And good listening skills is really critical if you’re part of a collaborative environment, which Coach always has been. So if someone was very talkative in the first parts of the interview, I might ask them, “On a scale of 1 to 10, if 10 is loquacious and 1 is taciturn, where would you rate yourself?” And typically, when pressed, they would say, “I’m an 8 or 9.” And another question that I might ask, 15 minutes earlier or afterwards, I would say, “What are your listening skills?” And they might say a 10. And I would say, “I don’t understand how your listening skills can be so good, since you talk a lot. And even in the interview, you interrupted me a few times.” It helps me develop an understanding of where the person has vulnerabilities, where the person might need coaching, watch-outs for us, or also how we might complement a senior leader who may not be that conscious of some of their areas where they really need strong partners. Well, it’s a good test of self-awareness, too, obviously. And if you ask if they’re loquacious or taciturn, how do they do on their SATs is really what this is getting at. So you say you’re hiring people who are curious. You’re trying to find people who are adaptable, right? To what extent did your own leadership style change over the decades, that you were in the CEO role? Well, when Coach was a small company, I worked very closely with the founder. I started the direct-to-consumer channels, and he left the day of the sale, and I became CEO. I might add that at the beginning of the sale process, he said to me, “I’d like you to stay around and help me sell the business. And even though you’re not yet qualified to be CEO, I’m going to recommend you to be CEO, because I want to leave the day of the sale, because I will not work with anyone.” And with that encouragement, I helped him find Sara Lee. In my early years, I was able to do it largely by myself, with a strong team. But as the business became larger and more complex, it became clear to me that I needed to bring in domain experts, people who knew more about their functional areas than I could learn. And these are people who are seasoned and who grew businesses, who scaled, who lived through adversity and demonstrated an ability to adapt. With these strong leaders came a responsibility for me to empower them. And over time, I learned that the best way to lead is through collaboration and empowerment with accountability. Earlier, I operated largely on persuasion and telling people what to do. And that doesn’t work when you’re building a very high-grade team. As for my own style within meetings, as I learned more about what made me tick, my self-awareness grew enough—if I was getting agitated, as an example, in a meeting, rather than just express that by saying, “You’re not prepared,” or “Let’s end the meeting,” or “Get back tomorrow,” I would think about what the intended outcome would be, and I would also be focused on the nature of the person and how they could receive the feedback in the most effective way. And that also reinforced the whole approach to executive coaching that is an important part of Coach through today. I want to go to another live viewer question. It’s also anonymous. Are all of the questions anonymous? Well, they don’t have to be, but people are preferring that, so there you go. I know, it’s fun to figure out who’s asking the question, where they are, who they are. But that’s OK. All good. But it’s an open-ended question about the brand. So brands are these sort of magical things that are out there, and yet they have real, tangible value. I used to work at Time magazine, and it was said that the most valuable thing we had was that red border. There’s just some magical brand associations. So the question is, how do you think about the value of brand, I guess, as opposed to just running a business? And what factors go into that valuation? Well, when I think about brands, I think about images and associations that people have in their minds. And to the extent that these images and associations are consistent and held over time—and time might mean from one generation to the next. You have a brand, and that brand has identifiable characteristics. When we think about brands, we think about underlying equities—belief in the company, trustworthiness, the product does the job. Then you get to foundational or functional equities: good value for the money, it’s durable, it’s lasting. It’s easy to find the product. The highest level on this triangle, of course, is the intangibles, the emotional attributes. And that’s where the worth of the brand is. And I can proudly say, through multiple transformations that Coach has gone through during the decades since it began, Coach is a legacy brand. It resonates in the hearts and minds of consumers around the world. And it’s hard to kill a legacy brand. Not impossible, but hard to kill. It can withstand, perhaps, bad management. If the essence of the brand is there, it can be restored. It can be transformed. What’s also important to understand with brands is really, you need to focus on consumers, where consumers are and where they’re traveling. And you need to really meet them where they are traveling. That’s interesting. I think scaling a brand, I guess, if you do it recklessly, can probably destroy a brand. Scaling and diversifying, I guess. So I’d be interested in your opinion. What’s the smartest growth decision you’ve made and what’s one that you regret? I think the smartest decision I made—and I wasn’t alone in making the decision, I was a catalyst for the decision—was taking Coach public, liberating Coach so that they could realize its own destiny. As we scaled within Coach, within Sara Lee, over the 15 years particularly, and when Coach reached the level of few hundred million dollars in sales and we were already an international brand, it was obvious to me that we would need to recruit a team that would require an organizational structure that was inconsistent with the way Sara Lee division companies were allowed to organize. Specifically, I needed to bring in a chief creative officer, and there were a lot of arguments that I should have a chief marketing officer. That was a standard back in the ’90s and ’80s, and I said it wasn’t working for me. Over time, it became clear to Sara Lee that Coach would do better on its own. I might also add that I had an opportunity to be CEO of a large, major British brand at 2x to 3x my compensation. And I loved Coach, and I really did not want to leave Coach. But it also opened up Sara Lee’s eyes to what is really required for Coach to become a global brand, and that was freedom to operate along the lines that are required to achieve its potential. So I have a question that is not anonymous. This is from Brett Hendrie at the Rotman School of Management in Toronto. And the question is, what are the most important strategies to ensure that a hot brand can remain relevant and popular over time, to weather the natural cycles in taste and styles that are always changing? Be attentive to consumers. Never listen. Never sit on your laurels. Maintain a 360 view of the business. Every part of the business has to evolve, whether it’s the manufacturing part of the business, the channels that you use to reach consumers, the products that you offer. So understanding societal trends—and not only understanding them, but being there when the products come out. So very early on, when we developed cell phones, clearly, I thought there was a great opportunity, as my team did, to create cell phone cases. So we did cell phone cases in many colors, many different sizes, many different attachments. Innovation is really critical. And getting regular feedback is essential. And Coach, through today, interviews more than 100,000 consumers around the world. It could be much more than that, actually. And they do that with a methodology that allows you to have predictive indices, to take measured risks. I’m always interested when CEOs, former CEOs, decide to write a memoir, or maybe it’s a memoir with a sort of framework attached. But what motivates them? And I guess my question is, if you had to boil down a single lesson that you hope readers will take from your book, from Bag Man, what would that be? There’s a few ways I can answer that. First, I would say, listen to your body. And part of the reason I wrote the book was to tell an authentic story. And you need to be mindful of your own individual health and the health and welfare of your team. That’s absolutely critical. Don’t put off things that you should do, and use different things to help yourself and encourage others to do so. And I would also say, lean on other people and their expertise. Look for mentors who can help accelerate your learning and can help you avoid mistakes. Those are great. We have time, maybe, for just one more question from the audience. This is anonymous. But marketing is changing, and this question is going to deal with things that, in some ways, have developed since you left the CEO role. But from a marketing perspective, what is your take on influencer culture? How much should consumer brands be investing in that particular part of the world? Also, a very relevant question, and I would say a lot. We live in a world where attention span is short. People are making purchase decisions in very different ways than they did before, so you really need to understand your consumer. If you’re focused on Gen Z, you’re going to use influencers much more, because they really rely on others to help them make decisions. If you’re dealing with older generations, influencers are less important. And so a lot depends on who you’re targeting. But it is a growing sector, and it will continue to be so in the digital age that we’re part of. So, Lew, this has been a great conversation. Thank you for being with us. I urge everybody, buy the book. Full disclosure: We’re the publishers with Bag Man. It really is a great book. And, Lew, thank you for being with us. Happy to be here. Thank you.

How to Reinvent a Legacy Brand—and Win

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