Little Black Stretchy Pants

“The following are a sample of the operating principles (I have over three hundred) that were critical in guiding our rocket ship trajectory. My next book will outline the entire set. Operating Principles Samples OP: Every piece of lululemon clothing must be able to be put through a hot water wash and a hot dryer and continue to look new for five years. WHY? Athletes are busy, and they may want to wear the same clothing the next day. A hot wash and dry is quick and kills all bacteria. As part of our quality guarantee, we promise clothing will not shrink more than 2 percent after being washed hot water and dried in a hot dryer. HISTORY: Before lululemon, people would buy garments one to two sizes too big, so after a wash, the garments would fit. We decided to make clothing that would continue to look exactly the way it did on the day it was purchased five years later. OP: Our store pant and short boxes must carry approximately 60 percent black or black-equivalent pieces at all times. WHY? Our Guests purchase solid black about 80 percent of the time, but we only show 60 percent black in the store boxes, so the Guests see 40 percent of the stock in an item in multiple colours. Most Guests want the perceived freedom to choose a colour, and then buy black. We show enough colour for the customer to have a choice and to make the store vibrant. To keep the black level at 60 percent, the pant wall person needs to be responsible for scanning the pant wall ten times per day and keeping inventory levels perfect. HISTORY: We found that if we didn’t stock 60 percent black, and we didn’t restock throughout the day, we lost sales because we would run out of stock by two o’clock in the afternoon. The entire concept of the boxes is to know exactly what inventory is on the floor in relation to the back room. We may sell 90 percent black, but the Guest wants choice before choosing black. We merchandise to the psyche of the Guests. OP: All invoices are paid in seven days. WHY? With retail stores, the worst thing that can happen to us is not to get delivery of product on time. The first company to pay the factories gets the first delivery, the best seamstresses and tailors, and access to the best technology, all of which is critical to quality-control and innovation. HISTORY: With Westbeach, I never had enough money to pay on time. As a result, I often got delivery last, the least experienced seamstresses and tailors and was the last to be offered innovation. OP: Every dollar a garment is discounted takes $10 off the company’s value. WHY? Guests subconsciously attach more value to full-priced garments and correlate full price to a strong brand. HISTORY: Customers are trained by merchandisers (who are incentivized by short-term bonuses) to wait for sales and these customers psychologically discount the value of the brand. OP: We value our customers’ time as though they are making $100/hour. WHY? We assume our Guests make $100 an hour, and if they are delayed fifteen…”

“Can you give us an outline of what the meltdown meetings were and why they differentiated a vertical company from a wholesale company? To be a truly design-led company, I knew we had to do things much differently than they were done in wholesale. The vertical retail model works on a nine-month calendar, which let us be a year or even two years ahead of our wholesalers since we didn’t have to make samples and show them to middlemen or fashion magazines. This led to developing something we called ‘the quarterly meltdown meeting,’ which became the single most important meeting at lululemon because it set the direction for every other department. In descending order, our line plan was built based on a series of rankings from the sales of the last quarter. Each new ranking was built onto the ones listed before it: • Inside each category (i.e. pants), we ranked styles in percentages sold from best to worst. • We readjusted rankings by what could have sold if we had perfect inventory, delivered at the perfect time. • We readjusted again based on what could have sold if we had perfect styles (i.e. the right number of styles in the perfect length, width, or fit). • Then we’d readjust the rankings again, using new or old styles to use up any excess liability fabrics or trims. All excess fabric must be used up in the next season’s line plan. • From there, we’d readjust to show how a future-focused design team would rearrange the ranking based on their knowledge from working in the stores, leading design meetings, forecasting books, and competitor’s designs. What styles go or remain in the line plan is determined by the head of design and not the buyer. This is a control system. Before the era of lululemon, a buyer was incentivized to order what worked the previous season (buyers are naturally risk-adverse and beholden to finance who wants what is best for accurate financial reporting but not what is best long-term demand). A design-led team might eliminate a good-selling item because the style negatively affects long-term brand value • Finally, we’d readjust to show, “What the production manager would change given fabric, factory bottlenecks, import duties, or opportunities.” What if there is only enough fabric for four styles but the line plan asks for fifteen? What factories are easy to work with? What mills can guarantee fabric delivery? We looked for bottlenecks…”

“designed our first professionally-built store. Then I took out an ad in our local weekly newspaper offering a free lululemon outfit to shoppers if they came naked on the store’s opening day. The response was unbelievable. It was so strong that I became concerned there would be a naked riot, and we would be forced to hand out our entire inventory free-of-charge. I went back to the paper and placed a second ad. This time I clarified that only the first thirty naked Guests would score free clothes. I had forgotten about Vancouver culture, and that given a chance, the whole city would show up naked. On the day of the opening, at around four o’clock in the morning, people started lining up outside. It was a drizzly, cool October morning in Vancouver, but groups of people were showing up wearing raincoats and nothing else. It was still dark outside, but I could see the numbers were growing. The inside of the store was still swarming with our efforts to get it ready. Not long after the line formed, the media showed up with trucks and vans. As dawn broke, a large crowd of spectators had assembled. Milestone’s—the restaurant across the street—had a balcony packed with people craning over their breakfasts to get a look at those lining up. Even lululemon’s meek, mild accountant who couldn’t have looked more out of place, had shown up not willing to miss the spectacle. As we got ready to unlock the front doors, I was very excited… until I got a good look at the group of people clustered by the front door. The first two customers lined up were young girls who couldn’t have been older than fourteen. I turned from the door and went to find Darrell Kopke in the back. I was verging on panic, thinking about the media and the video cameras filming, the crowd of spectators, and these kids about to strip down. What was supposed to be a funfest was suddenly verging on becoming a PR catastrophe. After a couple of minutes to assess the situation, I asked Shannon to help greet the naked Guests. We went to the door, opened it up, and stepped out to the crowd. I shouted, “You guys are fantastic—thanks for coming!” The tension broke that instant and there were cheers and clapping. Then we counted off the first thirty naked people over the threshold. As it turned out, those girls at the front of the line weren’t alone. They were sisters—and they came with their equally naked mother and grandmother. Dozens of Guests continued to show up naked to the store all day, just because they could do it. Three naked men came in the morning and just didn’t want to leave. It was a little creepy, but we went with it. We had no issues with the police, and this reminded me why I love Vancouver so much. There are plenty of cities in North America where this kind of event in 2002 wouldn’t have gone over nearly as smoothly.”

“Lessons from the IPO Going public was another critical juncture that affected the future of lululemon. Again, for those of you who might be in this position in your own lives, I would like to share my learnings: 1. Have each prospective director explain their theory as to what type of CEO is needed at each growth stage of the company. 2. I didn’t control the Board, so I should have nurtured and selected my own people to fill Board positions and not let PE do it. 3. A founder with more than 10 percent of the company will be a “dependent” director. The other directors are deemed as “independent” to ensure the founder-director does not control the company decision making, and these independent directors will elect a lead director. The lead director is essentially the chairman as he or she represents more board votes. Giving the chairman title to the founder is often nothing but smoke and mirrors. 4. A strategic CEO can divide and conquer a board by marginalizing the “dependent” founder from the independent board members if the CEO and founder do not see eye-to-eye on vision or operations. 5. A staggered board where only three directors are up for election each year does not allow directors to change with the speed at which the world changes. Directors get stale fast and nepotism and mediocrity set in quickly. 6. With new money in their pocket, the founder now has another job trying to figure out what to do with that money. A founder usually knows one way to turn a profit, and that’s in the business they just sold. I recommend the founder invest the money equally with three wealth managers and determine which firm does the best over a three-year period. If instead, the founder tries to build a new business or joins other boards, their eye gets taken off the ball. This creates a vacuum that gets filled quickly by operational directors and management looking for more power.”

“Collective Vision Lululemon’s vision statement used to be “elevating the world from mediocrity to greatness.” I don’t know what it is today; I looked online and couldn’t find it. For argument’s sake, let’s assume it’s remained the same. For a vision statement to be successful, the individuals who live into it must align on what it means for them collectively. If it is to be effective, a vision statement cannot just be words on an office wall that are left open to personal interpretation. We need to be clear on the meaning of these words, and more specifically, how we define “greatness.” If I am a metrics-driven Board member, then perhaps I see “greatness” in making lululemon the most valuable and sought-after stock in the US athletic basket. If I am an Employee, then maybe I see lululemon’s “greatness” in its active community engagement and the reach of its transformational development program. My point is, neither party is wrong in their interpretation. They are just misaligned in the collective interpretation and as a result, the collective intention becomes unclear. Prior to the creation of the Board, we didn’t have this misalignment because we were all in authentic communication all the time. There was no “us” and “them.” We aligned on what we wanted as a group and then lived into that vision every day. I believe that the Board, the Management, and the Employees can align again, and I believe that lululemon will fulfill on its vision. I remain lululemon’s number one cheerleader.”

“What concepts or inventions could be attributed to you? As a technical designer, there is much that I am proud of having contributed to the world: Triathlete clothing (1979); • Technical apparel vertical retail model (1979); • The “streetnic” movement (1979); • “No smoking” in a retail store (1980); • Reversible shorts (1981); • Long surf shorts (1981); • Dual front chest zippers on jackets to allow for intake-outtake venting and airflow (1989); • Vent zippers on inner thighs in snowboard pants (1990); • Pop-up stores (1991); • Zipper guards at the top of the zipper to solve for neck rashing (1991); • 10 .Gator clips on snowboard pants to solve for powder in boots (1991); • Sleeve thumbholes to solve for sleeves riding up and for warmth (1992); • Chest pockets for cell phones to ensure the wearer could access their phone in two rings (1994); • Free in-store hemming to solve for perfect long pants made for taller girls (1998); • Flat seaming in stretch pants to solve for rashing (1998); • Yoga pant (Groove Pant) featured in the MoMA in 2017 (1998); • Matte look in yoga pants to solve for “lightbulb butt” (1998); • Diamond gusseted crotch in women’s yoga pants to solve for camel toe (1998); • Luon 12 percent Lycra fabric to solve for transparency of women’s tights (1998); • Rip out fabric content labels (1999); Retail stores with half-flush toilets and recycling (2000); • Removal of inner-thigh seams to eliminate rashing in running shorts (2002); • Silver threads sewn into first-layer tops to eliminate bacterial stink (2005); • Mindfulness model for business (2012); • Denser, thinner threads in athletic tights to solve for athletic compression without pilling (2013).”

“Do you have any new manifesto sayings for the side of the lululemon shoppers? • Brains are designed for human survival. For the most part, the brain isn’t concerned with living a phenomenal life. The human being must consciously choose to override a life of mediocrity. • The brain is not necessarily correct about 80 percent of what we think and sense. We give the brain a bit of an idea, and it fills in the blanks. The brain is often not right. The brain connects immediate perception with all past experiences. • If I wasn’t concerned for my survival, with what would I be concerned and dedicate my life? • I know what is going to happen because I start in the future and work backwards. • Integrity is not right or wrong. It just gives workability and performance • The game of life is not looking good for others; the game is making life work. • The individual is a drop of water, and the family is the whole ocean. • Everyone learns differently, and I must find out what is important to other people. It is the key to having people want to work with me. 19. What was so different about lululemon’s design strategy? Lululemon was never about “enhancement” of women’s bodies. We never wanted to fool anyone. We were not a Spanx-like product that could to remould bodies, and we didn’t pad bras to create an illusion. Lululemon was all about being real a human being. We were comfortable with all bodies. This core belief came from a life of competitive swimming, Olympic clothing, and triathlon, where functional tight stretch apparel is a necessity for competition. The mission statement of “providing people with the components to live a longer, healthier, more fun life” dictated that lululemon was in the longevity business. The mission statement provided designers with a guiding light towards: • Athletic performance • Function before fashion (or more to the point, function is the fashion) As lululemon grew exponentially through the second half of the 2000s, finding the right designers became an interesting process. Big businesses and other large organizations – say, sports franchises – seem to always have three people on top who produce more than the five thousand people below them. This equation is a weird version of Pareto’s Principle where, instead of 20 percent delivering 80 percent, it’s more like 3 percent delivering 97 percent. With designers, I found there was usually one designer who could create consistently more than twenty others. To me, that one super-talented designer brought more value to lululemon than a CFO or head of HR. With financial, administrative, and managerial people, systems are in place where specific roles are quantifiable. It’s the opposite for designers, even those who’ve gone to design schools. Taking it a step further, designers must re-create four to eight times a year and the best can do it effortlessly. We would find the best designers by setting up labs. In these labs, the idea was to observe multiple designers and see who could…”

“The Original lululemon Manifesto (2003) (these were the quotes on the side of the lululemon shopping bags) Coke, Pepsi and other pops will be known as the cigarettes of the future. Colas are NOT a substitute for water. Colas are just another cheap drug made to look great by advertising. Drink fresh water and as much water as you can. Water flushes unwanted toxins and keeps your brain sharp. Love. Do yoga. It lets you live in the moment and stretching releases toxins from your muscles. Your outlook on life is a direct reflection of how much you like yourself. Do one thing a day that scares you. Sunscreen absorbed into the skin might be worse than no sunshine. Get the right amount of sunshine. Listen, listen, listen and then ask strategic questions. Life is full of setbacks. Success is determined by how you handle setbacks. Compliments from the heart elevate another person’s spirit and will often result in an encouraging word for someone else—a domino effect. Write down your short and long-term GOALS four times a year. A class study at Harvard found only 3% of the students had written goals. 20-years later, the same 3% were wealthier than the other 97% combined. A daily hit of athletic-induced endorphins will give you the power to make better decisions and help you be at peace with yourself. Let SWEAT FLOW from your pores once a day to regenerate your skin. Jealousy works the opposite way you want it to. One hour of aerobic exercise will release endorphins to regenerate cells and offset stress. Wake up and realize you are surrounded by amazing friends. Communication is COMPLICATED. Remember that each person is raised in a different family with a slightly different definition of every word. An agreement is an agreement only if each party knows the conditions for satisfaction and a time is set for satisfaction to occur. Friends are more important than money. Live near the ocean and inhale the pure salt air that flows over the water. Vancouver will do nicely. Do not use cleaning chemicals on your kitchen counters. Try vinegar and lemon. Someone will inevitably make a sandwich on your counter. Stress is related to 99% of all illnesses. Don’t trust that an old-age pension will be sufficient. Do yoga so you can remain active in physical sports as you age. Observe a plant before and after watering and notice the benefits water can have on your body and your brain. You ALWAYS have a choice and the conscious brain can only hold one thought at a time. Utilize your freedom to choose. Just like you did not know what an orgasm was before you had one, nature does not let you know how great children are until you have them. Children are the orgasm of life. Lululemon athletica was formed to provide people with components to live a longer, healthier and more fun life. If we can produce products to keep people active and stress free, we believe the world will be a better place. DO IT NOW. The world is changing AT SUCH A RAPID rate that waiting to implement changes…”

“Core Values Quality Our customers want to buy our product again. Product We create components designed by athletes for athletes. Integrity We do what we say we will do when we say we will do it. If we cannot keep our promise, we immediately contact all parties to set new by-when dates. Balance There is no separation between health, family, and work. You love every minute of your life. Entrepreneurship We treat and pay employees as though they run their own businesses. Greatness We create the possibility of greatness in people because it makes us great. Mediocrity undermines greatness. Fun When I die, I want to die like my grandmother who died peacefully in her sleep. Not screaming like all the passengers in her car.”

“lululemon Vision (Defined as an unwavering commitment to the number one principle) “Elevating the world from mediocrity to greatness.” Mission Statement Providing components for people to live a longer, healthier, and more fun life. Number One Principle The store Educator is the most important person, and all decisions are made with this in mind. Number One Goal Within six months of hiring, a person will have taken the Landmark Forum and be coached on how to set their two, five, and ten-year goals, which include two for each of health, business and personal.”

““In the end, it is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work. Perhaps, then, you might gain that rare tranquility that comes from knowing that you’ve had a hand in creating something of intrinsic excellence that makes a contribution. Indeed, you might even gain that deepest of all satisfactions: knowing that your short time here on this earth has been well spent, and that it mattered.” —Jim Collins, Good to Great: Why Some Companies Make the Leap…And Others Don’t”

“What is your essential reading / audio list for 2019? Good to Great, by Jim Collins The 7 Habits of Highly Effective People, by Dr. Stephen R. Covey The Goal, by Eliyahu Goldratt The Psychology of Achievement, by Brian Tracy Catch 22, by Joseph Heller Atlas Shrugged, by Ayn Rand The Tipping Point, by Malcolm Gladwell Shoe Dawg, by Phil Knight The Prince, by Machiavelli Black Box Thinking: The Surprising Truth about Success – And Why Some People Never Learn from Their Mistakes, by Matthew Syed 10% Happier: How I Tamed the Voice in My Head, Reduced Stress Without Losing My Edge, and Found Self-Help That Actually Works—A True Story, by Dan Harris After On: A Novel of Silicon Valley, by Rob Reid How I Built This, by Guy Raz (NPR podcast series) Middlesex, by Jeffrey Eugenides The Goldfinch, by Donna Tartt The Diamond Cutter: The Buddha on Managing Your Business and Your Life, by Geshe Michael Roach Guns, Germs, and Steel, by Jared Diamond Tinker Tailor Soldier Spy, by John le Carré The Lord of the Rings, by J. R. R. Tolkien The Fountainhead, by Ayn Rand”

“1. What are you doing now? I define retirement as being able to get up in the morning and do whatever I want, which often includes work. In this sense, my work, at least for the foreseeable future, will be in real estate. I’ve been enjoying applying the same things I did with clothing – taking functional buildings or run-down areas of Vancouver and Seattle and making them beautiful. I want to make areas into communities that a new generation of thirty-two-year-old single professionals (not just Super Girls but the young men who want to be near them) want to live and work. My present life allows me not just to be creative, but also to devote a lot of time to my family. I do parking patrol at the school that my three youngest sons attend. I do all the presentations and talks the school asks me to do – usually on business or entrepreneurship or Dragon’s Den-style projects. The most fun I have is coaching my twelve-year-old twins’ flag football league. As I have muscular dystrophy (FSHD), I have invested in and am a director of a company called Facio Therapies that is researching and developing treatments for this disorder. I am in my third “life learning session” during which I will read or listen to one hundred new business, development or experimental fiction novels in 2018/9. I am out to recreate who I am. I am committed to doubling the value of lululemon and working cooperatively with a diversified board of directors. My family has more wealth than is possible to fathom. We want to leave the world with a lasting legacy. Our two priorities are: • To eliminate poverty in Ethiopia by 2030 though leadership development. • To leave a remarkable, active, artistic outdoor space to the tourists and the people of British Columbia to enjoy with their families. 2. Could lululemon have started anywhere other than Vancouver? To be blunt, no. A Pulitzer Prize-winning book called Guns, Germs and Steel discusses how modern civilization came to be. As I remember it, the premise is that man started somewhere in Africa and moved north with grains that could be easily grown using beasts of burden. Civilization exploded east through Asia and west to France. Then after a long period, Europeans conquered central and South America with germs (smallpox, etc.) and a few steel guns. The upper East Coast of North America was populated, but because of a lack of hearty grains and no beasts of burden, man’s movement west was very slow. Vancouver, on the North West Coast, may be the youngest major city in the world. Vancouver was a lumber, mineral, and fishing mecca and these industries dominated an industrialized waterfront. When the world fair came to Vancouver in 1986, Vancouver had a massive, underdeveloped waterfront. City planning, as a concept, had just emerged, and Vancouver was a blank canvas surrounded by snow-capped mountains and an ocean with hundreds of islands. The government developed the waterfront into biking and running paths to meet the demands of a…”