Lululemon CEO Laurent Potdevin on building a mindful business

Having returned the once-troubled fitness apparel brand to health, Lululemon’s CEO is now focused on doubling revenues in the next five years

Lululemon Athletica CEO Laurent Potdevin

Lululemon Athletica CEO Laurent Potdevin in his Vancouver office. (Portrait by Jens Kristian Balle)

A former president of Burton Snowboards and Toms Shoes, Laurent Potdevin joined Lululemon Athletica in January 2014 with a mission to put product quality and image stumbles behind the clothing retailer. Today, one can only conclude he has succeeded: Sales should surpass US$2 billion this year, aided by overseas expansion and a healthy 4% growth in comparable store sales, and the stock is once again testing its all-time highs. Born in Switzerland, Potdevin holds both an MBA and a master’s degree in engineering.

This year you returned Lululemon to the growth trajectory it enjoyed until 2013. Sales were up 14% year-over-year in the latest quarter, and profit grew even more. Where will the brand’s growth come from going forward?

The trend of living a lifestyle that is athletic and mindful is something that is global, that’s across gender—it’s actually across generations. We’re positioning in a unique way at the intersection of mindfulness and sweating. When we think about our 10-year vision, we think about touching the lives of a billion people. When we think about the growth trajectory, the sky is really the limit. We’ve got this very productive network of stores. And then, in the past year and a half, we’ve leapfrogged from not having any digital strategy, really not engaging or knowing our guests intimately through the use of technology, to having this digital network that provides incredible air cover to our stores. Now you take that outside North America, you become a global brand, and you take that beyond women to the men’s market. We have a five-year goal of doubling our revenue and more than doubling our earnings. We really do feel like we have all the ingredients to continue to grow very sustainably, aggressively, for quite some time, while staying very true to who we are.

So it’s a diffuse approach, not about breakthrough products like the women’s yoga pant?

You’re right, it’s not just one product category. But one thing we’ve brought back—that the company had lost its way on a little bit—is being design-led. And being design-led means that in everything we do there is purpose and there is function. We’re solving a problem for the athletes. If it’s not functional, then we shouldn’t make it. I think we got a little distracted from that until a couple of years ago.

How do you grow the bottom line through increasing mindfulness?

There is nothing about increasing mindfulness that is mutually exclusive to increasing the bottom line. A company that grows profitably is one that continues to reinvest and one that continually leads. The more profitable we are, the more we can do. Because of our vertical model, we’ve got a margin structure that allows us to drive innovation. Every time we innovate, whether it’s in the field of mindfulness or directly related to product, we see no price resistance with our guests. In the field of mindfulness, you’re going to see us doing more and more—we do a lot internally, so we have a director of mindfulness in-house; we’re very focused on signature experiences for our employees—and it’s too early to talk about, but think about taking that to the outside world and what that means. That can be a product in itself.

All along, Lululemon has been admired for how it enters a new market: You start with a pop-up showroom, work with local yoga studios and then open a real store. Do you ever go into a place and find, no, it’s not going to work there?

I don’t think that has happened, not to my knowledge. I think the lifestyle we embrace is relevant in every community. I think that today the showroom makes us mull over what the community needs from us, then we come to life in different ways. What I’ve seen is showrooms that have created excitement in their communities very quickly, that have triggered a store opening faster—that would be the case in Seoul, Korea—and maybe areas where we’re going to be a little bit more patient. The market needs to be able to embrace the brand and pull us in.

What would you consider a fast rollout versus one where you had to be more patient?

A fast rollout would be, like, six months. On average, I think about a showroom as lasting 12 to 15 months. There could be a couple of markets in Europe where we have a showroom for two years, and that’s OK. The worst thing we can do is trigger a store opening that’s ahead of brand awareness. We succeed every time we get pulled in by the community. A typical retail model would be to sort of push yourself on the community. That’s what you see happening in China. People will say, “Next year we’re going to have 200 stores.” That’s not who we are.

Early on in your career, you trained and worked on the manufacturing side. Now you’re in a company that outsources that. How have you improved the quality control since the company faced a controversy for selling pants that were unintentionally sheer?

When I got here a little over two and a half years ago, the company had grown far quicker than its ability to make investments. Its investments had lagged behind the growth, and it didn’t have the infrastructure in place to support the scale of the business. So we’ve been really focused over the past two years, all the way from design to in-store delivery, on building a supply chain that is scalable on a global level but can also handle the complexity of the business. That really wasn’t in place, which explains why the problem happened. I think today we’re really driving innovation so we really work at the fibre, the yarn level. We work with our manufacturers on the construction techniques, whether it’s bonding or how we incorporate details. And we’ve got not only the product development and the commercialization strength in place but also the quality assurance and then, down the line, the [quality control] group to ensure we deliver a product that is second to none.

I read an interview where you described yourself as a low-key kind of leader. This is a company that’s been led by some big personalities, including founder Chip Wilson. How do you win over the people who were here already?

What I’m really proud of is in the past two years we’ve really evolved from being a founder-led organization to being a high-performance culture. When I look at the team I get to work with, it’s the strongest management team the company’s ever had. I like what Jim Collins has to say: that the one thing a CEO can do alone is take the company down; the only way up is with a really strong team. I don’t think my style is low-key so much as it’s collaborative. If you look at what’s happening in the world, in the next seven years you’ll have three billion more people connected to the Internet. When you think about what’s going on with crowdsourcing, thinking that you’re the holder of the best ideas is getting less and less relevant, no matter what. I think my job is to go get the best wherever it is and to build the puzzle. But I definitely don’t see myself as every piece of the puzzle. I love putting the puzzle together, though.

Is there a metric or something you look at that tells you how you’re doing?

[My measure is] really around people. I look first at the effectiveness of my team. When that team is engaged and having fun and delivering, I know I am leading that group the right way. If at some point it gets more dysfunctional, with a little bit more friction, then I know I need to lead differently. There are obviously all the metrics we deliver to the Street and the brand does well—that’s not a reflection of how I’m doing. That’s a reflection of how well everybody is doing. When it comes to how I’m doing, I look at the people I’m working with and how happy and engaged they are.

You mentioned earlier that one of the things you bring to the company is a global mindset. What’s it like being a rare Canadian consumer brand operating in a global marketplace?

I think being a Canadian brand today is actually incredibly powerful.

Why is that?

Because I think everybody loves Canada. You’ve got great leadership in the country. You’ve got a country people attach themselves to. When you think about Vancouver—I mean, I’ve lived in a lot of places around the world, and bringing urban, mountain and ocean together in such a powerful way is very unique. Being globally inspired, we listen to our 1,500 ambassadors around the world. We see what new categories and what new activities are happening, whether it’s in Australia, in Asia, in Europe or here. Being globally inspired but having our roots here is a great position to be in.