Should Other CEOs Follow the Lead of the New Adidas CEO?

Adidas, a recognizable name in the athletic wear industry, was on the verge of collapse following the pandemic and the discontinuation of a popular collaboration with Kanye West. Its financial health was precarious, losing a daunting $794 million in the final quarter of 2022. However, the company had an ace up its sleeve in the form of finding a new Adidas CEO.

In an attempt to steady its rocking ship, Adidas reached out to a familiar face, former employee Bjørn Gulden, who was already a well-respected figure after a successful decade at Puma. His leadership at Puma resulted in nearly tripling the company's sales. When Gulden agreed to become the CEO of Adidas, the company's stocks soared by 30%. The sports industry nodded in approval, seeing this as a golden opportunity for Adidas.

Perhaps investors were expecting the new Adidas CEO to follow his same tried-and-true strategies at Puma. Gulden, however, took an unexpected approach. He chose to give out his personal cell number to all 60,000 Adidas employees, making himself directly accessible to every single person in the company. This move may seem unconventional, even absurd, but it is remarkably perceptive. It exemplifies emotional intelligence in leadership — a skill crucial for any leader. Gulden's approach is a lesson in earning respect and trust.

Gulden could have banked on his previous achievements at Puma and opted for a more assertive leadership style. He could have asked everyone to follow his lead blindly, promising a positive turnaround. But he took a different path. He chose to listen first — because to earn respect and build trust, a leader needs to listen before making decisions.

"[Employees] should have access to leadership. And if they have something which is important, they should be feeling comfortable going direct [to me]."

Bjørn Gulden via a podcast with Norges Bank Investment Management

Gulden's approach to leadership is simple. He believes in open communication, direct access, and a flat organizational structure rather than a hierarchical one. This approach can have multiple benefits. By genuinely listening to employees' feedback, the environment might start to feel like more than just a workplace. Instead of a distant, clueless boss, a leader can become an understanding mentor who genuinely cares about their team. And when employees feel heard and understood, they follow leadership not because they have to, but because they truly want to.

According to research performed by McKinsey & Company, over half of executive teams are falling short, often due to a lack of awareness from their CEOs. In fact, only around a third of CEOs report any issues with their teams. Similarly, vital management processes that can directly influence a company's fortune are not always as effective as they should be, with less than a third of employees reporting that these processes are successful in achieving business goals.

The root cause of these disconnects isn't primarily intellectual. Instead, it's sociological. Problems arise from individual and institutional biases, as well as awkward group dynamics, negatively impacting the efficacy of both the team and its processes. The best CEOs see through this fog and make active efforts to rectify these issues.

An effective CEO prioritizes team performance over individual prowess. Working with a unified team toward a shared vision drastically increases the chances of achieving above-average financial results — almost twice as likely. In reality, this might mean making swift adjustments to the management team's composition, like promoting promising individuals.

Establishing a balance in relationships is also crucial — maintaining enough distance to stay objective, while fostering closeness to build trust and loyalty. Moreover, the best CEOs are committed to enhancing the productivity of their teams. They regularly review and improve the operating rhythm, interaction quality, and overall dynamics.

Adidas' revival under Bjørn Gulden's leadership illustrates the significance of accessible and empathetic leadership. His open approach addresses the socio-dynamic issues often overlooked by many CEOs. Instead of relying on authoritative rule, he emphasizes mutual respect and trust, which highlights a valuable approach for any leader and may serve as a model for other companies.

According to The Wall Street Journal, Gulden said that "Adidas is on track to return to profitability this year," and shares have nearly doubled since the company announced his return. So far, Gulden has jumped into the thick of things and made changes like cutting consultants who made poor decisions, getting back into sports like cricket and rugby that are popular in particular markets, and scrapping an evaluation system for managers that he believed "smothered executives with pointless box-ticking exercises."