Six unconventional methods helped lululemon achieve excess profits

In the development history of sportswear brand lululemon, its founder Chip Wilson adopted a series of unconventional methods, which not only helped the brand obtain excess profits in the highly competitive market, but also enabled it to surpass Adidas and become the world's second largest sports brand.

When we attribute the success of a great company, the media's attribution and the founder's attribution are often diametrically opposed.

For example, media analysis says that lululemon’s success comes from community marketing, but if you read founder Chip Wilson’s summary of lululemon, you’ll find that this is not the case.

Many of Chip Wilson's entrepreneurial methods are contrary to our common logic, but he led lululemon to surpass Adidas and become the world's second largest sports brand.

I have summarized 6 key entrepreneurial methods from him and would like to share them with you:

1. Relying on a certain concrete trend is a good entry point for starting a business.
2. Employees are more important than customers.
3. Not advertising, but dialogue.
4. Don’t “break profits.” Only by making your competitors feel that it is not worthwhile to compete with you can you block out the competition.
5. Emphasis on the company's intrinsic value: Visible performance comes from invisible quality.
6. "Diversification" is the fertilizer of growth, but it may also be the cancer of growth.

01 Relying on a certain concrete trend is a good entry point for entrepreneurship

Chip Wilson was a competitive swimmer before he started his own business.

At that time, more than 50% of swimming enthusiasts were girls, and these girls always complained to him that when they were paddling, their armpits were often in contact and friction with the shoulder straps, causing many rashes under their armpits.

The girls kept writing to a local swimwear company called Speedo, proposing new ideas for modifying the shoulder strap design, but Speedo never adopted them.

This incident gave Chip Wilson a lot of inspiration, and he decided to start a business.

Around 1979, he observed that sports such as surfing and skiing were on the rise, so he founded a sports brand called West Beach, specializing in selling surfing and skiing clothes.

In the following 18 years, West Beach continued to develop along with the rise of surfing and skiing. However, due to some business reasons, Chip Wilson finally sold the brand.

In 1998, he had a strong premonition that yoga wear was about to explode, so he founded lululemon.

In the summer of 1999, he found that more and more women began to wear lululemon when shopping, walking their dogs, and drinking coffee in cafes. Lululemon went from being a training suit in yoga studios to casual street wear. This further strengthened his view: lululemon will definitely be a great global company in the future.

So he invested more energy and R&D funds. He defined lululemon yoga clothes as "entry and exit yoga clothes". You can wear it before sweating or after sweating during exercise. It is an everyday wear. This positioning has enabled it to occupy a huge market worldwide.

Later, due to some interest issues, Chip Wilson was kicked out of the board of directors. After selling his shares, he set his sights on a similar sportswear brand. This brand is known to everyone, called Arc'teryx.

This is a typical outdoor luxury brand and has become one of the three-piece suits for the Chinese middle class. Wilson feels that Arc'teryx and lululemon have exactly the same design concept and product development thinking.

Arc'teryx was originally a manufacturer of climbing harnesses, which have very high quality requirements because they can determine the life and death of climbers.

Once it became the market leader in climbing harnesses, Arc'teryx moved into apparel and made outdoor jackets.

Arc'teryx, which has crossed over to the clothing industry, still uses military standards for quality control. Therefore, even though its price is very high, it is still highly recognized by the industry.

Wilson observed that mountain guides at a ski resort near Vancouver only wore Arc'teryx jackets, and he thought the brand was great and must have great potential.

Therefore, the idea of ​​acquiring Arc'teryx had been swirling in his mind. Until Anta and Capital acquired the company, he decided to contact them and eventually became a partner in the deal.

Let’s take stock of Chip Wilson: From founding ski wear and surf wear brands, to later founding a yoga wear brand, and then investing in the outdoor brand Arc’teryx, this man predicted and capitalized on the rise of a certain sports trend in advance. This entrepreneurial idea is particularly worth learning from.

There is a Chinese saying: small success depends on money, big success depends on momentum. If you want to achieve a big career, you can't rely on your own ability alone, you have to step on a big momentum. If this thing is concrete, Chip Wilson thinks it means relying on the trend of a certain sport.

Not only Chip Wilson does this, other brands do this too.

For example, the brand Onpao has been very popular around the world in recent years, and it basically took advantage of the rise of the running trend.

For example, Vans was able to rise to prominence by taking advantage of the skateboarding boom.

Going further out, for example, the rise of Bilibili is largely due to its taking advantage of the rise of the two-dimensional world in China.

Therefore, relying on a certain trend, especially a very concrete trend, is a good entry point for entrepreneurship.

02 Employees are more important than customers

Many people asked Chip Wilson why lululemon has achieved such great success?

He said: "The exponential growth of lululemon is due to the employees who choose to achieve brilliant results. I regard lululemon as a social experiment. I just want to see whether putting people's development above profits can generate excess profits. It turns out that my experiment is successful."

In Chip Wilson's opinion, employees are more important than customers. He believes that store employees are the most important people in the company because they are the ones who have direct contact with customers.

Therefore, whether in store marketing or employee management, lululemon gives store managers a high level of decision-making power.

What is the core of valuing employees? Lululemon’s core is training.

When Chip Wilson was still at lululemon, everyone who joined lululemon had to participate in a training called the “Milestone Forum”.

This is a self-development training that teaches people how to help individuals, families and companies develop their own action plans.

After Chip Wilson participated in this training in his early years, he felt that his life had undergone a very positive revolutionary change. Therefore, he hoped that everyone who worked with him would have the opportunity to experience a more wonderful life, so he came up with this rule.

Moreover, Chip Wilson not only requires his employees to take other people's courses, he also develops his own courses.

Around the beginning of 2001, lululemon's business was developing steadily and Chip Wilson had some free time. He read the book "Psychology of Achievement" and used the book's inspiration to develop lululemon's culture and training courses.

Why did he put so much effort into building lululemon's culture and training?

First of all, he thinks that if all people working at lululemon master a common culture, they can communicate with each other using a common language. They will have a common definition of "great" and "excellent", which can reduce friction within the company.

Moreover, lululemon's training philosophy is different from other companies. Many companies believe that if they train employees and then they leave, the training fee is wasted. But Chip Wilson believes that training employees must be based on their own interests, rather than expecting the company to get some kind of return.

When Chip Wilson was still at lululemon, he hoped that his employees would have bigger goals. This goal was not just lululemon's profit goal. He hoped that this person's ambitious goal would take him anywhere in the world, not just work at lululemon.

He believes that the success of a company lies in letting employees understand that they can develop their skills at lululemon, develop their leadership, and achieve their personal goals anywhere outside the company. On the contrary, if a company forgets this, people will be exhausted by the company's culture.

I think this idea is great, and McKinsey has the same training culture.

As far as employees are concerned, if you train them just to keep them, they will definitely recognize your intention. But if this training can help them achieve greater success in their lives and future, even if they leave, they will still remember your kindness, and a business alliance will be formed between you, and they will give back to the company.

Chip Wilson regards employee training as an investment, which is also related to his recruitment principles. He once said: "I only want to work with people I like, and I am willing to invest in their success."

Therefore, he attaches great importance to the recruitment of employees. If he has already determined that the person is excellent before hiring, then all he needs to do is to explore their potential.

This is why he believes that employees are more important than customers, and why he is willing to spend so much energy and money to invest in his employees.

03 Don’t advertise, but have a conversation

Chip Wilson’s approach to marketing is also very unique, which is “not advertising, but dialogue”.

Chip Wilson defines lululemon's core users as Super Girls, which translates to "Super Girls" in Chinese. In my opinion, this definition actually refers to middle-class Chinese women who have high incomes, high education, good aesthetics, and pursuits.

There was a time when lululemon was growing very fast, and the CEO and Chip Wilson agreed that it was time to advertise on a large scale. But when they presented the idea to the board of directors, the board believed that large-scale advertising would definitely affect profits and firmly disagreed with spending money on advertising.

Later, Chip Wilson set his sights on shopping bags. He thought that lululemon's shopping bags were walking advertisements that could carry a lot of creativity. So he proposed to use the concepts in a book to advertise on lululemon's shopping bags. The name of the book is "Atlas Shrugged".

This book is particularly famous in the United States. The Library of Congress once conducted a public opinion survey and found that Atlas Shrugged is the second most influential book after the Bible. About 87% of adult Americans have read this book, especially young middle-class women, almost everyone has read this book.

The protagonist of Atlas Shrugged is John Gert, a 30-something middle-class working woman who is aggressive and enterprising. In Chip Wilson's opinion, John Gert is the perfect representative of the Supergirl philosophy.

He really wanted the words "Who? It's John Gert" to be printed on the bag. You see, this is quite interesting, called "Who? It's John Gert", it doesn't sound like an advertisement at all.

Chip Wilson said he liked this kind of implicit and non-descript commentary and publicity. He felt that his target audience was a group of people with higher education and good reading skills, and only this group of people could understand the meaning of this sentence.

If they are not my non-target group, they basically don’t know what I am talking about. This kind of understanding can trigger a strong resonance among the target group.

To support this promotion, he also wrote a paragraph in his community:

"Many of us have unknowingly chosen mediocrity. Why do we do this? Because our society encourages us to live a life of mediocrity rather than achieve greatness. We remind ourselves on the bags to live a life we ​​love and to defeat the flood of mediocrity. There is a John Geert in everyone's heart cheering us on."

Although I haven't read the book "Atlas Shrugged", I will be moved by this passage.

Later, this bag was taken off the shelves shortly after it was launched.

Because this is a book of philosophical metaphors, the author of this book, Ayn Rand, is particularly eccentric, and her political stance offends almost all schools of thought in the United States.

Therefore, as soon as the bag was put on the shelves, it caused a strong response on social media, and many people said it was not good. Under pressure from public opinion, the bag was removed from the shelves. But Chip Wilson thought the bag was very good, and he thought that social boycott was actually a good thing.

In his mind, non-customer boycotts actually create real brand value because he believes that core customers simply disdain to associate with those opponents, and when there are opposition voices, the loyalty of the target group will increase.

Moreover, Chip Wilson also noticed that the loudest complaints often come from those who do not pursue excellence and are unwilling to work hard to do something. He thinks these people are not our customers. He also said that it is not good for our products to let mediocre people buy our products.

Although the shopping bag ad was only online for a short period of time, it caused widespread social discussion and was discussed in many newspapers and magazines.

"Not advertising, but dialogue", why did Chip Wilson adopt such a marketing principle to promote lululemon?

Because of his early years in the surfing, skating, snowboarding and other industries, almost all brands were established through "anti-traditional" methods. Specifically, they first established a tribe, and then they created a social trend to encourage others to follow suit.

This incident gave me a lot of inspiration. If you want to be an "anti-traditional" brand, you must have your own cultural proposition. The way to convey cultural propositions cannot be through advertising, but must be a heart-to-heart dialogue with your target audience.

To sum up

Today, I want to end with a sentence. This is also a slogan designed by Chip Wilson for lululemon shopping bags:

"Without the Wright brothers' invention of the first airplane, there would never have been a jet airplane - greatness must begin in obscurity."

I wish all business practitioners have the courage to go against tradition, the thinking of not conforming to anyone else, and can succeed in their own way.

*Part of the content is quoted from "The lululemon Method".