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By Judith A. Ross
Just seven years ago, Adidas, the German-based sports-shoe and apparel maker, was ready to throw in the towel. Once the world's dominant athletic footwear manufacturer, the company had seen its trademark three stripes worn by the likes of Jesse Owens and Muhammad Ali. But after the death of founder Adi Dassler in 1978, Adidas soon found itself playing catch-up to younger competitors Nike and Reebok. Left in their dust, it faced annual losses of nearly $100 million. In 1993, wtih Adidas on the brink of bankruptcy, representatives from the banks that had taken over the firm looked to superstar turnaround artist Robert Louis-Dreyfus (HBS MBA '73) for help.
Born into one of France's most prominent business families, Louis-Dreyfus, an avid runner and soccer fan himself, had already rejuvenated U.S. pharmaceutical market research company IMS International and London-based advertising giant Saatchi & Saatchi, when he came to Adidas's assistance. One of his first moves was to pour money into the company's worldwide marketing budget, doubling it to more than $270 million. The extra cash enabled Adidas to sponsor several high-profile athletes, garnering important brand exposure among its core consumers, aged ten to eighteen, who imitate what their favorite sports heroes are wearing.
Finding that Adidas had diversified too heavily into athletic apparel, Louis-Dreyfus pared down that product line by 65 percent and refocused the company on its original mission of making performance athletic shoes. Soon after taking charge, he also reproduced ten of the company's older styles, keeping their authentic look while incorporating the latest advances in technology. He then sent samples to elite modeling agencies. It was an inspired move on all fronts. "Before long the shoes were part of an ensemble on the cover of Elle, the trendsetting French fashion magazine. Because retro fashion was 'in' at the time, we hit the right note with the kids and gained some breathing room for further improvements," he recalls.
Louis-Dreyfus next instituted a more decentralized approach to the business, entrusting local tactical decisions to in-country managers while leaving it to corporate headquarters to oversee Adidas's overall mission, vision, and brand image. In order to stay abreast of regional fashion trends and be responsive to specific product needs (such as baseball shoes in the United States), he set up local design teams worldwide. "About 80 percent of our product is the same from country to country, except for the colors," he explains."The other 20 percent is country-specific."
By 1996, Adidas was back in shape, recording worldwide profits of $166.6 million. Two years later, the Adidas-sponsored French soccer team won the World Cup, garnering enormous world-wide publicity. Today the Adidas logo adorns the feet of a number of National Basketball Association stars and is emblazoned on the uniforms of major college and professional sports teams.
A graduate of the Parisian business school ‰cole des Cadres, Louis-Dreyfus got his start working in his family's firm, S.A. Louis-Dreyfus, one of the world's largest private commodity brokers. His first position brought him to the American Midwest, where he traded grain commodities. Concerned about limiting his opportunities, he applied to HBS. "Trading requires very specific technical skills. The more successful I was in trading, the less chance I had to move into other parts of the business," he says.
After earning his MBA in 1973, Louis-Dreyfus headed for southern Brazil, where he managed his family's soybean and animal feed production plants. But in 1982, ready for a change, he joined IMS International. He was named president and CEO a short time later, and it was then that he first made his mark as a reviver of troubled companies. Initially saddled with several divisions that were losing money, Louis-Dreyfus transformed IMS into the world's second-largest market research firm before selling it to Dun & Bradstreet in 1988 for $1.7 billion. Cashing in on a bevy of stock options, he thought he might like to retire at age 42. "The trouble was," he laughs, "all of my friends were still working, so I decided to try something else."
That "something else" turned into helping his friends Charles and Maurice Saatchi resuscitate their bankrupt advertising company. Loaning the firm money to pay off its debt, Louis-Dreyfus went to work recouping his investment. His first step as CEO was to rein in the firm's extravagant spending habits. He then made sure it focused more attention on existing major clients such as British Airways and Toyota. "I understood very quickly that the only way for us to make money was to get repeat business," he notes. "When I arrived at Saatchi & Saatchi, they had two big contracts with Toyota. By the time I left, they had twenty-five." His job complete, he left the firm in 1993.
More recently, Louis-Dreyfus has expanded the scope of Adidas's products with the 1997 purchase of Salomon, a maker of state-of-the-art ski equipment and finely engineered golf clubs—the latter marketed under the brand name Taylor Made. While it has taken some time to mesh the two corporate cultures, some synergies have already emerged. At this summer's Olympic Games in Sydney, Adidas-sponsored sprinters will have a better grip when rounding the track, thanks to a revolutionary new plate that seals spikes to shoe soles—a product created by Salomon from a material previously used in skis.
In March, Louis-Dreyfus, announced that he would move on in 2001, leaving adidas-Salomon well positioned for the future. He is already raising venture capital funds for investing in Internet companies. And he will return to the family business, making an old-line firm a player in the new economy by launching a fiber-optics offshoot called L-D COM Networks. A businessman of the world, Louis-Dreyfus is looking forward this time to mastering some challenges closer to home.
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