Leadership Anatomy in Motion

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1:47Take Lululemon, for example. Shares Tumble today. Lowest level in eight years. This upscale yoga wear company cut its annual forecast due to deteriorating performance in North America. The revenue and profit guidance for the current quarter really underscore the challenges that incoming CEO Heidi O 'Neill faces in revitalizing the brand, which she joins later this year. I want to bring in Louisa Louran, global executive advisor, author of Leadership Anatomy in Motion. She's worked at Diageo, Marist, Google, and more. She joins us in the Bloomberg Interactive Brokers Studio. Louisa, good to have you on the program.

2:18The reason I brought up Heidi O 'Neill and the challenge that she faces in revitalizing Lululemon is that that story is not unique. And the idea of executive change, executive turnover, bringing in new people to try to turn around a brand, that is nothing new. But that is what you understand. And that's what you have done throughout your career. And that's what the new book is really trying to highlight. This moment, though, seems unique in time because of the challenges that these executives face. It's not just, you know, the supply chain issues and the tariffs and higher energy prices. It's also AI.

2:54What is an executive to do? Absolutely, Tim. Great to be here. And thank you for the question. You're seeing it right. And I think that today is an opportune moment to take that step back because natural panic does exist when numbers show up as they do today. And the numbers we're equally seeing with the CEO turnover is putting pressure on everyone in those seats. But whether you are taking over a brand like Lululemon or steering any other company, we are consistently seeing that these patterns are not shocks to the system. What a lot of CEOs have been doing the last couple of years is actually recognizing that there is more tension, more disruption, and therefore they are building out optionality and supply chains.

3:38more and more businesses have increased their number of of cherry roots the last couple of years but at the same time they have not been decisive in deploying it and therefore it's been more of a cost extension rather than a change equally on the ai side exactly as you mentioned we see that 59 of companies are spending more than a million a year on it but only 29 are seeing the value. And this is truly this desire to partake in the market, but not the true understanding of what does the CEO need to do. So I do see we have many businesses in this situation at current time, and it's an opportune time for leadership to step in.

4:18Yeah, you know, it's kind of interesting. I think about a great financial crisis, then I think about the COVID pandemic, or COVID pandemic, and Louisa, all of a sudden, once again, a reminder of the CFO, increasingly the importance that they have in strategy at the company, reminding everybody, looking at the balance sheet, making sure it's secure. And I'm just waiting for those CFOs to start saying, you know, we're spending an awful lot, but we're not getting that return on investment. Are you hearing C-suites starting to talk more about this? Yes and no, because I do see that there are some great financial strategizing going on.

4:54And for instance, the play that Alphabet did this week is certainly one of them, where we do see that they're going to where the market is most willing to back them. At the same time, I think the biggest signal that everyone should be looking at is not coming from the CFO, but actually from a longer view of the market. And that is who backed that Alphabet investment. Because when we see players like Berkshire Hathaway come in and back the investment, this is a signal that we're not getting that shock out in the market. It's actually already inflicted from within that margin erosion by the spend.

5:26So as they start to look at this as a future infrastructure play, we're getting to a space where either you are playing someone else's game, they are the landlords and setting the terms, or you are, yeah, either you're the landlord or you're the tenant in that space. And I don't think this is necessarily a technology conversation. We have seen companies that have successfully transformed through time. Walmart is a great example. When they moved from just having their own data and wanted to connect to others, they led the way with EDI. And also today, they're truly accelerating through both their supply chain, but also through their business usage of AI.

6:05We're seeing the same for companies like JP Morgan, who also have an understanding of how things move through decades. And I think one of my favorite examples is actually something we've seen quite recently in the luxury space where Luca De Mio, who took over as CEO for Caring last summer, is looking at what Alexander McQueen has built out the last couple of years. They have built that network. They have created that optionality, but they have chased a market that wasn't ready to invest equally. So he is dialing back. He is looking at saying, what does my brand have to offer? And I understand in a luxury market, it is scarcity.

6:40It is not necessarily chasing that last headline. So the decision is not reacting to the immediate moment, but understanding how the market is moving and making sure that your brand is future ready. And you mentioned EDI in regards to Walmart. I assume you meant electronic data interchange, which is used for supply chain, retail and logistics. Sounds like you deal with it every day, Carol Masser. It sounds like I know how to Google really quickly. It really occurs into APIs and that exchange that more of us know today. It just shows how old I am. Alphabet soup with Carol. No, no, I know. This is your world.

7:17I just want to, you know, they say, maybe it isn't Romaine. Maybe it's you who gives me all the time. Hey, Louisa, one thing, though, to follow up on AI. You shared with our team and our producer, Talia, a thought about why the next governance failure likely will not come from AI misuse itself, but from boards ignoring what AI is revealing about the business. Can you walk us through what you mean by that? We've got about two minutes or so to go. Absolutely. I think that a lot of people are still looking at AI as coming in as a tool that can help save their cost. But the lens to which you can see your business through AI as a board is a unique opportunity.

7:57I do believe that as a board, you should use this to explore how are decisions being made because when AI is implemented into silos within an organization you often actually just get people running into walls faster so for instance a customer service team there to close a request quite quickly and then a sales team there to upsell at the same time that can be contradicting information and those deployed into an AI will not resolve that. But as a board, understanding what are these tensions that exist in your organization, you can start redesigning your business instead of just locking it into past behavior.

8:36Right now, many businesses are run on the software that was built in a different time, not the one that equips them for the future. Yeah, easier said than done. I mean, I've talked to some executives at banking, at large financial institutions who have said just the challenge of updating the software in the age of AI as this patchwork has been sort of put together over the last 30 years is such a daunting task. Just give us an example of a firm or a leader who does this really well right now. Well, I think, again, one of my favorite and most inspirational leaders is the one I mentioned before, because look at Amio, who's doing it now.

9:14He has done it before. He did at Groupe Renault, which is this European automotive company double the size of what Honda is here in the US. And it is a matter of not looking at the past structures, but honestly looking at what capabilities do I have and being willing to rewire that company. It is a large-scale transformation, it is a matter of looking at different metrics, and it's also a matter of saying which type of leader do I want to be in the future, because measuring the past will only keep you in that same space. All right. Interesting stuff. Like we say, it's an interesting time to be alive, to watch the markets, to see what companies are doing and what leaders are facing.

9:55And a difficult time, too, if we consider some of the wars that are going on around the globe. Luisa, really appreciate your time. Luisa Laron, she is Global Executive Advisor, author of Leadership anatomy in motion.

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11:32of them wanted. My first book was Divergent and when that came out like because it was so popular I think it attracted like mostly positivity but the negativity I sucked in like a sponge and I think it was like critiques of things I liked when I was like you know I was 23 and I wrote this book and it had all my like dorky little cheesy or maybe unrealistic loves in it and I started to feel a lot of shame about those things and so for the rest of my career I steered away from those little things that like make you feel pleasure when you read. But I also was like saying no to these parts of myself that I then was like, screw it.

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