LuluLemon CBO Nikki Neuburger | When Cracks in the C-Suite Become Craters at The Front Line

29:18Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. I can't help but think that the only thing that's surprising about so much of what you said because I mean it's it is I think as as practitioners right it's the fundamentals it's why I was so confused by that CMO who said oh yeah we're really getting our focus back on the customer like where the fuck was it what's so surprising surprising what's so impressive to me honestly that's a better word is is your commitment to it and your commitment to it certainly individually but also organizationally because as that CMO who I've kept nameless you know makes clear, and as you pointed out, because of pressure and distractions and other considerations, it is easy to lose that focus.

30:18But obviously, at least if we look at some measures, it isn't in and of itself enough, right? No. Because you got it. Yeah. It's definitely not. You still have to make a product. That product still needs to work and ideally exceed expectations. And there is a whole lot to making sure the product gets to where it's supposed to be on time, like all matter of things. But I think most, not most, a lot of cracks that I've observed in brands I haven't worked in, in brands I have worked in and then need to be corrected and addressed. A lot of them do start though with, was this the right thing to do for the consumer?

31:04And I will give credit to a person. So Trevor Edwards was the CMO when I started at Nike. He had just started the global brand team. And I was fortunate enough to be on that team when it was brand new and 20 people. And I was an intern. And yes, I had a real job, but also a lot of my time was spent actually just seeding product to the internal important people around that giant campus. But you get to then talk to really smart people who have had these amazing, impressive careers. And I think he was the CMO. He became the president. He's not there anymore. But I don't think I've met another person anywhere in any of my jobs, in any of my personal life, in any networking that is so relentless in his belief that if you really understand the consumer and you talk to them and you listen, you don't listen with like, I hope they say this answer that I already want to do and then I'm going to do that.

32:05The answer is in front of you. Then yes, you have to go make the product, put it in the right store, get it there on time, charge the right price for it. But that consumer is giving you all the information you need to be headed in the right direction. And so somebody once said to me, like whatever your first job, whatever your first job was stays with you for your whole career. And I think he was just, I was, he's just left such an imprint on me. And I think about him often, even like terrified of going into a meeting. I was like a marketing specialist with access to the CMO of Nike in its heyday.

32:41And I just remember going into meetings like, but if I know the consumer, if he asks the question, I just need to know enough about the consumer and really thought through every angle of it. And that's what he wants to know. He's not a test. He's genuinely curious. That's why he's asking me the question. And so to be able to teach now my team that type of thinking, like that's something I think about a lot. But yes, a lot of other things can go wrong. It's why lots of businesses fail. It's why lots of trust can be broken. Even if you know your consumer really well, it takes time to rebuild that, but ultimately you ain't going anywhere if you don't know who your guest is.

33:21Yeah. Nowhere good anyway. Nowhere good. And, and this is a bit of a build on where we just were, which is, and I want to keep coming back to cracks and craters in the game of telephone, because I think, I think both lines are so apt, but your title now includes product activation alongside brand. And it's an unusual combination, right? And it implies what I would say is kind of for an old marketer like me who grew up the four Ps, but long gone are they? RIP four Ps. It implies a belief that brand and product are not separate functions, right? But two expressions of the same thing. And, you know, we were talking about it just, you were talking about it, you know, If the product doesn't deliver, it doesn't matter how well you know your guest or how beautiful your brand is.

34:19So I'm wondering from your perspective, what you think changes about how value gets created when the person responsible for the brand is also responsible for how the product shows up? Is it as simple as integration is better than the absence of integration or is there more dimension to it still? I mean, it's a great question. I think the product activation part of my title, which is something that Calvin McDonald came up with, was really putting an emphasis on that the brand team isn't just here to tell stories about our values. which I think lots of non-marketers perceive brand to be off doing some weird feelings project.

35:08Yeah, it's downstream of strategy. And I think David Droga said it to me when I interviewed him a year or so ago. It's jazz hands. The perception. Yeah, exactly. The perception of jazz hands. And so I think maybe what Calvin was trying to do, in addition to I took on some functional responsibilities, and I'll come back to sort of some changes in our model that I think were really helpful and maybe important for some of your listeners to hear. But I think what he was really trying to say and make clear back to the creator, the crack to the creator is Nikki's job and the job of her team is not only to reinforce what this brand stands for.

35:52And again, what are the what's the promise ultimately that we're making to folks, but it's to help them find and understand what products are best for whatever they're looking for that meet their needs. So that means product education, like what are the technical, you know, benefits of what we're making, merchandising, like visual merchandising in a store, how am I organizing the store in a way that is going to enable both for you to find what you're looking for easy, but also discovery because we make lots of products you probably don't know about. Also, I think a great, I don't think he intended it this way, but it is a great reminder for me when we're writing a marketing plan, if there is no product at the center of it, there is no point of that marketing plan.

36:38Like people aren't just coming to Lululemon because they like a brand name. They're coming because we make great product and they want to buy some or they're interested in exploring if they want to buy some. So I think a lot of it was actually a signal to our organization that product marketing was going to be really important and how we activate product across every touchpoint is the responsibility of marketing team. From an operating model perspective, what I think it enabled in an important way at Lululemon, because the structures changed a lot over the 30 years of its existence, there wasn't a global brand team before I joined there were regional marketing leaders and really that team was doing in its origins a ton of community development which we still do but as we've grown and scaled and become this big international business like it requires working in a much more coordinated way and so it was also I think a means to saying okay Nikki Liz our chief merchandising officer, Jonathan, our head of design, I need you guys making decisions together about what products are going to be the most important to get marketing support this season.

37:54We need to be aligned when we show up and present to our regions what we want them to buy, because if everybody buys all different stuff, it becomes really, really difficult for a consumer to really understand the thing we want them to know most or what innovation we're most excited about. So it's also enabled, I think, just a way of working that is much more integrated across the two teams responsible for making things and putting them into the world. I'm curious about that last part, which is shouldn't the regions have autonomy over what is most important to their consumer rather than to the companies, which is going back to listening to the guests, Right.

38:34The expression of mindfulness is as a facet of the brand is different in Asia than it is in America. Yes. I think yes and no. My favorite answer. So we we talk a lot and we're talking a lot about the global regional operating model right now. I think anybody who works inside of an organization that has a central team, a global team, and then has distinct, unique markets probably is faced with some form of this challenge. And people manage it different ways, right? Like luxury is much more tops down. Apple tops down. Like the center decides and the region's localized, but there's not a whole lot of flexibility.

39:24I think, again, we're talking about apparel. and so there is a lot of nuance. Styling is super different. What people are comfortable in, what is socially appropriate, those are all different. And Japan looks very, very different than what it looks like in the U.S. and especially here in Southern California. So there is, we do have that built into the system. I would say like generally speaking, we are aligned as a, as the globe or as the worldwide team four times a year let's call it once a quarter and it's typically around a new innovation right so okay we are just launched unrestricted power is a new legging it's a brand new proprietary fabric it's like a very thin material but it's super strong and it's got four-way stretch so the the crude way of explaining the benefit is when you drop a squat like no plumbers crack most products most performance products are only built really to stretch like this way and this is going with you this way there is we don't need every region to recreate the story of how they want to explain that to their guests we do want them to create local assets so that their guests are seeing themselves it's styled appropriately but from like an innovation product storytelling perspective we want to launch it at the same time that's going to drive the most earned coverage.

40:50It's going to make it most clear. Our guests travel like the brand needs to be cohesive in terms of its experience. And then the other eight months of the year, the region is driving whatever is most appropriate based on balance. It's a balance and it's a constant negotiation. And let me tell you, it's like brothers and sisters. And it's been that way everywhere I've ever worked. The regional team thinks the global team doesn't get it. And And the global team's like, why won't the regions listen? I've seen that a lot. But ultimately, yeah. But I think that's pretty normal. It's like sibling rivalry in some kind of way.

41:29But it's powerful when you get those teams actually talking and listening to each other. The sibling rivalry reference reminds me of something you said a while ago. You were talking about, you know, the candor and the transparency and the pushback that happens needs to happen. in those exec team meetings. You know, be rational, not emotional. A sibling rivalry or a sibling relationship is often emotional. And I wanted to ask you then, what role do you think emotion within the operations of the enterprise has? And obviously, let's not go to where emotion, and I've been, by the way, I've been guilty of this more times than I like to admit to myself, where my emotional commitment to something in support of or in defense of the business, just it went too far.

42:24Me too, by the way. Me too. And I'm wondering, like, isn't emotion a necessary part of it? Because it's the expression of passion, conviction, and caring. At least if we don't go too far as I've done. I want to say yes, Seth. Like to some degree, I need people passionate. I don't need anybody working on the team who isn't passionate about what we do. I'm not going to get the best work out of them. They're not going to reach their potential. It's not a good match. Passion for the work, for the consumer, for the product. I think what I'm speaking about is this is my idea, and I'm passionate about getting my idea through by any means necessary.

43:07necessary. And so I'm emotional. If you have feedback about my idea versus like, again, sort of channeling the Lululemon way, like take a beat, take a deep breath. What is going to make the work the best it can possibly be? I have an example just happened a week ago. I had all four regions were in town because of seaweed. We were hosting folks from all over the world. And I had dinner with my leader from EMEA. We've just kicked off annual planning for next year. And we are going through sort of strategic shifts. What do we want to really be a big priority next year? And the global team kind of starts that conversation based on conversations we've had with the region.

43:47So we're collating all of the ideas and we're playing back some big themes. And she knew we're going to dinner. So she sent me an email with questions and feedback and some ideas. And we had an awesome dinner debating some things. And I would tell you coming out of that dinner because, and again, when I first read the email, like I could feel myself be like, Oh, I feel like I need to defend. I need to defend this idea that the global team has presented. But then just by like, again, taking a minute, she, she likes the idea. She's trying to make it better. Um, and so how do I be open to the feedback?

44:30And the dinner was amazing because I learned a few things that, that we've now played back and discussed as a team that are going to make the idea stronger. There were a couple of other places where I explained my rationale or a team member's rationale and she's like, okay, great. Thank you. Context. I get it. Makes sense. Like I don't, let's continue down that path, but there's just this, um, can it all comes back to communication? Yeah. Just like with, with any relationship, being able to articulate yourself clearly don't go into a conversation that's a big you know a big conversation where you need to make a decision if you are redlining or or having a moment or you just got you know you're a call from the school and your kids in trouble about something like all matter of things happen to us on a daily basis so that's really just what i mean is like maybe the better word is regulating your emotion and making sure that you're making decisions from the right place and in the right frame of mind.

45:30Yeah.

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47:07It's interesting. I mean, we want everybody to bring their humanity, just not too much of it. At a certain point. At a certain point. I have to tell you a story quickly from... a teammate of mine who is in our PNC department, because we talk a lot about, you know, like bringing your whole self to work was like a phrase that was getting thrown around everywhere. And she was like, hey, I want you to bring your whole self to work. Except for that, I want you to bring your whole professional self to work. Like that feels like the right person to bring to work. I'm still unprofessional. I'm myself, that's for sure.

47:46Nobody's ever accused me of being anything other than fully myself. And fully Nikki. By the way, I kind of want to title this episode, we're just going to focus group it right now. Okay. And the audience will know whether you approved it because you do have approval rights. Drop a squat, no plumber's crack. I love it. That sounds like it's going to drive a lot of engagement. it. I mean, honestly, like it doesn't feel it's too bad that it doesn't feel more on brand for you guys because I love that line so much and I hope you find a place to use it because. Hey, I will say one of the things about the brand that I am embracing, but it's a, it's a fine line and you're seeing it right now with, I don't, maybe you haven't seen it.

48:35The big ass bag is the product we just dropped. Speaking of Plumber's Cracks, by the way, you guys are so butt focus what's up plumbers cracks big ass bags oh yoga butts one of our one of the things our guests care is most about is by the way when i said that i i was being flippant but of course like the art when i became aware of lulu um which is i'm living in la you know epicenter of yoga pant and it was like the the product benefit was makes your ass look great and it makes everybody look awesome and honestly more important feel awesome like that's uh we we talk about ends yeah the confidence of yeah you're gonna go out in the world with this on do you feel good because if you feel good you're gonna look even better that's that is the promise that we have made but the big ass bag is going viral it's sold the black is sold out online already but there is this like quirkiness and not taking ourselves too seriously that is part of the spirit of lululemon that um Yeah, it's a fine line of not over to the like kooky cornball side of things, but I think our guest really appreciates a little bit of humor.

49:50I think, honestly, I think people appreciate humor no matter who they are, guest, client, customer, consumer of. And it is deployed too infrequently. And usually, in my estimation, like looking at Super Bowl, like humor for humor's sake rather than humor as a way into something. But I completely agree with you. Let me go to something that is less funny. And I'm wondering why you think it is in organizations of all sizes that in 2026, many a CMO has to make the case to their CEO and their CFO that brand is a financial asset that compounds, right? rather than an expense that needs justification and measurement with a myopic focus on the moment, the minute, the quarter at the expense of what follows?

50:56Why has this not changed? And maybe your perspective on it. Well, I'll guess. Yeah, yeah. One, I will start by saying, and you didn't say this either, you said many. I don't think that's true of all CEOs and CFOs. I've worked with many who I would say get it. That said, especially as a public company, we have a fiduciary responsibility, as they say, to our shareholders and to investors and the public at large to spend and invest. I should say invest, not spend in a way that's going to generate value. and I think the rub is alignment on what is the best way to do that and to your point on what timeline yeah and I think some brands have a bigger appetite some CEOs some CFOs and then the market honestly decides how much time some folks have how much time do you have to yield the market has any judgment or reason for its judgment to be as important yes that's a whole that's a whole other podcast um that topic but i do think there is i mean you've got to measure value you wouldn't make a product that cost you a thousand dollars and charge five hundred dollars for it like there's just some logic in it but i think because it's not hard math that you can see payback right this second it's hard for a lot of people who haven't grown up inside of an organization that puts a tremendously high value on it to understand.

52:34And so I think Uber was a phenomenal experience for me because that is a product, AKA engineering led organization, or at least was when I was there, they went through a, I would say a brand crisis with delete Uber at the time. I would say they did. And sort of woke up to the fact that like, oh, like brand matters. Our consumers care, our couriers care, our drivers care, and we don't totally understand it. So we need to recruit some folks who come from places that deeply understand it and we're going to listen and learn. And I give them a lot of credit for taking that action because some other organizations might've just decided to try to power through or that they knew better or that my favorite is like best product wins.

53:25No, it doesn't. I think we can give you a million examples of a lesser product being a more successful brand and product as a result of the brand perception. But that takes conversation. It takes dialogue. It takes leaders who want to learn and listen. And most of those conversations are more easily held when you're not under the pressure of an earnings call being tomorrow or a CEO transition or whatever it might be. But I think it's just the name of the game. I think all functions probably have some version of this that they struggle with and would talk about as like their single biggest barrier to overcome.

54:07But I do think, I do think it is getting, I think there's some things happening that are making it more obvious for people. And I'll tell you one that we've been talking a lot about, which I don't love, but in some ways it's actually, I think, going to work to the advantage of people needing to place a higher premium on that everything we do, to use your words, is either going to create or destroy value, is this shift to AI-based search and LLM discovery. And in our industry, I mean, we're like a top four in terms of, I'm no longer like Googling and paid search isn't going to help me make my decision.

54:47I'm going right to my chat bot of choice to say like, who's selling the best leggings right now? I think the fact that what you say on an earnings call, what Forbes is now saying about your business model or leadership team, the fact that that is so directly informing what is being said about your brand to a consumer just looking to buy a pair of shorts is really different than when I grew up in marketing. And I couldn't even told you when an earnings call was happening. I think now to see how business decisions are shaping consumer perception and brand value is actually when did a marketer's back?

55:33Honestly, that is the thesis of this show, right? So the subtitle of the show is reimagining marketing and and it is it is rooted in the premise that in today's world anything and everything anyone says or does going back to your ambassadors in the store to the customer service rep to the ceo very often um influences how i feel about the brand influences how i feel about the business and oftentimes influences increasingly influences whether or not, I'm going to consider you and or buy from you. And I think you really made the point of the show. So thank you for that too. Well, you came and spoke to the team and obviously I've known you for a bit now and you're now, it's like a worm in my brain.

56:23And I think the team's probably sick of me literally pointing out if something is a create or destroy moment, but it has stuck with me so it's sticky well I appreciate that and I hope it's been value accretive because you know stay on message alright let me ask you a last question speaking about creation and destruction as this of everybody who comes on the show if you had all the power in all the world for a moment in time and you could create anything tomorrow and you could destroy any one thing tomorrow. You can answer this through any lens. What would you create and what would you destroy?

57:07I got to tell you, since you asked me to be on this podcast, I have been thinking about what my answer would be. And even five minutes before, I was like, I don't know what my answer is going to be. There's so many things. And it's like, do I want to go with world peace or do I want to solve a marketing problem? Um, I think what I would create is a, um, again, I'm going to, I'm going to, I am going to come through the filter of my job. Um, what I would create is some, I mean, this isn't, I'm creating something that isn't real because you gave me all the power in the world. I would create an opportunity for every person who works at my organization to walk a day in the shoes of the guest and then just in their jobs, be able to actually be at some of these community-led events and be in the stores.

58:01Not everybody, we have thousands of employees, not everybody gets that luxury. But to be able to actually feel the culture and not just the internal company culture, but like the culture that we are not leading, because I don't think brands lead community. I think you can be like an enabler of community. You can connect people and make moments for people to come together to connect. But I think people will be so much more motivated and inspired in their jobs if they actually got to experience the final feeling or moment where a consumer finds that thing they're looking for or crosses the finish line or makes a new friend at a run club.

58:49Like it's such a powerful motivator and unlock. And then you realize like, oh, my job does matter. Like I'm doing good in the world. That's what I would create is some mechanism to allow that to happen for every single person who works at Lululemon. You've used the phrase a mile in someone's shoes a few times during our conversation. And when you first said it, I heard it is empathy, right? And I think you meant it in that context. As I hear you say it this time, I hear it as empathy and. Empathy and understanding. Understanding. Empathy and insight. And maybe understanding and insight are prerequisite ingredients for empathy.

59:35But I'm not sure on the first however many episodes of this show that the word empathy has come up twice before. and I think it is I think it is a undertaught, underutilized insanely important

59:58ingredient in value creation and it's just been a through line in everything you've said. Yeah. Now you get to destroy something. What is it? Okay, okay.

1:00:11I would destroy everything Oh, man, this is a really tough one. Because I actually feel like things, bad things happening are really important learning opportunities. Well, what would I destroy? I would, I would destroy meetings that happen before 8am. Well, you must have a lot of those because your, your business is around the world. they do happen a lot no that's not a great answer that's a stupid answer I'm gonna go with I would destroy um fear that lives inside of my team um I think fear is a culture killer I think fear leads to bad decision making I think fear makes life miserable I know it's a helpful tool in life fight or flight.

1:01:07Like when we feel scared of something, our body's trying to tell us something, but I don't see a place for it inside of the work that I do. Um, and so I would destroy fear. You're actually the second person to show that, which, and maybe even the third and, and don't, no, it's not an, oh no. I think it's, I think it's just proof of its prevalence. I think it's And, you know, oftentimes leaders are able to see it in ways that others aren't because you see so many people. I think it's proof of its prevalence and how destructive to value humans, etc. it is. Yeah, there's a fight or flight benefit, I suppose, to your point.

1:01:54But yeah, basically it just fucking sucks. I'm with you. I would destroy that too. Nobody's done their best work. when they're scared. Yeah. That's the bottom line. Yeah. Yeah. That's why I don't like Halloween. I don't love Halloween either. But mostly just because I feel so much pressure to have a great costume. And then I'm like, ah, I'm just going to stay. That's how I feel about New Year's Eve. Like so much pressure to have a great time that I just stay home and, you know, we watch TV. Which is its own version of a great time. As has this conversation been. And Nikki, thank you so much for joining us.

1:02:31Thank you. It's been great. And, you know, the. Yeah, you drop gems. So thank you so much. Thank you so much for having me.

1:02:44We end every week asking you to consider something this week. I'm asking you to consider this. Morgan Housel, the author of a couple of my favorite business books, The Psychology of Money and Same as Ever, said in the latter, and I'm quoting the valuation of every company is simply a number from today multiplied by a story about tomorrow. And if you're a CFO, every number you manage, gross margin, CAC, LTV, churn, revenue predictability, operating cash flow, is ultimately a reflection of people's attitudes and behaviors and the stories they've told themselves about your business with their wallets.

1:03:18Somebody did or didn't choose to buy, to stay, to pay full price, to recommend, to come back, or didn't. And the conditions driving these choices, the meaning, trust, preference, awareness, the willingness to pay without a discount, The attachment that makes switching feel like a loss, all of that is built far upstream by marketing long before it shows up downstream in anybody's financial statement. Which means your P &L, the P &L, whether you read it this way or don't, is a narrative about what people thought, felt, believed, compared, and chose. Every line is an aggregation of behavioral inputs and the outcomes that followed or didn't.

1:03:54And when a CFO treats marketing as a discretionary cost rather than the engine that creates the conditions for every one of those metrics to improve, they end up paying the actual cost of that efficiency somewhere else in promotions that eat margin and acquisition costs that creep up into the right in churn and talent that's harder to hire and less revenue and shareholder value. Panera is a case study worth knowing. Once the number one fast casual brand in America, they fell to number three behind Chipotle and Panda Express after a strategy rooted in cost-cutting and so-called efficiency. They squeezed food costs, shrank portions, swapped romaine for iceberg, and stripped labor from the cafes.

1:04:33The savings were pretty marginal. The consequence was, as their CEO Paul Carbone described it when he took over in 2025, death by a thousand paper cuts. because when the guests came in to buy what was a lower quality and smaller size sandwich, demand, trust, and share eroded and sales dropped. And here's the thing. Carbone was Panera's CFO before he became its CEO. He calls himself a reformed CFO. The cost-cutting he's now spending millions to undo happened, at least in part on his watch, which makes me think of a famous Peter Drucker line. There's nothing quite so useless as doing with great efficiency, that which shouldn't be done at all.

1:05:09Cost discipline's an obligation. Every enterprise needs it and everyone in the organization is responsible for it. But it's not a strategy. And when it becomes one, when the reasonable pursuit of efficiency hijacks the essential pursuit of effectiveness, the enterprise doesn't save money. It destroys the demand and thus the value it was supposed to create. The fundamental difference between finance and marketing, one measures value, the other creates it. And if you're a CFO and you're still not sure, consider what would happen if you stopped marketing. I'm going to bet nothing good. That's worth considering.

1:05:46Today's episode was produced by Art Chung, Jim Mackle, Manolo Moreno, Brandon McFarlane, and Ashley Futterman from the Vox Media Podcast Network and The Wisdomist Company.

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