#262: Lew Frankfort, Chairman Emeritus and former CEO of Coach – Combine magic and logic

29:55David Novak:Was there ever a time where the magic overwhelmed the logic or the logic overwhelmed the magic? I mean, how did you keep that in sync? And can you talk about how you did that as a leader? Because you kind of have this formula now, magic plus logic, but I could see how one could outweigh the other every now and then. Did that ever happen? Frequently, of course. It happens when you don't keep track of every aspect of the 360-degree experience of the company and product. When were you doing really well? It was not time for complacency. You're absolutely correct. And we were never complacent. However, there was a time when we were very dominant in the marketplace.

30:47well after we went public, when we did not notice a major new competitor coming in, copying our playbook, opening beautiful, shiny new stores right next to us. And our stores by this time felt a little dark and the like. And we didn't jump on that fast enough in terms of innovation. Who was that competitor? Michael Kors.

31:18David Novak:Michael Kors. All right. That's a very good brand. It's right in that lane there. You know, you mentioned copycats. You know, I don't know if there's too many industries that have more copycats than you. I mean, you know, I've spent a lot of time in China. I mean, you would see copycat everything. I mean, how did you deal with that? Well, when we talk about copies, there's imitations that where they, what we call counterfeits. That's one type of copy where they actually use the coach name and think they could get away with it. And the other copy is people who use our trademark dress to create bags that look strikingly similar to ours that can be confused in the marketplace.

32:07So we invested heavily in IP. We also were relentless, again, the word relentless, and tracking down people who sold counterfeits or sold bags that were confusing in the marketplace. We did everything from lawsuits to work with local governments, law enforcement agencies to ensure that these bags would not be sold and where they were being sold. Of course, you're never perfect, but we made it really hard for these people. So they would go after other brands. Yeah.

32:51David Novak:Now you're like, you know, you're, you're obviously someone who gets out in the marketplace, listens to customers, checks out competition. When you saw a really good competitive idea, you know, how did you, how did you bring that back to your company and what did you do with it? Did you ever blatantly copy an idea directly and just use the coach name and just do your version of it? Or how did you think about competition and innovation and how you apply it? It's another excellent question. The first word is carefully. We think about interpretation carefully. And there were times when we thought that we were interpreting someone else's idea into something that was uniquely coach.

33:46And we found by the marketplace not purchasing it that they didn't really see this as coach. So over the years, what we decided we would do was be much more rigorous about using our brand codes fully. The type of detailing, stitching, materials, pockets, everything that made Coach Coach would have to be evident at first glance to a consumer when they picked up the product.

34:19David Novak:You know, the other thing, Lou, which is amazing about your industry is that, you know, fashion is like constantly changing. You know, you become hot, you become cold. You know, it's like there's so many ins and outs. And yet, you know, Coach is this enduring brand, you know, that you've been able to keep relevant. How do you stick to your core but then evolve enough to where you still stay on trend? or do you just see yourself as timeless? We see ourselves as both timeless and on trend. So to step back, when you look at the marketplace, consumers have different things that motivate them. And in the case of clothing and accessories, there are people that are functional consumers.

35:11They just want a product that's going to do the job. And some consumers are classic. Some consumers are fashion. Some consumers are fashionistas. And understanding your addressable market, who you're targeting and how is very crucial so that you can develop the type of product, the type of distribution, marketing, storytelling, presentation, positioning. So Coach looks through today, of course, at consumers in every conceivable way by demographics, psychographics. Gen Z is a different consumer than a baby boomer. And knowing where the baby boomers live and where Gen Z shop, very helpful.

36:04David Novak:You've had this enormous success, and you keep topping yourself in your life, which I really admire. And at the same time, you mentioned that you used to wake up with these sweats where your T-shirt would be ringing wet. Were you the type of guy that could ever celebrate success? I mean, you talk a lot about fear driving you, but could you ever give yourself a pat on the back? or how hard was it for you to give other people a pat on the back? Great, great, great question. Early on, as Coach became a substantial business and I filled out a leadership team, I brought in a chief people officer who reminded me that when we reached a milestone, we needed to stop, applaud ourselves, applaud others, and mark these as occasions, as true milestones.

37:06And while it wasn't natural to me to begin with, it became part of our culture. And I will say today I'm much more about moments than I was 50 years ago or 20 years ago or even 10.

37:28David Novak:Yeah, well, we all grow. I mean, we're all constantly evolving and hopefully trying to get better. And you've said that you could be brutally honest, and sometimes you actually would create fear just with your directness. You know, can you share a story of where maybe you took it a little bit too far and how you recovered after realizing it? I have very high standards for myself and very high standards for the people that I work with. and developed a leadership team with similarly high standards. And a big challenge always for me is meeting with an executive who was not adequately prepared and who was trying to wing it as opposed to saying to me, Lou, I'm not ready for this.

38:25And earlier in my career, I would know that my blood pressure might go up and I might say, you're just not prepared. Let's end the meeting. Or I could even say worse. And now I'm much more aware of when my body talks to me, if I'm feeling my heart starting to race or feeling impatient, I ask myself, why? it and what do I want to do about it and what's the best way for the greater good for me to handle it. So I learned over the decades that you need to apply different leadership styles to different situations, of course.

39:10David Novak:That's a tough lesson for us all to learn, but it's so true. And everybody talks about culture, the importance of culture, the importance of the work environment, the behaviors that you drive. You know, when you think about Coach, what was the single biggest behavior that you felt you had to make sure everybody in the company knew that you had to execute and it became such a big part of your culture? When I joined Coach during that very first six years, I worked in a paternalistic culture. The founder was the boss. He was everything. And he treated people extremely kindly from a paternalistic perspective.

40:03When we became part of Sarah Lee, I knew I was in a performance environment and everything would be based upon metrics and achievements. When I made that transition, I coined the term performance family to describe the type of culture that we wanted to create. Family meant we wanted people with shared good values, that we had a greater purpose than just a paycheck. We wanted to build something. We had belief, strong work ethic. And anyone who tried and was successful, boundless opportunities. Someone who tried but wasn't successful, we needed to exit them in the way that we would like to be exited if it did not work.

40:59So over time, people understood that we had a collaborative environment. We were looking to help people perform at the very best levels, coaching them, training them. But if they did not perform, we needed to separate them and separate them in a way that we would like to be separated if that was the case. So over time, we became a performance culture.

41:26David Novak:You know, the interesting thing that's going on, obviously, in the world today, Lou, is AI and, you know, artificial intelligence. And, you know, you're in such a creative environment. You know, I think about your industry. How much do you see AI impacting your industry, or do you? It's going to permeate everything we do to the extent it doesn't even do so today. So when I think of some of the logic that we use from a data collection perspective, consumer insights perspective, I believe that AI will really be able to accelerate our learning, simplify it, but at the same time, hopefully not homogenize us.

42:21David Novak:And how do you as a leader, how have you gotten yourself up to speed? You're curious, obviously. You've got this investigative mindset. How have you gotten yourself up to speed on AI and what it can mean? I will say insufficiently so far. And I'm just blown away by what AI is doing today and will do tomorrow. I think it's unknown as to how much it will affect us beyond just the workplace. And how do you think about, as a leader, getting more up to speed? What do you see doing? First, at this stage of my career, I look to find people who are almost AI natives, people who are in their 20s and 30s who are actively in the learning curve and deploy them within the companies where we work, either as employees or freelance or agencies.

43:31David Novak:That makes a lot of sense. And I love how you keep evolving as a leader. Do you have a process that you use yourself that ensures the self-reflection you have to have to take your game to the next level? It's less a process than a habit or routine. Every day, virtually every day, I think about what I could have done differently and better. I'm also, I live in a multi-generational household where we're very active and I work with many private equity companies and I push people to help me understand how I could be more effective with them. And I'm always looking to learn. What's the biggest thing you're working on right now, Lou?

44:23David Novak:I'm going to say my memoir, actually. That's good. And you've got a lot to share. You know, this has been so much fun. And I want to have some more with my lightning round of questions. So are you ready for this? Sure. The three words that best describe you? Relentless, curious, marches their own beat. If you could be one person for a day beside yourself, who would it be? Franklin Delano Roosevelt. Your biggest pet peeve? The lack of value-driven leadership in many of the people who are in very senior positions, both in companies and in government. Who would play you in a movie? Maybe you could play me in a movie.

45:06David Novak:I'm not good looking enough. What's the most unlikely place you've ever spotted a coach bag? When I was in China visiting the Great Wall very early in our days, before coach really had any major business, seeing a coach bag carried by a Chinese tourist visiting the Great Wall. And I, of course, approached her at the time and said, where did you get the bag? And I did have someone who spoke Mandarin with me. That's awesome. Something you'd only know about the Bronx if you were from the Bronx. The Bronx is a microcosm of the world. And the diversity, the richness, how you can have a happy childhood without that much.

45:53David Novak:What's the one thing you do just for you? I play speed chess. Beside your family, what's your most prized possession? I actually don't have a most prized possession besides my family. The best leadership lesson you've learned from being a grandfather of eight grandchildren? Every child has to find his or her own path, and they develop in different ways at different rates. If I turned on the radio in your car, what would I hear? Probably news. What's something about you few people would know? Many of the things I discuss about me in Bad Man, my book. What's one of your daily rituals, something that you never miss?

46:38David Novak:Achieving at least 8 ,000 steps. All right. That's great. All right, Lou, we're out of the lightning round. I just got a few more questions here and we'll wrap this thing up. You and your wife, Bobby, you have three kids. What's something about leadership that you've taken from the office to how you lead at home? There's a variety of things. One example is understanding the whole idea of parking lots and compartmentalization. So one of the things, everyone has great ideas and everyone wants to implement these ideas now. And I developed the concept of a parking lot where you can park ideas, a short-term parking lot, medium-term or long-term.

47:21With each parking, whenever you put your car in the parking lot, you memorialize the date you're going to pick it up. This allows you the ability, allows me the ability to forget about it for the most part, knowing I'm going to pick it up once it's memorialized. So I apply the parking lot theory at home, too. When someone comes up with a great idea, I might say, it's a great idea, or why don't we get back to it some other time? A second idea is skirmishes, battles, and wars. I'm very keenly aware, both at work and at home, that a skirmish can turn into an unexpected war like that. And with children, grandchildren, with employees and colleagues and external relationships, when there's a conflict, you really need to be very conscious of how you want to resolve the conflict so that there isn't unintended consequences.

48:28consequences. And with grandkids growing up, I encourage my kids to understand the movement towards independence is innate. And it's going to happen no different than when I compare a brand to a person. And you need to give kids room. So if they want to stay up an extra half an hour, or they want to do something different, you have to decide whether this is the time to confront it or to let it go because you want to build up collateral to avoid bigger problems.

49:02David Novak:There's some real wisdom there. You know, when you think about your wife, Bobbi, what would be the biggest leadership lesson she's taught you? Consistency. She's always been there as CEO of my family and CEO of her own business for 20 years, plus doing many other things with purpose. All right. Next question here. What do you see now as your unfinished business? You've done so much. What's next? Have more moments and enjoy my life. It's all about relationships and purpose. So a combination of doing good, as I define it, trying to help brands grow, businesses grow, build leadership teams and the like, and also enjoy living.

49:50I mean, it's all about the journey. It's not the destination. We all have the same destination. That's true. So as my son has been urging me for 20 plus years, it's all about moments. So more special times, travel, trying different things, exploration.

50:15David Novak:Last question. What's one piece of advice you'd give to anyone who wants to be a better leader? Be vulnerable. Be open. Put your ego at bay. Really work hard to hold two antithetical views in your mind. Understand the world is not black and white. There's all shades of gray. And understand when you need to be decisive or when you need to step back. And the other thing I would say from a mental health perspective, listen to your body. If you're feeling down or you have backache or neckache, you need to understand that your psychological mental stress manifests physically. And you need to have balance in your life, particularly when your body is telling you you're not getting it.

51:10David Novak:Well, Lou, I have to tell you, this has been such a treat for me to have the opportunity to talk to you. You're an icon in the world of retail, the world of consumer goods. And it's easy to understand why. And I want to thank you for imparting the wisdom that you've provided today. It's been terrific. It's fun talking with a fellow traveler. You're right about that.

51:44David Novak:David, Lou Frankfurt is iconic. How did you get him on the show? I love that guy, the bag man. I get a lot of great people on this show. I'm glad you like him so much. And I know he's got a great reputation. He's iconic. But man, I got to hear what really blew you away. I think it's partly his accent from being from the Bronx. Secondly, like the brand coach takes me back to when I was like 12 years old and I was allowed to finally get a purse. Oh, well, you could finally afford one because they had accessible luxury. Accessible luxury. That's right. And so I love this brand 12 when I was 12 years old.

52:29David Novak:And they've had honestly quite the comeback recently. I mean, I feel like I see Coach all over TikTok and Instagram. They just did a collab with the cast from The Summer I Turned Pretty, which, David, if you don't know what that is, your granddaughter certainly will. It's a big deal that Coach had a collab with Belly from The Summer I Turned Pretty. And it's just all over the place. And Lou is the guy that we all get to thank for this. Yeah, well, you know, I might take issue with the word comeback because I think, you know, they've been on a major role ever since he took over the brand. I mean, he's grown into this huge, huge global business.

53:05David Novak:And he's found the sweet spot in marketing. You know, he's found that point where when you buy a coach bag, it says something very positive about you. And you can buy that bag at an affordable price. So, you know, when you can, you know, give people the sense that they're making an upgraded statement about what they're all about at an affordable price. that's magic. I mean, I think when he took over as CEO, I think they were doing like$6 million a year in revenue. And now they're at like$5 billion. So this is not just like a boom here or there. I mean, this is significant growth that he's been able to lead over the past 20 years.

53:50David Novak:And I'm curious, David, like when you hear that stat and after you interview a guy like Lou, What strikes you about what he's been able to do at Coach and his leadership style? Well, first of all, I think he defined what the Coach brand is. And in fashion, that's really, really important. It's important for every brand, but in fashion, you really got to stand for something. Because once you stand for it, it's really hard to stand for something else. So you better pick something that people really want and they're going to want for a long time. And so what he did is he stayed true to the Coach brand throughout those 20 years, but he made it culturally relevant throughout, just like he's just doing with the collaboration with the movie you just talked about.

54:42David Novak:That's how you keep an iconic brand culturally relevant. And that's what I think he's done over time. Yeah, it's so good. When he talked about first starting at Coach, he mentioned how important to him having an investigative skill set is. And you ask him, you know, what is this investigative skill set? I've never heard another leader talk about it like that. And basically, he says he went undercover as a reporter asking all of these department stores and retail stores what they thought about Coach. And I just love that he kind of carried that same curiosity into everything he did at Coach. And David, I'm curious, like when you hear someone say, oh, I have great investigative skills, what do you say to that?

55:29David Novak:I love that phrase. It's a great way to really characterize what I think the best leaders in the world do. You know, they're very curious. and when they go in to talk to customers and their people, they're looking for the truth. So they ask questions. They ask questions that bring out the truth, that help them define the reality that the company really needs to face. It helps them really define the opportunities that are out there. And I think when you have an investigative mind, a curious mind, I got to tell you, you know, you're on your way to success because you want to find the truth, nothing but the truth.

56:14David Novak:And I love that. And, you know, by the way, I just went to Ken Langone's 90th birthday party. Ken Langone is the co-founder of Home Depot. We did a fantastic podcast together a couple of times. The guy is great. You want to talk about an investigative, curious mind? I mean, he's got this in spade. And, you know, that's what I always find in all the great leaders. What I thought was also really interesting about what Lou credits some of his own success to is he says he has a very intense fear of failure. So much so that, you know, he used to wake up like drenched in sweat and would wake up in the middle of the night and had to change his pajamas because he was so scared in his sleep that he would just sweat through his clothes.

57:05David Novak:And, you know, we talk a lot about failure and how failure is information and you learn from it and all these things. But I've never really heard a leader talk about having a fear of failure in a way that led to such success. So I'm curious, David, when you like assess Lou and you hear him talk about how this fear of failure is what leads him to success, what's your take on that? That's really interesting, Kula, because I've had the good fortune to attend a number of CEO dinners and roundtables. And one of the questions we often get is, what drives you? The fear of failure or the joyous success?

57:47And as you go around the table, if you had 10 people at the

57:53David Novak:table, I don't know, it might be five to five. Many people are driven by the fear of failure. They just can't stand the thought of failing and going through whatever humiliation that might bring your way. And then others are driven by this joy of success that they just love winning. And they love competing and succeeding. Now, I have never lost a lot of sleep because of fear of failure. Never have. You know, what really drives me is the joy of winning. I just, I love competing. And that to me is what makes business fun, is just the competitive aspect of it. Now, I hate to lose. I hate to lose.

58:45David Novak:And I hate to lose so much, I'm driven by the joy of winning. So I don't know what comes first. I really don't. And that's why I think maybe it's five to five when I think about it. I don't know. I mean, I'm sure the people that have the fear of failure, they want to win too. It's just what drives you. I'm motivated by winning, not by having other people think I failed. It's interesting because when you think about the type of mindset that being afraid of failing would put you in versus the mindset that the joy of winning would put you in, I imagine that those are somewhat different. And I guess, I mean, to your point, they might lead to the same result.

59:22David Novak:Oh, I think they do lead to the same result. and they're probably intertwined to a certain extent. You know, you can't really separate them. But I'm glad that I did not have Lou's problem. I'm glad I did not have a wet bed, okay, for my sweat, okay? I'm glad. And if I was with you right now, we'd be laughing about that. You just said wet bed on a podcast. And I guarantee you he is one competitive guy and he loves winning too. So, you know, we would have a lot of fun laughing about that. Oh, Lou Frankfurt, what an icon. This is such a great episode, David. And not just because Lou's Bronx accent is incredible.

1:00:05David Novak:You pull out incredible stories from him. And Lou, I mean, he worked in local government in New York for a number of years. He helped a preschool get off the ground. I mean, this guy is just fascinating. And they took all that to a handbag company and blew it out of the water. So I just, I love this story. I love this episode. He's proof positive of what a curious mind can do. He had curiosity and then took that curiosity, took the learning that he had and put it into action. And he is the definition of what I would call an active learner. Well, as we end this episode, I really encourage you, if you're listening or watching this on YouTube, to think about one thing from Lou's episode that you really want to take with you into the next week, whether it is into your personal life or into your leadership or into your work.

1:00:51David Novak:There's so many great perspectives and points of view that Lou offers in this episode. So I really just challenge you to choose one and see what it does for you. So here's one thing I think everybody that's listening should do. Be curious this week. What can you learn more about? Where can you go do your own investigative skills? And let's see what you come up with. And let's see how you can put it to use and make it active in your business. Well, that does it for our episode of How Leaders Lead. Tune in next week and we'll see you soon. We'll see you next time.