Running Through the Boom: How Brooks Is Winning Over Generation Well

0:00Gen Z right now is engaging and running earlier than any other generation in the history of fitness. And we have data that shows, you know, for Gen X, for millennials, for boomers, they started running when they got into high school, cross country and track. What we're seeing with Gen Z is they started at age 11. Because think about it, in COVID, you're at home, your parents are going out for a run or walk, so you're going to join just to get out of the house. And so we have a wave of a generation coming that we're pretty excited about, and we're seeing it around the world. Hi, everyone. Welcome to Leadership Next, the podcast about the people and trends that are shaping the future of business.

0:41I'm Diane Brady, and I'm Kristen Stoller. Kristen, are you a runner? I am not. In fact, I can't bring myself to do it, but I Peloton. Yeah, I'm not a runner either, but I actually got very intrigued by running after our conversation with Dan Sheridan, the CEO Brooks Running Shoes, which I think of as a cult brand for people who really like to run, like Phil Waba, who interviewed him on stage at our COO. That's where we had Dan and did this interview. We were at our COO Summit, Scottsdale, Arizona. Our colleague Phil Waba interviewed him on stage and had a great conversation. And I chatted with him this morning because I was like, what was your favorite part?

1:19Because he loves a conference. And he said he loved that Dan said, we are mostly footwear, and that's what we've been historically. But now we have permission from customers to expand and get into new areas, fashion being one of them, athleisure. Yeah. How do you get permission from your customers? So this is what's also fascinating about Dan, I found is here's a guy who started as a field rep, 26 years in one company. Yeah. He's now, of course, CEO. And really, it is a brand that has been almost religiously focused on people who run, who care about the technical aspects. So why this pivot point and why now you're able to expand into a lot of different areas into this whole generation well, athleisure, as you mentioned.

2:05I think that's going to be interesting. Yeah. My thought is that now running is such a cultural phenomenon where it used to not be. We have the Strava app. People are using Strava like it's social media. So running is super popular. You want to date, get on those running shoes, right? Exactly. Yeah. So many dating running clubs in New York. And Dan, also just the most jovial guy, I think, I think we've ever talked to. Lots of great stories. We met him in Seattle. We're not going to judge yet most jovial. We'll appoint that at the end of the year when we do our wrap-up, I'm sure, our award ceremony.

2:37But I do love the culture that he's created, the messy Mondays, etc. So I think there's a lot of lessons to be learned in how do you create an incredibly engaged culture and expand. Let's not forget that other companies like Nike have been struggling because of tariffs. So these geopolitics, politics writ large is really impacting companies like Brooks. And we did talk about that as well. And speaking of Nike, just going up against such a giant as Nike, that's big competition. That's hard. Yep. Well, I will say, Phil, as I said, our resident runner on staff was very excited to have Brooks know better for him.

3:13And I was very excited to talk to him. I really enjoyed the conversation. Me too. All right. Well, let's roll tape. Cities are home to the majority of the world's population and account for 80 % of global GDP. That makes the health and sustainability of our cities critical to creating a prosperous future. And of course, business has a role to play. Jason Gerzadas, the CEO of Deloitte US, is the sponsor of this podcast, and he joins us now. Jason, great to see you. Great to see you, Diane. Thanks for having me. So how should businesses play a role in creating more vibrant and sustainable cities?

3:51It's clear to me that their health of cities is inextricably linked to businesses' viability and success. I think it starts with an awareness or a recognition of that mutually dependent reality. I think the how is around collaboration. It's bringing to bear the capabilities of businesses to support cities, renewal and innovation to understand the criticality of cities' role around economic prosperity, innovation, as well as cultural exchange. Jason, could you give us some examples of successful urban transformation projects that have been driven by these innovative business practices? I'm proud to say that Deloitte, back in 2023, we started an effort called YesSF here in San Francisco, where I live.

4:38The launch of YesSF with other business collaborators has brought together our competencies around stimulating interest amongst innovators to bring sustainability and technology innovation to benefit the city itself. Excellent. Well, that sounds like a very cool project. Thank you so much for sharing it with us. Thank you. Thanks, Jason. Dan, we're here at the COO Summit in Scottsdale. You just had a really great conversation with our colleague Phil Waba. And I love how you talk about Brooks running and the niche that it occupied and where it's going now. Yeah. Well, so, you know, I think the right way to talk about Brooks is we're a global brand.

5:23We sell in over 50 countries around the world. We're the number one brand here in the U.S. in performance run, and that's been a journey. It's not an accident. So niche is cruel? Is that a cruel way? Forgive me. I won't take offense to it. You're a mass market brand. Let me correct myself. We are a performance run brand at the root of everything we do. So every day we get up, there's 1 ,300 of us at Brooks that simply think about running, the run culture, runners, and their journey in life and health and wellness. And that focus, we often say sharp focus creates mass appeal, is inviting many people into this brand that choose an active life.

6:01And we love to say that if you put one foot in front of the other, you're our customer. And we've been able to execute. So walking's okay. Yeah. I love it. I think for anyone that health and wellness is a part of their life, many of us get up in the morning, we think about a few things. I think about coffee and then I think about moving and moving our bodies. And so our sharp focus on performance run has a big tent to invite many people in because more people than ever around the world are investing in themselves through health and wellness. And we sit in the middle of that from a product perspective.

6:40So our product is how we win every single day. And we've been consistent over a 25-year period to deliver performance products that are meaningful in people's lives. Now, I want to get into your background, Dan, because I find it fascinating. But before I do, I think I'd be remiss if I didn't say, are you a runner yourself? What's your running routine? Yeah. So in our company, we have two groups. There's runners, and then there's people that run. The runners, you can tell when you look at them, right? Maybe less than 5 % body fat. I'm joking a bit, but they're dedicated runners. It's who they are.

7:21They define themselves as runners. And then there's people that run. I'm a person that runs. I joke that I think I was genetically engineered to plow a field and sit on a bar stool, but I love running. It's a part of my life. And I grew up in ball and bat sports, but running was central to every activity that I ever engaged in. And then when I got to Brooks 27 years ago, I became a runner because of the people that I was surrounded by and, and, uh, and what it meant to me, you know, we, we believe at Brooks that, um, running is transformative in people's lives. It changes their lives. Yeah. You still haven't given Kristen your running routine.

8:00You've gone from being a person who runs to a runner, do you run every day? I don't. Um, age catch caught me. And, uh, so I run a couple times a week. I'm, I'm now a yogi. I do a lot of yoga. I do five, six days a week of yoga. Is there a shoe for that? There is not. This is our problem. We can't solve that, that issue for, uh, for yogis. There are those ones that like are very fitted to the foot. Yeah. So you don't slide off the mat. Yeah, exactly. We're not here to do product development. Well, we'll tap into that if we have to. Yeah. Dana, you've been at Brooks for over 25 years, working your way up.

8:37Tell us about your journey and why you've stayed so long. Yeah. So it's either a weird story to some people or a fun story. You can - Weird and fun. Yeah. Those are our two favorite things. So I actually got out of college. I went to the University of Washington in Seattle. And I grew up in a family of two teachers. So I went into the family business and I taught high school and coached high school basketball straight out of college. I thought that's what I wanted to do. I was a high school basketball player and I thought that was a great lifestyle for me. I didn't love the teaching. I was probably immature in my early 20s and found my way to Brooks through a friend that was working there.

9:19So I started in a very entry level role called the tech rep. What does that mean? Tech reps are field reps. So we traveled around to all of our customers and we trained them on our products and our programs and ultimately tried to get them to pull the blue box out of the back to sell. And that job was confirmation for me that I loved this industry. I was a sneaker head growing up. I always loved sneakers. But I found myself loving the business. And I was lucky enough, Brooks was very, very small. When I started at Brooks, we were 50 employees and about 50 million in global sales. We'll finish the year about 1.6 billion this year, 1 ,300 employees.

10:01And so I was super lucky to start almost in a startup, right? It was a startup at that time. And then Jim Weber showed up in early 2000s. And he was a leader that I could tap into for career development. But he had a vision. He was an incredible leader. He was an even better person. And I was able to study under him. And my career kind of progressed through sales and marketing and then operations and general management. And I'm now very humbled by the role that I fill for Brooks. So I want to go back to the tech rep days. I am not a person who runs. I'm a person who swims, also not a shoe opportunity.

10:41I love it. I swam growing up. Right. And I think about what, can you unpack for me, like, what was it? let's start beginning that made the running shoe so special. I mean, just give me a little bit of the technical details as to, because a little bit to me, a running shoe is a running shoe. Shame on me. How dare you? Yes. Well, you know. How dare you? So this is a question I get all the time, right? And you know, the truth about running is that it really matters to a runner on mile 22 two at the marathon, whether the shoe's going to work, right? And so what happens to runners is injury. Injury happens to every single runner.

11:22If you're doing something repetitiously, right, over and over again, it tends to end in injury. So early on in our journey, we tapped into that. How do we reduce injury in runners? So we've done 25 years of deep research on the biomechanics of human motion. We're science-based. And those studies help us develop R &D, innovation in materials, geometries in our shoe. And therefore, what we've done is we've got a model now where our consistency based in science, not in trend, like a lot of the market does, produces consistency and fit, feel, ride, and quality. And so our shoes over a 25-year period have been consistent in reducing injury, in making people more comfortable, and empowering their journey in fitness.

12:13Can you say what it was at the Genesis back when it was 50? I feel a little bit like it's KFC special recipe, like I'll tell you, but was there a particular aspect that really differentiated from what else was in the market? Yeah, I think, so a couple things. One, it's not, you know, product is the number one reason that Brooks is where we are, but it's a hundred things that matter in business for us to get there. So the very first thing that we identified is where runners are influenced into the sport of run. And that happens locally at your local shop, right? So we built our entire business model around independent running retailers because we knew that they were the best editors of the best brands and the best products in the world.

12:59And if we could get them to adopt our products and recommend them to runners, we were on to something. So we built our entire business model with this great product for the independent retailer. That looks like inventory planning for an independent shop who doesn't have a big back room for inventory. So we had to stock all the inventory. We have not changed that model. And so what we do is we're able to service 10 ,000 points of retail around the world on a weekly basis. And many of the bigger brands just can't operationally do that. So we've created this supply chain and operations team to really execute at a local level.

13:42And then you match it with marketing, right? So running again is local. It's the authenticity of our brand that knows running and knows the run culture that really matters to a runner. You put on top of that our purpose of inspiring everyone to run and be active, which we live by every single day to get people moving, it's a perfect scenario in business. We're purpose-driven, we execute really well, and we've got a product that people want. You're bringing me back. I'm getting some nostalgia about going with my mom to the local store in Connecticut, getting the shoes, trying them on, getting whatever that foot thing that you would slide on.

14:21There you go. You're bringing nostalgia. And I think another reason that I think your brand is doing so well right now, in my opinion, is that is this nostalgia factor with younger generations who are kind of drawing themselves to these older brands, you know, Brooks, New Balance, others, because they miss that kind of thing. Talk to me about how you're kind of capturing a new generation of customers for such an old brand. Yeah. We used to say that people aged into our brand. So stick with me on this one. And when you got into your 30s, you had work, you had maybe you were starting a family, maybe your body was starting to finally speak to you, pain, ache, things like that.

15:02Your foot actually was hurting. They would find our brand because we had a solution for all of that. And what we're seeing now in the marketplace, we call it generation well. There's actually four generations for the first time maybe ever that are all focused on some similar trends in performance run or health and wellness. You've got boomers, you've got Gen X, you've got millennials and Gen Z. And all the survey data shows that all four of those generations are focused on some key health and wellness benefits. Longevity is a goal for them. Movement, physical movement, social connection, mental health.

15:43We know in Gen Z that 65 % of Gen Z-ers on Strava say the reason that they're engaging and running right now is for mental health. That's never happened before. Are there idiosyncrasies between the generations? For sure. Gen X, millennial. Frequency. Frequency is one. How often you run is one. Social connection. So run clubs right now. I don't know, you know, in your community. Big in New York, especially in the dating scene. Yeah. Yeah. So Gen Z, not only mental well-being, but social connection. And we think it's a push off of the COVID years, right? Of growing up, you know, in your home with your parents and that connection that they want.

16:24We all can read the data on less drinking, less going to nightclubs or bars. And the social connection in run clubs now is the new dating app in our industry. Well, as is Strava, you brought up Strava, which I think is like people are using that like Instagram now to like track each other's runs. I'm sure that certainly helped you too. It is. And it's a bit of a social accountability for that generation to be accountable to your physical journey. And so, you know, this generation, Gen Z right now is engaging and running earlier than any other generation in the history of fitness. And we have data that shows, you know, for Gen X, for millennials, for boomers, they started running when they got into high school, cross country and track.

17:12What we're seeing with Gen Z is they started at age 11. Because think about it, in COVID, you're at home, your parents are going out for a run or walk. So you're going to join just to get out of the house. And so we have a wave of a generation coming that we're pretty excited about. And we're seeing it around the world. We just launched in China. China is having a running boom like never before I was there. Two weeks ago, we went for a run with a run club there called Dark Runner and they run at night in Shanghai. They run at night. OK. Yeah. And it is it's incredible. It's the universal truths of running.

17:46The transformative nature of run in people's lives is consistent in every market that we do. I'm just going to pause and just mention my family for a second as a slight divergence here. Because my kids, my Gen Z kid was a big skateboarder. And when you're talking, I think about the skate shops, the shoe drops, and the lifestyle brand, right? It was all about the sneaker app and such. How much of that, as you think about the lifestyle component, have you adopted any of the scarcity, for example? the collaborations, the things that also make people feel special, like they can't maybe get that particular pair that easily?

18:30Yeah, I think so. We're all start with that as first and foremost, the running silhouette, the run shoe is now the choice for almost every fitness activity. This is why this tent is so big and we're going to expand our brand. So if you go to the gym right now, most people are in a running shoe. If you go for a walk, they're not necessarily in a walking shoe, they're in a running shoe, right? So the running silhouette in our industry right now is the choice for most people. There's a lifestyle component to this that has come out of COVID as well. The casualization in the workforce is great for our business, right?

19:08So I don't know how you guys are Monday through Friday, but I rarely have a leather shoe on. I'm wearing a bit of where I work, but - Yeah, definitely more acceptable for you. But you see it everywhere. Conferences this week at conferences, I saw more athletic footwear with suits than I've seen. I know. I'm wearing a sneaker right now. Right. Yeah. So then you take that trend, right? And our brand, it's pretty fun right now. So we just launched our lifestyle category. Brooks is 110 years old, right? One of the oldest sporting goods companies in the world. And we have a catalog of product that has authenticity in our heritage of run.

19:48So we're bringing that back. And the way you do that is exactly what you said, Diane. You do it through scarcity models to make sure that one, your brand is in demand. You pick your distribution carefully because sneakerheads want to be authentic. They want the special products. And we've been able to do that. We just did a drop with Jeff Staple in New York, who's a huge sneakerhead and an icon in the space. So we're bringing back lifestyle. And it's because people are asking us, they want our products not only on the run, but they want them off the run. They want this brand to be a bigger part of their life.

20:25And so we have permission to do that because of our history and the products that we can bring to market. What part in your career did you realize you had the possibility of being CEO? Yeah, it's an interesting one. I've always wanted to be a leader in every part of my journey in life, whether it was when I was competing in sports, I always wanted to be the captain of the team, and I was lucky to do that. In high school, I was always a leader in clubs and sports. And in college, I really knew that I wanted to lead something. My parents were leaders. They were community leaders. They were teachers.

21:07And so when I got to Brooks, I always knew that I wanted to lead. Why? Why do you want to lead? Can we pause a second on that? My wife would say I don't follow very well. There's that. Good to be self-aware. I, even in conferences, Diane, I sit and I think, okay, how could this be better? Or what could I do to help? Or things like that. We'll continue that conversation. And no critique here. This was an unbelievable conference. You should both be very, very proud. But it's something inside of me that I just have always, you know, leaned into. I'm fascinated by great leaders. I study great leaders.

21:46I read about great leaders. I want to be around them. So I knew early on that I wanted to lead something. I also know that I'm a team player and I love building teams and being around great teams. And so over my years at Brooks, I always probably took more risk in my career to lead. I didn't know the function. I don't have a business degree. I have a sociology degree. and so I... Business of people, my friend. Business of people and strategy and connection and the like and so I knew early on I wanted to lead. It was probably in the last five years where Jim and I really started to talk about this and succession planning for any organization is critical.

22:28We've been succession planning at Brooks for over 10 years all the way down to our senior leaders and so you know that's a critical part of my success story is Jim had the vision to do a succession plan five years ago. He didn't anoint me or say you're the one, but he dealt and developed my career. You started getting invited to dinner once a week. He's like, hmm. All right. Well, I want to go back to the succession plan in a minute, but you mentioned there you took a lot of big risks and I want to know what those were. What was your biggest risk that you took? Yeah. So in 2019, we had a tragedy at Brooks.

23:04Our former COO passed away and I was in a general management role of global sales. So I was leading our global businesses around the world. And Jim pulled me in and said, I think you can do this COO role. I had never led an operations team. I had never led an IT team. I had no official training in any of that. I grew up in this business, so I knew it really well. And that was the biggest risk. We opened a distribution center in the Midwest just about four weeks after I became the COO and it went completely sideways. We could not ship the volumes that we needed. And I was placed in this role. It had no training in distribution, no training in operations.

23:50And what's always served me well is curiosity in solving problems and leaning on the experts around us so that they can do the work and I can help and guide and support. So that was a big risk on the company's part and on my part in terms of the skills that were actually needed to do that job. I had incredible people around me. I lived in Indianapolis for some 30 weeks, getting that facility up and running. And now it's a world-class facility, and I'm super proud of all the work that the team has done. But that was a huge one. That's a good one. And then how did you convince Jim that you were the one?

24:34Oh, I don't know if it was convincing. You know, I look, I get asked all the time on advice of career development. Right. And the truth is there's there's fortune in that. No pun intended here. We'll take it. There's a lot of luck. But I think, you know, the hard work that goes into anyone's careers, you guys know that, is no accident. And I worked really hard to position myself with others to be in a spot where I was a choice, right? Right. And so, you know, it was it was it was 25 years of of grinding and working and and all the things that people do in their career to put myself in that position.

25:16I don't apologize for that at all. I worked really hard at it. You wanted it. Right. Well, you said you studied leadership, great leaders. I mean, talk about what struck you as you were doing your studying. Are there books that really you found particularly useful as a guide for where to go? Yeah, I mean, there's a lot of books on leadership. I actually study mistakes a lot in leadership. What's your favorite mistake? Yeah, I won't go. There's one that I think deeply about that I won't talk about because it's a competitive one. But what I watch in leadership. Now I'm guessing. I know. My mind is wireless.

25:57Okay. Yeah. You know, here are some general themes that I think about in leadership mistakes. The first is not understanding the customer really well. And the customer can be very broad. Maybe stakeholders the right term, right? I think of our stakeholders as first and foremost our end consumer, our owner, right? our employees, and then the direct teams that I manage. And what I've watched over time is when people lose sight of those stakeholders, and it becomes about an individual. And so we have a saying that was brought to us by Charlie Munger at Berkshire Hathaway. Very funny guy. Very funny guy, very incredibly intelligent.

26:44And he talks a lot about organizations avoiding the ABCs, arrogance, bureaucracy, and complacency. And I think in leadership, it's just a good guide and a mental model that I always follow. I approach things with low arrogance because I don't know everything. So I'm super curious in how I approach people. You know, bureaucracy, I often say I'm allergic to bureaucracy. even in nonprofits or school committees that I'm asked to be on. My first question is, is there a lot of bureaucracy in this organization? I can't function in that. I don't know how to function in it. And so Brooks is a place where there's low bureaucracy.