HIVEMIND MENTALITY

Adidas Opens Up

  • Why it matters

    Why it matters

    As Adidas and other sports brands come under growing pressure to keep up with changing consumer tastes, they are seeking out new ideas and partnerships to stay competitive.

  • Facts

    Facts

    • Adidas has set ambitious earnings targets through 2020, including 10 to 12 percent growth in average annual sales and a profit bump of at least 20 percent.
    • As part of the “open-source concept” pioneered by former chief executive Herbert Hainer, Adidas launched Glitch, a kind of crowd-sourced soccer cleat, in 2016.
    • The Herzogenaurach-based company debuted a new production facility in Germany known as the “Speedfactory” in hope of making its products closer to where its consumers are.
  • Audio

    Audio

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Whose idea was this? Source: PR

For years, the person who set the course at Adidas was the same person for whom the sportswear giant was named: Adi Dassler, the company’s founder.

It all started with a pair of cleats. The screw-in studs Mr. Dassler pioneered gave West Germany’s national soccer team the edge in the final game of the 1954 World Cup — and catapulted Adidas to the sporting goods industry’s top ranks.

But Adidas is increasingly embracing a “more-the-merrier” approach when it comes to conceptualizing the company’s latest products. Instead of relying on a single visionary, Adidas has tasked hundreds of designers, developers, and market researchers with ensuring its long-term success. Now, it wants to expand that circle even further.

“We have to open up to partners,” said James Carnes, the company’s vice president of global brand strategy. “Our goal is to be faster than the competition.” In a bid to keep up with consumers’ rapidly changing tastes, Adidas is engaging those customers more than ever before. And it’s applying the same strategy to designers, startups and nonprofit organizations.

Access was restricted to members of the “Glitch community” in London, who could order the cleats using an app and have them delivered in just four hours.

It started more than two years ago, when then-chief executive Herbert Hainer introduced his “open-source concept.” That strategy has allowed Adidas to cater to customers’ current tastes more effectively than its competitors — and has sent second-quarter sales soaring by one-fifth.

Glitch is just one of the open-source initiatives Adidas has launched to engage athletes on the pitch. It’s a new football boot – with removable plastic shells – marketed in a new way. Athletes keep the inner shoe but can change up the outer skin.

The way Glitch was born was also unusual for Adidas. Last spring, the company tapped 30 up-and-coming football players in London to wear the first prototypes and report back, not just on their experience with the cleats, but also on other aspects of their lives. After a close collaboration between the testers and company experts, Adidas debuted its first line of Glitch boots in the fall.

Access was restricted to members of the “Glitch community” in London, who could order the cleats using an app and have them delivered in just four hours. As for who could join that circle, Adidas left it up to the buyers themselves, who could give invite codes to their friends.

By the company’s standards, Glitch has proven to be a huge success. “As multipliers, the members of the community are really interesting,” said Marc Makowski, the director of business development for Adidas’ football division.

Among young footballers, those in the Glitch group are seen as trendsetters. Since the boot’s launch, the community has grown to 30,000 members in London and Berlin. Mr. Makowski described the contact Adidas has established with its target market as “extremely important.”

“We get very honest and direct feedback,” he said. Based on that input, Adidas releases new sets of plastic skins every couple of weeks – but they don’t come cheap. A Glitch starter pack goes for €300, or $354 in the United States, and a new outer shoe runs €120.

Industry experts say it’s a smart move for Adidas to open up to outside influences. “It’s a good way of orienting new products and digital services toward consumers and bringing them to the market more quickly,” said Hartmut Heinrich of the Fjord consultancy in Zurich.

Besides Adidas, many other sportswear firms now recognize the value of outside input, but they still lack the resources and the know-how to reach out to individual players. The Ispo Munich trade fair has made a business out of connecting these companies with some of the 40,000 athletes in its rolodex.

“These people are very interested in sports, they set trends, and they’re role models in their community,” said Ispo director Tobias Gröber. “You could call them professional consumers.”

For Adidas, Glitch is just one of many open-source projects in the pipeline. The company has gotten global attention for another partnership, with the advocacy organization Parley for the Oceans. Adidas executive board member Eric Liedtke presented the product of their collaboration at the United Nations: a shoe collection made from recycled plastic waste from the ocean.

This spirit of cooperation extends to Adidas’ production methods as well. The company turned to German engineering firms, such as Oechsler as well as Manz, to develop its “Speedfactory” concept, which involves manufacturing sportswear closer to the customers themselves. Instead of having to order its products months in advance from factories in Asia, Adidas is looking local to keep up with customer demand.

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After setting up its first Speedfactory in the Bavarian city of Ansbach, Adidas started working on opening up a second facility in Atlanta. For now, the factories are only able to produce a million pairs of shoes in a year – what the company sells in a single day – but the sportswear giant is looking to establish more such outlets around the world.

Meanwhile, word has spread of Adidas’ strategic opening. “By now, many companies are coming to us,” said Roland Auschel, a member of the executive board. This includes the California startup Carbon, a maker of 3D printers, which is working with Adidas to mass-produce custom shoe soles.

Part of Adidas’ outward pivot has to do with financial targets set by the company’s leadership. Last fall, chief executive Kasper Rorsted pledged that Adidas would boost average annual sales by 10 to 12 percent by 2020, with profit increases of up to 22 percent.

Meanwhile, protecting the company’s new ventures means continuing to invest in them. “It’s important to take the community seriously and to give it enough recognition,” Mr. Makowski said. Since launching its Glitch project, Adidas has offered full-time positions to former members of the group – and soon, the initiative will expand to a third city.

Even once the circle of Glitch customers grows to 60,000, only members will be able buy the designs their friends help create. But sooner or later, the styles soccer’s trendsetters embrace will trickle down to Adidas’ actual collections – and, the company hopes, drive stronger sales.

Yet according to Mr. Heinrich of Fjord, it’s not enough for firms like Adidas to open their doors to outside influences. The industry also has to break down silos and hierarchies, allowing employees more autonomy and responsibility. “Otherwise, even the best outside ideas will fizzle in the face of bureaucracy and rigid annual plans,” he said.

For companies with roots going back as far as Adidas, that’s no easy task.

 

Joachim Hofer covers the sports, leisure and IT sectors for Handelsblatt. To contact the author: hofer@handelsblatt.com

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