WOOL: Chip, thank you for joining us. You lead an iconic brand and a global business giant. What is it like being in your shoes?
Chip: We have been around for 165 years and one of my biggest responsibilities is to make sure that we're around for another 165.
I can say for sure that we will be a different company five years from today; more different than we are now when compared to the last five, because of the degree of disruption that we are now introducing in our operations. I believe that if you don't disrupt yourself, somebody else will do it to you, so in areas of disruption and innovation, we want to stay ahead of the curve.
Technology is not just changing processes but also customer expectations. It has become almost impossible to predict consumer behavior, so all we can do is be as agile as possible. To use a sports analogy - we skate to where the puck is going. But if innovation and disruption, and shaping the future is one piece, the other is to live by our values.
The role of a CEO is more special when the company has a track record of not being afraid to stick its neck out and stand up for causes we believe are right, even if that means taking an unpopular stand. We were one of the first companies to stand up to the recent immigration ban, for instance. We were one of the first to provide same sex partners with healthcare benefits; we raised awareness about HIV and AIDS, before it was recognized. We withdrew support from the Boy Scouts when they banned gay troop leaders.
We have nurtured a forward looking thought process all along. It's of pivotal importance to reinforce our values because it is a reason for people to join the company and why so many choose to stay.
WOOL: I want to stay on the topic of innovation, technology and survival. After leveraging the voice, the next technological transformation is expected to be reined in by touch - how we wear our devices becomes a prominent question. The textile industry can be a great place for applying technology-led innovations. How are you gearing up to ride the innovation challenge?
Chip: Innovation has been at the center of Levi's® core ideology, and it is the essential lifeblood of what has made it the company it is today. Levi's® was founded on an innovation! Levi Strauss, the man himself, along with his partner Jacob Davis came up with, and patented - the riveted blue jean. This dates back to the times of the gold rush.
If you were a miner, mining for gold hundreds of miles from downtown San Francisco and you busted your pants, you would have to spend the next couple of days travelling to San Francisco, getting a new pair of pants made, and getting back to the mine. There was a meaningful consumer need at that point of time, and Levi's® tapped into this demand and delivered tough garments that could withstand manual labor, innovating with materials that were far more durable. Even now, our turnaround has hinged heavily on bringing back the importance of innovation, whether it is in the fabrics we use or the finishes we do, to even how we produce a pair of jeans.
We are now starting to innovate with Project F.L.X. (Future-Led Execution) for instance, which uses laser technology to manufacture denim.
Technology is not just changing processes but also customer expectations. It has become almost impossible to predict consumer behavior, so all we can do is be as agile as possible. To use a sports analogy - we skate to where the puck is going.
WOOL: Could you elaborate on Project F.L.X. and the edge it allows you?
Chip: The apparel industry somehow still operates in a similar fashion as it did perhaps 150 years ago. Clothes-making is still a largely manually-intensive sector.
We do have computers cut patterns, but from that point forward, it becomes a labor driven, manual process. We recognized that there is a mega opportunity for disruption, so we announced Project F.L.X. Use of this technology allows us to finish our jeans using lasers. It's important to recognize that lasers have been around for a long time, but they lacked the granular capabilities required to finish jeans without supplementing it with hand finishing. We have developed proprietary technology that takes this blunt instrument and makes it into something like a surgical instrument and allows us to perfectly match our products to a hand-finished pair of jeans.The benefits of that are:
1. A hand-finished pair of jeans can take up to 20 minutes to finish and lasers can do the job in less than two minutes
2. From a sustainability point of view, a laser is preferred because it reduces our dependence on chemicals
WOOL: That's awesome. Now since Levi's® is in the process of rebranding, how are you serving an iconic brand, which is rooted in tradition and modernizing it to suit the millennial taste? How are you ensuring that today's generation tell their Levi's® stories with pride?
Chip: You know, as a 22-year old, I took a backpacking vacation in Europe, using a Euro Rail pass trip through Norway and Sweden, staying in youth hostels and camping grounds. It's the kind of trip where you wash your clothes by hopping into the shower with them on, and washing yourself down with a bar of soap and hanging everything up to dry overnight. So, in Norway, in a youth hostel, I needed to wash my clothes. I took the wallet out of my jeans, put it on the window sill, jumped into the shower, wearing my Levi's®, soaped myself down, rinsed off, wrung everything out, hung it out to dry and went to bed. When I woke up in the morning, I realized I had left my wallet in the bathroom! Of course, I ran to the bathroom, and guess what, my wallet is still there but my Levi's® are gone!
This is how powerful the brand was back in the 1980s; it was like cash, perhaps even worth more than cash in several parts of the world. I had friends who graduated from college with me and travelled through Eastern Europe and Russia, with suitcases full of Levi's® jeans and Marlboro cigarettes, basically bartering their way through for a couple of weeks!