Herbert Hainer ED cxo :25 June 30/11/09 10:43 Page 46

SPORT
Herbert Hainer ED cxo :25 June 30/11/09 10:43 Page 47

SURVIVAL
OF THE

FITTEST
Its iconic triumvirate of perfectly parallel stripes have been synonymous
with sport for decades. But with profits tumbling in the year Adidas
celebrates its 60th birthday, Chairman and CEO Herbert Hainer talks
candidly about trimming the fat, beating archrival Nike into submission
and why innovation is key to this sportswear giant’s future.

By Julian Rogers and Adam Burns

W
hen Barcelona FC’s playmaker Lionel Messi Messi is the latest in a long list of sports superstars to don ‘the
put his side two-nil up in this May’s UEFA three stripes’ – stretching back to the early days when the company
Champions League final you could say the was founded by the late Adolf (Adi) Dassler (Das). The bedrock of
diminutive Argentinean tore up the cele- Dassler’s business strategy more than half a century ago, was to en-
bration rulebook. There was to be gage with the athletes and pick their brains in order to
no acrobatic back flip, no belly-flop slide across the manufacture and refine performance-enhancing and
turf and no John Travolta-esque hip wiggling comfortable sportswear. It’s an uncomplicated ide-
against the corner flag. Instead, in front of
72,000 fans packed inside Rome’s Stadio
38,982 ology that has stood the test of time, according to
Hainer. “Just a few months ago we re-launched
Olimpico, and millions watching around the Number of the so-called Adi Dassler standards and we tried
world on TV, he removed one of his glossy Adidas group to educate everybody to go the way he did it,”
blue boots and pressed it against his lips in an employees at the Hainer reveals. “Adi Dassler spoke to the ath-
actions-speak-louder-than-words seal of ap- end of 2008 letes when he brought in new and innovative
proval. A few days earlier those very same F50i products and tried to make improvements. We
boots were personally presented by Herbert Hainer to have to make the best products for the athletes and this
Messi when he dropped by at Adidas HQ in is only possible if you are permanently in dialogue with the
Herzogenaurach, Germany. Whether the kiss by arguably the athletes, if you listen to them and work together.”
world’s finest player was impromptu or planned is irrelevant to Hainer, who joined the company as a sales director back in
Adidas because the boot’s sales shot through the roof after 1987 before rising through the ranks to Chairman and CEO 14 years
Barcelona’s victory. It was a marketing masterstroke. later, refrains from describing the Adi Dassler standards as a back-

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Herbert Hainer ED cxo :25 June 30/11/09 10:43 Page 48

a tinge of annoyance in his voice. “We were not ag-

gressive anymore, the processes were not harmonised
and our lack of innovation was shining through.”
Hainer says his remit in the top job was to “revolu-
tionise” the company and the Adidas brand.

200
million
to-basics approach. Instead, he says it encapsulates that constant
strive to manufacture better and more innovative products for
Adidas produces
today’s sportsmen and sportswomen. This is especially true in
today’s competitive and fickle sports apparel market with trends
evaporating just as quickly as they emerge. Adidas and market leader
Nike still battle to see who is top dog, although the likes of Puma – Adidas’
domestic rival – and specialist sportswear and equipment manufacturers are
snapping at their heels.
Ever since Hainer took control eight years ago he has refused to let the
company rest on its laurels. The 55-year-old, who describes himself as ag-
gressive in business and impatient to get things done, pushes Adidas, which
produces 200 million pairs of shoes and 400 million items of apparel a year,
to perform like a lean, mean athlete. “In 2001 we had a great success story be-
hind us and four or five good years after the stock market flotation but we had
become a little bit too self-complacent, a bit too self-confident,” he recalls with
Restructuring
As part of this transformation he offloaded
mountain sports company Salomon, although Hainer
opted to hang on to the TaylorMade golf brand. “Golf
is a natural sport for Adidas,” Hainer explains. “We
began 35 years ago when we made golf shoes for
Bernhard Langer and for Sandy Lyle.” In 2005, US-
based Reebok was aquired for €3.1 billion in order to
strengthen the Adidas group and challenge Nike.
Hainer also recognised that R&D was to be the
cornerstone of the company’s future success.
Eight years ago R&D, which employed 30 staff,
Number of operated with a management tier between it-
pairs of shoes self and the board. So Hainer put measures in
place to ensure they reported directly to the
head of marketing on the board. He also
every year
ploughed more money into the research facility
and doubled the team to 60. “This showed the impor-
tance we gave to the R&D department within the organisa-
tion.” R&D was also divided into separate units – one facility in Germany and
one in the US geared towards the lucrative American sports market.
At his first press conference Hainer recalls how he placed a major em-
phasis on innovation. He vowed to release one innovative product every sea-
son – a completely new product and not just a change of colour. This
pro-active approach to change and ambitious vision has made Adidas a dif-
ferent animal. “I definitely do believe that we are today much faster,” he an-
nounces, “much more proactive in how we cater to the market, how we talk
to our consumers, how we bring products and concepts to market, as well as

60 YEARS IN THE MAKING 1960s

‘Fringe sports’ like
athletics see track and
field stars donning the
three stripes.
Unconventional high
jumper Dick Fosbury
launches himself up
and over in Adidas
footwear

1970s
Muhammad Ali and
Joe Frazier face each
other in the ‘Fight of
1949 1954 the Century’. Both
Adidas is registered as a Germany football team battle Hungary with wear special boxing
company, named after its a competitive advantage. They are wearing boots developed by
founder: ‘Adi’ from Adolf and Adidas soccer boots that for the first time Adi Dassler
‘Das’ from Dassler feature removable studs
Herbert Hainer ED cxo :25 June 30/11/09 10:43 Page 49
how fast we can react to certain trends. We are permanently bringing new,
innovative products to the market, and I think this is one of the key success
factors for us.” He also sees speed rather than the size of a company being a
game winner: “It’s about being faster and not your size, otherwise the di-
nosaurs would be still alive and all the little animals dead. It’s the fastest one
who will win the race.”
Uphill battle
The dinosaurs eventually became extinct. In today’s marketplace it is
very much a case of survival of the fittest since the economic global melt-
down and subsequent recession. In August, Adidas reported a massive 95
percent plunge in profits as consumer spending dried up. Sales grew in the
Americas but shrunk in Europe and Asia. It was a headline-grabbing down-
turn in fortunes for the sportswear titan but Hainer argues that this fig-
ure needs to be put into context, especially in the year succeeding the
European football championships and the Beijing Olympic Games. He
says higher manufacturing costs and devaluation of currencies like the
Russian rouble, UK pound and Argentinean peso had an impact.
Adidas also shelled out €100 million on restructuring measures.
“Compared to the rest of the world and compared to other industries,
I think we are still doing very well.”
Adidas holds meetings with employees every six months to update them
on developments, but during the downturn this has been stepped up to every
quarter. Dialogue is paramount in this situation, Hainer discloses. “I want to
keep communication with the people going because everyday they hear neg-
ative things in the news and then rumours start. If you don’t talk to people
then you never know what kind of rumours they have just heard and you can-
not correct them if they are wrong.”
In a similar fashion to how he shaved expenditure and re-moulded the
company in the first half of the decade, Hainer says the crisis opened up op-
portunities to again trim excess fat. “This crisis gives you a lot of chances to
cut out the dead wood or cut out the fat that we gathered over the last eight
years. When you are permanently running from one success to the next and
from one successful or record year to the next, you are gaining fat. You are
1980s
Adidas stars Ivan
Lendl, Stefan Edberg
and Steffi Graf play
their way to the top
of the world tennis
rankings
1990s
At the Olympic Games
in Atlanta Adidas
equips 6000 athletes
from 33 countries.
These competitors
scoop 220 medals,
including 70 golds.
Apparel sales increase
50 percent
not as aggressive anymore and you’re not as strict anymore on cost con-
trolling and process improvement. So we took the opportunity to cut
through, to change the way how we do business to a certain extent, to de-
fine new processes, to get faster, to get leaner and to get more efficient.”
Shortly following the cataclysmic collapse of investment bank Lehman
Brothers last year Hainer says he instigated a policy dubbed ‘divest and invest’.
On the one hand they had to slash costs, such as putting a freeze on hiring, but
continue to invest for the future, including the announcement of increased foot-
ball sponsorship and investment in company ambassadors. “We have to do the
hard and dirty work and to save costs and lose some people to make us leaner,
but on the other hand we take this money and we invest it into the future of the
company.” Adidas has dabbled in a bit of shopping too, picking up two small
companies – Ashworth (golf apparel) and Textronics (chips and sensors). The
“There is still a lot of opportunity for
us out there, be it individual categories
or in certain regions of the world”
latter will boost efforts to implement technology into products for runners and
performance athletes. In these tough times Hainer, however, is quick to stress
that Adidas won’t be cutting back on innovation and product development, es-
pecially with a lucrative football world cup in South Africa on the horizon.
Indeed, Hainer describes the world cup products in the pipeline as “fantastic”
because “football is in our DNA”.
Ideas factory
The shift in emphasis toward the creative side has made a tangible dif-
ference to the Adidas products, even just on an aesthetic level, “It doesn’t help
if the product is good but looks terrible,” he says. Of course, new durable and
lighter materials are constantly improving products and, ultimately, the athlete’s
performance. Take the humble football boot, for instance. Forty years ago it was
a distinctly unattractive chunky black leather shoe with half a dozen studs pro-
2000s
At the Sydney Olympic
Games the most lasting
impression is left by the
Adidas Full Body
Swimsuit, in which Ian
Thorpe, Australia’s 17-
year-old national
hero, wins three gold
medals and sets four
world records
2009
Lionel Messi shows off his boot
after scoring in the UEFA
Champions League final, sending
F50i sales into orbit
Herbert Hainer ED cxo :25 June 30/11/09 10:43 Page 50

Q. With your products being manufactured in India

and Indonesia there is a perception Adidas is putting
profits before the wellbeing of the workers. What’s
your reaction to this accusation?
truding from the sole. Today’s boots come in a wide array of colours, are fash-
Herbert Heiner. “We completely outsourced our production
ioned from tough, lightweight synthetic materials and don’t absorb water like a
15 years ago but this does not mean that we are losing
roll of kitchen towel, à la the previous generation of boot. It probably explains why
responsibility for the production process and for the people
Messi was so keen to publicly smooch with his F50i. “A boot used to weigh around
who are working in the production facilities. Around 10 years
400 grams but today it’s 200 grams, so it’s 50 percent lighter and, of course, if you
ago we started to work in close cooperation with our
don’t have to carry so much weight on your foot you can run faster or you can run
suppliers to ensure that the people are treated well. We
longer,” says Hainer, a semi-professional footballer in his youth. “Today a foot-
have a social and environmental department to take care
ball player runs 13 to 14 kilometres in a game but it was seven to eight kilometres
of this, and we publish an annual report that clearly gives
20 or 25 years ago. You can’t do it in 400-gram leather boot sucking in water. The
targets and objectives of what we want to achieve in
new materials offer functionality, stability and cushioning.”
cooperation with our suppliers. This ensures no child or
Perhaps anticipating the next question, he’s quick to dispel the notion
forced labour, fair wages, sanitary installations and
that sports equipment can magically transform a Sunday morning footballer
pregnant women are treated fairly and it puts a restriction
into a professional. It’s the same with golf. “A new golf club cannot make an am-
on how many hours they work a week or per month. I do
ateur a professional, but it definitely can improve the game of a normal golf
believe that we are one of the leaders in our industry, and I
player from a handicap of 25 down to handicap 15, because he has the ability to
do believe that this is highly appreciated by the worker
play better with the club.” Adidas strives to make sport easier and more fun by
and by the consumer. I go out at least once a year for a
introducing groundbreaking products, a case in point being a golf driver re-
tour of between seven and 10 days and visit the key
leased earlier this year – the R9 sporting an adjustable ankle. Within a week of
suppliers in the Far East, talk to them, explain about new
hitting the shelves it was the highest selling driver on the marker. It’s a similar
programmes, and ways we can improve. And I let our
story with the Reebok EasyTone running shoe with its in-built balance pods that
suppliers know as well what we are expecting from them.”
create instability, much like the feeling of walking on a sandy beach. EasyTone,
which encourages toning in three areas of the wearer’s leg, has proved a huge
hit with people looking to work out. “Therefore, in my opinion, innovation is premacy. For example, Hainer notes how his company was the first to roll
the key to success,” the boss acknowledges. out the ‘intelligent’ trainer two years ago. The shoe could automatic adjust
R&D at Adidas adopts short-term and long-term vision simultaneously. the cushioning by measuring the wearer’s weight and analysing the hard-
One part is dedicated to improving existing products or producing prod- ness of the ground. “Developments like that take longer,” he remarks. “It’s
ucts for new seasons based on existing technologies; the other is about a complicated process to put a microchip into a shoe, ensure it works, and
starting from scratch with less time pressures to find that next big thing. glue together different components like metal and polyurethane.”
Being able to steal a march on the likes of Nike with a groundbreaking Whilst Adidas keeps a watchful eye on what the competition is up to in
trainer, sweatshirt or football can prove invaluable in the tussle for su- terms new products, technologies and sponsorships, the company’s priority

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Hainer on heritage:
“Since we acquired Reebok we
repositioned it after identifying that one
of the key pillars for this brand was the women’s
business. Reebok has an extremely good reputation
with the female consumer and was the
company that founded step aerobics 20 years
ago, which created a completely new way of
Adidas group
fitness. So this is a heritage that Reebok
has 792 still has in the mind of a lot of consumers.
is focused solely on its own work and the brand. “First
concept stores and The first success that we already see with
and foremost, we look to ourselves, what our mission and 381
factory the new Reebok is the women’s category.
We have a new shoe, EasyTone, which is
where we want to be as a company in the future,” Hainer outlets
says. “Of course, we monitor our competitors quite closely, the bestselling shoe in the industry at the
and this is not only Nike; you have a lot of other competitors moment. So, therefore, heritage can definitely
who are good in several individual categories, so you have good run- be a very positive tool to guide you into the future,
ning brands, good tennis brands, good golf brands, and so on.” He adds: “If providing you use it right.”
we have to adjust our strategy then we do it, but on the whole we stay in the
direction that we think is right for our company and for our brand.”
Not all products, though, are hot sellers, he admits with a chuckle. The applies to whatever you do. There is a saying in Germany, ‘The fish always thinks
company has hundreds of staff dedicated to marketing so Hainer chooses to keep from the head,’ so your employees believe in what you make them do.” Perhaps
his distance when judging whether a potential product will be a hit. “I’m far away unsurprisingly, Hainer is an advocate of team sports at Adidas – not just because
from looking at every product and saying, ‘this is right or this is wrong, and this it’s his industry but because it keeps in touch with his employees. “I play sport
colour I do like or I don’t like this colour,’ because I’m not the target group. So with our people, we play football and run together which gives you the feeling
most probably if I like it then it might be not too good for the market or the other that you are one of them and they can tell me what’s going on in the company.”
way around. I give the responsibility to the experts and they can work in silence Aside from getting sweaty in competitive football matches with his staff,
and I keep a distance.” the pressing priority for this boss is to put the disappointing results of 2009
Despite his reticence to get involved with product development, he recog- behind him and steer Adidas back into positive territory. This he hopes to
nises the importance of being seen as an inspirational figure for his staff. It also achieve “as fast as possible” by exploiting new markets. “There is still a lot of
means practising what you preach. “As a CEO you are always a role model, opportunity for us out there, be it individual categories or in certain regions
whether you like it or you dislike it, because people look to you and follow what- of the world. India will be one of the next big emerging markets and I see plen-
ever you do, good or bad.” Hainer offers up an example of this philosophy: “If as ty of other growth potential for us in the years to come, which is what we are
a CEO you talk permanently about sport and how people should be active but trying to harvest.” In the mean time the race for sportswear dominance con-
you don’t do any sport, then they will see it and they will not believe you, and this tinues to rage. 

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