Leadership Anatomy in Motion

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news.

**SPEAKER_2** (0:07)
You're listening to Bloomberg Businessweek with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Tim Stenovec** (0:14)
Take Lululemon, for example, shares tumbled today, lowest level in eight years. Upskill Yogawear Company cut its annual forecast due to deteriorating performance in North America. The revenue and profit guidance for the current quarter really underscore the challenges that incoming CEO Heidi O'Neill faces in revitalizing the brand which she joins later this year. I want to bring in Louisa Loran, global executive advisor, author of Leadership Anatomy in Motion. She's worked at Diageo, Marist, Google and more. She joins us in the Bloomberg Interactive Brokers Studio. Louisa, good to have you on the program. The reason I brought up Heidi O'Neill and the challenge that she faces in revitalizing Lululemon, is that that story is not unique and the idea of executive change, of executive turnover, bringing in new people to try to turn around a brand, that is nothing new, but that is what you understand and that's what you have done throughout your career and that's what the new book is really trying to highlight. This moment though seems unique in time because of the challenges that these executives face. It's not just the supply chain issues and the tariffs and higher energy prices, it's also AI. What is an executive to do?

**Louisa Loran** (1:24)
Absolutely, Tim. Great to be here and thank you for the question.
You're seeing it right and I think that today is an opportune moment to take that step back because natural panic does exist when numbers show up as they do today and the numbers we're equally seeing with the CEO turnover is putting pressure on everyone in those seats. But whether you are taking over a brand like Lululemon or steering any other company, we are consistently seeing that these patterns are not shocked to the system. What a lot of CEOs have been doing the last couple of years is actually recognizing that there is more tension, more disruption and therefore they are building out optionality and supply chains. More and more businesses have increased their number of cherried roots the last couple of years, but at the same time they have not been decisive in deploying it and therefore it's been more of a cost extension rather than a change. Equally on the AI side exactly as you mentioned, we see that 59 percent of companies are spending more than a million a year on it, but only 29 percent are seeing the value. This is truly this desire to partake in the market, but not the true understanding of what does the CEO need to do. I do see we have many businesses in this situation at current time and it's an opportune time for leadership to step in.

**Carol Massar** (2:45)
Yeah, it's kind of interesting. I think about great financial crisis than I think about the COVID pandemic and Louisa, all of a sudden once again, a reminder of the CFO increasingly, the importance that they have in strategy at the company, reminding everybody, looking at the balance sheet, making sure it's secure and I'm just waiting for those CFOs to start saying, we're spending an awful lot, but we're not getting that return on investment. Are you hearing C-Suites starting to talk more about this?

**Louisa Loran** (3:15)
Yes and no, because I do see that there are some great financial strategizing going on. For instance, the play that Alphabet did this week is certainly one of them, where we do see that they're going to where the market is most willing to back them. At the same time, I think the biggest signal that everyone should be looking at is not coming from the CFO but actually from a longer view of the market, and that is who backed that Alphabet investment. Because when we see players like Berkshire Hathaway come in and back the investment, this is a signal that we're not getting that shock out in the market. It's actually already inflicted from within that margin erosion by the spend. So as they start to look at this as a future infrastructure play, we're getting to a space where either you are playing someone else's game, they are the landlords and setting the terms, or you are, yeah, either you are the landlord or you are the tenant in that space. And I don't think this is necessarily a technology conversation. We have seen companies that have successfully transformed through time. Walmart is a great example. When they moved from just having their own data and wanted to connect to others, they led the way with EDI. And also today, they're truly accelerating through both their supply chain, but also through their business usage of AI. We're seeing the same for companies like JP Morgan, who also have an understanding of how things move through decades.