adidas is on an industry-changing sustainability journey, and one man is enabling this change – Head of Global Brands Eric Liedtke.
In this exclusive podcast we sit down with Eric to talk about the twists and turns on that journey, and what drives him to challenge the sports company he loves to change its addiction to plastic.
Podcast Interview Transcript
Eric. Thanks for joining me.
Thanks for having me.
What was 2014 like at adidas? Paint me a picture of what the time was like.
It was a year I’ll never forget. I, first of all, had the birth of my second daughter, which was amazing. She has just turned five. But in the work world, it was kind of chaotic. We had, unfortunately, missed some targets. We had the issue two profit warnings that year. I was appointed to the board that year, and with a clear brief from the CEO, at the time Herbert Hainer, to reset the brand, redo the brand, but reset the brand in a way that would accelerate into the future. With that, we get to work, on how we operate as an operating model, and started to work on strategic business plan that would send us on the course for the next five years.
Turning a passion in to a reality
In that year, there was quite a lot of pressure on you. How much was sustainability featuring in those plans to redirect adidas?
We clearly had a passion for sustainability. We clearly had some ideas of what we do our sustainability, but we knew there was much for us to do. What we started to really experiment with and really push was why can’t sustainability be a real USP, Unique Selling Proposition, to our consumers.
And so, in 2014, when a gentleman named Cyrill Gutsch, from Parley for the Oceans, walked in my office and said, “Would you be interested in saving the oceans?” I said Yes, of course, who wouldn’t?” He said, “Well, we have a plastic problem.” And of course, there’s certain things we could do as a brand, as a company that would be more beneficial to the oceans. That was our battle with plastics. That’s how we started.
Was that a difficult decision for you then? Because one the one hand you've got profit warnings and the challenge of restructuring the whole company and then the other…
Don’t forget the baby.
Plus a new baby. On the other hand, you've got Cyrill Gutsch coming in and saying, ``Hey, if we join forces, we can save the oceans.`` Was that a difficult decision for you to make if that was the right thing to do?
100%. I think the challenge always is how you separate your own passion with the best interest in the company and performing my fiduciary responsibility to the shareholders. I think that’s always something you have to separate but also something you have to recognize. At the time, I was very torn because I picture myself or fancy myself a water man. I like to surf. I like to scuba dive. I like to snorkel. I like to kayak. I like to swim. It’s something I’ve always done since I was a very small child.
It’s easy for me to get very passionate about saving the ocean, saving the fish, saving the turtles and seals, the wales, etc. but is it best for the company? I wrestled with that for a few days and I brought some of my closest colleagues around me and asked them. Martin at the time said to me,
He just made it that clear.
I think that was the argument that sold me at the end of the day. I guess I’ve been here 20-plus years at the time and I am in charge of the brand that is roots and I think that was the one that released me and said, okay, let’s take the risk and let’s jump. It was something that was a turning point for me.
And for the company arguably.
The momentum grows and the world starts to listen
You obviously have a real passion for the ocean and for being in water. Where did you grow up? Was it an ocean city or where does that come from?
I grew up in Harrisville, Pennsylvania which couldn’t be more landlocked. I guess Germany gives it a really close competition. I don’t know, I think it goes back to my parents just sticking me in water early because I had too much energy. When I was three years old, they already just put me in swim lessons because I was driving my mom crazy. It’s a matter not where the water is but the fact that water is involved in your life.
Let's move on to 2015 now. So, Cyrill Gutsch has come in. He's done his pitch. You've decided that you're going to push forward with his Parley collaboration. The UN announced that they're going to hold a conference with Parley called Ocean Climate Life and you're going to be one of the keynote speakers – a pretty big deal, pretty big speech, I imagine. Was that quite a big moment for you?
Personally, it was one of the highlights of my life. I speak a lot. I do a lot of presentations but to present at the general assembly as a keynote speaker about my passion for the oceans and the fact that we need to start taking action to create a cause behind protecting the oceans, absolutely. I couldn’t have been more honored and proud of the moment.
The shoes made from fishnets
This is a great moment where you stood on stage and you revealed the first Parley issue. When the decision was made that you wanted to have the shoe on stage, how ready was it?
That’s a good story because I think this speaks for our culture. I wasn’t even aware the guys were making the shoe for me. I was going to the UN to speak on behalf of myself and the company, on the plight of the oceans. That was my speech.
On top of that, there was this whole background that was going on that started about a week before the presentation. With Cyrill, with James Carnes, with Alex Taylor and a few other great passionate people on the topic, I still remember I ran into James in the hotel lobby two days before the UN, like, “What are you doing here?” He said, “I brought you a shoe.” I was like “Okay, cool.” I was like, “Let me see it.”
So, the background without your knowledge, the design team here at adidas talking to Cyrill Gutsch and they're like, right, we've got bottles from the Maldives and we're going to turn them into a shoe, which Eric can hold on stage.
100%. They had recovered this gillnet.
Describe what gillnet is for those people who’ve not seen it.
Gillnet is something that sits deep in the ocean, 72 kilometers or 40 miles of just destruction. It’s basically just a net of death. But these poachers don’t care and there is no government that really goes and polices it. So, these activist groups like Sea Shepherd, Greenpeace, however, they go out and try to protect the oceans dock based on the rule of law. So, they’ve done this, and this is what we ended up with. We’ve got this massive gillnet now sitting in the port of Hamburg. The idea and the phone calls seven days before the UN presentation was, can we make a shoe out of it? With that, the guys got to work.
They did that in a week.
The blue on that shoe, the gillnet, it looks like an almost indestructible material, isn't it? Very difficult I imagine to repurpose and it was made into this thread, which creates the top layer of the first Parley shoe.
Yes, I think gillnet is by nature indestructible. It has to be because it has to deal with the extremes of the ocean at depth. I think that it has to capture all of these massive animals and creatures. So, I think man has done an amazing job to make something just absolutely indestructible and it’s very difficult to work with to try to make it into a product.
The first thing you had to do was clean it, then you had to melt it down… the gillnet had to be melted and then so it could be extruded into usable pellets, which again is very hard to do with gillnet.
I heard that there were literally people hand washing it in order to clean it. So, hundreds of kilograms of gillnet, hand cleaned.
Absolutely. And one person, in particular, that deserves a lot of credit and that’s, Kelli George, who’s from our Portland office, who spent countless hours hand cleaning and prepping the kilos of gillnet for recycling.
That just shows you the testament of how important cause can be. I don’t think that team would have assembled themselves to do something in a week for another reason. It was the moment of the UN platform, but it was also the belief that we have at adidas ‘Through Sport, We Have the Power to Change Lives, really living that and really putting that into action that we can change lives. We can take action. We can create the change we want to see in the world, to borrow one of my favorite Ghandi quotes.
The value of moonshots
So, you're at the conference then. You not only reveal the shoe but you commit that it will be available to buy in February to March the following year. With all that you've said there about the scale of the challenge, that was a bit of a gamble?
I think it’s always a gamble.
If I can’t set that direction, then I can’t expect the people to know where to go. I have to always say, “Guys, this is where we want to go. This is where we’ve got to get to.” I like the term moonshot. I like the term north star. Then the how, I leave to the teams, but the what is leadership’s responsibility. If I can’t say, “We’re going to be in production, we’re going to have these available to our consumers in eight months,” then how can I expect people to execute with urgency and to really get to work on the how. Show me an idea, then show me convincing scale in it.
I think that’s my role and I take that very seriously. Then I know that I’ve got the teams that can run behind that. That’s the exciting part to say. You’ve got the team that can answer the bell.
In 2016, by this stage, things are really moving forward with the pilot projects. adidas also made the first apparel products from recycled ocean plastic that year, notably the launch of the Bayern Munich and Real Madrid football jerseys. That must have been quite rewarding for you in a way to have taken this gamble and then just felt this great groundswell of enthusiasm, not only within the company, but from other people, hearing about the Parley of the Ocean plastic project and wanting to be involved with it.
Yes. I haven’t taken a lot of time to reflect, and I’m sure one day I will.
Another example is, just because we said, okay, my job was to say we have a battle with plastic. My job was to say, we’re going to do these things against plastic and the people, they started to come up with all sorts of ideas, like eliminating plastic from our store base. Just one idea after another, after another started coming out and it started going into action, because we just set a north star.
Did you ever have to convince anyone who didn't think it was the direction adidas should be going in?
No. I think the obvious questions that I come up with when I speak at luncheons or different areas where people ask me how they could do similar things at their company is always, they always talk about the battle with the CFO, or the battle with the CEO, who are typically very profit, loss driven. And that is sometimes hard to counterbalance. I being the branding guy, I being the marketing guy, have to make the argument very clearly that it’s building brand advocacy. It is building the net revenue, which does build the bottom line.
I would have to say I’ve had 100% support from my colleagues on the board and my CEO, both her and Herbert and now with Kasper. They think it’s a compelling evidence of who we are and they want to just accelerate it.
I think in my case, I’ve either been fortunate or really smart, probably a little bit of both, to be successful in that field.
Run For The Oceans is born
Let's move on to 2017 now. Two years on from the initial Parley launch, and you sold one million pairs of Parley sneakers and you're back in New York. It's another United Nations ocean conference. How did it feel to be going back there with proof in a way that this concept of using recycled plastic can work commercially?
It was great. The UN is a tricky place, so I think by then, I was more convinced than ever that we in the private sector need to create the change. Public sector is great, but the public sector also comes with its own issues that they have to solve, which is that they are always looking for some sort of mandate from the overall party, and that mandate is always going to be some sort of compromise. Just by the nature of what it is. And I don’t think we can avoid any more compromise. I’d become a little bit more radical in my approach to say – UN you keep moving, I’ll keep helping wherever I can.
I’d started to pivot more my attention towards how do we create greater awareness to the plight of the oceans and how do we get people start to solve that and start to look for brands that are offering a solution? And that’s what led us to mobilize consumers against this. The greatest testament to that it was what I would call a run for the oceans.
Run For The Oceans started small: 60,000 runners in the first year and then it was almost a million runners last year, so definitely growing exponentially which is exciting. I'm just going to play devil's advocate. What can you really change just by people running? Running, one thing, the ocean is something different.
I think it’s about awareness. I think we with Parley have a very clear strategy against how we educate people. I think education is key to anything. Any issue you want to solve in life, you have to start with how are you educating the consumer base. Awareness is a big part. Once you create awareness of the ocean problem, once you create awareness of, “Hey, do you really need to drink out of that straw that you’re going to use for 7.2 seconds then it goes into the oceans?” Because unless people understand that single-use plastic is really bad for the world and that even though it’s not in your hands anymore, there is no away. You throw it away but where does that go?
The away is typically into a landfill. You can either burn it, lay and filled or thrown in the ocean. All three end up coming back to bite us in the ass.
You’ve already started to change mentality. The younger we can get that mentality the better.
Educating for the future
But again, once you hear it, you can’t unhear it. I see a world that’s not only based on making things differently, but it’s also based on people behaving differently.
Run For The Oceans should be the greatest mobilization of mankind to save our planet. That’s our goal. If you think about it, how many people run the Boston Marathon? I think 50,000. We’ll have 1.2 million people running Run for the Oceans this year and we’re not going to slow down. We’ll match kilometers with money so that we can continue to raise the bar again and again and again. To me, we are trying to fight on all fronts. Again, it’s not just marketing, it’s not just philanthropy. It’s our belief.
Where does the money go?
The money goes to Parley for the Oceans for greater education systems and cleanup efforts. Parley for the Oceans is really focused on creating awareness of the cause, again, really focused on the awareness. Then they have robust intercept programs on really the small island development states or SIDS what the UN calls them, whether it be the Maldives or Dominican Republic or places like that, that they can really start to create change at these island states that are already infected with the plastic problems.
The consumers who buy what we stand for
When you're on stage at Southwest, which I think was 2018, you said people don't buy what you make. They buy what you stand for. Do you think that is what consumers are looking for?
A hundred percent. I do believe consumers are in a world of sameness, if we can call that not just in our world but in many. They are looking for product.
I think that is always been the case. I think that’s becoming more and more evident in today’s age than ever before because of the mentality of the us versus them and the state of the earth. I think they’re going to want to participate and support companies they believe are standing for the things that they want to stand for and doing things to support life on this planet.
Sustainable innovation that makes commercial sense
In 2018, you hit the target of selling five million pairs of Parley shoes. Now, what was the biggest challenge in scaling up that production by such a dramatic number?
I think, the first thing in innovation, and I’ve actually learned this from Google and I love it…show me a compelling demonstration. Now show me convincing scale. And I think that’s innovation in a nutshell. Show me a compelling demonstration of can you make it? And then show me you can take it to convincing scale, otherwise it’s just a beautiful piece that might be in a museum one day.
Going back to the Parley shoe, to me the hard thing is finding the source base. There’s no source base for ocean plastic, not the way we’ve defined it. Which is from the oceans or threatening to go in the oceans, but we have to invent that. Then we had to with Parley say, “Hey, you guys are working on the small island development states, that’s great, but we’d quickly run out of plastic if you just go in the Maldives trying to make nine million pairs of shoes.”
So now, we had to incorporate our entire ecosystem of sourcing to say, “Okay, guys. Let’s go out and find the source.”
You have to go every step all the way down to how you collect, where you collect, how you process, how you extrude, how you melt it down and extrude into new things and what you select and putting that into a new standard way of operating.
You talked about compelling demonstrations. This year start of 2019, you stood on stage in New York and launch the FUTURECRAFT.LOOP. This is the first shoe that can be completely recycled. The beginning of the end of waste. When I heard about this, I thought, ``Yes, you can completely recycle a shoe, that sounds doable.`` Then I drill down into some of the details of it and started to understand just how difficult it is to recycle a normal shoe. Tell me why it was so hard to make a shoe that can just be put in a shredder and remade into a new shoe?
That is not an easy feat. Because a typical shoe from us has 10 to 12, maybe 15 materials in it based upon the product itself. That can’t happen if you’re going to just put a single item into a grinder to extrude new materials out of.
You have to choose just one and try and make all the other bits from that one.
Yes, which is probably the hardest thing we’ve ever done, if we’ve being honest about that challenge. One material, sorry. It’s an unbelievable engineering feat if you think about it.
Then put it all together without using glue, which is absolutely synonymous in every sneaker up until this point?
Exactly. But if we can do it, again, just trying to be that pilot, others can too. I can take that to the Legos or Ikea’s or SC Johnson’s of to the world and say, “Guys. Hey, let’s do it.” If we could all make things out of a single material, then the collection effort, then the recycling effort gets a lot easier to all of us. To me, this is a big answer to some of the dilemmas we’re facing right now. It’s interesting because I think it also showed the world that we’re not just out here telling pretty stories about saving the oceans.
Look into the future then, where do you want the company to be in 5, 10, 20 years?
Well, that’s kind of like my why. For me personally, and I know it’s not about me, but it’s also good for the company, like.
That’s what drives me throughout our purpose-driven culture, but also from our sustainability efforts. It’s like we have to show that a 20 billion plus Euro company, that’s a top DAX company can be unbelievably financially successful while doing less and less harm to the earth. That would be a job well done.