Mark King is CEO of TaylorMade-adidas Golf, the largest golf equipment and apparel company in the world with more than a $1 billion slice of a reported $7.5 billion market. While most golf equipment companies have seen sales drop amid a soft economy, King has used a strategy he calls “relentless innovation” to push TaylorMade to consistent growth. A perennial No. 1 in the sale of drivers and other metal woods, TaylorMade introduced earlier this year a new line of these clubs painted white rather than the traditional black. Consumers have snatched them off store shelves, helping to boost TaylorMade’s market share from 30% last year to 45% through April 2011, a dramatic increase in a golf biz beaten up by the economy. As the professional golf tour was prepping for America’s national championship, the U.S. Open on June 16-19, Mark King addressed five major business questions.
An effective leader creates an environment where every employee takes responsibility for creating the future. -King
1. TaylorMade is known for introducing new products each year. How do you keep the innovation machine cooking?
King: The key is in leadership. Traditionally leaders were command and control. They drove the innovation. My CEO coach once told me that with the pace of change in the world today a small group of leaders cannot sustain innovation themselves. That’s why very mature traditional companies can fall off the map almost overnight because the leadership group’s intelligence expires and they have nowhere to go. An effective leader creates an environment where every employee takes responsibility for creating the future. What it means is that the culture has to be about innovation. Every company probably says that, but we really live it here. We preach it. We create forums for people to speak up. We have 800 employees and we get about 600 ideas annually. We end up with 20 to 30 ideas that actually impact the company. Employees feel as if they’re asked to participate at a deeper level, and morale has improved. We have a saying: If you’re doing the same thing the same way a year from now that you are doing today, you are falling behind. Not very many employees like that constant pressure of doing things, being more efficient. I tell people who are in charge today you’re not in charge of the decision; you’re in charge of creating an environment where people can raise their hand and express their ideas. It’s messy and clumsy sometimes, and controversial. I just believe that the struggle of this process is what creates the new innovation.
You can’t be afraid of risks. You cant be afraid of failure. -King
2. You mentioned leadership. What should effective leaders focus on in a soft economy such as this in order to allow the best chance for success?
King: It’s really simple. I always preach …be aggressive. We are not going to pull back. Now, if business were down would you have to lay people off or cut expenses? Sure. We’re going to manage a business the way you have to. We’re going to deliver profitability. We’re part of a publicly traded company (Adidas Group). But as a practical matter we will be more aggressive than our competitors. We will think more positively. We will act faster. And we will expect results. In Q4 of 2008, when other companies were saying, “We’ve got inventory we can’t sell. We’ve got to lay people off.” We were saying, “We will be more aggressive than ever. We’re going to grab market share and when the economy comes back we are going to be better positioned than we were before.” I don’t believe that you can incrementally get better anymore and survive. I think you have to be thinking about obsoleting yourself every year. That takes an aggressive nature. You can’t be afraid of risk. You can’t be afraid of failure. That is what we said with white drivers: “We’re going to obsolete black as a color for drivers. Now whether we do it or not, I don’t know, but that’s the way we think. We were double the size of our nearest competitor and we said, “That’s not enough, we’re going for white.” That was a risky proposition.
Crockett: To be aggressive does that mean you are spending more, investing more?
King: It could. But I don’t think being aggressive necessarily equates to spending more money. What we do more than most is we’re willing to rob the bank of all available resources and put it behind one thing to make it happen. We’re really not spending more of our marketing dollars we’re just channeling it in a different way. Of our total marketing spend half goes to advertising and promotions. And 50% of those ad and promo dollars historically goes to metal woods. But this year we spent 75% of those dollars on the white metal woods. What suffered was everything else: footwear, golf balls, irons. But look at the payoff. To me being aggressive is not necessarily about spending more money it’s about attacking the marketplace and doing it with speed. We have a saying around here: “I’d rather be wrong and fast than right and slow.” Speed is more important today than being perfect. That is what wins today.
3. Unfortunately for many, the U.S. unemployment rate is still hovering around 9%. What should businesses be doing to get people back to work?
King: We laid off 75 people in Q1 of 2009 and since then we’ve hired that number back. And we’re definitely still hiring. You have to stay aggressive. You have to watch things like profitability, but we never once thought about pulling in the reins. The way to create jobs is to grow. It’s really no more complicated than that. And the only way to grow today is to be ultra aggressive.
You need to be more exciting and more appealing for consumers than the competitive alternative. -King
4. Businesses are concerned that the current U.S. taxation policy doesn’t make it advantageous for businesses to invest. What do you feel will spark investment?
King: I’m not in a heavily regulated industry. We don’t have a lot of interaction with the government. Whatever the policy is, it is. I’m not going to change it. At the end of the day, consumers are looking to spend their money on something—albeit not as much today as they were prior to 2008. So what you need to do as a company and a brand is you need to be more exciting and more appealing for consumers than the competitive alternative. It’s no longer acceptable to be who you were and to be conservative and to be traditional. Because if people are going to part with their dollars—and they are more conservative about that today—they are only going to do it when they’re really excited about what they are going to buy. That is what we should be focused on, and not the government loosening taxation.
Being centralized in today’s world slows you down. -King
5. Your company does lots of business overseas. What is the secret to excelling in a global marketplace in today’s economy?
King: In the mid-1980s our previous owner was very involved in how we operated the company—the products we sold, the cosmetics of the products, the price of the products. They were very hands-on. The CEO of adidas (the current owner) gives me specific expectations around growth and profitability and corporate compliance. But other than those broad guidelines I can run this company pretty much how I see fit. When you have offices, subsidiaries or divisions outside of the country you have to let them operate, and not try to control it from corporate headquarters thousands of miles away. We hire general managers in all of the major countries that have golf—Canada, the UK, France Germany, Korea Japan, Australia. We give them the ability to customize how we go to market based on local conditions. We don’t dictate from here how the general manager in Korea needs to position the brand, or what distribution or price points should be assigned. If you want to thrive in Korea, the people who understand Korea need to be able to operate it. Most companies will tell you they do that, but most do not. The bigger companies get, the bigger the impact their HQ has on subsidiaries around the world. Centralized in today’s world slows you down. You’re not connected to the consumer. When you are a friend of the consumer you can move business forward.