CBS Distinguished Speaker Series: A Conversation with Lew Frankfort, Former CEO, Coach

Key Concepts

• Serendipity and Opportunity: The role of chance encounters and being open to unexpected possibilities in career advancement.
• Logic and Magic: The dual forces of rational analysis (data, metrics, collaboration) and intuition/creativity (belief, imagination, instinct) in business success.
• Customer Centricity: Focusing on understanding and serving the needs and desires of the consumer.
• Multi-channel/Omni-channel Retail: Evolving from traditional wholesale to direct-to-consumer sales through various platforms.
• Gen Z Consumer: Understanding the values, purchasing habits, and influences of the younger generation.
• Sustainability and Circular Economy: The growing importance of environmentally responsible practices in product design and lifecycle.
• Brand Evolution: Adapting to changing market dynamics and consumer preferences to maintain relevance.

Summary

This transcript features an interview with Lou Frankfurt, a former executive at Coach, discussing his career journey, business philosophy, and insights into brand building. The conversation, hosted by Sylvia Belleta of Columbia Business School, highlights Frankfurt's transformation of Coach from a $6 million business to a $5 billion brand over 35 years.

The Role of Columbia Business School and Early Career

Frankfurt emphasizes the profound impact of his time at Columbia Business School, graduating in 1969. He notes that his undergraduate major in government and psychology, rather than business, made the case study method particularly valuable. This approach, which involved analyzing real company problems and developing strategic plans, accelerated his learning by bridging the gap between big-picture strategy and execution. He also encourages students to take courses outside their core discipline, citing his own interest in sociology and psychology to understand human motivation and values.

His entry into Coach was serendipitous, stemming from a conversation with an adjunct professor. After a decade in city government, managing programs like daycare and Head Start, Frankfurt found himself disillusioned after a political appointment he felt was unqualified. This led to a taxi ride where he expressed his desire for a role combining strategy and execution outside of government. The professor connected him with the founder of Coach, a small leather goods company, who was seeking a protégé with good values but no prior experience in the garment industry.

The Power of Logic and Magic

Frankfurt articulates a core philosophy centered on the interplay of "logic" and "magic" in business.

• Magic: This encompasses belief in one's purpose, imagination to envision future possibilities, immersive curiosity for continuous learning, and following one's instincts.
• Logic: This involves data analytics, metrics, collaboration, and a commitment to the "greater good."

He stresses that for a brand to thrive, it needs both. At Coach, this translated into a consumer-centric approach, focusing on the customer's needs and building relationships. He highlights that Coach was never a design-driven brand but rather one that served its customers. The brand's success was built on four pillars: the product (authentic and durable), the brand (storytelling and communication), the marketplace (how the product is brought to market), and the community (employees). This holistic perspective, he argues, is essential for a 360-degree view of the business.

Evolving Retail Strategies and Customer Centricity

Frankfurt recounts Coach's early adoption of direct-to-consumer strategies. In 1980, Coach transitioned from a wholesale-only model to opening its first catalog and then its first retail store in 1981, a move inspired by Ruit with Don's distribution strategy. He describes this as a multi-channel approach, which has since evolved into today's omni-channel landscape.

He acknowledges the dramatic changes in the retail world, particularly the impact of the internet and social media. While brick-and-mortar remains important, its strategic role has shifted. Frankfurt emphasizes the need to anticipate where the customer is going. He notes the significant decline in department and specialty store sales in the US, from approximately 30% in 1980 to around 8% today, contributing to numerous bankruptcies and mergers.

Engaging Gen Z and the Future of Retail

Coach's current focus is on Gen Z, a generation characterized by a focus on cultural and value aspects. Frankfurt states that Gen Z is agnostic about where they purchase, prioritizing convenience and buying when they see or believe in a product, with social media being a primary influence.

He provides data on the growing importance of younger generations:

• Globally, 25 million women turn 18 each year in Coach's key markets.
• Gen Z currently represents about 20% of retail sales and is projected to reach 40-45% in the US within 10-15 years.
• Brands that fail to evolve and attract younger demographics risk becoming like Talbot's, a strong American brand with an aging customer base that has not adapted.

Sustainability and Coachtopia

Frankfurt discusses Coachtopia, a sub-brand launched by Coach to embrace the circular economy and sustainability. He explains that this initiative is driven by a sense of societal responsibility and the scarcity of resources. Coachtopia focuses on reusing materials, inviting customer input on designs, and creating products inspired by sustainable practices. He believes this resonates with young people who seek authenticity and products they can believe in, especially given Coach's use of natural leather that develops a patina over time. He credits the leadership of CEO Todd Kahn and Steuart Vevia for embracing sustainability.

Conclusion

Lou Frankfurt's narrative underscores the importance of a dual approach to business, blending analytical rigor with creative vision. His journey from government to leading a major retail brand highlights the power of adaptability, continuous learning, and a deep understanding of evolving consumer behavior, particularly the critical role of engaging younger generations like Gen Z through authentic and responsible brand practices. The interview serves as a testament to how strategic foresight and a commitment to core values can drive enduring success in the dynamic world of commerce.