What Is The Role Of Gucci's "Shadow Board"?

Luxury brand is a business system. In order to avoid falling into the cognitive bias of inertia, brand needs to overcome prejudice and boldly infuse new blood.

The Harvard Business Review, in the latest article written by social psychologist Jennifer Jordan and Michael Sorell, "what the role of young people is, and see the difference between PDA and Gucci", brings a new inspiration to the luxury industry by the concept of "shadow board".

Taking Prada and Gucci of two typical Italy enterprises in the luxury brand as an example, this paper points out that many companies are faced with two seemingly irrelevant issues, one is that young employees are less dedicated and perfunctory, and the other is that the company is powerless to respond to changing market conditions.

Prada has a legendary creative director and soul Miuccia Prada, which has been growing well since 90s, but its growth has been blocked since 2014. In 2017, Prada finally admitted that it was slow to understand the importance of digital channels and social media trends. Miuccia Prada's husband and joint CEO Patrizio Bertelli also admitted that the brand had made a mistake.

But at the same time, Gucci was promoted by CEO Marco Bizzarri and creative director Alessandro Michele. It underwent a comprehensive transformation and became a dark horse to stir up the market of luxury goods.

In the first quarter of March 31st, Gucci sales increased by 24.6% to 2 billion 326 million euros, the growth rate slowed sharply compared with 37.9% in the same period last year, and the growth rate also slowed down. The increase in the fourth quarter of last year was 28%. However, the quarterly performance still exceeded Bloomberg analyst's forecast growth of 20%, and has recorded double-digit growth for 13 consecutive quarters.

Last August, Marco Bizzarri said in an interview with the media that the reason for the brand to maintain steady and rapid growth is that it has a committee composed of millennials under 30 years old. Since 2015, it has met regularly with the top management team to find the hottest topic at the same time, and to explore measures to improve the brand business.

According to Marco Bizzarri, the shadow board includes members drawn from different functional departments. They are the most talented young people in the company. They discuss the concerns of the executive team and use their insights to "wake the leadership."

Shadow director is a classic concept of company law, which has been implemented in some countries such as Britain and Germany. Refers to some large shareholders who do not have the qualification of directors but manipulate the board of directors. They refuse to become directors in order to avoid personal responsibility, but he keeps running the activities of directors of the company behind the scenes, which is the actual controller of the company.

The academic research on shadow directors is very extensive. Although the system does not serve as a director, the major shareholder or the actual controller exercising the power of directors must shoulder the responsibilities as directors, so as to make up for the gaps in regulation or regulation.

But in today's practice, the meaning of "shadow board" has begun to spread, and it has begun to refer to a form of organization that allows executives not to work with senior managers and make full use of the insight of young people to diversify executives' perspectives. The purpose of this move is to enable young people to assume responsibility for the future development of enterprises and let them feel that the development of enterprises is related to themselves (relevant), and the millennial generation growing up in the flood of information is more concerned about the relevance of things to themselves (relevance).

Jennifer Jordan and Michael Sorell believe that the "shadow board" has the advantages of reshaping the business model, redesigning the process, restructuring the organization and improving the attention of the millennial generation. They wrote that research indicates that the millennial generation crave more attention and opportunities, and the shadow board provides such conditions. For shadow board members, such visibility often leads to significant career development and promotion.

At present, the oligopoly effect of the luxury goods industry is becoming more and more obvious. The large group headed by LVMH, Kai Yun group and Li Feng group dominated most of the market share. But the larger the volume of an enterprise, the harder it is to make decisions. Luxury, like any other field, is faced with the predicament of the survival of large enterprises, but the contradiction is that fashion is just a business that needs rapid response and change.

The famous Parkinson's law in twentieth Century has already known the "big business disease". The law explains the causes and consequences of the expansion of staff. It considers that an incompetent employee may have three outlets. First, he should apply for resignation and give up his seat to competent people. The second is to enable a competent person to assist himself in his work. The third is to appoint two people who are below their abilities as assistants.

The first road means giving up the vested interests, and the second way can not go because the capable person will become his opponent. Most people will seek third solutions, so that two mediocre assistants can share his work, and he will be able to command the higher authorities, because others will not pose a threat to their rights.

The principle of Peter proposed by American scholar Lawrence Peter believes that employees in various organizations tend to be promoted to their incompetent status because they are used to promote promotions to those who are competent at a certain level.

The rigidity of the big enterprise structure and the creative industry form a fundamental logical contradiction to the demand for continuous innovation, which will lead to more frequent decision-making mistakes. Such defects have been exposed in the recent luxury industry.

Last year, a number of luxury brands suspected of racial discrimination made the industry alert and worried. From last year's boiling Dolce&Gabbana insult to China, Prada and Gucci issued an apology for suspected black discrimination. Three luxury brands in Italy have become targets of public criticism.

The Dolce&Gabbana incident exposes designer brand "one word and speech" and ignores the potential danger of regional market communication. Earlier, a person familiar with the matter said that the Dolce&Gabbana headquarters with serious centralization did not listen to the views of the Chinese team. It proved that the Italy enterprise did not understand or even wanted to know about the Chinese market. Through the success of shortcuts such as speculative marketing, the brand ignores the ability of self evolution by absorbing experience and lessons, and also loses its humility in the process of overseas market. Gucci's "black face sweater" incident and Prada "black face" pendant incidents are also exposed from the organizational level. (extended reading: depth, risk and steep luxury business)

In the two case, the focus of public opinion is on why Gucci and Prada, which should have a tight process, can make products that are obviously racially disputed can be put on shelves by layers of testing. The answer is obvious, because the lack of ethnic minority representatives in creative teams and policymakers is a clear contradiction with the globalization of luxury business.

Gucci announced afterwards that after causing racial discrimination, it will rectify and take a number of initiatives to promote corporate cultural diversity and raise employee awareness. Gucci promises to hire diversified talents in key functional departments and leadership positions of the group, including creative teams, and has released four initiatives, including engaging executives in various regions and regions to achieve diversity and inclusiveness, establishing multicultural design training projects, creating a project to enhance awareness of employee culture inclusiveness and diversity, and launching global exchange projects.

In February 13th, Prada also announced the establishment of a multicultural and inclusive Advisory Committee, and invited African American behavioral artist Theaster Gates and African American women writer, director and producer Ava DuVernay as co chairs to enhance the cultural diversity of the company and the fashion industry. In addition, the Prada group and the Advisory Committee will work with some universities and institutions to develop internship and apprenticeship training programs in minority groups to narrow the gap between the racial and cultural industries in the fashion industry.

Gucci has already realized the potential market potential of structural reform. Since last March, Gucci began to implement a new organizational structure to further promote its global business expansion. The structural adjustment is mainly targeted at four new areas. Jacopo Venturini will be responsible for the commercialization and global marketing of the brand. Piero Braga will be responsible for wholesale channels, Oteri J and tourism retail business. Robert Triefus will be responsible for managing the participation of brands and consumers. Gucci's digital business and innovation will be responsible for Nicolas Oudinot.

Meanwhile, Gucci executive vice president and chief consumer officer Micaela Le Divelec announced the departure. After the restructuring, the four will report to Gucci CEO Marco Bizzarri.

Gucci pointed out in the statement that the introduction of the new framework aims to further strengthen and deepen the relationship between the brand and consumers, and to better apply new technologies to various channels on the basis of personalization. Marco Bizzarri said that in the past few years, the brand has been trying to break the traditional rules of the fashion industry. On the basis of defining the clear values, the culture of people-oriented, creative and innovative brands has been constantly strengthened. Now is the right time to evolve to a more flexible management structure. The new framework will help brands better predict market trends and better meet consumer demand.

American fashion brand Calvin Klein has also recently demonstrated the possibility of organizational innovation. In May, Marie Gulin-Merle, chief marketing officer of PVH group, parent company of Calvin Klein, announced a marketing plan called InCKubator in an internal memorandum in May 17th. The InCKubator program aims to convene external creative talents, conduct various forms of cooperation in fashion and retail space, and launch four to six cooperation projects for different consumer groups annually. The team will be led by Greg Baglione, a former senior director of global strategy and business development, and a group of young employees in the group will be convened.

Although the brand has carried out drastic internal personnel and business adjustment and reform, but since the former creative director Raf Simons and Calvin Klein broke up, the position of the creative director has been vacant. This seems to mean that Calvin Klein no longer rests all the expectations of reform on a creative director. It also reflects that the role of creative director in a highly commercialized brand tends to be weaker.

The outcome of such an attempt remains to be tested by time. But we can be sure that, compared with the introspection and criticism of the culture in the fashion industry, the whole industry's reflection on the organizational structure is still not enough.

As early as Raf Simons left Calvin Klein, did I ever deteriorate in the deep fashion industry? It is pointed out in the article that the brand has made a bad demonstration of Raf Simons's public accusation. The resulting chain effect may be that more and more brands will blame business mistakes on creativity, and fewer brands dare to delegate power to creative directors. The business machines that despise creativity will be disparaging creativity with Calvin Klein as evidence.

The problem of Raf Simons itself stems from the limitations of being unable to adapt to the logic of the new market. However, it is worth noting that when the whole industry impatiently seeks rewards and drives creativity to the corner, smart consumers will no longer be excited about fashion, but the outcome is nothing less than the collective suicide of the brand. Fashion is a business, but the fundamental driving force of this business is creativity. If every brand wants to find a Virgil Abloh that can bring short-term returns, then young designers will have fewer opportunities.

While the industry is in turmoil, the research on the organizational innovation of the fashion industry and luxury goods industry has been stagnant. The balance between the strength of the two brands of CEO and creative director has always been the focus of discussion in the industry, but constructive suggestions are lacking so far. In a volatile fashion industry, the two power game has created a large number of creative directors who become victims of unrest in enterprises.

Four years ago, the tacit partnership between Marco Bizzarri and creative director Alessandro Michele promoted the rapid growth of Gucci, breaking the cut apart perspective of people's luxury brand business and creativity, and made the industry have a cognitive subversion to the importance of the positive interaction within the brand.

Marco Bizzarri, who joined the Gucci business strategy from Bottega Venetta to Gucci, found Alessandro Michele in 2015. The latter was Gucci veteran, who joined Gucci in 2002 and served as assistant to creative director and head of accessories department. In the 5 days after he designed and made a series of men's clothing in autumn and winter in 2015, Marco Bizzarri formally promoted Michele to creative director. Marco Bizzarri commented on Alessandro Michele. "People are very modest. How can he stay in a company for more than 12 years, but they do not have a completely different view of the company's present and past image? I think we have the right people. "

The success of Alessandro Michele, promoted by Marco Bizzarri and promoted from inside, has provided confidence for more brands to select young creative directors. Recently, the appointment of Daniel Lee from Bottega Veneta to the appointment of Bruno Sialelli by Lanvin reflects this trend. Compared with the creative director of highly paid stars, the initial cost of hiring young designers is small. Although they lack experience, they are more flexible in achieving the process of brand betting.

However, there is still room for further exploration. Unlike previous star creative directors who have the right to speak, active scenes in front of the curtain, the Marco Bizzarri, the best business leader of the British Fashion Awards for three consecutive years, even appeared more frequently than the Alessandro Michele in front of the media. It is also more prominent than the management of Louis Vuitton, Chanel and other brands, which reflects to some extent the strength of CEO in the brand. Prada, which is contrasted with Gucci, is also a striking counterexample. As a creative brain, Miuccia Prada is obviously closer to brand soul than Patrizio Bertelli.

What people need to reflect is that although the young creative director who has inexperienced experience embodies the trust of the group to young talents, the position of creative director is still weak in front of the business brain. Whether these creative directors can take a firm foothold depends on whether they can adapt to the competition between oligarchs and whether the personal design vision and group ambition can be consistent. Otherwise, Raf Simons will split up with Calvin Klein.

Marco Bizzarri looks at the loyalty of Alessandro Michele in a company for 12 years, but the potential danger lies in the leader's cognitive bias that may exist in strong CEO. When a strong creative director does not agree with his opinion, a CEO with too much power is likely to have a blind area of decision making.

When people put their eyes on the long-term development of enterprises, controlling risks is even more important than making the right decisions. Especially in today's high-risk global luxury goods industry, compared with the industry's praise of young creative power, the importance of luxury enterprises' organizational innovation is obviously underestimated.

However, in any case, the industry should at least have a new understanding of the younger generation of luxury brands, that is, the brand should not only trust the young people with diverse backgrounds at the creative level, but also listen to the young people's views through the organizational innovation in business, so as to enhance their decision-making power. Because of the early influence of diversity education, the younger generation is more equitable and open to new things. This is the natural advantage of the times.

As far as the industry is concerned about how long Gucci can continue to fire, Marco Bizzarri's view is that Gucci must always be like a startup. This also means that the "shadow" force that pushes forward the development of luxury brands must be the younger generation.