Transcript

Relevance is a sport: Gap’s Richard Dickson on swinging, missing, and winning

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1:20 Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. Some extent what happened to Gap. We got spooked with some of the swings and ultimately became very safe and therefore not very interesting.

1:43 And so to get people interested, you have to be interesting. Our cat's eye campaign. I mean we were trending number one on TikTok within 24 hours. I mean, if we had said three years ago, do you think Gap Brand is gonna be trending on TikTok, let alone trending as number one on search, no one would ever believe that. If we're not swinging.

2:05 We're never gonna hit. That's Richard Dixon, CEO of Gap Inc., the business housing gap, banana republic, old Navy, and Athleta. I sat down with Richard at the Ken Lions Advertising Festival in France to understand how he's applying a playbook he used at Mattel to the challenges at Gap. The secret he says is leaning into pop culture. Richard talks about why Sidney Sweeney's viral jeans ad was surprisingly good for the industry, even though it didn't come from the gap, and why he tracks brand love metrics on a dashboard every day.

2:48 Plus timely lessons around the relationship between profit and social purpose. the need to keep taking risks after failure and more. So let's get to it. I'm Bob Safian and this is Rapid Response. I'm Bob Staffian. I'm here with Richard Dixon, the CEO of Gaped. Uh thanks for being here.

3:14 Bob, it's good to be here. You uh before Gap, you were at Mattel. Uh when Barbie was a little tarnished and then Brought her into g into her glory. Yes. You went to Gap. Also a little bit on a little bit of a lull. Like do you do you like the turnaround of taking an iconic brand to someplace else? Seems I like that pain. I like that pain. Yeah. I I actually um it is true. I I love

3:38 uh iconic brands that had uh a break through and then ultimately through their life span had peaks and pits. I think Barbie is a great example of that. There are others and certainly the gap story is one of them as well. Do you think about it as renovation? Do you think about it as sort of restarting, refounding? I I think about it as revitalization. Um, and and to the extent that

4:02 You know, you have to study a brand's uh history. Ultimately, what made it great to begin with? Why was it interesting? Why were people interested to find that core again? To find the essence. The the sort of what was the breakthrough that inspired such success. Uh, and then along the way with brands certainly that I've been a part of, they're generational. And so they oh go they go through trials and tribulations and a lot of, let's say, outside influences that change the brand. But ultimately at some point those brands either lose their way

4:34 Or reinvent themselves to be relevant. And in the case of what I have found interesting, it's getting involved in brands that arguably have lost their way. I need to find that revitalized narrative. to be relevant again. And I think for me You know, my experience in doing that has a methodology Uh, but it's really about the execution of that methodology that makes the success or

4:55 Doesn't Well, so far the success has been strong. You've had Nine quarters of positive sales, right? Market values up to eight and a half billion dollars. And the driver that you've pointed to connecting all this is pop culture. Which

5:12 is For a lot of business people seems kinda soft. Yeah. I think you know, pop culture it's is sounds simple, does hard. Uh-huh. M moving at the speed of culture, staying relevant. Particularly for brands that have history.

5:27 is is difficult. Uh and in the context of brand that have history Yeah, these brands started when it was T V in print. And outdoor. Uh being where your consumer is today means being everywhere.

5:41 That's very difficult to do. And ultimately to stay relevant. Is a sport. And that When you get it right. Relevance can drive revenue.

5:51 And so when you only concentrate on numbers and deliverables, a brand could lose its way. Because ultimately you start to make decisions That are financially based, not necessarily narrative or brand based. And that's when you start to potentially fragment. the dialogue with consumers because you're driving a commercial proposition. But not necessarily one that really drives that consumer authenticity. That emotion that emotion. I mean, brands are relationships. Yeah. Purely. And it doesn't matter what category they're in, you have a relationship with a brand.

6:23 And when that brand fragments that in any way, you lose trust. And trust is the foundation of any brand relationship. And once that's fractured It takes a long time to regain it. And at some point We lost the storytelling and became more about the stuff.

6:39 The conversation often around retail and fashion apparel brands is That it is about fashion, it's about style, and you sort of have to stay up with the pace of the style. The clothing itself is what drives it. Obviously, you wouldn't say the clothing doesn't matter, but like how do those things go together? Look, the the the the essence of any consumer product business is the product. So you you've gotta have a product proposition that connects to consumers. In our case Fit.

7:09 Fabrication, value, style. Right. Getting the product right is no joke. And that that wasn't The first thing when you came in where you said like, Oh, that's what I have to fix first. There's no first because really it's an orchestra. You know, it's everything from the product to the marketing to the staff to the keyboard. So everything. The shipping, the logistics, when you have thousands of stores. It's really a complex

7:35 Um conversation internally to get right. And so we laid out a very set agenda with strategic priorities. that focus the company, by the way, eighty thousand people around the company around our strategic objectives. And the first one was fundamentally, we have to just run a better business. We need financial and operational rigor. We need to understand, you know, how much we've got.

7:58 and to be more effective and efficient about it. And then run as a retailer a smart open to buy. Smart bats. chasing some things, managing the business in a way that really kinda is agile. But discipline.

8:11 And then it is about the cultural relevance. Telling the story. about the product, about the brand connects people to that story. And storytellers need to be, you know, great great brand narrators. I mean that that is what When you find a good brand, it's a good story. And granted, the the deliverable is actually the product because you could drive traffic, you could drive interest, and if you get there, It doesn't fit. It's too expensive. I don't like it.

8:38 Y you you don't have the conversion. The magic happens when you have great product and great storytelling and great execution. And Not everything is gonna go right all the time, but once you start that practice, you can create that flywheel. For you, you you sort of knew that maybe the the product wasn't gonna be your personal sweet spot that you would bring people in. I'm not a clothing designer, no. But I but I think w probably what I

9:04 uh realized early on, particularly with scale businesses, it's a team sport. There there's Sure, there's vision and there's there's leaders that have the conviction to move things along. But you can't do it alone. You know, and so you need to bring in and surround yourself with the best talent. that are better than you at exactly what you know you need them to do. And so I think of myself more as a conductor

9:31 bringing in the musicians and creating an orchestra that plays together. You know, at the beginning of an orchestra. You have, you know, when the symphony is tuning up, right? And and there's no harmony. Mm-hmm. But then the conductor starts and Everybody starts to play together, and it's a magical moment.

9:48 I would say as a metaphor, when I got To Gap Inc. There was A lot of tuning up. Really?

9:55 Good musicians not necessarily playing together. And so orchestrating that, bringing in right musicians to play with each other. And bringing it into a a more harmonious state, I think, is the role that I play as the leader. Well and and you have a a feel for pop culture too, I think, and and that that emphasis, which is not something that At least the gap just before was leaning into sure. Look, I think there's a taste level.

10:21 You know, I mean we're in a business that nobody needs us. We have to create want. Uh-huh. You you create demand, and to some extent it is a taste level business. Um fashion is entertainment. It's story telling, it's it's feel, it's fabric, it's fit.

10:36 What we do builds confidence. You look in the mirror, you feel good, you're out in the world. If we can do that for you, for our customers. That's Essentially the the sort of secret sauce that's not such a secret. So I would argue that I have, you know, certainly a taste level that can be appreciated. Um, but also I I would think of myself probably more as an architect of branding. You know, there there's edits that need to be made. You know, you used to walk into one of our stores, and arguably there are some stores you still walk into in our portfolio, where you you know, the message is not coming across as clear. And we edited a lot of stuff out of our assortment. And all of a sudden you start to see the storytelling. What do the merchants really believe in?

11:17 What do we want our consumers to really believe in that we want them to share in that experience? A denim shop, a khaki shop, a fleece shop. These are things that speak to consumers without somebody necessarily taking them through it. And I think that is to some extent the road that we're on right now. I noticed that you've hired a chief entertainment officer, which is not a title you see at certainly at most retailers.

11:43 Is Gap a pop culture brand the way Barbie is? Like, are we gonna see a Gap movie? I mean, how Never know. You never know. Like Yeah. I I I think look, first off, fashion is entertainment. It is. I mean you whether you're looking on the runways, look at sports today, the tunnel. What are they wearing in the tunnel? Fashion is entertainment.

12:05 Once as you you sort of embrace that. Uh you you have to sort of embrace it to the extent that you need to start to think about storytelling and what are forms of entertainment. In our case, it's music, it's art, it's film. It's events. These are experts, and we need the expertise to actually drive those with authenticity.

12:24 So of course you need a chief entertainment officer. Of course you need talent that really can take you into those places to to credibly to authentically. A hundred percent. Yeah. Look at the you know, conversation that we're having around gap today. It's about music. It's about fashion. It's about our content. It's about our media mix model. That's the story we're telling. But then when you get to our stores or you get that product, you feel like, oh, this is now my best friend again. And so for us, we have to keep that

12:54 narrative and and storytelling continuously going, and that is the speed of culture. That today is Price of entry for a brand. Unlike some CEOs, Richard acknowledges that his expertise is more about brand orchestration than about the company's core product.

13:14 So how might AI muddy those orchestration waters? And how can leaders stay motivated to keep taking risks after failure? We'll talk about that and more after the break. Stay with us. Humans will never be more intelligent than AI. Those were great at AI and those that went out of business because they weren't. How do we build a future? That is human centered.

13:46 I'm Rana El Calyubi. And on my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in.

14:15 Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show because every Friday we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely. From Ford CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find. Just search Rapid Response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there. Before the break, Gaps Richard Dixon talked about how he's leaning into pop culture to turn around the company. Now Richard explains why he's tracking brand love metrics at his desk every day, and why striking out should never deter a leader from swinging again and again. Let's dive back in.

15:15 You know, some CEOs get obsessed with watching the stock price all the time. Even though few like to admit it. Um but y you said you look at a different metric hourly. I don't know if this is right, a dashboard called brand love. I do. I did. Where'd you get that from? You know, I guess it's it sounds a bit distracting though, like looking looking that often. I mean I I you know, sounds like when I got lost in my TikTok feeds like what Well it can be, it can be, but I I find first of all, retail is detail. And you you're in it every hour. We have a flash that we could look at and say, How are we doing?

15:48 Uh and when we're doing well, you should ask why are we doing so well. And when we're not doing well, you say why are we not doing well. And so these are sales numbers? Well, there's sales metrics. I have a dashboard in my office that has uh graphs and and sales metrics. And then there's another dashboard that measures Brand love, brand search. uh attributes uh that uh we're measuring with our consumers in the context of receptivity to our narratives to our media mixture. You're tracking this every day. We're tracking it every day, all the time. And it's not distracting, it's guiding.

16:20 I believe it's the information that you need to drive the business. And if you're not Curious. About The work. And what's working or what's not working.

16:32 Um, this is not a business for you. It really isn't. And you see it that fast when you do that. When you're when something which which is new in the way I guess both the speed of culture and the speed of business work. Absolutely. I mean you you can see it as soon as it hits uh the marketplace. I mean Even some of our, you know, gap work, our cat's eye campaign. I mean, we were trending number one on TikTok within twenty four hours. I mean, if we had said three years ago Do you think gap brand is gonna be trending on TikTok, let alone trending is number one on search?

17:02 No one would ever believe that, but in the context of the data that we could receive. With that data, we can then add multiple ways of sharing more storytelling, expanding that concept. being motivated by the insights that we're gathering on a daily basis, which moves the organization forward. We see that with what sells also. You know, you see when a product sells, you see when it doesn't. Uhhuh. When it doesn't, it's not gonna get better. I mean

17:26 A product that doesn't have the shelf. Move it through the system. Uh huh. Yes, it's a it's a markdown. And it is what it is. But that's the business. I know that that's gonna happen. Of course it's gonna happen. If we're not swinging. We're never gonna hit. There's gonna be misses.

17:44 But The objective is to have more hits than misses and ultimately not necessarily reward the misses, but acknowledge that we swung and missed. So what do we learn from that? Why didn't it work? That element of dialogue um is a really important part of the conversation in our company. And I think what leaders today need to embrace is the ability to feel

18:07 Comfortably uncomfortable. You've got to take shots on goal. You've got to take swings in order to move the business forward. And The biggest risk of it all is not taking risk. Every day you're getting information that's this is going well and you're getting information that this is going badly. And like how do you know what the balance is in it's going through that? And do you or do you just decide I'm gonna be optimistic and emphasize the things that are going well or

18:34 I'm A consummate optimist, and I I love the challenge. We got bad news or something didn't work. It's process of editing. That didn't work. We got to figure out what does work. You don't let it get you down, you let it inspire the the next sort of breakthrough.

18:51 Sometimes you're ahead of the game. You know, sometimes we might have been too Forehead. And it was a good idea, strategically well intended, flawed in terms of timing, or strategically well intended and flawed execution. And in some cases. Some dialogue and there's a lot of companies that have this.

19:07 Well, we tried that. We tried that. We tried that. And it's not that it wasn't the right try, but For whatever reason, the execution or the timing was off. Try again.

19:19 Try again. And when you do hit it. That team player and that cultural, you know, the spark. can drive incredible momentum into your business. Well on the flip side, when when people are saying we tried that, we tried that, you stop trying anything.

19:34 Exactly right. And that's when the business really Yeah it's deer in a headlight. You don't try anything. Yeah. And you become incredibly safe. Uh and arguably that that is to some extent what happened to Gap. Yeah and and our brands. You know, we We we got spooked with some of the swings and ultimately became very safe and therefore not very interesting. And so to get people interested

19:58 You have to be interesting. And that is ultimately I think becoming what is more uh connecting our consumers back to our brands is where interesting and so even like the Sydney Sweeney stuff that was a little controversial like that's okay. It's great. Well I think it's great for the industry. You know, I mean we're we're we're in an industry Uh obviously we wanna be the winners in the industry. But when the industry is driving creativity, it should inspire better competition. You know, when you look left and you look right and you go, Wow, that's pretty good. And they're out there doing that. You go like, Okay, like let's go. Uh-huh. And so I I I think we're inspiring better work in the industry. And I think the industry is doing better work on their own. And I think it moves us Um as an industry forward. And obviously, you know, our goals and ambitions are beat to the

20:44 to be the best of the best, but we've got, you know, we've got a long way to go before we can claim that. You announced new sustainability goals this year, along with a partnership called Get Blue with Matt Damon's Water.org. Talk around sustainability has kind of been on the wane. It has not been a hot Topic lately. W why do this now? Sustainability is is one dynamic of what we'll call

21:09 purpose in the context of, you know, Gap Inc brands. We've always been Purposeful. And arguably, the more profit we drive, the more purposeful we can be. And purpose and profit have an interesting integration.

21:24 Um and throughout our history, you know, we we've always been a thoughtful um citizen, if you will, not only of the communities that we live in, but the the the world and the consumers that we serve. Our our origin story, as you you may know, started with one store in San Francisco called the generation gap. And our founder, Doris Fisher, crossed out generation and it became the gap.

21:48 But the original intent was to bridge the generation gap. And that's a very purposeful statement unto itself. And so as our company has evolved with Old Navy and Banana Republic and Athleta and all the things that we've done over time, we've evolved that narrative into bridging gaps. To create a better world. And one of the gaps that we take a lot of pride in bridging is the sustainability efforts to bridge the climate gap. Within that, it gets very complicated very quickly. And so we've chosen water. As the leading initiative that we can have real impact for, and to be blunt.

22:20 We can't do what we do without water. I mean, you know, to di to make denim and denim washes and and to feed cotton. Cotton's a thirsty plant. We need water. So we use a lot of water, and water is a scarce commodity. And so it's a responsibility that we have. To recognize that and do what we can to recycle, reuse, replenish water and get Access

22:42 To clean water in places where we manufacture our product. And so Yes, it sounds like a a nice to do, but it's an essential to do. Fifty percent of our our GDP is nature.

22:55 We're partners with nature. So it it is a strategic objective for us. So I can't have a conversation with uh with the CEO today and not uh ask about AI. How do you think about it for your business? How Disruptive. I mean it's certainly having a an impact in culture. It is an essential part of our lives today. Uh like it or don't like it, learn to love it. Uh it is here and it is here to stay. And if we don't embrace it and acknowledge

23:24 It as a valuable tool. Um, then I think you you're gonna be, you know, for for particularly for businesses left behind. We're gonna move to a place where the entire business is based on it. It's an operating platform. Uh it doesn't just enable things, it actually is the platform for which everything is going to sit on. Uh, and we are evolving in that direction. I mean, we're we're making tremendous strides and making significant investments in technology of which a lot of it is AI based. Um, it is in fact impacting our business in a positive way. Everything from consumer insights to uh design and development to the speed uh which we can sort of digest information.

24:04 And so I find it um an incredibly exciting chapter. It's a bit daunting. But um once you sort of jump in that pool and swim around and get a little bit, you know, warmer in it. I think it's the practice that we we all need to do. Right now it's more sort of behind the scenes. as a system, but I actually think it's gonna get more and more consumer facing.

24:25 Uh does that mean I that I'm there gonna be fewer. Humans working in your store or like I don't think so. I don't think we first of all I don't think we think like that, but I do think that the the experience from digital to physical and physical to digital will will become more seamless. Um and in the context of us knowing you. And knowing your style. And knowing who you are and knowing what you bought. But you have to make you have to reinforce that trust element for your brand for me to share all that with you. Right. A hundred percent.

24:57 Yeah. And then again, that goes back to The fundamentals of brand. Even in you know, the the time that passes. It's all about trust. The retail experience. I mean

25:09 It's so varied now. Right? Like what will a gap store look like in twenty thirty? Do do you know yet or I you know, for me, I w I I think we are constantly making progress, not necessarily perfection. It's nice to imagine perfection. But every day in retail Is another aha moment of something we could have done better.

25:30 And so I think we're constantly evolving. I mean, even in our remodels right now, we've done remodels for gap, remodels for banana, remodels for old Navy. We see progress. But not perfection. And so every meet and the whole way you have to think about it is different. It's like you're not gonna remodel once, you're gonna keep remodeling every time. And so you have to think about, by the way, store design in the context of when does it need to get refreshed. And these are all the things that you need to consider. But the reality of stores, I think, is going to become even more important. as consumers are looking for human experiences. For places where we can connect.

26:09 Where you can actually feel the product, try it on, listen to the music, hear the sounds, get the service, have community. I believe that is gonna become more and more important. And if you look at Gen Z and even Alpha, there's a return to a bit of analog versus digital. And I don't mean it literally, but I do recognize that You know.

26:31 Putting down your phone. having a a a a a human experience, what's happening in sports today is incredible. You see these Places where humans and people are gathering. And it creates emotional connection and unity. And I think retail could be a really important part of that process.

26:49 What do you feel like is at stake for gap right now? I think the recognition that we are an iconic American brand that shapes culture. And I think we have Arguably woken up.

27:03 And I think we're a brand where people never didn't like us. They just wondered what happened. You know, what happened to Gap? I I used to go, I used to love it, and then something happened. And we sort of disappeared for a while. And so I think now we're we're back. And we're back on the cultural conversation and now it's a question of what do we do with it.

27:23 And I think truly when you think about the word gap. It is the space between us. And so what better space today to bring people together than in the gap between us? And we take that seriously. And I think you're gonna see over time. That cultural connection and that conversation get stronger. And more powerful as uh as we get into more of our flywheel.

27:44 Well, the our world certainly needs more uh more closing of those gaps, bridging of those gaps. No doubt. Thanks for doing this today. I really appreciate it. Thank you. It's been fun. There can sometimes be something shallow and sweaty about a company hungering for relevance, trying too hard, latching onto every viral meme. What differentiates a successful reinvention is genuine curiosity about culture, and as Richard notes, a willingness to take swings that don't land. In the quest for greater knowledge and better understanding. The deer in the headlights phenomenon that Richard describes, fear of taking inaction because actions have gone badly in the past.

28:25 It's an understandable reaction to uncertain times, but it's not effective or inspiring. I followed Gap for a long time and yet it never occurred to me that the brand could stand for bridging gaps. It's an appealing aspiration and the kind of relevant storytelling that fits this moment. So what story are you telling? and how might it benefit from some new twists.

28:49 If it's good enough for Barbie and Gap. might be good enough for you too. I'm Bob Sapphian. Thanks for listening. Rapid response is a wait what original.

29:09 I'm Bob Safian, our executive producer is Eve Tro. Our senior producer is Alex Morris. And our associate producer is Masha Makutonina. Mixing and Mastering by Aaron Bastanelli and Brian Pugh. Our theme music is by Ryan Holiday.

29:27 Our head of podcasts is Lital Malad. For more, visit rapidresponse show.com.