“Adidas: Navigating Digital Transformation and Collaborative Leadership”
1.1.Introduction:
1.1.1. History of the company:
In 1949, Adi Dassler started a shoe-making company called “Adolf Dassler (Adidas) Sportschuhfabrik.” He started adding the iconic 3-striped design to stand out from its competitors and used it as a trademark for his company. His wife Kathe supported him and managed and ran the company even after his death (Walters, 2021).
1.1.2. Size of the company:
Adidas now, is a multinational company, the largest sportswear manufacturer in Europe, and second only to Nike in the worldwide competition. Adidas is also a shareholder in the German football club Bayern Munich. Stats for 2022 show that Adidas had a brand value of 14.6 Billion dollars and was ranked as the fifth-largest apparel-making brand in the world.
In 2022 alone, Adidas is singlehandedly responsible for employing roughly 59 thousand people worldwide. Following a sales decline in 2020–2021 due to COVID-19, it saw a significant increase of 22.5 billion dollars in global net sales. Its largest clients are America and China, collaboratively responsible for roughly 40 percent of the company’s annual retail sales. In the said year, the company produced 480 million units of sportswear and 420 million pairs of shoes worldwide (Tighe, 2022).
1.1.3. Core Products of the Company:
Adidas has a large variety of sub-products in three main categories. Apparel, Footwear, and accessories all lie under the broader umbrella of sportswear. It may seem that they may not offer much, but they come in many different sizes, colors, and features while being different for males and females. For Example, the company provides multiple apparel designs, including shirts, pants, and jackets, all in multiple sizes and colors, for both men and women (KEISHEL, 2013).
1.1.4. The sector of operation of the company:
Adidas majorly targets the markets saturated by athletes and sportspeople. They are doing well in providing apparel, Footwear, and accessories. The company constantly provides updated, innovative, and inspiring designs and varieties as they quickly become obsolete in this niche. For Example, there is always a constant need amongst people for new shoes and apparel. Adidas operates in different countries worldwide, but most of its sales come from the EMEA region (Sabanoglu, 2021). The detailed revenue structure of Adidas is given below:
1.2.Areas of the organization impacted by digital disruption:
Technological advancement altered the previous methods into more advanced approaches to complete tasks in every field. Similarly, the introduction of digital disruption also showed us more advanced ways to conduct our business and affected different business sectors. Adidas has also faced digital disruption, and it impacted the following sectors of Adidas:
1.2.1. Supply Chain Digitalization:
Digitalization has been done in the supply chain department of Adidas, and the company is integrating the IT tools, and they have to alter it after facing digital disruption. According to the analyst, the supply chain department of sports shoes is quite slow and takes time. Still, digital tools adopted by the competitors forced Adidas to improve in supply chain and make quick deliveries (Stolzenberg, 2017). Adidas sped up the process by reducing the time taken in prototyping and started making prototypes using virtual tools (Sa, 2017).
1.2.2. Marekting Techniques:
The brands’ marketing techniques are quite basic, including signing up with famous athletes and professional players. These players used to wear shoes built by Adidas and won many competitions. As a result, the Adidas brand became famous among people and got promoted quite easily. But the digital tools allowed the competitors to grab customers’ attention according to their demographics. This act also impacted the marketing sector of the brand and made them use different virtual and digital tools to market and promote their products among customers.
Adidas launched Ozworld, the world’s first personality-based, AI-generated avatar creation platform, that helped them promote the series of Footwear among consumers (Mixson, 2022).
1.3. The digital transformation objectives:
Adidas is currently focusing on its supply-chain department and marketing strategies and improving them using digital tools. Adidas has good quality products and currently has advanced technologies. They need to make their products more accessible to the people so they can easily buy them. Hence, the company should focus on integrating digital tools that can help them understand the psychology of people, which can help them pinpoint their weaknesses. Moreover, they should have the objective of having the fastest and most active supply chain department among all their competitors so that customers can get their desired product without worry.
2. Data and Decision Process:
To make the right decision, companies gather consumer insights and data to understand the market trend, which is processed to make the right decision. The data helps companies with product design, marketing strategies, and product modification. The consumers’ feedback allows the companies to read the people’s behavior against the company’s specific product. This feedback highlights the companies’ mistakes and the products’ shortcomings and plays an important role in design improvement. This data has a direct impact on the final decision of the company and helps the company to compete more aggressively within the market.
2.1.Techniques and Technologies to Detect Change:
As data aids the company in decision-making, companies adopt different techniques and technologies to gather the data that allows them to understand the market trend and upcoming changes. These techniques are necessary as data collection is quite a complex process. These technologies speed up the process of data collection and channel it appropriately. The techniques process the data and give you conclusions that help you predict the consequence of a specific product. The techniques that can help Adidas to detect the change in the market are given as follows:
2.1.1. Social media monitoring
Everyone is widely using social media, and it is the most common platform to approach people from different age groups having different demographics. People are very expressive about their opinion, giving you a good idea about the consumer’s reaction to your new products.
Different tools help you monitor the company’s popularity among the public, and it helps you estimate the active, loyal customers of the company. “HowSociable” is a digital tool that indicates the brand’s impact on social media. After collecting data from different social sites, “HowSociable” gave a total score of 7.8/10, which shows that the brand is quite renowned among the public (Brisbane, 2013). Companies are using different tools to extract the required data from social media, and out of which few that Adidas can use are given below:
Hootsuite:
The Hootsuite tool helps you monitor social media and keep a record of the important topics for your company. For Example, suppose you are launching a new product. In that case, you can track the comments about the product’s design and modify it according to the customers’ expectations before launching it. It can help the company avoid huge losses and get the desired ROI by meeting customer needs (Lua, 2023).
Agora Pulse:
The Agora Pluse is another digital tool that can help you record the opinion and comments of people about your business. This tool helps you to understand the positive and negative aspects from the third party’s perspective (Lua, 2023).
2.1.2. Market Research:
Market research is necessary to understand the changing behavior of the market as it allows you to the recent fashion, the most recent technology, and the design that is famous among customers. Market research is an extensive task and must be organized to draw good results out of this research. Different tools give you consumer insights, market saturation, and the competition level and assist you in finding the right audience for the brand. The few tools that can help the Adidas brand with market research are given as follows:
Think with Google:
The “Think with Google” digital tool collects data from different sources like articles, videos, interviews, etc., and gives you effective insights based on extensive data (March, 2022).
Quick Explainer:
It is an efficient tool that keeps track of the most discussed item and frequently asked questions, which can highlight the maximum amount of issues about a specific product (March, 2022).
2.1.3. Competitive Intelligence:
Competitive intelligence is an important technique to detect market change, as your competitors can switch the market trend in their favor. Hence, you need to study the competitors’ strategies to understand the upcoming innovations they will launch in the future so that you can develop your policy and products accordingly. Different tools help you compare your company with your competitors. For Example, Topsy is a tool used to get the links, tweets, and searches done about your company, and you can compare it with your competitors. The comparison between Nike and Adidas generated by Topsy by taking the data of almost one month between the 24th of August and the 23rd of September 2013 is given as follows (Brisbane, 2013):
The tools used by the companies for competitive intelligence are given below:
Sprout Social
It is a digital tool that gathers data from third parties and compares performance in the form of stats between you and your competitors. The stats are plotted in graphs, which can be easily observed to understand the areas where your competitors are more efficient (Barnhart, 2020). The interface of the Sprout Social is given as follows:
SEMRush:
It is an SEO tool, but its competitive analysis is also quite good. It can inform you about the number of admirers your competitors have and help you monitor the change in their rankings (Barnhart, 2020).
2.2.Digital Systems to Make Fast Decisions:
Good insights are not good enough to compete in the market, but you have to use those insights to make a difference and lead the market by making fast decisions. These fast decisions can be made using advanced tools that allow you to act quickly and implement the design and supply in the market before it is too common. The company is partially using different technologies to make fast decisions. These technologies are discussed below:
2.2.1. Speed Factories:
The company is using the concept of speed factories for prototyping purposes. The speed factories have data-driven designs. They use robotic technology that includes the Primeknit method and artificially developed fibers that can be altered easily, considering the design in mind. Adidas can use the speed factories after refining for real product development and after the integration of other technologies like 3D printers (GA, 2017).
Adidas has installed chips inside the shoes that keep track of the performance of the shoe and hence have huge data. They must expand this idea as Zara did instead of adopting other technology.
2.2.2. E-commerce:
The availability of stock is another issue faced by the companies, and they have to quickly adopt a method that must resolve the issue of the availability of the stock. The idea of E-commerce and the integration of digital tools can help Adidas to overcome these issues. The company is also learning and initializing different initiatives like “Ship from Store” that reduce the delivery time and make it easier for customers to get their desired product (Sa, 2017).
The company can take inspiration from content management systems like Shopify, Magneto, BigCommerce, etc., to manage its content more smartly. It can develop similar digital tools to operate its E-store more efficiently. It improves the number of sales and your popularity among people because of good service and good store management policies adopted by the company (Jennie, 2023).
3. Task 3: Implementing Digital Culture:
The digital culture plays an important part in the company’s digital transformation. Digital transformation is quite a complex process, and many companies have faced huge losses during digital transformation. Hence, it is always recommended to build a digital-ready culture that assists people in adapting the new technologies and tools (Dialani, 2020). The digital culture is necessary as it reduces the chances of failure and ensures you use digital tools properly. The success of digital transformation is to extract the maximum profit and generate policies that keep you ahead of your competitors. The companies use different innovative approaches to create a digital-ready culture which is discussed below:
3.1.Deliver Digital Training:
The best way to create a digital-ready culture is to give proper training so that they can understand the purpose of digital tools and the best method to use them. The training sessions will familiarize the employees with the digital tools, and they won’t be reluctant while adapting to the new methods. The digital training session will also help the leader understand how much effort he needs to put into correctly pulling off the digital transformation (Dialani, 2020).
3.2.Encourage Experimentation:
Digital transformation is a process in which you use innovative tools and experiment with new approaches to get the best results. Hence, another approach to creating a digital-ready culture is encouraging experimentation so people can experience the tools without hesitation. The experimentation makes every employee comfortable with the sudden change, making it easier for them to blend in, increasing productivity (Soule, 2020).
3.3.Be comfortable with Risk:
Digital transformation has a high level of uncertainty, and it can either become a complete success or a complete disaster; hence you have to create an environment willing to take Risks. When you are comfortable with the risks, you make decisions more calmly and logically instead of rushing (Institute, 2018).
4. Collaborative Team Leadership:
Collaborative team leadership is a key factor behind the success of every digital leadership. Collaborative team leadership encourages teamwork, resulting in employees growing together by learning from each other (Goman, 2017). Collaboration among company employees makes it easier to solve problems and overcome challenges (Moseley, 2021).
The leadership style that I would recommend is the combination of Transformational Leadership and Coaching Leadership. Transformational leadership helps the employees to remain motivated in times of difficulty and uncertainty while coaching leadership helps the employees to learn and adapt to the changes.
4.1.Transformational Leadership:
It is a leadership style in which a leader encourages the employees, motivates them, and stands by their side to face all the problems. It increases collaboration and provides the ideal environment to learn new skills; hence, it acts as quite an effective leadership style in the case of Adidas (Becker, 2022).
4.2.Coaching Leadership:
Coaching leadership is always recommended in the case of digital transformation, as it is necessary to train the employees according to the tools the industry will integrate. The coaching leadership will speed up the process of digital transformation and helps Adidas grow more fastly (Becker, 2022).
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