Good Decision Making at PUMA

When Jochen Zeitz took over as CEO of PUMA AG in 1993 at the age of 30, the company was facing major threats.PUMA AG, based in the small German sneaker-producing town of Herzogenaurach,had lost money for the past eight years and PUMA North America was facing imminent bankruptcy.

Facing tough decisions about how to turn around the company's fortunes, Zeitz decided that rather than trying to compete based on the performance capabilities of its athletic shoes and equipment, PUMA would focus more on style, colours, and lines of shoes produced in a sustainable manner. Essentially, Zeitz saw a potential opportunity in trying to start up a new division focused on experimental fashion and sport as lifestyle. Of course, Zeitz also made difficult decisions to respond to the threats the company was facing by, for example, dramatically reducing costs of production and taking back control over distribution of PUMA products in North America.Another example is the decision to update its policies on sustainable production. In collaboration with Greenpeace, PUMA is engaged in a detoxification process of all its operations. PUMA feels that an update of its sustainability policies must be based on sound decisions and has therefore started a dialogue with industry peers, experts, and the chemical industry to investigate which substances can be phased out with existing technology and where more research is needed.PUMA continues to produce high-performance athletic shoes and gear for serious sport.

Nonetheless, Zeitz's bold decision to pursue the world of fashion and style was a major contributor to PUMA becoming the fourth biggest athletic apparel company worldwide. Recognizing the importance of coming up with creative designs and sustainable products, he decided to make a new division called "sport lifestyle" led by Antonio Bertone, then a 21-year-old skateboarder.The division was tasked to create experimental fashion products. Bertone partnered with German fashion designer Jil Sander to turn PUMA's traditional 1960s-style cleated soccer shoe into a trendy fashion sneaker using funky colours and suede. At first, this new experimental product line received a lot of skepticism from industry experts and retailers alike; famed soccer player Pel had worn PUMA cleats, and it was unthinkable to many that PUMA would succeed in the world of fashion. As Zeitz indicates, "It took a whileand from my perspective, a lot of energyto protect this new little child [the lifestyle group] of PUMA from getting killed ... Eventually, it became the entire company."

Customers loved the more ecologically friendly, retro look and edgy colours of the new line of sneakers, which are now sold in a variety of venues ranging from Foot Locker to high-end stores like Barneys to upscale department stores. PUMA has its own showcase boutique in the meatpacking district of Manhattan and 600 stores around the world in more than 40 countries.

Zeitz continues to pursue new opportunities at PUMAreinventing traditional products to combine performance with styleand continues to partner with creative thinkers such as Zuly Bet, born in Mali and now a Paris fashion designer, and Yasuhiro Mihara of Japan to create new products.

Former skateboarder Bertone is now based in Boston as PUMA's global director of brand management. Now a top manager, Bertone continues to make decisions to seize opportunities for creative and innovative product lines such as the limited-edition line called Thrift (products made from vintage clothing) and Mongolian Shoe BBQ (shoes that can be customized online).

Zeitz continues to make decisions in response to opportunities and, in the process, has expanded PUMA's range of products in far-reaching directions.Clearly, the decisions Zeitz and other managers make at PUMA are key contributors to the success of PUMA today. And while much uncertainty and ambiguity surrounded these decisions at the time they were made, and they were sometimes met with skepticism, they have propelled PUMA to be a powerhouse of innovation and sustainability.

Group Questions:

1. What type of decision was made by Zeitz when PUMA launched into sport lifestyle fashions?
2. Identify the threats and opportunities in the industry-specific environment that impact PUMA's decision making.
3. How does PUMA foster sustainability and promote creativity and innovation? Why is this good decision making?