Conquering the North Face

by Hap Klopp

  Our dealers came up with several wonderful ideas which we used. One was to expand the lighting in the back of the stores. The back of the store is always the least well trafficked area with the lowest sales per square foot. By increasing wattage, changing color schemes, or using windows, retailers were able to attract more customers to the back, and let them spend more time pleasurably in the stores.

  Another idea was to alternate the direction of hangers on the clothing racks at the front of the store. This prevented shoplifters from snatching an armful of merchandise and running off.

  By taking the dealers to our stores and openly discussing the facts of our business, good and bad, we all learned and became more imbued with the concept of quality. There was tremendous individual growth. And there was more; there was business growth. Our dealer loyalty soared. Many dealers immediately improved the visual merchandising and operations of their stores as a result of the seminar. This translated into greatly improved sales and profits. And the best part was everyone had a good time. Quality, unquestionably, is fun.

  In some companies, however, quality is not a guiding concept; it is merely a public relations slogan. It has no meaning because there is nothing behind it. There is no care, no commitment. The product isn’t the best—it’s maybe okay. The people who make it do it solely for money. Even the people who buy it don’t expect much. They have been beaten down by bad products.

  Eventually, though, customers change companies. Even the most timid customers—though uncomplaining—will begin to vote with their feet. Everyone wants something of quality.

  There is one way to tell people up front of your commitment to highest quality. It is the best way—a full and complete warranty. A lifetime warranty.

  For one thing, a warranty gives you an easy way to quantify quality—just measure the returns on warranty. It’s not perfectly accurate, but it’s a start. An even better way to quantify quality is counting the number of defects produced that never go to market. Many companies believe that if defects go down the company is improving. My experience is different. I believe every company produces some defects; that is the nature of production and the nature of business. If you don’t acknowledge the defects and cull them out, they don’t go away. They probably go to your customers, who will then either create returns or, far worse, vote with their feet and begin buying from another company.

  Yet lawyers and vulture capitalists will tell you that you are crazy to consider a lifetime warranty on anything. They are wrong!

  A full warranty sends a profound message—it says you will back the product forever. Not many companies use that strategy, but those that do are almost always successful.

  Ironically, with a full warranty some of your best reputation comes when you have major problems. People doubt quality so much that they never really believe what you say with your warranty until you prove it. When you do honor your obligation and treat your customer right, it is so unusual that the customer becomes a vociferous spokesperson for your company.

  When Gore-tex Fabrics introduced a new waterproof, breathable fabric, it revolutionized the business of outerwear and sports clothing. It was a success from the start—functional, high priced, but without competition. For years people had been looking for the product they created. It was the highest known quality.

  But there was a problem. A year after it was introduced, the new material, which was laminated to standard commercial fabric, began to bubble and separate. In the fashion-conscious world of outdoor clothing, the product was a loser. Even more important from a quality point of view, the separation caused the clothing to lose some of its function—the garment didn’t keep its owner as dry as before the problem started.

  It was a potential disaster. But Gore immediately put its R&D people to work and they developed what they called Generation II Gore-tex. The company then offered to replace every garment that failed. Every one. And they lived up to their promise.

  The customers were ecstatic. Gore-tex reached an unassailable quality and ethical pinnacle. Even when the competition developed similar waterproof, breathable products at lower price points, they couldn’t overtake Gore. The company continues to lead the waterproof, breathable fabric market. Their product unquestionably meets the test of being the highest quality. And every day they are working to improve even that.

  When The North Face launched its line of ski wear in 1980, we had the perfect plan. But what we learned is that a plan is just a word without the right product.

  The right product for The North Face was, of course, to have the very best outerwear in the world. We knew how to do it—we had the technology. But we were also naive about the difficulty of being the best in ski wear. We knew it would be hard. We didn’t know how hard.

  We did great research and had a totally revolutionary product—ski wear that stood up to the cold, wind, sun, and abuse. Layers of clothing that worked combined or alone—in different altitudes and in different kinds of weather. Behind this, we had total assurance from our fabric suppliers that their materials could do what we said they could do.

  Our plan was to outfit the ski instructors at Vail. It went like this: They’d get the outfits for a nominal fee and be happy because the product was the best. We’d get positive publicity because all winter long skiers at Vail would see the instructors in The North Face ski wear—word of mouth goes fast in such small enclaves as Vail. Good skiers in good equipment. Great idea.

  There was a problem. You see, when good-skiers-in-good-equipment become good-skiers-in-bad-equipment, you’ve got a real problem. By the end of the first season at Vail, all the outfits of the instructors were deteriorating from the sun’s ultraviolet rays on the mountain—they started looking like cheap sharkskin suits.

  You know what we had on all that equipment? We had our lifetime warranty on all that equipment. And we had a fabric supplier who refused to back us up. Basically we had asked the supplier if they could make fabric that would hold up to the sun, and they said yes. So we went forward.

  And when it didn’t work, the supplier refused any help other than an offer of $1,000 toward an ad with their company name in it. Hell of a guy. I’ll never forget it.

  As a result we wrote off more than $100,000 by taking every piece back and replacing them with new, workable garments made from fabric from another supplier. That was a huge amount for a company our size.

  And you know what? It was without a doubt one of the best things we ever did. Vail was ecstatic with the replacement product. The people at Vail were so amazed that we actually lived up to our warranty that they became vocal advocates for our company.

  The North Face is now the U.S. volume leader in the market of highest-quality functional ski-wear for serious skiers. In fact, in 20 years the cost of our warranty rebates for all of our products never exceeded 1 percent of our sales. Sure, we had blips like the Vail situation. But all in all, I can honestly say we couldn’t have afforded not to back our products with a full warranty.

  I don’t ever want to apologize for my product, but if I have to, I will. That is a statement of commitment.

  In fact, our warranty and repair department became so famous for its work that it broadcast the quality of the company. We repaired sleeping bags on which people had put hot skillets and backpacks that bears had chewed on. The work was good, efficient, and fair. If the fault was even remotely ours, we would repair or replace the product for free. If it was the customer’s fault, we would charge only a modest fee. Our goal was to make them happy.

  One day a customer came in with a Sierra Designs sleeping bag—ironically, a company we would later acquire. The customer said. “I hear you do the best and fastest repair work. I bought this at Sierra Designs, but they tell me they can’t repair it for three weeks. I need it now for my vacation. Can you repair it? For free?” The customer claimed he didn’t have any money for the repair, since he needed it for his vacation. “Maybe you can get the money back from Sierra Designs,” suggested the customer.
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  The warranty and repair department decided to do the work for free. Their reasoning, which I totally supported when I later learned of it, was that the cost of the repair was minimal. The person would be so delighted about the repair (even though he was clearly scamming us) and so positive about our company that he would be sure to tell everyone he knew. It would be infinitely more effective than any advertisement we could ever put out.

  A full warranty also works on customers on a subliminal level—they realize you can’t afford many errors like the one they just experienced and stay in business. A full warranty telegraphs the message that you are serious about quality.

  The concept behind a strong warranty works as well inside a company as it does with your customers. It provides clarity, simplicity, and focus. It sets a clear policy for dealing with customers and a guideline for everyone, from switchboard operators to designers. It is a story that can be easily and swiftly communicated to all employees: We make only the best. It is a policy that personally involves everyone. As a result attitudes are buoyed and employees become positive salespeople for your company.

  A full warranty says you understand quality as a goal and as an idea. As a goal, quality is tied in to hard work, inspiration, dedication, and fun. As an idea quality is a harder call. Should one aim for the highest quality? If so, isn’t it unattainable? Is quality a final aim or one of a vital, continuous state of being? A full warranty tells the buyer that quality is fluid—it must always be there.

  All of these words pile up now—words such as focus and fluid and perseverance and instinct and resilience and discipline. On and on goes the list. But what does it mean? What does it mean, finally, when you get past all the verbal barriers?

  Quality is joy. That’s what it means. In the midst of all the hard work quality is laughter with a friend on the path to mutual accomplishment. Quality, quite simply, is the best.

  10

  SHARING VISIONS:

  When Leaders Lead

  But then they danced down the street like dingledodies, and I shambled after as I’ve been doing all my life after the people who interest me, because the only people for me are the mad ones, the ones who are mad to live, mad to talk, mad to be saved, desirous of everything at the same time, the ones who never yawn or say a commonplace thing, but burn, burn, burn like fabulous yellow roman candles exploding like spiders across the stars and in the middle you see the blue centerlight pop and everybody goes, “Awww!”

  —Jack Kerouac, On the Road

  Dingledodies live! I’ve worked with them and I know, as Kerouac knew, that the mad ones are the ones who buy into the dream with the deepest fervor. The dream of life. A leader’s job is to share his version of that same dream and then rally the talents and energies of everyone toward the cause.

  There is nothing more energizing than talent—plugged-in talent. The electric ones are the ones whose leadership aims to incite. When the light is bright enough, it can create work that is not only moving but also inspiring. Ernest Hemingway’s A Farewell to Arms had that effect on Edward Hope, a reviewer with the New York Herald-Tribune. Hope was so moved by Hemingway’s tale of love and war on the World War I Italian front that he wrote: “It is one of those things—like the Grand Canyon—that one doesn’t care to talk about. It is so great a book that praise of it sounds like empty babbling.”

  And so it is with praise of the human spirit. It sounds like empty babbling, but—dingledodies live!

  For the last 25 years or so I have watched, dumbfounded, as much of American business has flailed about aimlessly in the singular pursuit of profits. Executives disconnected themselves from everyone as they spent every spare moment weaving their private cocoons. It was almost funny, almost like the fable of the emperor’s new clothes, as I watched the business fabric of jargon, titles, and prejudice unravel. Beyond the pretentious audacity to employees, and in fact to the rest of the world, it was, simply, a disgrace.

  I’m fed up with shoddy quality and service and incompetent people doing nothing more than trying to hold on to their jobs. I’m angry with the lack of energy and pride. I’m tired of old excuses, and I’m bored with “new and improved” when it means nothing.

  I’m too competitive to accept playing dead to global competition, particularly when it is clear to me there is nothing—and everything—magical to running a business. It is about common sense, the ability to think logically and emotionally. That’s all. It’s about quality, about digging past the layers of bullshit most organizations pretend exist and finding humanity. It’s easy to do and more than worth the effort.

  You have to look at more than profits if you want to be a leader. You have to actually care about your company and the people in the company. Leading requires passionately immersing yourself in a deep vision of the future. Leading means creating the future, creating more light than heat.

  Leading means making connections, both for yourself and your company. You want people to identify with the company and its mission so that there is a bond. It is a winning, home-team attitude—like that of Harley Davidson, with perhaps the most loyal customers in the world.

  Every company has its own culture. There are many types, but the best revolves around fun and humor. Business, after all, is the theater of the absurd—a potpourri of laughter for those who connect to the vision.

  Connections are always individual events, even when the leader leads thousands. And in the increasingly global world (if that makes sense), leaders sometimes must communicate with three or more continents in one day. Leaders now must make electronic connections to the masses and yet the goal must be the same—to touch individuals personally. It is ever more difficult to go beyond the mechanical connection to the human one.

  True leaders revel in individuality—their own and their employees’. They allow employees freedom within the boundaries of fairness. Leaders recognize and honor each human spirit they meet. They revel in the energy and potential. They start with themselves.

  Galen Rowell, the photographer, is famous for his pictures using morning and evening light. He is famous for a good reason—he takes great photos. On one adventure he was in Tibet to take pictures of the Potalla, the Dalai Lama’s residence. He wanted to do it in his signature way—at sunset. He began his arduous ascent in the late morning, hiking to locations where he could best photograph the Potalla. The altitude was between 12,000 and 13,000 feet— sorry-lung altitude. Certainly not the easiest place to hike or run.

  Just as the sun was going down, it started to rain. Galen saw a rainbow. He figured out that if he ran about a mile up and to his left, he could take a picture of the rainbow exactly over the Dalai Lama’s palace.

  So he ran.

  And he ran.

  And he ran. You possibly saw the picture. It’s been published all over. Your first reaction may have been, “What a great shot! Was that photographer lucky!” Lucky, yes. He’s worked so hard he’s been lucky hundreds of times.

  Galen Rowell is a leader in his field. He is among the very best outdoor photographers in the world—meeting an internal challenge to be a leader to himself.

  From the spark that ignites will, leadership creates a vision and shares it with others. When the vision is accepted and shared, a human will can accomplish almost anything. Focus and direct—quality will come forth.

  In the early 1950s Sapporo, Japan, was a cold and isolated city. On the northernmost island of Japan, where winds whip in from Siberia, Sapparo’s winters were a study in monotony and depression. The economy was depressed. There was nothing for the residents to do but burrow themselves in their homes. Some stewed, but others dreamed.

  Every winter it was the same—isolation. The cold was a fact; the Siberian winds to many were a curse. But the Sapporo civic leaders in the early 1950s had a most radical idea—to stop vilifying the weather and celebrate it. The idea was to celebrate in the cold and create an event unique to Sapporo. They did this by creating the Yuki Matsuri Festival, a celebration of snow and ic
e sculpture.

  It started small. At first it was a local event, designed mainly to enliven the spirits of the locals. But it grew swiftly. Word quickly spread that people were having fun in the dead of winter in Sapporo. Newspapers printed pictures of the spectacular sculptures carved for the festival. Artists began planning their year around the event.

  It is an incredible sight, with hundreds of snow and ice sculptures—some as large as five-story buildings. But the large sculptures are no mere artistic feat; they require the skills of world-class ice climbers as well as the talent of sculptors. The sculptures vary greatly in size and design. There are replicas of fierce warriors, castles, mythical characters, and whatever else the artists’ imaginations conjure up. The festival has continued to this day.

  In recent years more than two million people have visited the annual festival—toasting the sculptures with sake and joyously spending their money in Sapporo.

  A shared vision is a wonderful thing. It doesn’t just happen; the shared vision emanates from an individual vision. It is molded into a shared vision when a leader takes action and motivates others to also take action.

  In Sapporo civic leaders were faced with a depressing situation—terrible weather, monotony, and economic doldrums. They turned it around because they had a vision of how to change it. With that vision they were able to get the city to buy into their dream of an ice festival. United, the people of Sapporo created magic.

  The start of cubism in the art world exemplifies the evolution of a shared vision. In the early 1900s Pablo Picasso was a Spanish artist living in the impoverished artist colony in the Montparnasse section of Paris. It was there that he met and befriended French artist Georges Braque.

  They made a connection. Despite their differences in nationality, they had much in common. It was a friendship based on energy and inspiration. It was a friendship that would change the art world.