A Tale of Two Sneakers

In many ways the rise of Adidas as an international company is the story of the rise of sports as an international business. How big a role do you think Adidas played in the growth of the sports industry?
Undeniably, when Adidas came along, sport wasn't a daily pastime. It was seen as frivolous and Europeans concentrated on just a couple of sports—particularly gymnastics and soccer. Today sports participation is huge and part of the global lifestyle, not to mention that we're wearing sneakers to go buy groceries. The whole practice of sports has been woven into weekly if not daily routines. The other aspect I find perhaps even more fascinating is how Horst [Adi's son] sold sports events as an advertising platform. He sold sports, not just sports apparel. He made contracts with sports federations and the Olympic committees and was involved in selling the World Cup [to sponsors].

I know Horst died prematurely. Now only one family member remains involved in either company, right?
Frank Dassler, the grandson of Rudolf Dassler, is the only one. At one point he was head of Puma USA, and he's now been appointed head of legal affairs at Adidas.

He crossed the river!
Yes. It caused a bit of a storm. But it really symbolizes that things are a bit more rational these days.

Do any remaining family members regret that they're not more involved now?
The comments I heard were that they wanted to put it behind them. It was such a struggle. They were constantly fighting. There was so much unpleasantness in the family between the brothers and between Horst and his parents and sisters. It was such a tense family environment that they were eager to just let it rest. There's bitterness among [Adi's children] that they sold in a rush, because they believed that Adidas in the late 1980s was really threatened.

Adidas is now the second-largest sports apparel company in the world, and owns Reebok, but at one time it lagged way behind Reebok. How did it turn around?
Adidas made the terrible mistake of saying it was not interested in jogging, and then aerobics became huge and Adidas and Nike both made the mistake of saying they were not interested in aerobics. They completely missed out on these trends, but Reebok didn't. Within about three years Reebok went from revenues of a couple hundred million to several billion. It continued on that way for years. But then Reebok lost its way. And Adidas, for all its mistakes, never lost its way as badly as that … Through it all, Adidas has remained in the consciousness as a solid sports brand. Reebok doesn't have that, either as a sports or lifestyle brand.

How are Puma's prospects now?
The French conglomerate PPR, which owns Gucci, has now acquired it. A few years ago it was being sold in bazaars and people had declared it dead, and it is now being named in the same breath as Gucci … That repositioning will probably be taught to MBA students for several years.

As a business case, what are the most important lessons we can draw from the history of Puma and Adidas? What has made them such enduring brands?
At the beginning of the story, there's always a great product. Puma has survived its worst years because it had a great soccer boot. It's the same story for Adidas; it just makes great products. Another interesting lesson is that you need great enemies. I don't think either company would be where it is today if it hadn't been stimulated by the rivalry with the other.

© 2008