Lululemon: Accountable When Others Are Not
Whether one believes Christine Day resigned as Lululemon's CEO or was pushed out after her five-and-a-half year tenure, she is leaving not only at the right time but in the manner a true leader should.
Shortly after the announcement three months ago that Lululemon would recall the now infamous, see-through black Luon yoga pants, Chief Product Officer Sheree Waterson resigned. She was responsible for product quality, and her leaving at that time undoubtedly reinforced a culture where accountability means something.
Day's duty extended to far more than damage control from "Sheergate." She had to stabilize Lululemon, to quickly protect the brand and stay on a growth trajectory.
Lululemon's first quarter ended May 5. In the press release announcing Day's exit, the company also said it had posted a 21 percent gain in net revenue year over year, highlighted by 7 percent growth in same-store sales.
Those numbers illustrate that Day successfully completed her mission, accepting the consequences of a massive product recall while overseeing an orderly transition to her successor.
Companies of all sizes and in all industries give great lip service to having "a culture of accountability," but few practice it the way Lululemon does. For instance, contrast Lululemon's conduct and executive departures with the way Bloomberg News has dealt with its recent controversy.
Shortly after news broke that Bloomberg reporters' using installed terminal data as source material, Editor-in-Chief Matthew Winkler issued an apparently strong statement: "Our reporters should not have access to any data considered proprietary. I am sorry they did. The error is inexcusable."
With great conviction, Bloomberg executives said they would hold the entire organization accountable, and hired to support their heartfelt efforts, retired IBM Chairman and CEO Samuel Palmisano was hired as an independent advisor to help the company manage security standards.
But the evidence and Winkler's admission show the company violated customers' trust. Who is accountable, and what are the consequences?
(Read an Alternative Opinion: Cramer: Lululemon's CEO Should Not Resign, Sell the Stock)
Accountability means far more than a forceful reaction when caught. And no organization can create a meaningful culture of accountability by merely issuing a series of post-scandal guidelines without reprimanding those in charge.
(Read More: Not-So-Sheer Lululemon Yoga Pants Doing Downward Dog Again)
It does not matter if Day was forced out or if she left on her own. "Sheergate" happened on her watch. Clearly, she has worked diligently since the early-spring recall to fulfill her responsibilities so that her successor can move Lululemon forward from a solid foundation.
All Lululemon stakeholders—notably employees and customers—certainly now recognize that it has the highest standards for quality, integrity and accountability. While I'm not in the market for yoga pants, based on Lululemon's corporate behavior, I am going to buy its stock today.
Mike Berman is a consultant for start-ups and companies facing transitions. He has more than 20 years of executive experience in diverse industries and regularly publishes at his blog, Berman Means Business.