Angela Ahrendts: The secrets behind Burberry’s growth

June 19, 2012, 2:54 PM UTC

By Nina Easton, senior editor-at-large

Angela Ahrendts at the Fortune Most Powerful Women Summit in London. Photo: Anthony Upton

FORTUNE — When Angela Ahrendts took over Burberry in 2006, she had no time to waste. The 150-year-old label had lost its cache. In a sector growing 13%, its growth clocked in at 2%. Its best days seemed behind; Ahrendts needed to lean forward. “There was not time to even think about the downsides” of making big changes, she says.

By targeting a more youthful market and embracing digital and social media, the luxury brand is back in the game. Since Ahrendts, now 46, took over as CEO, the company’s stock has risen 200%. In a wide-ranging interview with Fortune executive editor Stephanie Mehta at the inaugural Fortune Most Powerful Women event in London, where Burberry is based, Ahrendts took her audience inside her strategy—and shared her secrets for success.

It’s not about you. “I work through teams. It’s the only way I know how to work.” Her first move as CEO was to pull together more than a hundred senior managers from all over the world for a week of brain-storming on how to re-launch a brand that had lost its edge. She would again reach out to her team when the 2008 financial crisis hit and the company had to hunker down for the coming rough seas.

Move forward fast. But also look backward to identify enduring strengths. The first conclusion Ahrendts and her team made in 2006, after they examined the competition: “We’re British. They’re not. How do we exploit that heritage?”

Go millennial. One figure stuck in Ahrendts head: 60% of the world’s population is under 30. She brought in research consultants who produced numbers showing that in growing global markets, this is also where the high net worth customers are. Ahrendts and her team quickly determined that Burberry’s future hinged on targeting the millennial market.

Nab those “digital natives.” To communicate with a millennial audience, you need an employee base that speaks their language—through digital and social media. “That’s their mother tongue,” she says of young people. Today, 70% of Burberry employees are under 30, and 40 nationalities are represented in her London office alone.

Create a unified branding vision—in house. When Arhrendts came on board, Burberry was working with advertising agencies all over the world. Ahrendts brought that effort inside, under the direction of creative brain Christopher Bailey, ten years her junior and her “bridge to a younger generation.” The move gave Burberry “total control and singular vision.”

Stay on message. “There’s only one brand. The more consistent we are, the more aligned [we can be].” With everyone from suppliers to investors, the themes emanate from, “our million-square foot story.”

Always do what’s best for the brand. “Don’t do what’s best for any individual for any division, for any department.” That alone, she says, “takes the ego out. It unites everyone around one common theme.”

“Give 60 and take 40”. That was a lesson that Ahrendts’ father, an entrepreneur in a small Indiana town, taught his six children—along with faith, strong family values, and a work ethic. As a child, Ahrendts “took on the role of spectator. I never took on the role of fighter. I was the observer, and it has served me well [in management]. I much prefer to listen.”

Link your team. Burberry sends out monthly webcasts to employees, hip videos come out weekly, and sales associates in 500 stores are treated to previews of ad campaigns before the media sees them. “Knowledge is power. So the more the associates know about the strategy, about what’s coming,” the better they can perform. “Everyone talks about building a relationship with your customer. I think you build one with your employees first.”

Use two-way conversation to find and recruit top talent from within. Remember this about digital natives: “They’re hard for companies to attract but they’re even harder to retain. Because they have so much access to so much.”

To learn more about innovation at Burberry, read Burberry’s Angela Ahrendts: High tech’s fashion model.

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