Levi’s next CEO accepted a demotion to prepare for her role leading the jeans maker: ‘We had to check our egos at the door’

Bergh has been CEO of Levi Strauss & Co. for 12 years, and his board wanted him to be succeeded by an insider. But he felt the company needed the skills that only an outsider could bring. So he persuaded Michelle Gass to leave her job as CEO of Kohl’s and join Levi’s as president…with the presumption, but no guarantee, that she would succeed him in 12-18 months.

“I was the right guy for 12 years ago, when the brand was broken. I’m a brand guy. But now, more and more of our business is retail. We have grown our direct-to-consumer business from roughly 20% to over 40%. So we are really a retailer today, and I felt we needed somebody with a different skill set.’

For Gass, this amounted to a demotion. So why did she agree? 

“When you get an opportunity like this, you have to think about the long game. Also, I’ve known Chip for over a decade. We were at P&G together. I had such deep respect for Chip, and deep respect for the brand…But for both of us, it took a level of humility. We had to check our egos at the door.”

The insider versus outsider question has been debated by countless boards. The benefits to either approach are clear: one provides continuity, the other offers an injection of fresh thinking. The Bergh-Gass solution was an attempt to get the best of both. Will others copy this unusual approach? Says Bergh:

“I think we may be creating a new model for succession. At least we’d like to believe it will be a model.”

Gass says she would advise others in her situation to consider it:

“People have to see the big picture. This was just one year across many years…I look at this and go wow, just having the benefit of a year…it’s been a privilege to have a year to go deep into the business, in the brand, traveling around, deeply understanding the opportunities to accelerate the business and the values of the company…Who wouldn’t want that?”

One added benefit of the new job for Gass: Controlling ownership of Levi’s is held by the family of the founder. That means she doesn’t have to worry about the kind of activist investors that dogged her at Kohl’s.

More news below. This is the last CEO Daily of the year, but we will be back Jan. 2.

Alan Murray
@alansmurray
alan.murray@fortune.com

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This edition of CEO Daily was curated by Nicholas Gordon.