November 22, 2006

Closing the Fiscal/Fashion Gap

I’ve heard of some strange CEO criticisms, but get a load of what they’re saying about Paul Pressler. His critics, including some members of his own board, are questioning whether Pressler is the man to lead the company because he may not have enough of a fashion sense.

Fashion sense? The man runs the Gap. Why does he need a fashion sense for that? If you can pick a pair of tan khakis and a blue shirt out of a police lineup, you have enough fashion sense to run the Gap.

Besides, that’s not why they hired Pressler in the first place. He had been a Disney executive, and everyone knows that Disney is associated with only one thing – breeding financial hatchet men. The Gap had plenty of fashion sense – well, for the Gap – under its longtime CEO Millard “Mickey” Drexler. Unfortunately, in the Drexler days, Gap never met a debt it wouldn’t incur. By the time the board ousted Drexler and brought in Pressler in 2002, the company’s debt load was so crushing you would have thought someone had mixed polka dots and plaids on the bank statement.

No one on the board cared if Pressler knew fashion when they hired him. They didn’t even care if he could match his left shoe to his right shoe. They only cared that he would take that famous Mickey Mouse Club Machete to the company’s spending habits.

He did. Fiscal discipline is back! The board cheered. Pressler is a hero! The board beamed.

But you know boards. They’re not happy unless they’re not happy, and they started getting fidgety about a year ago when they noticed that sales were tanking. We’re not happy, Paul! Do something!

Pressler figured it was an easily correctable situation. You know those ads Gap always runs around Christmas? It’s usually something like: Eleven white people and one black dude all dressed in khakis walking in a circle and snapping their fingers. Show Gap logo. Wait for sales.

No problem. Pop one of those things on the air and we’re good.

Problem! Apparently the 2005 Gap Christmas ad was four blocks south of horrendous, and for whatever reason this was deemed unacceptable, perhaps because six consecutive horrendous ad campaigns is just too many.

So the ad campaign was pulled, sales continued tanking, Pressler received a bonus check in the amount of $0.00, and by spring Pressler was having to explain why he should keep his job. An analysis by Fortune deems Pressler safe as long as the he has the support of the Fisher family – the people who founded the company – because they own 37 percent of the stock. An analysis by D.F. Krause indicates that 37 percent may quite possibly be less than 50 percent, but hey, I don’t write for Fortune, so don’t go by my math.

Pressler’s biggest supporter on the board is eBay’s Meg Whitman. Of course, eBay is known for encouraging consumers to patronize full-price retailers. Oh, did I mention that Whitman is leaving the board? Perhaps she plans to auction off some of her khakis.

It can’t be easy to run a fashion retailer. I can empathize with Mr. Pressler’s problems. I don’t even know how to pronounce chinos, and I have trouble picking out my own clothes, let alone developing ideas for other people.

But the Gap board might consider this rather revolutionary idea: If you choose a CEO because of his fiscal acumen, then you realize later on that you want someone who knows fashion, you can – how can I make this simple so they can understand? – hire some other fashion dude to handle the fashion ideas.

It’s called delegation, not a tremendously familiar concept for many boards. It works like this: The CEO makes a budget. The fashion dude picks out clothes. The CEO looks at the clothes, nods his head as if he has a clue, then cuts the fashion dude’s budget. Then the CEO goes in front of a camera wearing some of the clothes, snaps his fingers a few times, and you’ve got your 2006 Gap Christmas commercial.

Or you could fire the guy from Disney because he can’t match his left shoe to his right shoe.

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