Adidas eliminated seven layers of decision-making and that is how it recovered its ability to compete
When Bjørn Gulden took over the leadership of Adidas in January 2023, the company was carrying $1.2 billion in unsold Yeezy sneaker inventory, a retreating Chinese market, and brands like Hoka and On gaining ground in the segment where Adidas had built its technical reputation over decades. It was, by every measurable standard, a multifocal crisis. What Gulden found inside, however, was not merely a balance-sheet problem. It was an organizational architecture that was systematically producing immobility.
At the Fast Company Innovation Festival held in New York in September 2026, Gulden described with unusual precision for a CEO in a public forum what his initial diagnosis of the company had been: too many hierarchical layers, too many veto points, too many people whose implicit function was to say no. "If you have seven, eight, nine layers in a decision process, you only need one person to say no for everything to stop," he said. The statement is not rhetorical. It is a technical description of how innovation is blocked in large organizations without anyone making the explicit decision to block it.
The central strategy of Adidas's recovery was not to launch a new product or sign a spectacular alliance. It was to redesign the internal power network so that people with energy and ideas could actually get somewhere.
When bureaucracy is the product of fear
There is a convenient narrative about Adidas in 2022 and 2023 that places all the explanatory weight on the Yeezy debacle. The break with Kanye West was undoubtedly costly: $1.2 billion in immobilized inventory is a figure that pressures liquidity, reputation, and internal morale all at once. The drop in sales in China following the brand's positioning on forced labor in Xinjiang added pressure from another front. And the advance of niche brands with greater product agility completed the picture.
But none of those external factors alone explains why a company with Adidas's resources, history, and talent base took so long to adapt. What does explain it is the internal geometry of its decision-making.
Organizations that accumulate hierarchical layers do not do so out of negligence. They do so as a rational response to previous risk episodes: a failed launch, an alliance that went wrong, a broken public promise. Each failure produces a new filter, a new committee, a new validation process. The intention is to reduce the probability of error. The actual effect is to distribute responsibility until it becomes invisible and to ensure that the only ideas that survive are those that no one can object to—which tend to be the same ideas that no one actually needs. Bureaucracy, in this sense, is not accidental inefficiency. It is the rational product of organizations that learned to punish error more than to reward movement.
Gulden identified this mechanism and attacked it head-on. The elimination of the so-called "no-sayers" was not a purge of difficult personalities. It was the dismantling of a structural function: that of blocking through distributed veto. In January 2025, Adidas announced cuts of up to 500 positions at its headquarters in Bavaria. The financial figure matters less than what it signals: the company was willing to pay the organizational and reputational cost of physically reducing the number of blocking nodes in its internal network.
What this enabled was that people at the second, third, and fourth levels of the structure could make decisions with real consequences. Gulden put it plainly: they needed "the good people to be able to breathe." Translated into network terms, this means increasing the density of connections between those who have ideas and those who have the authority to implement them, while reducing the structural distance between both nodes.
The numbers that validate the architecture
Gulden's organizational argument would remain abstract without the financial results that accompany it. And here the data are specific enough to sustain the analysis.
In 2023, Adidas recorded an operating profit of 268 million euros, a figure that came in nearly 1 billion euros above initial projections. Part of that difference came from the decision to sell the remaining Yeezy inventory rather than write it off as a loss. That decision alone generated significant revenues and contributed directly to the operating result in a year that had been shaping up as catastrophic. For 2024, sales of the remaining Yeezy inventory contributed around 650 million euros in revenue and approximately 200 million in operating profit.
But the most revealing figure of the internal recovery process is a different one: a reduction in inventories of almost 1.5 billion euros in 2023, equivalent to a 24% decline. That reduction does not happen on its own. It requires hundreds of purchasing decisions, wholesale sell-in arrangements, and channel management decisions to be made in a coordinated and rapid manner. That is the kind of execution that an organization with nine layers of approval cannot sustain. The speed with which Adidas cleaned excess stock off its balance sheet is indirect but solid evidence that the decision-making architecture had already changed.
Gross margin in the fourth quarter of 2024 reached 49.8%, an improvement of 5.2 percentage points compared to the prior year, driven by lower product and freight costs, a better channel mix, and a substantial reduction in discounting. A margin improvement in the context of a volume recovery is not a market accident. It is the effect of a company that stopped selling under pressure and began selling from a position of control over its inventory and its pricing.
In China, sales grew 8% in currency-neutral terms during 2023, with double-digit growth in both the wholesale channel and owned stores. In structural terms, the Chinese recovery is also an execution test: it demands local adaptation, speed of response, and the capacity to make decisions close to the market rather than from a central committee.
The two-hour marathon as product thesis
In April 2026, Kenyan runner Sabastian Sawe completed the London Marathon in 1:59:30, wearing the Adidas Adizero Adios Pro Evo 3. Gulden mentioned this fact at the festival not as a sporting anecdote but as a proof of concept for the internal transformation. That is a distinction worth analyzing.
Sports performance brands compete on two simultaneous planes: technical credibility, measured in elite results, and cultural relevance, measured in mass adoption. Adidas had maintained a presence on the second plane through its lifestyle franchises, primarily Samba and Gazelle, which continued to be sales drivers throughout the crisis period. But technical credibility in running required a different kind of demonstration: an elite athlete, a maximum-visibility competition, and a shoe that could withstand the scrutiny of the technical community.
Achieving that result is not merely a matter of research budget. It requires that development teams have the authority to make design decisions without submitting them to endless internal validation cycles. Marc Makowski, Adidas's Senior Vice President of Innovation, has described a model in which design authority moves away from headquarters and closer to product teams and the athletes themselves. That is consistent with what Gulden describes in leadership terms: the problem was not a lack of talent but a lack of authority to exercise it.
The achievement in London is, in this sense, the public-facing version of a process that happened internally: when you stop asking seven layers for approval and start trusting the people who design, the product can reach places that were previously out of reach for reasons that had nothing to do with the technical capability of the team.
The geography of power that Adidas's recovery lays bare
The recovery of Adidas under Gulden contains a structural lesson that goes beyond the company's particular history. Organizations that go through crises tend to diagnose their problems as external, because external factors are visible, measurable, and above all do not imply internal responsibility. The break with Yeezy, the decline in China, the competition from Hoka and On: all of these are real factors, and all of them are external. But the speed of response to those factors depends on the internal architecture of power.
What Gulden revealed, in describing nine layers of decision-making and the figure of the "no-sayer" as a functional organizational type, is that the real bottleneck at Adidas was not its product portfolio or its market position. It was the internal network of approvals, which had turned the control function into a system of distributed and anonymous veto. No one in that network was making the explicit decision to block innovation. Each node simply said no, or asked for more information, or escalated upward, and the cumulative result was a company that could not move at the speed the market demanded.
The reduction of 500 positions at headquarters, the elevation of talent from intermediate levels, and the explicit mandate to let designers and creatives operate without the constant mediation of spreadsheets are not organizational culture measures in the soft sense of the term. They are network architecture interventions: they redistribute authority, shorten the distance between decision and execution, and eliminate the nodes that were functioning as systematic blocking filters.
The peripheral intelligence that Adidas needed in order to recover was inside the company before Gulden arrived. It resided in the product teams, in the designers, in the channel managers who saw the market up close. What was missing was not talent or information. It was an architecture that would allow that intelligence to reach where it needed to go without being stopped along the way by someone whose implicit function was to stop it. That is the fragility that large organizations produce without noticing it: not the absence of capability, but the accumulation of layers that neutralize it.
