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PARIS — Lindsay Owen-Jones is winding down what he describes as the “great adventure” of his nearly 37-year career at L’Oréal in the same way he began it — with a burst of speed.
To celebrate the turning over of the chief executive officer reins to Jean-Paul Agon on April 25 — and his just-passed 60th birthday — Owen-Jones bought the fastest, baddest motorcycle he could find, a newly marketed 1,200-cubic-centimeter BMW capable of doing 200 miles an hour. He took off on a long weekend with wife Cristina on board with the intention of exploring little-known country back roads. The man known to friends and associates simply as O.J. spent his youth testing the edges of his fate on a Grand Prix track at 180 mph. He gave up auto racing upon turning 50, but not before finishing fifth at the grueling 24-hour Le Mans race in 1996, and contented himself with flying helicopters and taking up yacht racing. His boat is a 77-foot Wally, called Magic Carpet, and is said to be high-tech and quick on the water.
“Whatever I’m going to do, it’s going to happen fast,” Owen-Jones said during an interview the week before he stepped down. Noting that his fascination with fast cars started at age three, he suggested: “Yeah, I guess somebody’s going to say, ‘Ah, people who love speed — it’s because they want to be somewhere else than where they are.'”
But for 37 years, especially the last 18 when he was chairman and ceo, the place where Owen-Jones wanted to be was in his office on the 10th floor of L’Oréal’s headquarters in the Clichy suburb of Paris. Sitting here, Owen-Jones compiled one of the most remarkable records in the history of the beauty industry and directed the creation of the world’s biggest beauty giant with sales last year of $18.1 billion and an unbroken string of 21 years of double-digit profit growth.
While Owen-Jones leaves discussion of L’Oréal’s future to his successor, Agon, he has some incisive views on the industry’s challenges in the years ahead, including:
- How global companies can nurture individual creativity to keep their edge while maintaining their financial performance;
- The need to be more embracing of the requirements of ethnic markets worldwide.
- The opportunity for brands to integrate forward into retailing.
- The fundamental changes in advertising strategy as younger consumers’ attentions migrate to the Internet and consumers in general concentrate more on self-satisfaction.
- The trend toward more natural products, which was partially what drove L’Oréal’s recent transaction involving The Body Shop.
- A growing trend away from self-service toward individual consultation with consumers.
“He made L’Oréal a world-class company and number one in cosmetics,” said Guy Peyrelongue, the retired president and ceo of L’Oréal USA. “Before him, L’Oréal was a very successful French company that did plenty of business outside France, but it very much had the spirit of a French company. He made it a worldwide company. It was his vision, his plan and his ability to understand what was needed. He very much wanted to build a management composed of people from everywhere in the world. He also strongly believed that women should be in managerial positions.”
When Owen-Jones returns to his 10th-floor office, that is where he’ll stay. Agon was named the new ceo of L’Oréal, while Owen-Jones was elected the chairman of the company’s board for the next four years. Owen-Jones had offered to swap offices with Agon, but the new ceo graciously declined, letting his predecessor stay in place. “[Jean-Paul] decided that he likes his better, so they’ll let me grow old with the office,” Owen-Jones quipped, while describing his new role as “a benevolent and reassuring figure in the background.”
Asked about speculation he will work in the shadows on acquisitions, Owen-Jones painted a picture of helping to shoulder dread, rather than share power. “The ceo has got to have the last word on acquisitions,” he said. “He’s the one who’s going to assume it, he’s going to make it work, he’s going to have to make the numbers. But we can work together. Making acquisitions is a lonely thing for a ceo, and I’d say being two [people] is cool. Just having somebody to agree with you, support you, play ping-pong within your mind, talk it through.”
In addition, “there is now so much to running a large, publicly quoted company that has nothing to do with your customers [or] your employees,” he said, referring to issues of compliance and accountability. “When I started out as a young ceo, I think [I spent] about 90 percent of my time just doing it and perhaps at most 10 percent justifying what I’d done. Nowadays, that proportion is probably closer to 50 [percent]. And if I can take some of that 50 off Jean-Paul’s back, then I feel that’s a major contribution to letting Jean-Paul concentrate on what really counts, which is doing the business.”
Owen-Jones added that at least during Agon’s transition, he could deal with the increase in “the incredible layers of additional accountability and compliance to everything. Nowadays, the company has got to think of everything in terms not just of business, but also of compliance in the widest possible sense; that’s something you learn gradually.”
Despite all of this talk of sharing, Owen-Jones made it clear “there’s no ambiguity, the steering wheel is going to be in his hands and that’s what I wanted and I’m delighted. I’ve always thought that at 60, in such a youth-oriented business, you really have to hand that steering wheel over to a younger man who is simply closer to your customers, closer to your employees, closer to your consumers.” Agon is now 49.
Indeed, Owen-Jones admits that the decision he was the most satisfied with during his tenure was the one to retire. “The only one I’m really proud of is stepping down while I’m still fighting fit and ahead of the game,” he declared. “That takes lucidity and I think you’ve got to believe that the organization is more important than yourself to do that. Nobody was quite expecting it yet and so many people use the same method, in fact, to prolong their stewardship rather than shorten it.”
During the nearly 90-minute interview, Owen-Jones often seemed reflective, while looking back on his career and discussing the emerging opportunities and challenges now confronting the industry. He nimbly moved from one topic to another while pinpointing the dynamics driving the trends. The former L’Oréal chief has never been one for small talk or concepts — he’s always been drawn by the big ideas.
Recalling the scene in 1969 when he joined L’Oréal as a young product manager after graduating from Oxford University and INSEAD, Owen-Jones said it was at the time an entrepreneurial company dominated by then-ceo François Dalle, who, like Charles Revson at Revlon, made every decision down to lipstick shades. “He chose everything; he didn’t feel obligated to even explain why,” Owen-Jones recounted, noting that, by the time he took the helm in 1988, “it was obvious that system had incredible limits because all the companies that had been run by these great, entrepreneurial figures all declined dramatically when they withdrew.”
So Owen-Jones decided to replace the “one benevolent dictator” with a “team of stars” consisting of a worldwide division of executive vice presidents controlling the brands.
“That is the biggest difference today: We are not handing over a one-man band,” he said. “That’s why there’s so much continuity. It’s already a star team.”
The other major difference, Owen-Jones recalled, was that this company was exquisitely French. “My predecessor [Dalle] didn’t speak a word of English. And if you think of what he achieved despite that, it’s quite amazing because he was a truly brilliant man, an instinctive marketer. And this company today has, inevitably, English as the only language that our teams from Chile and Taiwan have in common. It has become a truly global and diversified company.”
Owen-Jones added that, when he joined L’Oréal, France comprised nearly 40 percent of the company’s business. Now the number is “perhaps just over 10 percent.”
Looking ahead, Owen-Jones said: “We all know that the future of this company is already in a geographical area that we’re going to have to rebaptize because it’s right now called ‘the rest of the world,’ meaning outside of Western Europe and North America.” Last year, that catchall region accounted for 25.4 percent of L’Oréal’s global sales. “It is growing so fast that we all know that within Jean-Paul’s command, you can predict that it will become the first and most important geographical activity of our company, bigger than Europe, bigger than the States.”
In turn, Owen-Jones likes to think that L’Oréal has had an impact on shaping values in the industry, particularly its insistence on scientific research and taking a long-term view toward developing brands and personnel. The same can be said for the L’Oréal dictum of concentrating on a finite number of brands that can be marketed worldwide, an idea that wasn’t in fashion 25 to 30 years ago. “People boasted that they had American brands for America, European brands for Europe.” He continued, “L’Oréal had this idea that you could make a brand portfolio out of a lot of things from different places. Most of the industry started from somewhere and basically tried to sell either France to the rest of the world, or America to the rest of the world, or Japan to the rest of the world. L’Oréal said, ‘No, let’s see if we can sell French to the Americans, American to the Chinese and the Japanese to everybody, with Shu Uemura.’ It seemed at the time like a crazy thing to do. Nowadays, people think it’s normal.”
Out of that emerged what in the industry is referred to as “the L’Oréal model.” The company not only operates at different price points in prestige, professional and mass markets, but it has achieved a rare global reach of enveloping brands.
Owen-Jones said, “Very early on, I had a vision of the family of brands, the portfolio. I had the belief that, if we fine-tuned the proposition of each brand, that they all potentially could be sold in every single country in the world, that they would all occupy a totally separate niche.
“In fact, that wasn’t the way it was 20 years ago,” he continued. “They were all overlapping, many of them competed amongst themselves. Some of them were in the same price points as others or had the same psychological profile. We spent a long time separating, getting rid of some of them.”
A friend of his, Maurice Levy, ceo of the Publicis Group, said, “He is so successful because he has an unfair advantage. He is good at every aspect” of the business, including managing, marketing, motivating people, understanding finance and working with research and development. “He’s just great,” Levy said, “and he has a secret that he has been trying to hide for a long time: He has a big heart; he loves people.”
In addition to globalizing the brand portfolio, Owen-Jones also internationalized his top management. He said his only disappointment now is “that we haven’t yet succeeded in tempting enough Americans away from their home country to run things here.” However, he clearly is proud of a Financial Times poll of 1,000 ceo’s in December that ranked L’Oréal among the 20 most admired companies in the world.
In discussing the various ceo’s of L’Oréal, Guy Peyrelongue said Dalle took the reins after founder Eugène Schueller died in 1957, and built upon the hair color and toiletries foundation put in place by Schueller.
Dalle acquired major French brands such as Lancôme, Vichy and Garnier. Owen-Jones, who ran the U.S. business from 1981 to 1984, had developed “a sensitivity” for the potential of American brands and, during his tenure as ceo, stocked the L’Oréal arsenal with acquisitions such as Helena Rubinstein, Ralph Lauren Fragrances, Redken, Kiehl’s, Maybelline, Matrix and SoftSheen-Carson, according to Peyrelongue, who spearheaded most of those purchases.
The transaction involving The Body Shop was the latest move. L’Oréal said Thursday it has received valid acceptances for 89.9 percent of The Body Shop’s share capital and will extend its cash offer for remaining shares until the end of this month.
In terms of product, Peyrelongue said when Owen-Jones entered the picture, L’Oréal was essentially doing business in hair care, coloring and skin care. The young ceo saw an opportunity in providing makeup with technology as a weapon. He put the company’s name on a mass color cosmetics line and launched L’Oréal Paris. Later, Peyrelongue added, Owen-Jones saw an opportunity to break into the Chinese and Japanese markets with a Maybelline mascara.
Robert Salmon, who retired from L’Oréal in 1998 after 37 years with the company, where he was a vice president in charge of strategic planning, said Owen-Jones followed Dalle with a much-needed analytical fact-based profit and loss approach with an eye on internal growth and a strong belief in R&D. His success was undeniable, but Salmon said Owen-Jones turned a bit conservative in the last five years. Salmon said he wished Owen-Jones had been less of a perfectionist and dreamed a little more and put more emphasis on top-line external growth as vigorously as competitors such as Procter & Gamble did. Salmon suggested L’Oréal could have bought Gillette instead of P&G. He described Owen-Jones’ caution as “the trap of success.”
Owen-Jones could not be reached for further comment at press time, but L’Oréal executives in the past have explained that the focus is purely on beauty, since three-quarters of the world’s population has not yet consumed cosmetics products. They insist that there’s no taboo on external growth. It’s a question of finding brands that fit the portfolio, as was the case with Yue-Sai Kan in China and The Body Shop.
Owen-Jones has had setbacks, such as a painful experiment in owning a majority stake in the Lanvin fashion house in the early Nineties. Then there was a brief flare-up of controversy during the same period involving the World War II Nazi affiliations of former executive Jacques Courreze, whose death ended the dispute. Owen-Jones confronted the issue at the time and took action. His performance was praised in November when he received an international leadership award from the Anti-Defamation League in New York.
Considering that Owen-Jones has been made a commander of the Légion d’Honneur by his adopted country, France, and knighted as a commander of the British Empire in his homeland, the Welsh native has no trouble showing humility. When Owen-Jones was asked how he wanted to be remembered, he turned pensive for a moment and replied: “A provincial Brit with an improbable destiny.”
Owen-Jones previously had identified the “next frontier as how one company, with its origins in one place, can become a supplier of all types of beauty to all types of women in the world, and yet do it in an economically satisfying way.” Asked if progress is being made, Owen-Jones replied: “There’s a double dimension to this. It’s called making diversity both a moral commitment and a marketing strategy. And perhaps the moral commitment is more sincere because it is founded in your financial and marketing objectives.
“And that means not just hiring a dream team,” he said. “You’ve got to say, ‘Look, who really ever cared about African-American consumers among the world’s big cosmetic companies?’ Answer: nobody. They were left for their specialized needs basically to small companies, entrepreneurial African-American companies. And it’s a long process. After all these years, we’re creating a center for research in African-American skin and hair in Chicago. We’re still just beginning to realize how we can apply new technologies to this industry. It’s a longer process than any of us thought — but it’s happening.”
He added, “We opened this year a research center in China. Again, historically, we really concentrated all our research into the U.S. and Europe and now we’re opening a center in China, not just as a gesture, but because we know we’ve really got to take the challenge of understanding and servicing the needs of Asian hair and skin extremely seriously.”
As he looks back, Owen-Jones often associates his happiest moments with the riskiest times. “Funny how people associate risks only with acquisitions,” he said, revealing the company faced a dilemma after the fall of communism. “If L’Oréal wanted to stay [as the] industry leader, it had to suddenly be a successful player in dozens of countries, which were, up until then, just names on a map,” he said. “You didn’t have the time to do what would’ve been reasonable, which was to test something and do it one by one. What you had to basically do was against all the normal principles, which was to launch nearly all the brands in all the segments in all the countries at the same time, which was operationally crazy. It was really risky at that time.”
While other companies did the opposite, L’Oréal gambled on the shotgun approach and “we got into a lot of markets ahead of our competition, before it became too much of a trench war.
“We walked the streets of Shanghai together and said, ‘We’re going to buy and put up the biggest billboard in the world right there. And we’re going to launch not just Maybelline, we’re going to launch L’Oréal.’ We realized that it was incredibly dangerous. We walked up and down until 2 in the morning and we said, ‘We’ve gotta do it, we’ve gotta do it.’
“Those were great, great memories of the adventure we had,” he continued. “What people see is the financial performance. But I don’t want to be remembered as the guy who did 21 years of double-digit growth. That’s the consequence of the adventure, it’s not the reason.”