From opening up international markets to launching perennial bestsellers, the four people here helped shape the modern beauty industry. Now, as the industry gathers for the WWD Beauty CEO Summit, we asked them to share their memorable moments — and weigh in on what it will take for the next generation to win.
This story first appeared in the May 11, 2012 issue of WWD. Subscribe Today.
GUY PEYRELONGUE: When Guy Peyrelongue retired in 2001 after 14 years as president and chief executive of L’Oréal USA, he had completely transformed the company. Upon his arrival, the company then known as Cosmair had annual sales of about $700 million. By the time he left, sales in North America had soared to almost $4 billion, and L’Oréal was dominant in the mass, prestige and professional markets across all product categories—a position it still occupies today.
JEANETTE WAGNER: As president of the international division of the Estée Lauder Cos., Jeanette Wagner was responsible for launching key brands in the BRIC countries before such markets were big enough to warrant an acronym. From China to Moscow, Wagner forged a global path that myriad brands have since followed. When Wagner was promoted from that position after a 12-year tenure to vice chairman of the board in 1998, the International Division had reached $2 billion in sales, accounting for roughly half of Lauder’s overall business.
ARIE KOPELMAN: During his tenure as president and chief operating officer of Chanel from 1986 until his retirement in late 2004, Arie Kopelman oversaw explosive growth for the company — from opening more than 20 boutiques and 90 retail accounts to launching Coco Mademoiselle, still the top-selling fragrance in the U.S. prestige market today, and signing Nicole Kidman as the very high-profile face of Chanel No. 5. Lauded equally for his entertaining quips as his business acumen, Kopelman helped propel Chanel to more than $2 billion in sales in that time.
ROBERT METTLER: A veteran department store exectuve, Robert Mettler held top spots at Macy’s, May Department Stores and Sears Roebuck. He was instrumental in orchestrating some of the early department store consolidations in the Eighties, but is best known for his accomplishments in his last role. As chairman and chief executive officer of Macy’s West, Mettler doubled the business in less than five years, from $4.7 billion to $9.5 billion in volume, and transformed Macy’s West’s San Francisco flagship into one of the crown jewels of American retailing.
WWD: What does it take to be a great leader?
Guy Peyrelongue: You need to have a clear vision of what you want to achieve and focus completely and totally on those objectives. You’re not a great leader without a great team. You have to build your team, and select who you think will be the best, starting first with the people who are in the organization. You must also communicate very clearly what your priorities are, which will be their key priorities and you have to be certain they won’t deviate. Something which I also always tried to do with a new team was have them win some successes, even small, to build their confidence in their ability to be successful. That helps build pride and confidence.
Jeanette Wagner: There are great bad leaders and great good leaders. Good leaders need to have passion, compassion, vision, persuasion, courage to manage risk, resilience, intelligence and the ability to inspire. You can’t be a leader if people aren’t willing to follow you and people aren’t willing to follow you unless you’ve inspired them.
Robert Mettler: In no particular order — being open minded, being a great listener, being collaborative. At the same time, having the ability to make decisions and move on and learn from them, whether they’re great ones or not so great.
Arie Kopelman: It is a combination of things. One is having a focused vision, so that you can take people in a particular direction. Secondly, it is creating a sense of teamwork, so that people don’t go off in 18 directions, but realize they are part of something larger, where the whole is more than the parts. Thirdly, it is motivating people to make it happen. It is one thing to have an idea, quite another to see it executed properly. Also, it’s creating a corporate culture where there is a real sense of camaraderie and belonging and eliminating that “not invented here” mind-set.
Which professional achievements are you most proud of and why?
GP: What we have been able to achieve in the U.S. When I came in 1986, the name was Cosmair. We were the agent of L’Oréal and had $700 million in sales. Fifteen years later, when I left, we were selling $3.4 billion. We had a good run.
Beyond those figures, there were more specific achievements. We made L’Oréal hair color number one in the market. When we came, we were second behind Clairol by far. Another was, when I came, in the beauty salon market, we had almost no presence, selling $20 million. In 2001, we passed $500 million and became the number-one with L’Oréal hair color and the launch of Kérastase and two acquisitions, Matrix and Redken. The last one is special to me: In the fragrance market, we dream of creating a classic and with Ralph Lauren Romance, we achieved that.
JW: There are so many and each is different. One was in 1991, when the international division reached its first billion — from being the smallest and least profitable [division] to being the biggest and most profitable was very exciting. When we did the IPO, doing the roadshow to sell shares, I was made aware of what we had achieved internationally, and that it was significant to the valuation of the company.
Opening the first freestanding store for the company, in Budapest in 1989, and opening Russia and Mittle Europe with Estée [Lauder] was also extraordinarily exciting. And China, which we opened in 1992. Those are all very exciting moments.
RM: Growing people — being proud of them, of their achievements and hopefully playing some part of their success. After 47 years in the business, there are lots of people in lots of different companies who have been very successful and are running businesses today who worked with me. The other part I’m most proud of are growing businesses that might have been stagnant and did achieve measures of success.
AK: My number-one favorite story on the make-it-happen front is the launch of Coco Mademoiselle. We had launched Coco and it was reasonably successful, but it wasn’t a big business. We didn’t want the brand to just be a small niche one, and we came up with the idea of launching an entirely different kind of fragrance as a flanker brand. At that time, people didn’t talk about “flankers.” You would not believe the amount of infighting. There was a sizable group in the company that didn’t believe in the concept of a flanker and didn’t want to do it. We launched Coco Mademoiselle and it became the number-one brand in the business. We worked hard to make it happen, and the results speak for themselves.
What was the most difficult business decision you had to make?
GP: When I came in 1986, the company was for the first time in some trouble. It had lost money for the first time and there were some discussions with the then-chairman Francois Dalle, who said you should refocus on where you are making money, which was Lancôme and L’Oréal hair color. L’Oréal makeup at that time was challenging. It had launched in the U.S., and was a beautiful line, mainly focused on lipstick and nail enamel. They had started marketing to try to compete with Revlon, which was the big brand at that time. Dalle said, “Let’s stop. Why compete with Revlon?” He used a French saying, “You don’t bring your beer to Munich.”
I knew if we were giving up on L’Oréal cosmetics because they weren’t [sold] in France, we would never come back. With the support of Lindsay Owen-Jones, we asked if he would give us two years to try to make it work. I committed that we would reduce the losses. I knew that to compete with Revlon on lipstick and nail enamel was very difficult, but we had a formula of mascara in Lancôme that had been used for many years and was absolutely fantastic. We cut all the promotions, developed a product called Lash Out and put money in advertising to become the number-one mascara advertiser in the mass market. In less than one year, we took 7 percent of the mascara market.
That was our beachhead. For the first time, the team said, “We are a winner,” and from that we rebuilt everything. That was a difficult decision because I knew that if we hadn’t been successful, I would not have stayed. Would I do it again? I think so. I was gambling on a product that I was pretty sure about.
JW: I don’t really remember because if you do the right thing, if you protect and grow the brand’s DNA, no decisions really are tough. It’s not about the money. A good idea is a good idea no matter what it costs and a bad idea is a bad idea no matter how much money you make.
RM: Letting go of an idea or a person. You get invested in a comfort level, in an idea, a person or a process that you may have thought was integral to the business. What would I do differently? I would make the decisions sooner. Every time I procrastinated on a decision, I regretted not making it sooner.
AK: You have to pick your fights and we were ready to go down with the ship on Coco Mademoiselle. It was a discussion we weren’t going to let end. On the fashion end, we had a senior executive who did an analysis that was very detailed on why it didn’t make sense to stay in the shoe business. Needless to say, when women buy handbags, they tend to think of coordinating colors for shoes. But there was serious discussion — was it a financially worthwhile proposition? The moral is, there are a lot of ways of interpreting numbers, and there are times when you have to make the leap and say the numbers might not take you in a direction that makes sense, but you have to look past that and have a vision of what it could be so that the numbers will make sense eventually. You can’t just look at things in the here and now.
What were some of the biggest changes that you saw in the industry?
GP: There were some major changes in distribution. In 1986, you still had some of the old traditional department stores. That changed with the major movements of acquisition, and you saw for a period of time a uniformity in the department stores. We suffered somewhat from that. Now there is a revival. We also saw the emergence of new stores like Sephora and that was interesting. We wanted them to give us the space and service, and they felt we should give them everything. More and more, we came to an agreement. It took time to develop business with them. The other element was e-commerce.
The other change was among the players of the industry. You saw the emergence of companies like the Estée Lauder Cos. and P&G, while some of the big players are no longer [market] leaders. When we came, Clairol was number one in hair color and Revlon in makeup. That was a change.
Finally, I bought Maybelline for L’Oréal. At that time, Owen-Jones had the strategic idea to use Maybelline to move L’Oréal very strongly into China. We launched Maybelline in China and it was the entry into the mass market. Maybelline was the Trojan Horse for L’Oréal in China.
JW: The main one was a concept of globalization. When I joined in 1975, Leonard Lauder said “I want to be known as a fashion makeup company.” When I was doing my homework, it was clear you could not be a fashion leader if you sold your products in Europe a year or two after the U.S. So we revolutionized the makeup business and drove it through the sky by being the first to launch simultaneously. The idea of thinking global and adapting local was the biggest change of that period.
RM: The consolidation of brands and companies becoming portfolio companies that are far more global. Over the last 20 years, companies have become truly global, and the idea of how to maximize brand equity across both cultures and geography has been the biggest change, aided by technology and other ways that a brand can get extended and leveraged. What you have now is companies that have a variety of brands that live somewhat independently but leverage the strength of the company’s ability to grow them and keep them brand-centric and at the same time, be able to use both talent and technology and financing. It’s not easy to grow businesses in today’s world. It takes both people and money.
AK: The exponentially increasing number of brands being launched. The fragrance industry became crazy. The concept of fragrance being a precious and important gift got diluted tremendously by the amount of launches and the insane level of celebrity fragrances. While it made a short-term buck, it also meant reasonably short brand life cycles. If we are running an industry that has stability and growth on a consistent basis, it is important to think longer term and longer brand life cycles. It takes real discipline to run a business for the long term.
What is your assessment of the current landscape?
GP: The changes are accelerating and the world is becoming more global every day. The use of information technology allows us to be efficient with less people. It is true in manufacturing of course, but in administration, too. It is a challenge for leaders because they have to review and rebalance their organization.
That brings a human challenge. You need to do that while you are keeping your good people motivated and also you need to be able to bring young talent into the organization. In cosmetics, we need very young women and men and when you have a big company you have people who have been very loyal and very good, but you need to be in a situation where the young people can grow and develop.
Finally, the great [industry] players are still American or European. When you look at their executive committees, in the U.S., you see a lot of Americans and in Europe, a lot of Europeans. They need to open it up and get people on board from emerging countries — India, Brazil, Mexico, China. It’s not an easy thing.
JW: I think it is on the dull side. The current landscape is really not very innova- tive, in technology or chemistry, and that surprises me. The industry is behind in meeting the wants, not to mention the needs, of consumers.
RM: Difficult but do-able. External macroeconomics are difficult. All economies are facing change of both socioeconomic and political pressures that make it difficult to be in business. That being said, look what’s been spawned for new concepts, new businesses, over the last five years. Facebook has a market cap of $105 billion. That is pretty amazing.
AK: I’m not involved every day, but, from Chanel’s point of view, we continue to run the business for the long term.
What is most important for today’s leaders to pay attention to and why?
GP: Their products and their people. You have to be sure you have good products in the pipeline — real products, not just another thing you present as new. More and more, technology is important in cosmetics. The other thing is the people. People make the difference. You need to be able to let the creative talent express themselves as close as they can to the decision maker. People in research should be very close to the decision maker. Today, I see too many layers of people. I just read the biography of Steve Jobs and was impressed to see how close he was to the designers. If I was a CEO today, I would make sure of that, because it is the way to make real progress.
JW: They should be paying attention to the imagination and quality of their teams, the people they hire and work with. They should also pay attention to how they recognize and reward them. It is critical to make sure you’ve got able people who are collaborative, who can inspire their teams, who can bring people along, who understand how to use knowledge and data. People get drowned in data without understanding the pattern or direction the data is pointing to.
RM: Young people. A few years ago I gave a speech and I integrated all of my commentary to Instant Messaging shorthand. It was amazing how illiterate the audience was. I’m sure that’s changed, but I was shocked that people who were in positions of decision making had no idea what was happening with their primary customers. Those are things that are so necessary in today’s world to understand, to get into the psyche of change of anytime, anywhere, and paying attention to technology.
AR: It boils down to trying to look at things not only long term, but paying attention to detail in every step you take. You really have to turn over every stone and think deeply about what you’re doing and why. I’m a great believer in thorough strategic thinking before you start running off in creative directions. This is a business about creativity. On the other hand, you have to take the impulsive out of the equation to the extent possible so that you increase the odds of a success. The great ideas can still be from the gut. Innovative thinking is the heart and soul of this business. I always use the phrase, “high-leveraged bold strokes,” in other words, fresh, innovative, big ideas. I’m a big believer in leapfrogging the competition and doing things in a way that is not about baby steps.
How would you describe your leadership style?
GP: I am a marketing person. And somewhat a people person. What interested me were the products and the advertising. I don’t believe that cosmetics is hope in a jar. You have to be sure that you don’t disperse yourself with too many things, too many launches. You have to really work on the products. You have to be able, when you have a good name, to renew that product every two to three years and build on your equity.
JW: People will tell you I’m very tough but very fair. I have extremely high standards, which my team used to tease me about. My standards for quality of ideas and execution are second to none. I never cared about being the biggest, I only cared that we would be the best. That is my driving spirit. I serve on eight nonprofit boards and my passion is education and public school education and arts and cultural affairs. My questions are always, “What does it take to be the best and what do we have to do to serve the public the best?” And if that is hard for people, I encourage them to find jobs elsewhere. I don’t tailor down. I have never done that.
RM: I’m a people person, and I am a communicator. People have said I have passion for the business. I think those are all soft comments. They may be true, but belie the fact that preparation and understanding of the business were keys to success. I worked extra hard to understand things which allowed me to be a little more open minded on an integrative process.
AK: No matter how tough and competitive the business gets, I want everyone to have fun, to be excited about coming into work everyday. That starts at the top. They say a fish rots from the head, and it is so true. If something isn’t working at the very top, it’s going to permeate through the organization.
What does it take to reach the top? What do you attribute your success to?
GP: You have to start young. When I was 24 years old, I was a second lieutenant in the army in Algeria, the head of a cavalry platoon in a remote post. I was with 44 guys, four Europeans and 40 Algerians, some of them former rebels. I was leading them and they trusted me, and you learn, in an environment that is completely different socially and culturally, the character of people. The advice I would give if you are in a big organization is don’t use the big highway that everyone is using. Try to find a way where there aren’t so many bottlenecks. Three years after I joined L’Oréal, I became CEO of Mexico. When you are far away, you have much more independence and you can take much more responsibility. In six years, we built it to the number-one country in Latin America. I would recommend to do something of your own in a big organization, where people say, “Who is doing that?” You need to find the breakthrough. Sometimes it’s easier to do if you come after a guy who hasn’t been too successful or you’re in a place where you have more freedom to act.
JW: I chose my parents very carefully. [Laughs]. My parents were immigrants. A good education was the most important thing in my family. I was born in the depression — there wasn’t any money. My parents were gender blind. They thought my brother and I could both be presidents of the U.S. and I thought all parents told their children that and learned it wasn’t so when I went to college. That resilience and expectation level has been with me all my life.
RM: Being inquisitive. I usually spent weekends looking at customers in a store, trying to understand how they behaved, what they looked for, how they looked at different products, what turned them on and off. Also, challenging the status quo. Is the status quo appropriate and what changes had to be made? Thirdly, a willingness to change. I moved physically five times in my career. I had a very supportive family and that’s important.
AK: I once congratulated Karl Lagerfeld on a collection and he said to me, “No congratulations. That collection is now history. The only thing that counts is the next collection.” The focus has to be on going forward and not ever resting on your laurels.
What was your most memorable moment and why?
GP: When I was offered the CEO position of L’Oréal in the U.S. I loved the U.S. and my wife loved it. My father’s mother was from an American family. When I was offered the job, I would wake up in the middle of the night in New York City, thinking, Am I really in New York? That was, in my professional life, the best time of my life.
JW: Moment is the wrong word. It is moments, plural. It is a continuum. I remember Estée saying to me when we became the biggest and were all over the world, “To think I started this.” The joy in her voice was a very exciting moment. Every benchmark was memorable. Launching our own stores, every country in which we became the number-one luxury brand and every staffer exceeding their own expectations was very exciting. When I run into people who I used to work with, they all say, “It was the most wonderful working experience I’ve ever had.” It was definitely not the easiest, but we had a fabulous time.”
Arguing with the mayor of Moscow when we put our store in is another moment I’ll always remember. I insisted that 100 percent of our product had to be available to the average Russian, because they used to take everything and give it to the VIPs. I said we wouldn’t do that. We argued and argued and I said I wouldn’t sign the contract. I would walk away. He agreed to 25 percent and I said okay, because I knew he was going to come back to me and tell me I was right and agree to 100 percent. If you do the right thing, they are not tough calls, but you have to be willing to manage the risk and do what you say you will do and walk away.
RM: In the beauty business, I had the opportunity to meet Estée Lauder, Charles Revson, Helena Rubinstein and Elizabeth Arden. Those are pretty special moments. They all had their pluses and minuses — like anyone, they had blind spots — but they all contributed both to their own companies and the way I looked at things.
AK: I will never forget Day One of the job. The idea of helping run a luxury goods business was very exciting, and I couldn’t believe it when I walked in the first day on 9 West 57th Street. Every time I walk into the building, I remember the first day and looking back on what’s happened to the company just makes me feel terrific.