By  on June 1, 2009

The transformation of L’Oréal into an international beauty giant turned on a number of pivotal factors. One of the most decisive moments — its entry into China—arrived with a light touch.

So much so that Lindsay Owen-Jones, the charismatic, 63-year-old master architect of L’Oréal’s rise to dominance as chief executive officer from 1988 to 2006 and now the company’s non–executive chairman, still smiles at the memory. Back in the early Nineties, executives knew they were going to have to make a high-impact, high-profile entry into China to create desire for its products. After all, they were entering a market where daily needs often were difficult to fill, and discretionary items were a pure luxury. “We said, ‘OK, we’re going to put up the biggest single advertising sign in the world in the Bay of Shanghai with “L’Oréal, because I’m worth it,” in Chinese,’” Owen-Jones recalls, adding that the plan was to get a foot in the door “by just putting the name L’Oréal in the sky alongside Sony or Hitachi.”

To heighten the effect, Paolo Gasparrini, president and managing director of L’Oréal China, organized a ceremony on the top floor of the Peace Hotel so Owen-Jones could throw a switch to dramatically illuminate the sign.

“We pulled the lever and nothing happened — except that, from behind a screen in the corner of the room, you could hear a little voice saying, ‘Turn the bloody thing on, you fool,’” Owen-Jones continues. “The switch was connected to nothing. But there was a guy on a phone… telling the guys to light the sign.” When the truth had sunk in, “the whole room collapsed in a fit of giggles.”

This was the company’s grand entrance to what Owen-Jones predicts “will one day probably be the biggest single L’Oréal company in the world. If we had missed that boat, that would’ve been really critical.” Instead, the reality is much brighter. “All of the L’Oréal brands have been extremely successful there. It has made a huge difference to the perspectives of our company today,” he says.

China’s mushrooming growth illustrates Owen-Jones’ feeling that what burst last fall was more than an economic bubble. The financial boom of recent years may have been considered a bubble, but “it was the opening for hundreds of millions of people around the world to a better life, to more prosperity, to greater hopes,” Owen-Jones says. “It’s a bit like the toothpaste that you can’t put back in the tube.”

To that end, he dismisses doomsday talk. “There’s a huge aspiration of hundreds of millions of people to reach decent economic levels and lifestyle standards,” he says, noting that governments will work hard to preserve those gains “if only just to maintain some sort of social peace.”

Owen-Jones knows better than most the challenges of maintaining forward momentum. During his tenure, he forged L’Oréal into a multinational, multiethnic, multichannel beauty behemoth, one whose geographic reach is unmatched. The transformation involved a massive reengineering of L’Oréal’s vast array of brands as soon as Owen-Jones took over.

He describes the L’Oréal he inherited as “an extremely dynamic, culturally boiling sort of creative company.”

“It was a little confused… in that my predecessor’s great talent was this fantastic dynamism, in which he had a new idea every day and he applied all of them,” Owen-Jones says of L’Oréal’s second ceo, the legendary François Dalle. “By the end of the Eighties, we were drowning in too many projects.” Moreover, Dalle had established a code of internal self-competition, which made the brands tougher and more resilient, “but we were wasting 50 percent of our energy fighting amongst ourselves.”

Worse, brands such as Garnier, in an effort to emulate the leading L’Oréal brand, came to resemble it and an element of sameness pervaded the group. “We hadn’t quite organized our brands into a rational portfolio with each one of them taking a certain space, either psychologically in its profile, or practically in terms of pricing and distribution,” Owen-Jones says.

To that end, he repositioned many brands and acquired others. Among those repositioned was Garnier, which was recast into a greener, “more sensible, down-to-earth” line. “It’s the girl next door,” Owen-Jones says.

Key acquisitions included Maybelline, which L’Oréal acquired because of its ability to sell huge volumes of mass market makeup. “We had to find something different to get into China,” Owen-Jones says. L’Oréal’s brands, honed by years of internal competition, were deemed “too sophisticated.” Owen-Jones recalls thinking that, “if [Maybelline’s previous owners] can sell makeup out of Memphis, Tenn., we can sell that to China. It’s a sensible makeup for the sensible masses. We made it a little bit more glamorous, but what I wanted was precisely the down-to-earth, sensible mascara and no-nonsense approach to makeup.” His instinct proved correct: Today it’s a market leader in China and the number-one mass brand in the world.

That single-minded obsession with beauty and a passion for innovation have enabled L’Oréal to endure and succeed for a century, Owen-Jones says. Those characteristics were instilled in the company at its birth. Owen-Jones refers to an early photo of founder Dr. Eugène Schueller posed in his lab. The caption underneath proclaims, “A product of French science.”

“This was the guy who said the opposite of ‘we sell hope in a jar.’ Owen-Jones says. “He said, ‘No, we sell high technology, which we then dress up and try to make look attractive and relevant and fun. But this is a serious business; it’s about quality and innovation.’”

When the conversation switches to the question of his legacy, Owen-Jones counters that the real question is what will remain. There’s the massive brand reengineering and globalization, of course. Hand in hand with that is the diversifi cation of L’Oréal’s population.

Being a Welshman running a venerable French company (he even had a knighthood) was the best argument he had to demonstrate that L’Oréal was a level playing field. “It was a company that was going to try and become a global company with a global culture,” Owen-Jones says. “It wasn’t going to be anymore a French, quote-unquote, company.”

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