By  on May 26, 2006

Old habits die hard. But for the chief executive of a multibillion-dollar beauty firm, complacency means losing ground to a growing circle of competitors.

After a tough 2005, the need to look at her business objectively and address its challenges without bias is precisely why Andrea Jung engaged in the mental exercise of firing herself as chairman and chief executive officer of Avon Products Inc., and then rehiring herself the next morning.

During her keynote address, she challenged her peers to write their own virtual pink slips.

"You've got to fire yourself and rehire yourself tomorrow morning," she said. "You've got to act. Because you all know what happens when you change a ceo and someone comes in and is able to look at everything extraordinarily objectively, go out of the box, break all paradigms, lose any emotion to the way things were and be able to make the kind of change that is necessary, sometimes a seismic change…. And if you can do that while you're there, it's harder, but it's the best of both."

In Jung's case, the exercise resulted in a multiyear restructuring plan for Avon that involved trimming layers of management and focusing on fewer, but better, products.

Jung declared that the seismic shifts of the retail landscape — including consolidation, multichannel strategies and new distribution partnerships — will "redefine the business."

"That's going to be the final endgame-changer for this industry in the next several years, and we've got to break the channel paradigm," she said.

Jung nodded to several paradigm-breakers, such as Target, which has peppered its mix with Boots products; J.C. Penney for its partnership with Sephora, and the Estée Lauder Cos.' deal with Kohl's Department Stores. She also acknowledged that Avon's partnership with Penney's fell apart after a solid try, saying, "I still believe it was a good thought at the wrong time."

"Those of us who have tried to spawn new businesses from the mother ship know it's tough," said Jung, adding that it requires incubating the project to protect it from antibodies that want to destroy it.

Reflecting on Avon's need to "break its own mold" after 110 years of selling items door-to-door, Jung noted the company has pursued selective franchise opportunities, including kiosks in U.S. malls and in China, where prior to this year it was forced to forge a retail business due to a government ban on direct selling. "I think this concept of a single-brand, single-retail channel that defined us for more than a century had to be broken for us to really go forward and see what the potential could be," she said.

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