“I have a passion: chess. And chess is just what leadership is about: The ability to analyze, synthesize and then decide, decide and decide.”
Leave it to Dario Ferrari himself to best summarize the essence of his career. The founder and president of Intercos Group, perennially the top-ranked supplier of color cosmetics to the global beauty industry, is a man who needs no introduction. He built his reputation as one of the most visionary entrepreneurs in the industry over the last half century through his passion, intuition and betting big on innovation, which is the real engine of his company.
Founded in 1972 in Agrate Brianza — a 40-minute drive from Milan — the Italian powerhouse reported 2019 revenues of 712.7 million euros, up 3 percent year-over-year; it currently employs about 5,800 people worldwide, with 11 research centers, 15 production plants and 15 sales offices on three continents.
Ferrari is a charming combination of charisma and ruthless honesty, pragmatic attitude and a sharp sense of humor that truly sets him apart. These qualities never abandoned him, not even when the pandemic checkmated the IPO the company had planned for this year.
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Here, Ferrari on the future of the listing, why experience is no longer enough in the industry today and the one aspect of the business that still surprises him.
What have been the key challenges this year so far, considering the global pandemic and consequent economic context?
Dario Ferrari: It seems like destiny, but before the storm, it’s always calm. In the first quarter of this year we performed, at least in terms of income of orders, in an absolutely exceptional way and I thought: “Wow, this year will be fantastic.” It was all going smoothly. Orders coming in, the IPO was approaching, everybody wanted to invest in Intercos and then we got this [punch in the face].
But we made virtue out of necessity and tried to react and work in some way.…We have been primarily concerned with the health of our employees, we closed [offices] for a long time, we especially had problems in the U.S. Luckily we belong to an industry for which production could continue, so on that level the damage was not significant. The main problem was the purveyance, so maybe we were open but we didn’t have the raw materials or packaging to be able to produce as much as we would have liked to.
In terms of personnel, we have now done a series of serological tests that have really given us good results, so from the human point of view we think we have managed the pandemic well. We are a company that makes innovation and new products and we continued to do so. Obviously working [in these conditions] is very difficult. We were ready to unveil a fantastic showroom, hundreds of customers were to come to visit us and all this didn’t happen. So we had to start working through the formats we all know today, such as smart working and livestreaming with clients….This taught us a new way of working and we have found our way of dealing with the situation.
You mentioned the IPO. Are you still eyeing it and just postponing it or there’s a change of plans about this?
D.F.: It’s the second time that we can’t go forward with the IPO due to market conditions. Before returning to being attractive to the market, the market has to [regain traction] itself.…I don’t think we could talk about an IPO before two years from now, so let’s wait. From this point of view we are fatalists. Luckily, investors want us, they call us, they ask for us, so it means that we have done a good job and therefore we just have to wait for the right moment. As always in life, timing is everything.
What about future acquisitions? In early July you took over your joint venture with Shinsegae International in South Korea. Are you planning any other move?
D.F.: It’s a moment of opportunities, meaning that not everyone will make it [through this situation] and something could happen in this sense. South Korea was a truly strategic need, because we believe in South Korea a lot and we wanted to incorporate it into the group….It will become an innovation hub for Asia. Now we are thinking about a possible operation for Japan, which is something that we have been considering since before the pandemic and for the moment we have not stopped considering it. There are other possibilities related perhaps to the mass market, but taking steps in this moment can also be dangerous. Since we are doing fine, we are healthy in spite of everything, we think thoroughly before acting.
How do you see the beauty industry changing? Which will be the most important drivers? What will beauty customers — and therefore brands — want?
D.F.: This is the question of the century [laughs]. Just to be completely transparent, I have been doing this job for 48 years, so experience is the only thing I don’t lack. I have to say that we relied on experience for many years, but unfortunately today, experience is no longer needed as the world moves so fast. What we are forced to do is to work much faster, or rather try to anticipate change more quickly.
How can we do that? Today there is a lot of talk about big data and all the systems that can provide us with information, and this is what we are doing. We are working with an internal system: We usually connect with 450 to 500 clients and each of them talks with us, tells us what they want, where they want to go. Therefore we have an incredible source of information, which has to be taken into consideration and elaborated. So first of all we are trying to best bring together the data that only we have access to through the Intercos Intelligence system we developed.
Then we talk to experts, but even they don’t really know how to anticipate the future either, so to do it, you have to really understand what young people want. We have seen how Gen Z has changed the rules of this game, and we’re seeing how the pandemic is changing the rules, too. [We’re seeing] how with the use of masks, obviously makeup is performing less while skin care is doing better; how the mass market works better because drugstores have remained open and prestige suffers more, while previously it was the opposite.
There’s also an economic factor that plays a role. We have been working in this direction for a while — three to four years ago, we already realized that we had to change the way we were working to try to anticipate the market, trends and what consumers wanted. In the next four to six years, we will have more than 1 billion new consumers, with most of them coming from Asia, then the fundamental problem for any company that wants to survive is to understand what this billion people will want.
But we will have to understand also the impact this pandemic will have in terms of attitudes and consumption. Let’s not forget that today there is an aspect that will be critical which is the psychological one. The so-called Cabin Fever syndrome is a fact, people are afraid, they don’t want to go out and if they do, they have changed the way they interact with each other. So there are many elements to consider if we want to continue being a leader. Obviously a lot will depend on how the market will react and what our clients and competitors will be able to do. Certainly we will not change the way we work, we have not stopped for a second our research and innovation, because I believe that only those who have managed to continue to work in the right way will have advantages in the future.
Innovation, technology, which other element helps you differentiating yourselves from the competition today?
D.F.: I respect all my competitors. I try to understand what they do and I try to understand how we can do it better. With a little presumption but also trying to tell the truth, I believe that we have always been ahead of what our competitors have been doing, so it is difficult for me to think or compare myself or find aspects of differentiation. We have our own way of working we are committed to. Today we have almost 1,000 people working only on innovation, which is a lot considering that we essentially do color cosmetics and skin care. Today we can easily say that we are the company that invests the most on makeup, because nobody is putting the same energies that we put in developing new products. But today we are doing more than formulations. Even the people we hired recently are all hailing from branding positions, so we’re importing the culture we didn’t have. Before, we were — and we still are — a product company, so the most important thing is the product we sell, but we now have to position it, try to be more marketing-oriented. This enables us to communicate with clients by speaking a little bit of their own language. We don’t stop at a beautiful formula, now we put it in a market context, so we can give ideas, advice and help from a marketing and trend point of view. And this is an added value — we do the work of the best agencies for free for our clients, and this is the path we are investing more and more on.
What’s the ultimate vision you have for your business? Where do you want to further take the company in terms of size and scale?
D.F.: The sky is the limit. I believe I’ve structured the company to make that important leap that I think we are still in a position to do. If we want to grow, we must also diversify. We are already quite global, but we must diversify products; we still have many spaces to fill. Our growth could continue to be important, if the market allows it, but we have always grown more than the market. And in my opinion, we will continue to do so because the assets we can bring to the table today in terms of innovation, creativity, marketing and global presence are starting to be really important. So this is a mechanism that can take us further because it took a while to create it.
Innovation is not something you can buy. It’s a cultural problem that comes from afar: It comes from raising people in the right way, motivating people in the right way, having the right people. It’s truly a painstaking job. It took us all this time to have a team that is quite unique. And in fact others try to take away people from us but they are right to do so because my people are the best and when they take them away, they also take away a piece of Intercos’ know-how. But the fundamental fact is that we never stop. What they are taking away today, we will have more of that tomorrow, so this is the way to overcome the competition and be at the forefront.
What makes a good leader today?
D.F.: Everyone has his own, completely different style of leadership and manages his company differently. However, there are fundamental elements that a good entrepreneur must never forget. First of all, change. In my opinion, you can only grow through change. And change is a very complex thing in a company, but without it, firms are stuck, they don’t move, they don’t grow, they have no possibility of looking ahead. So there are many companies that get moldy just because their leaders are not able to change them, they are not curious enough, they don’t generate new sensations.
The other fundamental aspect is the ability to take decisions. A leader takes a number of decisions a day and must take them quickly. Are all the decisions right? No. I took a lot of wrong decisions, but the important thing was to decide at that moment.
What has been most surprising as you build the business?
D.F.: If I had to turn back time, I would probably never do this job again, even if I owe a lot to this job because I like it and, in fact, I have been doing it for 48 years. The thing that surprises me most every day is that I still enjoy it. I consider it a complicated job…because makeup is the most complex product, the most difficult to conceive, produce, sell and distribute, we are truly within the highest complexity. And therefore managing all this, it takes a little crazy entrepreneur [laughs]. But I’m still here on the front line because in the end I still enjoy it.