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Fabrizio Freda: Leading for the Long-Term

For Estée Lauder ceo Fabrizio Freda, total transparency has been the key to achieving stability in times of extreme uncertainty.

Say you’re an executive at the Estée Lauder Cos. Inc., holding a Zoom meeting with your team in the new normal of work from home. Don’t be surprised if chief executive officer Fabrizio Freda makes an unexpected “visit” during your session.

The peripatetic executive — prior to the coronavirus outbreak, Freda traveled to far-flung markets about 50 percent of his time — thrives on interpersonal interactions, and a global pandemic is not about to change that.

“Travel was my way to stay in touch and understand what was happening and offer people support,” Freda said in an exclusive interview with Beauty Inc. “I miss the interaction enormously, but I have learned that meeting virtually can be very efficient and constructive. You can learn how to be authentic virtually.”

That is just one of many lessons about leadership that Freda has learned during the crisis. After propelling the company to a decade of unprecedented global growth, one driven by what he likes to call “multiple engines of growth” — ranging from the rise of the Chinese consumer both in their home country and in the travel retail channel to a hero product strategy that has fueled sales of key franchises like Estée Lauder’s Advanced Night Repair — Freda now faces a very different set of challenges.

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How do you set a course for the future during a veritable global shutdown? How do you maintain morale when the human toll is so high? How can business serve the greater good and also the needs of employees and shareholders? Like all c-suite leaders, Freda is grappling with these issues and many more.

“This is the moment when leadership counts,” Freda said, speaking from his home in the Hamptons. “It is the moment of very transparent leadership. This has been one of my big learnings. Sometimes leaders don’t want to show doubt, weakness, worries. In this moment, transparency is important. People need to see everything,” he continued. “Our people are the future of the company.

“This is an unprecedented crisis, but it will pass and be a one-time moment,” Freda continued. “What we do with people during will stay and be remembered, and what we do to recover will inform the next 10 years.”

While the company’s employees are the key constituency, Freda has also worked to make sure that that level of communication is clear to consumers and business leaders in and out of the company. “There is nothing more precious than relationships, and we have to keep them going,” he said. “For consumers, it is making sure they get the education, the answers, following up to every email and call. For business, I’ve been personally calling ceo’s all over the world, offering support and help.”

Freda has been equally as focused on pivoting the organization to envision the longer-term consequences, as well. “We need to exercise vision and see through the crisis,” he said. “We can’t only be looking at this in the short-term.”

To that end, he has temporarily reorganized Lauder’s leadership teams into four groups: One team is focused on the short-term crisis; a second is managing preparedness and the medical aspect of making sure that the return doesn’t compromise anyone’s health and safety; a third is concentrated on financial costs and containment activities, and a fourth is completely focused on the future. Freda likens it to a military action. “You need to go into a very different way of working and manage the day-to-day in a completely different way,” he said.

One key goal is to protect and optimize long-term drivers. So in China, for example, Lauder has accelerated its investment in a new Shanghai R&D center, while its digital teams are hyperfocused on reinforcing the company’s capabilities online.

“We need to anticipate new drivers — I’m working day and night to study consumer trends in every part of the world, what they are feeling during crisis and what they expect, in terms of channels and distribution and services and products,” Freda said.

He posited that being able to help the organization envision the future doesn’t just make good business sense, it also boosts the morale of everyone on the team. “It has a super-positive effect,” Freda said. “It creates a better mood. It’s difficult from a human standpoint to work only on short-term issues and problems. Being able to focus on positives for the future also helps our mental health.”

Freda himself is relatively cheered by the first signs of recovery in China, where Lauder’s Shanghai headquarters reopened in late April. During an earnings call with analysts on May 1, Freda predicted that sales in the Asia-Pacific region for the company’s fiscal fourth quarter will grow in the double digits. “The recovery is happening in a disciplined, pretty fast way,” he said. “What is evident in this moment is that it starts with a strong acceleration of online sales. The amount of consumption going online is increasing and is here to stay, and will happen in the U.S. as well.”

As for the hard-hit travel retail channel, that will take longer, with Freda predicting a recovery to begin in 2021, as the world slowly opens up again. Still, he struck a positive note on the call. “We will come out stronger after the crisis. Our key drivers of growth — online sales, the Chinese consumer, skin care — are recovering and will come out stronger in the long term, even as in the short term we are going to be hit hard by the closures and the consumer shock.”

And as much as he loves to travel, there has been an upside to being grounded for the past couple of months as well. “The time I’m spending in lockdown with my family has been a gift. My son and daughter were at university, and now they’re back home,” Freda said. “That has been a positive surprise, and has really helped me have the balance to do all of the things I’m doing, with the intensity that I’m doing them with.”