MILAN — Known for everything from paper towels to laundry soap, Procter & Gamble also continues to churn out a bounty of fashion, beauty and luxury executives.
“It’s not proven that it prepares for luxury, but it is a management school,” observed Safilo chief executive officer Luisa Delgado, who was appointed in 2013 after spending more than 20 years at the consumer products giant. “It communicates with its consumers, it’s very disciplinarian at the level of processes, it has a philosophy of values and very strong people-management skills.”
Executives from such mass distribution companies bring “new skills and a different context helps to think out of the box, which leads to innovation, creativity and a different vision,” agreed Paola Cillo, associate professor and vice-director of the department of management and technology at Bocconi University. She is also coordinator of the Concentration in Luxury Business Management FT MBA at SDA Bocconi School of Management.
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Indeed, a host of companies are increasingly looking outside the industry for executives that bring a new set of skills — and P&G remains a fertile talent pool. The latest example is Virginia Drosos, the new chief executive officer at Signet Jewelers Ltd., who took up the role last month. Drosos was a Signet board member since 2012 and a former Procter & Gamble executive. Another prominent example is Patrice Louvet, previously group president, global beauty at P&G, who was named ceo at Ralph Lauren Corp. in May.
The list of executives who have developed their careers at the American corporation and its international operations is impressive. Examples include Fabrizio Freda, who rose through the ranks at P&G to become president of global snacks in 2001, and is now ceo at The Estée Lauder Cos. Inc.; LVMH Moët Hennessy Louis Vuitton group managing director Toni Belloni, who was a former president of P&G Europe; Gianluca Brozzetti, Buccellati’s current ceo, who previously held the same role at Roberto Cavalli; Michele Scannavini, president of Italian trade agency ICE and a former Coty Inc. ceo; Renato Semerari, also a former ceo of Roberto Cavalli; Chip Bergh, former group president, global grooming at P&G who is now president and ceo of Levi’s, and Stephen Sadove, a former president of Clairol Worldwide and a former chairman and ceo of Saks Fifth Avenue who is now principal of Stephen Sadove and Associates. In 2011, Marcolin SpA tapped vice president Vito Varvaro as interim ceo from outgoing ceo Massimo Saracchi. Both boasted extensive management experience at P&G, including Varvaro’s post as president and ceo of P&G’s Italian unit, and Saracchi’s as vice president, Europe.
During her P&G career, Safilo’s Delgado held, among others, roles of increasing responsibility in human resources. From mid-2007 to mid-2012, she was general manager and vice president for Procter & Gamble Nordic (Sweden, Denmark, Finland, Norway) based in Stockholm. She noted P&G executives often oversee between six and seven countries, which “prepares for changes” and familiarizes executives with different business models.
For a long time, luxury executives distrusted digital platforms as they thought products were made too accessible, but the digital revolution and social communication shortened the distance. “Inevitably, because the consumer is the same that uses car sharing, Uber, Facebook and Instagram, he or she is used to these vehicles and seeks them also in luxury,” said Cillo.
Why recruit from the mass distribution pool? “Because these executives have used social media and digital tools for many years, they know that communication channel very well, and they know how to customize them for a luxury brand. Social media provides a very relevant input, shows trends and trajectories. It’s informative, if you know how to read between the lines,” she said, emphasizing how companies such as P&G are strong in marketing and product innovation. “P&G constantly creates new products and knows how to sell them.”
Cillo remarked that “a good luxury ceo balances creativity and innovation with commercial issues. In mass distribution, these are two faces of the same coin but not in fashion, where there is the creator and the merchandiser.” Cillo said that in at least three recent cases of student addresses, she heard luxury executives emphasize a designer’s need to be free. Gucci president and ceo Marco Bizzarri; Valentino’s ceo Stefano Sassi, and Yves Saint Laurent ceo Francesca Bellettini all work to “create the conditions for the designer to design independently and without interferences.” Generally, executives who have built their careers in fashion feel more competent and tend to interfere, said Cillo.
She also highlighted how important it is for a ceo to manage and understand the numbers, avoiding cannibalization and damage to the image, knowing how to manage analytics and big data from e-commerce, social media and stores. “You need very strong business skills for this,” she observed.
Cillo was not surprised by the rise of consumer products executives in fashion and beauty, pointing to Robert Polet as a forerunner. Polet joined what was then-Gucci Group in 2004 as president and chief executive officer from Unilever’s ice cream and frozen foods division, exiting in 2011. “That was one of the first signals that the rules had been broken and that there were new and different rules, and that the fashion sector was opening up,” said Cillo.
Executives today need to monitor key performance indicators and be more analytic. For this reason, she contended, “P&G is an incredible learning place. You make decisions based on numbers and you find solutions and ways to translate a painting into a T-shirt.”
Armando Branchini, deputy chairman of Milan-based luxury goods consultancy Intercorporate, highlighted the evolution of the governance structure within luxury companies. What was traditionally a pairing of a creative director with a business-savvy executive has now become a triangle, with the increasingly relevant role of the chief financial officer. Recently, as brands expanded their retail footprint, a head of merchandising became increasingly more important, as “a bridge between the creative director and the market.” Now the potential need for a “pentagon” structure is arising, as brands also require a digital manager. And, increasingly, ceos that have a digital expertise.
Asked about P&G, Branchini said the American giant “has a strong branding culture, and always developed branded businesses with innovation. Think Braun, Oral-B and Gillette, for example. Although we are talking about mass market, there are points of contact with luxury in terms of strategies and management. P&G just sold its fragrance business to Coty, which was an additional point of contact.”
Giovanna Brambilla, managing partner at Value Search Srl, specialized in executive recruitment, said this “moment of discontinuity in luxury has changed the rules of the game. The context is more complicated because of the changes in consumers, their attitude toward the purchase, their geographies and the evolution trends. In such a situation there is no magic recipe, it depends on each brand and each company.”
The one important element among the numerous requirements is the ability to identify the “clear pillars” that will determine where the executive wants to bring the brand, supported by the numbers, and knowing how “to read and interpret numbers and situations in a structured and not occasional way, understanding where to invest, in what categories, geographies and channels,” Brambilla said. “This is redesigning the route to market, which was [standard] at P&G and Unilever. In consumer goods, they are masters at this.”
Brambilla also noted that margins in mass distribution are much slimmer compared with the luxury industry, and executives optimize the portfolio of investments. P&G, she said, is also “an inspiring place” where methods and strategies are compared among “equally brilliant minds.” Because P&G alumni may have “different reference models and rely on a different language, based on numbers, statistics and projections, sometimes it’s not easy” for them to be accepted by luxury veterans with a different outlook.
P&G and Unilever are schools of marketing, but Brambilla urged companies to continue to consider “the sensitivity to luxury” and respect of the brand’s DNA in order to avoid massification by applying the same rules that work in large distribution to luxury.