CODE BREAK­ERS

The 21st an­nual WWD Ap­parel & Re­tail CEO Sum­mit last week at The Wag­ner ho­tel in Bat­tery Park in Man­hat­tan drew lead­ing re­tail­ers, brand chief ex­ec­u­tive of­fi­cers and de­sign­ers to talk about The Con­sumer Age — and how to at­tract, ex­cite and in­spire to­day's

WWD Digital Daily - - Front Page - BY AL­LI­SON COLLINS

“The great­est les­son is this: Num­ber one, you have to be fair.

Re­mem­ber as kids, what’s the one thing you’d com­plain to your par­ents about? ‘That’s not fair.’ But you have to be fair and even though it hurts, be fair.”

LEONARD A. LAUDER, THE ES­TÉE LAUDER COS. INC.

“Cul­ture ex­ists be­cause it’s a merger. It’s an ecosys­tem that one thing changes the other. So I pre­fer to ex­ist and con­trib­ute to the larger ecosys­tem. Fash­ion is just one small silo that dic­tates the pop cul­ture that ex­ists.”

VIR­GIL ABLOH

“You can’t do qual­ity fast. It takes time. That’s where the time­less as­pect comes from. You’re go­ing to in­vest your time in de­sign­ing what will have a cer­tain value. You have to have a de­sign that’s not trend-based or trend-fo­cused. You’re go­ing to have it for­ever.”

GABRIELA HEARST

“Cool is some­thing that is not for­ever. Right now I’d rather be un­cool and time­less.

This is my goal.”

OLIVIER ROUSTEING

“Ninety-five per­cent of our cus­tomers are talk­ing about speed. Dig­i­ti­za­tion is some­thing that we think will hap­pen. No mat­ter whether we like it or not, ev­ery­thing will have a dig­i­tal com­po­nent to it.

SPENCER FUNG, LI & FUNG

“Don’t lock your­self into do­ing things that Don’t be too proud you’ve al­ways done. to change your fash­ion some­times be­cause if you get for­mu­laic, you’ll die.”

SIR PAUL SMITH

“Do we need to do some­thing dif­fer­ent to win their hearts? Have our cus­tomers fallen out of love with us? In a world where tech­nol­ogy moves so fast, we have to change the con­ver­sa­tion. We need to re­ally find how we can en­gage. We need to go back to the magic of emo­tions, the magic of ex­pe­ri­ences.”

GEOFFROY VAN RAEMDONCK, NEIMAN MAR­CUS GROUP

“Mil­len­ni­als want cre­ative, durable, de­sir­able and beau­ti­ful prod­ucts. But they do add a new cri­te­rion: Re­spect. It is not only for me the way to honor the late Aretha Franklin, but it’s a true per­sonal be­lief.”

AN­TOINE ARNAULT, BERLUTI

Leonard Lauder, the chair­man emer­i­tus at the Es­tée Lauder Cos., is full of wise words.

Some, like, “When sex goes out of busi­ness, so are we,” he bor­rows from his late mother, Es­tée, who founded the name­sake busi­ness. But oth­ers, like “peo­ple don't work for money, they work for recog­ni­tion,” are his own, in­fused with the deep pas­sion for men­tor­ing that has be­come the hall­mark of his ca­reer.

Lauder, the third re­cip­i­ent of the John. B Fairchild honor, is cred­ited with turn­ing what was once an $800,000 one-bran­done-mar­ket busi­ness into a 29-brand $13.6 bil­lion global con­glom­er­ate. He led the charge on bold moves — ex­pand­ing into the U.K. be­fore global ex­pan­sion was the norm, and go­ing pub­lic in 1995 at $26 per share. (The firm is now trad­ing at above $140 per share).

But be­yond that, he is cred­ited with men­tor­ing a gen­er­a­tion of beauty ex­ec­u­tives, and en­cour­ag­ing those around him not to be afraid to take risks. “Ev­ery­one who works for us is ba­si­cally bul­let­proof,” Lauder said. “We en­cour­age them to take chances. I give a course in the com­pany called ‘Brand Eq­uity' and one of the ses­sions I have is ‘Leonard Lauder's Cham­ber of Hor­rors.' What is that? All the mis­takes that I've made.”

Lauder, who cred­ited John Fairchild with lay­ing the ground­work for fash­ion, beauty and gos­sip to flour­ish, painted a fond pic­ture of his late friend. “When John came back from Paris to join Fairchild, it was a very quiet world. There was very lit­tle hap­pen­ing in de­sign­ers' work in the United States. John cre­ated — name by name, brand by brand,” Lauder said.

“The ‘his­torics' of that era started the con­cept of in­flu­encers,” Lauder con­tin­ued. “When we launched Clin­ique in 1968, do you know what medium I used? Women's Wear Daily, be­cause they were the most in­flu­en­tial press there was of all.”

WWD: When you joined the fam­ily firm at 25 — you'd grown up in the busi­ness, but you said you ar­rived know­ing al­most noth­ing. How did you learn?

Leonard Lauder: I had a good pair of ears. I ar­rived in Fe­bru­ary 1958, I walked into a tiny of­fice that I was to share with my mother, Mrs. Es­tée Lauder, and on the desk were two piles of en­velopes. And we had one sec­re­tary. And I said, “What do I do with these?” And she said, “Open them all up, and then the pile on the left, those are or­ders and you send them out to the plant to fill the or­ders, and on the right, those are checks — you de­posit the checks.”

So the sec­re­tary said, ‘The buyer from Lord & Tay­lor is here to talk about his demon­stra­tion.” That's a bunch of stu­dents throw­ing a tomato at the Amer­i­can em­bassy — what's a demon­stra­tion? You stand be­hind the counter and sell the prod­ucts.

OK, so ev­ery evening I took the sales re­ports back home, to­taled them up and wrote up a com­mis­sion check and then sent a lit­tle note. Les­son num­ber one — peo­ple don't work for money, they work for recog­ni­tion. And when I wrote those notes, the peo­ple I wrote those notes to stayed around for many, many years be­cause we were able to rec­og­nize them with those lit­tle notes.

WWD: Lit­tle notes which were on blue pa­per, I un­der­stand. How did you pick blue pa­per?

L.L.: The color of the pack­ag­ing. We were called Big Blue at one time — we and IBM.

WWD: You also de­scribed how you al­ways tried to be the Wayne Gret­zky mo­ment. Ex­plain.

L.L.: Firstly, I don't play hockey. Re­lax.

But he said, “I don't fol­low the puck, I go where the puck will be.” And I al­ways in­tu­ited where the puck was go­ing to be, and that's where I was. I wanted to be the first im­ported brand to get into the U.K. be­cause they had aus­ter­ity and you couldn't im­port cos­met­ics. Al­ways get there first — if you're there first, you'll win.

WWD: That takes a cer­tain amount of fear­less­ness. How do you in­still that in your ex­ec­u­tives?

L.L.: Look, ev­ery­one who works for us is ba­si­cally bul­let­proof. We en­cour­age them to take chances. So, I give a course in the com­pany called ‘Brand Eq­uity' and one of the ses­sions I have is ‘Leonard Lauder's cham­ber of Hor­rors.' What is that? All the mis­takes that I've made. And peo­ple say, “Hey, he can make mis­takes? I can make mis­takes.” So you never crit­i­cize any­one for tak­ing a chance. One of the first things I said to peo­ple was this: “Bet­ter the wrong de­ci­sion than no de­ci­sion.” And that's what we al­ways have to fol­low.

WWD: But then what else do you look for in ex­ec­u­tives when you hire them? L.L.: Do they burn. Do they love what we're do­ing. Do they like cos­met­ics — you think that's funny? You can't imag­ine what I've been through with some guys.

I in­ter­viewed some­one, he was 28. “What kind of re­tire­ment plan do you have?”

We wanted to go in­ter­na­tional — “So, tell me have you worked in in­ter­na­tional? “Yes, I have.” “Where have you been?” “To Geneva, Switzer­land.” “Oh re­ally, what ►

ho­tel did you stay at?” “Well, ac­tu­ally, I changed planes in the air­port.”

You learn. We were a tiny com­pany so if some­one came in to fill some kind of piece of pa­per, we said you have to put your ti­tle in there, son.

WWD: Were you ever afraid of mak­ing a ma­jor mis­take?

L.L.: Never. I made a lot of them. I kept my job.

WWD: You've also said Es­tée Lauder's not a democ­racy — is that dif­fi­cult some­times, to make those de­ci­sions?

L.L.: Early on, when we had a hand­ful of peo­ple, it was easy be­cause we all un­der­stood each other. As time went on, we got big­ger and big­ger and big­ger, and peo­ple were mak­ing the de­ci­sions — then it gets a lit­tle tough. But when I said democ­racy ex­ists, when it came to cre­ativ­ity there was only one boss. I have to tell you a lit­tle story. We cre­ated our first big ad, a dou­ble-page spread for Vogue mag­a­zine and it was for the evening makeup col­lec­tion. This is go­ing to be our break­through. There were about six or eight of us in the com­pany at the time, ev­ery­one had an­other idea as to the head­line and on and on and on and on.

OK, so I said, “You know what, I'll bring it home.” I was liv­ing in the coun­try for the sum­mer then, I wanted to show it to my late wife, Eve­lyn. I put it in a big manila en­ve­lope, I brought it home, and she said, ‘What's in the en­ve­lope?' I said, “Some­thing I'm work­ing on.” I wouldn't show it to her. You know why? I said to my­self, “You know what? If I ask her for her opin­ion, if I don't like it I'm in trou­ble. If it doesn't work, it's my neck. If it does work, ev­ery­body gets the credit.” And so that's when I made the de­ci­sion, right then and there, that if you're ac­count­able you are ac­count­able and no one else is ac­count­able. I've got­ten into some trou­ble over the years on that whole thing, but it was al­ways my neck. I'm still here, though.

WWD: You de­scribe your cur­rent role at the com­pany as chief teach­ing of­fi­cer. Was that some­thing you had to learn or did that come nat­u­rally?

L.L.: Well, I learned a lot. I was in the Navy, I de­cided that — by the way, all my friends are get­ting drafted into the Army and they be­came clerk typ­ists for two years. I said, “What am I go­ing to do, spend two years learn­ing to type?” So, I ap­plied for the U.S. Navy Of­fi­cer Can­di­date School and I got ac­cepted. That meant not only the three and a half years ac­tive duty, an­other six years in the re­serves. I wanted to learn. And learn I did. My first boss was Lieu­tenant Com­man­der in the sup­ply corp and he had just come back from the Har­vard Busi­ness School. Well, he was a good teacher for that but when it came to what he learned at the Har­vard Busi­ness School, for­get it.

Am I al­lowed to tell this story? I had to take an in­ven­tory of the whole stock in the ship store and I came to him with a list and said Len, you had 4,000 pack­ages of pro­phy­lac­tics. Let's mark them down, that's what they taught me in Har­vard. I said com­man­der, we're at sea — please if you're record­ing this for­get it.

WWD: That was a les­son they didn't teach at Har­vard, that was im­por­tant. But what is the great­est les­son you try to in­still in those you teach?

L.L.: The great­est les­son is this: Num­ber one, you have to be fair. Re­mem­ber as kids, what's the one thing you'd com­plain to your par­ents about? “That's not fair.” But you have to be fair and even though it hurts, be fair.

Num­ber two, recog­ni­tion. Peo­ple don't re­ally work for money as much as they work for recog­ni­tion. I'm go­ing to tell you where I learned that. At the age of 21, I was

a coun­selor at a sum­mer camp — a camp of six-year olds. And on my day off, I had no car, I was in Ver­mont (U.S. 7 for those of your who live in Ver­mont). I hitch­hiked to Rut­land, Vt., to Wool­worths and I bought about 10 or 12 lit­tle plas­tic [tro­phies] at Wool­worths. Brought them back to my six-year olds, and once a week we had an awards cer­e­mony. Who cleaned up their bed the most, who made their bed the best, on and on. The best one was who didn't wet their bed in a week. You learn.

WWD: You've said there's a dif­fer­ence be­tween profit and rel­e­vance. How do you bal­ance them?

L.L.: Look, you have to know what your cus­tomer wants. And if you have what she wants, that's what you sell. Some­times it's a highly prof­itable prod­uct, some­times it's a less prof­itable prod­uct. You sell her what she wants and what she likes. The first sale you make is the most ex­pen­sive one, how­ever, if she comes back and buys it again and again and again and again, that is when you've done well. You al­ways have to try to match what you've got with who you have. I don't know what went on in to­day's ses­sion, but there's some­thing fas­ci­nat­ing go­ing on I think. The Amer­ica I grew up in was all white-bread. To­day, we are the one of the most di­verse na­tions in the world. So, there­fore, if you're sell­ing a prod­uct in a His­panic neigh­bor­hood, you give them foun­da­tions and prod­ucts that they'll use. If you're [sell­ing in a] Viet­namese [neigh­bor­hood] in Los An­ge­les, that's what you sell them. By giv­ing them the prod­ucts that they want and they need, rather than the prod­ucts that you want them to buy, slowly but surely you'll win, and they'll come back to you again and again.

WWD: Very early on when you started at Lauder, how did you see the op­por­tu­ni­ties glob­ally — was it the Navy, apart from the Har­vard busi­ness school les­son?

L.L.: A lit­tle of both. When I was in the Navy I was in the At­lantic fleet and our ship went all over the At­lantic. It went as far south as Guan­tanamo Bay in Cuba, and also to places I haven't been back to since. Haiti and stuff like that. And then ev­ery time we came into port — for ex­am­ple we went to Ed­in­burgh, [Scot­land], I took a week's leave and went down to Lon­don. And in Barcelona, I took a week's leave and I went to Madrid. I saw things I could never have seen be­fore. When I went to Ger­many in 1953, Frank­furt and Cologne were in ru­ins. But they were build­ing, the en­ergy there. I came away from there con­vinced that our fu­ture lay not just in the United States, in­ter­na­tion­ally and world­wide. I kept it in my mind.

WWD: Did it go as smoothly as you thought?

L.L.: Noth­ing goes as smoothly as you think.

WWD: Switch­ing gears a lit­tle bit, and slightly go­ing back to the Wayne Gret­zky mo­ment, was it a Wayne Gret­zky mo­ment that made you col­lect Cu­bism?

L.L.: No. What hap­pened was that — by the way I'm a col­lec­tor at heart, I have the bug. As a lit­tle kid I col­lected pic­ture post­cards. Then I col­lected posters, then I col­lected this and that and what­ever.

So I loved film, all films, and I would go down to the Mu­seum of Mod­ern Art ev­ery week or ev­ery other week and see the old movies. I'd al­ways ar­rive early and walk around in the gallery. I loved the com­pli­ca­tions of Cu­bism, I just loved them. And sud­denly, I found a paint­ing in a gallery done by a guy named Pablo Pi­casso, who no one had ever heard of ex­cept for me of course, so any­way, I loved what it looked like and it spoke to me. Then I bought an­other one and an­other one, and I had three or four or what­ever it is. And a friend of mine in­vited me to a lec­ture at NYU's In­sti­tute of Fine Arts. It was a lec­ture given by the late Kurt Von­negut from MoMA. And he flashed on the screen a pic­ture — an oval can­vas, a pic­ture by Pi­casso. And he said, “This is the most im­por­tant Cu­bist paint­ing in the world.” That's my pic­ture. Boy, am I bril­liant. I didn't know it was the most im­por­tant, but all of a sud­den he's say­ing to me, “Well, your taste isn't bad.” So, I fol­lowed my nose. And by the way Mr. [FrançoisHenri] Pin­ault, I bought some­thing from you a month ago. I hope you're grate­ful. I'm grate­ful to you, too.

Au­di­ence Ques­tion: Hello, Leonard. That was a great con­ver­sion. You're one of the world's great­est trav­el­ers, you've been ev­ery­where a zil­lion times, you've been to a hun­dred mil­lion events and a zil­lion stores and a zil­lion coun­tries — is there one mo­ment that sticks out in your mind with this ca­reer of yours — one glit­ter­ing mo­ment that stays with you?

L.L: I'd like to say yes, but I re­ally can't. I'll tell you why. There was a song from a Broad­way play, I think it was [Bur­ton Lane], it says, “When I'm not near the girl I love, I love the girl I'm near.” Judy, my wife Judy is here, Judy I didn't mean that. Any­way, that means that I can think of a hun­dred in­ci­dents — I used to be a run­ner — run­ning in the Champs de Mars un­der the Eif­fel Tower at 6 o'clock in the morn­ing. Run­ning along the Seine at 6 o'clock in the morn­ing, be­ing in Red Square in the snow, run­ning also. Go­ing to ev­ery coun­try you could ever imag­ine, each one of them made an im­pres­sion on me. I be­lieve life is like a mo­saic — red tile, green tile, gold tile, sil­ver tile — and it all adds up to the im­age of the world. I love the world, not any one par­tic­u­lar coun­try or the other. ■

“By giv­ing [cus­tomers] the prod­ucts that they want and they need, rather than the prod­ucts that you want them to buy, slowly but surely you’ll win.”

Leonard A. Lauder

Leonard A. Lauder

Lauder re­ceived the John B. Fairchild Honor.

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