Lindsay Owen-Jones, the hard-nosed, 56-year-old Welsh chief executive of L'Oreál, France's multinational cosmetics powerhouse, doesn't mind talking about the mistakes he has made. When he was a junior L'Oreál product manager in Belgium in the early 1970s, he launched a hair spray called Toute Douceur--in French, "all softness." "It was a monumental error on my part," he says today. "It was so damned soft, it couldn't hold the hair."
But Owen-Jones learned from his mistake. And when he became chairman and CEO of L'Oreál in 1988, he instituted a policy to make good on the experience: le droit à l'erreur--the right to make a mistake. "You have to give people a second chance," he says.
It's a philosophy that has paid off for Owen-Jones. When O.J.--as he's referred to by the group's 50,000 employees--took over, L'Oreál's sales were $3.7 billion, and the company barely registered outside Western Europe. Now it's a global business with sales of $14 billion and a stable of more than a dozen powerful brands like Maybelline, Lancôme, and Vichy. And in one of the most economically challenging years of his tenure, Owen-Jones is coming up with some of his best numbers yet: In the first half of 2002, L'Oreál's sales increased by 8% and net profits rose 30%.
His secret? Owen-Jones doesn't mind being called old-fashioned. He doesn't get sidetracked by gimmicky new businesses to pump up the share price in the short term. He's proud that L'Oreál manufactures most of its own products, unlike many other consumer and luxury-goods companies. And because he's focused on his core cosmetics business, his big strategic moves have been remarkably astute. He picked up the somewhat downmarket Maybelline brand in 1996 for what seemed like a high price--$760 million. But with sales up fourfold since the acquisition, Maybelline is now the No. 1 makeup brand in the world. Its Watershine Diamond lipstick, for example, is the top seller in China.
It is on emerging consumer markets like China that Owen-Jones is pinning hopes for L'Oreál's future growth. Sales to Russia and China, where an expanding middle class is starting to spend, are already growing over 60% a year. He is also targeting sub-Saharan Africa, and he recently set up a research and development center in Chicago to study African hair types.
Owen-Jones is sharply critical of some of the corporate highfliers, such as Vivendi Universal under ousted CEO Jean-Marie Messier, that were held up as examples of management excellence in the U.S. and Europe throughout much of the 1990s: "So much of the craziness of this past period has been about looking for magical shortcuts. If you sold cars, say, you had to find a way to get out of the business, or if you were a water utility, you had to get into the media business." Touché.
-- L'Oreál's first-half net profits are up 29.4%--the 18th straight year of double-digit profit growth
-- Sales to Russia and China this year are up more than 60%, while Maybelline has the best-selling lipstick in China