Avon, The Net, And Glass Ceilings

A conversation with Andrea Jung

Avon Products Inc. (AVP ), the world's largest direct sales cosmetics company, is facing increasingly stiff competition from discounters and a slowdown at home and abroad. Late last year, Chief Executive Andrea Jung announced a restructuring plan to revive growth that will cost up to $500 million. On Jan. 19 she spoke with Editor-in-Chief Stephen J. Adler as part of BusinessWeek's Captains of Industry series at New York's 92nd Street Y. Here are edited excerpts:

Is the direct sales model much more challenged in the U.S. than it is overseas?

We're not trying to go head-to-head with Wal-Mart (WMT ). If we do our job right, I have a relationship with your wife -- she is my friend, and she trusts me. It's the opposite of obsolete. As long as you believe that a person-to-person relationship counts, and it's not just a transaction, I think we have a continued opportunity -- not just at Avon, but in the U.S. Direct selling has changed, too. It isn't "ding-dong," knocking on doors. The Internet is an important tool for our representatives, and in over 80% of offices around America someone is an Avon representative.

Does the Internet ultimately help you or hurt you?

It's a huge enabler. Some 70% of Avon representatives do business online. The efficiencies are huge. It costs a dollar-something to process a paper order and about 11 cents online. And with the Internet you can combine high tech and high touch.

How do you deal with criticism?

I think you're never as good as they say and you're never as bad. The truth is somewhere in between. Certainly there has been criticism of the business in 2005. It was not the year that we had hoped for, but the business model is very sound. I'd rather be us any day than companies that just compete for the same shelf space day in, day out.

Managers joining Avon have to be sales reps for a while. I have a little trouble imagining you doing that.

It was a humbling experience. But it brought to light even faster some of the dramatic changes that needed to be made.

How do you set up a rapport with people who obviously aren't as stylish as you?

The whole business model is built around respect. These women, not just here in the U.S. but everywhere, come to the company wanting to be independent, have an earnings opportunity, run their own businesses. I have seen extraordinary ways that they have changed their lives. We have this opportunity to teach younger women how to be entrepreneurs.

Does it offend you that you're always on the list of the top female CEOs?

I have mixed feelings. I hate that there is a differentiation. But the numbers still say that there is a glass ceiling.

I'm actually optimistic. In the next five years, I think you're going to see dimensionally different opportunities for women.

Do you think women manage differently than men do?

There are some gender traits. I used to think it was a stereotype. But men can be more linear in decision-making, you know, A to B, and there are a lot of times that I find women try and go from A to C to D to circle all options. One way is not better than another. What's important is to have both groups of thinking around the table. I would not advocate having all women around our table at all.

What does a CEO like you do all day at the office?

I actually haven't been in my office much since Jan. 2 because so much of our business is outside the U.S., so I have been traveling. We own and operate more than 50 businesses in 120 countries, and that is where the work happens.

Are your children aware of how special the role is that you play, and do they talk about it? Or are you just a mom?

I'm just Mom. I remember there was a list that came out of the most powerful women and as I was reading it, my son was saying, "You are not the boss of me." Obviously, it's not easy to balance work and the children but no different than for other women and men, I would say.

    Before it's here, it's on the Bloomberg Terminal.