Robert Polet, Gucci Group Wednesday 25th November 2009 CEO of Gucci Group has demonstrated a unique ability to bring out the best in his people and his brands Born: July 25, 1955 Kuala Lumpur, Malaysia Education: Nyenrode Business Universiteit, MBA 1976 University of Oregon Career: 1978-2004 Various positions at Unilever, became CEO and President 2004 CEO of Gucci Group Trivia: Guinness World Records cites the Gucci “Genius Jeans” as the most expensive jeans in the world, priced at $3,134
In 2004, CEO Domenico de Sole and creative director Tom Ford quit Gucci over a failure to agree contract terms with new owners, PPR (Pinault-Printemps-Redoute). Within months, nearly half of the company’s top management had also walked, prompting observers in the fashion industry to predict the imminent demise of an iconic business. They had reason. Five of the brands within the luxury group were making losses, and many believed that one, Yves St Laurent, was beyond repair.
The loss of the team that had rescued the business from near bankruptcy in the 1990s, and in particular the director responsible for its creative inspiration, had the potential to render the brands rudderless. After all, observers reasoned, Tom Ford and Domenico de Sole were Gucci, weren’t they? PPR believed otherwise, and turned to a most unlikely source to recruit a new chief executive. Robert Polet, 49 at the time, had joined Unilever after earning an MBA degree from the University of Oregon. Of Dutch origin, he was born in Malaysia and educated in Britain, the Netherlands and the US.
During his 26 year career with Unilever, he had worked in Paris, Milan, Hamburg and Malaysia, before being appointed president of the ice cream and frozen foods division from which PPR eventually recruited him. When his appointment as the new CEO of Gucci Group was announced, the press was full of jokes about the switch from ice cream bars to snake skin bags, but one fashion industry expert noted, “Unilever turns out some of the most highly trained, professional managers in the world. They have top communication, analytical and management skills — it doesn’t matter whether hey’re selling ice cream or peanuts. And they think globally, which is what Gucci needs. ” Polet was also known for his entrepreneurial management style and an ability to think outside the confines of tradition. He was credited with turning around a dysfunctional management team at the failing Unilever division in Malaysia, and helping the company pioneer a new liquid margarine product. Managing creativity His first look at the Gucci business convinced this ardent family man that he needed to do something drastic.
He told his wife and two daughters that for once he would not be accompanying them on summer holiday: instead, he packed his bags and spent the next six weeks visiting over 160 stores and talking to 2,500 staff around the world. He also visited 100 competitor stores. That tour taught him a lot about the business. “There’s a real wish within the group to win in the marketplace,” he later commented. “We have people in our factories and our partner factories who have been working on our products for 20 or 30 years, and they are proud.
I even met a shoemaker in Florence who had been in the factory for 45 years. ” But there was a commercial disconnect at senior levels. Polet asked the managers of each brand within the group – which includes Gucci, Yves St Laurent, Sergio Rossi, Boucheron and Balenciaga – to prepare three-years plans. Each one put in plans that forecast increasing costs and widening losses, believing that in the fashion industry, almost limitless investment in the brand was the way forward. Polet disagreed.
He reorganised and refocused the business, pared costs, improved customer awareness and increased flexibility in the supply chain. Over the next four years gross profits nearly tripled, from €264m to €730m. “I focus on three things,” Polet recently told Andrew Cave, reporting for the Telegraph: “leading and coaching people, managing brands and creating an environment where creativity can flourish. ” Despite others’ misgivings, he was confident that his experience with ice cream was relevant to managing luxury goods brands. “[At Unilever] I didn’t sell ice cream,” he said in 2004. I sold concepts. I sold worlds in which people consume ice cream. Luxury brands [are also] more than the goods… They give people the opportunity to live a dream. ” More importantly, he understood that a brand will outlive the management teams and creative directors that work on it and this understanding enabled him to dismantle the culture at an organisation where the head of design had become a celebrity. In Polet’s new group structure, each brand would be led by a two-person team consisting of a commercially-focused chief executive partnered with a creative director.
That way, he figured, each brand would get the right design strategy, backed by sound merchandising expertise. Having imposed a structure, he then gave the teams the freedom to manage their brands in their own way, within a framework of strategic objectives set at the top. “Other companies try to manage creativity, but actually stifle it,” he observes. He refused to follow advice that he could boost sales by introducing lower priced lines, believing that such a move would have a negative long term impact on the brand’s value.
He also decided against shifting production to lower cost economies in Asia, which, ironically, have now become the strongest markets in the company’s growth plans. The current recession has had an inevitable impact on profits at all the luxury end fashion houses, as retailers rushed to de-stock following the collapse of Lehman Brothers. However, as stock management across the industry improves and confidence increases, the Gucci group continues to perform well.
Characteristically, Polet sees the current economic downturn as an opportunity to connect with his people as, once again, he has taken to the road to have a dialogue with the business. “In the past few months,” he says, “I’ve started travelling more than ever before, because people need to see me. They ask: ‘Is he down? Does he look pessimistic? Or is he looking optimistic and smiling? Does he know where we’re going? ’ When they see for themselves that I’m fine – and that I am convinced that we are going to be fine – they are fine too. A recession, he believes, can bring out the best in good people, and allow their talents to shine. In a recent article for Business Week magazine he writes, “Challenging times are the perfect opportunity for high performers to shine. These individuals are highly motivated and must be challenged to stay engaged. Providing them with a tough issue to tackle, expanded responsibility, or a position of greater authority will give them what they seek while simultaneously benefiting the organisation. ” From frozen food to hot leather
An interview with Robert Polet, president, CEO, and chairman of Gucci Group. By Robert Friedman, Fortune international editor June 12 2007: 2:19 PM EDT (Fortune Magazine) — When Robert Polet, former head of Unilever’s frozen-foods division, took over the luxury group in 2004 after the departure of celebrity designer Tom Ford, industry insiders predicted a meltdown. Polet has proved them wrong. Last year profits at the group soared 44 percent, to $741 million. Fortune’s international editor, Robert Friedman, talked to the 52-year-old executive about how he silenced the skeptics.
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At the end of 2001 we went from mono brands and local operations to having real portfolio brands and a global group. We tilted the organization from a leadership of two to a leadership of 20. We had the essence of each brand, a three-year plan, brand by brand, and we put teams of a CEO and creative director with each brand. So you came in with this in mind? When I came in July 1, 2004, after 3 1/2 weeks I said to my wife, “I won’t be joining you guys on a holiday. ” I packed my bags, stepped on a plane, and went around the world visiting 168 of our stores.
I spoke to or met 2,500 of the 11,000 people working in Gucci. I visited 100 stores of the competition. I had the chance to actually discover the company, the culture, the people, the competition, the rules of the game. I came back with knowledge and a good view. After Tom Ford left, a lot of people thought Gucci (Charts) would suffer. What is it about the brand that’s so powerful? Last year Gucci had its 85th birthday, and I would say it’s still young and as relevant for my 20-year-old daughter as it is for my mother, who’s 76.
Here lies the secret of brands: They need to be managed for the long term. There will be CEOs and designers who come and go. So the brand is always king. But some brands vanish. How do you manage them long-term? One word: consistency. Imagine the brand is a friend. If that friend becomes inconsistent, the first time you say, “Hmm, strange. ” Second time it happens you say, “I’m not sure I feel comfortable with this person anymore because they’re unpredictable. ” The third time you say, “I’m going to look for a new friend. ” That’s exactly what happens with a brand.
If it is managed in an inconsistent way, the consumer distrusts it and starts moving to another. That’s how a brand dies. What in retail excites you? Customers get educated by the retail experience they have. So a customer who goes into an Apple store, or an H&M or Zara, will be influenced by the way the merchandise is presented or how quickly and how often the merchandise is shifted. If the customers have been educated to expect new collections every seven or eight weeks, that’s what they’ll expect in our stores. So are you speeding up your processes? Yes.
It’s important that customers know that every two months it’s a good idea to go in because there might be something new. And you’d rather have your customers in your store ten times a year than only three or four times. How is H’s disposable mindset affecting luxury brands? What you see when customers have the self-confidence and are informed about brands and products is that they dare to choose to wear Gap jeans with a $3,000 Bottega Veneta handbag. So they mix and match. I think it’s an expression of self-confidence, and it’s natural and totally right as well. Managing top talent at Gucci Group
Naysayers doubted the move from frozen foods to luxury fashion, but three years later the Gucci Group CEO’s style of management has helped the company flourish, says Fortune’s Jia Lynn Yang. By Jia Lynn Yang, Fortune reporter July 18 2007: 9:39 AM EDT (Fortune Magazine) — When Robert Polet jumped from Unilever’s ice cream and frozen-foods division to the top of the Gucci Group in 2004, Women’s Wear Daily quipped, “What do frozen fish and ice cream have to do with $8,000 crocodile handbags? ” Besides being an outsider, Polet (pronounced po-LET) had to take the reins after superstar designer Tom Ford had exited the flagship brand.
It all raised the question: Could a marketer of Klondike bars manage the personalities of Gucci Group’s remaining star designers, like Stella McCartney and Alexander McQueen? [pic]Turns out Polet, who is of Dutch origin and works out of Gucci’s London offices, had a trick or two up his well-tailored sleeve. Operating income last year rose 44 percent, and some previously lagging brands, like Balenciaga and Bottega Veneta, are turning a profit ahead of schedule. Checking in with Fortune from the men’s fashion shows in Milan, Polet shared his tips for marrying art and commerce. Make the brand, not the talent, the star.
In the late 1990s, Gucci’s lead designer, Tom Ford, engineered a legendary turnaround of the label – and became an A-list celebrity in the process. But now Polet says it’s crucial to promote the product, not the personality behind it, since the brand can outlive a designer or a manager. So he picks creative directors with strong opinions but with a clear focus on making great goods. “The designer works in the service of the brand,” he says. Assign a business (and a creative) manager to each brand. The Gucci Group has ten brands under its umbrella, including Yves Saint Laurent and Boucheron.
Previously, creative control of individual brands was concentrated at the top of the Gucci Group (Charts), but when Polet took over, he installed a two-person team to run the labels: a creative director to lead the vision and a CEO who works as the “business partner in the marriage. ” That way, he says, the products achieve the right look but also have the right merchandising strategy. “It’s not creativity for creativity’s sake,” he says. Don’t micromanage. Unlike his predecessors, Polet leaves virtually all design decisions to the designers.
Where he exerts control is in selecting the right leaders, setting three-year business plans for each division, and creating what he calls the “rules of the game,” a two-page description of what’s allowed and what’s not. “Then we actually say to the teams, ‘Go for it. ‘” says Polet. “It’s about the art of letting go. ” [pic] Gucci Group: Freedom within the Framework by F. Asis Martinez-Jerez, Elena Corsi, Vincent Dessain 40 pages. Publication date: Apr 16, 2009. Prod. #: 109079-PDF-ENG Gucci Group’s CEO had to decide if his decentralized management style was the most effective philosophy in an economic downturn.
The sharing of customer information across units and its use in the creative process are key initiatives analyzed in the case. CEO Robert Polet joined the high-end fashion Gucci Group in 2004, after 26 years at one of the largest consumer goods companies. Since his arrival, the Group had grown both in revenues and profitability. Part of his secret was his decentralized… Read More » Gucci Group’s CEO had to decide if his decentralized management style was the most effective philosophy in an economic downturn.
The sharing of customer information across units and its use in the creative process are key initiatives analyzed in the case. CEO Robert Polet joined the high-end fashion Gucci Group in 2004, after 26 years at one of the largest consumer goods companies. Since his arrival, the Group had grown both in revenues and profitability. Part of his secret was his decentralized and empowering management style. In 2008, in the midst of the economic downturn following the credit crunch crisis, Polet learned that after four years of growth the Gucci brand–the Group’s largest business–would report a slowdown for the year’s first semester.
He knew that according to his management philosophy he should leave the primary decisions for the Gucci brand to Gucci’s CEO. Yet, given the urgency of the situation, Polet wondered if it would be more effective to become directly involved in the brand’s decision-making process. To anchor the discussion on Polet’s management style, the case discusses how customer information is used in the creative process and whether it would be beneficial for the group to share customer information across stores, regions, and brands.