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04.19.2014

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June 1, 2009 9:05 PM

Beauty

A Lesson at L'Oréal

Lindsay-Owen-JonesPhoto by Dominique Maitre. Sometimes, the only answer is the obvious. During the two-month siege of interviewing, fact-checking, writing, editing and late-night office dwelling that resulted in WWD's 100-page L'Oréal Milestone opus -- published June 1 -- there were...

Lindsay-Owen-Jones
Photo by Dominique Maitre.
Sometimes, the only answer is the obvious.

During the two-month siege of interviewing, fact-checking, writing, editing and late-night office dwelling that resulted in WWD's 100-page L'Oréal Milestone opus -- published June 1 -- there were a few light, bright and unexpected moments. One came at the beginning of my interview with Lindsay Owen-Jones, the non-executive chairman, who during his 18-year-run as chief executive officer built L'Oréal into the beauty industry's global leader.

OJ, as he has long been known, is not one to regard lightly. He usually is so preoccupied with weighty matters that his idea of small can be hefty. Once, while walking to a meeting at a WWD CEO Summit, he made an a casual, off-hand remark about the death of foot traffic in department stores. And his chosen method of finding relaxation has proven to be no less daunting.

For most of his career, he spent his weekends unwinding at 180 m.p.h. on a grand prix race track (he once finished sixth in the Le Mans 24-hour classic).

So there was a bit of anxiety involved when it came time in April to interview Jean-Paul Agon, the current ceo, and Owen-Jones in their thickly carpeted 10th floor offices in L'Oréal's headquarters in the Paris suburb of Clichy.

Surprisingly, Owen-Jones seemed relaxed and at ease. So much so that he jump-started the interview by seizing upon an early question about whether he had an early inkling of the coming global financial meltdown.

"I'll tell you a funny story," he began. "Well actually, it's a terrible story. I had been on the board of France's biggest bank, which will remain nameless, for nearly 20 years. And it's a very well managed, sensible sort of bank. But about two years before this thing blew up, I had gotten to the point where I no longer understood how it was making all its money.

"It's all done through initials -- the OLB is superior to the QRP by two point something points. The whole thing gradually becomes less and less sensible. People putting money into your bank, you use it to lend to other people and you take a margin on the difference -- that's all gone. It's all much more complicated.

"So I went to see the chairman of the board. I said, 'Look, you know, I don't think I'm really performing my duty very well anymore because if I don't understand how this works, what sort of governance is this?'

"'I think my duty at this point is to resign from this bank.' He said, 'Oh, OJ you can't do that.' I said, 'Well. I don't understand how it works.' He said, 'Well nobody understands.'

"What he meant was not nobody in the bank. He meant nobody among the board of directors," Owen-Jones explained. "But even that was an incredible thing. Basically the thing had gotten to a point where the method had become so technical and so difficult to understand that most common sense people no longer understood where this ballooning paper profit was coming from.

"And I resigned. I sometimes think that if everybody who hadn't understood why -- where the money was coming from -- had all resigned at the same time, then perhaps we just might have asked a few questions and somebody might have found some answers. If you don't understand it, you can't govern. That is a lesson we can all take away from this nonsense."
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