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we're meeting today with alan ennis
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who's the president and ceo of revlon
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thank you for joining us at knowledge at
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wharton thank you steve glad to be here
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i wanted to ask you first about your
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leadership style and there's two things
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that i think
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maybe you could think about as you
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answer one is the fact that
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you come out of the finance area you've
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been in accounting and finance and yet
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here you are the head of a cosmetics
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company
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creative and all the rest of it so that
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seems like a bit of an anomaly and then
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also i can't help noticing that you're a
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male
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and was obviously very much a woman's
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product line
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so could you tell us about your
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leadership style taking those two things
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into account
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sure uh happy too so a couple of things
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so first of all just in terms of
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leadership style putting aside my gender
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and putting aside the industry
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and putting some of my background my
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leadership style is pretty
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straightforward and that is
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probably not typical of a ceo
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and that is founded on a very basic
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principle which is uncomfortable being
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wrong
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and so i have a leadership team where i
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tell them regularly listen guys i'm
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going to be wrong half the time
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and if you can be right half the time
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i'm wrong then we'll be right 75
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of the time and making three out of four
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decisions you know correct in the
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you know corporate world today is a
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pretty good thing so i think i endear my
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leadership team to be
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to be opinionated to be vocal to
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challenge me um
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which also benefits them because they
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feel like they're playing a role so
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there's there's
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there's a ceo and then there's the ceo
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leadership team uh that leads revlon so
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that's
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somewhat unique you avoid the bubble you
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avoid that exactly i avoid people
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leaning
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where they think i'm leaning and
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therefore we get better results
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as it relates to the finance piece you
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know
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a lot of businesses today if not most
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businesses certainly outside the
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the charity world would be for-profit
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organizations and so it's all about
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making money
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ultimately money in the form of
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shareholder wealth in the form of free
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cash flow to reinvest in the business or
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to buy additional assets
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and so it doesn't matter whether you're
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selling a lipstick you know or a
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screwdriver
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you know it's how do you sell more of
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them at a higher profit margin per unit
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and i think a big part of any business
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is the financial underpinning and so
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finance
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is i think a very good basis and a very
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good foundation
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for any general manager of any business
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uh i will say also that revlon
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is majority owned by ronald perlman and
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ronald perlman is at his heart
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a finance finance guy he's essentially a
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private equity organization
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and so he likes to have strong finance
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people run run his companies and so
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i'm not the first cfo turned ceo that's
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ron revlon my predecessor david kennedy
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was the cfo at revlon before he became
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the ceo and so
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you do see quite a lot of uh finance
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guys
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running ronald parliament type companies
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as it relates to
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being a male in a female world uh
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certainly i am um conflicted because i'm
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not a consumer
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uh and i can i can be noticed debating
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different shades of pink
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uh i was wondering about to my uh to my
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detriment
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uh but but in reality what i do is i
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submerge myself into the category i can
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be
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spotted daily walking around wearing
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different types of nail enamel that
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are supposed to exhibit different
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characteristics whether they be fast dry
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or scented nail
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and in our product commercialization
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process i actually try all the products
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so i've become very adept at putting on
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mascara and
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an eyeliner and so obviously i take it
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off most of the time before i go home on
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the train but
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you know so i just have submerged myself
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into the into the category and people i
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think respect
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and many ways endear the fact that i am
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putting myself out there to be connected
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having said all of that
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the person who runs our marketing
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organization is a woman
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so the one who really calls the shots in
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terms of products and shades
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and connecting with consumer thankfully
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as someone who is uh
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not conflicted that she is a consumer in
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the space okay fair enough
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um your company's been around for a long
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time since 1932.
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you've got a lot of long-standing
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customers but at the same time
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you need to attract younger consumers
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how do you go about doing that where's
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your sweet spot for marketing
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well it's interesting the color
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cosmetics category is very much based
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on innovation and bringing new news to
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the marketplace and that's probably not
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dissimilar to most
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fast moving consumer goods companies
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it's about bringing news to the consumer
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whether it's in
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laundry detergent or pampers or
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toothpaste or whatever it may be
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how do you bring something to her that
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solves a problem that she has so how do
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you bring a mascara that is
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both volumizing um and comes off easy
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but doesn't uh
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doesn't stain in the rain how do you
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bring a lipstick to her that's long wear
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but doesn't feel tacky at the same time
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and so bringing innovation to the
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marketplace is a critical part of our
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success and so what we do
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is we now have a three-year rolling
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portfolio plan
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for all of our brands where our product
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development team research and
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development team are chemists and
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scientists
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our packaging group all work together to
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bring either real product innovation
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as a new technology new formula a
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package innovation which is
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uh the same product in a different
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delivery system or quite frankly a
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marketing innovation which is bringing
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an existing product
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but having a new claim or a new spin on
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that product that solves her need
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and of course it's a very competitive
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space revlon competes directly with the
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likes of
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maybelline l'oreal which are both owned
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by the l'oreal company
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or cover girl which competes sorry which
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is part of
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procter and gamble and so
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you know there's a lot of big hitters in
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the marketplace so bringing new
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to her in a timely way that solves a
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problem that she
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either has or doesn't know she has but
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believes that she could have
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um and doing that with the latest trends
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so it's a tough game
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but we've got a great team so your your
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um
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company like everyone else has been
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through a very
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deep recession a great recession there's
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a partial recovery now going on
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how did it affect your company and also
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the industry more widely
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well it's interesting if you look at and
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i've done some research here if you look
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at how a recession
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generally impacts consumption behavior
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across a broad range of categories
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what you'll find is in most cases 80
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households the woman in the household is
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is the decision maker with regards to
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household spending uh and she has a
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certain level of trade-offs
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what things she is least likely to
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forego in the in this in a situation
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where she's short of money
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and most likely to forego so on the top
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of that list things that she is least
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likely for
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to forego she will always spend on are
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things around her children
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generally so food clothing a roof over
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their head uh
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warm water so she pay bills um pay her
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mortgage
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buy food etc so maslow's hierarchy of
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needs
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for that's it american women or global
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women yep
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and so that's that is that is uh top of
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the list at the bottom of the list
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are things that you'd argue would be
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more discretionary and lose a new tv
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a new sofa changing the car for a newer
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car
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whether they be bigger small purchases
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things that that don't need to be
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changed on a regular basis
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interestingly her health and beauty
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regime is quite high on the list
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so you know a woman can tell you yes i'm
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cutting back discretionary spending
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but if a woman who's has gray hair has
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her hair treated or colored every six
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weeks
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you know she may stretch that to seven
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weeks or maybe eight weeks but she's not
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going to leave the house and go out in a
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either in a professional setting or
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in a domestic setting you know with with
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gray roots
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similarly she's not going to go out
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without putting on her you know her
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concealer or
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you know her uh her foundation she just
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doesn't do those things or her
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moisturizer
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and so in reality what's happened over
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the course of the recession
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is that the beauty category broadly
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speaking has really not been hugely
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impacted
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where you do see some activity is what
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we call the concept of trading down
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where a consumer who is a department
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store consumer may say you know i'm not
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going to buy
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you know the clinique or lancome
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lipstick i'm going to go to a drugstore
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i'm going to buy the revlon
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or the all my lipstick so you do see
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some of that
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but in reality you know there is what
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they call the lipstick index which is
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you know recession or boom you know
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she's going to spend money on beauty and
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so you do see that the color cosmetics
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category actually grew
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albeit low single digit through the
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entire last five year period
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and we fared you know we fared
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reasonably well when it comes to
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marketing though
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how is it that you approach it to um to
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support
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those trends that are already out there
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so you've got you've got the
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you know different ages also right so in
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terms of marketing and one of the things
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that um
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i know that you want to talk about is
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around media and social media and and
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how do you interact
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um using all of the the space that's out
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there uh
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in reality what's really important with
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marketing
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is to have a message a communication
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that means something to her
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um in this day and age that becomes much
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more difficult because it used to be
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you'd run a tv commercial or you'd put a
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print out in a magazine
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and you would control the agenda now
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with
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with the onslaught of of social media uh
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it's instantaneous your messages
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is um in the blogospheres is uh
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communicated broadly instantaneously
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and people have opinions about your
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product which are also broadcast
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uh instantaneously so you don't control
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the dialogue anymore but what's really
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important is to have a message
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that she can relate to so there's a
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there's a consumer need
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in the marketplace that we directly
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address that consumer need
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with a specific message a claim that we
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make
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a shade that she wants that's on trend
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um
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and that we communicate that to her in
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in a way and at a time that she's open
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to receiving that message
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right so you know people are inundated
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with with information today even
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standing in an elevator you know they
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now have the uh the tv screen and the
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elevator there's no silence you know
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uh there's no piece you know mostly yes
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in the cabin
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everywhere airplanes now you know they
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think they're satisfying the consumer
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need that most airplanes now have a
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facility where you can have wi-fi access
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for the entire
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duration of your journey which was one
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of the things i used to enjoy actually
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was down time
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on an airplane it's difficult
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but if you have the right marketing
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organization you can reach her
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at the right time with the right message
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and compared to the past how
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important or how do you characterize the
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importance of social media well it's
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hugely important
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and you know social media as we know it
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today is a blip
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in a continuum of communication and you
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know
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not not professing to know what the
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future would be but if we look back
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10 years from now at what we're doing
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today it'll look archaic
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and so you know facebook for example it
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used to be
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a year ago 18 months ago how many
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facebook fans you had
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right i've got 800 000 likes versus
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cover girls
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x 100 000 likes and therefore we're
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better
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well that's shifted away from simply
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facebook fans to what they call how many
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of those facebook
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fans are actually interacting with your
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brand so they call it consumer
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engagement
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so how many of those fans are actually
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you know clicking like that they like a
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picture
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or writing a comment or downloading a
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coupon for example from your facebook
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page
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and so metrics have become very
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important in the overall measurement
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of um of how effective social media is
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uh you know and of course the the the
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types of tools out there keep evolving
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so facebook
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you know twitter uh you know tumblr
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instagram uh pinterest whatever it may
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be staying current
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with how you communicate with the
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consumers critically important so we've
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got a we've got a dedicated digital team
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uh work with a bunch of external
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agencies to make sure that we're
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delivering
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the right message at the right time
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through the right medium
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so you've got consumers and then you
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have bloggers which is
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another drilling down another category
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which can which
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i i'm sure takes a whole different
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approach and there's a lot of them out
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there blogging about cosmetics
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what's your strategy how do you how do
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you work with them or
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so two things communicate with them yeah
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so so we look at at beauty editors and
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bloggers as one group of communicators
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beauty editors would be the
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editorial uh staff within the major
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magazines
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and then bloggers would be just the
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online group
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our objective is to make sure that they
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have whatever information they need
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about our products
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so we have what we call desk side
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meetings with them where we will
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invite them into our offices uh either
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the the
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both together the the magazine and the
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online
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sit down with them take them through our
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product offering we'll give them some
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samples that they can use
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explain the benefits of a product and
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then let them do their thing
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ultimately the the benefit of a blogger
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to a consumer
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is independence right it's one thing for
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revlon to put a tv commercial with halle
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berry or emma stone to say
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you know how wonderful a product is but
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the consumer
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uh respects to a much greater degree an
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independent voice of someone who is
00:12:44
a consumer like them you know a 25 28
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year old woman who's
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tried a whole bunch of different
00:12:48
lipsticks and she's doing either a video
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blog or a written blog
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telling the consumer group her view on
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the products
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and so maintaining that level of
00:12:56
independence with the bloggers is
00:12:57
important but of course you have to
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facilitate
00:12:59
the dialogue if they have questions if
00:13:01
they have needs if they have concerns if
00:13:03
they've tried a problem they don't like
00:13:04
it
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you know ask why are they using it the
00:13:06
wrong way is there something about the
00:13:08
delivery that they're
00:13:09
confused about so it becomes a bit of a
00:13:11
focus group for you as well yes
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exactly yep and one last thing what
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challenge or challenges keep you up at
00:13:19
night as a leader
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um well i have three young children and
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they keep me up
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regularly at night so generally i sleep
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pretty well when they don't wake me up
00:13:28
you know i'm a pretty cam individual i
00:13:30
don't get overly animated
00:13:32
by business issues uh because getting
00:13:34
animated in any way
00:13:35
anxiety stress isn't really helpful so i
00:13:37
i try and manage that
00:13:38
right but just but in i think in reality
00:13:42
in in the business world you know the
00:13:44
the strength of competition
00:13:46
is a big factor um you know when you're
00:13:48
up against an 80 billion dollar company
00:13:50
like p g or a 20 billion
00:13:52
company like l'oreal and we're a 1.5
00:13:54
billion company they've got a big stick
00:13:56
and so trying to stay one step ahead of
00:13:58
them trying to respond to the market as
00:14:00
quickly as we can
00:14:02
and dealing with marketplace dynamics
00:14:03
because it changes very quickly
00:14:05
is probably what causes me the most uh
00:14:09
the most sleepless nights if there are
00:14:11
any okay
00:14:12
well thanks very much for joining us my
00:14:14
pleasure steve
00:14:38
you
