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