"Culture eats strategy for lunch." Deborrah Himsel
Deborrah Himsel is the author of a new book titled Beauty Queen: Inside the Reign of Avon's Andrea Jung (Palgrave Mcmillian). A former senior leader at Avon Products, Deutsche Bank and Pfizer, Himsel is currently a leadership development consultant and executive coach for many global companies, including Johnson & Johnson, ExxonMobil, KPMG, Essilor, Citigroup and Walmart. She teaches at Thunderbird School of Global Management.
Welcome to a Leadership Channel podcast on TotalPicture Radio. Andrea Jung, the former head of Avon, was one of the world's most charismatic and effective CEOs, credited with the astonishing turnaround of the company. Universally praised in the business press, I remember meeting her at the HSM World Business Forum at Radio City Music Hall, (now called WOBI), during the peak of her power. She clearly projected the aura and authority of a Fortune 500 CEO. So what went wrong?
Deborrah Himsel TotalPicture Radio Transcript
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Hi, this is Peter Clayton. Welcome to a special leadership channel podcast on TotalPicture Radio. Today, we're going to be speaking about someone who is a former CEO who is on Professor Finkelstein's third worst CEO of 2012 list. He is actually the professor at the Tuck School of Business at Dartmouth University, and this individual actually when she took over the reins of the company, it had a market value of about $21 billion back in 2004 and in 2012 its market value was down to $6 billion. We are speaking about Andrea Jung who is the former CEO of Avon, a celebrity CEO. We're going to be speaking today with Deborrah Himsel who is the author of Beauty Queen: Inside the Reign of Avon's Andrea Jung, a brand new book that is just published and she was a VP at Avon at that time that Andrea was the reigning queen there, and I'm really interested in getting her perspective. So thank you very much for taking time to speak with us.
Deborrah: Thank you, Peter, for having me.
Peter: What inspired you to write this book first of all?
Deborrah: Well, I have over 25 years of experience in the leadership development space and one of the things that I found is that storytelling is just such a powerful learning tool and the story of Andrea Jung is compelling. I mean, you talked about how she ended up on the worst CEO list and she started out here tenure as one of the most admired CEO's and she was on the cover of Fortune, Business Week also Time's one of their most influential 100 and when I left Avon in 2005, things were going well and I couldn't even imagine Avon or Andrea falling and then as you said, things just kind of went downhill. I always thought that she was a very, very strong leader. In fact, I actually still do but I was really curious as to what went wrong and most importantly I really wanted to understand why and what we can learn from that. So the book actually Beauty Queen is in two parts. The first is the Avon story and kind of her rise and eventual fall, and then the second part are really the broader leadership lessons learned. So as I mentioned, I really wanted to focus on what we can learn.
Peter: Right. Yeah, and you're right, she was a celebrity. I mean, there's no question. She spoke at Clinton Global Initiative. She spoke at the World Business Forum. I was there, and she was a star. She was like...
Deborrah: Yeah. Almost could do no wrong as well.
Peter: I've had the opportunity, as have you, of working personally with CEOs of very large organizations, and I have to say it is a rarified world of private jets. They're almost like state leaders. I mean, they have that kind of staff and resources available to them. So tell us a little bit about your story at Avon and how you came to work with her there.
Deborrah: I was leaving Deutsche Bank at that time and I got a call from a recruiter and they said there was a fantastic opportunity at Avon and my first thought was like, is Avon still around? Because at that time when I went there and then at the time when Andrea took over, Avon was really struggling. There were takeover attempts. The brand was very outdated and it was called I think not your mother's brand but your grandmother's brand. I joined before she was CEO but the company was in the midst of a large scale change and transformation. They said they really wanted to focus on leadership as an avenue to drive organizational change and I met with her, I met with other people and it sounded really exciting.
I remember the first time I met her and she's just tall, beautiful, gorgeous, speaks so eloquently and she just motivated me with the vision of the company that was really all around women's empowerment all around the world, and I could tell that she believed and she got me to sign up and away I went. My role was really to help architect the transformation from really Avon that operated as a set of independent countries and the vision was to really move to a more integrated organization where there wasn't one of everything and you had more efficiencies and economies of scale and I wanted to be part of it and it was a terrific ride. It really was.
Peter: Give us some timeframe, when did you start working there at Avon?
Deborrah: I started working there in 1999 and I left in 2005 and then was relocated from New York and I live out in Arizona and I teach and consult now and like I said, when I left everything was great and then it started kind of going up and down from there. I was just cringing on the sidelines and so is my stock portfolio.
Peter: Yeah. Absolutely. Wow. Obviously, you've done a lot of research in putting together this book and some of the lessons learned from her tenure there. Do you see any comparison between her leadership at Avon and Carly Fiorina at HP?
Deborrah: A little bit. I mean, style wise I think their styles were very different from what I have read about Carly - a more directive leadership style and Andrea's style was really more inclusive, which really is strength and she really worked hard to kind of get everybody all on board with where she was going which I think that was one of her strengths. One of the lessons that I talk about in Beauty Queen is that also was a liability because she oftentimes would not... she would shy away from some of the tough conflict and some of the tough decisions because she really wanted... she was a pleaser and she wanted to make sure there was harmony and almost to a fault that everybody was on board.
One of the things that I did learn is that you can have different styles and when I was there Andrea was CEO and she had another woman Susan Croft who was her number two and they were like Yin and Yang and very different. Susan was an operations person, very detailed. Andrea very strategic, very visionary and one of the things that I talked about is that complement was so helpful because ultimately what I find in leaders is that you need both focused on the vision as well as the focus on the operations. I think we're seeing a lot of companies today Veterans Administration, GM, the list goes on where they really need some leaders that are down there in the nitty-gritty detail.
Peter: I think one of the criticisms of Andrea was that she was a marketing wizard but knew absolutely or cared nothing about operations.
Deborrah: Yeah, and that was I think overall one of the key takeaways for leaders and there's a little bit of everything for everybody in the book but you have to really know where your tilt is. As I mentioned Andrea's was in marketing, it was on the mobilizing the strategy, what can be, had a million great ideas and when she had her strong CEO there, they really balanced each other but when the CEO retired, she never really had that complement on her team and to your point, where she really struggled was in the details.
One of the things that really t tripped her up in the company in the end was that they had IT infrastructure problems in Brazil and they lost representatives and sales. They just couldn't get orders out the door so some supply chain issues as well, and a bad acquisition. So part of this was just really some of the fundamentals of the blocking and tackling that were missing.
Peter: You write in your book about the risk of functional favoritism and over-specialization. Can you talk about that a little bit?
Deborrah: I think that was to your point earlier that Andrea's strengths was really as a marketing whiz and all the jobs that she had were marketing jobs and around re-inventing the brand and things like that, and so she had never had when she got the role at Avon, she had never had a role outside the United States and Avon's portfolio was shifting from when she came in it was about 80% sales in the United States, 20% overseas and that's reversed right now. So she hadn't had any overseas assignments and she had never had any assignments outside of marketing. So that goes back to our earlier discussion is you could really see how that hindered her because in terms of really knowing the operations, what drove some of the P&L lovers, she just really didn't have that. In the latter part of her reign, she was still focused on the marketing ideas and the big marketing programs and that's not what the company needed right then.
So part of the lesson is to really make sure that if you have ideas and aspirations of more general management roles, you really need to have some rotations into other areas outside your comfort zone, especially for women. Sometimes companies have difficulty getting women outside the sort of normal stereotypical roles in getting them into some assignments where you really get into the bows of the organization.
Peter: I'm curious, do you think women CEO are treated differently than men CEO? I mean, obviously... and you brought this up the new CEO of GM Mary Barra of course has been in the news a lot lately and on television.
Deborrah: They keep grilling her like...
Peter: Oh my god, it's unbelievable.
Deborrah: Well, you know what, when I look - I'll just take Mary Barra for an example - I sometimes think and I don't know if the research bears that out a little bit does that we expect female CEOs and leaders to be exhibiting of the those I'll call them kind of stereotypical and characteristics that women do more compassionate, more let's say... some of the kind of warm and fuzzy, maybe more direct communication, not evading the issues and I think that...
Peter: But those are all good attributes.
Deborrah: Well, they are, but I think that sometimes and when I watch the Mary Barra grillings that it sometimes you think that they want her to be saying just to give away the whole store and to say, oh my gosh, we're so sorry. We're just going to give anybody whatever amount that they need to compensate them for and/or to kind of say things that are maybe what we'd all like to hear but potentially put GM in a more libelous position than they already are. I don't know if I made that clear but with their all good attributes but sometimes I think we expect that that will extend into other situations and you know what, some of that is not good business. I think what she is doing is she's trying to be compassionate but also trying to protect her company and that's a very difficult paradox, I believe.
Peter: She clearly walked into a snake pit here.
Deborrah: I know. I feel for her and some people say is she on the glass cliff that she was just there potentially as a scapegoat. I don't think she's on the glass cliff but I think it's so sad that her tenure may be defined just by this incident, which I think is very sad.
Peter: I agree with that. In reading your book, I interviewed David Rose recently who's an angel investor in New York. His book is all about angel investing, and I pulled a quote out of that which is, "Any company designed for success in the 20th century is doomed to failure in the 21st." In reading your book, it seems to me like Avon was really stuck in the 20th century. They just didn't really perceive the impact of the internet and what all of this was going to mean to their business.
Deborrah: You're exactly right and I talk about that not as in the Beauty Queen, not as much on the internet but what I do talk about is just not adapting the business model to meet the real needs of the local markets and how to really walk that line between driving global scale and economies of scale, but also locally. What happened, which is I think really interesting, in the US direct selling is still viable but I think to your point we've got the internet, we've got Amazon where you can buy everything and you've got just different ways that people are selling.
In the US, the kind of typical door to door just isn't as strong as it was. But in markets like Brazil, in Chile, Vietnam and some of these emerging markets where you don't have the corner drugstore, direct selling is really a viable business model. So I think one of the big lessons learned is companies just have to be very nimble and adaptable and have to really look at what's right for one market may be very, very different from another market and I think that's really, to me, the big lesson learned.
Peter: Deborrah, in doing the research on this book, is there anything that really surprised you when you were doing the research that you learned?
Deborrah: Well, the thing that really surprised me was - and I interviewed close to 100 people - how loyal that everyone still was to Andrea and in fact, I really wanted to in the book Beauty Queen to actually have individuals quoted, and only about three or four people said I could use their name. Everybody wanted to be anonymous. I think it just struck me how at the end stock price was down, people spoke when case were in the toilet and the company was ripe for a takeover and yet... and I just didn't go after everybody that I knew would be loyal to her but I did a cross section and there was still so much loyalty to her and people really... I don't want to say most people but many people said, you know what it was just the perfect storm. Things collided it all at one time. She's really still a good leader. I have to say that it just really surprised me that how much they still think of her, and the company is still struggling now and it's still takeover rumors are once again rampant. So I have to say that was the biggest surprise overall.
Peter: Yeah, of course during her reign Coty made a $10 billion offer which was rejected and she's been roundly criticized for that.
Deborrah: Yeah, very much so. And now Coty and Avon have an arrangement in Brazil where they will co-market some products which is really interesting, and I think those takeover rumors are once again kind of bubbling a little bit to the surface but they're still really struggling which to me, and even though the book I'm really happy that it's a balanced book about what she did well and what she didn't do well still when you go back and look at it, Avon is still struggling and still so many remnants of what wasn't focused on when she was there.
Peter: Was it really all of the bribery charges that brought her down?
Deborrah: That was another thing I think that surprised me that it wasn't just one thing; it was multiple things. Clearly the alleged bribery in China and the investigation it was just a cash drain, and when all is kind of totaled up for legal fees and the SCC charges or settlement will be close to half a billion dollars. So if you just look at that and then there was, as I mentioned, IT problems and just... what you could tell there was just a lack of investment in infrastructure which really had Brazil at that time was the biggest market and really had a profound effect on that. There was a bad acquisition Avon acquired during her reign Silpada which was a party plan silver company for $650 million and then silver prices skyrocketed. Anyway, last year they sold the company back to the original owners for $85 million.
Peter: One of those. One of those. Oh man, yeah.
Deborrah: Then the last thing there was a talent drain and people - the really good talent were really fed up and so there was kind of the revolving door.
Peter: Right. You wrote a lot about culture and how important culture is within an organization and she really didn't seem... I mean, she had her inner circle and her loyal, as you put her very loyal supporters within the organization, but when you're operating a global organization like that that's not enough.
Deborrah: No. And also what had happened during the second half was she ended up more tilted with outsiders coming in and they seemed to have the floor more without the understanding of the business and sometimes the outsiders really denigrated the insiders. You had a lot of the people who really understood direct selling leave and so you had a drain really on the direct selling business as well.
Just as an aside, going back to GM again, some of the congress has said, 'GM needs to get rid all of the long tenure people bring in a bunch of new people.' One of my big learnings was it's not an either/or it's and/both. So you have to have a mix of people that really understand the business with also some fresh blood, and that's one of the things that Andrea didn't do as well as really manage those tensions between the old and the new.
Peter: Another criticism from our friend Professor Finkelstein was that she had no succession plan. There was no one in place to take her role.
Deborrah: Yeah, and at the end of the book I have what's called kind of the manager to-do list and you've just got to have succession plan and you have to have more than one also. She had a successor identified Liz Smith, but Liz Smith got frustrated because the job wasn't hers, and she didn't see it in the future so she left. Andrea, I think, in the end she almost boxed herself into a corner in that there was really nobody else that the board could turn to until it was really almost too late.
So even though I find leaders sometimes find it hard to have somebody waiting in the wings, you really need to have that pipeline, you need to have that succession plan in place and more than one. Most companies, as you know Peter, they have the horse race, they have multiple people that can really take on it anytime.
Peter: One more question for you. As we all know, women CEO remain extremely, extremely rare out there and according to a recent PWC study, women CEOs are more likely to be forced out of office than men. So what do you think the future holds for women in Corporate America?
Deborrah: Well, maybe it's my optimistic personality but when Andrea took over the CEO role in 1999, there were only three other CEOs and at least now my latest stat show 5% women in the CEO roles but the pipeline looks good. I've actually gone in and looked at the pipeline of CEOs in some of the Fortune 500 companies and it's strong.
But I'd say for the younger women coming up, they face challenges as I mentioned earlier about getting some of these cross-functional roles where they can really learn different parts of the business and secondly raising their hands. Sheryl Sandberg talks about that a lot in Lean In, but raise your hand for those high visibility assignments, those ones where you can get noticed.
Sometimes what I find - when I do a lot of executive coaching - is that women don't promote themselves enough and they think well if I do good work people will see me, and you just can't do that. So it's raising your hand for these assignments.
The third thing which this is some of the researchers call it the second order gender biased but it's those kind of subtle ways where women may not be getting their voice in the workplace, may not be getting the coaching that they need and we really, that's a both ways that both men and women need to work together to really understand how we can continue to move women through the pipeline. Because I think we've got a lot of ones that may be ready to take on the senior positions but it's the earlier ones and some of the women that are opting out and they're just saying, 'who needs all of this. I don't want to be grilled like Mary Barra in front of congress.' So I think it's a number of issues that we still need to address.
Peter: I think that's some great advice and I completely agree with you about women in these roles in Corporate America really need to help promote themselves and take those expat assignments because that will be invaluable in promoting and advancing your career.
Deborrah: One of the biggest learnings that I've had is that it's easier to do that when you're younger, when your children that are younger, your spouse it's a little bit easier for them to move. So getting organizations to do some of this earlier versus later when the compensation just gets too high, so do it earlier when you're young and a little bit more mobile.
Peter: Deborrah, thank you very much for taking time to speak with us here on TotalPicture Radio. I enjoyed your book.
Deborrah: Yeah. Thank you. I really enjoyed our conversation. Thanks very much.
Deborrah Himsel is the author of Beauty Queen: Inside the Reign of Avon's Andrea Jung. It's available now in bookstores or in Amazon or wherever you buy your books. You'll find this podcast in the leadership channel of TotalPicture Radio, that's totalpicture.com. Visit Deborrah's showpage where you'll find a complete transcript of our podcast. While there, sign up for our newsletter. It's free, easy and fast. Connect with our TotalPicture Radio group on Facebook. Follow me on Twitter @peterclayton and @totalpicture. I'm happy to connect on LinkedIn with TotalPicture Radio listeners. Please be sure to include in your invite that you listen to my show when sending the invitation. Thank you for tuning in.
On his YouTube Channel, Professor Finkelstein, from the Tuck School of Business, Dartmouth University, (see sidebar link) rated Jung the "Third Worst CEO of 2012," stating, "Avon has been in virtual free-fall for several years, seemingly unable to get back on track. This year saw further deterioration in performance, as well as the ongoing investigation into bribery that has cast a pall over the entire company. Jung was much feted as CEO for years, but her lack of operational skills has made a turnaround difficult. Just as she was given credit for the good days, she deserves blame for the bad ones."
Deborrah Himsel's inside account of the rise and tumultuous fall of this celebrity CEO is a fascinating and instructive read. I pulled a quote from a recent interview I conducted with Angel Investor David Rose, that seems appropriate here: "Any company designed for success in the twentieth century is doomed to failure in the twenty-first." Is that what happened to Avon? Have a listen.
About Peter Clayton
Peter Clayton, Producer/Host, is an award-winning producer/director of radio, television, documentary, video, interactive and Web-based media who has created breakthrough media for a wide array of Fortune 100 clients.