A Cosmetic Fix?

Cosmetic FixOne of the questions I’m frequently asked by corporate leaders struggling to manage in the current environment is how far to go with their cost-cutting measures. With their companies suffering sales declines, they’ve got to trim somewhere to maintain profitability (and in some cases to stay afloat), but they don’t want to cut the wrong things.

Recent moves by Jean-Paul Agon, CEO of L’Oreal, offer a good example. The luxury cosmetics maker has had a difficult year so far, in part because it “scrimped” on brand promotion, reports the Wall Street Journal. In light of this Agon knew he had to cut back, but he has done so wisely. He launched a reorganization plan which included a hiring freeze. He trimmed travel expenses and even closed three factories. What Agon did not do was cut off the company’s lifeblood, marketing and R&D.

Says Agon, “We’re strengthening our media and promotion. It’s a brave strategy because when you face a crisis, most companies say I’m going to reduce my media budget. We decided to do just the opposite.” When it comes to R&D, Agon is even more resolute: “The last thing to do would be to give up innovation because cosmetics is really about permanently inventing new products, new technologies, new benefits, new results.”

There is no cookie cutter answer for how a struggling company should cut back to make its numbers work. But when you’re faced with those difficult decisions, do your best to trim expenses and leave the investments in place.

Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of “When Growth Stalls: How it Happens, Why You’re Stuck, and What To Do About It.” Learn more about him at www.WhenGrowthStalls.com and at https://twitter.com/whengrowthstall.

Steve McKee




Cultivating food from the air we breathe: How decades-old NASA technology is still delivering disruptive tech today

By Dan Blacharski | June 29, 2021

The “Replicator” machine seen on the “Star Trek: The Next Generation” television series was imagined as a 24th century technology…

Read More

Il Sole 24 Ore and qiibee launch the first book ever made on Blockchain & NFT

By Francesco Pagano | June 23, 2021

The first book in the world made on blockchain, the first ‘decentralized’ discussion on leadership, completely shared and co-created with…

Read More

Leave a Comment