Beauty conglomerate L’Oréal celebrates its centenary with pole position in the billion-dollar beauty industry. We trace the company’s rise from its humble beginning in the founder’s kitchen and the history of its leadership. Anandhi Gopinath has the story.

The billion-dollar beauty business has a star shining right at the top — French conglomerate L’Oréal. A mighty machine with over 63,000 employees and products sold in more than 130 countries, L’Oréal has achieved a worldwide domination that most other companies can only dream about. Celebrating its centenary this year, the company’s pledge to scientific research in the name of beauty has resulted in a global presence second to none, with 12,876,712 products manufactured everyday and an average of 500 patents registered each year.

Over the past century, L’Oréal has enjoyed a stable, secure leadership from just five CEOs, unique for a major international corporation. Eugène Schueller (1909-1957), François Dalle (1957-1984), Charles Zviak (1984-1988), Sir Lindsay Owen-Jones (1988-2006) and Jean-Paul Agon (2006-present) have each lent the company their unique skills and leadership styles, allowing L’Oréal to stay true to its founding principles and yet constantly evolving with the changing times.

As the group celebrates its 100th anniversary, the history of its leadership reflects a dynamic 100-year adventure that has changed the beauty business forever.

Here’s a closer look at the achievements of the five CEOs of L’Oréal.

The age of discovery
Eugène Schueller (1909 – 1957)

The L’Oréal story begins in turn-of-the-century Paris. Women who wanted to dye their hair were faced with severely limited options in terms of colour and quality — it was either fiery red or coal black tresses, and there was no guarantee that their hair would survive the trauma. In 1907, an innovative young chemist, researcher and innovator named Eugène Schueller decided that human hair was to be the object of his scientific study, and he started researching new ways to make different colour dyes, cold perm solutions and soap-free shampoos. Hair dyes were his focus, which he would concoct in his kitchen sink at night after work, and then sell to hair salons in the morning.

Determined to succeed in an industry that did not yet exist — his boss at the pharmacy he worked at said hair dyeing is “a very limited market, with little or no future” — Schueller created a revolutionary formulation that coloured hair yet kept it protected, nourished and healthy. In 1909, Schueller went on to set up the Société Française de Teintures Inoffensives pour Cheveux (the Safe Hair Dye Company of France) that later became L’Oréal. The company’s early years under Schueller’s leadership exemplified the values and leadership style that the brand would continue to practise as time wore on, defined by innovative product lines and continuous focus on research.

By 1912, the company had extended its reach to Austria, Holland and Italy. And by 1920, women in 17 countries were using Schueller’s hair dyes. The name L’Oréal was coined in 1939: a combination of Schueller’s first hair dye, L’Auréole, and a popular hairstyle at the time called l’auréole. The guiding principles of Schueller’s company were research and innovation in the interest of beauty — something that is integral to the brand’s personality to this day.

Schueller’s timing in creating his company was impeccable. The end of World War I was celebrated by the Jazz Age, when short hairstyles became fashionable with a new emphasis on shape and colour. By the end of the 1920s, there were 40,000 hair salons in France alone and the products that Schueller was making quickly captured this growing market. Even World War II did not put a damper on L’Oréal’s growth as strict rationing drove women to seek solace in some pampering — women bought cosmetics and permed their hair to boost morale.

In the 1930s, 1940s and 1950s, platinum-haired screen sirens like Jean Harlow, Mae West, Marilyn Monroe and Brigitte Bardot (who was originally a brunette) made blonde hair especially popular, and L’Oréal hair bleaches began to fly off shelves.

It wasn’t all luck, however, as Schueller began to display L’Oréal’s now deeply recognisable ability of meeting rising consumer demands. When the left wing alliance of Front Populaire won the 1936 legislative elections in France and introduced the first paid holidays for French workers, L’Oréal’s Amber Solaire was ready and waiting to capture the market for suntan lotion.

Schueller was well aware that he needed to look at new ways to grow the company, understanding that hair dye wasn’t going to be enough to create the kind of company that L’Oréal was to be one day. As early as 1928, the brand made its first move towards diversification — another defining activity of the company — when it bought over Monsavon, a soap company that it sold much later in 1969. The acquisition brought Schueller and L’Oréal two other valuable assets — Françoise Dalle and Charles Zviak, both of whom would later become CEOs. Both Dalle and Zviak were recruited by Monsavon at a time when the cosmetics industry held far less attraction for graduate chemical engineers than the atomic energy or oil industries. Schueller recognised the abilities of both men, and by 1948 Dalle was joint general manager of L’Oréal.

From hair dyes, Schueller began to see the value in moving into skincare, so he entered into technological agreements with Vichy in 1954, a brand that L’Oréal went on to acquire in 1980. Much like L’Oréal, the fundamentals of the Vichy brand lay in science and research.

Schueller genuinely believed the union of science and beauty could bring forth fundamental innovations, answering consumers’ needs, and by the time he passed away in 1957, L’Oréal’s success had proved him correct.

The age of expansion and research
Françoise Dalle (1957 – 1984)
When Françoise Dalle took over as CEO after the passing of his predecessor, L’Oréal founder Eugène Schueller, the company was still considered a petites et moyennes enterprises — a small or medium business with overseas earnings accounting for 3% of its total revenue. By the time Dalle resigned from his post in 1984, that figure stood at 60%.

Taking off from Schueller’s expansion plan, Dalle oversaw the acquisition of several major brands that enriched L’Oréal’s portfolio. With a passion for social issues, Dalle’s unique approach to management brought many substantial changes to the company, including increased focus on research, the development of recruitment strategies, and increased emphasis on advertising and marketing. The acquisition of new brands also necessitated the development of new fields of competence beyond that of just hair, and the company’s deeply international outlook was beginning to emerge.

The 1960s were years of cultural and commercial revolution. Music, art and fashion became increasingly teen-oriented and there was a growing need to conserve and simulate youthful looks. The consumer boom of the 1950s had resulted in a huge number of supermarkets, chain stores and boutiques that were catering to an increasingly sophisticated market.

Dalle had by this time stepped up the company’s capital investment and channelled even more of the company’s resources to research. In 1960, L’Oréal established a research and production centre in Aulnay-sous-Bois, bringing the number of research staff to 300. In the following years, the company opened new cosmetological and bacteriological facilities in Uruguay, Algeria, Mexico, Canada and Peru, cementing its highly scientific approach to skincare. The feather in Dalle’s research cap was the setting up of the International Centre for Dermatological Research in Sophia Antipolis, France in 1979, which focuses on high-tech research units specialising in skin physiology.

But while research was a key focus, Dalle ensured the brand remained grounded in the day-to-day lives of its customers by expanding its contact with an increasingly wide range of consumers. In 1964, L’Oréal bought Jacques Fath perfumes and a year later Lancôme, which gave the brand access into the high-end skincare, make-up and perfume market. They went on to acquire many other brands, many of which are household names today — for examples, Biotherm and Garnier.

Ensuring that the company would be stable enough to handle all the expansion it was undertaking, Dalle led a hugely successful restructuring exercise of the L’Oréal group that led to its listing on the Paris Stock Exchange in 1963. As a result of the increased expertise and access to new resources, L’Oréal launched a number of new products — including Ellnet, the first-ever aerosol hair spray — and made innovative scientific advances in skin and hair care. Eventually, L’Oréal’s earnings outstripped those of any other blue-chip company in France and was growing twice as fast as the industry average. In the mid-1970s, L’Oréal moved into New Zealand, Japan, Australia and Hong Kong and the former Soviet Union.

Dalle expounded his ideas about wealth creation “through the love of work and the passion for a product” in his book L’Adventure L’Oréal in 2001, which he co-wrote when he was 83. His abilities as a successful industrialist, entrepreneur and leader were recognised outside the sphere of the beauty business as he was regularly invited to contribute to France’s own national interest. In 1984, Socialist minister Laurent Fabian sought Dalle’s advice on revitalising the French automobile industry. Two years later, right-wing politician Philippe Seguin came to Dalle for help on industrial relations matters. The most illustrious of Dalle’s friends, former French president Francois Mitterand, famously relied on his input decade after decade.

Yet, Dalle had a sense of humour and was clearly a man who knew how to have a bit of fun. “Politicians often ask for advice,” he said about his famous friends in L’Adventure L’Oréal. “But they don’t often take it.”

The age of revolution and clarity
Charles Zviak (1984 – 1988)
Although Charles Zviak was CEO for only four years, he created a very important scientific legacy for L’Oréal that strongly tied back to what founder Eugène Schueller had once advocated. At the time of Zviak’s ascension to the position in 1984, the cosmetics industry was experiencing a period of evolution: products were becoming more specialised, and research techniques were quickly becoming more advanced, precise and complex.

His leadership brought clarity of vision to the organisation of L’Oréal’s research laboratories, encouraging advances in all fields of science. The way Zviak saw it, cosmetic products were at the junction of an infinite number of other sciences such as physics, chemistry, biology or electronics. His priority in developing product innovations was on quality and product performance, so as to provide the most effective beauty solutions. So, as the company’s view on cosmetics became more focused and more complex, its tools became sharper and its expertise greater.

L’Oréal had began to play an increasingly important role on Synthelabo, France’s third largest pharmaceutical company, which was also the first private laboratory to participate in the World Health Organisation’s project for research and education in neuroscience. L’Oréal in turn lent Synthelabo its Midas touch — by the end of the 1980s, Synthelabo’s ailing performance in its overseas markets had improved drastically and new products were ready to be launched.

L’Oréal’s research and development facilities grew rapidly with research staff hitting an all-time high of 1,000. Scientific advancements soon led to the success of products like Lancôme Niosôme, one of the few anti-ageing creams found to be effective by independent dermatologists. L’Oréal also made a huge breakthrough in its core business of hair with the discovery of Céramide R, a molecule offering protection against the effects of ageing on hair using a lipid called Céramide.

Economically, the company continued to develop, gearing towards becoming a worldwide conglomerate. In 1986, L’Oréal shares were distributed to investors outside France for the first time as part of a restructuring exercise, raising 1.4 billion French francs. The company acquired several high-end fragrance companies in the US, further strengthening the market in that region, and also sold off other components of the group that were considered too far outside its main interests and weren’t in accord with L’Oréal’s policy of internationalisation.

Four short years after becoming CEO of L’Oréal, Zviak moved to the chairmanship of Synthelabo. He died the next year as one of the few chemists to attain leadership of a major French company, and left several accomplishments in his wake — Biotherm Homme, a complete men’s skincare line was launched, L’Oréal became the world leader in cosmetics, and with the Look Good Feel Better programme to support women battling cancer, the company had begun its journey in corporate social responsibility.

The age of globalisation
Sir Lindsay Owen-Jones (1988 – 2006)
In the years following his appointment to the CEO’s chair in 1988, Sir Lindsay Owen-Jones set about making L’Oréal a genuinely international company. The only non-French CEO of the brand to date, the ruddy Welshman is responsible for L’Oréal spreading its wings far beyond Europe to emerging markets in China, Brazil, Russia, Spain and India.

Owen-Jones’ global strategy, however, was more than just establishing a presence in new markets all over the world. It was about making the company itself more international, and to that end ensured that the company took emphatic steps to truly understand the various different markets it operated in.

In the 1980s, research had indicated that traditional ethnic classifications of African, Asian and Caucasian that many cosmetic companies were subscribing too were obsolete. The Asian definition alone neglected Indians, while Caucasian did not include Hispanics — markets that L’Oréal realised were huge and waiting to be explored. Sixty-three distinct skin tones were recorded worldwide at the end of the decade, reflecting the major migratory movements of populations.

Based on Schueller’s original premise of science in the name of beauty, Owen-Jones decided that L’Oréal should adapt products to the different needs of different cultures and ethnicities. The opening of the Chicago Institute for Ethnic Hair and Skin Research, for example, allowed L’Oréal to intensify its knowledge about the cosmetic needs of African-Americans. In 2005, L’Oréal opened a research centre dedicated to the study of Asian skin and hair in Pudong, China.

To date, five research centres and 15 evaluation centres have been created in the four corners of the world, to allow each geographical zone to have an understanding that is aligned to its local consumer base. L’Oréal is the first cosmetics group to have this type of expertise.

As the company grew to include locations all over the world, Owen-Jones also understood the value of integrating those core competencies. For example, after Lancôme Niosôme was developed in 1986, Owen-Jones ensured that the new technology was translated into a mass market L’Oréal skincare line under the name Plenitude. Analyst reports say that it was Owen-Jones’ astute ability to create such synergy between subsidiaries that led to its continual success — in 1H2002, BusinessWeek reported that L’Oréal’s sales had increased by 8% and net profits rose 30%.

L’Oréal’s now famous all-inclusive recruitment policies were also born in Owen-Jones’ time. As part of his globalisation process for the company, he ensured that human resource policies would provide individuals from all backgrounds from all areas of the world the opportunity to work for L’Oréal. In L’Oréal Malaysia, for example, a large number of staff are male — a perceived oddity in the beauty business — and consist of Malaysians from all races.

Owen-Jones’ people skills and the importance he placed in his staff are legendary. As a young man in the 1970s working in L’Oréal’s Belgium office, he launched a hair spray called Toute Douceur — French for all softness. “It was a monumental error on my part,” he told BusinessWeek in a 2003 interview. “It was so damned soft, it couldn’t hold the hair.” It’s a lesson he never forgot, as well as the fact that everyone makes mistakes — sometimes, necessary mistakes to get ahead. “They [staff] have to have the right to err. Otherwise, they are afraid to take risks. You will never see a bloodbath of people at L’Oréal as a result of something gone wrong,” he said.

A perfectionist, Owen-Jones’ personal work ethic drove L’Oréal to its giddying success. “I am never satisfied by anything, particularly because my successor needs to create the same success over the next 20 years,” he once told CNBC. “That is the challenge of managing a company like this: constantly wanting more.”

After 18 years at the helm of the world’s leading cosmetics company, Owen-Jones stepped down as L’Oréal’s CEO in favour of Frenchman Jean Paul Agon, but remaining as chairman of the executive board — and his vision a permanent imprint in L’Oréal’s DNA.

The age of collaboration
Jean-Paul Agon (2006 – present)
Jean-Paul Agon, L’Oréal’s fifth CEO, proved his worth very early on in his career when he was tasked to manage the company’s not-so-successful subsidiary in Greece. Sheer determination and a passion for beauty were a potent combination for the ambitious former sales representative, and Agon slowly but surely moved from country manager of L’Oréal Greece at just 24 right up to the CEO’s position in 2006 at 49.

His predecessor, Sir Lindsay Owen-Jones, was a tough act to follow and all eyes were on Agon as he prepared to steer the now billion-dollar conglomerate into the future. While L’Oréal always enjoyed some level of exclusivity over the playing field before, the growth of the industry meant stiff competition to keep ahead of newly-emerging markets.

The acquisition of ethical beauty brand The Body Shop remains one of Agon’s hugest accomplishments, and was what changed the personality of the brand a little bit as it geared into taking on the future. He successfully wooed the late Dame Anita Roddick into joining the L’Oréal family, promising her that the acquisition would help change his business from within. While Roddick is no more, Agon’s promise has remained as L’Oréal actively promotes sustainable business practices across the board.

Acquiring The Body Shop also gave a new business direction to the company — natural product brands. Spurred on by the success that The Body Shop brought L’Oréal, Agon pursued Laboratoire Sanoflore, a French pioneer in the design, manufacture and marketing of certified organic cosmetics products. Agon and L’Oréal were harnessing a huge trend — the demand for green cosmetics, fair trade products and the use of more natural, organic materials.

Under Agon’s leadership, L’Oréal has not only enhanced its sales numbers with the two new brands but also established itself as a serious participant in sustainable development and business practices. L’Oréal was ranked as the leader in its sector for managing environmental, social and governance risks by strategic value adviser Innovest, and designated as one of the world’s most ethical companies by Ethisphere magazine, published by the Ethisphere Council. The company is also included in international sustainable development indices like ASPI Eurozone, FTSE4Good and Ethibel.

While he created a new legacy for L’Oréal, Agon also retained strategies his predecessors had begun. Research is a key focus, with several new technologies debuting in the market. The discovery of Pro-Xylane, an anti-ageing molecule derived from beechwood, marked an important breakthrough in green chemistry and was incorporated into a skincare line by Vichy and a specialised lipstick in Lancôme’s L’Absolu Rouge range. Earlier this year, Lancôme launched its Génifique youth activating concentrate, the first product on the market to be based on research in genetics.

Highlighting the value of external expansion, Agon developed collaborations with universities, research laboratories, and professionals from other industries in order to chase new ideas, and develop beauty solutions adapted to a global culture, for individuals of all backgrounds and ages.

As the company has grown even more under Agon’s leadership to include a presence in Eastern Europe, Asia and Latin America, it has retained its reputation as an employer that is fair and equal, and a great place to work in. Last year, L’Oréal was named Europe’s top business employer by the European Student Barometer, a survey that covers 20 European countries and incorporates the responses of over 91,000 students.

With a management strategy based on exemplary corporate citizenship, strong human resources, and a sustainable, successful business model, Agon’s leadership is set to carry L’Oréal well forward into the next century.

This article appeared in Options, the lifestyle pullout of The Edge Malaysia, Issue 758, June 8 - 14, 2009.