A Century of Selling “Dreams in Jars”
A very special Continuous Education session took place on the IESE Barcelona campus last week. A capacity audience of more than 500 people filled the Aula Magna for the presentation of the Harvard Business (HBS) case study “Puig: The Second Century.” The study, which marks the cosmetics and fashion multinational’s centenary, was co-authored by IESE Prof. Pedro Nueno and HBS professor Krishna Palepu.
Prof. Nueno kicked off the discussion by presenting four potential strategic directions that Puig might take as it heads into its second century in business. These are:
Continue with the current strategy: branching out from fashion into the perfume industry;
Strengthen Puig’s position in the fashion and luxury sector by creating a Puig brand – this would probably entail purchasing an existing company;
Expand the business model to include makeup and cosmetics, leveraging the experience of “sister brand” Isdin in the pharmaceutical space; and
Continue to focus on the perfume sector, but with a more global vision and an agressive commercial strategy that targets big developing markets like China or Brazil.
Puig has set itself an ambitious target for 2020: to become one of the global top three names in selective perfumery; and to grow market share from 8.6% to 12%.
Succession: a Tailor-Made Suit
Following a short discussion of the study, focus turned to the ever-delicate topic of succession and the corporate governance in family businesses. Puig stands out in this regard, having successfully managed not one, but two leadership hand overs across two generations in its history.
Succession in leadership is like a “tailor-made suit,” says former chairman, Mariano Puig, father of current Chairman and Chief Executive Officer, Marc Puig.
He says that passing on the torch, particularly from the second to the third generation, has hinged on company’s governing bodies “having a signficant role to play.”
The family has brought the business a strong sense of commitment, shareholder stability and a long-term mission, he explains, which are based on its values, its culture and its distinctive way of doing things.
“Every decision we take is governed by how it will affect the next generation,” he says, “much more than the results we’ll be sharing with the press next quarter.”
External advisors have a role to play, not only in proportioning objectivity or in the arbitration of decisions, but by imposing greater rigor in operations and management.
One Ship, One Captain
Before Marc Puig took on the role of CEO, Puig was managed by a governing body made up of three executive family members, and one external member. There came a moment, says Josep Oliu, president of the Sabadell Bank and long-term advisor to Puig, when the company realized it would have to take a difficult and far-reaching decision: it needed a captain at the helm.
This was when the importance of the Puig family values became most evident, he says: “generosity and objectivity, and the ability to prioritize the interests of the company and the well-being of the family above and beyond the interests of the individual.”
One of 14 third generation cousins, Marc Puig can still recall the initial panic he felt when it was announced he would be taking over leadership of the company. Although he stresses that his anxiety soon resolved with the support of the family, and a strong sense of what was expected of him. “The goal was to hand on the baton, build on our talent, and pass this company on to the next generation, while maintaining a series of values and a way of doing things that has always been characteristic of Puig.”
His leadership is guided, he says, by a process of checks and balances, built on “accountability and the filter provided by a top-level board of directors.”
Asked which of the four strategic directions outlined by the HBS study the company would opt for, Marc Puig was circumspect in his answer. “We’re not discounting any of the options, though some are more attractive than others.”
In subsequent interviews with the media, Marc Puig did reveal that he was confident the company would maintain its results this year (176 million euros last year in profits and a turnover of 1.500 million euros in 2013), although he conceded that the challenge would be “complicated.” He also confirmed that Puig will be opening a subsidiary in Saudi Arabia in January.