Over the last few weeks, the articles on IOI Partners have focused on examining the ways and methods that organizations become more innovative. While the IOI Partners team has extensive and impressive backgrounds in the life sciences and diagnostics industries with expertise in chemistry, biology and engineering innovation, they also have an excellent sense of humor and thought it would be highly entertaining (and hopefully informative) to have their technical-oriented readers hear from a CEO that has to grapple with change and innovation within the prestige beauty market.
You are probably asking (and rightfully so), what is prestige beauty? From a market categorization standpoint, prestige beauty is a sub-market of beauty, which is a sub-market of consumer packaged goods. Depending on the market report you read, prestige beauty is a $15b to $17b market. Prestige beauty is that $20 lipstick, $40 foundation and $55 eye-shadow palette that hopefully either you, your daughter, your wife or significant other just purchased (and preferably together).
Prestige beauty is differentiated because of the confluence of innovative product performance and packaging aesthetic. The prestige beauty shopper not only expects and wants the best in product performance, but she expects and wants the product appearance and delivery system to be innovative, fresh and beautiful. This market “price to entry” is not static and is driven by overall societal change and specific beauty trends and styles. Consequently, successful prestige beauty brands consistently deliver to the market innovative formulas within an invigorating form that are influenced by current fashion trends and create an emotional connection.
Why Innovation Is Key in the Prestige Beauty Market
Why have I been asked to write about innovation within prestige beauty? Because when it comes to the packaged consumer goods industry and specifically the prestige beauty market, innovation is the key driver for success. The requirement to innovate exists in most if not all industries but in the $15b U.S. prestige beauty market, innovation requirements are pervasive as companies must rapidly initiate changes or respond to changes in how the prestige beauty customer shops, why she shops, where she shops and how she feels after purchasing.
Simply put, to grow and remain relevant successful brands must innovate constantly to maintain engagement with customers.
One of the most exciting and interesting aspects of innovation’s impact on prestige beauty is how and where she shops at retail. The days of shopping for prestige beauty behind the department store counter and serviced by a professional dressed in a white smock are gone. Open air shopping pioneered by specialty retail innovators Sephora and ULTA Beauty now dominate the industry. The open air shopping experience allows her to experiment with and try prestige beauty products like never before.
The ripple effect of the retail prestige shopping evolution is profound, requiring specific innovation to effectively design and market products that win in an environment that encourages experimentation but affords limited human interaction. However, the innovation avalanche slamming prestige beauty (and I realize all of society, as in, what is this Snapchat thing anyway and why do I feel like I’m learning an entirely new language…) is social and digital media. Figuring out how to build and market a product to her, where shopping is increasingly based on using her thumb to scroll through frames on a smart phone, is a solution that only additional innovation can address.
So where does all of this innovation leave the prestige beauty brand and, more importantly to me, the CEO of the beauty company? We are left with only one option; to embrace and utilize many of the changes occurring around us and adapt our products and practices throughout the organization to engage our customers. Innovation cannot just be a product development concept. Our willingness to change to meet continually changing demands has to be a core expectation of every department and every employee of the company. But how?
Achieving a Foundation of Innovation Through Culture
“Culture” is the number one strategy we deploy to help push the company to accept the pace of innovation. Building the right culture is not easy or inexpensive because it has to be intentional and continual. Starting with our hiring process, we train our teams to interview with an attempt to discern the candidate’s disposition for change. This may sound rudimentary, but in my experience so many companies simply don’t get past this stage because interviewing is a difficult skill that is easily overlooked as a priority for executives.
Once hired, organizational and self-development concerning handling change (or what we call developing the “change muscle”) is an important aspect of our culture. We invest heavily in a skilled consulting group that specializes in teaching how to see, perceive and handle change. This is not a one-off lecture, but an on-going set of purposeful development sessions designed to help employees understand that change is a tool and that we must become better at change. These sessions consist of active programs that help our teams identify certain personal traits and dogma that may be limiting and create self-development tools for growth.
Fundamentally, we believe the right culture creates a foundation that allows the company to move quickly, because change is no longer a limiting factor but a true catalyst.
When the change muscle is developed both organizationally and individually, great possibilities spring to life because the mindset is no longer limiting. Here is one example: We now have on staff two data scientists. That is right, a prestige beauty company has two PhD scientists that work hand-in-hand with our teams. The conversations are priceless and material for another article, but their non-traditional beauty insights into our data are allowing us to understand and navigate the innovation and change described above. I would venture to guess our competition does not see the need for this type of talent.
Okay, all of this cultural change development is outstanding, but could someone please help me find our video on Snapchat!
The above article was authored by Tim McMeekan, the CEO of LORAC Cosmetics, LLC, a leading color cosmetics brand located in Los Angeles.