Controversy will always be the dominant focus of an obituary when a scandal has touched the deceased life. And so it is with Liliane Bettencourt, the second-generation owner of the cosmetic giant, L’Oréal. But the grande dame of the cosmetics world was first and foremost a brilliant family business strategist and innovator. Here are five reasons why Bettencourt should be remembered first for her great flair as a businesswoman, and not the scandal involving her and her daughter:
Total conviction to the business
Back in 2010, Bettencourt told the French newspaper Le Monde: "My life is L'Oréal. I have always been involved in the development of the company, and I will protect it to the end." When you talk to family business visionaries like Bettencourt, the conviction to their business is always foremost - it's almost infectious. You rarely get that level of conviction with non-family business leaders.
Here’s another example of that commitment, as told by the French media. Back in the 1990s, Isabella Rossellini, the famous actress and model, fronted the advertising campaign for Lancôme, a L’Oréal brand. Feeling that maybe new blood was needed to front the Lancôme brand - Rossellini was in her early 40s - rather than dumping her outright and to assuage her feelings some at L’Oréal felt the actress could be offered the role of “ambassador” for the business. Bettencourt was told about the idea and was meant to have said: "But, ambassador of L'Oréal, it's me!"
Family control was paramount...
Part of that conviction was her commitment to ensuring L’Oréal remained controlled by the Bettencourt family. Even when the Swiss multinational Nestle was brought in as a shareholder in 1974 to help the business, an agreement was made with the Swiss multinational that it could not take over more than its 30% of share in the business as long as Bettencourt was alive. So the family would always be the biggest shareholder, controlling a third of the voting shares as long as she was alive.
Also, Bettencourt might have had her disagreements with her daughter Françoise Bettencourt-Meyers, but the family always voted in unison on the board - Liliane, Françoise, and her husband, Jean-Pierre Meyers, all sat on L’Oréal’s board - when it came to the big decisions. The appointment of Jean-Victor Meyers, the son of Françoise and Bettencourt’s grandson, was also a way of bringing unity to the family - and ensuring the next gen would play a prominent role in the business. All the family players in the business agreed with this move - even Bettencourt.
...this created stability
One of the big outcomes of ensuring the primacy of the family was creating stability so the business could grow. This point has been made by Béatrice Collin, an academic, who wrote a book entitled L'Oréal, La beauté de la stratégie (L'Oréal, The Beauty of Strategy) a few years ago. Collin’s said: “Since its inception, the family character of L'Oréal has always been a vital force for the company, despite the twists in recent years. Family ownership has brought stability, long-term vision, and a mindset that combines prudence and entrepreneurial spirit.”
Appointment of great non-family CEOs
Bettencourt realised the need to appoint great non-family leaders to propel the business forward. Under her direction, she worked with three of the best CEOs around - François Dalle, Lindsay Owen-Jones, and Jean-Paul Agon, the current chairman and CEO. Dalle was appointed after the death of Eugène Schueller, Bettencourt's father and the founder of L’Oréal. Dalle transformed the small company that L’Oréal was in the 1950s into one of the most successful cosmetic groups in the world. Owen-Jones and Agon built on those strong foundations and took the business even further.
As Collin said in her book: “Few companies have experienced, such as L'Oréal, such stability of their leadership and management teams” she says. “In over a century, only five leaders have succeeded at the head of the group and this continuity is also at the level of shareholding. The heirs of the founder have also maintained the power of decision-making at board level. This stability of leadership and governance is certainly a key factor in L’Oréal’s success.”
The business under Bettencourt's ownership grew from a small cosmetics group with most of its products sold domestically into the biggest cosmetics group in the world in terms of revenues. Revenues were close to €26 billion last year, with operating profit of €4.5 billion. Market capitalisation of L’Oréal is now around €100 billion, making it one of the biggest companies in France. And the shares Bettencourt sold to Nestle back in 1974 have multiplied by more than 100 times - a much better performance than its own shares. That’s some legacy to leave the business, Bettencourt inherited 60 years ago.