Robert Polet, Gucci Group

Wednesday 25th November 2009

CEO of Gucci Group has demonstrated a unique ability to bring out the best in his people and his brands

Born: July 25, 1955 Kuala Lumpur, Malaysia
Education: Nyenrode Business Universiteit, MBA 1976 University of Oregon
Career: 1978-2004 Various positions at Unilever, became CEO and President 2004 CEO of Gucci Group
Trivia: Guinness World Records cites the Gucci “Genius Jeans” as the most expensive jeans in the world, priced at $3,134

In 2004, CEO Domenico de Sole and creative director Tom Ford quit Gucci over a failure to agree contract terms with new owners, PPR (Pinault-Printemps-Redoute). Within months, nearly half of the company’s top management had also walked, prompting observers in the fashion industry to predict the imminent demise of an iconic business.

They had reason. Five of the brands within the luxury group were making losses, and many believed that one, Yves St Laurent, was beyond repair. The loss of the team that had rescued the business from near bankruptcy in the 1990s, and in particular the director responsible for its creative inspiration, had the potential to render the brands rudderless. After all, observers reasoned, Tom Ford and Domenico de Sole were Gucci, weren’t they?

PPR believed otherwise, and turned to a most unlikely source to recruit a new chief executive. Robert Polet, 49 at the time, had joined Unilever after earning an MBA degree from the University of Oregon. Of Dutch origin, he was born in Malaysia and educated in Britain, the Netherlands and the US. During his 26 year career with Unilever, he had worked in Paris, Milan, Hamburg and Malaysia, before being appointed president of the ice cream and frozen foods division from which PPR eventually recruited him.

When his appointment as the new CEO of Gucci Group was announced, the press was full of jokes about the switch from ice cream bars to snake skin bags, but one fashion industry expert noted, “Unilever turns out some of the most highly trained, professional managers in the world. They have top communication, analytical and management skills — it doesn’t matter whether they’re selling ice cream or peanuts. And they think globally, which is what Gucci needs.”

Polet was also known for his entrepreneurial management style and an ability to think outside the confines of tradition. He was credited with turning around a dysfunctional management team at the failing Unilever division in Malaysia, and helping the company pioneer a new liquid margarine product.

Managing creativity
His first look at the Gucci business convinced this ardent family man that he needed to do something drastic. He told his wife and two daughters that for once he would not be accompanying them on summer holiday: instead, he packed his bags and spent the next six weeks visiting over 160 stores and talking to 2,500 staff around the world. He also visited 100 competitor stores.

That tour taught him a lot about the business. “There’s a real wish within the group to win in the marketplace,” he later commented. “We have people in our factories and our partner factories who have been working on our products for 20 or 30 years, and they are proud. I even met a shoemaker in Florence who had been in the factory for 45 years.”

But there was a commercial disconnect at senior levels. Polet asked the managers of each brand within the group – which includes Gucci, Yves St Laurent, Sergio Rossi, Boucheron and Balenciaga – to prepare three-years plans. Each one put in plans that forecast increasing costs and widening losses, believing that in the fashion industry, almost limitless investment in the brand was the way forward. Polet disagreed. He reorganised and refocused the business, pared costs, improved customer awareness and increased flexibility in the supply chain. Over the next four years gross profits nearly tripled, from €264m to €730m.

“I focus on three things,” Polet recently told Andrew Cave, reporting for the Telegraph: “leading and coaching people, managing brands and creating an environment where creativity can flourish.” Despite others’ misgivings, he was confident that his experience with ice cream was relevant to managing luxury goods brands. “[At Unilever] I didn’t sell ice cream,” he said in 2004. “I sold concepts. I sold worlds in which people consume ice cream. Luxury brands [are also] more than the goods… They give people the opportunity to live a dream.”

More importantly, he understood that a brand will outlive the management teams and creative directors that work on it and this understanding enabled him to dismantle the culture at an organisation where the head of design had become a celebrity. In Polet’s new group structure, each brand would be led by a two-person team consisting of a commercially-focused chief executive partnered with a creative director. That way, he figured, each brand would get the right design strategy, backed by sound merchandising expertise.

Having imposed a structure, he then gave the teams the freedom to manage their brands in their own way, within a framework of strategic objectives set at the top. “Other companies try to manage creativity, but actually stifle it,” he observes.

He refused to follow advice that he could boost sales by introducing lower priced lines, believing that such a move would have a negative long term impact on the brand’s value. He also decided against shifting production to lower cost economies in Asia, which, ironically, have now become the strongest markets in the company’s growth plans.

The current recession has had an inevitable impact on profits at all the luxury end fashion houses, as retailers rushed to de-stock following the collapse of Lehman Brothers. However, as stock management across the industry improves and confidence increases, the Gucci group continues to perform well.

Characteristically, Polet sees the current economic downturn as an opportunity to connect with his people as, once again, he has taken to the road to have a dialogue with the business. “In the past few months,” he says, “I’ve started travelling more than ever before, because people need to see me. They ask: ‘Is he down? Does he look pessimistic? Or is he looking optimistic and smiling? Does he know where we’re going?’ When they see for themselves that I’m fine – and that I am convinced that we are going to be fine – they are fine too.”

A recession, he believes, can bring out the best in good people, and allow their talents to shine. In a recent article for Business Week magazine he writes, “Challenging times are the perfect opportunity for high performers to shine. These individuals are highly motivated and must be challenged to stay engaged. Providing them with a tough issue to tackle, expanded responsibility, or a position of greater authority will give them what they seek while simultaneously benefiting the organisation.”

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