An example of Excellent Top Management :) Taken from WSJ news

By ELLEN BYRON

Estée Lauder Cos. CEO Fabrizio Freda, only the second nonfamily member to lead the company since its founding in 1946, would like to change the way department stores sell cosmetics.Mr. Freda wants to woo customers who are still hesitant to splurge on upscale cosmetics. To make shopping less intimidating, some beauty counters now display prices, loosening a taboo. He is also designing counters to cater to varied shopping preferences.Since arriving as president from Procter & Gamble Co. two years ago—he added the CEO title in July—the Italian-born Mr. Freda has also been working with the Lauder family, most of whom hold management positions, to remake the company.Estée Lauder's inefficient operations have long pressured profits, its reliance on U.S. department stores has hampered sales growth, and its management structure has encouraged fierce rivalry among executives. The recession also curbed shoppers' appetite for high-end cosmetics just as mass-market brands were increasing product launches and marketing.To cut costs, Mr. Freda forced brands to share consumer research and other back-office functions and cut ad and sampling spending. He also announced plans to cut 2,000 jobs.The company's new frugality has started to boost the bottom line, with profit in its most recent quarter up 62%, to $256.2 million, and sales up 11%.

In an interview, Mr. Freda explained how he's trying to shake up the beauty business.

Excerpts:

WSJ: What happened when some of your beauty counters started posting prices?Mr. Freda: It allowed the consumer to make up her mind without having to ask the price. This takes embarrassment away. Surprisingly, most consumers said, "I didn't know it was so affordable."We have an opportunity to better explain the value that we provide. For example, when a consumer buys a mass-market foundation, they have two to three times more chance of [selecting the wrong shade]. We get it right the first time.

WSJ: U.S. department stores have been a drag on Estée Lauder's results for years. How do you fix that?Mr. Freda: We are cooperating with U.S. department stores to get energy and [shopper] traffic back to the cosmetics floor. We can improve the level of service and education we give.We know that 45% of women entering the store want only to replenish a cosmetic and not have a full trial experience. Some women, particularly younger women, like to play with products without being disturbed by a consultant. Other women want full service. We are working to be sure we can serve consumers the way they want to be served.

Credit for both: Estee Lauder

At Bloomingdale's new Clinique counter in New York, you can have full service from a consultant, analysis from a computer or browse on your own. A corner called Clinique Express provides product replenishment. So far the counter is doing well.

WSJ: You've cut a lot of costs. Where are you investing?Mr. Freda: We're putting more emphasis on global product development. The biggest opportunities are skin care and makeup. In geographic terms, we're focusing on Asia in general and China in particular. We are cooperating with department stores around the globe to accelerate growth.

WSJ: You are investing more in consumer research. Why?Mr. Freda: We don't want to just do the products that consumers want. We want to be inspired by consumer desires and surprise them with products and services that they don't expect.

WSJ: So you want to offer consumers what they don't know they want?Mr. Freda: Correct. If you shop in a mass-market retailer, you're going to buy toilet paper, detergents and you can buy cosmetics. But this experience for the majority of women around the globe is not pleasant. When you buy cosmetics in a beautiful department store, your shopping experience is a moment of indulgence. We're trying to build our strategy to be sure this is well understood by consumers.

WSJ: Are upscale beauty consumers spending again?Mr. Freda: In the U.S. and Europe, consumers moved away from the idea of luxury being an element of status. Will they come back to where they started in 2006 or 2007? I don't think so. But I believe the elements of quality, value sensitivity and attention to their full experience will stay for a long time.Consumers in developing markets like China, Russia and Brazil, they're back full speed. They spend time at our counters—in this moment much more so than in developed markets.Our MAC brand is particularly successful in emerging markets where mothers don't teach daughters how to do makeup. The bigger the cultural differences between generations, the more the service provided by our makeup artists has value.

WSJ: Some surmise that your cost cutting would make Estée Lauder an attractive acquisition. Do you see advantages in being part of a bigger company?Mr. Freda: No. We see ourselves as an acquisitive company in the long term.

WSJ: How do you work with the Lauder family?Mr. Freda: Each one of them in a different way has been coaching me. [Executive Chairman and former CEO] William Lauder has been helping me understand all the opportunities and issues we have much faster than what I could've learned on my own. The right balance between consumer understanding and creativity is a strategic direction that emerged from a dialogue between me and my team and the family.

WSJ: Have any books influenced your leadership style?Mr. Freda: "The Prince" by Machiavelli. The book is much more positive than what history says about it.What we learn reading this book is the difficulty of change. Machiavelli explains [that] when you need to change something, you have as enemies all the people who were happy in the previous status. You look for supporters in the people who want to change but don't know how their life would be after change.