The Right Decisions Aren't Always Easy, Says Avon's Jung
STANFORD GRADUATE SCHOOL OF BUSINESS —Maybe Avon CEO Andrea Jung's passion for her work was most visible early this year when the company known for women's cosmetics decided to spend huge bucks on a TV ad during the Super Bowl, the game known for sweaty men and Budweiser.
Her workers were skeptical, Jung said in response to a question from Stanford Graduate School of Business student Roanak Desai on Nov. 9 as part of the student-sponsored View from the Top series. "They said, 'So, Andrea, are we going to advertise skin care or lipstick?' And I said, 'Neither. We’re going to create a testimonial ad of people who've joined us since they got laid off, and they're going to tell their story.'"
Amid the global economic brutality, Avon has been a success story, offering opportunities for women who had been laid off, had seen their husbands laid off, or simply needed extra cash.
"It’s been extremely motivating. There's almost no language necessary when you have the mission and purpose," Jung said. "People really said, 'I can’t get laid off. I am running my own business. They're my own hours.'"
Jung's 10 years as CEO of Avon is the denouement of a personal success story — she is one of the world's most influential female business leaders, serving on the boards at Apple and General Electric, as well as leading Avon. It wouldn't have come about without at least four significant decisions:
— After graduating magna cum laude from Princeton, Jung decided to go into retail rather than something like law or medicine, which didn't exactly thrill her parents, both Chinese immigrants. "I think their first reaction was, 'That wasn't really what we had in mind.' But then the family values set in, which were,'‘No matter what it is you do, you'd better go and be your best.'"
— When Jung got bogged down early in her career, stuck with uninspiring work in retail, her mother told her quitting was not an option. Work through the challenge, and get it done. That's what the family does. That's what Jung did.
— In 1997, when Jung was a top candidate for the Avon CEO job, a 52-year-old man was chosen instead. She thought about going to another company.
"A mentor of mine said, 'Follow your compass, not your clock,'" Jung recalled. Her compass told her that Avon was still the place that suited her best. "I loved the company — its mission, its purpose."
Jung says she wouldn't have regretted the decision even if she had never gotten the promotion, but fate soon made the circumstances moot. "It didn't work out for him, so I got the job in 21 months, and the rest is history."
— In 2005, after Avon missed earnings projections a couple of times, a colleague pointed to something AT&T had done: Cutting layers of management to streamline bureaucracy. Jung resisted, but later in the week a trusted advisor told her that she was likely to lose her own job within 120 days, despite her popularity, if she couldn't turn Avon around. The advisor said Jung would end up leading another struggling company where she wouldn’t know anyone, and then have to try to turn that company around.
That was a jolt, because her first five years as a CEO had seen substantial growth. "We were booming into emerging markets. We had double-digit top-line growth," Jung said. "I had no idea what the word 'turnaround' meant — and we hit the wall."
After talking with the advisor, Jung realized that if she was going to have to be a tough, budget-cutting CEO no matter what, she might as well do it at the company she loved. So she cut layers of management at Avon, painful though it was. "I had to become a definer of my own second chapter and start it fresh."
That second chapter has seen the most people join Avon in the United States at any time since the 1970s. Jung said managing them is different than in most companies because the salespeople are independent representatives, not employees. "Motivation, inspiration, and influence are very different things than leadership requirements and mandates, and so the skill of communicating is the skill of influencing and inspiring. Mission and values and purpose have been the way that we've effectively kept that sales force going this year."
Looking outside the United States is even more crucial. Jung said that in her industry category 88% of the growth from 2008 to 2013 is projected to come from emerging markets.
One huge market is China, where Avon has more than one million workers. "We decided at Avon not to focus on the eastern seaboard cities, the large cities," she said. "We decided to penetrate the small towns and villages and have a supply chain and infrastructure strategy where the women were because we knew that the government would like the fact that we were offering opportunities for people not to have to bus themselves to work into large cities — that we could create work for them right in the towns and villages where they were."
As her career has evolved, Jung has seen through companies such as Avon and Amazon.com that finding the most effective distribution channels is crucial for retailers.
"He or she who can nail and reinvent the distribution game will win," she said. "Branding is critical — that's the cost of entry now. Distribution is the final trump."