How does your Company Measure up to the Talent Factories in the Luxury Industry?
I just published an article in Harvard Business Review on the best practices of talent management in the luxury goods industry. Below is a small excerpt, and you can read more by following the link below. HBR allows to read up to 5 articles, like mine, for free!
"Fifty years ago fashion and luxury goods were all about family businesses and entrepreneurial designers. Today most of the world’s leading brands and labels belong to one of a few groups, of which the biggest by revenue is LVMH, the owner of Moët & Chandon and Louis Vuitton. Two other groups—Richemont, the owner of Cartier and Chloé, and Kering (formerly PPR), which owns Gucci and Saint Laurent—give LVMH fierce competition.
When we analyzed the drivers of performance for more than 350 fashion houses from 2000 to 2010, we found that producing successful, creative fashion collections was positively correlated with being part of a business group. On average, retailers and wholesalers of high-end clothing judged collections made by group-affiliated brands to be three times as creative as collections made by independent competitors.
Being a part of a business group generates costs savings by centralizing support functions such as operations and logistics, finance, and real estate management. Another advantage of group membership is the relatively efficient internal market for capital that luxury groups provide by identifying promising brands and supporting them with the capital they need to grow. But our research suggests that the real source of the groups’ value is the way they exploit their diverse business portfolios to offer rich learning opportunities to both managers and creative talent. This is why their brands excel at design and business innovation.
To understand just how the groups developed this talent advantage, we conducted detailed case studies, which involved more than 50 in-depth interviews with senior executives. What we saw was that within their boundaries, the three groups have all created a vibrant circulation of talent that allows them to spread knowledge and best practices, despite the sometimes intense rivalry between their brands."