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Letter #120: Antoine Arnault (2017)
CEO and Vice Chairman of Christian Dior SE | Fake News and Transparency
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Today’s letter is the transcript of Antoine Arnault’s speech and Q&A Session at the International Luxury Conference 2017. In this speech, he discusses the themes of transparency and fake news. He starts by defining the communication triangle of a luxury house, then discusses brand DNA, pontificates on the fundamental question in corporate (and real) life, dissects his stakeholders’ desires, tells a story of the Les Journees Particulieres, shares a lesson from his father, and closes in a nuanced way. In the Q&A portion, he discusses the model charter, how he thinks about communicating with customers, being the wizard behind the curtain vs stepping out, lessons from Loro Piana, being taken out of context, the fine line between communication and overcommunication, the perfection of transparency vs actual transparency, being upfront, LVMH’s approach to sustainability, whether the future of luxury is exclusive or inclusive, and whether the luxury industry is capable of mea culpas.
Antoine is the CEO and Vice Chairman of Christian Dior SE, the holding company of LVMH, and a member of the LVMH Board of Directors. He has also been the Chairman of Loro Piana, the CEO of Berluti, and director of communications and image at LVMH, the director of communication at Louis Vuitton. He started his fashion career in LVMH’s advertising department, which he joined from Domainoo, a company he founded at the age of 23 that specialized in searching for and protecting domain names.
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Good morning. Good morning, everyone. Thank you, Vanessa, for your invitation.
First of all, I have to confess that despite my affection and admiration for you, I was a little hesitant to accept your offer to address this theme of transparency and fake news. It cannot be denied that the question of transparency is always a tricky one. A question that needs to be handled with tact and lightness of touch, just like the delicate lace. As a citizen, I am of course in favor of transparency, especially nowadays. As a business leader, I'm also in favor of it so long as it respects the company and its employees. As an observer of the corporate world, and in particular luxury, I can clearly see the growing demand for transparency with which we are faced and to which we must respond. It's at this point that the real issues are raised. What does transparency really mean? And how far does it go? Should a company disclose everything? To whom does it have a duty of transparency? These are the ideas I want to explore with you in the next few minutes.
Before I begin, however, I would like to assure you that these questions are ones which on a sincere personal level, I regularly ask myself. So crucial are they to corporate governance now and in the future. I would also like to apologize in advance for not giving any definitive answers. After all, even as we speak, circumstances are changing, societies, laws, techniques, ways of disseminating information, are changing. As are methods of destabilization. In the midst of this, companies must adapt, and the role of management as I see it, is to set out principles that can be applied through changing and uncertain times.
Transparency, authenticity, sincerity. These are the three points of the communication triangle of a luxury house or group. And these three notions, though they have elements of overlap, are by no means the same thing.
Let's start by playing with a metaphor that we all use in our industry, that of brand DNA. We luxury houses have the strongest possible DNA, unique heritage, a long history, exceptional savoir faire, iconic designs, incredible shows, fantastic designers, you name it. In short, a luxury brand is constantly working to increase its visibility. And it's gained a global competitive edge by successfully demonstrating that it is more unique than others. That its DNA is stronger, clearer, more individual, more authentic. But what is the point of DNA, if not to be decoded? Our high profile communications, notably but not exclusively, advertising, quite naturally arouse the curiosity of the public, who in turn asked to be given the code of our wonderful houses. But are we as exceptional as we claim? Do we show all of our DNA, or only the parts that suit us? Have we always been irreproachable?
And the fundamental question in corporate life as in real life, is it our interest, is it our duty to reveal all our secrets? It's understandable that, of all sectors of industry, luxury houses should be the particular focus of a demand for transparency. It is also the natural corollary of the communication strategy and the intensification of grand visibility on which the prosperity of our sector has been built for the past 20 years. And yet, precisely because they appeal to desire, are not luxury houses those that have the most to lose by revealing all? Where does the demand for transparency come from?
First of all, of course from our clients. Luxury clients are the best informed, and the most sophisticated. More than 75% of their purchases are made following research on the internet. Here, our clients find extremely diverse types of information, comments from other clients, press articles, blogs by fashion influencers, and so on and so on. The more digitally connected our clients, the more perfect our products must be, because the slightest defect is immediately publicized, and the more comprehensive must be the information about them. For the price they pay, our clients want to be sure they are acquiring a product, a garment, that will live up to their high standards. Not only because it's beautiful and well made, but also because it's produced in optimum conditions of social and environmental responsibility, and marketed in optimum conditions of transparency. As far as possible, it's our duty to respond.
Second group, from our employees. The people we employ, and particularly the up and coming generation of the under 40s, are extremely attentive to the values of the companies they work for. They expect their organization not only to be irreproachable in terms of governance, but also to reflect their aspirations and their visions for a more open world. There are two aspects of this trend. When it comes to choosing an employer, they favorite companies with strong values. Once employed, they expect their company to adhere to the values that are important to them. Here again, the demand is in many ways legitimate, and to ignore it would be to fail to recognize the cement that hold companies together in the current climate.
Third group, quickly, from our shareholders. I mention shareholders only for the record, since the financial transparency relating to them is so clearly set down by law.
Fourth group, from the arbiters of civil society, of the decision makers, NGOs, etc. This is the hardest part to admit. Now we'd like to spend a little time on it. Voices such as these calling out a company are neither clients, nor employees, nor shareholders. In no way does the company belong to them. Yet they question its presence in the public sphere, much as they would do for a political decision maker. They question the power of the company and its impact on the environment, on society, on its fabric. Often, their calls are amplified by the media. Strictly speaking, the company has no obligation to respond, even to their demands that sometimes sound more like ultimatums. However, I do feel, and in this I know that reflects the sentiments of my generation, that companies should view such demands not as a threat, but as an indicator of potential trends. The question luxury houses should ask themselves is, in my opinion, the following one, are the social and environmental issues being raised by a few voices today, destined to be raised by the whole of civil society in a few years time? If the answer is yes, then we will have to respond sooner or later. We would be well advised, therefore, not to bury our heads in the sand, and perhaps, even to seize the initiative.
In this contexts, and I think we'll speak about it a little bit later, and thank you, Sarah, for representing those models so well, I was determined to push through an improvement in the way our houses work with fashion models. You have seen the reports about the charter we introduced and its immediate consequences. I wanted to lead this reform firstly because I was personally and sincerely concerned by the models' working conditions, but also because I felt that on this issue, the fashion world was failing to hit a profound social shift. Our houses must remain sensitive to change, and in this instance, I think they have.
So what should we reveal, and how? This is a question I've constantly asked myself ever since I joined the group. As you might know, one of the first campaigns I supervised at Louis Vuitton was called the core values campaign, demonstrating the importance I attached to expressing a set of authentic principles. However, I sensed that advertising was not sufficient, and authenticity could be expressed in other ways.
In 2011, I then initiated Les Journées Particulières, in which we opened to the public around 30 production sites belonging to our group. It was an instant success with 100,000 visitors over the first weekend, which allowed me to appreciate two things. First of all, the extent of the demand for houses to open up, having perhaps been too secretive until then. And the sincerity of our artisans, who were genuinely delighted to demonstrate their skills to the public. The next two editions of Les Journées Particulières confirmed those impressions. However, a word of warning. I've always believed that such unveiling should never be too long, nor too easy, nor too frequent. It should arouse desire, but not fulfill it. In conclusion, I would sum up the question of transparency as follows: For luxury houses, transparency is more a result one obtains than than an objective one seeks.
My father is fond of saying that a company's financial prosperity is a consequence of the quality of its products and its ongoing investment in savoir faire. It seems to me that the same goes for transparency, which is, a reflection of the authenticity of the brand and the sincerity of its spokespeople. If a brand is authentic, in other words, if it has a frank and healthy relationship with its environment, its skills, its history, then its management and its spokespeople will be sincere. And the company will, at the end of the day, be perceived as transparent.
As an example, we recently celebrated the 25th anniversary of our environmental department. Each and every one of the featured environmental initiatives by our group's houses, Louis Vuitton, Guerlain, Veuve Clicquot, for example, was closely linked to the history of each brand, and indeed represented a natural extension of it. It is this level of sincerity and authenticity that has enabled the group's houses to offer genuine guarantees of transparency in environmental matters.
However, if a luxury house seeks transparency for its own sake, and speaks out on social issues that have nothing to do with its brand identity, if it exposes itself too much, or in the wrong way, then it breaks the spell of desire that binds it to its clients. Opacity kills love, total transparency destroys desire. All our art, as business leaders, is to find the right kind of lace.
Thank you for your attention.
Host: I feel like we did you a bit of a disservice in our in our program listing, because I see we have you as Chief Executive of Berluti, which of course you are, Antoine, but you are also Chairman of Loro Piana and a member of the Board of LVMH. So you have a kind of global view on the group, and can speak to many different dimensions of it beyond a single brand. One of the things I wanted to ask you about was, you refer to the fact you were determined to push through the model charter. How hard was it?
Antoine Arnault: It was actually not hard at all. I mean, we started this a little bit by coincidence earlier this year. And the story around it, which seems a little bit fake, but is actually true is that, I was simply in my car, going back home, and reading a message, this famous message by James Scully about about the treatment of models doing fashion casting. And a little bit naively, I just wrote an answer back on his Instagram saying, if you know that anything like this happens in one of our houses, please contact me and we'll make sure it doesn't happen again. And he was in my office the next day telling me, "Listen, buddy, that happens literally every time." So I think we just needed that wake up call of something almost really bad happening for us to take measures. It wasn't difficult in the sense that we started writing something very quickly, internally. Then we knew that Kering was doing the same thing following the incidents. And we joined forces. In a way, as you said earlier, and as Sarah expressed, it's an industry where there are so many layers that no one really takes accountability and responsibility for what happens. In the end, we don't pay the models directly, we pay the agencies. Or we pay the casting agencies or directors, or the stylists. But we're still the ones at the top of the chain that pay. And to come back to the gentleman from Oscar de la Renta who spoke out, I think, if, from now on, we hear that an agency lied to us, or behaved badly towards their models or didn't pay in time, we now have the power to tell that agency "Listen, for the next three seasons, we're not going to work with you." And I can tell you that it will take a little bit of time, but very quickly, they'll understand that they need us as clients. I mean, if they don't have LVMH and Kering, of course, it's going to be a much more difficult game for them. Last thing on this charter, we already had a few requests, and we're more than ready to welcome any brand that wants to join this charter and sign it with us. It was a first step, it goes in the right direction. Not everything is perfect, but we are already amending it to make it better for the next season. And it's not only for fashion shows, we have shootings almost every day in almost every one of our houses. So we put a stone in that garden, we're proud of it, and we think it's definitely going in the right direction. There are many issues that we need to address, but step by step. Systemic changes do not happen in a day. So we're working on things getting better for those models and for diversity as well.
Host: I mean, that's certainly a communication that has been disseminated throughout the industry. Is it also something that you think is important to kind of reveal to consumers?
Antoine Arnault: Yes. I mean, let's not hide it. Obviously, it's going to be also good for our houses to show that we're taking action. By the way, we got a little bit lucky. I mean, had we launched this charter after the whole Weinstein ordeal, it would have looked like we were just reacting. So, you know, timing is also a little bit, you need a little bit of luck and intuition. But yes, it's clearly something that's also positive for the image of our group and the brands that compose it.
Host: But was it something that was embraced internally, when you first brought it up? In the same way that the open day is something that was embraced? Because, as you say, luxury, and LVMH to a certain extent, is not a group, is not an industry that is used to inviting people in. It's used to being the wizard behind the curtain.
Antoine Arnault: Yes. I think that also has to do with the personality and the history of the group. And the generation that led it, and that leads it today. I am of a new generation. I think I understand, and I respect the fact that we need to be more open. We cannot do anything in secret anymore. Not only because of social networks, but also because of changes of the way business is conducted today. And it's not something difficult to convince the instances on the ninth floor at LVMH. They understand very well that there needs to be a change. However, my generation is the one that will embrace it, probably more.
Host: I mean, we live at a time when the whole question of fake news, and what is true, and what is not true, and how people are actually behaving versus how they are seen to be behaving is very much part of the conversation. Do you think that there is a real risk for a business that if you're seen as hiding something, or as being too opaque, that people will presume something negative, and there's risk attached to that?
Antoine Arnault: There is. Actually, my time at Loro Piana taught me something about that. Loro Piana had had this tradition of not doing advertising. It's something that Sergio Piana really thought was important for the brand. He said, "I know almost personally all my consumers, and we don't need to advertise. Bigger brands advertise. We don't need to".
Host: He knew all his consumers?
Antoine Arnault: It was, of course, it was sort of a joke, especially at this size. But he, that's what he said. He didn't really sincerely believe it, but at a time where, especially in Asia, you need to exist on the map, we did a few image studies, it seemed strange, and almost as if the brand was having financial problems not to advertise at that time. The fact of not communicating and being too opaque seemed to the consumer to be suspicious. So we started this ad campaign to show who we were, to show the products that we presented, and immediately, the image changed. I just have a little nuance to give on that. I also think, today with all the news that's put out, it's a bit dangerous to speak too much. You're always going to have every single word of what you say dissected. And one sentence that's taken out of context can also be very dangerous for your brand, for the way the consumers perceive it. So you need to be very, very cautious in the way you communicate.
Host: Do you have an example of when you said too much and got in trouble?
Antoine Arnault: In my personal life, yes. Luckily, not yet publicly.
Host: So how do you tell? I mean, how does the business know where the line is between just enough and too much?
Antoine Arnault: Well, listen, that's our job. You need to choose the right spokespeople, you need, especially when you choose people that are going to represent you, make sure that nothing, or photographers, in that instance, or people that work for your brands. It's almost like you need to do a checkup of every single person that works for you. It's good in a way, but at the same time, you know you're going to be confronted with problems that you didn't expect. So it's a very fine line that you have to walk on. And you know, it just makes the job more interesting.
Host: How do you go about shifting the internal culture of the group from one that really prizes mystique to one that is open to the idea of transparency?
Antoine Arnault: Yes, well I don't have that pretension not to think that I'm shifting it like this. But by little steps. And by creating those events, by seeing, and by having people see how proud they are, how proud these artisans, but also the people who work inside our group, are to show their skill, show their art. It's quite evident. I mean, you just come for one day during Les Journées Particulières, you'll see that people are proud, people are happy to be there, and see those proud people. So it's quite obvious, but you need to make it happen. I'm lucky to have access to the people who take these decisions. And to have a little bit of a force of persuasion. So that's what I tried to do.
Host: Are there magic words?
Antoine Arnault: No. You just have to prove that it's gonna work.
Host: You talked about the difference between the perception of transparency and maybe actual transparency? Can you elaborate on that a bit?
Antoine Arnault: Yes. I mean, clearly, what you show and who you are, is a bit different. I mean, we all put makeup on, and all brands that communicate want to show only the best and the most beautiful aspects of their personality. Now, I think if you have something that you really want to hide, eventually it will come out, especially nowadays. So you're almost better off trying to counteract on that and prepare yourself for a little bit of an earthquake. Luckily, the brands that we have in the group don't have this problem. However, you really always have to walk on eggs. And to come back to what I was saying a little bit earlier, it's this fine line, and you always have to juggle with a few balls.
Host: So would you advocate, for example, if you were doing a kind of internal checkup, and you found an issue, do you think it's a better idea to kind of put it out there, to get in front of the story, to almost say, "Here's our problem, here's how we're going to fix it" rather than let it kind of come out?
Antoine Arnault: Definitely. I truly believe that nowadays, anything that can be found, will be found. So yes, it's probably better to come out and come clean.
Host: Okay, I have one final question. And then I'll let everyone else ask away. The sustainability question, which has been a big part of our discussion over the last day and a half, is an area where LVMH has been very active for a very long time, but not particularly vocal. You could find the information if you wanted to, on your website. But it really wasn't something you guys talked about, or advertised in any particular way. Why was that? And will it change?
Antoine Arnault: You know, it wasn't something that we purposely hid, obviously, but it had just--our group is quite small. I know it looks big, but it's--
Host: I dispute that. How many stores--
Antoine Arnault: No, no, no, let me finish. Yes, no. There are a lot of big brands in our group, but the group itself is quite small. We do have less than 50 people who work at the group level. We have an environmental department that was led by Sylvie Bénard for the past 25 years, when sustainable development and environment wasn't a very sexy subject. It just happened that in the past 10 years, no one took that torch and really wanted to put it up front. When they came to us and said it's the 25th anniversary of this department, we thought well, we've been doing this secretly, almost, for the past 25 years. It's ridiculous. Let's advocate it. And we Did. Once again, we're not saying we're perfect. Of course, we, in terms of environment, could do better, and try to do better. But at least we'll put it a little bit more on the front of our, not only website, but on the front of every single one of our houses from now on.
Host: So it's sort of the third stage. You've got the open days, the model charter, and sustainability.
Antoine Arnault: Yes. I'm less involved in the sustainability aspect of it. Of course, very proud of what the group has done, but yes, it is the third stage.
Host: Okay. Questions, anybody? For Antoine? Oh, come on you guys. This is the last one. This is your last chance. Okay, Sarah has a question.
Audience Member: Thank you. Again, I want to commend you on the on the models charter. And in interest of transparency, I'm curious, the charter doesn't say who serves on the monitoring committee. And I wasn't sure whether that was in house or if that was sort of an independent group of people from the brand and perhaps the models themselves, agencies, and so on. Could you speak to that a bit more?
Antoine Arnault: Of course. We are deciding now who is going to be on the monitoring panel. It will be people from our group, people from Kering, Cyril Brule, the director of syndicat des mannequins in Paris, a couple of other agencies because not all of them have the same voice, a couple of models. I will give you their names after, I don't remember them by heart. And I was telling Isabella, that we would be happy if you joined, if you wanted to. Because of course, your voice would be more than helpful to tell us how to go in the right direction and how to improve things.
Host: Any other questions? Sir?
Audience Member: It's another question on the charter. I was really moved by what I heard from Sarah. I mean, companies, groups like yours can really make a difference. And my question is, the problem has been not just Harvey Weinstein, but so many of the stories is just an all pervasive thing to keep these things quiet, and not talk about them. Because some of the mud sticks back onto the company, on the organizations. You could have the charter, but how do you make sure that you actually talk about stuff which could have a negative impact on your group, or the Kering group, or any other group?
Antoine Arnault: Well, it's just a question of ethics. Once we launched this, we were clear that the process would be bottom up. Anything that happens inside a shooting, a fashion show, would have to come up to the referent of the house, and then come back to us, to my office directly, to Marc-Antoine Jamet, the Secretary General of the group. So any incident that happened this year, and some have, let's not think that just by signing this charter, suddenly everything happens to be perfect. But little by little, step by step, it goes in the right direction. Things will always happen, people will always have bad behaviors. What we can commit to is not to work with them anymore. But then we will have new people working for us, and they might have bad behaviors. We're not magicians here. However, I could not say more little by little, things will improve. We sincerely think that.
Host: Any other questions?
Audience Member: Hi, I'm Elisa Niemtzow, from Business for Social Responsibility. I have a question. We've talked a lot during this conference about inclusion and luxury. Do you think the future of luxury is exclusive or inclusive?
Antoine Arnault: Definitely inclusive. We, as a group, and every single one of our companies, are very inclusive. In terms of diversity, whatever it means, I mean, and the multiple definitions of diversity, and absolutely inclusive in terms of our employees, in terms of our clients. Now, exclusivity is also something that we want to nurture. And desire comes also from this exclusivity that our products can convey as an image. So yes, it's once again, this balance between between both.
Host: Okay, I'm going to invoke executive privilege and get to award myself the last question for you. I studied history in school, and one of everyone's favorite cliches is those who don't learn from history are doomed to repeat it. In the US over the last year, a lot of institutions have looked at their own past behavior, both like way in the past as part of our discussion about diversity and civil rights, and like schools looked at their involvement with slavery, and they've also looked a lot about their own past history with sexual harassment. And there have been reports and reports of things that happened in the 1970s, things that happened two centuries ago. And mea culpas, or a desire to take responsibility for what has gone on in order to do better going forward. Is that something you could ever imagine a luxury group doing? Because, yes, it's hard right now. But things 20 years ago weren't great either.
Antoine Arnault: No, absolutely. I believe in mea culpas. If anything comes up, we definitely will. And it's not only sexual harassment. I mean, our brands have long histories, and I'm sure if you dig in, and I'm sure people will, you can find things that will deserve apologies and mea culpas. And absolutely, we would.
Host: Thank you very much.
Antoine Arnault: Thank you, Vanessa.
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