08/10/2007

By WWD Staff

Left brain-right brain. In the world of fashion and luxury goods these days, one needs both sides to beat the competition.
But is analytical ability more important than the creative side? Are talents in business more key than being able to cut, sew and tailor? In short, is the designer more important than the chief executive officer, or vice versa?

It’s a $64 million — or, these days, given the size of fashion conglomerates, $6.4 billion — question. Unquestionably, there have been a handful of successful partnerships between designer and ceo. They include Calvin Klein and Barry Schwartz; Tom Ford and Domenico De Sole; Yves Saint Laurent and Pierre Bergé; Valentino and Giancarlo Giammetti; Liz Claiborne and Art Ortenberg; Reed Krakoff and Lew Frankfort; Miuccia Prada and Patrizio Bertelli, and Marc Jacobs and Robert Duffy, just to name a few.

Their respective companies often are seen as among the epitomes of success in fashion and luxury goods. Without each others’ talents and a strong partnership, their businesses never would have flourished the way they did.

Then there are those rare companies where a designer is really in charge, such as Giorgio Armani and Ralph Lauren, who is both chairman and ceo of Polo, although he has had strong partners in Peter Strom and, now, Roger Farah.

However, in some companies, the designer has the upper hand — think Oscar de la Renta or Dolce & Gabbana — while in others, it’s the ceo. Ceo’s are increasingly coming to the fore as private equity firms and other outside investors come into the fashion world, often with a focus more on the bottom line than on the creative talent.

So which model is the best? Here’s how the industry weighed in on the topic:

Donna Karan
“It’s the ‘we,’ not the ‘me.’ It’s not ‘either-or,’ it’s ‘and.’ Unless they’re in sync with one another, neither one could do their job. Neither one could be successful.”Robert Polet, president and ceo, Gucci Group

“It’s a real marriage of equals. It is when you combine long-term business sense with independent but guided creativity at the service of a particular brand. It’s this combination that makes it very, very fruitful. I would estimate that in all very successful brands, there would have been this seamless cooperation with a business sense, a merchandising sense, a customer service sense and a creative point of view.”

Polet said it’s that combination of creativity, merchandising and product development that makes a brand tick and ensures an outcome of “relevant, desirable products.” He said respect between all the players is essential, especially since there is “a field of natural tension” between creative and business types. “The thing to do then is to let them be entrepreneurial in those roles. It’s so different if you really feel you have the trust of someone else to let you do your job.”

Alber Elbaz, designer of Lanvin
“This is like asking a child, ‘Who do you love more? Daddy or mommy?’ You need them both and love them both in a different way. The role of the ceo and the designer is like a mother and a father; only when parents love and support each other will their child be strong and healthy and wealthy.

“Some of the best ceo’s whom I’ve met through my career were the ones who think like artists and true innovators. And some of the best designers are the ones who think like ceo’s. It’s not about territorial power play, but more about collaborating and respecting each other’s responsibilities.”

In Elbaz’s view, it’s impossible for a brand to be great, without strong fashion and business leaders. “You need both a great designer and a great ceo to dream together in order to make this dream come true.”

Oscar de la Renta
“[It’s] the perfect combination of the two: the designer for his creativity and the ceo for his vision.”

Ralph Toledano, chairman and ceo, Chloé
“I always say the most important thing is finding the right couple. The secret of success is the quality of the relationship. You cannot grow without a good designer and you cannot grow without a good ceo. When I hire people, I always say I’m looking for a partner. Credit is often given to management, but formula is very dangerous because it kills creativity. Management has to understand that they have to stimulate newness. A brand needs a talented designer. It needs constant change. Opportunism and formula kills a brand.”

To be sure, there have been periods in the industry when designers were perhaps given too much power and elevated to star status. “For me, the star is not the designer; the star is not the ceo; the star is the brand,” Toledano said. “I think people confuse the idea of the star designer and dependency on designers.”

Mario Grauso, president, Puig Fashion Group
“The most important issue at a fashion house is the relationship between the ceo and the designer. They must communicate well, trust one another and have mutual respect. This is the key to a great brand.”

Elizabeth Pearce, a New York attorney who specializes in the fashion and luxury goods industries
The balance of power “depends on the nature of the organization,” but Pearce said it has tilted in favor of management as the “ceo is more linked with the board and the powers that be.” And despite the fact that consumers are fascinated by designer personas, large companies are wary of “putting too much emphasis on the public image of a particular designer. It’s like a rock band: Once the lead singer’s gone, what’s left?

“The premise of a brand is that it’s a collection of concepts, ideas and imagery,” she continued. “A brand can only be powerful and sustainable if there’s something that goes beyond one person’s point of view.” That said, Pearce stressed that, “Each side has to have a voice and that voice has to be respected by the other party.”

Christian Lacroix
“The most important thing is the alchemy needed between designers and ceo’s. Without that, nothing is possible since a fashion house, like a boat, cannot have several skippers at the helm. In a race — and fashion is kind of a race — you need to go straight ahead and not navigate two opposite strategies at the same time, as we did for too long with [previous owner] LVMH. After a decade of struggling with many opposite strategies, star ceo’s-versus-star designers and the poverty of the result, wisdom is back again and we all understood that this balance is needed with the same language, the same target and, at the end, the same interests.

“A fashion house cannot afford schizophrenia. Creativity is not only the reserve of the style and designing team, but that we need creativity everywhere, from the accountant to the ceo. Good designing without the right management is as negative as powerful businesspeople without the right products.”

Valerie Hermann, ceo, Yves Saint Laurent
“Defining the limits and territories for both designers and ceo’s is important. Each should have his or her priorities. For me, a designer is never more creative than when you give him a framework in which to work….A good product is not only a fantasy of the designer; it has to have a defined purpose.”
Hermann also stressed designers and ceo’s must work in tandem, not in competition with each other. “It has to be about winning the competition together. I don’t think it’s a hierarchical relationship in the traditional sense of a boss and an employee: it’s a partnership relationship.

“There is always a creative solution to any challenge, whether you are a designer or a ceo.”

Bryan Bradley, designer of Tuleh
“The designer is the heart of the house and the president [or ceo] is like the brain. At its best, it’s a symbiotic relationship without strict borders…and even if the heart can survive without the brain, I don’t recommend it.”

William L. McComb, ceo, Liz Claiborne Inc.
“I do believe in the design-merchant king. That far supersedes any role I would play, though there are ceo’s who are merchant kings like Mickey Drexler.”

McComb said one of the reasons he hired Tim Gunn as chief creative director was to have a design-merchant advocate on the executive floor at Claiborne, while letting brand designers remain decentralized. “The center of gravity needs to be design and merchandising, and our company had lost our way in that respect. Now we are putting the companies back together as independent brand-driven teams. It was always that way with Juicy, though our corporate structure impaired that. Now we are bringing it to Mexx, Liz Claiborne and Monet.”

Didier Grumbach, president, French Fashion Federation
“At the beginning, the designer is key and later it’s the contrary,” said Grumbach, who was previously ceo of Thierry Mugler. Given the couture tradition, most houses in France were founded on designers who became the stars of their companies, whereas today, a partnership is necessary between the designer and the ceo. “If one of them wins, the company is lost,” he said. “There should be respect, but there should be tension.”

Mark Lee, ceo, Gucci
Lee attributed success to “a combination of the brand’s depth and history. “Creativity is the engine of our business. I have to give tribute to Frida [Giannini], for her clarity, strength and innovation, building the brand and moving forward, but we work in sync. There must be an executive with a strategic vision, upgrading and protecting, and maintaining the exclusivity of the brand.”

Franco Pené, chairman of Gibò
Pené said it is a 50-50 deal. “Both designers and executives are instrumental, although it’s very difficult to have the right balance with both.” In particular, Pené said there is not a large pool of top-quality candidates who can become successful fashion executives. “Few really emerge.”

Arnold Cohen, founder, Mahoney Cohen & Co. accounting firm
“I’m going to have to take the middle of the road and say both. I can’t think of an industry where the two have to work more closely. My biggest argument in the industry is that designers aren’t business-oriented enough. Very few of them take the time to acclimate into the business segment. They don’t have the time or the inclination. To me, the partnership is best. Look at Calvin Klein and Barry Schwartz, or Peter Strom and Ralph Lauren at that time, and subsequently, Roger Farah and Ralph Lauren today. Even Oscar de la Renta and Jeffry Aronsson.”

Karen H arvey, presi d ent, Karen Harvey Consulting Group
“It depends on where the brand is. If you are a small designer brand that has an amazing product, the most important element you need is a ceo to grow the business. If you are a brand that has evolved but is sliding in relevancy, then the most important thing is the designer to get the brand back on track. In the end the best situation is a partnership and synergy between the two: a ceo who can help a designer be better by forming a strategy and pathway to the consumer in ways that help them expand without sacrificing their vision.”

Dana Telsey, founder, Telsey Advisory Group
“The blend of the financial and the creative is essential to grow the business. We have seen that as businesses have gotten bigger. Take a look at Coach [with Lew Frankfort and Reed Krakoff], and what Domenico De Sole and Tom Ford did to build Gucci. You need to have the right brain and left brain coming together to drive the business as a whole.”

Robert Burke, founder of consulting firm Robert Burke Associates
“I don’t think one can survive without the other and be truly successful. I think you need someone who can position the business and also communicate with the designers. I think that you don’t want either one to have the advantage, but if they do, the name and the designer image is more impactful on a departure because of the visibility of the designer. But it seems to be a trend right now that ceo’s are being recognized and written about on a much more regular basis. The role is no longer about just being a numbers person, but also about having a vision for the business and making sure that vision is communicated and realized. The role of the ceo is becoming more creative and the best ceo’s are ones who understand the design process and know how to support the designers, but also push the business.”

Joseph Velosa, co-founder of the Matthew Williamson business
“I can only really speak from our experience, but I don’t think one can exist without the other. It’s a 50-50 relationship. We each do our separate jobs, but there is a huge amount of gray area and crossover, and there has to be a mutual respect and understanding. At the end of the day, though, you can’t have a design business without a designer, and without the product, you have nothing. The ceo has to respect that.”

Velosa said, however, that when a brand name becomes bigger than the designer’s personality, that’s a different scenario. “There comes a tipping point when the brand is established and entrenched and can carry on, like with YSL, which dipped and then had a revival, or Valentino, where the passing of the reins was straightforward.”

M atthew Williamson
“If you were to caricature us, it would be me throwing pink chiffon in the air all day, and Joseph [Velosa] presiding over piles of money. I’m business-minded. I’m a commercial designer making a product that I want women to pay hard cash for and to wear. And Joseph is incredibly creative. He’ll come to me with a business strategy, and I’ll go to him with a dress design.”

Pierre Mallevays, founder and managing partner of Savigny Partners, a luxury goods advisory and mergers and acquisitions firm in London
“Both are equally important, but I also think it depends on the stage the company is at. Sometimes, a company needs a creative spurt, and other times it needs to get organized under good management. And I do think that, in the case of truly successful brands, behind every successful designer, there is a successful ceo.”

On more mature luxury companies, he said, “I think that once the brand DNA is established, then the designer can disappear, as long as the new designer or design team respects the DNA. But the brand has to pass that tipping point for the transition to happen smoothly.

Lanvin, for example, is not at that tipping point yet because the brand is still too dependent upon Alber Elbaz and women’s wear. That company needs another few years to build success in men’s wear and derive the benefits of a symbiotic relationship between designer and ceo, so the jury is still out.

“A designer can be commercially successful, but if there are no checks and balances from the business side, there’s the risk they can end up in sublime isolation, geniuses left out in the cold with no real business.”

Mallevays pointed to Phoebe Philo and Hedi Slimane as two examples. Both fell out with their business partners: In the case of Philo, she left because she didn’t see eye-to-eye with Ralph Toledano, and Slimane made certain demands that his partner, LVMH, was not willing to fulfill. He said the two could now find it more difficult than anticipated to secure a backer because they are essentially working alone — and come with very high expectations of future partnerships. “There is no alter-ego ceo who can temper them.”

Bud Konheim, ceo, Nicole Miller
“The bottom line is this business is a commercial art, not a fine art. If you have a designer without a ceo, you have a fine art. If you have a ceo without a designer, you just have a commodity, and you won’t thrive for long.

“Without great design, you can be the biggest ceo in the world and everything can be a joke,” Konheim said. “If the designer is able to make all this great product without a ceo, then you don’t need a ceo. But the really good designers are prolific and creative, and they all need an alter ego they can throw ideas against. Someone has to boil it down to what we are going to make a living on.”

Konheim has been that person at Nicole Miller for more than two decades.
“Nicole and my partnership is based on a couple of philosophical tenants I laid down at the beginning: The business is going to be called Nicole Miller, the muse you are going to design things for is you and I am confident there are enough people who share your aesthetic to make a business. I’ve tried to manage her best design efforts, without wrecking it by saying we are having such a great season with all this stuff, don’t make any new things. New innovations aren’t big sellers out of the box, but you have to get them out there.”

Elaine Hughes, president, executive search firm E.A. Hughes & Co.
“In hiring for any company when the designer is an active participant in the business, you have to understand how the designer thinks and then you look for complementary skill sets. In a designer-driven company, designers need to be partnered with someone to hold them accountable, and you look for someone financially sound with a success record. Some designers like [Lauren] think like a businessperson, and he directly recruited Roger Farah, who had the retail experience and was an excellent complement.”

Allan Ellinger, senior managing director, Marketing Management Group
He argues that a third person is equally important: the head of merchandising. “A classically organized apparel company is like a seesaw with the ceo on one side and the designer on the other — and you need the merchant in the middle to create the balance. That person really has to marry the commerciality of the product to the design through helping plan what the collections will look like, edit the line and make sure the collection meets the price points required by the company.”
For Ellinger, the question is whether the ceo is a merchant or an operations guy.

“If you have a ceo who is not a product- or marketing-driven person, that ceo will be totally reliant on someone else to develop and market the product, because the product is the most important part of our business. If you have a very large company that can afford to have a ceo who is financially oriented, like [Phillips-Van Heusen] and Jones [Apparel Group], and is smart enough to hire a product guy, then it’s ideal to have all three.

For example, Bill McComb does not come from this background, and he hired Tim Gunn, which I think was a really smart move, because Tim is really product-centric.”

Bill D’Arienzo, ceo, WDA Marketing
D’Arienzo recently made a presentation to Liz Claiborne Inc. on whether the ceo or designer is more important in resuscitating slumping brands. From case studies on Lacoste, Coach, Burberry, J.C. Penney and J. Crew, he determined it was the ceo. “In every single instance, the ceo did three things instantly: first, he understood and embraced the brand heritage; second, he researched the consumers’ past and current perception of the brand, and third, he brought in a design director to orchestrate the findings and stayed in close communication,” D’Arienzo said. “So it all begins at the top and then is driven by the design director in terms of execution — but these aren’t absentee ceo’s.”

Catherine Sadler, president of New York marketing firm Catherine Sadler Group
“What the designer brings is the heart, and the designer often embodies the brand and its vision. When the product isn’t right, the best ceo in the world is going to fail.

“But designers are artists, and they do their best work when they are unfettered by financial concerns. Design in itself isn’t enough, and many young designers are overcome by unanticipated demands: Brands need to be differentiated and have the right retail relationships. In that sense, the ceo holds the key. Ceo’s need to encourage innovation and support it with the right business acumen, but carefully, because rules and data can kill creativity.”