Education forum extends into luxury culture

Christian Dior perfume, Louis Vuitton trunks, Moet & Chandon champagne ... all world-famous brands in their own right, but now all part of LVMH, the luxury goods group.

The formation of LVMH in 1987, through the merger of Moet Hennessy and Louis Vuitton, created the world's largest luxury goods group and, with it, management challenges as well as management synergies.

In particular, when it came to management development, business schools were adept at dealing with large consumer groups, not large luxury goods groups, says Concetta Lanciaux, adviser to the chairman at LVMH and group executive vice-president, synergies.

While consumer marketing is generally about selling as many products to as many consumers as possible, luxury goods are about adding value and quality, she says.

Before the formation of LVMH, most luxury goods companies were small, family-owned businesses, but the formation of the new group required new areas of business school research. Ms Lanciaux and the LVMH board decided it was up to them to lead the way.

The first move, in 1990, was to run a series of five in-house courses to help to set up the luxury management culture. The company needed to be as good in people management as it was in developing products, says Ms Lanciaux.

LVMH also decided to work with Essec, the Parisian business school, to develop a degree programme with a concentration on luxury goods.

"There was nothing out there," says Ms Lanciaux. "We needed a place for research, thinking and teaching."

But it was in 1996 that the group made the big push into management education, following the decision to split the group into five divisions, each focusing on a single product segment: wines and spirits; fashion and leather goods; perfumes and cosmetics; watches and jewellery; and selective retailing.

Although the divisions were needed to develop the different product groups, the LVMH board expressed its concern that the new organisation could result in a divergence of management.

So it decided to find a blue-chip business school which could run a series of forums for the group's top executives.

Ms Lanciaux talked to six business schools in the US and Europe over the period of a year, including London Business School (LBS). She says she "hit it off" with the then-dean, John Quelch, and so LBS became LVMH's partner for top-level management thinking. Together with Essec and the in-house courses, the resulting forums with LBS form the core of LVMH's corporate university, or LVMH House.

LBS had a further advantage for LVMH: it was in London, not Paris. "We wanted a place where everyone would be comfortable," says Ms Lanciaux. "We wanted somewhere that would be free of hierarchy."

This was particularly important as the bulk of the manufacture of LVMH goods is done in France, Italy and Switzerland, while the bulk of the group's managers are involved in distribution companies around the world.

All the forums are now held in LVMH's headquarters in central London.

One of the most innovative moves was to involve the people at the very top of the company.

The bosses of the five divisions act as coaches for the forums (Ms Lanciaux is the sixth coach). Ms Lanciaux says the most difficult thing was to persuade these board members to become coaches at the outset: once they had led one forum, they were eager to participate again.

"It is so much fun. For the five coaches it gives them access to people they would never get access to. It is the role of our top senior executives to get a feel for what is going on and this enables them to do this," she says.

When the course participants - all senior managers - attend the two-and-a-half-day forums, they are equally impressed with the networking opportunities. Indeed, they report that 50 per cent of the value of the forums are meeting the other participants and knowing who to call in the group for help when they need it.

They also report that they go back to their divisions with six or seven new ideas and with the knowledge that they have been able to benchmark their work against that of 29 other executives from around the world.

So far, LBS has run two different forums for LVMH: leadership and e-strategy, which was directed by Michael Earl, and strategic innovation and creativity, directed by Costas Markides. Six hundred managers have attended the leadership forum, while 450 attended the session about creativity.

Two further forums are now in the pipeline. The executives have asked for a second forum on leadership. "The first leadership forum was critical," says Ms Lanciaux. "It really improved management." The fourth forum will be in customer relationship management.

Each forum is a melting pot of company and cultural visits, dinners, workshops, case studies and presentations by both academics and company executives. "At the end of each forum, we review every single (appraisal) form, so we improve every time," says Ms Lanciaux.

The forums are clearly not cheap: Ms Lanciaux and three of her colleagues work constantly with staff and faculty at LBS to develop the forums. But if you are the world's top luxury goods company, perhaps cost is not the issue.