LVMH’s Mathilde Delhoume-Debreu | From Diapers to Dior: Value Creation Across Industry

0:00This episode is brought to you by Palmolive. Family time isn't just the big moments, it's weeknight dinners. Sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more.

0:42Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Chronic migraine is 15 or more headache days a month, each lasting four hours or more. Botox, onabotulinum toxin A, prevents headaches in adults with chronic migraine before they start. It's not for those with 14 or fewer headache days a month. It prevents on average 8 to 9 headache days a month versus 6 to 7 for placebo.

1:18Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection causing serious symptoms. Alert your doctor right away as difficulty swallowing, speaking, breathing, eye problems or muscle weakness can be signs of a life-threatening condition. Patients with these conditions before injection are at highest risk. Side effects may include allergic reactions, neck and injection site pain, fatigue, and headache. Allergic reactions can include rash, welts, asthma symptoms, and dizziness. Don't receive Botox if there's a skin infection. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lou Gehrig's disease, myasthenia gravis or Lambert-Eaton syndrome, and medications, including botulinum toxins, as these may increase the risk of serious side effects.

1:54Why wait? Ask your doctor, visit BotoxChronicMigraine.com, or call 1-800-44-BOTOX to learn more. I always take the analogy of the airplane. You know, you take fuel to take off and fly. You're at your cruising altitude. And then you take off the fuel. You take off feeding your brand. So you do what you call the shitty brand. And then the jet stream is going to carry you for three years. And it's going to give the illusion that your brand is still doing well. Yeah. Until the moment where it goes. And so either it crashes very fast or you need to put a crazy amount of fuel to get it back to the cruising altitude.

2:35But if you have waited too long, you are going to crash.

2:43Before she was the global brand officer at LVMH, Mathilde Delhomme-DeBros spent 30 years at Procter & Gamble. And in our conversation, she tells me a story that every CEO and CFO needs to hear. It's a story about when Pampers was positioned around functional superiority. It's superior dryness, and it was a$3 billion brand. But when she and the team at Proctor repositioned it based on the insight that for parents, a diaper isn't just about dryness, but about their baby's development, that a baby who sleeps undisturbed because of superior dryness grows better, and that changing your baby's diaper seven times a day is a moment of love, the brand's revenues tripled to$9 billion in only three years.

3:27The product didn't change, but the meaning around it did, and that in turn changed everything. In this episode, Mathilde and I talk about what her nearly 10 years as global brand officer and her current role as brand equity advisor across LVMH's 75 independent maison have taught her about desire as a mechanism of value creation, and why creativity without coherence and craft without culture both lead to value destruction, and also why in luxury, the moment you believe you've done an excellent job is the moment value starts to erode. I don't know if you remember the very first time we met. It's Cannes, where we are recording, four years ago, and it was that Friday morning, right?

4:14So the festival was pretty much over. And the day before, I had just, in my role at Forbes, put out that year's, I think it was the 2022 Forbes World's Most Influential CMOs list. And like five seconds into meeting, you said to me, and by the way, I agreed with you completely. But what you said to me is, Seth, at LVMH, we consider influence only based on impact on the bottom line. Do you remember? Mm-hmm. And one of the things I said to you at the time, agreeing with you completely, right, was how would I, editing that list, separate or define your impact or an individual CMO of a maison's impact as opposed to 127 years of brand equity as one easy example.

5:08So my question is, as somebody whose career has taken you from Proctor to LVMH, which is quite a spectrum if you want my personal opinion, how do you think about how the audience should think about identifying a CMO's influence on the bottom line? Did I say that in 2020? And you know you did. Yeah, and I remember what I told you also. I said, in fact, being on your ranking is a bad omen because usually the year after the brand collapsed. Well, not all. We have had a few. No, no, a few collapsed. And this is why I was talking about how do we make sure that the influence we have as CMO carries fruit tomorrow, but also in the long term.

6:00And perhaps I'm not talking about 150 years, but making sure that we are not sacrificing the brand DNA for a short-term jump that will damage the brand on the long term. So I think this is what CMO is here for. It's to promote excellence in craft, making sure that every day when he goes to the office, it's to make sure that it will be excellence in brand building craft. I'm not talking about the products. Usually it's not in the realm of the CMO, but I'm talking about brand building craft. and this one gets sacrificed this day, not at LVMH, it's still a reparamment, but in other companies, I see that kind of deteriorating.

6:54The second one is creativity. The CMO is here not always to be the creative because not all CMOs are born creative, but to be able to recognize creativity and nurture creativity. So I think that's the second impact that you can really observe on a CMO. And the third one, which this day can be a bit controversial, but it's coherence. Because lots of people think that creativity and coherence fight against each other. No, because in fact, it's a kind of coherent disruption. You need to encourage all the time, but to make sure that you build your brand on its DNA with creativity and you don't damage it.

7:43So I think those three things are really important. If I go every morning to the office or when I had the luck to be the global brand office of LVMH, I had in mind craft, creativity, and coherence was my motto, which I like to see in all CMOs. How do you then tie the creativity, the coherence, and the craft to commercial impact? I'll add a fourth C, which is commercial impact. And obviously luxury is rooted in brand. It has always been. It will always be. Has the luxury category figured something out about brand that you think others are perhaps missing? Perhaps the balancing short-term, long-term.

8:36Yeah, as you were saying. And there was a speech last year. I don't remember who said that. The person asked the audience, who is going to buy an expensive smartphone in the next two weeks? Only a few people raised their hands. And then he asked, who is going to buy one in the next two years? basically the entire auditorium raises them. So I think this is what I mean is that we are not a toothpaste. We are not a laundry detergent or diaper which need replenishment every month. This is something which is about desire. So you need to create the desire. So the impact is the ability to create desire.

9:22Of course, you need an exceptional product at the beginning to create. But then once you have this exceptional product, the role of the CMO and its commercial impact is to create the desirability. It may not happen tomorrow or in the next two weeks. Perhaps it will happen over the next year. There's something called Christmas. And this is something that we need to keep in mind. So not commercial impact, short term. Yeah, long term equity, long term value. And then desirability. being able to show that you grow the disability of your brand over time. Last year, when I had my Forbes podcast, The CEO's Guide to Marketing, I was sitting with AC Eggleston Bracey, who at the time was the global CMO at Unilever.

10:12Desire at scale. Desire at scale. And it was really interesting to me that AC was as focused, Unilever was as focused on creating desire for FMCG as you are and your colleagues are creating desire for Dior and Louis Vuitton. As somebody who comes from Procter, did you think about desire back then, right, when you were selling diapers and not speedies? No, but I talked to Essie Comex before she launched a desire at scale so i i think i know where the idea is coming from hello i see so uh so no and frankly if today i was back in fmcg yeah i would have a completely different approach tell us about that because if you if you sell a diaper just on functional superiority it's going to be very difficult to justify the premium you ask versus just a private label.

11:18Of course, a few hours of dryness more or sometimes not even noticeable by the consumer. So I think what you need to do is to provide this product superiority, but to elevate it to an emotional need that you fulfill that makes full sense and justifies the price premium. I mean, Proctor's always done that, right? Yes and no. Maybe not everywhere. Not everywhere. And some brands are better than others at P &G at leveraging this emotional need or this emotional insight. But it's very rooted in functional superiority, and sometimes it stops there. And in FSTG, lots of people stop there. And you get the who when you get to the emotional need.

12:05You know, you're reminding me of something that Scott Galloway, who is also a slightly better known than me, Vox Media personality, a little bit more successful. I'm coming for you, Scott. said about, I think it was like three or four years ago. And Mr. Arnault had in that moment in time just become the world's wealthiest human being. And Scott, I think it was a post that I saw posted that, you know, worth noting, I'm paraphrasing, worth noting that the world's wealthiest person makes something nobody needs. And I was like, you're missing the point entirely because everybody needs identity, expression, the communication of status.

12:51Luxury to me, yes, a diaper has an efficacy in a moment that arguably a Dior bag does not. I don't need a Dior bag to carry my keys, but I absolutely, some of us, need it to share with the world our taste, our identity and our status. And I'm wondering, you know, if you got to choose between, you know, Scott's perspective, nobody needs luxury. And mine, which is, I think you're missing the point of luxury. Where do you fall? Of course, I think I'm on your side. Scott is arriving. Be ready. I'm on your side. I think the motto of LVMH is savoir faire rêver. the art of crafting dreams so and you know humanity needs to dream yeah if you don't dream you die okay and i think what the luxury is bringing indeed you don't need physically the bag but you need beauty in this world you need to craft those dreams and to be part of the beauty we bring to be a real actor in culture and being able to promote subcultures through luxury, which is also important.

14:14So for me, it's as essential as an FMCG. But one is you need, when you have a toothache, you need to go to the dentist. Okay, it's a chore. But there are things that are not chore in human life that luxury is taken care of. And this being said, I go back to Pampers. You know, when Pampers was just about superior dryness, it was a$3 billion brand. With Jim, at the time I was working for Jim Stengel and Gianni Cesarani, and we moved Pampers from superior dryness to caring for your baby development. Development? Baby development. And I was called together with Gianni at the time by the chairman of P &G.

15:05And he said, Mathilde, what have you been smoking? It must be good because baby development and a diaper. And I said, well, probably because you don't change your baby enough. Because when you change your baby seven times a day, it's a moment of exchange of love and you build the development. I have to. I loved changing my kids' diapers. You see? Because it was just that moment there on the table, eye to eye. And I didn't actually like the act of changing the diaper, but I liked the moment of changing the diaper. I loved it. And then I was saying when a baby sleeps well, it develops better. And so diapers that keeps him dry overnight.

15:44So a higher order need. It sleeps well. When a baby moves freely because he has a stretchy diaper, it develops better. When a baby pulls on his diaper by himself, it develops his personality. So I'm sorry, but a diaper is a huge enabler of baby development. And then I remember at the time they all stopped and said, hmm, it makes sense. And it makes so much sense that three years after Pempers had moved from$3 billion to$9 billion. In three years, the business tripled. In three years. Because of the positioning and frame. Yeah, and every single line. You know, there were things that were in the cupboard that R &D, because there was genius R &D people, but it was not about superior dryness.

16:27It was about stretchy sides. It was about a wetness indicator. So it was not for dryness, but it was completely relevant for baby development. How did you communicate development? You didn't talk about development, right? You don't talk about that. But I remember we did an ad which worked very well at the time. we say, your baby grows half a millimeter per night while sleeping. This is why it better have an undisturbed sleep. But we didn't say, but we said it. And same thing, you know, moving is part of life. It's part of growing up and same thing. So we put the insight where it was important.

17:12Did pampers ever get into adult diapers? I have no idea why this has occurred to me. It has been a long time I've left P &G, but there was adult incontinence diapers also. Under the Pampers portfolio? Because Pampers was for babies. Yes. Yeah, babies first. Not for diapers. And at the time, what was a rule is we don't say that the parents are going to sleep better. We say it's a baby at the center. Right, because your concern is the baby. Yeah. Of course, all moms say, I sleep so much better. But we say, not our issue. Yeah, yeah. So that's it. So you see, we move from a functional need to a desire that every parent has to see their baby develop happy and healthy.

17:56And this was a shift. Functional desire. A need, a desire. Except in luxury, very often we don't have a functional needs per se, so we build on desire. But I would say we have craft. We have such an amazing craft. Bernard Hanou always say, we don't do luxury. We do product of exceptional quality. And I think this is what we have. We have products of exceptional quality. Well, I mean, to charge what you charge, you have to have products of exceptional quality and you have to have brands of exceptional quality. No one will buy... Actually, here's a question. Not every image, just generally. Acme Luxury Company.

18:45What fails faster? A brilliant brand, luxury brand, with a shitty product? No pun on diapers. Or a shitty brand with a brilliant product? Luxury. Acme Luxury Company. The second one will fail more often. you know it's a bad brand with a great product because uh but if the brand builds you know because on the capitalize on this great product to build the brand it will work if they just stay at product level it will not work yeah but the other one will collapse uh it will take time to collapse i always take the analogy of the airplane you know it takes you It takes fuel to take off and fly. You're at your cruising altitude.

19:37And then you take off the fuel. You take off feeding your brand. So you do what you call the shitty brand. And then the jet stream is going to carry you for three years. And it's going to give the illusion that your brand is still doing well. Until the moment where it goes. And so either it crashes very fast. or you need to put a crazy amount of fuel to get it back to the cruising altitude. But if you have waited too long, you are going to crash. And of course, I created a false binary and it's very hard to build a brilliant brand on a shitty product. But I do think about it in the context and I think my question comes from a world in a time when so many CEOs, outside of luxury in particular, are questioning, and CFOs are questioning the value of brand, are so myopically focused on, as you were talking about, the balance between short and long this quarter's numbers, to the detriment of the long term.

20:44Yeah, and now what I try to reconcilia this paradox is to say even performance should build brands. 100 % we should stop opposing one versus the other we should synergize and brand should perform we want a brand advertising that doesn't perform it's just when is it going to really have a visible impact that a brand should perform and a performance should brand no excuse and my friend from Meta knows that when they are doing the catalog yes and Nicola knows very well that I'm fighting against this catalog where you have seven bags, seven necklaces, with the same for Bulgari, Cartier, Tiffany, and the cheap brand of not even luxury.

21:42I think this one is the worst you can do because it's performance that is not branded. Yeah, yeah. So even performance should be well-branded to communicate the assets of your brand.

22:00This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more.

22:41Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at indeed.com slash podcast. That's indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Chronic migraine is 15 or more headache days a month, each lasting four hours or more. Botox, onabotulinum toxin A, prevents headaches in adults with chronic migraine before they start. It's not for those with 14 or fewer headache days a month. It prevents on average eight to nine headache days a month versus six to seven for placebo.

23:17Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection, causing serious symptoms. Allerge your doctor right away as difficulty swallowing, speaking, breathing, eye problems, or muscle weakness can be signs of a life-threatening condition. Patients with these conditions before injection are at highest risk. Side effects may include allergic reactions, neck and injection site pain, fatigue, and headache. Allergic reactions can include rash, welts, asthma symptoms, and dizziness. Don't receive Botox if there's a skin infection. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lou Gehrig's disease, myasthenia gravis or Lambert-Eaton syndrome, and medications, including botulinum toxins, as these may increase the risk of serious side effects.

23:53Why wait? Ask your doctor, visit BotoxChronicMigraine.com, or call 1-800-44-BOTOX to learn more.

24:05you had mentioned in passing and answering one of my earlier questions that i think you said this that if you went back to png after or to fmcg even after your time here at lvmh you would look at the world differently and i want to i want to ask you kind of a follow-up question to a bit of our conversation on desire and it's it's pretty consistent with what we're talking about, but do you think that the marketplace, the commercial marketplace writ large, defines desire too narrowly, right? And does desire at scale, is that a premise that extends beyond any one company? That's a good one. Never thought about it that way, but yes, I think you're right.

24:51It's, in fact, for advertising media money reason, it's really deployed and activated short term by the commercial context. So there is lots of pressure which is put on the CMO to go for that, not only from their CFO, but by the media world. And I think this is where our agencies have a role to play, have the role to play as a voice of wisdom to be the intermediary between the media supplier and the media buyer also we are to make sure that we keep this balance. Because if you go direct, you have the fear of missing out. What I'm not doing, I should be doing. And you always need the kind of the strategic thinking that helps you put things in perspective?

25:50You just used the word balance, and I want to ask two questions that are about balance. The first is, I think fashion labels in particular are a great metaphor for the premise of this show, which is that every decision a company makes either contributes to value creation or value destruction, not just the ones people consider marketing. And we've been talking about product, a designer has so much influence over desirability in any given moment, in any given season, in any given tenure. How does that balance work within a luxury company or is the job of the marketer to express the vision of the designer?

26:45I think there are different types of fashion labels. Fashion labels where you have an artistic director that really has their hands on what is going to be created. And you have brands without artistic director, where you are just a CEO, a CMO, a studio, and they express a brand. So that's something. I'm talking about the artistic director. If you talk about the first one, which is brand with the artistic director, you have to be realistic because the role of the CMO is really indeed to put forward, to put in full light what the artistic director is doing. Because he's the artist. I think the artistic director carries a huge responsibility, which is to understand the DNA of the brand and put it in the future.

27:32so that's really where you have the uh the balancing act dna and future because if you stay dna only you become very dusty if you are future only you lose the roots of your brain yeah and i i think this is what uh the jonathan anderson and dior is doing wonderfully well understanding the roots of christian dior and putting it into the future so this is one example but I could say the same on Michael Ryder on Céline, or Nicolas Gésquerre on Vuitton, or even Pharrell Williams on Vuitton Home. So they are people that dive into the DNA of the brand, but not to replicate it, to stretch it into the future.

28:19And I've seen other artistic directors, usually not at LVMH, kind of ignoring the DNA of the brand. and it becomes their own ego and their own creation. And usually you look at the brands that are in trouble, it's because of that. Or some others that are just applying the DNA, flat, flat-footed, and this goes nowhere either. So this is where, you know, they are really artists that have a vision. And I think that the beauty of LVMH is to kind of give the freedom of speech to this artist to express their vision of the brand. Is there a decision within a portfolio like LVMH's that a brand like Tiffany will always supersede any individual artistic designer?

29:16And obviously there are collaborations with the Elsa Peretti's. Yeah, and there are artistic directors that have been at Tiffany also. So, no. You know, and you know, every maison is completely independent. So they do it their way. Yeah, actually, I want to come back to that in a minute. Which is really amazing at LVMH. You know, it's not a conglomerate. Right. It's really 75 independent maisons with their own DNA and their own teams that are accountable for the results. Yeah. I want to ask you kind of a follow-up question about balance. And there's a tension that I think every brand in any category faces, which is finding the balance between shouting and being heard but not seen and speaking quietly and being not heard.

30:17right the balance between you know broadcast and narrow cast between standing out and standing apart and i'm wondering and it feels particularly true in in luxury right because there's a requirement of elegance um how as somebody who has marketed pampers and speedies how how do you think what's your advice to the audience on how to find that balance because in my observation you got a lot of people shouting and saying nothing today first you need to avoid that you don't shout in luxury if you start shouting you are not luxury yeah uh then it's not one size fits all i always say that for me there are three categories of luxury brand.