THE BOB JOHNSTON PODCAST
By Bob Johnston
October 21, 2020
SEASON
1
EPISODE
27
Pauline Brown on Aesthetic Intelligence ("the other A.I.")

Q: Why do we love brands like Apple, Yeti (love a cooler – yes!) and Vespa? A: Because we feel them. The leaders at these companies have figured out how to decipher what feel and look good to them and mobilize teams to embed it in the products. This is pure magic.

My guest today is Pauline Brown, former chairman of LVMH and author of the book, Aesthetic Intelligence. She also worked at Bain, Estee Lauder and The Carlyle Group and served as a Henry Crown Fellow at the Aspen Institute.

Pauline and I discuss and decipher what, exactly, it means for a brand – whether B2C or B2B – to infuse aesthetic intelligence into their strategy, thinking and products to delight the senses of customers. Little did I know that Vespa products have a far greater re-sale value than competitors – they’ve figured out how to tap into A.I. and Pauline shows us how you can do the same.

We also cover ground on the state of Retail, what’s in store for Black Friday / Cyber Monday, the 4 steps to adding A.I. into your personal life, plus leading a life of not just success…but significance and meaning.

For nearly 30 years, Pauline Brown has acquired, built, and led the world’s most influential global luxury brands. Most recently, she served as the Chairman of North America for the world’s leading luxury goods company, LVMH Moët Hennessy Louis Vuitton, where she provided regional leadership for about 70 brands in five sectors including fashion and leather goods, watches and jewelry, perfume and cosmetics, wine and spirits, and selective retailing. While at LVMH, Pauline also served on the board of L Capital, a private equity fund backed by LVMH, as well as on the boards of several LVMH subsidiaries including Donna Karan, Marc Jacobs, and Fresh Cosmetics. In 2016, Pauline joined the faculty of the Harvard Business School, where she introduced a new interdisciplinary course for graduate students named “The Business of Aesthetics.” In 2018, she decided to write a book based on the learnings and insights from her HBS course. The book, entitled "Aesthetic Intelligence: How to Boost It and Use It in Business and Beyond,” will be released by HarperCollins this November.

Pauline Brown boasts unparalleled expertise when it comes to understanding why long-term financial value in today’s world rests on an ability to deliver aesthetic value. Touching on the strategies that have built consumer demand and loyalty for booming brands in the age of Amazon, she explains how such companies are rewarded not only for eliciting a high degree of pleasure in those who buy their goods and services, but also for spurring desirability among others who aspire to them. Pauline focuses on helping business leaders discern, appraise, and enhance their companies by tapping into the power of their own senses—a critical and oftentimes under-developed skill set for corporate executives, entrepreneurs, and investors alike—as well as to analyze the issues and challenges of running aesthetic business from a strategic, financial, organizational, and cultural vantage.

In addition to her operational experience in the luxury goods sector, Pauline Brown also boasts a successful track record as an investor in luxury brands. Before joining LVMH, she was a Managing Director at private equity firm, The Carlyle Group, where she helped build the firm’s global consumer and retail practice, co-led deals, and served on the boards of portfolio companies including the European sportswear brand, Moncler, and the American beauty brand, Philosophy. Earlier in her career, Pauline held senior executive positions in the global beauty industry including Head of Corporate Strategy and New Business Development at The Estee Lauder Companies. There, she led all mergers, acquisitions, and licensing activities and helped to expand Estee Lauder’s portfolio from eight to 25 distinct beauty brands. She reported to the Company’s CEO and was a member of its Executive Committee. Pauline began her career as a Management Consultant at Bain & Company.

Since 2008, Pauline has been a Henry Crown Fellow of the Aspen Institute, a program that seeks to develop the next generation of community-spirited leaders. In 2013, she joined the board of the Henry Crown Fellowship Program. She also currently sits on the boards of the Parsons School of Design and is a former board member of the National Retail Federation, Fashion Group International and Cosmetic Executive Women.

Pauline received an M.B.A. from the Wharton School and a B.A. from Dartmouth College. She is a member of Wharton’s Executive Alumni Board and a former member of Dartmouth’s Alumni Council.

SELECTED QUOTES
We buy what we want because of how a brand makes us feel.
On why aesthetic intelligence is crucial for customer success
I can be me better than anyone else...
On infusing A.I. in your career and personal life
EPISODE MARKERS

0:30 Pauline’s career at Bain, Estee Lauder, Carlyle Group (Consumer Retail Practice) and LVMH though 2016 when she began teaching a course at Harvard on the business of aesthetics

3:35 Where we’re headed for Black Friday / Cyber Monday in 2020
Tale of Two Cities - foot traffic low, tourism shopping nil…but online commerce booming
Pandemic has been disastrous for brands such as JC Penney, J’ Crew Lord & Taylor, all of which were already hurting…yet upside is we haven’t been spending on other stuff during the pandemic, so we have more money to spend on family and loved ones to celebrate them

7:20 Effect on stock market and accessing malls; generational shift in terms of going into public spaces and why we desire to go into public spaces

11:30 commercial landlords and tenancy issues for retailers; the pandemic is a way to re-start with a store footprint that makes sense; online/offline seamless integration will be the ultimate winner, i.e. Warby Parkers of the world

14:50 Pauline’s book, Aesthetic Intelligence - aesthetics is all about beauty - perception of the senses…eating a great meal…riding a roller coaster…delights the senses.

16:15 Brands don’t have AI, people do; we buy what we buy because of how it makes us feel - same is true for B2B, i.e. how we felt about the original Mac…infused AI to decipher what felt and looked good to him and mobilize his company to embed it; that is genius

19:45 brands with AI that she loves - Yeti (love a cooler? Yes!), Vespa (retains value better than others)

22:01 - dig yourself out of your AI funk; CEOs should own AI don’t need to get into weeds but develop your own taste and reward it downstream
When she was coming up to be professional was to be impersonal yet my only competitive advantage is that “I can be me better than anyone else”

25:15 her personal AI; needs to be exercised like any other skill; decide what’s important to you and culture it; good taste comes thru exposure, i.e. music, develop a good ear

26:45
4 steps to AI:
Attuned  
Interpretation
Articulation
Curation

31:20 on Pruning and Collecting; minimalist settings and Maximalist settings; she is a maximalist with a wall with perhaps too many stuff on it and eclectic mix whereas workspace she might want more minimalist

34:00 Trend Call – brands like Gucci could have a sharp downturn over the next year; probably peaked; bullish on resurgence of mom and pop stores where they know their community and how a brand like LV expresses itself in SoHo will be different than on the Champs-Elysees; localization of food, too. This gives us experience, attention and discovery

37:45 Pauline’s work with Aspen Institute - lead lives of success to lives of significance; what draws you to your position is not what makes your life meaningful; leading with values; most transformative thing she’s done in her life aside from having kids; have cohorts each year and she was inducted - these are people at an inflection point and looking for something more.

43:00 The world’s best and brightest will be creative coming out of this tumultuous period; for the most part the best and brightest have been in finance over the past 30 years.

46:05 Why we feel is thru storytelling and we all need to feel more now than ever and want leaders who can leverage their AI;

48:28 Airbnb real edge was to create a way to feel and trust online and had a design aesthetic

49:48 Contrarian view: we will look back at our human treatment of pets as barbaric and see more humanity, emotion and intelligence in animals that we can’t envision right now

52:30 Pauline’s go-to resources for passions: Architectural Digest, Elle Decor, WWD, The Business of Fashion, nesting magazines give her the most, fashion mags not at all, NYT crossword everyday is her meditation, does of nature, read things that you enjoy, spends time with her plants

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