Innovation Blog

“It’s the Avon Lady!”  

By Shlomo Maital

Oct. 16/2009

    There are two management functions that are consistently undervalued, even in organizations of excellence. 

    One is HR – human resources.  HR managers are often first to be fired, first to have training and development budgets slashed, and often do not have a seat at the table where company strategy is made.   When HR executives have training exclusively in organizational development, they are often not sufficiently intimate with company products, strategy and operations, to merit membership in the strategy brain trust.  This is regrettable, because few strategies can be successfully implemented without well-aligned human capital elements.

    A second is sales.  Most companies have Marketing VP’s, but many lack Sales VP’s, or combine Marketing and Sales (a mistake: they are often oil and water), or put the head of Sales under the Marketing VP.   Sales personnel have a wealth of information about clients and markets. But because they are in the field, rather than at headquarters,  they are often not sufficiently consulted.  I have given workshops to large numbers of senior managers, and, in a group of, say, 150, find there are no sales managers present at all or perhaps one or two.

    How the sales force is organized and managed can be a powerful source of innovation and competitive advantage.  Avon,  one of the three largest global cosmetics firms, is a good example.  Avon has 5.8 million direct-sale “Avon ladies”.  Avon (will not sell its products in stores, in order not to compete with them.  In the global downturn, Avon’s dynamic CEO Andrea Jung has recruited 200,000 more Avon ladies in the U.S. alone; when jobs are scarce, selling Avon products door-to-door becomes attractive. 

    According to CEO Jung, one of the world’s highest-paid female executives ($19 m. last year):[1]

   ” We’ve been successful at gaining representatives and consumers during these tough economic times. This confirms our belief in the inherent advantage of our direct-selling business model. As women around the globe are seeking income and smart value products, Avon is there to meet their needs.    We’re offering women an opportunity when times are tough and unemployment is high. Women are turning to us for additional income for their families. In the emerging world, women are coming into a socio-economic status where they’re wanting to earn. We’re one of the largest micro-lenders in the world, because every time a representative joins us, we give her a small loan by supplying her with her initial products up front.  With credit drying up in the world, we have more money lent to women than any other business.    This year, Avon responded to the recession by launching the biggest recruitment drive in its history to hire new door-to-door agents in 44 markets.  It increased its agent headcount by 200,000 in the US alone in the first quarter of 2009 and  lots more are signing up in the UK too.

     “What keeps [my job]  meaningful and purposeful is that it’s about doing good, not just doing well: making some kind of difference.    On a bad day I go out and meet our Avon representatives and they really do inspire me because they’ll tell you stories about how from nothing this company has given them an opportunity to change their lives. I meet people from villages all over the world who say they have been able to send their son or daughter to the UK or US for education. No matter what kind of day I’m having, that’s a hugely satisfying and gratifying thing.”

     Jung understands the opportunities inherent in the downturn.  She says:

   “My philosophy was ‘let’s go on the offence, not the defence’.    It’s easy in these kinds of times to hunker down, cut everything and wait for sunnier days. But if you study businesses in the worst economic periods, that’s when heroes can be made. More market share can be lost or gained in tough economic times than in other periods.    Our bold strategies to counter the recession are working.” 

     Imagine having 5.8 million energized sales personnel in the field, in 44 countries, reporting back on market reactions and suggesting new product ideas, at a time when the success of those ideas directly imply higher sales and incomes for each of them, and at a time when the global downturn is causing rapid change in customer preferences.     This innovation function of a sales force is, I believe, often underutilized and neglected. 

    

 

[1]  “Avon boss on the offensive”, London Sunday   Telegraph 10 Oct 2009, p. 10