Chapter 1 - Estee: A Successful Story
This Chapter is based on the Book “Estee: A Successful Story”, an autobiography by Estee Lauder.
Buy it on Amazon here:
https://www.amazon.com/Estee-Success-Story-Lauder/dp/0394551915
Here’s what I have learned from the book:
Balancing Family & Business
“Take a simple idea and take it seriously” - Charlie Munger
If you read many biographies, you’ll notice a common thread among most successful entrepreneurs; they are truly fanatics when running their businesses. It is this dedication and discipline that makes them so successful. Yet, this can lead to founders neglecting their family members. Estee Lauder was in a similar position which led to her divorce with her husband Leonard.
This experience pushed Estee to find a solution to balance her time between her life as a businesswoman and her life as a Wife and Mother. Her solution was to involve her family in the business by making Estee Lauder a family business. Even when her son Leonard was in college, Estee would continue to send him reports of the company so that he is aware of what is happening in the family business. I believe having his son involved in the family business at an early age certainly allowed Estee to prepare her son to eventually take over the business as the CEO and to, therefore, keep the business in the family.
Power of Reciprocity
“Reciprocation tendency subtly causes many extreme and dangerous consequences, not just on rare occasions but pretty much all the time.” - Charlie Munger
In my opinion, Estee Lauder was a master at implementing Robert Cialdini’s principle of reciprocity in her sales and marketing ideas.
Cialdini, a social psychologist who is widely known for his studies on the principles of persuasion, identified several key principles, and one of them is the power of reciprocity. According to Cialdini, humans are hardwired to give back to others the form of behavior they have received. In other words, when someone does something nice for us, we feel an obligation to do something nice in return.
This principle has been applied in various fields, including sales & marketing. Estee Lauder was one of the pioneers in implementing the power of reciprocity in marketing in the beauty industry. She gave free samples of her products to customers, which not only allowed them to try Estee Lauder's products but also created a sense of obligation to buy the products in return for the free samples. This approach proved to be very successful and has since become a common practice in the beauty industry.
Beyond the Book
Read “Reciprocation Bias” by Farnam Street
We've often heard of the negative side of running a family business, in the sense that it can consume all of the families time and potentially break the filial links, what is your stance on that?