Perfect Paradox of Star Brands: An Interview with Bernard Arnault of LVMH

Few companies can boast a collection of star brands like LVMH Moet Hennessy Louis Vuitton, the French powerhouse that owns the likes of Dior, Dom Perignon, and TAG Heuer. What accounts for the company's spectacular success? In a rare interview, the chairman of LVMH, Bernard Arnault, opens the window on that question with HBR editor Suzy Wetlaufer. Arnault identifies how companies build star brands and describes the process LVMH uses to create its wildly innovative products. First, the luxury goods giant begins with radical innovation--an unpredictable, messy, highly emotional activity that the company wholly endorses. Unlike many companies, LVMH does not believe in managerial limit setting. Artists must be completely unfettered by financial and commercial concerns, Arnault insists, to do their best work. When it comes to getting that creativity onto the shelves, however, LVMH banishes such chaos. The company imposes strict discipline on its manufacturing processes, meticulously planning, for instance, all 1,000 tasks in the construction of one purse. Through near-draconian manufacturing disciplines, the company is able to achieve exceptionally high productivity, rivaling even some of today's most technologically advanced factories. The bottom line is that LVMH has one goal: star brands. According to Arnault, star brands are born only when a company manages to make products that "speak to the ages" but feel intensely modern. Such products sell fast and furiously, all the while raking in profits. As Arnault notes dryly, "Mastering the paradox of star brands is very difficult and rare--fortunately."

• Job interviews
• Innovation
• Advertising
• Manufacturing processes
• Brand management
• Creativity