Digital Transformation

Learnings from Estee Lauder’s Digital Transformation Journey

The times of this covid pandemic has been devastating. It has not only shut many budding companies but also the companies that started a few centuries back, case in point in Debenhams.

The pandemic is one of the many critical moments in the human history where businesses had to radically shift to survive. While lockdowns were the norm, most companies that were dependent on physical interactions were forced to take a hit – most did not live to tell the tale. And some, a very few of them, seized the opportunity to go digital and have now come out on the other side looking like Caesers.

Estee Lauder is one of the leading cosmetic brands. People generally like to try on cosmetic products before a purchase decision. With the pandemic raging, the shut stores was a major obstacle in meeting their revenue goals. Instead of accepting helplessness, they turned towards technology, towards augmented reality (AR) to be specific.

Using AR through Virtual Try On (VTO) platform, their customers were able to try on make-up, lipsticks and other beauty products before hitting the buy button.

The company had radically shifted, taken the opportunity of locked stores to present their customers to get a feel for the cosmetic products before deciding to buy. After the pandemic passes, even when the stores will remain open, many customers will opt for a virtual try-on, and this shift towards AR will help Estee Lauder in the long run to remain in front of the league.

Tying Digital Transformation to Business Problems

Digital transformation is key. But most importantly, the transformation must be aimed at business problems. Whether the business problem gets solved through AR or a different technology, it is immaterial. What did the business get out of the transformation exercise and did it solve a real problem they faced? If the transformation objective answers yes to this question, then the transformation is successful.

Every digital transformation exercise that we undertake or propose to undertake must be tied back to a business objective. Unless and until the business sees a direct benefit, they are not going to jump into spending on transformation exercises.

Plus the Luck Factor

No matter the science of transformations that are driven by real business needs, there needs to be a certain luck going your way.

Who would have thought that augmented reality would rule the world today?

The pandemic that involves social distancing and the technology to recreate reality is the perfect mixture that made impossible the possible for Estee Lauder. Their customers got a feel for the cosmetics on their looks and the business continued to chug along while the other stragglers got left behind.

This is not a limited time bridge that takes Estee Lauder through the difficult times. Even after the social distancing rules cease to exist, the company will capitalize on the vagabonds who would prefer to try on without setting a foot outside their homes.

Does COTS beat Bespoke?

Estee Lauder did not call the VTO company to propose a solution when the pandemic broke out. They started on a journey of building their own solution. Six months on, they got nowhere and the project was shelved.

Building your own product takes a lot of capital, and ideas don’t flow when the timescale pressures are hedged up. And the company found out six months on that a product developed by VTO cost them about half of what they spent in six months and it took 10 weeks to bring their MVP online.

There’s an important lesson for all of us here. Search out our drawers first before trying to create something new. The way I see it, solutions and products exist. We just need to identify the right one to tag onto, customize or combine to get what we want. Bespoke is good, but that brilliant unique idea which doesn’t converge with other existing products is a rarity.

Transformation Change Management Obstacles

Any transformation exercise is going to turn the existing status quo upside down and disrupt everything along the way. The people involved in the value stream, the processes implemented and the involved technologies are facing a definite upheaval.

Estee Lauder had not opted for a standardized solution and approach for their brands. Each brand could decide their way forward. With AR becoming a plausible way forward, with VTO seeming the likely choice, the company was looking for a face-off.

The company had traditionally built and owned their solutions. With VTO being introduced, they were giving away the controls to a third party and this shook their beliefs that held them strong. The team that led the transformation put their weight behind consensus. They held several roadshows, brought the stakeholders to the table, talked, agreed, disagreed, consented, and dictated until a decision could be reached.

A successful pilot showcased a working product, solving the problems the businesses faced and effected cost cuts which paved way for wider implementation across their brands.

This case study must encourage digital transformation enthusiasts to never quit trying to convince their customers to do the right thing.

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1 comment

L’Oréal's Digital Transformation and how it Differs from that of Estée Lauder's - Abhinav PMP July 27, 2021 at 10:39 PM

[…] Lauder opted to build their own tool when the pandemic hit. To me, this is a big miss. When the stores are shut, the top priority would […]

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