For any founder-led company, there is always a critical leadership question: Who takes the reigns after the founder? The beauty industry is no different. Iconic brands often have even more iconic founders and their company names and personal names have often intermingled. But whether a beauty brand is a global icon or a dazzling newcomer, the timing and choice of a new leader can be a complex and emotionally charged process, requiring more foresight, time, and thoughtful planning than other leadership transitions.
There are some unique elements that make beauty founder succession so complex. One is that the brand often starts as the solution to a personal problem or challenge and many of the brands carry the founder’s name in their moniker. Secondly, beauty founders are often highly visible in consumer-to-consumer communications, engaging on social media, doing retailer tours, and getting involved in product development. However, as the business scales, the leadership muscles required change, and founders (and funders) must evaluate how to build for the next chapter – approaching the delicate and critical topic of succession.
Based on conversations with our clients and other industry leaders, we delve into what has worked well in leadership transitions along with some pitfalls to watch out for as businesses prepare for their next chapters.
No One Likes Surprises: Plan for the Long Run
Founder succession in beauty happens often and takes on many forms. While succession planning is always delicate—it requires founders to grapple with their own identity and legacy—advance planning is necessary for a smooth transition. The first step is alignment between shareholders and the founder, ensuring there is clarity about the intent for a founder succession and then determining the timing.
For investors, if bringing in a more seasoned CEO is part of the investment thesis, funders should be upfront about this to build trust with the founder. This would also establish succession as a priority and the eventual transition as a natural occurrence.
For founders, the moment to decide “it’s time” is always tricky. It is a complicated feeling to “relinquish” control over something you’ve built intimately for so long. However, the decision to bring in a new CEO is forward-looking, focusing on how to secure the company’s position for the long run – far beyond today. “When we got to about 40 people, I realized I don’t know how to do this. What I do know how to do is build a brand,” said Sheena Zadeh-Daly, Founder of Kosas, during the 2023 WWD Beauty CEO Summit. “I’m an artist – I’m probably not the right person to go to ask questions about the supply chain.”
Amanda Baldwin, incoming CEO of Olaplex and previously the founder-successor CEO of Supergoop!, shares, “The greatest founders are often the ones who fundamentally believe they don’t need to do it on their own. Bringing in a CEO is the biggest sign of saying, ‘I believe in what I’m doing.’”
Look for Different Pieces of the Puzzle, Not for the Same Shape
While it might seem tempting to select a successor who appears to be a replica of the founder, everyone involved in succession planning must be aware of – and wary of – affinity bias (which is the tendency to be naturally drawn toward individuals with similar characteristics, backgrounds, and interests). The incoming leader should share the core values and beliefs of the company mission, but they also should possess different skill sets to scale and drive the next chapter of the business. “The process is about matching-making and fit with each other, not about right and wrong,” explains Baldwin.
This type of approach has worked out well in many instances. “The best founder/CEO combos bring complementary – often opposite ends of the spectrum – skillsets, but at the same time, they have an appreciation for each other’s respective strengths,” says Hui Chan, Managing Director at Bain Capital who invests in the consumer and beauty sector. “Take the Creative/Analytical duo where the creative also loves data, and the analytical mind that deep down is an artist – those are the partnerships that have worked best. They each bring something to the table while also pushing each other’s capabilities at the same time.”
These complementary duos enable creative tension, spark new ideas and empower each leader to shine in their respective areas of expertise. Zadeh-Daly describes her work with Kosas CEO Jean-Marc Plisson as a “loving partnership.” “It gives me the space to connect with people and know that finance, ops, and supply chain are in a great place [with Marc].”
Multi-time founder-successor CEO Elana Drell-Szyfer shares the reflection framework she uses: "What is important for you achieve as the CEO? What is important for the founder to hold onto, both internally and externally?" These lanes are deeply nuanced and need to be explicitly stated.
Evolving for the Next Chapter and Beyond
A major part of succession planning is crystalizing clear decision-making lines and differentiating roles and responsibilities of the incoming CEO and the transitioning founder well ahead of time. This is especially key if the founder will stay involved in the business. These roles may also shift as the company expands and scales, as all job scopes evolve. The team should work together to establish a clear decision-making order of command to ensure the founder is engaged at the relevant moments.
A strong starting point is a specific and aligned role spec for the founder about their involvement, which clarifies their sense of purpose, defines the rules of engagement, and draws clear boundaries. The board, CEO, and founder will want to revisit the role specs as needed to avoid making assumptions.
Also critical is determining how to honor the founder’s vision and legacy and preserve the company values they helped to develop. It’s important to remember that the founder has poured their heart and soul into the business and while a leadership transition may seem like standard business practice, in these instances, this is also an individual’s life work. Companies will want to underscore that while new leaders may bring different perspectives and strategies, the soul of the brand will remain intact. Consumers often come to a brand based on how they feel about the founder attached to it, so a new leader at the helm requires built-up trust to keep customer loyalty.
Essential Succession Principles for Beauty Brands
There are three key principles for beauty companies to keep in mind in succession planning:
- Time: Allocate sufficient time, as traditional CEO successions take between 12 to 18 months. Founder succession should not be rushed either, and it is crucial that all key stakeholders are engaged, including the team members that will ideally remain after the transition.
- Transparency: The more all stakeholders are on the same page about the long-term goals of the company, the reason for a CEO transition, and what good looks like, the better the outcome. These conversations can be difficult and may require facilitation and deep reflection to separate personal identity from that of the business.
- Trust: Actively establishing and maintaining trust early on and consistently is the most critical element in succession, and there are multiple ways to build it. Founders tend to appreciate those who share their convictions and vision, demonstrating that they “get it” and are committed to the cause. Another way is through transparency. Many founders appreciate people who will speak the truth, share information openly and understand that transparency is in the best interest of the business, suspending their own agenda when sharing information.
Using these three principles as a grounding for a well-paced transition, beauty companies can ensure that the incoming CEO has the necessary understanding of the brand's values and vision. Engaging all stakeholders, from shareholders to employees, fosters a cohesive understanding of the company's trajectory. This clarity not only facilitates smoother transitions but also solidifies commitment to the brand's continued success. Through open and honest communication, the intricate process of succession becomes an opportunity for growth and a testament to the brand's – and the founder’s – enduring legacy.