👉 Background: Estée Lauder is the cosmetics company that was founded by Estée Lauder and her hubby back in 1946. Since then, it has grown to become the second largest cosmetics company in the world - behind L’Oreal. It also owns other big name cosmetics brands like Clinique, Le Labo, Jo Malone London, Tom Ford Beauty, MAC, Bobbi Brown and a whole lot more.

‍👉 What happened: Estée Lauder’s new CEO faced investors for the very first time, with a very stern warning: its revenues dropped 6% and it also saw its operating margin drop from 13.4% to -14.5% in its second quarter. Yikes!

‍👉 What else: The worst part is that beauty retail sales are growing across the industry. So they can't blame the industry for its downfall. Ultimately, you need to turn to the people at the top. Which, in this case, happens to be a boardroom full of the Lauder family descendants.‍

‍

‍What's the key learning?

💡Nothing derails a company’s strategy faster than a battle at the top - especially when founding families retain majority voting rights of a public company.

💡Despite being a public company, the Lauder family still owns 35% of the shares and 84% of the voting rights. In short, what they say, goes. But the problem is when there is a strategic dispute between family members.

• One group of family members wanted to see Estee Lauder push to appeal to younger shoppers
• The other group wanted to push harder into China and the prestige market

💡And this has created a division that has impacted Estée Lauder’s overall strategy and share price. But this ain't the first family-controlled-public-company that has struggled with internal disputes - think aboutthe battle between the Murdochs and the succession plan of NewsCorp.