Louis Vuitton’s Pivot During COVID-19 Highlights the Value of Their Flexible Management Approach
Introduction:
A lot of companies have stepped up or been ordered to help with the medical personal protective equipment and disinfectant shortage during the current global pandemic. Chemical companies like Dow, Ineos, and Solvay are some of the companies that are producing hand sanitizers. Many fashion brands have also committed to helping the medical supplies industry – from Zara’s owner Inditex and H&M producing hospital gowns and masks for patients and medical workers alike to L’Oréal also contributing to help meet the hand sanitizer shortage. Elsewhere, brands have made sizable donations to try and support efforts to combat the spread of the virus. However, Louis Vuitton (LVMH) was the first fashion company to start producing disinfectant gel at its French facilities that usually produce perfume and cosmetics for brands including Guerlain, Christian Dior, and Givenchy. LVMH’s project came together 72 hours after the French government issued a call to industry on March 13 to help fill gaps for key medical supplies.
Use Case and Business Impact:
LVMH describes itself as being an agile and decentralized organization that encourages efficiency and responsiveness. LVMH is far more vertically integrated than other fashion brands and thus has a lot more control to pivot and make quick changes. This combined with the company’s decentralized decision-making enabled the group to make a prompt executive decision to pause the usual business and use its facilities for other products. LVMH’s swift action to change its manufacturing quickly is a testament to the concepts of decentralized organization structure and agile decision-making.
Lux Take:
Delivering value in the shortest sustainable lead time requires decentralized decision-making, which is a key tenet of agile thinking. One of the principles from the Agile Manifesto is responding to change over following a plan. Companies should consider adopting flexible thinking and form empowered teams not just during crises but throughout their usual business to enable fast changes, high throughput, and agility for the ups and downs in fluctuating markets. Large companies will need to place more emphasis on the ability to be flexible when making decisions about whether to outsource versus being vertically integrated, as flexibility will be a more important competitive differentiator in the future.