Why Every Leader Needs “Aesthetic Intelligence”

HANNAH BATES: Welcome to HBR On Strategy, case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. Do you have good A.I.? I’m not talking about technology. I mean aesthetic intelligence. Pauline Brown argues that, in addition to traditional and emotional intelligence, leaders also need to understand good taste. Literally, how services and products stimulate the five senses to spark delight. Brown was formerly a chairman of the luxury goods company LVMH, whose brands include Louis Vuitton, Christian Dior, Sephora, and Hennessy, and she’s also the author of the book, Aesthetic Intelligence: How to Boost It and Use It in Business and Beyond. She says that in today’s crowded marketplace, strong aesthetics set companies apart – and not just in the consumer products and luxury sectors. In this episode, you’ll learn from companies  – like Starbucks, AirBnB, and, of course, Apple — that successfully used aesthetics to set their products apart. You’ll also learn why it’s important for leaders or founders – not customers – to define and maintain a company’s aesthetic principles. This episode originally aired on HBR IdeaCast in November 2019. Here it is.

ALISON BEARD: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Alison Beard. Trader Joe’s grocery stores, Disney Theme Parks, Veuve Clicquot champagne, Essie nail polish, Aveda shampoo, Airbnb, LEGOs. Apart from being both popular and profitable, what do all of these products and services have in common? Our guest today says that they’re all created with something she calls aesthetic intelligence. Pauline Brown is a former chairman of North America for the luxury good company, LVMH and also previously worked at cosmetic company Estee Lauder. But she’s talking about more than making gorgeous handbags and fancy makeup. She’s also a Wharton MBA, a former Bain consultant and a former managing director of the private equity firm, The Carlyle Group. After decades in business she’s come to believe that her kind of AI can help any organization to be more successful. She says it can be developed in both. She says it can be developed in individuals, teams and entire companies. She’s even taught a class on it at Harvard Business School.

PAULINE BROWN: Thank you for having me Alison.

ALISON BEARD: So, here at HBR, we know intelligence – emotional intelligence, artificial intelligence, market intelligence, even design intelligence. But what exactly is aesthetic intelligence?

PAULINE BROWN: So, in a word it’s taste. Sadly, taste has taken on a very superficial connotation. Aesthetic intelligence is the ability to use ones senses to both appreciate and elicit, and recreate pleasurable experiences. So, if I use a very mundane example, going to a great restaurant. Obviously, a great restaurant has to consist of great food and an interesting or well executed menu. But it’s also about the design. It’s about the ambience. It’s about the acoustics. It’s about the lighting and how the lighting works in different areas of the restaurant. Even down to the choice of utensils and how that interacts with the food that you’re eating. A steakhouse requires a very different aesthetic design of its utensils than does say, a sushi restaurant. But in both cases that decision is fundamentally important to the experience.

ALISON BEARD: So, I can see how a food business, fashion brand, beauty brand, can engage all the senses with its products or its retail experience. But how does that extend to more pedestrian products or services? Like a tire maker or accounting firm, or a software company?

PAULINE BROWN: Well, historically it didn’t and that’s part of the problem. It goes without saying that if you work in luxury goods as I did, or in fashion, or in cosmetics that you wouldn’t exist without this principle of aesthetics. I used to joke, actually only half-jokingly, say that at LVMH a company that generates more than $40 billion a year in revenue doesn’t make one product that anyone needs. And so, why do people spend so much money on LVMH products across 70 brands and five different sectors? And it’s because they are brilliant at providing products and services and experiences around those products and services that elicit true delight. So, when I think of other industries that never thought that aesthetics should even factor in, or if it did it was sort of like icing on the cake, I say you know, that’s because we’ve lived in an era, in an industrial era at that, where the primary motive of most of these other industries was to grow through scale and through efficiency, and through automation, and all the things that sort of define big industry of the last century or so. Well we’ve taken that principle to it’s extreme to the point where I think we’re actually in an era where we’re experiencing diseconomies of scale. Where by virtue of you doing you as a company, doing things faster, and bigger, and more powerfully, you’re actually at a disadvantage to all those entrepreneurs who are doing things differently and interestingly. So, we moved into this different era. Big companies have not adapted to it and I would even argue that business education hasn’t adapted in its vernacular and in its concepts to the era that we’ve moved into.

ALISON BEARD: So what are some examples of commodity products or services that have applied aesthetic intelligence in order to capture customer interest?

PAULINE BROWN: The most obvious to me is Steve Jobs and his re-creation of what not just a computer, but any technological device could feel like to a user. Prior to his infusing his own aesthetic into all Mac products, computers were just about microprocessing power. And there was a race to do things faster and cheaper. He was the first one who came around and said, you know what? We should do things fast and they should be functioning at a high level, but we’re not going to win on that basis. We’re going to win because we’re providing a human experience that really lifts the user in ways that no one else in his industry had thought even possible or valuable. And what’s interesting about Steve Jobs as an example is he was not an artist. It didn’t take an artist for him to really redefine what a computer could feel like. He just had extraordinary aesthetic intelligence. Other example would be what Howard Shultz did with Starbucks. Prior to that a cup of coffee was a cup of coffee. His genius was taking what is one of the most commoditized products in the market, which is a coffee bean, and saying I can sell it at a premium not because you’re buying coffee, but because you’re buying into a “third space” as he called it. Everything about the Starbucks example was using aesthetic principles to the extreme.

ALISON BEARD: OK, so I’m going to keep throwing up challenging examples. How does a purely online company, so no taste, no touch, no smell, only visual, maybe some sound deploy aesthetic intelligence?

PAULINE BROWN: Well it’s hard. Because if you think about aesthetics as I define it, which is really about touching as many, if not all of the five senses, the human senses, online at best gets one and a half of them. Even the visual which is clearly the strongest, the strongest stimuli of doing anything digitally, is not even as strong as an offline experience because it’s 2D. And we see things in 3D. Audio, getting a lot better, but I would say not as good as a live concert. When you listen to something, a music digitally versus listening in a theater, it’s a very, very different human experience. So, one of the digital examples that I like to give is sort of why is Airbnb the biggest of its competitive lot? Let’s say we compared it to HomeAway or VRBO, or their precedent company which was Craigslist. Craiglist was posting homes for rent a decade before Airbnb was even conceived. So Airbnb comes around, comes along and doesn’t from a functional perspective, doesn’t offer anything notably different, but what’s interesting about Airbnb, unlike all these other players is that the two founders actually were graduates of Rhode Island School of Design. It didn’t come out of technology. And they were able through the few queues that you have at your possession with digital to express something that became more than just an apartment rental, but it became a different way to experience travel.

ALISON BEARD: So, how is this different that sort of traditional branding, marketing, excellent customer service? How does this move it forward?

PAULINE BROWN: So, if you go back to the genesis of branding, it really started in the age where, now I’m going back a few 100 years now, where sellers were having to market their wares to buyers who weren’t necessarily their neighbors in their communities. And there therefore was a built in distrust. I don’t know, and technically actually a brand was branding cattle. And really what a brand was, was just a guarantee by virtue of my name is on it and therefore you know that there’s somebody who’s standing by the quality of what I’m selling. When you fast forward into say the 50s and 60s and 70s, and I’d say one of the leaders in brand management, Proctor & Gamble. They sort of took this idea of recognition and trust and a sort of guarantee built around a name and said, OK. Now we can take it a step further and really elaborate on it via commercials.

You look at now, we’re in 2019, and advertising really doesn’t drive much, relative to what it did just 20 years ago. For one because just the fact that I’ve heard of the brand, or the fact that my grandmother used it doesn’t make it desirable to me. In fact if you look at industries like food, the movement has been more toward local discovery, a special. I think we’re trusting our senses to have that element of desirability in a way that we haven’t for at least 50, 60 years. So all of the concepts that built modern day branding are not really working anymore. And so, I think of it more around experiences that delight. And you mentioned earlier in the intro about design thinking. The differences between aesthetic strategies and design thinking that design thinking is essentially using the skills of good design to solve problems. But the benefit of aesthetics is it’s not solving a problem, its offering delight. And delight is something you can’t test for. It’s not something you’re going to learn through customer research. But it is so, it is as important now to a buyer as it was 1,000 years ago, 500 years ago, 100 years ago, 20 years ago. And this is what big companies, I think all companies, but especially big companies have completely lost grasp of.

ALISON BEARD: And have you worked with, or seen large companies that have managed to turn it around and build aesthetic intelligence into their organizations?

PAULINE BROWN: I have, but I would say not without a lot of challenges. I think it’s easier to work with fast growing innovative young companies and ones that are armed with young people who are a little less entrenched in the old way of doing things. What I’m suggesting here though is not that big companies are going to go away. Obviously there are still a lot of capabilities that we rely on to be a high functioning society. And I’m not suggesting that big or small companies do away with big data and analytics, and all this sort of quantitative reasoning that has driven them for so many years. What I’m suggesting is that it needs to be balanced with other types of thinking. Because when you look at the research, the vast majority of reasons that anyone will buy one product over another, anywhere from 80 to 90 percent of the decision is based on how that makes, that product or service makes the person feel. And yet, marketers and researchers are predominately focused on what their customers think on how they would reason the features, the functions, the costs, the benefits. That is not what’s driving buying decisions and yet we really are a rather unsophisticated as a marketplace in terms of understanding how people feel, empathizing with it and then actually taping into it. And delivering in ways that are genuine and that are uplifting.

ALISON BEARD: Yeah. We’ve talked mostly about customer facing businesses so far. Can this work for B2B companies too?

PAULINE BROWN: I think it works for all companies. I mean, or almost all companies. Maybe not oil and gas. But, let me give you the example from by Carlyle years. So I was a partner in the consumer and retail team based here in New York. And I always thought why does Carlyle win some deals and its arch competitors Bain Capital, KKR, Blackstone win others? Some of it is that on the margin it was around valuation, but if you sort of breakdown their business models, all of the firms are essentially doing the same math. They have access to the same lending terms. They’re working with pretty much the same group of Bulge Bracket firms, lending firms and so forth. They have access to the same deals. And they’re recruiting from the same three business schools, one which is Harvard. So what is their differentiation and why if I am a seller of a quality company in a very competitive market, why would I pick say, KKR versus Carlyle? And I looked at the aesthetics of David Rubenstein, founder of Carlyle, one of the three, and the aesthetics of Henry Kravis, founder of KKR. Henry came out of Wall Street, sort of classic investment banking background. He’s a big art collector. When you enter his office, a lot of heavy wood and art dripping on the walls. You go to Carlyle’s headquarter office in Washington, D.C. You have a pure expression of David and his value system. He’s the son of a postal worker from Baltimore. David and all of his expressions, his choice of prescription eyeglasses, his choice of suits and his choice of office space and how that has built out without, in the most economic fashion is a very pure expression of what he believes. There are people who look at KKR and say, you know what I want to be? That’s a master of the universe house and I want to be there. And there are others who look at Carlyle and say you know what? These people they’re down to earth and they are there to just drive value and there’s no waste. That works for me. And in another domain this might be called culture, but I actually think culture is hard to put your arms around. I think culture is very amorphous. But the aesthetics of those environments and the people who lead them, that to me is very clear.

ALISON BEARD: That actually brings me to my next question. You talked at one point about good taste. Is there widespread agreement on what looks and sounds, and smells, and feels, and taste physically delightful? Does biological science back that up? Don’t we have different preferences and surely across cultures we think differently, right?

PAULINE BROWN: So, this is an age-old debate. Is there such a thing as good taste? And the way I always responded is no. There’s a lot of different tastes, but there is such a thing as bad taste. So, in the history of mankind, or modern mankind, I don’t think anyone ever walked past a jackhammer and said, oh that sounds so good to my ear. There’s certain things that just are jarring and unpleasant, and that are you know, constitute for biological reasons and for cultural reasons, things that we want to avoid. And then you have a whole range of human experiences that speak to people in different ways. I mean even Steve Jobs who had a very kind of midcentury California influence on what for him, felt good, and it was minimalist. That is not my taste because my taste is more formed as a first generation American Jew of a very strong European household with a lot of sort of Victorian era styles that I grew up with. I have a very different sense of what feels good to me and where I come alive. That said, I can appreciate a lot of different tastes. And I’d say it’s the same thing with music. There are people who love rock and there are people who love country music. One doesn’t constitute better taste than the other. But the important thing for the individual is to know what their taste is.

ALISON BEARD: Is the idea that you need to figure out the taste of your ideal customer and design your products and services to appeal to them?

PAULINE BROWN: Absolutely not.

ALISON BEARD: Oh.

PAULINE BROWN: I always say it doesn’t start with the customer. It starts with the value system of the organization and the organization’s value system really starts with its founders and its leaders. And then it should go all the way down. So, let’s go back to the Steve Jobs example. He didn’t sit in a boardroom and say, how can we design this such that feels good in someone else’s hands? He said, how can we design this so that it feels great in my hand? And then he maintained very, very clear standards around that aesthetic design – that set of aesthetic principles. So, I think typically it starts in a really well-branded company with one person and one person who’s all powerful. And then, to be sustained as say Disney has sustained its aesthetic principles, it takes the right systems in place. It takes a lot of consistency. It takes training. I mean Walt has been dead for many, many decades, Walt Disney. But when he was there he had this sort of profound sense of how can I create a theme park that really is so immersive that it isn’t just about the ride, or the snack bar. But it’s about the world that you’re stepping into. And the fact that so many decades after his passing that it keeps getting better and better in terms of its reach and its ability to continue to delight, even for people who go back time and again. I mean that is masterful. That is a truly aesthetically intelligent organization.

ALISON BEARD: And what about a company that doesn’t demonstrate aesthetic intelligence currently? How can they try to create it when the founder’s long gone, everyone has disparate views on what the company’s aesthetic should be?

PAULINE BROWN: So, the first step, you know there’s a reason that that company has been around for however long. And the first step is to sort of go back to the roots of what did the founder believe? What did the early people who came to the fore, whether it was in the form of employees, or in the form of partners, or in the form of customers, what were they gravitating to and why? And what are sort of the other things that are sort of part of the heritage of this? And then the other point I’d make is we very much in big companies devalued creative people. We often kind of siloed them to the art department. And I always say why is it that in big companies we would expect a CEO to be very facile in finance, in operations, maybe in engineering. But somehow we don’t think that they should really own art and creative functions with the same command and the same involvement that they do these other functions.

ALISON BEARD: You have a very hard business background. You’re a Wharton MBA. You worked at Bain. When did you start thinking about this area being so key to company’s success?

PAULINE BROWN: Well I’d say early. For one because I was struck when I first left Bain, I was in the strategy group at Estee Lauder Companies and I started to realize that a lot of the things that I was trained to do so well from Wharton to Bain, really didn’t serve me so well in a company like Estee Lauder. I kind of had to unlearn some of them. So, because the reason people are buying and not just cosmetics, but I’d say especially something like cosmetics, is how it makes them feel. People want to dream. They want to aspire. I mean that’s just a human nature. And those are not the things that I was prepared to deliver on coming out of Wharton or Bain.

ALISON BEARD: When you brought these ideas to business leaders outside fashion, luxury, cosmetics, food, do you get questions about return on investment though? We make this more of a sensory experience. We invest in bricks and mortar, retail experience. But what does that do for our bottom line?

PAULINE BROWN: Well the first flaw in that question, and I do get that question on occasion, is that it takes a lot more resources to do what I’m suggesting than not to do it. So let’s just take a classic, I don’t know, a public school. That public school where I would say is generally going to be pretty weak on aesthetics and a concern with this that I experienced. They’re going to choose a color paint for the wall. They’re going to choose a tile for the floor. They’re going to choose a font for the signage that goes on the front of the school or the back of the school. These are all decisions that are happening and yet, what I’m arguing for is mindfulness. That if you’re going to pick a color pallet for the wall, why shouldn’t it be one that’s bright or cheerful? If you’re going to pick a light bulb for the ceiling, nowadays it cost you no more to do a lightbulb that has a bit more warmth in its reflection, that might feel a little more inviting versus one that’s a little cold or fluorescent that feels sterile. And that has a real impact on, in the case of a school, how students respond and interact and how at home they feel. So let’s start with the decisions, the aesthetic decisions you’re already making, but you’re not making them mindfully. And the other point I make, and this is an important one is that the, implicit in that question is that to have taste it takes money. I often say that the people I know in my world who have the best taste do not have the most money. In fact I sometimes think the people with the most money have worse taste because they don’t, it doesn’t require tradeoffs.

ALISON BEARD: So, how do you hire for aesthetic intelligence then?

PAULINE BROWN: Well, I think you have to start with, the hirer has to start with themselves. So, if I hire a great art director and I say go make this look and feel great while I go tend to the P&L. It’s not going to work. You could have all the intelligence you want, but it’s not going to find its way. It has to be empowered. So for example when I was at Estee Lauder, Estee Lauder is a portfolio of brands. It’s not just one flagship brand, although the Estee Lauder name is one of the larger ones. And one of the last deals I worked on, I was in the M&A department, was the licensing arrangement with Tom Ford who at the time, and this is 2004, was not that well known. He had just left a few years earlier, having been the chief designer for Gucci. He did things that the Estee Lauder brand or the Clinique brand also in the portfolio, could never do. And I would tell for starters these big companies whether they’re in finance or in automotive, or in any business to stop playing it so safe because that’s a race to the bottom.

ALISON BEARD: And can a manager who’s not involved in marketing, or branding, or product development, design apply this idea to how they do their jobs?

PAULINE BROWN: Absolutely. I mean for starters, apply it to your office. Your space. And I don’t mean you need to hire an interior decorator and make the space something that is completely out of sequence with where you work and what others are doing. But why is it when I often walk into an executive’s office, I see very sort of standard industrial setup, right. And maybe there’s two or three photos sitting on a desk. But the lack of personal expression says to me that that person has so suppressed who they are, when they’re in their professional space. But if I go to that same executive’s home, even their home office, I see a very different side. And so, the first step wherever you sit in the organization, and assuming you’re in the right organization, is to bring a lot more of you to your professional space. All companies, almost all companies have to move a lot farther away from delivering on value and delivering on features and functions, and the like. And really start to what I call, become more human in everything they do and become more real. We want as a people, and it’s probably because we see what’s happening to the planet around us. We want to get back to nature. And so, people in companies I think have to find ways, many more ways to bring nature and replicate nature. I also think there’s going to be a backlash as we’re already starting to see against all things digital. It took us a few years to realize the effect of e-cigarettes on our health. And I think it’s taking us a lot longer to realize the effect of e-living on ourself and our sort of human development and our cognitive development. And so I think things like a digital Sabbath and sabbaticals are going to be more of a mainstream thing. I think anything that removes people from the screen and makes them feel alive again will be embraced.

ALISON BEARD: Pauline, thank you so much for talking with me today.

PAULINE BROWN: Thanks Alison. I’ve enjoyed it thoroughly.

HANNAH BATES: That was Pauline Brown in conversation with Alison Beard on the HBR IdeaCast. Brown is a leader in the luxury goods industry and author of the book, Aesthetic Intelligence: How to Boost It and Use It in Business and Beyond. We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. We’re a production of the Harvard Business Review – if you want more articles, case studies, books, and videos like this, find it all at HBR.org. This episode was produced by Mary Dooe, Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Special thanks to Rob Eckhardt, Adam Buchholz, Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.