“Few have exemplified leadership so graciously in every aspect of their lives … as William P. Lauder, W’83,” said Blackstone COO Jon Gray, W’92, C’92, at this year’s Joseph Wharton Awards Dinner in New York City. It was high — and well-deserved — praise for this year’s winner from the previous year’s recipient of the Wharton Award, which recognizes “the Wharton alumnus who embodies the highest standards of leadership in both business and society.”

William has done just that during his more than 30-year tenure at The Estée Lauder Companies, where he has served in numerous leadership roles, including as CEO, and now serves as Executive Chairman. Among his accomplishments are taking the iconic company global, successfully navigating the age of e-commerce and building a blockbuster portfolio of brands — all while developing the next generation of the company’s board and leadership structure.

William’s impact extends well beyond the beauty industry. He has long been a leading advocate in the fight against breast cancer, and has given back to the school he loves — as a Trustee, as a treasured Wharton course instructor for the past eight years and as a philanthropic force establishing institutions that will serve Wharton well into its future.

I had the honor of spending an hour in conversation with William. Our time together flew by as he shared insights on leadership, learning and his legacy.

When you were at Wharton, did you ever have a moment when you considered not going into the family business?

Many moments! I did well in my legal studies class. I found it easy to study the materials and do well on my papers and exams. One of my professors came to me three-quarters of the way through the course and said, “You know, they allow me to name one student to refer, to go to law school next year.” I was honored, and knew the study of law would be a good grounding, but I just couldn’t see myself becoming a lawyer or a law professor. So, I chose not to go to law school — though I eventually did wind up at the front of the classroom!

What classes had the most impact on you?

In my last years as a student, I shifted gears from the subjects that interested me to the teachers who were most dynamic and interesting, taking only classes with professors who had the highest ratings. Also, I found classes taught by teams more interesting than standard, solo-taught classes because of the interplay and dynamics between the teachers.

One of the classes that was most influential for me was a real estate course taught by a professor named Bill Zucker. The format of his class is the format I now use for my class, because I found it very engaging as a student — three hours, once a week. In three hours, you can go much deeper than you can in two more-condensed sessions.

Describe your role as Executive Chairman of The Estée Lauder Companies. How is it different from that of the CEO? Talk about your relationship with the CEO.

Our CEO is Fabrizio Freda. He and I have a unique distribution of responsibilities. Of course, while we both have our lanes of authority, there’s a lot of stuff in the middle that we talk through together. There are plenty of cases where Fabrizio wants to bounce ideas off me before he makes a decision, and vice versa. And then we go out and do it.

We’ve been working together for 10 years now. Our teams are very comfortable knowing which issues are “go to Fabrizio” issues, and which are “go to William” ones. The structure we have right now works well for us and, more importantly, works well for our employees. It’s no small part of why we’ve delivered good results over such a long period of time.

What are some of your best leadership practices at The Estée Lauder Companies?

Most of my time in my office consists of one-on-one or small group meetings — three or four of us sitting around a table. I tell anyone who walks into my office the same thing: You can say anything about anything to me, including what you don’t like about me. You’re not going to get a negative reaction. We’re just going to discuss the issue, and how we can resolve it.

That’s important for my working style. I want to create a place that’s safe for all people I work with, where they feel comfortable sharing anything with me. My goal is always to do the right thing for our company over the long run. That means I don’t want someone walking out of here saying, “Well, I’m never doing that again. I’m never sharing with him.”

What do you want to hear about in business updates?

I want to hear about your business — your opportunities, your challenges. But, also, be prepared to talk about your team. How are they doing? How are your stars doing? What are their biggest successes? Their struggles?

At the end of the day, it’s not about me solving people’s problems. It’s about helping teams find solutions so they can solve problems themselves.

You mentioned “stars”— tell us more about what that looks like. How about the opposite? What does it look like when a person is very talented, but not a great fit for your company?

Of course, being a “star” is about having incredible drive and, subsequently, success. But just as importantly, it’s about having a level of humility that allows you to give all the credit to the people you lead, and to accept all the blame when things don’t go your way. That’s why, when I interview people, I try to understand what challenges they’ve faced in their lives and careers, and how they overcame those challenges. I want to hear how concise they are. I want to know the things that are important to them. And I want to make sure that they’re not too obsequious, because I need them to be honest with everybody they work with. If I get the sense that somebody is telling me what I want to hear as opposed to what’s really going on, then I know that I will be a far less effective executive if I work with them. You’ve heard the expression “sharp elbows”? That personality style doesn’t work here. If you can’t play well with others, you’re not going to be effective here in our very collaborative culture.

In your book, Decision Making in the Leadership Chair, you talk about “big swings” — a concept I find compelling. What are the biggest swings you have taken in your time at The Estée Lauder Companies?

When I say “big swings,” I mean “big swings.” These are decisions where the price of success can be extraordinary, and the price of failure can be equally destructive. I would say I’ve taken three “big swings” that defined my career and defined our company.

First was the creation of the Origins brand. I was 30 years old at the time, and had been at the company for about four years. My thought was that this brand could add something new to the company product-wise, and could also be used as a laboratory for different ideas that might have some resonance with the rest of the company.

Origins is also where we started our own retail strategy. Opening our own free-standing stores was a decision that drew resistance from some of our core customers: department stores. We had built our business with them as our partners, but they didn’t see this as an opportunity for them. They were concerned that, if we had our own stores, it would mean more competition and fewer consumers shopping in department stores.

I knew it was a risk to go forward, but in the end, following my gut was a risk that paid off — and one that transformed the way we do business.

Then, this internet thing came along, and that led to the second big swing. I was always fascinated by the direct-to-consumer business. So, as the online world began to grow, I thought, “Oh, this is both a natural extension of the kind of stuff we’re trying to do with Origins, and a platform that offers new ways to engage with the consumer.” For several years, we made a huge investment in e-commerce, and it caused a fair amount of loss. But we were patient, because we knew that building a solid foundation online would pay off. And it did.

Finally, I took a third big swing when I was CEO, when I realized that: 1) I needed a partner to run this company; and 2) I needed that partner to come from outside our industry. I wanted someone with a completely different perspective, who understood the consumer mindset and how consumer companies are run. I also wanted someone who could help transform our company, as opposed to just maintaining and improving it around the edges.

It became clear that that someone was Fabrizio. To bring somebody in who didn’t have any experience in our industry was a controversial decision, both inside and outside our company. But, clearly, it was a decision that paid off. One of the things I’m most proud of is that Fabrizio was able to accomplish what he’s accomplished over the past 10 years with the team that I assembled over the previous 15 to 20 years. He helped them become even better executives in a way that I never could. To me, hiring Fabrizio was a good example of doing the right thing at the right time to ensure the long-term success of our organization.

What do you see as the core principles of leadership?

Leadership starts with understanding that you’re only as good as the people you have the privilege of leading. Your responsibility is to help them be as good as they possibly can be, whatever they do. If you can inculcate in them the values and mission of your organization, you are on your way. Because every day, thousands of decisions are made by thousands of people at all levels of the company. These aren’t decisions that are raised to the top — but they are informed by the mission and values exemplified by those at the top.

Getting that message across takes effective communication and leadership, especially the ability to distill big ideas — like a company’s values and mission — into understandable, digestible sound bites that are repeatable by the people you’re trying to lead. Because then, they can easily pass them along to their teams, who, when they need to make a decision, refer to them and determine the right thing to do.

How do you define your mission at The Estée Lauder Companies?

This company was founded by my grandparents and built by my father. Three generations of Lauder family members have since held senior leadership positions. Over the decades, we’ve been shaped by an extraordinary population of very talented people, many of whom have been a part of our company for many years. With that, my mission is, and long has been, to transform our company for the 21st century. And, as we grow, to be both reverential of how we got here, and mindful that the future isn’t going to be an echo of the past.

What would you like people to think of when they think of you?

I grew up going to Maine for summer camp where we often went camping, canoeing and hiking. There was a simple principle they taught me from the time I was nine years old: You must leave the campsite in better shape than you found it. However it looked when you first got there, leave it cleaner, nicer, more organized. You could pile some wood up — whatever it takes to get it in better shape for the next person.

My goal for our company is to leave it in better shape for the next person. I want to have an effective time here, to not overstay my welcome, and to do good — both for my employees and the world around me. I want those who lead after me to be able to build on the success we’ve built with the confidence that they can change what needs to be changed, so the company can be sustainable and successful well into the future beyond my lifetime.

BIO

William P. Lauder is the grandson of Estée and Joseph Lauder, and the son of Evelyn and Leonard Lauder, W’54, who won the 2012 Joseph Wharton Award for Lifetime Achievement. William Lauder became Executive Chairman and Chairman of the Board of Directors in July 2009. Prior to that, he served as CEO from July 2004 through June 2009. During his five-year tenure as CEO, he expanded the company’s international presence and distribution channels, and greatly strengthened the brand portfolio.

He joined the company in 1986 as Regional Marketing Director of Clinique U.S.A. in the New York metropolitan area. In 1990, he led the creation of the Origins brand, and pioneered its innovative store-within-a-store concept. He went on to lead the worldwide businesses for Clinique and Origins, and oversaw the company’s free-standing stores and internet business. In 2003, he became the COO, overseeing the company’s global operations, as well as nine specialty brands.

Prior to joining the company, Lauder completed Macy’s Executive Training Program in New York City, and was Associate Merchandising Manager of the New York Division/Dallas store when it opened in 1985.

Lauder is a member of the Board of Trustees of the University of Pennsylvania and an Emeritus Trustee on the Trinity School Board in New York City, both his alma maters. He is also Chairman of the Board of the Fresh Air Fund. Lauder is a Co-Chair of the Breast Cancer Research Foundation, an organization founded by his mother Evelyn H. Lauder. He is also a member of the Boards of Directors of the 92nd Street Y and the Partnership for New York City, and on the Advisory Board of Zelnick Media.

In 2012, Lauder received a lecturer appointment to the faculty of the Wharton School of the University of Pennsylvania, where he teaches “Decision Making in the Leadership Chair,” a course he designed for second-year MBA students.