Who's Got the Power?

ONCE UPON A TIME, FASHION WAS A BUSINESS defined solely by creative talent. A bubble skirt, a padlocked handbag or any other commercial success was attributed to the "artiste" who sketched out his or her dreams and somehow, with just a hemline or a dangly tchotchke, was able to seize the zeitgeist and magically send millions of cash registers ringing. Every six months, newspapers and fashion journals would feature quaint headlines announcing the dictates of those creative types—PARIS SAYS PANTS! Nobody paid much attention to the anxious number crunchers in the back offices studiously poring over sales estimates and marketing budgets.

That was then.

Global luxury has wrought billion-dollar businesses and dizzying amounts of dealmaking—which means that today's fashion stars aren't only those manufactured in schools like London's Central Saint Martins or New York City's Parsons. A whole new breed of fashion influencers are formed at hard-core business schools like Harvard, HEC, ESSEC and Bocconi where the syllabus doesn't include patternmaking but rather an altogether different kind of intangible skill set, namely the ability to manage intensely creative talent. Dior president Sidney Toledano, a graduate of the top French engineering school ECP, compares the structure of his company and his role within it to a nuclear power plant: the brand is the sun, the source of raw energy, the designer supplies the radium to set off fusion, and those highly skilled managers run the plant.

"I am an engineer, after all," Toledano says. "I think in terms of energy. I know how to optimize it and how to take risks to maximize it."

Toledano has been very successful as Dior's head plant manager: ever since he reined in John Galliano in 1998, sales have tripled and, at $825.7 million in 2005, are edging toward the $1 billion mark. Of course, back in 1997 containing and ultimately commercializing Galliano was a long shot considering the designer's past. As fashion's brilliant wild man known for exceptional creativity and pitiful financial results, he had seen backers pull the plug and had been penniless twice.

Fendi CEO Michael Burke faced a similar dilemma when he took over the Roman-based brand in 2004. With a mandate from LVMH boss Bernard Arnault to turn the company around, Burke had to find a way to keep designer Karl Lagerfeld in the fold and also massage a better relationship between the designer and Silvia Venturini Fendi, the talent behind Fendi's handbag business. That required yet another kind of nuclear power plant, one that Burke promptly set about creating in the form of Fendi's historic palazzo in the center of Rome, which he renovated in order to relocate scattered design studios and management offices under one roof. The idea was to centralize the talent and boost productivity. While Burke heaps praise on Fendi's designers, he is emphatic that far from everything resting "on a designer's pencil point, the brand is the boss."

That's tough talk for a business in which designers have long considered that everything revolves around them. While fashion's new breed of management-oriented CEOs stress that they do all they can to nurture creative visionaries with, as Toledano puts it, "the ability to hear sounds we don't hear and a satellite showing things that we don't see," even those lauded in the media as geniuses are ultimately replaceable.