Thirty years ago, a French business legend was peering into the abyss. Once classed as one of the world’s richest men, Marcel Boussac was known as King Cotton, ruler of an eponymous textiles empire that included the Dior haute couture house, which he founded. But in April 1978, the heavily indebted Boussac group was on the verge of collapse. Its autocratic but paternalistic owner, then 89 years old, had failed to respond to a surge in cheap imports from developing countries, and had also been left vulnerable by the rise of synthetic fibres. Could Mr Boussac ward off bankruptcy with yet another attempt at restructuring?

The tone of the FT’s coverage at the time was sceptical. In a management article published on April 4, 1978, FT Paris correspondent David Curry (now a Conservative MP) went through Mr Boussac’s early achievements, calling him “one of the last of the great French entrepeneurs born in the 19th century”, but then outlined the ways in which he had allowed the business to wither.

Wariness was justified. A matter of weeks after the article appeared, the Paris commercial court took control of the textile group and then Mr Boussac’s own assets. The Boussac group was soon sold to the upstart Agache-Willot group, against the will of its founder. His famed stable of racehorses was bought by the Aga Khan. New owners were also found for his newspapers.

Mr Boussac died in 1980. Under its new owners, the company that bore his name collapsed again in 1981. The story didn’t end there, however. A young entrepreneur called Bernard Arnault eventually took control of Boussac. Its Dior brand became the foundation stone of his luxury goods empire, which now includes Louis Vuitton, Fendi, and Donna Karan.

So what can be gleaned from this cautionary tale? At his best, Mr Boussac exemplified the boldness, imagination and flair found in the best entrepeneurs. After the First World War, he bought up unsold stocks of fabric designed to cover aeroplane wings, correctly sensing that they could be turned into clothes very profitably. He also had the vision to hire the unknown Christian Dior shortly after the Second World War. By inventing the New Look, Dior changed the rules of fashion.

But Mr Boussac lost the ability to move with the times. His company had begun its death spiral years before it finally went under.  In 1971, for instance, Business Week declared that he suffered from a “a 19th century management style”, blaming his “old-school paternalism” for stopping him from closing loss-making plants. Seven years later, the FT made the same criticism:

He has inherited the autocratic tradition and intense reluctance to sacrifice part of the family interests (either by closure or sale) in order to safeguard the rest.

In the end, his failure to align Boussac with the new realities of the marketplace did indeed mean that the entire business fell.

You can read the first half of the FT’s 1978 analyis of the fall of Boussac here. The second half is here. To magnify the image, press the Ctrl key and the plus sign together. To reduce, press Ctrl and minus.

This is the first in an occasional series of posts showcasing management-related articles from the FT’s archive that have not yet been digitised. Is there a famous manager from past decades you’d like to see featured? Please make suggestions below.

April 23rd, 2008 in Family businesses, From the archive, Leadership, Strategy | Permalink