The CIO at cosmetics conglomerate Estée Lauder Companies Inc. — known for brands such as Tom Ford, Estée Lauder and Clinique — has given the IT group a makeover in the last 12 months that goes more than skin-deep.

Michael Smith joined the New York-based "prestige beauty" company as senior vice president and chief information officer, information technology last year, with a mandate for pushing IT innovation to help the company stay abreast of the fast-moving beauty industry, where an Instagram photo of celebrity's new lip gloss can drive sales.

In an interview with CIO Dive, Smith praised the foundation laid by his predecessor and leadership team.

Layered on top of that, Smith said, the IT organization's accomplishments during his first year as CIO include:

• Reorganizing IT to align with business units, instead of technologies, so IT staffers can stay close to business needs.

• Hiring IT talent, globally, with new skill sets.

• Fostering greater IT agility and speed, such as moving from waterfall to agile software development processes, and breaking down walls between applications and infrastructure groups to adopt DevOps.

• Moving from a buy-and-integrate IT strategy to building systems in-house when they provide a competitive advantage.

Some CIOs would call that collection of changes a "digital transformation" – but not Smith.

"We don't talk about digital transformation," he said. "I don't like that term, because it's a buzzword, and it means 15 different things to 15 different people."

Instead, he's focusing the IT group on "growth-enabling [business] opportunities," Smith said. "We're creating an IT organization that has the agility and the speed that is needed to keep up in this rapidly changing landscape. Our consumers are constantly demanding new things. Expectations are raised."

Anticipating market shifts

So far, Estée Lauder has done a good job of shifting to meet consumers' growing preference for premium brands, as well as "marketing to make-up loving millennials" via influential video-bloggers, said Aleksandrina Yotova, consumer analyst at GlobalData Plc.

Estée Lauder has benefited from smart acquisitions, robust online sales and a strong presence in the booming China market, according to independent analysts at Zacks Investment Research Inc.

The company's two biggest risks? The decline of brick-and-mortar department stores where Estée Lauder products are sold; and any failure to predict market trends and consumer preferences, which would leave it with an outdated product mix, a Zacks report said.

In an effort to promote rapidly shifting customer demands, many CIOs are turning to data. Smith is eager to use data analytics to anticipate market and customer shifts. "If companies aren't [exploiting analytics], they're going to lose," he said. "I think it is table stakes. I don't believe that it's even a competitive advantage any more."

Year 2: New digs

As Smith starts his second year as CIO, Estée Lauder just moved most of its New York-area IT staff — which had been spread over nine locations — to a new "technology hub" in the up-and-coming Long Island City neighborhood in New York City's Queens borough.

The goal: encourage collaboration and innovation.

The office space has conference rooms, breakout rooms (for those daily "scrum" meetings), impromptu meeting spaces, social gathering spots (with food pantries), and top-notch audiovisual and collaboration technologies, Smith said.

"We put in retail labs, innovation labs, analytics labs. They're designed to create immersive experiences and foster experimentation, so that we can use this as a place to incubate new innovations, new ideas," he said. "It's an elevated employee experience."

Estée Lauder doesn't disclose exact employment figures at its locations, but a spokesperson said "hundreds" of employees are located at the new technology hub. The company subleased 96,070 square feet in Long Island City, according to a research report by real-estate analysts at Newmark Knight Frank.

Long Island City — a neighborhood across the East River from Manhattan — has been revitalized as old industrial buildings are converted into modern office spaces for what real-estate professionals call TAMI tenants — technology, advertising, media, and IT companies.

"We're super-excited about that neighborhood," Smith said, noting that it's just two subway stops away from his headquarters office in midtown Manhattan. "A lot of tech startups are going there, a lot of Fortune 500 companies are putting their innovation centers there. New restaurants, new pubs, a great art scene, thousands of apartments going online." 

Smith said the technology hub is set up to host visiting business partners, to educate them about emerging technologies — "the art of the possible" — and to experiment and collaborate with IT staffers on solving business problems, which he calls "the co-creation process".

"There's a lot of things that attracted me to this company," Smith said, "but one of them is that innovation is in our DNA. I'm trying to amplify that inside of IT."