Fast Company

Rinse and Repeat

Lush Cosmetics is a fast-growing $100 million brand, thanks to founder Mark Constantine's contrary product-development philosophy: Innovate like mad, then start over again.

Mark Constantine is not the kind of guy strangers usually want to get naked for. Silver mane and champagne-colored eyes aside, he's your average 51-year-old married guy. So when the words "naked" and "protest" marched shoulder to shoulder across his computer screen one afternoon two years ago, the threat got his attention.

Constantine, founder and CEO of Lush Cosmetics, makes bath products -- shampoos, soaps, moisturizers, and the like. He had planned to discontinue a carnation- and rose-scented moisturizer called Potion in 2003 because it was among Lush's worst sellers. But its devotees were now threatening a fleshy, Greenpeace-esque display in London's Trafalgar Square. Oops. Inspired by the hostility, Constantine and his creative team responded by letting Potion's potent fans order small batches online. An ugly scene was averted.

This flash of naked outrage -- and the company's reply -- reflect a practice that makes Lush more than just another hot cosmetics company peddling irreverently branded products made from fresh ingredients such as mangoes and avocados. Constantine is devoted to change: He insists upon shedding one-third of Lush's entire product line each year in favor of more offbeat and tantalizing bath goods. "If anything, as businesses mature, they get more dull," he says, donning an apron in his perfume lab in Poole, England. Lush has avoided that trap -- and blossomed from one store in 1995 to 320 today (21 stores in the United States and growing), doing $100 million in annual sales in 35 countries, with plans to triple in size by 2008.

So whether he knows it or not, Constantine has stumbled upon a solution to what Harvard professor Clayton Christensen famously called the "innovator's dilemma," in which companies become so devoted to their successes that they over-look disruptive innovations: He's doing the disrupting himself. Otherwise, he might miss the next hot thing that the invariably fickle cosmetics customer craves. Hence, the annual product exfoliation, which takes place during what Lush appropriately calls "Mafia meetings." It may look as though he's antagonizing customers, but they love it.

To keep fresh innovations pouring in, Lush often turns to its customers for input. At its Web site, Lushies swarm the company's forums by the thousands to chat online with Constantine and his staff. They flirt with him, insult him, and debate him -- yes, about soap. (Long, curse-laden posts about shampoo are not uncommon.) Last year, Lush picked a group of forum members to actually help manufacture products. It flew them in, put them up in a B&B, took them out for dinner -- the works.

Constantine knows that genius can come from anywhere, because that's how he got his break. Responding to an ad placed by Body Shop founder Anita Roddick in 1977 (when she had just one store), he impressed her with his creations. The resulting relationship transformed Constantine from a small-time cosmetician working out of his home to a respected freelance designer with a team of assistants, and gave the Body Shop as much as 80% of its best-selling products by the late 1980s. But in the latter years of their partnership, the Body Shop turned down radical product ideas, such as Bath Bombs -- fizzing, aromatic balls that disintegrate in water -- in favor of more conventional choices. "We kept showing them new things, and they weren't taking them," he recalls. The rejections led to a buyout. After his noncompete agreement expired, he opened his first Lush. Today, Lush turns out as many as 60,000 Bath Bombs a day, and they're 40% of sales.

Two consequences flow from dropping so many products each year. First, Constantine's team needs at least 100 new products annually to replace those that are discontinued. "It's like launching a new brand every year," says Lush's North American CEO, Mark Wolverton. That creates opportunities for incredible flights of fancy. Noriko Miura, a recent addition to the design team, took her assignment to work on toothpaste in "unbelievably wonderful and frightfully weird" flavor directions, Constantine says. Think green apple, salt, and charcoal. For every product that makes it, at least 20 are rejected, so these may be thrown out. But Constantine is excited by the courage alone. "She has absolutely no boundaries," he says. "It's very stimulating. And, okay, it isn't always good. . . ."

It's that fearlessness, though, that leads to major breakthroughs. How does the Lush team know when they've got a hit? "The best is when someone nicks your product before you've actually shown it," says Mary Linehan, Lush's marketing head. After Constantine's wife, Helen, designed a lip balm, she brought it to a Mafia meeting to let the group try it out, but it disappeared before she had the chance. The Whipstick, as it's known, is a top seller.

The second outgrowth of the ritualistic shedding of underachieving products is disappointing the customers who loved them. Thus the threatened nude protest over Potion. But the crisis and the response have led to Lush selling personal batches of "cut list" products three to four times a year. This past January, the company mailed out more than $75,000 worth, a 25% increase over last fall's order. "Every time we've done a special sale, it gets bigger and bigger," says Lush's Web-site manager, Simon Nicholls. "There's this exclusivity. Only 300 people around the world will have these products."

Back in the lab, Constantine works on a product for an audience of one. He's listening to an album by Karin Park, a Norwegian singer, while conducting a silent symphony of smell. Park once walked into the Poole store when Constantine was working the counter. Intrigued, he offered to concoct a scent just for her. ("I'm always looking for a muse," he says.) That's what he's doing now. Half a dozen vials sit on the counter in front of him. "I'm trying to get the dusty smell of rain," he says. "Plus pine -- for longing. Plus seaweed -- because that's sad, that's wet. And then something else . . . I don't know what the other side is going to be. But much jollier. And we'll see what happens." Well, he and Park will. Everyone else will have to ask for their own.

Lucas Conley is a Fast Company staff writer.

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