Business

Hair dryers from drones and makeup mirrors from movie animators: How L’Oréal makes open innovation work

Published

3 months ago

September 15, 2025

If you bring up innovation at the dinner table, the conversation will likely turn to tech: AI, iPhones, electric vehicles, digital things pioneered in Silicon Valley or Eastern China.

Yet tech companies hardly have a monopoly on new ideas, and the success of Europe’s most dynamic businesses suggests the continent can still compete in the second quarter of the 21st century.

One leading light is global beauty leader L’Oréal, which Fortune recently named Europe’s Most Innovative Company. Although famed for its $1.5bn (€1.3 billion) R&D budget, there is more to its success here than brute scale. As the company’s head of tech and open innovation, Guive Balooch tells us, it’s the way L’Oréal approaches it that makes the difference.

“Beauty is at an inflection point, with so many areas of research, science and innovation that are beyond the core expertise of our industry, which up till now has been chemistry-based. Now tech is having major involvement, with beauty devices, diagnostics and digital services, but there are also [trends] like biotech and wellness.

“All these require us to have an innovation strategy which is inside and outside,” says Balooch, a Californian who joined the French firm 18 years ago after a brief career in academic research. For most of that time, he’s been pioneering this ‘inside and outside’ approach of open innovation, which in practice means that alongside L’Oréal’s extensive pipeline of in-house lab formulations, it also partners with external companies to develop novel products and services that neither could create alone.

Balooch points to L’Oréal’s Makeup Genius (now Beauty Genius), which in 2014 became the beauty industry’s first use of augmented reality to help consumers visualize how a product would look on their skin before buying. Its utility was obvious—digital makeup mirrors are now commonplace in beauty retail—but its origin was surprising.

91 L’Oréal’s rank on Fortune 500 Europe

“We collaborated with startups in the animation industry, because they’re the best when it comes to augmented reality, using our use case as a way to inspire them,” Balooch says. L’Oréal later acquired one of these firms, ModiFace, in 2018, after previously investing.

It’s a similar story for its AirLight Pro hair dryer, developed in partnership with a drone firm (Zuvi), and Cell BioPrint, a tabletop device that analyzes skin types in just five minutes for personalized skincare recommendations, which came from a collaboration with Korean medical diagnostics firm NanoEnTek.

“We’re constantly looking, but most of these partners are very surprised when we go to them. NanoEnTek were doing [their work] for health, they hadn’t thought of beauty applications,” Balooch says.

“Now tech is having major involvement, with beauty devices, diagnostics and digital services, but there are also [trends] like biotech and wellness.”Guive Balooch, L’Oréal’s head of tech and open innovation

A capacity for ideas

How does L’Oréal come up with the ideas for innovations in the first place though, before seeking out third parties?

On the one hand, Balooch says, the company has deep levels of marketing insight that define consumer problems that need solving. Sometimes this can come from analysis of social media data, but on other occasions it comes from firsthand experience.

L’Oréal Cell Bioprint.

L’Oréal Groupe

Balooch points to a marketing staff member who saw that many people were struggling to mix hair colors themselves, and had the idea for a handheld device that would do it for them. They entered it into an internal competition that L’Oréal runs, where it gives a budget to the winner to develop their idea.

“It came to my team, and seven years later, because it was a hard one to do, we launched Colorsonic,” he says.

While ideas for innovation can emerge from anywhere, they more commonly originate from a dedicated central team that brings together diverse specialists to look at how trends in consumer behaviour and science might impact beauty.

L’Oréal AirLight pro.

L’Oréal Groupe

“We think about future frontiers like longevity or the microbiome, and we have different people in the company come up with ideas. Then we have a pipeline meeting once a year, where we present these ideas to our different brands and divisions, and see the excitement behind them,” Balooch says, adding that there are many impromptu meetings throughout the year as well.

A key element is team composition, as well as the involvement of senior management, all the way up to the CEO. “It’s the tension between the scientists and the creatives. We sit together… I’m a PhD in biology and I’m running the tech team. You wouldn’t see that in many companies,” Balooch says.

Determining the return on investment can be difficult, given that it can take years for new products or services to come to fruition, but Balooch says there are targets around the tangible impact of innovations, for example how often partnerships turn into new products. Consumer insight also helps to determine whether customers feel their problems have actually been solved by the new innovation.

“It’s the tension between the scientists and the creatives. We sit together… I’m a PhD in biology and I’m running the tech team. You wouldn’t see that in many companies”

Balooch

Altogether it’s a multi-faceted approach that has yielded results. L’Oréal’s bevy of new products and services have not only helped it extend its lead at the top of the highly competitive global beauty market, they’ve also earned it plaudits outside the sector, exemplified by CEO Nicolas Hieronimus’s 2024 keynote speech at tech show CES, a first for a beauty brand business.

Europe as an innovation hub

The level of innovation is not easy to replicate elsewhere—if it were, L’Oréal wouldn’t still have its lead—but it does still give ambitious European companies in other sectors something to aim for.

And Europe is increasingly a great place to do innovation, and particularly open innovation, Balooch says. “There are so many great scientists and universities in Europe, a lot of intellectual property, but there’s also a lot of movement now with startups being created. I’ve lived in Europe for a long time, and I see that now much more than I’ve ever seen. You have a lot more support for startups. So it’s a great ecosystem for innovation.”

The key, however, is for European companies to leverage this alongside the innovation taking place elsewhere. “The world is so much more interconnected today. There were so many more silos in science 20 years ago,” says Balooch, adding that combining different ways of approaching innovation can unlock fresh thinking, even within a company.

“I send a lot of my French people to the U.S., a lot of my U.S. people to France. It’s incredible to see what happens when you do that.”

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Business

If the Fed cuts interest rates today it may be the last round of cheaper money until June 2026

Published

16 minutes ago

December 10, 2025

Jace Porter

Enjoy your Fed interest rate cut today—it may be the last one for a while. There is a 90% certainty that U.S. Federal Reserve Chairman Jerome Powell will announce a 0.25% cut to the base rate this afternoon, bringing it down to the 3.5% level, according to speculators on the CME FedWatch Fed funds futures index. But after that, the FedWatch index is indicating no certainty for any further cuts in 2026.

Today’s cut is priced in at level of certainty approaching 90%. But here are what the levels of certainty for keeping the rate at 3.5% look like for 2026, per FedWatch:

January: 72.2%
March: 55.8%
April: 47.6%

Only in June does a plurality—41.9%—emerge for a further cut to 3.25%.

Analysts are all over the place in their guesses about how many further rounds of cheaper money the Fed will deliver next year, and with good reason: President Trump is set to replace Powell with a new Fed chair in May.

“We see the Fed cutting rates twice in 2026, with moves in March and in June,” ING’s James Knightley et alargued earlier this month. Plus, “the potential for a more dovish FOMC tilts the risks toward additional rate cuts later in the year.”

“But does this matter, given that we know the Federal Reserve’s structure is changing?” Knightley wrote.

At Deutsche Bank, the forecast is “one further 25bp cut in each of 2026 and 2027.”

Pantheon Macroeconomics’ guess is for three cuts, “We expect 75bp of easing in 2026, but fiscal policy and FOMC personnel changes cloud the outlook.”

The presumed favorite candidate for the new Fed chair is Kevin Hassett, widely regarded as a “dove” who will follow Trump’s preference for lower rates regardless of rising inflation. But there are three others in the running: Fed governors Kevin Warsh, Christopher Waller and Michelle, Bowman, and BlackRock Chief Investment Officer of Global Fixed Income Rick Rieder.

It’s not certain if the new appointee will tip the Federal Open Markets Comittee into a more dovish position (favoring more cuts) or whether the Fed’s institutional commitment to apolitical economics will prevail, which would imply a slower schedule of cuts or perhaps—if inflation continues to rise—none at all.

ING’s Knightley noted that by the end of 2026 it is possible that “five of the seven members of the Board of Governors are Trump appointees.” The Fed is about to become much more unpredictable, in other words.

Stock markets are largely in a holding pattern today as investors wait for the rate decision. It will be Powell’s commentary— and whether he says or doesn’t say certain words—that move markets this afternoon. S&P 500 futures were flat this morning prior to the open after the index closed flat yesterday.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

S&P 500 futures were flat this morning. The last session closed down marginally 0.09%.
STOXX Europe 600 was down 0.12% in early trading.
The U.K.’s FTSE 100 was up 0.29% in early trading.
Japan’s Nikkei 225 was down 0.1%.
China’s CSI 300 was down 0.14%.
The South Korea KOSPI was down 0.21%.
India’s NIFTY 50 was down 0.32%.
Bitcoin was at $92K.

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Business

Exclusive: U.S. businesses are getting throttled by the drop in tourism from Canada: ‘I can count the number of Canadian visitors on one hand’

Published

48 minutes ago

December 10, 2025

Jace Porter

From Washington state to northern New England, American businesses that have long depended on Canadian visitors are seeing traffic dry up — and with it, a crucial source of revenue.

A new report shared exclusively with Fortune by the Joint Economic Committee (JEC) – Minority, a congressional standing committee dating back to 1946 responsible for documenting the economic conditions of the U.S., details how a sharp drop in Canadian tourism is hitting every U.S. state along the northern border. The findings come as President Trump has proposed annexing Canada, imposed several rounds of tariffs on Canadian goods, and repeatedly broken off trade talks with Ottawa, contributing to a chill in cross-border travel and spending.

From January to October 2025, the number of passenger vehicles crossing the U.S.-Canada border fell by nearly 20% compared with the same period in 2024, according to the JEC analysis, which draws on U.S. Customs and Border Protection travel statistics. In some border states, the decline reached 27%, a shift that local tourism agencies say is showing up in fewer tourists, more hotel vacancies, and weaker sales.

“Going back for generations, Canadians have visited New Hampshire and many other states along the U.S.-Canada border to see family or friends, stay in our hotels, share a meal at our restaurants, and shop at our stores,” said U.S. Senator Maggie Hassan (D-NH), Ranking Member of the Joint Economic Committee. “However, in the wake of President Trump’s reckless tariffs and needless provocations, fewer and fewer Canadians are making trips to the United States, putting many American businesses in jeopardy and straining the close ties that bind our two nations.”

Canadians have historically been among the most important international visitors to the U.S., both in sheer numbers and in spending. Analysts and tourism officials note that rising prices, a weaker Canadian dollar, and heightened political tensions have nudged many travelers to choose domestic trips within Canada or alternative international destinations instead. For U.S. border communities, that shift is being felt in real time.

“These are more than numbers; they represent missed revenue for local businesses, reduced hotel demand, and fewer dollars supporting jobs and investment in our community,” said Shirley Hughes, president and CEO of Visit Fargo-Moorhead in Fargo, North Dakota, and Moorhead, Minnesota.

In northern New Hampshire, the absence of Canadian license plates is especially stark. “Being only eight miles from the border, normally Canadians make up anywhere from 15-25% of visitors. Now, I can probably count the number of Canadian visitors on one hand. I’m just trying to plug along and keep my nose above the waterline,” said Elizabeth Guerin, owner of the Fiddleheads gift shop in Colebrook, New Hampshire.

The impact stretches beyond retail and lodging into wineries and attractions that rely on cross-border regulars.

“The drop in visits from Canadian tourists has had a noticeable impact on our bottom line. With Canadians making up about 10% of our business, fewer cross-border travelers mean fewer tastings, tours, and wine sales — a ripple effect that touches our entire operation, underscoring how important cross-border tourism is to our business model,” said Scott Osborn, president and co-owner of Fox Run Vineyards in Penn Yan, New York.

Some operators worry the damage will outlast any eventual thaw in U.S.–Canada trade relations, as Canadian travelers form new habits elsewhere.

“This is long-lasting damage to a relationship and emotional damage takes time to heal. While people aren’t visiting Vermont, they’ll be finding new places to visit, making new memories, building new family traditions, and we will not recapture all of that,” said Christa Bowdish, owner of the Old Stagecoach Inn in Waterbury, Vermont.

On the West Coast, festival organizers are also feeling the pinch.

“Since March of this year, we have not only seen Canadian traffic drop drastically, but we have also seen a drop in our number of attendees at our festival this year in late September. We knew that after March, we could not rely on our Canadian business because of fear at the border and lack of understanding of what is happening with tariffs and Canada drawing a strong line of promoting Canada first,” said Kevin Coleman, executive director of SeaFeast in Bellingham, Washington.

For businesses up and down the northern border, the question now is not just when Canadians will return in force, but how much of that lost business can ever be won back.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.

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Business

Activist investors are targeting female CEOs—and it’s costing Corporate America

Published

1 hour ago

December 10, 2025

Jace Porter

Good morning. When Victoria’s Secret reported stellar quarterly results last week, shares shot up 14% and likely gave Hillary Super some breathing room from the activist investors pushing the lingerie company to, among other things, consider whether the CEO of 16 months is up to the task of turning it around.

Of course, the potential of having to deal with an activist investor’s campaign goes with the territory of being a CEO, especially at a company that has been struggling. But Super’s saga is a reminder that women CEOs remain much likelier than their male counterparts to be targeted by activist investors.

This year, according to a report last week by the Conference Board, women have made up 8% of the CEOs in the Russell 3000 index but accounted for 15% of activist campaigns specifically targeting chief executives. Other women to have recently confronted activists: Cracker Barrel’s Julie Masino, who survived a campaign, and Vail Resorts’ Kirsten Lynch, who did not.

What makes the Conference Board report especially frustrating is that it adds more proof points to an old, seemingly intractable trend.

In 2015, the New York Times’ DealBook pondered “Do Activist Investors Target Female CEOs?” while Fortune’s Pattie Sellers asked “Does Nelson Peltz have a problem with women?” In 2017, Harvard Law School found that women CEOs had almost a 50% higher probability than men of becoming the target of shareholder activism.

Why? One reason, the Conference Board theorized, is rooted in a stereotype that women are more cooperative. It’s also conceivable that the trend reflects the glass cliff phenomenon in which women often take the helm of companies in decline. But there is almost certainly some bias at play. The Conference Board research showed that women targeted by activists face the same odds of being canned whether they turn things around or not, while male CEOs are less likely to be ousted when results improve.

Some of the most prominent women chief executives ever have tangled with activists: PepsiCo’s ex-CEO Indra Nooyi, ex-Yahoo CEO Marissa Mayer, ex-DuPont CEO Ellen Kullman, ex-Mondelez CEO Irene Rosenfeld, ex-HP CEO Meg Whitman, and Mary Barra, still at GM. Michelle Gass, now thriving as CEO of Levi Strauss & Co, dealt with not one but three activist campaigns as she tried to fix Kohl’s.

Everyone should be held accountable when their company is failing or on a bad path. But it is worth wondering what this extra hurdle women CEOs face is costing us. Activist campaigns are bruising to the company but also to a CEO’s reputation. Does this mean boards might be more likely to avoid naming a woman to lower the odds of an activist campaign, or that fewer women will throw their hat in the ring?

Either way, it seems the phenomenon could needlessly be costing corporate America some much needed talent.—Phil Wahba

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Fed watch

All eyes will be on the Fed meeting today even though an interest rate cut is all but certain. Instead, investors will focus on Chair Jerome Powell’s tone and whether he characterizes Fed policy as “in a good place;” doing so would imply that a January cut is unlikely.

Fed chair watch

Meanwhile, President Donald Trump has narrowed down the candidates to replace Powell as Fed chair. The frontrunner is National Economic Council Director Kevin Hassett, but to clinch the job he’ll reportedly have to outshine three other contenders in the final round of interviews, suggesting he’s not a shoo-in for the job.

Trump’s affordability tour

In his first in a series of speeches about “affordability,” President Trump mocked the term and insisted that Americans are doing better than ever. In reality, U.S. inflation is close to 3%, about where it was when Trump’s predecessor Joe Biden left office.

Miami’s mayoral race

As Trump railed against affordability, Eileen Higgins, a Democrat, defeated Trump’s favored candidate in Miami’s mayoral race with a campaign focused in part on affordable housing. She’s the first Democrat to occupy Miami’s City Hall in three decades (and the first-ever woman), giving Democrats another jolt of momentum ahead of the 2026 midterms.

Taiwan’s chip action

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Layoffs hit 1.1 million

Recruitment firm Challenger, Gray & Christmas has calculated the number of layoffs so far this year at 1.1 million, the sixth time since 1993 that layoffs have been that high. Technology was the hardest hit sector with 150,000 layoffs.

Americans ‘living on the financial edge’

Moody’s Analytics Chief Economist Mark Zandi told Fortunethat many Americans are “already living on the financial edge,” and that a drop in their spending could lead to a recession. If layoffs increase, then Zandi estimates that a “jobs recession” is certain.

Sam Altman worries about ‘rate of change’

During an appearance on The Tonight Show with Jimmy Fallon, OpenAI CEO Sam Altman admitted that he’s worried about “the rate of change that’s happening in the world right now.” He added that the “rate at which jobs will change over may be pretty fast,” with hopes that “much better jobs” will follow.

The markets

S&P 500 futures were up 0.05% this morning. The last session closed down 0.09%. STOXX Europe 600 was down 0.19% in early trading. The U.K.’s FTSE 100 was up 0.14% in early trading. Japan’s Nikkei 225 was down 0.1%. China’s CSI 300 was down 0.14%. The South Korea KOSPI was down 0.21%. India’s NIFTY 50 is down 0.32%. Bitcoin is up at $93K.