Remarkably few blockbuster businesses maintain their dominance from one generation to the next.
I say a generation, by which I mean about 30 years, because it is an awfully long time to maintain market leadership or a growth trajectory.
Founders with vision and energy can make an incredible impact for a decade. But sustaining it for 30 or more years is incredibly tough and they normally hand over to a younger executive team, some of which take businesses to even greater heights, but most of which manage slow decline.
Decline is normally preceded by a plateauing of growth, which is precisely what we have seen with the Swiss watch industry, which has not grown since hitting global exports of CHF 21 billion in 2015.
A major McKinsey & Company study released in the spring predicts growth at 1% to 3% per year through to 2025, based on a retail value for the entire watch industry of $49 billion in 2019 (I personally think growth will be much higher, particularly in Europe and the United States, which McKinsey thinks will flat line).
History is littered with industrialists, banks, airlines, retailers technology companies, car makers, media giants and myriad others where the best days are behind the biggest companies.
The Swiss watch industry likes to think it is different, and businesses that have been manufacturing more or less the exact same product since the 18th century have reason to believe they can defy normal business wisdom as the world changes around them.
These venerable watchmakers, however, have not enjoyed centuries of uninterrupted success.
Many have failed multiple times and what has survived, thankfully, have been their names and their archive of historic references.
Most brands that lord it over the Swiss watch industry today had virtually no capital value when their names, and not much else, were rescued by incredible entrepreneurs that have built Richemont, Kering, LVMH and Swatch Group over the past 50 years.
I make this point not to besmirch the reputations of some truly exceptional watchmakers and business leaders, but to make the case that there is no god-given right for them to thrive in the future.
The industry is changing so dramatically now that only the nimble and exceptional are assured a future for another generation.
One trait that troubles me is how secretive, sensitive and thin-skinned the Swiss watch industry remains today.
These are characteristics that have might have been considered assets until 10 years’ ago, but I believe will be weaknesses in an era that increasingly values transparency and authenticity.
Right now — and I would not overstate this hypothesis — I believe we are already seeing the impact that CEOs who are open and accessible are making at brands like Audemars Piguet and Breitling.
The Wizard of Oz mystique of pulling levers from behind a curtain is hugely powerful for a time, but we all know how it ends.
I am not suggesting that the Swiss should throw away all the history and tradition that has brought them to the global leadership it enjoys today.
What I am saying is that it needs to be open to ideas, to challenge and to criticism.
Above all, the Swiss watch industry needs to stop being so sensitive and thin-skinned. These are not traits that the world values much these days.
Every new product is instantly reviewed on social media by millions of enthusiasts whose voices need to be heard.
Strategy should not necessarily be dictated by the social media mob, but it cannot be ignored, and nor should the views of more expert commentators who have ideas on how things can change and voice them only because they want this industry to thrive for centuries to come.