While the group has been tripping over its own human resources practices<\/a><\/strong><\/span>, its brands have been existing in various states of malaise \u2014 unable to act, spend, or release new products. Richemont is controlled by a board that exerts absolute power over all the brands within the group\u2019s umbrella. Now that the board itself cannot figure out how to chart a course into the future, all the brands are suffering as a result. The board believes it can solve problems by announcing new members, new leaders, and new energy. We will see how that goes.<\/p>\nNow let me discuss the practice of how watch brands use firing and hiring of top managers as ineffective tool to initiate change. The common story goes like this: \u201cWe just injected new life into our company by hiring this guy who did the exact role at another company. Let\u2019s all celebrate and look forward to a brighter future.\u201d This happens with increasing frequency, and yet all of the watch industry\u2019s problems remain, be it at the watchmaker\u2019s bench or the desk of top-level management. What is going on here?<\/p>\n
A former Richemont executive said it best to me when discussing how the Richemont board operates, it\u2019s not the people at the top who are the problem, but rather the system itself. Replace those roles with as many new people as you like, he explained, and the same problems will happen over and over again. The best analogy that comes to mind is like a watch movement itself. You can replace a set of gears repeatedly with new parts to your heart\u2019s content to fix a problem. If the watch movement architecture itself is to blame, then simply replacing new parts is never going to fix the problem. How the watch industry keeps getting this problem wrong over and over again is simply a testament to deeper dysfunction.<\/p>\n
What does a watch brand manager or employee need for success? A watch industry investor would probably say that they need a good system to work within and measurable parameters for success. Nothing could be less true in 2020. What a good manager needs in 2020 is available money to spend and relatively few restrictions on making decisions. If a brand can\u2019t offer an employee this in 2020, there is a good chance that funneling more and more people into overly restrictive roles will do no good.<\/p>\n
Finally, the biggest failure of the established watch industry\u2019s hiring practices is its insular and deeply protective approach to hiring new talent. From watch collectors and retailers to media executives and marketeers, the volume of good people with good ideas being absolutely squandered in the luxury watch space is nearly scandalous. People with established dedication and performance in the watch space are nearly never considered as potential managers or even hires at the very brands to which they have dedicated themselves.<\/p>\n
Let\u2019s say there is a particular third-party retailer who has become very skilled at selling Omega watches. Will the company ever think to hire him or her? Probably not. Let\u2019s say there is a public relations or marketing professional who has come up with a brilliant advertising campaign for a brand. Will they be considered as a new in-brand marketing manager? Probably not. Even though this is a global industry the watch industry still hires locals who speak the same languages and who will not disagree with them on material matters. If you are from another country, if you don\u2019t speak French, if you don\u2019t seem like the typical person to hire\u2026 you will simply never be considered or given some small carved out role in the corner without any real power or influence. The silver lining for the European luxury watch industry\u2019s biggest brands is that passionate new talent is all around them \u2013 and they are simply ignoring it due to their own determined indifference to change.<\/p>\n
We should encourage the European luxury watch industry to be mindful of two important facts. First, hiring laterally for key positions at companies is more often than not a terrible idea that has a track record of disappointment. Rather, companies should foster cultures of internal promotion and advancement. People who have been working at a company for long enough are often in the best position to help that company. Watch brands need to reward loyalty and long-term performance with promotions, not just stable jobs that don\u2019t come with increases in power and importance.<\/p>\n
Second, the watch industry needs to once again promote a culture of creativity and embrace new ideas outside of just the smallest brands. The typical story is that the brands that are the most open-minded are also those with the least amount of money. The more capital a company has, the more loathe they appear to be when it comes to trying anything new. This is patently dysfunctional because the industry is allowing good ideas to burn up while never capturing the resulting energy. Brands need to keep good people working at their companies, while allowing them to professionally grow within the company. Outside ideas are welcome, but outside people coming into otherwise rigid systems won\u2019t end up solving any problems.<\/p>\n
The situation has never been more dire than it is now. The general watch industry is sitting back observing, while its larger corporate pillars are teetering and may fall. Few people have confidence that Richemont, Swatch, and LVMH will miraculously come up with new management systems, hiring practices, and near or long-term strategies before at least some of their business units entirely fall apart. Buckling under the pressure of their own weight, the big groups are hardly the place to seek inspiring innovation until at least 2022 or 2023 at the earliest.<\/p>\n
Change needs to begin where it can, with the smaller, more agile brands who can start to encourage a culture of internal career development and acceptance of new ideas (not just outside ideas). If successful, they will create a new generation of Hayek-like mindsets. If unsuccessful, the larger luxury watch industry may experience a prolonged era of hibernation. The choice is in the hands of industry leaders.<\/p>\n","protected":false},"excerpt":{"rendered":"
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