The Problem with Eggs and Baskets

A little inside baseball - rumors were actually swirling on Tuesday that a decision was coming from Richememont / SIHH as to whether or not they would be moving forward and that a formal announcement would be coming that very afternoon/evening.  Now like any other consumer led business, the fans and journalists follow the machinations of the watch business with more than just a passing interest.  I suspect that several writers and outlets had already drafted their copy, simply waiting for the specific "quotable", made a quick update and hit send.  I, for one, was a wee-bit surprised that the decision took as long as it did to be aired out.  And let's keep in mind that BaselWorld still hangs in the balance.

Allow me to state something clearly - the cancellation of the "Fair Previously Known as SIHH" will not single-handedly bring down Richemont, or the other brands.  Moreover, if the worst does happen and the Geneva Auto Show and other events lead to the BaselWorld fair to reconsider?  Both the fair will survive and the industry at large.

But what what the Watches & Wonders slow Fandango with cancellation has demonstrated is that there was, essentially, no plan B.

But what it also has demonstrated is an inability, or simple unwillingness to consider hiring and working with a skilled practitioner of System D.

For those of you neither culinary or French, courtesy of the Urban Dictionary:
System D

System D is a shorthand term that refers back to the French word débrouillard, (one who is) skilled or resourceful at handling any difficulty. System D refers to a manner of responding to challenges that requires one to have the ability to think fast, to adapt, and to improvise when getting the job done.

The term gained popularity after appearing in the 2006 publication of Anthony Bourdain's The Nasty Bits. Bourdain's sous-chef likens the use of System D to being a modern-day MacGyver ... getting the job done with a mix of whatever resources are available and a great deal of personal innovation.

In The Nasty Bits, Bourdain references first coming upon the term while reading Nicolas Freeling's memoir, The Kitchen, written about Freeling's years as a Grand Hotel cook in France.

References 
* débrouillard (2009). Webster's New World College Dictionary. Retrieved May 24th, 2009, from www.yourdictionary.com/d-ebrouillard 
* Bourdain, Anthony (2006). The Nasty Bits. New York: Bloomsbury. 
* Nicolas Freeling (1970). The Kitchen. Hamish Hamilton, Ltd.

by Daisy Gatsby May 27, 2009

It goes without saying that you make plans and you try to stick to them.  But you also have a back up.  Many readers may not recall, but the 1986 World Cup was originally slated to take place in...
Colombia.  Colombia proved unable to pull it together in time, and the baton was passed to Mexico.  Mexico, who had hosted the event just 16 years previously.  The US made a bid, and by all accounts was ready, but got the fuzzy end of the lollipop on that one.  The World Cup is a HUGE event, and to be fair, they didn't just pick up and shift 60 days out, but what does bear considering is that they considered it not beyond the possible to make a change.

A few errors were made on the planning path of both shows:
1.  Holidays -
Ramadan and Golden Week.  
2.  Sequencing - 
The attempt to synchronize the two shows was admirable, but the SIHH's unwillingness to consider moving their show to Basel, and have it run at the same time is proof positive that hubris is a killer.

A solution -
Woefully simple:
Run Watches and Wonders and BaselWorld at the same time.  This would ensure that the US journalists who were "deemed" worthy by those arbiters of talent and actually invited to Watches & Wonders as members of the press would not have to choose which one.  Less travel expense, less expense for Richemont who would not feel the need to pay for hotel accommodations.

With SWATCH Group out, as well as some others, there is actually room for Richemont.  When you think about the fair as it is now, you do not get to walk past security and into the Tag Heuer booth, so it's not as if Richemont won't be able to control who gets in, and who gets out.

Curious to relate, several media outlets have expressed relief about the cancelation of SWATCH Group's ego trip (also known as Time to Move), as they would not have to spend that amount of time and money.  And I have already heard similar feedback regarding the cancellation of Watches & Wonders.  It is important to understand that coverage actually costs money.  For those of us in the "volunteer" media, that comes out of OUR OWN POCKET.  But if you are a business, and you are struggling to keep going with poor ad revenues, etc.?  You are probably not going to weep over not having to shell out several thousand additional CHF.

It is inevitable to potentially have all of your eggs in one basket, but as that other noted commentator on the watch industry, the Easter Bunny will tell you, you have to be nimble, quick, and have a back-up basket ; )

Stay tuned.

What Jeff Ma Could Teach the Watch Industry

In fairness, a lot of what will be referencing Jeff Ma's conversation with Dave Chang on Mr. Chang's podcast - The Dave Chang Show.

There were some very interesting notions that I thought might be worth a view through the lens of the watch world. For those of you unfamiliar, and I was certainly one of them, Jeff Ma is a graduate of MIT, with a degree in Mechanical Engineering, but is best known for his research and application of analytics in gambling (casinos, etc.) and now advises business leaders and a few professional sports teams on how to better understand analytics and think more clearly about how they run the day to day of their business.

A few ideas that they discussed:

Unconscious Bias - 
This is a notion that I have dipped into when thinking about what Bill James, Billy Beane and others have called out as foolish behavior.  What Mr. Ma went into detail about was the notion that we often think in terms of narratives rather than analytic realities.  And more often than not, the narrative is, in fact, false.  Essentially, what it boils down to is a pre-existing belief about how something should be, and how our unconscious bias will prevent us from looking at things as they really are.  Now as someone who spends the majority of his waking life working for a non-profit, social justing seeking organization, I know that unconscious bias is a very familiar term used when we try to understand societal inequities. But what Mr. Ma underscores is that unconscious bias will impact pretty much everything we do - which includes business.  

So how does that apply to the watch business?
Well, my fellow members of the Fourth and Fifth Estates can confirm that more often than not, a watch brand will hire a PR firm from the same pool of 2 firms that they always hire from.  Now the interesting thing is that they will typically work with Firm A for 2 years, not renew the contract and go with Firm B for 2 years, only to come back and work with Firm A again.  In other words?  Firm C who can actually provide solid analytical data that proves their firm could be as (if not more) effective will never be considered.  The same is true with brand leaders.  All too often, the same faces keep appearing in the same roles, merely changing jerseys like a professional footballer.  The unconscious bias prevents the hiring committees from making an informed hiring decision, because they are more comfortable hiring someone who fits the pre-conceived mold of what they are looking for, rather than the best person for the job.  Ever wonder why so many brand managers in the US are, more often than not, European expats?  

Misaligned Incentives -
Brand CEOs, and brand managers are most typically focused not on "winning" or having the most successful brand in terms of quantifiable data results.  More often than not, the greater concern is that of keeping their job, remaining employed.  While there are some true alternative thinkers and practitioners out there, that willingness to try something different is going to be stifled by the misaligned incentives they are operating under.  Is it better to make fewer watches, spend less money on red carpet PR events, sell what you have and not dump the majority of your product into the grey market?  YES.  But the misaligned incentives of the big-time watch world enforce a different mentality.  Winning is no longer having a successful respected brand, it is churning as many units out the door as possible, regardless of whether or not they are legitimate sales, or the red-headed step children of the grey market.  When a group of people in a brand are operating mostly from a position of self-preservation?  Well, I think you can see how that is going to turn out.

Omission Bias -
Essentially favoring inaction over action when we fear that the action might lead to further or worse harm.  Mr. Ma shares the story of when his mother suffered a stroke, and the doctor offered two options:
1.  Do nothing, the odds were only 22% that she would  survive beyond 60 days. 
2.  Operate, remove the blood clot and pro-actively relieve pressure on the brain, which might help the brain recover more quickly.  Now obviously brain surgery is nothing to be taken lightly, but the decision to operate had a higher probability of success, if it was successful.

And it is interesting to me to consider this, because in many ways the medical realities of suffering a stroke are not that dissimilar to the watch industry as a whole right now.  Think about how the stroke metaphor applies to the industry.  The industry, as a whole, is chasing option 1 - Inaction.  The fear of really rolling up their sleeves and understanding just how things are going to work is terrifying.  What if it's a mistake?  What if you get it wrong?  What if you don't get your bonus?  Essentially, the industry is playing not to lose, rather than playing to win.  Because the foolish hope that is being clung onto, is if they wait it out, and whistle past the graveyard, things will go back to the way they once were.  But what we are now understanding with the rupture of the grey market balloon?  Things were never that great to begin with.