Wednesday, December 10, 2014

The Transfer Window Opens...

At Tag Heuer.

So by now many of you know that the the status of Tag Heuer CEO Stéphane Linder is that of "former".  The official word from Tag Heuer central is that he has "left to pursue other professional endeavors".  Generally speaking you don't tend to leave mid-week to "pursue other professional endeavors".  Feel free to draw your own conclusions.  The usual "niceness" crafted into a company statement that has probably been keeping warm in the "on deck" circle ready for dispatch for some time now.

I used to fantasize about being a "big swinging dick" in the watch world.  Running the show, Maserati  for a company cars, all the watches I could eat.  I am beginning to feel more and more that it is truly a poison chalice.  With the frequency and volume of watch brand CEO's cleaning out their desks I have drawn a few conclusions which may be fair, and then again maybe not.

1.  The watch industry keeps hiring a "type of guy".  Usually someone who has worked in the industry at a certain level and whether they've been successful or not, they are hired because they meet a profile that everyone is comfortable with.  He fails, they hire another in essentially the same mold.  Lather, rinse, repeat.  And somehow they expect that things will miraculously be different...

2.  The person brought in has in fact already been terminated.  This happened even before their first day in the office.  The cards were stacked against them from the start.  They might have a few of what people battling fatal illnesses refer to as "good days", but by and large their goose was already cooked.  They just didn't know it.

3.  The parent company has some pretty unrealistic expectations about what sales numbers should or shouldn't be.  The shareholders want to see growth, and growth is marked in sales numbers.  Now of course what this fails to take into account is sales numbers achieved through the "cleansing elixir" of the grey market where your worst sales quarter is suddenly one of your best sales quarters!  The shareholders are happy - you sold what you needed to!  But the perception of the brand starts to ease it's way down a "greased rabbit hole" that becomes increasing difficult to extricate itself from.  Think I'm kidding?  Why the f*&^k am I shopping for a Tag Heuer in an OUTLET MALL?!?!?  "Yeah, I stopped in for some irregular underwear and an Orange Julius and picked up this little beauty from Tag!"

This is moral hazard writ large for all of us to see.  The industry needs to change NOW, because it is cannibalizing itself and blaming it on China, or the strong dollar or the weak Euro or a hang nail...

The answer is simple - not sexy.  
1.  Make a good product
2.  Market the product, not some brain-dead partnership because you have childhood daydreams about playing pro soccer or being an F1 driver.
3.  Impress upon your board of directors that, in fact, the world has a somewhat "finite" number of potential customers, therefore it is not realistic to produce a number of watches at 3 times that rate and expect to sell them.
4.  The 80s are over, as are the 90s and even the 00s.  There is nothing wrong with growth, but I don't even like steroids in my sports, I sure as hell don't like them in my earnings projections.  Learn to be a bit more pragmatic, a bit more steady.   

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