Many innovators and strategists are obsessed with predicting how the world will change in the future, and then they then try and develop new products and business models to fit this “new hypothetical world”. As Jeff Bezos describes, it can be even more valuable to figure out what will not change in the future – here’s what he says in the video:
I very frequently get the question: “What’s going to change in the next 10 years?” That’s a very interesting question. I almost never get the question: “What’s not going to change in the next 10 years?” And I submit to you that that second question is actually the more important of the two. You can build a business strategy around the things that are stable in time.
In our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection.
It’s impossible to imagine a future 10 years from now where a customer comes up and says, “Jeff I love Amazon, I just wish the prices were a little higher.” Or, “I love Amazon, I just wish you’d deliver a little slower.” Impossible.
So we know the energy we put into these things today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.Jeff Bezos
So when you apply this to the world of watches, what do you conclude? It’s an interesting question, and one which I would be curious to hear responses from brands on.
There are obviously intrinsic and extrinsic factors when it comes to a watch purchase, since it is a luxury good whose price and function are only correlated by perception and emotion. If you wanted a device solely to tell the time, you need not spend thousands, or hundreds of thousands. Specifically, I’d imagine people would like to have increasingly longer service intervals, longer warranty periods, increased durability, longer power reserves and so on – these are the equivalents to Jeff’s examples of price and delivery time.
Less tangible, are the of course the extrinsic factors like resale value and street cred (or ‘hype’) level for each brand or watch. What appears to be true, is that the brands are taking a reactionary approach to their product strategy and focusing more on extrinsic characteristics, and less on intrinsic ones – which seems insane, because they have 100% control over intrinsic factors, and much less control over extrinsic ones.
By way of example – Vacheron Constantin has now found themselves aboard a ‘hype train’ with the Overseas watch, and as a reaction, they have closed deposits on the piece until further notice – as the proverbial waitlist, at least in London, extends beyond 5 years – based on the typical delivery schedule derived from their production timelines. If you asked anyone at Vacheron, they would say production simply cannot keep up with demand. Ok, so what?
Well, let’s say this is true – what should they be doing about it? They could potentially increase capacity to be able to fulfil demand – but this is a short-term gain and would probably upset existing collectors who see the market being flooded and devaluing their watches. Should VC care? Being owned by Richemont, this is still a possibility, to meet shareholders’ desires – but let’s hope not.
What is probably a better long-term play, is to simply take this current watch, and make it better in every way. Make another watch which will be a worthy replacement for this one – because that’s exactly what customers want! It could be thinner, it could have a less fragile movement, it could have a longer power reserve, it could come without a date window 🙂
Another one to watch will be AP, when they eventually launch the replacement for the 15202 at 39mm – it currently has a really archaic movement and when they launch, I wonder whether they will really blow the competition away, or simply offer incremental gains. The technology exists to offer upward of 100hrs power reserve for instance – yet we don’t see this too often. I am no expert on movement architecture, but some of these big brands have insane budgets, so how is it that the best ‘innovation’ is coming out of small time players? Capital allocation seems to be upside down.
Anyway, curious to hear what you think on the subject… how would you apply this if you were in charge of a watch company? What would you focus on?