Lessons from companies that dazzled in downturns
By: Jan Brassem
By all signs, leading economic indicators, consumer confidence, stock market averages and a slew of other measures, the painful recession of 2008-2009 may have bottomed out. But the big question remains: Will the jewelry industry ever return to the good old days of increasing sales and robust profits?
It's no secret that this was not the first time U.S. companies have weathered an economic storm. In fact, many firms survived--although some precariously--in economically challenging times. Others even thrived to become household names. Who are they and how did they do it? Here are a few companies that we all recognize:
H.J. Heinz Co.: This company was founded by Henry John Heinz, who quickly went "belly-up" during a banking crisis (much like the one earlier this year), but was back at it again three months later. He led the company through product innovation, by determining the demand (need) for his product and, of course, by managing his cash flow (partly by selling his parents' furniture).
Procter and Gamble Co. (P and G): During the Great Depression, the company decided to market, market and market some more. P and G became the first company to market on radio, which was like the Internet of its time. A developer of Ivory soap, P and G also decided to sponsor little radio dramas, later to be called soap operas. The company's lessons were simple: create innovative product and market heavily during downturns.
International Business Machines (IBM): During the Depression, Tom Watson, the IBM chairman, decided to invest heavily in research and development, while competitors were in fact cutting R and D costs. By luck or premonition (some say inside information), the Social Security Act (1935) created an enormous new market, which IBM served. Watson set an example of leadership, entrepreneurship and insight.
Each of the "Big Three" companies exited their financial crises to become world-class corporations. While there are few similarities between these giants and the jewelry companies of today, these examples yield several lessons.
Surprisingly, each company, through dedicated leadership, had similar success strategies, namely product innovation and skillful marketing. (As an aside, an unusual amount of good luck supported each one too.)
"Every exit is an entry to somewhere else," wrote William Bridges in Managing Transitions, Da Capo Press, 2009, now in its third edition.
That "somewhere else" can be--and often is--years, decades, of uninterrupted growth and prosperity. The jeweler of today is thankfully exiting the 2008-2009 recession and entering a potentially prosperous future.
It is not too late for jewelers to position themselves to capture this prosperity by combining the lessons of the Big Three--marketing and product innovation--with today's "scientific management."
Marketing: The Big Three used intuitive marketing to propel themselves in difficult times. Instead of luck, premonition or who knows what else, the jeweler now has a long list of scientific tools to measure product demand. Marketing has become scientific.
While his customer base has become segmented, (i.e., Baby Boomers, Gen X, Gen Y, Millennial), the jeweler has the ability, through scientific analysis, modeling, productivity analysis, probability theories--you name it--to measure how each segment values a particular design or style.
One such tool, called "conjoint measuring," for example, measures via computer analysis the relative importance of marketing factors (price, design, packaging, etc.) for each design.
The Big Three also had an ability to segment their marketing media. P and G in particular was astute enough to select radio as an advertising media. Similarly, jewelry industry leaders were those shrewd enough to use the Internet to market and even sell their designs and brands.
Product: Without a saleable product, of course, nothing is sold. The Big Three developed exciting and profitable products--some are still around. This offers an important lesson for the modern jeweler.
While jewelry designs have generally grown in beauty and creativity, little has changed intrinsically.
Let's be honest, the jewelry industry will never grow as fast as technology companies, and demand for jewelry will remain single-digit. But can it never reach the stratospheric levels of other products? How can jewelers develop products with appeal across all market segments?
Perhaps the answer lies in finding a way to combine technology with design.
