Foreword

The myth of Kronos devouring his children still has today in fact, especially today an interesting objective correlative: the observation, common to all men and thus truly democratic, that the passage of time relentlessly consumes our existence. But in the myth Zeus, who was after all the father of the gods, the symbol of power and wisdom, was saved from the fury of the old pagan god. In other words, the evolution of humanity, not to mention human life itself, depends on knowledge and the intelligent management of time. And theres no dynamic evolution without an orderly measurement. A watch is not, and never has been, merely a time-telling instrument. Managing, measuring and organizing time has always been an activity tied to the use of power. So much so that just two historical holders of power have had a similar potestas: kings and the Church. For both, the calculation and scansion of time were essential activities in order to exercise power. Thanks to their commissions, master clockmakers were repeatedly asked to improve the performance of time measuring instruments, from the most primitive models up to the most sophisticated jewels. At the same time, marking off the hours for princes and pontiffs wasnt merely about collecting functional mechanisms. Their forms, materials, stones, enamels, designs, which have been shown off over the centuries, brought about a constant evolution
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of the applied arts, and have had positive influences on all artistic output. Today, a few square centimeters of noble metal holds the culmination of 600 years of history. Its the story of man and time. The watch, especially the mechanical one, has always represented not only the objective passage of time, but also its successive and strong acceleration, an acceleration thats noticeable in particular from the 17th century onward and which has never stopped evolving from the Industrial Revolution to the conquest of space. Originally a product for a select few, since the 1930s the watch has become widespread in society, taking on (especially after the electronics revolution of the 1960s and 1970s) a value that is more and more about reflecting the personal style of those that wear it on their wrist. Thanks to the constant changes in the creation, function and technology related to timekeeping, the mechanical watch has taken on a role thats increasingly a reflection of ones personality. Brands and models, but also mechanisms and complications, have been studied and realized to represent and perhaps inspire different lifestyles, whether its sports enthusiasts or those with more audacious endeavors. There has been a constant evolution (sicut erat in principio) and refined technical watchmaking has attracted more and more fans to the topics that the long history of timekeeping has touched upon. In the last few years, weve witnessed an impressive and unchecked development of the entire watchmaking industry, be it from a heuristic and hermeneutic point of view as well as in commercial terms. In particular, the Haute Horlogerie brands have been protagonists of a diffusion that has seen an impressive and truly global growth, having revealed its preciseness but also its alarming protean nature. From San Francisco to Miami, New York to London, Moscow to Shanghai, brands offerings have multiplied, branched out and homogenized in countries apparently similar from a business standpoint, yet totally unique in terms of culture, customs and motivation when it comes to acquiring goods (and also services) typical of Haute Horlogerie.
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The work you have between your hands, Time to Change, has arrived at a crucial moment for this world: it serves as an instrument to help understand that which awaits brands and managers now that the explosive growth has been put to the test by the global economic and financial crisis. Several questions cannot be ignored: How does one stay faithful to the founding values of Haute Horlogerie? How does one preserve its exclusiveness? Which levers does one use to attract new clients (both the young and admiring fans), who are motivated by different cultures, perceptions and outlooks? Above all, has the cycle that pushed production volumes and Haute Horlogerie values to difficult to replicate levels now come to an end? Put another way, there was a rush forward and now one is a bit out of breath. Perhaps its a sign to stop and inhale in order to recoup oxygen and energy. In 2010, in order to sustain effectively the original values of this sector (its fundamental cultural cues and its attractive exclusiveness), things need to change. Indeed, one could say: Its time to change. This research, which has resulted in a new level of cooperation between the FHH and Milans Bocconi University (and when we speak of universities we are talking about youth and culture), outlines the findings of an in-depth analysis of the sectors most important markets (U.S., Japan, Europe, Asia-Pacific, South America) through dozens of interviews with key players in management, distribution and watch collecting. CEOs, local managers, retailers, journalists, opinion leaders and collectors have offered significant contributions to this work and for this I would like to express to them, in my capacity as president, my personal gratitude for having supported the FHH in this complex endeavor. This undertaking is firstly a scientific research and therefore represents an objective snapshot of the situation. Objectivity and truth are born from the authors complete freedom to investigate, and which is objectively verifiable since opinions expressed are put forth in conversations as opposed to preconceived notions or hypotheses. The freedom to judge is the basis on which to uncover the truth. From the information collected, one can outline the scenarios that brands and managers may encounter in the next two years.
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The Haute Horlogerie Fondation, ever faithful to its mission, wants very much to remain the axis around which revolves this world, a world that must disseminate culture and quality in order to attain credibility and a future. Culture has always been the founding principle for an art, namely watchmaking, that represents in a world ever more individualistic a happy achievement for those who want to live out time, their own time, in a true and earnest life. I would like to thank those who have shared with the FHH, the authors and the brands of Haute Horlogerie a critical phase in our recent history, and I ask the patient readers to be aware of one last thing. Namely, one has the personal and unrelenting responsibility to always dedicate the maximum effort to guarantee the future for that which is our passion: the measurement of time via the mechanical watch that has, in the words of Tosca, lived for art and lived for love, and which marks off the happy and beautiful days. Franco Cologni, President, Fondation de la Haute Horlogerie

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Preface

Today, every person who chooses to buy a quality mechanical watch has made a personal journey that touches on rationality and emotion, subjectivity and individualism, but one that also expresses the desire to represent their way of being with others who share his life. The watchmaking world has gone through years of great changes and evolutions, a portentous development for the business, with a greater number of larger collections that combine tradition and innovation, new interpretations or new applications of manufacturing techniques. But this is always done by respecting the heritage that allows for new inventions and creations in Haute Horlogerie. The recent history of the industry has transformed the Haute Horlogerie market into a welldefined and focused international circuit, one in which every brand and its management, retailers and direct distribution channels operate and compete. On a daily basis, each of the players deals with the different conditions and challenges that arise in the mature, growing and emerging markets. With the book Time to Change, the FHH has courageously chosen to investigate, using a strategic and managerial perspective, the most appropriate policies and tools for operating and competing in different regions, be it at the headquarters, country or retail level.
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As CEO of IWC Schaffhausen, I instantly supported the project and the research, since one of the authors of Time To Change is a country manager of our brand, as well as a FHH Delegate for Italy and Greece. Therefore, I asked for the cooperation of our worldwide subsidiaries to reveal to Luana Carcano and Carlo Ceppi the reality of each single region visited and researched by them, connecting them, without prejudice, with the most representative players of each specific market. This was in order to obtain the most objective opinions possible. There are over a hundred authoritative interviews from which the reader may draw upon. With the book Time to Change, I believe that the Fondation de la Haute Horlogerie provides an important and relevant starting point to analyze and think about key issues on which to graft the strategic and managerial renewal of the entire watchmaking industry. The effects of the global financial crisis of 2008-2010, the different distribution structures in areas not far from each other, the dissimilar speed of implementation of manufacturing strategies and marketing activities in different regions, and the new thinking about the use of the internet and the network anomalies caused by discounting and parallel imports are just some of the commonalities in the environment that manufacturers, who recognize themselves in the perimeter of FHH brands, confront. Its an environment that, in the common interest, must continue to be solid and roomy. I am very confident that the FHH knows how to renew itself and respect its great tradition, which perpetuates the charm that makes every mechanical watch an original and valuable witness for those who wish to unite it with the more intense and meaningful moments of their life. Managing the market, feeding the passion that must pervade the whole chain from production to watch retail, using the drivers of technology, communication and marketing being sure to respect each brands DNA in the process is our task as managers. Our thanks goes to the Fondation Haute Horlogerie and, in particular, to its President, Franco Cologni, who has always considered the doing culture a winning strategy.
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Culture and tradition are, in fact, the most effective fuel to perpetuate the human and historical content of our business and with it the charm of the watchmaking world. Georges Kern, Chief Executive Officer, IWC

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Presentation

Haute Horlogerie is a fascinating industry. It somehow lives in its own world, with its own industrial schema, infinite specialties, a vast network of highly specialized craftsmen, an impressive array of skills, and a very rich culture. It is also an industry that is, like its products, not entirely rational and driven by passion. Until September 2008, the Haute Horlogerie industry was living a dream. Every year was, amazingly, better than the last. The growth rate (+15-25% annually) far exceeded the average, and virtually every watch of every design, and at every price level, found a buyer. Back then, very few people were suggesting something was wrong. Unfortunately something was. The financial and economic crisis that kicked in during the second half of 2008 drew attention to structural issues that had to be addressed in an industry that lacks visibility compared with, say, the automotive industry, which is far more structured and where more indicators exist. In Haute Horlogerie, much like in other high-end luxury businesses, many brands and groups dont publish results and, except in a few countries, there is no consolidation of statistics and relevant figures. Historically, decisions are based largely on intangible elements, such as the reproduction of patterns observed in the past. The effects of this unprecedented crisis have therefore been particularly tough for the entire industry.
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This one-of-a-kind study, brilliantly conducted by Luana Carcano and Carlo Ceppi, focuses on getting this missing information to decision-makers so that the industry can be better positioned for the future. Luana and Carlo have put tremendous energy into compiling this study, based on field research and desk analysis. They have interviewed key people at brand and group headquarters all over the world, as well as the major players in the markets: brand managers, retailers, collectors, editors. Their analysis of todays situation and their hindsight have produced interesting findings. For the first time ever, this book draws thought-provoking and credible scenarios or new ways of thinking and behavior to ensure that past mistakes are not repeated. It is also an excellent opportunity to find out more about the industry, how it is structured, and how it operates through the people who actually make Haute Horlogerie today. No doubt you, the reader, will learn a lot about this exciting industry in these pages. Long live Haute Horlogerie! Pascal O. Ravessoud, MBA Director of Development, Fondation de la Haute Horlogerie

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