Counter Positioning and Swiss Watches
In 1979, Jean-Claude Biver was a relatively young product manager at Omega, the Swiss Watch company. Omega, along with the rest of the Swiss watch industry, was reeling.
Asian companies such as Seiko and Casio began selling watches that used a battery powered quartz movement instead of traditional mechanical movements. Once they hit the market they were a massive success.
Quartz watches are cheaper, easier to produce, easier to maintain and more accurate than their mechanical counterparts. Due to this shift in demand, many Swiss Watch manufacturers went out of business. The carnage ultimately got so bad that the two largest Swiss watch manufacturers -- ASUAG and SSIH -- were merged together with the help of the Swiss Government in 1983 to create what would ultimately be named the Swatch Group.
In 1979, Omega was in the process of moving more and more of their watches from mechanical movements to Quartz. Much to the dismay of Biver.
Biver, who was a rising star in the industry, was very unhappy with Omega’s decision. From Biver’s perspective mechanical watches were not doomed, they were just mis-positioned. Because quartz was a technology, it was subject to the same fate that all technologies are subject to...massive initial success and then disruption.
Mechanical watches, on the other hand, were about craftsmanship and longevity. As Biver likes to point out...Big Ben is a mechanical clock and it’s been running for hundreds of years!
Little did his managers at Omega know, not only was the precocious Biver correct, he would eventually be credited for single handedly saving the entire Swiss watch industry. Biver achieved this by following a relatively simple playbook his entire career.
By positioning the brand he was running against his competition(counter-positioning in the 7 Powers* framework) and coupling that with patents and complimentary product development (cornered resources in 7 powers framework) which ultimately created an enduring luxury brand.
BLANCPAIN
Omega’s parent company, SSIH, retired a lot of brands during this crisis. One of which was Blancpain.
A few years later, Biver was still convinced that his strategy of positioning mechanical watches as an enduring luxury product was correct. So Biver, along with his friend Jacques Piguet (who happened to own a mechanical movement factory), decided to buy the decommissioned brand name Blancpain from SSIH for CHF22,000 (~$20,000). Blancpain had a very important attribute for Biver’s plan. Being founded in 1735, it is the oldest Swiss Watch brand in existence.
The first thing that Biver did was give Blancpain a new slogan.
“Since 1735, Blancpain has never made a Quartz watch and it never will.”
Over the next decade, JCB matched the slogan by innovating on mechanical watch movements. Less than two years after buying Blancpain, they released the smallest moonphase watch on the market at the time. 4 years after that they released the smallest minute-repeater movement as well as the thinnest self-winding chronograph. One year after that (1988) they released the thinnest split-seconds chronograph, in 1989, they released the thinnest flying tourbillon movement. All of this innovation was capped off in 1991, when they released the 1735 Grande Complication which included all 6 of Blancpain’s movements in one watch. The result was the most complicated watch at the time it was released.
All of this innovation led to Biver selling Blancpain back to Swatch Group (formerly SSIH, who they bought the brand from) for CHF60,000,000 in 1992, 11 years after taking over and reviving the brand.
While this story is great, and likely JCB’s crowning achievement, he wasn’t done using this playbook to build up an underdog brand.
HUBLOT
Biver stayed with Swatch post-Blancpain acquisition for 10 years and then took a year off. During this year off, he rediscovered his love for watches and decided to take on a new, entrepreneurial challenge by becoming the CEO of Hublot. Why Hublot?
The answer to why Hublot was that, over the years, Biver had done analyses of Swiss watch takeover targets. “Every analysis that I did came out the same: one should buy Hublot," he said. "It is a very clean brand with a clear, identifiable product. The overall concept, rubber, was never betrayed. The brand had never been prostituted," he said. "Other brands I analyzed had gone through many changes, so that the recovery process would be long and painful. My view was that Hublot was a brand slightly asleep. But when you sleep, you don’t make many mistakes. It means that I could wake it up.” 4
Hublot was a 24 year old watch brand in 2004. It was doing around $20 million per year in revenue4 when Biver took over. Hublot was known at the time for selling relatively small porthole style (Hublot means porthole in french) gold watches with rubber straps. This was unique because the use of rubber was considered a faux paus amongst other swiss luxury watchmakers.
Biver embraced this clear contrarian view of Hublot. He created a more precise brand strategy around the idea of fusion. Instead of mixing gold traditionally, Hublot used more durable materials like Rubber. When Biver took over, he took it to another level. Embracing the new idea of fusion and counter-positioning against gold’s intrinsic weakness -- it’s softness -- Hublot invested in research to add new metals to their precious metals to make them scratch resistant and much more durable. They still own a patent for this process.
To share this new message of “The Art of Fusion” and focus on the benefit of durability, Hublot focused heavily on sponsorships. The first and biggest of which was European Football/Soccer, but eventually went on to include F1, basketball, and cricket.
When Biver took over Hublot, he was given a 20% ownership stake. The intention was to buy all of Hublot in a few years, however there was a problem. Hublot was so successful Biver could not afford to buy it!
After taking over in 2004 with $20m in revenue, Biver grew Hublot to over $150 million in Revenue in 2007.7 This lead to an acquisition from LVMH Group for nearly $500 million in 2008.
WRAPPING UP
Biver stayed with LVMH post acquisition, ultimately running Omega, where we started this story, amongst a few others.
His counter-positioning, coupled with excellent execution led Biver to become one of the greatest luxury brand builders of all-time.
The key to counter-positioning, as Hamilton Helmer goes into in deeper detail in his book which I’ve linked in the notes below, is by positioning his brands against the core feature of his competition, his competition could not simply copy him as they woud dilute their own brand. A lose-lose scenario for his competition.
Then he built on top of that base by creating patents and innovations (most advanced movements at Blancpain, new materials at Hublot) to create the enduring brands that all watch aficionados know today. It is not enough to say you're different, you have to actually follow through.
Notes
1: https://www.wired.co.uk/article/jean-claude-biver-luxury-watches-lvmh-work-productivity-tips
2:https://www.hodinkee.com/articles/jean-claude-biver-explains-zenith-takeover-exclusive-interview
3: https://www.gq-magazine.co.uk/article/why-jean-claude-biver-is-ahead-of-his-time
5: https://www.youtube.com/watch?v=h_qDj7AbxCg
6: https://www.youtube.com/watch?v=WKZtNdKkrC8
7: https://www.businesswire.com/news/home/20080424005569/en/LVMH-Acquires-Swiss-Watchmaker-Hublot
