Luxury, Tradition and Irrationality
One of the most interesting animal foibles that luxury exploits in every one of us is not the desire for exclusivity, the pursuit of niche satisfactions or even the crafting of everlasting memories. Rather, our capacity to think in irrational terms and to sacrifice elements of our objective reality in pursuit of fantastical dreams is what makes the entire luxury industry possible at all.
Nowhere is this more clear than when product segments evolve to appropriate technology as an enabler for luxurious experiences rather than as iconoclastic vulgarity.
Jean-Claude Biver, non-executive President of LVMH’s Watches division and until recently its operational President, recently attended a session of the Global Strategy MBA class at INSEAD to discuss the case of Tag Heuer’s Connected watch.
The central tension in the case comes from the challenge facing Swiss watchmakers with the emergence of the smartwatch category. Tradition has long been a feature of pride of Swiss watchmaking, which made it past the turbulent transformation of the quartz revolution by staying true to high engineering and making breathtaking works of art with lambskin straps for everyday wear.
“Technology,” on the other hand, “grows by killing the past” notes Jean-Claude. In his 2018 biography¹, he contrasts technology with art since, “unlike technology, art never becomes obsolete. A painting by Matisse or Renoir may not please the new generation but it cannot be obsolete.”
The challenge modern technology presents for manufacturers of luxury goods is the notion of ephemerality. Even highly engineered technological goods that prize form as well as function suffer from the curse of being made obsolete with the relentless march of modern science.
On the other hand, the renown of the Swiss watchmaking tradition lies in the respect of artisanal knowhow and highly cultivated timepieces beyond their ability to actually tell the time. “As an indicator of the time, my phone is more accurate than my watch,” comes the startling admission, somewhat self-evident in retrospect. Watchmakers take pride in accuracy, to be certain, but they especially take pride in complications that go well past day-to-day need. The word ‘complications’ in itself captures succinctly that which makes them quite so compelling.
A recent example of the level of dedication to watchmaking as an art comes from Jean-Claude Biver’s own flagship brand, Hublot. In 1901, divers uncovered a mysterious machine off the coast of the island of Antikythera, Greece. It featured gears and knobs and for decades was assumed to have been an artifact misplaced among Ancient Greek relics in the same find. It accepted inputs through knobs and dials and outputted the moon phase with a remarkable degree of accuracy, deviating a mere 0.15 seconds per day. Advanced imaging later uncovered inscriptions that placed the origins of the machine in 300–100 BC, making the astonishing Antikythera mechanism one of the world’s oldest computing machines.
In 2012, Hublot built miniature replicas of the mechanism, launched a series of diving watches and a landmark movement, Calibre 2033-CH01. The limited-run Hublot Masterpiece MP-08 Sunmoon watch, with a complication inspired by the Antikythera computing engine, is a remarkable piece of engineering that ran for an eyewatering €300,000. The Antikythera complication illustrates, to an extreme degree, the level of artistic expression that luxury watches indulge in to sell a product to discerning consumers.
At face value, the Tag Heuer Connected Watch appears difficult to reconcile. Built with legacy watchmaking materials such as titanium, steel or ceramic in a round case, the watch nevertheless houses an Intel Atom processor and between 512MB and 1GB of RAM, running Android Wear as an operating system.
What role is there for a watch that might not work with the latest software update in a few years? Apple demonstrated that consumers were willing to put up with it for €400 but Tag Heuer’s Generation 02 Connected Watch starts at €1,000.
Tag Heuer appeals to the discerning consumer by involving the same production processes and the same designs available on disconnected watches. Jean-Claude Biver explained that the design team worried a lot about the problem of bridging eternity with ephemerality. They ended up producing an analog component to the watch to give buyers the option to make their watch ‘eternal’.
The surprising outcome was that consumers did end up buying the Connected Watch in droves but totally ignored the analog module. “Consumers are part of a new generation accustomed to obsolescence.” Buyers of the Connected Watch are comfortable buying into a technology platform that they know they might have to stop using in a few years. Granted, the analog component would cost the consumer a further €1,000 but a total cost in the €2,000 range is very much on the low-end of what a discerning watch consumer might spend on a Swiss watch, including a Tag Heuer.
The blinding insight is that 2018’s young watch consumers grew up with the internet and are used to not actually wearing a watch at all. If the Tag Heuer Connected Watch appeals to them at all, the first thing it has to do is speak a familiar language. Its Connected nature is not a remarkable feature, it’s an expectation as natural as understanding that modern phones come with touchscreens instead of buttons.
The final and most important appeal it needs to make is to the same irrational nerve that makes people travel in their minds to a 1901 bathyscaphe in Greece when they read about the Antikythera machine, idly thinking about a €300,000 watch. Or when they idolize their Formula-1 idols, project onto heroic tennis players and listen to their favorite musicians.
“Why should a consumer pay €2,000 for a connected watch? Why wouldn’t they? Any watch over €50 is a highly irrational purchase. At €50 you should buy a Swatch. It tells the time, it’s fun, it’s high quality — honestly, it’s the best watch money can buy at that price. Above €50 you have entered the world of irrationality. Irrationality is about fantasy. It’s about dreams and about ideas.”
A watch is not a time-keeper, a watch is a communication tool that people project onto. The modern consumer doesn’t make the distinction between a Connected watch and an analog watch, to them they are simply a watch. The one they’ll end up buying will be the watch they see as part of their world and speaks to them with familiar vocabulary.
Jean-Claude Biver has spent a lot of resources and energy connecting Hublot to the world of football (spheres not pigskins). His reasoning was that in a stadium with 90,000 people, there’ll be 10,000 kids. Of these 10,000 kids, a sizable number will likely be in or near the target consumer segment for a Swiss watch in 30 years time. Even if only 10 kids end up entering his target market, Jean-Claude Biver wants to make sure the only watch they dream about is Hublot. His objective with football partnerships is to make sure that the world these kids are immersed in features Hublot at every turn. “When the consumer thinks Hublot is part of his world you are done selling. All you need to do is wait.”
Luxury involves objects that have heritage, knowhow, tradition, substance and objective quality. But most importantly, they appeal to people’s irrationality and they write on the canvas of people’s projections about themselves. Luxury product categories may lose functional appeal over time but innovation can help them stay relevant by appropriating the elements of modern design language that consumers are accustomed to. Whether a Tag Heuer has an automatic movement or a touchscreen, it’s still the watch Lewis Hamilton wears and challenges young buyers to Don’t Crack Under Pressure. Tag Heuer’s promise of avant-garde Swiss Made technology remains whether a consumer expects a step counter or a moon-phase complication. The design language is appropriated from technology and repurposed in the mold of tradition. “Innovation cannot nonetheless be built on something that is unsustainable. Our base is tradition, quality, status, exclusivity and dreams. On that base, you can build anything. Tradition can be the basis on which innovation is built.”
Since Connected Watches are part of our collective consumer vocabulary, where is the upper limit? Is there room for a €10,000 Intel Inside Rolex? Jean-Claude hesitates, “why doesn’t Rolex make connected watches? Why should they? Why should Rolex sell something for 2,000 CHF when they could sell something for 10,000?” But by Biver’s own framework, the fact of the matter is there is no reason why there shouldn’t be one. Rolex only needs to inspire the same dreams in future consumers who expect touchscreens in their watches to justify the creation of a €10,000 Connected Rolex.
The lesson the designers of the Tag Heuer Connected Watch learned was that its luxury wouldn’t come purely from its ‘eternity’ as a Swiss watch, from its price or from pandering to tradition. The designers tried to make the same watch as they had always made and realized people were interested in a Connected Watch for the projection it allowed, not for the Connected functions it performed. Jean-Claude Biver strongly believes in the value of tradition to Swiss watchmaking but all the same warns in his biography that “repeating tradition is the role of a museum, not a business.”
¹ “The Wizard of Watchmaking”, Jean-Claude Biver and Gerard Lelarge
Luxury, Tradition and Irrationality
Research & References of Luxury, Tradition and Irrationality|A&C Accounting And Tax Services
Source
