What can leaders learn from luxury?
What can leaders learn from the luxury goods industry? This interesting question is posed by Markus Kramer here. Makus knows a thing or two about luxury goods, having been Global Brand Director of Aston Martin. He was kind enough to be interviewed as part of my social brands research and, more importantly, arrange a tour of the Aston Martin factory for me.
If your category is a long way from luxury goods you may be asking yourself how relevant this question is. Well, one simple reason to read on is the killer data that Markus kicks off with (below), comparing the S&P Global Luxury index (blue line) Index versus the S&P 500. This shows a consistent pattern of growth and ‘outperformance’ for the luxury goods industry.
So, what can we learn from this? The explosive growth is Asia is a factor. But Markus suggests three further learnings that have broad application.
Anchored in heritage
Successful luxury brands have a rich history they can draw on. Often, there is a founder at the heart of the original business, who gives a sense of identity to the brand. Is some cases, such as Patek Philippe (below), family members continue to play a leading role in the business. As Markus says, "This provides them with anchorage, a clear sense of why they exist, what they are good at and whom they serve."
=> Look back at he heritage of your brand and what made you famous. What "brand truths" can you find by digging into your brand and business history?
I saw for myself at the Aston Martin factory a culture of excellence and personal attention to detail. Every Aston Martin engine block carries the name of the final inspection engineer. And the painting alone of each car takes 50 hours. As Markus says, "Craftsmen, their skills honed over decades and generations in some instances, are at the core of what the luxury story encapsulates: something special made for someone very special."
=> Are people in your business passionate about crafting your product or service, however humble? What touches can you add to your product to show you care?
Luxury companies live out the promises they make to customers by going to great lengths to source the right raw materials and then craft these to make exceptional products. "The materials they use are honest, real. In turn, this builds trust with customers over time," as Markus comments. This approach can be seen in Nespresso, with a real investment into the materials used, whether it be in the coffee capsules or the design of the boutiques.
=> What care and attention is being put into your supply chain? Is this focus on cutting costs, and maybe even corners? Or on adding some value and integrity into your product to support a premium price?
In conclusion, as Markus sums up in inspirational fashion, "If executive leadership would root more strongly in heritage and purpose, celebrating a culture of excellence based on integrity, humanity and trust, would we not be better off?"