The decision-making processes involved in strategy and innovation are riddled with cognitive biases. Perhaps that is why companies whose leadership focus on information coming from their customers and the market succeed over companies who practice ‘good management’ principles without doing the former as well.[1] That is, after all, what former CEO of Cisco, John Chambers, attributed the company’s success to: responding to market transitions, even at the expense of cannibalization and organizational restructuring.[2] The inability to rely on routine and standardized decision-making however, can be addressed by following frameworks such as that prescribed in Clayton Christensen’s book, The Innovators Dilemma, and by being aware of these common pitfalls. In this blog post, I will explore how some of these biases are currently taking place in the jewelry, watch, and accessories industry (JWA).
The JWA has slowly been transitioning in two major ways. First, the way people are buying has changed. The industry has not been exempted from the transition from brick and mortar to online retailing. Unfortunately, most JWA retailers are small, independently own businesses which lack either the capital, expertise, or con to capitalize on this transition. Hundreds of independent brick and mortar stores have closed in the U.S. in the past decade. The remaining retailers have attributed their success to ‘being the best’ at what they do. The remaining few were the most successful stores in their region and believe that their survival is due to ‘good management’ and a loyal customer base.
The second major transition has been the introduction of ‘disruptive technologies’, primarily smart watches and synthetic diamonds. Started by the Apple Watch, smart watches have led to a new category of accessories called wearable tech. This new product category has had a minor role in the market, with most products outstripping customer needs. Traditional retailers and watchmakers have struggled with how to incorporate wearable tech into their product line. As described in The Innovators Dilemma, these products have minor margins and a small customer base. Retails have had little incentive to invest in incorporating smart watches into their inventory and allocating significant shelf space or advertising.
Synthetic diamonds present a different challenge: the threat of cannibalization. Customers and gemologists alike are unable to detect the difference between real and synthetic diamonds.[3] These new stones have become more popular in the mainstream market due to the diminishing purchasing power of millennials, who are now getting engaged and looking for alternatives to the large price tag of a real diamond, while maintaining social expectations and pressures. Genuine diamonds are generally five times more expensive than their synthetic counterparts and make up about a third of most retailers profits.[4]
While the JWA is not as fast-moving as tech industries, it is facing many of the same challenges brought upon by emerging and disruptive innovations. Successful companies in this space should borrow a few lessons from companies in the tech industry, before it is too late.
[1] Christensen, Clayton M. The Innovator's Dilemma. Harper Business, 2011.
[2] Chambers, John. Cisco’s CEO on Staying Ahead of Technology Shifts.
[3] Perron, Celeste. “Can You Tell Which Diamonds Are Lab Grown?” Brilliant Earth, 30 Jan. 2020, www.brilliantearth.com/news/can-you-tell-which-diamonds-are-lab-grown/#:~:text=Although%20grown%20by%20scientists%20instead,you%20the%20chance%20to%20guess.
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