Brigadoon Weekend = Global Street Smart Ideas
May 1, 2021
Business Models, LVMH, and Bernard Arnault
A cuckoo bird is an odd inspiration for business success.
I mean, they're also shameless parasites - who wants to be a part of that?
You see, many species of cuckoos are known to leave their eggs in other birds' nests. Their whole means of success depends on letting entirely different species raise their young.
Ornithologists used to think that cuckoos would simply wait for the opportune moment to lay their eggs in other birds' nests, but it turns out that cuckoos have more moxie than that.
In a study in the journal Ethology, researchers from the University of Granada found that the Great Spotted Cuckoo laid its eggs in magpies' nests while the magpie was sitting on the nest. These researchers thought that magpies had just gotten sick of raising these ungrateful cuckoo birds and started sitting on their nests almost constantly while they were incubating their eggs.
In Darwin-esque brinkmanship, the cuckoo called the magpie's bluff and went for the crazy (cuckoo, if you will) option, laying eggs in another bird's nest while the bird was still sitting there.
Even when magpies fought back with aggressive pecking, in every single instance, the cuckoo accomplished her mission and laid her eggs.
That is some moxie.
This brings me to business models, LVMH, and Bernard Arnault.
In 2019 LVMH announced that it had purchased the American icon Tiffany for $16.6 billion, adding to its sprawling luxury goods empire.
The Financial Times reports the acquisition is the latest in four decades of voracious dealmaking by Arnault and marks the luxury sector's largest deal ever. Tiffany, known for its robin's egg blue boxes, will join a stable of LVMH brands that has diversified far beyond its roots in Christian Dior couture, Louis Vuitton luggage, and Hennessy Cognac to include Rimowa suitcases, make-up by pop star Rihanna, and even train journeys across Europe on the Venice Simplon-Orient-Express.
"Arnault is like a cuckoo: he moves in and takes over others' nests rather than building his own," says Dana Thomas, author of Deluxe: How Luxury Lost Its Lustre.
Arnault has never stitched a bag, designed a ring, or launched a product - he and his team have simply made them better.
Going from zero to one sounds sexy and will get you on the cover of magazines, but a better move might be to innovate and make something better.
Anyone who has launched a new product and tried to sell it knows how challenging this process is - even for the best-funded, best-organized blue-chip companies.
Thomas Steenburgh, a marketing professor at the University of Virginia Darden School of Business, was inspired by his early career at Xerox to discover why firms with stellar sales and R&D departments still struggle to sell innovations. The answer, he finds, is that too many companies expect shiny new products to sell themselves.
Steenburgh penned this in the November–December 2018 issue of Harvard Business Review: "Successfully executing an organic growth strategy requires a deep and lasting commitment from the entire senior leadership team, because bringing new-to-the-world products to market transforms selling organizations as much as it transforms buying organizations. The best companies are strategically aligned, from the sales force to the C-suite, when new products launch. They recognize that selling these products involves different barriers, and they develop new processes to overcome them."
In today's global business environment, it is clear that the best companies must field the right resources—the know-how, technology, processes, and people—in the right way if they are to have any chance of generating consistent, healthy levels of growth.
Build, Borrow, or Buy: Solving the Growth Dilemma by professors Laurence Capron of INSEAD, and Will Mitchell of Duke University's Fuqua School of Business, is one of my favorite business books exploring tactics for positive revenue generation.
The book examines the three fundamental modes—or "pathways"—for obtaining the resources needed to grow. They are developing the resources required internally, or "building" them, contracting or partnering to get help, or "borrowing" them, and acquiring or "buying" them.
According to the authors, companies should be adept at all three.
From my own business experience as an entrepreneur and consumer, the best organizations can innovate, create, and aggregate as needed - recognizing that these three tools working in concert are powerful.
DEEP DIVE
Bernard Arnault: France’s ‘wolf-in-cashmere’ billionaire: Arnault’s story is not exactly rags-to-riches, but it does reveal a man driven by ambition who built his own empire.
AFP
The perfect paradox of star brands: An interview with Bernard Arnault of LVMH: Who would want to run a company that makes and sells products no one needs? Only a fool, right? Unless, of course, the company is LVMH Moët Hennessy Louis Vuitton, the world’s largest and by far most successful purveyor of luxury goods.
HBR
Bernard Arnault: ‘I always liked being number one’: One of the world’s richest men on luxury, LVMH’s succession — and taking a point off Federer.
FT
Finding the right path: Executing a new strategy nearly always involves acquiring new resources and capabilities. Since firms can’t possibly get everything they need through internal development, it seems reasonable in theory to expect that they’ll often turn to license agreements, alliances, and M&A as well.
HBR
Here’s how to turn all your salespeople into stars: How do you motivate your sales team? What strategies are best for helping your top, middle and bottom performers scramble to a higher plateau?
Fortune
How to sell new products: Focus on learning, not performance.
HBR
BRIGADOON WATCHES
Bernard Arnault - Full Q&A @ Oxford Union
Bernard Arnault, Chairman and CEO of LVMH | The Brave Ones
A fireside chat with Tom Steenburgh, Senior Associate Dean, UVA Darden
INSEAD Professor Laurence Capron on Corporate Growing Pains: Build, Borrow or Buy?
Build, Borrow or Buy: Will Mitchell
BRIGADOON EVENTS
Brigadoon May Call | The Poetry of Leadership
Fateme Banishoeib | heARTist + Founder @ ReNewBusiness
May 19, 2021
Brigadoon June Call | Adventures with Fiat Pandas + Autogrills + Negronis
Matt Hranek | Founder + Editor @ Wm Brown Magazine
June 16, 2021
More details and passes - click here.
Thanks for supporting Brigadoon. See you next week.
-Marc
Curation + commentary by Marc A. Ross | Founder + Chief Curator @ Brigadoon
Brigadoon is always powerpoint free and conversation-driven for better insights and connections.
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