Mark Ritson Columnist

Mark is an Associate Professor of Marketing at Melbourne Business School and is recognised as one of the world's leading experts on brand strategy. His clients have included McKinsey, PepsiCo, Donna Karan, Johnson & Johnson, Dom Perignon, Baxter, De Beers, Krug, Ericsson and WD40.

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Apple not a forbidden destination for Deneve

Published 11 July 2013 00:06, Updated 11 July 2013 12:00

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Apple not a forbidden destination for Deneve

I was in Paris last week when the news filtered through that Paul Deneve had resigned from his role as CEO of Yves Saint Laurent. The news was surprising for three reasons. First, Deneve had been in the role for barely two years – a minuscule tenure for the luxury industry where presidents tend to occupy the big chair much longer than other sectors. Second, despite initial questions being raised about his decision-making, Deneve was beginning to enjoy significant success at YSL. Last year his brand grew sales and profits faster than any of its sister brands in the Karing luxury goods group. But the third reason was the most stunning of all – his destination was Apple.

Crossing the threshold from luxury to any other sector is relatively unheard of at Deneve’s level. Granted he had worked at Apple previously, but that was two decades ago, when both he and Apple were very different.Clearly this was a big gamble by Deneve and an even bigger one by Apple. So what motivated the move?

Apple was typically cryptic when it announced Deneve’s new role, stating only that he was going to work on “special projects” and that he would report directly to CEO Tim Cook. The media has been bubbling over with its own theories.Depending on what you read, Deneve had been hired to run the emerging wearable technology part of Apple’s business; or spearhead their rapidly approaching launch of the iWatch; or transform Apple from a technology company into a luxury brand.

None of which is true.

To understand why Apple hired Deneve, you have to first understand the nature of luxury brands. There is a widespread fallacy that luxury brands are restricted to certain categories: fine wines, leather goods, fashion and watches and jewellery.I’ve spent 15 years working with the biggest and best luxury brands in the world and while each is unique and remarkable in its own way, study them carefully and a similar picture usually emerges.

Disruption and creativity

Start with a founder who has a disruptive vision and an artisan’s gift to create something different. The old black-and-white photographs of Coco Chanel or Christian Dior misrepresent them as conservative and austere – like all great luxury founders, they were pirates, entrepreneurs and creators of astonishing talent. Second, put them in a category that is newly emerging and deemed to be radical and emergent by society at that time.

It might sound odd today, but once upon a time champagne was an unusual new discovery, and only a century ago wearing a wrist watch was the original wearable technology – a device that would cause gasps when it was revealed on a wearer’s wrist. Third, and equally important, maintain mythology though secrecy. Unlike the competition, keep your formulas and strategies secret and maintain your legend scrupulously.

Finally add time – lots of it. While the original products may begin to fade, the legend for creativity and the mythological status of the house behind these creations builds the brand into something above the competitors that subsequently arrive.Heritage becomes the brand’s ultimate advantage and even though history records most luxury brands taking multiple missteps in the intervening years, their status and potential remains undiminished.

Now take this formula and apply it to Apple; two things become clear.

Founder (disruption x creativity) x Newly Emerging Category x Secrecy x Time

First, Apple does not need to transform itself into a luxury brand because it already fits the equation perfectly. Second, Paul Deneve was not hired to work on wearable technology or the iWatch. He was brought in because Apple has correctly realised that they don’t need technology executives to run Apple, they need someone with genuine luxury goods experience. Ignore the whispers from Paris, Paul Deneve has not left the luxury goods business. Far from it. He has simply upgraded from a relatively small luxury brand based in Paris with $700 million in revenues to another – 250 times bigger – that’s based in California.

Mark Ritson is an associate professor at Melbourne Business School and a consultant to global brands.

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