TOKYO -- Many consider digital innovation a ticking time bomb for the luxury mechanical watch industry. Yet, as IWC Schaffhausen CEO Christoph Grainger-Herr put it: "Times change, but time essentially does not change."
Grainger-Herr, who became chief executive of the watchmaker in April, told the Nikkei Global Management Forum on Tuesday that mechanical timepieces and digital smartwatches are "fundamentally different products" and do not cannibalize each other.
"From a functional perspective, nobody needs a mechanical watch," the 39-year-old said in a session on luxury brand management and innovation in the digital age. Nevertheless, he presented a graph showing rising sales of mechanical products.
These watches offer "certainty in an otherwise very uncertain world," Grainger-Herr said, offering one reason for their enduring popularity. "People buy these products because they become part of [the family] for generations to come. I don't think a smartwatch will ever be able to deliver that."
Even so, digital innovation is clearly changing the watch business. Boutiques and high-end department stores used to be the main purveyors of mechanical products, but those sales channels are being disrupted by omni-channel marketing, Grainger-Herr said.
Thanks to big data, watchmakers can now manage stocks and promote their products more effectively. The IWC chief said he is not afraid of millennials' thrifty tendencies, arguing they can be reached with the right communication strategies.
As for his approach to management, the relatively young CEO said he advocates flexibility in the workplace. "My style," he said, "is to give people freedom to be creative and get things done."