+ 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?
Many species of cuckoos are known to leave their eggs in other birds' nests. Their success depends on letting entirely different species raise their young.
Ornithologists used to think that cuckoos simply wait for the right moment to lay their eggs in other birds' nests, but they have more moxie than that.
In a study published in the journal Ethology, researchers from the University of Granada found that the Great Spotted Cuckoo laid its eggs in magpies' nests while the magpies sat on them. These researchers thought that magpies had gotten sick of raising these ungrateful cuckoos and started sitting on their nests almost constantly while the cuckoos 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 retaliated with aggressive pecking, the cuckoo always 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 reported 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 wrote 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. When new products launch, the best companies are strategically aligned, from the sales force to the C-suite. They recognize that selling these products involves different barriers, and they develop new processes to overcome them."
In today's global business environment, the best companies must deploy the right resources—know-how, technology, processes, and people—to generate consistent, healthy growth.
One of my favorite business books is 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. It explores tactics for generating positive revenue.
The book examines the three fundamental modes—or "pathways"—for obtaining the resources needed to grow. These include developing the resources necessary internally or "building" them; contracting or partnering to get help; borrowing or " buying" 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, I know that the best organizations can innovate, create, and aggregate as needed, recognizing that these three tools, working together, are powerful.
-Marc
