A TimeZone Interview With Fabian Krone

TimeZone Interview With Fabian Krone

TimeZone Interview With Fabian Krone,

CEO of A. Lange & Söhne

Conducted at the SIHH on April 6, 2005

TZ: Now that we are approaching the first anniversary of your being named CEO of A. Lange & Söhne, what goals did you set for yourself and for the company during your first year, and how are you doing on those goals?

FK: Well, I have been with the company now for two and a half years and I can say that in the first year the target was to clean up some issues with the distribution and get some organizational matters in the product development done, so when I was appointed CEO last year in May things were already happening. I think now we are in a situation where we came back to be in line with the product philosophy …with the brand philosophy of A. Lange & Söhne - in the products, in the design of the products, in the design of the movements, and in the functions, so that was actually my target to try to get back on the steps of Adolph Lange and to get back on track with respect to the history and what was done in the first 10 years. In the products, I think the Lange team has managed to do that with the Lange 1 Time Zone and also last year with the Lange Double Split.

TZ: What has been your best moment as CEO?

FK: You know it's very hard to say because there are many best moments. One is when I have the opportunity to pass through the manufacture, and the second is when I have the opportunity to talk to customers. But the most beautiful moment of course is when the ideas which are developed during one year are realized: a product is ready and you say “Wow!”, and then you really have a feeling of emotions in the stomach...

TZ: What is the process for determining which new model will be released, or what your next project will be? For example, there will be a new watch next year, or more than one. What is the process for determining which watch will come next?

FK: Well, during my first year with Lange, we’ve done big efforts on trying to understand where we want to go to. Where we're going to with the products, where we’re going to with production capacity, where are we going to in the distribution. And so what we have found in the last year is our roadmap. For example, we now have a long distance roadmap on the product development....

TZ: So, if I may, and I am sorry to interrupt, regarding product development there would be a list that says "In 2006 we will introduce this model, in 2007 this model, in 2008 this model...."

FK:…We have a list that is out to 2014, it says we should have certain models. Of course the list is flexible, we always can do some changes. It takes three to five years, sometimes a little bit more, to develop a product, so we have set out clearly which products will be launched. But there is no hurry…there is no stress… there is nobody pushing us to launch the next new product next year and so on. One of the most important decisions that was taken is to step back. Considering the multitude of new launches of new products from many brands, what we're doing is exactly the opposite: we have launched this year one, main product. That’s it. It's a very risky step we're taking. In my opinion, there is a slight inflation of new products in the market, so we're trying to focus on one.

TZ: When you're determining which product will be next - where products fall on the list, for example whether a product is in 2006 or in 2009 or in 2012, what are the factors that you consider? Do you look at the competition? Do you say “That company has this complication, and we must have one as well?"

FK: We do not have a big marketing machine which does market analysis and so on. We have watchmakers who have lovely ideas. If we were to have asked a couple of years ago “What is the new function that you need for your customers?” nobody would have said he needs a double rattrapante. So I think it is our job to create the new demand… to create new ideas in the watchmaking. If we want to try to be ahead, we have to create new ideas and new functions which are not yet on a wristwatch. And of course we’re working on that. There will again be something that has not existed before.

TZ: Each year it seems that watches grow larger and larger. Do you see that as a fad, or do you think larger watches are here to stay?

FK: I think there is a certain trend that the watches are getting bigger, but slightly bigger. And I think the trend is that there’s some exaggeration on the market now. So on one side it's a trend - so it’s fashion, but on the other side the effect is that you will have slightly bigger watches. So I don't think that in the next 4, 5, or 6 years we will go back to the 36 or 38 millimeter watch. I think the 39 to 40 mm watch will be the standard, like it was 37 or 38 mm a couple of years ago. I think the 43 to 45 mm and whatever you see, that's quite fashionable.

TZ: Some people have commented that in their view, with the large Lange 1 or Grande Lange 1, the proportions were not quite as aesthetically pleasing as the original. How would you respond to those comments?

FK: After nearly 10 years, it was time to offer an alternative dimension of the Lange 1 to our customers. The sales show that we where right.

TZ: I know you have a background in the automotive industry, and people often like to draw analogies between wristwatches and automobiles. I've heard people say if an exotic automobile can be serviced in 10 days, why can't an exotic wristwatch be serviced in 10 days? What would you say to those people?

FK: I think that's a nice question, thank you very much, because I never thought about it that way. When I think about it now, the big difference is that a car driver, normally has this retailer who has complete service and complete sales. So they are trained and they sell a certain amount per year. Normally there is exclusivity - selling two or maximum three brands - so he can actually concentrate on teaching and training his mechanics on that car and that model. I'm not saying it's better or worse in our business, but in the watch industry, you have partners of the manufacturers, they have up to a few dozens brands, so I think we would have a problem to train the watchmaker on all of them, especially the high-level models. That is one point.

The logical consequence is that the watch in many cases has to be sent back to the central service. This unfortunately takes time. To explain the complexity of servicing a A. Lange & Söhne to the customer we have introduced the “History of your watch”. This book explains the servicing process and gives the service-watchmaker the opportunity to note the masterwork which has been done on the watch.

TZ: At the Basel show this year, Glashütte Original introduced a new movement in which they split the three-quarter plate. One of the reasons given for doing it that way is ease of service - it speeds the servicing of the watch. Do you think Lange & Söhne would ever take a similar step, or do you think that you will maintain the tradition of the three-quarter plate?

FK: First of all, if I say there's no compromise for us, remaining in the steps of Adolph Lange and the old historical watches, there's no reason to change. Now you could say it's more efficient. The fact that we are assembling and disassembling each movement twice, we could say: OK, we do it faster, assembling once and not disassembling any more, for efficiency reasons. But I think there's no efficiency reason to split the three-quarter plate. They may have their reasons, and of course I respect the reasons. I think it's not the way to go for us, because maybe you can shorten the lead time in the service by a couple of hours, so increase process efficiency. At the end it is not that what our customers expect from an A. Lange & Söhne watch. It is beauty, the uncompromised art of watchmaking.

TZ: At the Basel show this year, Patek Philippe, which is generally considered a traditional and conservative company, introduced a movement in which they incorporate a silicon escape wheel. I'm wondering if you see Lange & Söhne going in that direction at all, for example experimenting with or using exotic materials to improve the movement.

FK: I think the step which Patek Philippe has taken is a very interesting and excellent step because they have managed to do something in watchmaking that not many are able to do. And the reason why they have done it is to increase the quality and decrease the services, so there is a useful reason, it is not a gimmick. I could imagine that a step like that Lange also takes, as long as it is not a gimmick, as long as it is really useful….

TZ: What do you see as the greatest benefit and the greatest drawback to being part of a group like Richemont?

Well, the big benefit is surely that, although a traditional small company, A. Lange & Söhne, was and will always be a very international company, because the customers are international and the partners are international. They have to be serviced and they have to be managed and we have to work with them. And to work with them, we have to be nearby. And to be nearby we can all do an organizational structure… an A. Lange & Söhne organizational structure, or we can use the Richemont platform. So the big advantage is in the distribution, and we are able to have our own organizational structure in Japan, in Hong Kong, in America with our own people. So what Richemont does is the whole back office, which does not touch the retailer or our customer, like HR, controlling, and so on.

The other big advantage is surely that being in a group like Richemont, there is big innovation and energy in this group. There are highly motivated people running the different companies and that is very motivating. That encourages us to also go faster. The disadvantage is, I don't know... I couldn't tell you (laughter). Well, of course since we’re in Glashütte, far away from everywhere, we are quite independent in what we're doing, so I actually do not see a big disadvantage.

TZ: Do you see Lange & Söhne ever producing watches in stainless steel?

FK: This is a question which is often asked. We have a very limited capacity, which we are not able to increase very much. We have around 350 employees, of which around 50 % are watchmakers. To find a watchmaker is not easy. So we have a school where we train them for three years and they come into the process. So before we are able to increase the capacity, it takes time, and if we increase by maybe 500, 600 watches, this is nothing. So the question is “Why do stainless steel?” If we do it, we will probably increase the demand and will have a price which is lower than today, and we will not be able to deliver those watches. So there's not a reason today to do stainless steel.

TZ: Are there any plans for sport watches or for a military or pilot-inspired line?

FK: I think we are in the market now where others are trying to get in. In the whole field of water and air, with all the divers and pilots watches, there are so many competitors and they're all trying to get market share and so on. And if we do this, it would have to be in stainless steel. For the time being, we do not want to get in this competition. If we do a sportive watch – you could also say that the Datograph is a sportive watch - if we pursue that, we would try to find something different, and that could be – that is open.

TZ: Do you see Lange & Söhne production ever exceeding 10,000 pieces per year?

FK: 10,000 watches a year in the world is not a lot. So if we would find further 250-300 watchmakers we would maybe try to get there. But, that is a big, big bottleneck. And we will remain on the strategy of having only our own movements, and we will increase the number of parts or elements that we produce in-house. We will not buy movements like others do and change it a little bit, which is another reason why we will not be able to exceed it. In the next 10 years, were not planning to exceed that number.

TZ: Turning now to the new Time Zone watch, the case diameter is 41.9 mm. Was that diameter driven by an aesthetics or by the size of the movement plus the world time complication?

FK: Exactly. This is the dial of the Lange 1 of the “old” Lange 1, plus it has the city ring, so that combination is one reason why we had to have the watch in that diameter. And the second is that the movement actually got bigger because of the further mechanisms and components which are in it.

TZ: What was the inspiration for the mechanism that allows the owner to switch the home time from the small time display to the large time display?

FK: Our watchmakers never stop. I mean they never stop increasing the quality and increasing the complexity, not for the sake of complexity, but asking “What happens if I do that and that? Is there a function which allows me to do that?” So they actually never stop. They do something on one day, and the next day they say “Well, that’s not good enough, so let's continue.” The reason why we did that switching of times is the utility it has. We said "What happens if our customer stays two weeks in New York?" The big time display is still the time in Berlin, and the small time is New York. So, how useful is that? It's useless - because they automatically look at the watch and look at the big dial, not the small one. So we said "Well, can we manage to change that?" And if we change that, then how does he know if it’s day or night? So we had to do a second day and night indication. That's the actual process. Then, at a certain time, you have to say, now this is enough. It was really long process and it was always improvements and improvements until we got where we are, and that is the reason why.

TZ: Do you know approximately how long it took to develop the movement from the first day someone said "This would be a good idea" to the day there was a working prototype?

FK: Well from the first idea - which was completely different from what it is now - it took about 3 to 3 1/2 years. And we changed quite strongly in the last 2 1/2 years….

TZ: When will the Time Zone watch be available in the retail stores?

FK: The first watches will be delivered in July. We'll do an interesting global event to introduce the watch. We are just working on it, the details will be announced soon.

TZ: Approximately how many pieces of the Time Zone will be produced this year?

FK: Well, we have had extreme success, and we’re actually already sold out for this year, so after the exhibition we will have to think a little bit about this year’s production.

TZ: What will the pricing be?

FK: I can tell you in Euro, for the platinum one it's 35,200, and for the gold one it's 26,200.

TZ: When we do an interview on TimeZone, we always ask…. What watch are you wearing today, and does the watch have any special significance for you?

FK: It's actually the watch which I wore last year, and the year before…the Datograph…

TZ: …It must be a personal favorite…

FK: I would not say it like that (laughing). On TimeZone people like it, everybody likes it. It has a beautiful movement…

TZ: …It’s a cult favorite...

FK: …It's lovely.

TZ: I know many people whose desktop on their computer is a picture of that movement.

FK: (Laughing) I've got it too.

TZ: Those are all the questions I have. Thank you so much for spending this time with us.

FK: Thank you and all the best to the TimeZone community.

Interview conducted by Mike Disher. Certain questions provided by Peter Chong.

Photos courtesy of A. Lange & Söhne, used with permission. Photo of Fabian Krone by Mike Disher.