Bonamassa isn't buying Gibson;)

[zionstrat]

https://www.musicradar.com/news/joe...t-are-taking-over-gibson-and-theyre-good-guys

So glad that rumor has been squelched:

“I know the people that are taking over Gibson, and they're good guys,” Bonamassa enthused. “They're guitar guys."

Assuming he has real inside knowledge, I'm a bit concerned because Gibson has 2 core problems and 'guitar guys' only addresses a piece of the problem:

1. Becoming irrelevant on the high end-
Clearly, the Suhrs and Lowden shops of the world are driven by 'guitar guys', who are good at understanding coustomer needs- But they also understand quality, pricing and innovation- In a really small shop, 'guitar guys' can keep a good finger on the pulse of customer- but Gibson has always wanted much larger scale that requires good process as well...

2. Becoming irrelevant on the mass production side-
Again, 'guitar guys' might bring a better understanding of customer needs, so bring it on! But with the middle and low end manufacturing, you need strong understanding of processes across product, messaging, biz dev, channel management, supply chain, analytics and these are not artisan roles- Quality, competitive value points and building markets requires expertise that are not necessarily strengths with 'Guitar Guys'.

We may be writing the Saving Gibson series purely as a Business Transformation business case, however, it would be really nice if KKR is thinking a lot deeper than this quote.

Of course, they may be thinking deeper and Bonamassa may be thinking deeper and the reporter maybe the reporter simply missed the bigger story-

https://www.guitaryoudreamabout.com/blog

 

[Chris Pile]

Re: Bonamassa isn't buying Gibson

Getting rid of Henry will be the best part of the equation. As I understand, he negotiated an "advisor" position for a couple years. I hope they just send him some money, and never ask him a single question.

 

[zionstrat]

Re: Bonamassa isn't buying Gibson

Getting rid of Henry will be the best part of the equation. As I understand, he negotiated an "adviser" position for a couple years. I hope they just send him some money, and never ask him a single question.

Don't quote me cause I don't have the numbers here, but I believe it was over $2m- Assuming that they contractually had no choice, but it's a shame because that money is clearly needed elsewhere.

 

[Ayrton]

Re: Bonamassa isn't buying Gibson

Henry's opinion is not what is desired here, but his full cooperation. That is what the agreement is about.

 

[justFred]

Re: Bonamassa isn't buying Gibson

I don't know but I been told that Gibson just hit it's dealers with a 25% increase in mandatory buy...that ain't the way guitar guys would treat their music store partners...that tells me that JB has been fed a line of BS...

 

[MitchMiami]

Re: Bonamassa isn't buying Gibson

Getting rid of Henry will be the best part of the equation. As I understand, he negotiated an "advisor" position for a couple years. I hope they just send him some money, and never ask him a single question.

Or ask Henry business questions especially on expansion outside of their traditional areas of doing business and do the opposite of what he says.



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[SAguitar]

Re: Bonamassa isn't buying Gibson

I'm just very glad I have some great Gibsons, certainly enough to last me the rest of this life.

 

[Aceman]

Re: Bonamassa isn't buying Gibson

The problem with "Guitar Guys" is that very few are not self-absorbed, narcissists who believe their formula is correct. Now - Henry is the same thing, just a business guy. Balnac e, Balance, Balance.


As I said - when applying for the North American VP position, the Job Description stunk to high hell of Cost-cutting efficiency monster....Guitar guy had dick to do with it, which was wrong.

 

[Mincer]

Re: Bonamassa isn't buying Gibson

Maybe Joe B is a silent partner?

 

[Darg1911]

Re: Bonamassa isn't buying Gibson

Maybe Joe B would rather not lose what money he has ...

 

[zionstrat]

Re: Bonamassa isn't buying Gibson

I don't know but I been told that Gibson just hit it's dealers with a 25% increase in mandatory buy...that ain't the way guitar guys would treat their music store partners...that tells me that JB has been fed a line of BS...

I'm trying to get confirmation on this now... A nightmare if true... Dealer network has been bled to near death in past and hard to imagine that they would continue this behaviour if they have learned anything.

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[JMP/HBE]

Re: Bonamassa isn't buying Gibson

Joe spends too much money on gear to be buying Corporations. He's out of his League.

I have no faith in Gibson as a Company, they should sell to someone that knows what they're doing.

The fact the Henry is still there after going Bankrupt is proof they havent a clue.

 

[DavidRavenMoon]

Re: Bonamassa isn't buying Gibson

Don't quote me cause I don't have the numbers here, but I believe it was over $2m- Assuming that they contractually had no choice, but it's a shame because that money is clearly needed elsewhere.

$560 Million


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[DavidRavenMoon]

Re: Bonamassa isn't buying Gibson

The fact the Henry is still there after going Bankrupt is proof they havent a clue.

He’s no longer the owner. Hopefully he’s gone soon.


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[JMP/HBE]

Re: Bonamassa isn't buying Gibson

He’s no longer the owner. Hopefully he’s gone soon.


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Correct, he's an "Adviser" and still on the payroll ..... Henry drove the Company off the Fiscal Cliff, what more advice could they possibly want.

The definition of Insanity is doing the same thing over & expecting different results.

Like i said i have no faith in the Company or its Mission Statement.

I never buy Gibsons retail anyway.

I knew they were Doomed when Juszkiewicz claimed the Firebird X was the Future of the Company.

 

[zionstrat]

Re: Bonamassa isn't buying Gibson

Talked to a good sized mom and pop this afternoon and their contract is undefined "until new ownership". Quite interesting conversation... compared and contrasted everything to PRS with PRS way ahead of the curve from quality to incenting dealers...

PRS = no min $ requirements, rep takes care of everything and dealer feels that they are doing everything they can to be positive partners...

Example... Customer wanted a recently discontinued model... Dealer called PRS and all were sold, but PRS told dealer they would look into it and either found or made one within 2 weeks.

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[justFred]

Re: Bonamassa isn't buying Gibson

to try and put things in perspective....when Henry J and partners bought Gibson they were on the verge of going out of business...turn back the clock and no Henry J back then and possibly no Gibson today...or a worse situation like what AMF did to Harley...or worse...
"During Juszkiewicz's tenure, Gibson has grown from a $700 million company to one valued at more than $3 billion, with nearly 5,000 employees worldwide and a global market share that he estimates at 40 percent."
It's a business operating in a rapidly changing environment...one of you fellows like to step up and take the drivers seat...guaranteed you'll find it a much bigger ship to try and drive then you ever imagined...
give the guy some credit for saving Gibson in the first place, growing the business...things obviously got out of hand...mistakes were made...let it go and hope the new team is up to the challenge of getting a company with a nostalgic product base to survive...

 

[JMP/HBE]

Re: Bonamassa isn't buying Gibson

They make guitars, not Saturn V Rockets to another planet. Gibson could fade away tomorrow and the World will still be full of guitars.
Henry should be fired and go away for failing his Company, period.

As far as Gibson dealers they were required to buy a full years worth of guitars in advance, and many other horrid Business practices.

I love Les Pauls but can easily do with Gibson as a Company. And frankly many other Companies can build a better LP than Gibson.

 

[zionstrat]

Re: Bonamassa isn't buying Gibson

give the guy some credit for saving Gibson in the first place, growing the business...things obviously got out of hand...mistakes were made...let it go and hope the new team is up to the challenge of getting a company with a nostalgic product base to survive...

JustFred, I had to sit on this response overnight because you make a good case- As usual, I would say that the truth is somewhere in the middle, but we are human and emotions tend to pull us to the extremes, so I had to break things down. So please forgive this really, really long post

I went back to the SWOT table that underlies the articles and I just decided to cut and paste- so please excuse the mess- there’s bound to be repetition and missing stuff-

But you’re getting a free preview of underlying thinking for an upcoming article and I wonder if you think it makes a point?

Positives
1. Initial bailout and turn around when Henry came onboard
2. Growth for a significant period

Negatives
1. Leadership
a. Practically every item on the negative side is a result of poor leadership

2. Love of industry and Market Knowledge- Modern CEOs invest time and resources to understand customers, competition and the total ecosystem:
a. Optimizing the tradeoffs between artisanship vs. technology is a great example- where deep core knowledge is necessary to achieve sustainable balance.
b. Voice of the customer- Customer needs drives everything and Gibson appears to be out of touch ranging from quality to product needs and competitive pricing.
c. Organizations have to provide inspiration and innovation to build new markets, while Gibson has remained focused on past markets.
d. Differentiation and Competitive Value Points (quality at a competitive price)

3. Balance- The ability to see both ends of the continuum and identifying strong opportunities that are often found in the middle of the road. Less exciting, but on average, ‘good’ is often better than ‘show stopping’.

4. Communications- Clear internal and external messaging- Ability to clearly define opportunities, resources, goals and direct and motivate employees, partners, dealers and customers. Must be based on reality as opposed to wishful thinking.

5. Turning knowledge and data and into good decisions
Defining processes and measurements to prioritize high Return on Investment opportunities and to modify or discontinue poor performers
a. Avoiding low ROI, poorly planned investments
b. Process and business knowledge
c. From a manufacturing perspective, Six Sigma is the industry standard approach to reduce costs and increase in quality.
d. Identifying KPIs that point to high ROI opportunities
e. And the product, marketing and business development processes we have explored surface Key Performance Indicators that reduce the risk of ‘gut decisions’, and if in place, most likely would have squelched costly acquisitions (Onkyo) and development decisions (Robo tuners).

6. Weakened dealer network
a. Greatly reduced opportunities for users to see and play Gibson
b. Increased wall space for competition

7. Loss of knowledge capital
c. Employees
d. Dealers
e. Partners

8. Supply chain
a. When you don’t have focused product planning, you don’t know how to prioritize ‘parts and pieces’ and it’s impossible to optimize the supply chain, resulting in high costs and uncertain quality.

9. Long-term investment strategies
a. Waste
i. Robo tuners = $40 Million, 11 Year Tech Gamble
ii. Unplanned, uncoordinated ancillary lines
b. Happy employees, dealers and customers are consistently add more long-term value than large, short-term profits.
c. Customer Life Time Value (discussed in Part III) is usually more important than short term sales.

10. Change Management- All organizations need to successfully manage change- However, Gibson needs to modernizing processes while, repositioning, revamping products and selling assets. Planning and clear, calm leadership is clearly needed.

11. Innovation
a. This could be a draw- Robo tuners is likely to be judged as a major setback, but Jimmy Page wiring is likely to be considered a positive- need more examples.

12. Brand Erosion / Mindshare /Walletshare / Marketshare
a. Gibson was perceived as top of the line for the vast majority of its existence
b. Few would argue that boutiques don’t currently out perform at the top of the line.
c. Few would argue that mass production experts don’t currently provide better value across mid and low price points.

13. Attitude
a. Denial of reality and excuses:
i. “Retailers are fearful as can be, they're all afraid of e-commerce”
ii. “Innovation is a part of every business to some degree, but [the guitar industry] hates it. The kids demand it, and if you don’t have it, they walk.”
iii. Dealer feedback
b. This is topic is so big that it is addressed in detail as the 10th priority

14. Bankruptcy
a. It’s not easy to turn such a strong organization into such a weak one.

In my mind Brand Erosion, Attitude and Bankruptcy are such major failures that we wouldn’t need to focus on the rest of the list- except these are all crucial opportunities for change management with new management, and that's the point- we're not beating on Henry- we're focusing on what went wrong and what needs to happen.

History may prove differently, but I think most of us have an underlying love of Gibson, we see them as an underdog and we want them to live- It’s kind of like the story about the coach who takes over a dying team and get’s the players to rally for a big season- That simple change of leadership can inspire short term change by itself, but...

The long term is what matters in the end, and in my mind, this messy, unclear list demonstrates that the negatives greatly outweigh the positives.

So, big, big long post, I would appreciate any and all criticism, and JustFred, thanks for an opportunity to focus!

 

[JMP/HBE]

Re: Bonamassa isn't buying Gibson

Outstanding ... someone buy that Man a beverage of his choosing.

On a side note i can tell you ive turned down at least 15 Gibson purchases because they had PCB pots and/or robo-tuners.

If you can't tune a guitar you shouldn't be trying to use one.