Re: Bonamassa isn't buying Gibson
Hating Henry is a favorite pastime on every guitar forum, but those are the same forums where everyone lusts over the 90s Standards and the Custom Shop models from any year.
Henry made some fantastic decisions until he lost the thread.
Sorry to disagree Inkstained, but in my mind, this has nothing to do with hating Henry- it's about the work that Gibson needs to be doing (and thus far haven't demonstrated) to get back on track-
As always, nothing is black and white- Henry did do some good things early on, but at this point the problems are so much bigger- at risk of boring everyone, here's a repeat of the SWOT table behind the opportnuities:
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.
