Frédéric Arnault, TAG Heuer CEO

TAG Heuer has had some well-known leaders over its 185 years. In fact, the model is outlined by the period of Jack Heuer, who developed and launched many of the collections which might be emblematic of the model at this time. This century alone has seen TAG Heuer below the management of business legends similar to Jean-Christophe Babin (now of Bulgari), Jean-Claude Biver (no introduction needed) and Stephane Bianchi (now head of LVMH Watch and Jewelry).

Right this moment, the model is the area of one other well-known title, Arnault. CEO Frédéric Arnault is maybe greatest often called the son of LVMH supremo Bernard Arnault, one of many world’s richest individuals (some say the richest, relying on how Elon Musk is tweeting) and undoubtedly Europe’s richest man. That’s in fact unfair, and we carry it up now simply to get it out of the way in which. Simply utilizing the surname Arnault in an LVMH-related story could have you pondering instantly of the senior Arnault, so there isn’t any avoiding it. In our dialog with Frédéric Arnault, we didn’t focus on his household — apart from one particular point out, associated to his first watch — and the usual publicity strictures across the younger CEO (he’s 28) preclude any private questions. This isn’t uncommon, in itself, as a result of loads of CEOs don’t put themselves on the centre of their model’s narratives.

We lastly managed to get some face time with Arnault in Singapore when he was on the town for the Singapore Grand Prix this yr, and we had been excited. The timing was not best, given the size of time between the interview and publication. With that in thoughts, it was determined to attempt a distinct format for this story, provided that now we have by no means spoken with Arnault beforehand, in any capability. This isn’t to say that he’s a cipher or something, though he’s extra reserved than anticipated for a CEO. Actually, the distinction between himself and different extra established figures at TAG Heuer is a robust one. Whereas we may have used this story within the Legacy situation, it appeared a greater match for our commonplace Festive situation as a substitute. We’ve got had a deluge of interviews within the second half of this yr, ensuing within the largest interview part now we have run since 2016, and we’re managing all this by publishing in chronological order.

Again on Observe

So far as the story of the Arnault household and their ties to TAG Heuer go, bringing this up in relation to Frédéric Arnault’s high job is especially unfair for quite a lot of causes. To start with, on the advertising aspect of issues, TAG Heuer trustworthy will bear in mind Frédéric Arnault as the person who lastly made the Carrera connection between Porsche and TAG Heuer official. Biver didn’t do this, and never even Jack managed it. Frédéric Arnault did, however first he needed to pivot the model away from soccer, or soccer, and again to motorsports, in a transfer that many — inside TAG Heuer and amongst watch lovers too — had been unconvinced by, initially.

“Folks had been saying, ‘Oh, motorsports, it’s not what it was; it’s not as thrilling; it doesn’t appeal to a younger crowd… Are you actually positive you wish to reinvest closely in that course?’ And there’s like all this sustainability points (linked with motorsports), however I had the assumption that that was proper for the model, and that’s the place we should be robust. That’s the place we would have liked to additionally dominate within the business as being the watch model most carefully linked with this world. So, in fact it was motor racing for us.”

It was a daring transfer, even when it felt like a return to custom as a result of the soccer connection was solely in its nascent section, or beta section as Arnault says, and he notes that it was a significant funding. In any case, TAG Heuer is again in System 1 now, and climbed to the highest of the rostrum in its partnership with reigning world champions Purple Bull Racing. The profitable Porsche connection adopted, nevertheless it was not the case that Arnault may simply trip on each his well-known title and that of the model he commanded. In accordance with numerous sources, together with the wonderful New York Occasions article by Vanessa Freidman referenced closely for this story, Arnault achieved this by making chilly calls and being tenacious.

Digital Renaissance

“He writes a letter to the chairman and will get no reply,” Bianchi instructed the New York Occasions. “He writes to the VP for advertising: no reply. He invitations them to see the corporate. He had three or 4 refusals earlier than they even agreed to come back and hear.”

“So the administration, and the household as effectively as a result of you realize it’s a family-owned enterprise, noticed the historic connection,” mentioned Arnault. “They noticed the imaginative and prescient now we have for the model, they usually needed to be a part of it. For now, it’s doing very effectively for us.” It appeared to line up completely, what with Porsche nearly sure at one level to re-join System 1 with none aside from Purple Bull Racing. Occasions have put paid to that plan, however the mud has not but settled.

Arnault can be the architect behind the digital renaissance at TAG Heuer. It’s no small feat that TAG Heuer stays the main Swiss participant within the smartwatch sport, giving fellow LVMH manufacturers similar to Louis Vuitton and Hublot a leg up on this space.

“We’ve got a imaginative and prescient and technique that’s totally different from our watch opponents as a result of we determined to take a position closely, and construct (the Related Watch) as a pillar. Of the watch manufacturers, now we have legitimacy as a result of avant-garde is a part of our title [this was in response to our suggestion about the meaning behind TAG – Ed] therefore innovation as effectively…additionally due to our relationship with the worlds of sports activities, well being and wellness. This has all the time been so essential for TAG Heuer, and can be one of many key options on the Related Watch. Our values (thus) enable us to make it work higher than different manufacturers.”

Rising Up Arnault

It’s this growth of smartwatches that appears most salient in the case of discussing the youthful Arnault. It’s no exaggeration that many of the Swiss watch commerce by no means actually tried to make a go of grabbing a part of the smartwatch pie. So why and the way did TAG Heuer handle it? The reply in a single title is Frédéric Arnault, though he was behind the scenes on the time and has by no means actually made the TAG Heuer Related Watch about himself. There’s an attention-grabbing story right here, which requires us to backtrack a little bit and get into Arnault’s historical past.

The fourth little one of Bernard Arnault, Frédéric is on the document saying he by no means felt pressured to affix what quantities to the household enterprise. Notably, he’s additionally one in every of 5 Arnault kids to seek out himself working at LVMH, and now the second within the watch enterprise; youthful brother Jean works at Louis Vuitton watches, however Frédéric paved the way in which for him, arguably. The New York Occasions and South China Morning Publish, amongst others, observe that Frédéric and the opposite Arnault kids all grew up in, or round, the enterprise, which can be a supposition however not an unfair one provided that they’re basically a part of a household enterprise. Consider it this manner: What do you name a farmer’s spouse, and kids? The reply is farmers, in fact.

Like lots of France’s elite, Frédéric Arnault attended the École Polytechnique, rising with a level in utilized arithmetic and laptop science. He later interned at Fb and McKinsey & Firm, earlier than co-founding a cell cost start-up with a pal from faculty. On the identical time, he was already engaged on the Related Watch at TAG Heuer. The beginning-up was offered to funding agency BNP after 18 months and Arnault correctly joined TAG Heuer in 2017 in a short lived function because the boss of linked applied sciences. On the identical time, he indulged in his love of music, reportedly taking part in piano at spectacular ranges. He used to present concert events annually, till he turned CEO in fact, in line with the New York Occasions.

Software program Engineering

Whereas Arnault’s rise might have been meteoric, he did study some spectacular classes throughout his know-how stints. For instance, in our dialogue, he expressed a level of incredulity concerning the fascination Swiss watchmaking corporations have with vertical integration, though he does observe the significance of leveraging TAG Heuer’s know-how in assembling nice wristwatches. He simply didn’t suppose the corporate wanted to be within the micro-electronics enterprise. Arnault understood instantly that software program was the sport.

“After I joined, emphasis had been placed on the manufacturing, making all the pieces Swiss-Made, so investing in our personal factories to construct the Related Watch. After I studied the business, the applied sciences evolve so quick that it’s nearly unimaginable (to perform) with the volumes that we had, and what we deliberate to realize… It took a while for me to shift this (to say) really we’re not going to take a position ourselves in manufacturing (of the Related Watch). The place we have to make investments is on differentiation (between all the numerous smartwatch choices), which implies software program, and that’s why we constructed our personal software program crew.”

In the long run, Arnault leveraged on his experience within the know-how sector to arrange store in Paris, the place TAG Heuer takes care of design and mechanics by leveraging off the experience of the Swiss manufacturing groups. He notes that they now deal with creating software program, and making some {hardware}, to construct the model’s use-cases and drive the know-how behind the success of the Related Watch. The remainder of the electronics {hardware}, effectively that’s constructed by companions and distributors. One main pay-off right here is that TAG Heuer has the preferred golf app on the earth, in line with the Occasions.

Superdiver

This partnership narrative performs out in different areas of manufacturing as effectively, with quartz know-how being one other instance. It additionally explains one of the vital talked-up and shocking developments arising from TAG Heuer this yr: the Aquaracer Superdiver, powered by a Kenissi automated motion.

“What’s essential is differentiation on the merchandise and the extent of high quality we provide to our clients. Generally for some actions, we make investments in-house for many of the points just like the Heuer automated motion and the place we go very deep. We’re investing additionally on the hairspring…it’s not industrialized but so we are able to solely supply it on very high-end items similar to our tourbillon or among the Solely Watch items that we do. We’re engaged on industrializing it as a result of it has a whole lot of advantages for the shopper: higher precision, higher sturdiness, and a few manufacturing advantages as effectively.

“So, there’s causes for us to take a position there, however we don’t essentially need or aspire to do all the pieces ourselves. For some actions, we accomplice with the very best…so with Kenissi for a threehand motion in our Aquaracer. Additionally, for quartz, we’re not going to develop and construct quartz ourselves once we can have entry to the very best know-how and work hand-in-hand with a accomplice that may enable us to develop unique applied sciences for us.”

This level-headed and pragmatic strategy will not be restricted to manufacturing and the digital realm, and goes a good distance in the direction of explaining why Arnault (and LVMH) should not shy about Web3 components similar to cryptocurrency and NFTs, present headwinds however. Why ought to manufacturers not hedge their bets, in any case. Maybe essentially the most well-known of Arnault’s partnership strikes is his largest publicity coup: securing Ryan Gosling as a TAG Heuer model ambassador. Identical to the Porsche partnership, Arnault drove the hassle to safe the Drive star. Gosling had by no means accepted any model partnerships, and famously doesn’t play this sport. However, Arnault felt he was a terrific match.

Thought Chief

“Sure, sports activities performed an essential function within the historical past of the model, however we additionally all the time had a really robust reference to Hollywood, being current in some iconic films. In fact, there’s Steve McQueen (whose relationship with the Monaco is famous, see #65 – Ed) and extra not too long ago we had additionally some very iconic ambassadors on this world (Chris Hemsworth, notably).

“We wish to construct the connection with Ryan Gosling (he’s presently designing a watch with TAG Heuer). You realize, that’s how we strategy it. We don’t need a one-way partnership the place the ambassador is simply there as a result of he’s been known as upon by the model (to do one thing). No, he must need it. To provide his time, to present enter; it’s actual collaboration now we have with him, and he’s very concerned within the particulars of all of the creatives with him. He offers a whole lot of concepts. He challenges us.”

Clearly, Arnault relishes challenges, and is himself considerably difficult. He’s definitely an interview problem, as famous earlier, and maybe Gosling’s rejection of social media (he has no public presence on any platform, besides TAG Heuer’s now) resonated. Internally, Arnault clashed with loads of TAG Heuer executives, with numerous information studies harping on his tendency to be cussed about getting his approach. “We clashed in all places at first, however now we chuckle about it,” Bianchi mentioned. “You possibly can have an enormous mind and never be a pacesetter. He has each.”

It appears Arnault has mellowed considerably, if he values partnerships as a lot as mentioned he does on this interview. Provided that these initiatives are all long-term, then his actions give pressure to his phrases. We sit up for checking in with him once more quickly.

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