Interview: Wilhelm Schmid, CEO at A. Lange & Söhne

0 0 Saturday 28 October 2023 Edit this post

An insightful conversation on strategy, distribution and much more

Wilhelm Schmid has been the CEO of A. Lange & Söhne since 2011, leveraging his passion for horology and his extensive business expertise to lead the Saxon watchmaker towards a path of ongoing excellence in the world of watchmaking.

Before his role at A. Lange & Söhne, he enjoyed a successful career in the automotive industry, where he held senior positions in sales and marketing at prominent companies such as BMW AG and Burmah Oil Germany (Burmah-Castrol).

On the occasion of the launch of the new Zeitwerk Minute Repeater Honeygold, Alessandro Mazzardo, founder and executive editor at Time and Watches, conducted an interview with Mr. Schmid. Read his valuable insights and responses below.

The A. Lange & Söhne Zeitwerk Minute Repeater Honeygold

Time and Watches: You're one of the longest-serving CEOs in the watchmaking industry, having been with the same company for almost thirteen years. Could you provide your insights into how the watchmaking industry has evolved in recent years and how A. Lange & Söhne's strategy has adapted to these changes?  

Wilhelm Schmid: There have been many changes, particularly within the high-end watchmaking sector, which is my area of expertise. When I reflect on the past thirteen years, arguably the most significant change is in how we engage with our clients and those interested in our brand. Thirteen years ago, our focus was primarily on wholesale sales, with retailers handling the majority of customer interactions. Today, we predominantly sell through our boutiques, allowing us to establish a direct and more intimate connection with our customers, a notable shift from the more indirect relationships of the past. This trend has become quite prevalent in our industry.

In the past, the primary sources of information were magazines, with the emergence of forums and blogs. Nowadays, the internet has become the primary source of information, leading to a multi-channel landscape.

Looking back, the business faced fewer disruptions than it does today. While we encountered challenges during the 2008/2009 financial crisis, we had a relatively stable five-year period before the next crisis emerged. In contrast, over the last five years, we've witnessed an acceleration of significant events, from the impact of Covid to global conflicts. Maintaining business resilience in the face of such rapidly changing conditions has become an even more vital challenge today compared to thirteen years ago.

These are the key changes I've observed from the time I started to the present day.    

Time and Watches: The demand for A. Lange & Söhne watches is very high, and acquiring one can be challenging. Could you discuss the brand's strategy for managing this demand? And how the brand operates to ensure a fair distribution process for enthusiasts and collectors?  

Wilhelm Schmid: I agree that today the demand for our watches outstrips our production capacity by far. The one thing I have to say upfront is that there is no chance for us to just ramp up production to support demand because we rely on skilled craftsmen for our work.

It's the skilled hands that assemble and finish the watches, working for 8, sometimes 9, hours a day, but not longer. The result is about five and a half thousands watches per year. That's all we can produce and there's no way to produce a lot more.

With six hundred people involved in this process, you can understand that we operate as more of an artisanal watchmaker rather than an industrialized one. This, in turn, places a limit on our growth, dictated by both our traditional watchmaking methods and the time it takes to train new watchmakers – a five-year process.

The movement of the A. Lange & Söhne Datograph Up/Down Lumen

So we deal with the fact that we have a very limited production and we have a demand that outstrip such capacity. So how do we allocate watches fairly? Quite frankly you can try whatever you want but those who don't get the watch think they have been treated unfairly while those who get it think that we have a great system. So you have to find a balance. What we have is very clear rules about what sort of profile can apply for a watch and we will alway support customers that we know for long over customer that we don't know.

Given our restricted production capacity and high demand, we face the challenge of how to allocate our watches fairly. To be honest, no matter what system we implement, there will always be those who are disappointed because they didn't secure a watch, and they may perceive it as unfair. On the flip side, those who successfully purchase a watch may view our system as effective. It's a fine balancing act. To address this, we have clear guidelines outlining the type of customer profile eligible to apply for our watches. We tend to prioritize customers with whom we've had long-standing relationships over those we know less about.

However, transitioning from an old wholesale-centric approach to a boutique-oriented model has led to situations where some customers may feel overlooked, simply because we haven't interacted with them as much in the past. Consequently, we rely on these clear rules to make the allocation process as objective as possible. Since many of our watches quickly gain value, we aim to prevent them from being sold in the grey market almost immediately.

This is why we decided not to have a "First come, first served" approach. For us it's all about the relationship with the customers. We want to reward those who worked with us for a long time. I know that you have to start the journey somewhere but you cannot expect to start it with the hottest watch and maybe sell it tomorrow for a profit.    

Time and Watches: So essentially, you aim to ensure that your timepieces are in good hands!

Wilhelm Schmid: You are right. We go the extra mile after sales.

Time and Watches: I guess this is also the explanation behind reducing the number of authorized dealers and the opening of brand boutiques: to establish close relationships with customers. I understand this, but a question remains: how do you guarantee the brand's presence on the territory?

Wilhelm Schmid: You can't. But you also can't have it both ways because, if you can't meet the demand, having numerous sales points doesn't resolve the issue. You'd end up with a point of sale proudly displaying the A. Lange & Söhne logo but containing only two watches. It's a challenge. On one hand, we want to stay close to our clients, but, on the other hand, we can't afford to maintain so many points of sale. We have significantly reduced their number, but we haven't yet achieved the network we have in mind. We aim for each of our sales points to represent our watches effectively.

The newly opened flagship boutique in New York and, below, the interiors of the boutiques in Miami and Frankfurt

Time and Watches: You genuinely value the connection with collectors and enthusiasts. Does their feedback influence your strategies and decisions?

Wilhelm Schmid: We maintain a meaningful dialogue, not with everyone, of course, but we do have numerous points of entry for anyone interested in connecting with us. In a way, our Odysseus, launched in 2019, was a response to a frequently raised request by some collectors who were seeking a timepiece they could wear during a weekend with children or on vacation, be it at the beach or on a boat, just as an example.

We certainly pay attention to the feedback, especially during the after-sales phase, where we receive and listen to their requests, advice, and, at times, their complaints.

Time and Watches: Is your participation to classic cars events also a way to stay close to your customers, many of whom have a passion for both types of collecting? Could you highlight the main parallels and differences between the two collecting worlds: high-end timepieces and classic cars?

Wilhelm Schmid: Well, it's not specifically about classic cars in general; we actually partner with Concours of Elegance, like the ones in Hampton Court Palace or Villa d'Este. We are only interested in the concours part of it because that's where you can see cars that share our set of values. They are always hand-made, they were already very important in their time, they outlive any fashion, and they are as attractive today as they were back then. So that's the aspect of the business where we believe there is a match of values. It's a fantastic arena for us, even if it is not directly related to our product.

Moreover, it is also interesting for our customers because, typically, they are not involved in that world, and they appreciate being introduced to it. On the other hand, there are car collectors whom we meet at these Concours of Elegance events, and they become passionate watch collectors. Both groups have a passion for art - art on wheels and art on the wrist.

The location on the shores of Lake Como of the Concorso d’Eleganza Villa d’Este, and below, a special 1815 Chronograph model, which was the award for the 'Best of Show"

Time and Watches: Could you explain how A. Lange & Söhne approaches innovation and technological advancements while also preserving traditional watchmaking techniques? Is there a commitment to preserving the status quo, or are you open to innovations, particularly in areas like materials, for both cases and movement components?

Wilhelm Schmid: Tradition, for me, represents a set of values that we are committed to preserving. This entails, among the others, a strong focus on the movement and a dedication to double assembly. It means maintaining consistent quality across all our watches, regardless of price, as they all receive the same meticulous attention to detail and craftsmanship. These values are at the core of our identity, and we are unwavering in our commitment to upholding them.

However, this dedication to tradition has not hindered us from introducing innovations such as the Odysseus in titanium, or even conceiving a tourbillon with a seconds-reset function, as these innovations align with our traditional values. To illustrate, incorporating silicon into our movement components would not align with our philosophy, as it is more suited to mainstream, industrial watchmaking. Our movements are designed to be assembled by hand by skilled watchmaker.

The Odysseus in titanium and, below, The patented ZERO-RESET mechanism which allows the balance inside the rotating tourbillon cage to be stopped instantaneously

Time and Watches: What advice would you give to watch collectors that would like to start adding A. Lange & Söhne timepieces to his/her collection, especially considering the challenges that we discussed earlier in the interview.

Wilhelm Schmid: We have reduced our network to ensure that we can always offer a good representation of our watches at the boutiques, and some of them always have to be for sale. I believe that our Lange 1 is a great start for any collector. It's been around for 29 years and it's still our best-seller. It epitomises everything we stand for. If someone would like a plainer or less expensive watch, there's the Saxonia Thin, the manufactory's flattest watch. The 1815 Up/Down is a great choice if you want a more traditional look. I think these are the three main options if you want to start an A. Lange & Söhne collection.