Walking the road that is difficult for others: Hermes’ 100-year prosperity enlightenment

As a family business that spans more than 180 years and has been inherited for 6 generations, Hermès has 311 stores in 45 countries around the world. It is hailed by the industry as the “ceiling of the luxury world”. Even today, people often refer to some high-end products, It is likened to “Hermes in the XX field”. Operating such a huge business empire, the head of Hermès is bound to face various problems in every period:

During the feudal dynasty, how did Hermes truly gain the recognition of high-class customers?

During the industrial revolution, how did Hermes retain its own advantages and adapt to the new production model?

In today’s economic globalization, as a family business, how can Hermes effectively counter external capital forces?

When we look back on history, it is not difficult to find that in each period, many companies with excellent products and excellent culture have emerged, but most of them are only short-lived. When facing major difficulties, they are submerged in the long river of history. Up. Under similar conditions and environments, what did Hermès do right to break through numerous difficulties and maintain a long-lasting foundation?

The answer to this question can be found in the movie “Himalayan”: on one side, the team was full of the old, the weak, the sick and the disabled. Because they chose the right path, they finally defeated the young and middle-aged team on the other side.

“Himalaya” tells us: in the same general environment, no matter how far the starting point is or how great the disparity in strength is, when you have two paths in front of you, choose the most difficult one. The head of Hermès also understands this. After all, the competition between enterprises and enterprises is, in the final analysis, a contest between the thinking of decision-makers. By studying the “Hermes History Timeline”, we have gained enlightenment: it is precisely because the decision makers have chosen the “difficult road” every time that they have come to today step by step.

Dynasty Era: Sales Priority or Product Priority
In 1837, France was in the reign of the July dynasty. During this period, horse-drawn carriages were still the main means of transportation for people to travel. Thierry Hermes, who was born in the army and the founder of Hermes, opened a harness workshop in Paris, France.

For most entrepreneurs, in the primitive accumulation stage, being able to earn the first pot of gold at the fastest speed is an important guarantee for the survival of the company. In order to ensure sales, many companies will adopt a “barbaric” approach. The growth method uses all means to cater to the market.

The rapid primitive accumulation was originally a “routine question” that was easy to get started, but Thierry, the entrepreneurial recruit, wanted to do the “Olympic question” first. Since the first day of the workshop, Thierry seems to have foreseen Hermès 100 years later. Brilliant, confident and determined to set up the purpose of entrepreneurship: through exquisite craftsmanship, and understanding the lifestyle of customers, to create practical, elegant, and testable objects, to create value for the society.

Therefore, from the very beginning, Hermès put the sales problem behind and vigorously promoted the spirit of craftsmanship. However, it was also this concept that initially made Thierry “suffering”: Originally, the market was not opened, and Hermès was also posted by customers ” With the label of “slow shipment”, the operation of the workshop is very tight. Even so, Hermès never considered reducing the quality of the product, as large as a rivet, as small as a stitch. Thierry did not allow the slightest error in his work. This persistence finally came to fruition. In 1842, the French prince Ferdinand traveled in a carriage. On the way, the horse was frightened because the horseshoe was not strong, and the carriage was overturned, and Ferdinand died as a result. Since then, Hermès, known for its safety, has re-entered the public’s field of vision and became the beloved of the French upper class at the time. Even if they need to wait, they must buy Hermès horse gear.

The age of the industrial revolution: cater to the trend or stick to yourself
In the second half of the 19th century, Hermès finally survived the period of primitive accumulation, vigorously industrialized production, with new technologies, new materials, and new standards. This time, the “stubborn” Hermès encountered again. Unprecedented impact: In terms of user demand, the original upper class who favored Hermès has been lost in large numbers, and the entire society’s aesthetic needs for products and process requirements have been greatly reduced, and the focus has been on the high output, low cost, and short cycle of products.

This is a serious violation of the artisan spirit that Hermès has always advocated. As cheap goods have entered the market, a small amount of craftsmanship has been gradually replaced by a large number of machines. On the growth business line, with the widespread popularity of trains and automobiles, horse-drawn carriages are no longer the first choice for people to travel, and the production of Hermes’ most proud horse gear is also facing suspension.

Faced with the same dilemma, all the manual workshops at that time had almost two ways to go: Either cater to the trend of the times, integrate into the industrial revolution, craftsmen become workers, and the workshops are reorganized into a part of the factory production line; or Cities have retreated to the countryside, where the cost of survival is lower.

According to the historical conditions at the time, it seemed more reasonable to “change the production mode and cater to the industrial age” no matter what, but Hermès’s “difficulty-seeking heart” appeared again. The changes of the times were earth-shaking, and it still insisted on the craftsmanship and high-quality line. After the implementation, facing huge difficulties, the successors made two decisions that seemed extremely risky at the time.

1. Continue to expand the market: Compared with the “evacuation” route of other workshops, Charles, the second-generation heir, not only did not escape, but also moved the shop to the Boulevard de Fuba in the center of Paris. In addition, he personally travels to European countries to promote his products.

In order to expand overseas markets, even Tsarist Russia, which had a dispute with France at the time, took the risk of his life to actively go there. Under his multi-party lobbying, Hermès has further enhanced its brand awareness, expanded its customer base, and has since then moved towards global expansion.

In 1964, China and France had just established diplomatic relations. In the same year, Hermès opened the first Hermès counter in the Peninsula Hotel in Wangfujing, Beijing. Its globalization strategy has never stopped.

2. Adjust the product line: In response to the impact brought by the automotive industry, the third-generation heir émile has withstood the pressure of mass production of large machines. Under the premise of insisting on maintaining the process and production mode, he resolutely changed the product line from making harnesses to Making bags, this is also the prototype of modern Hermes bags.

Since then, Hermes has expanded into new growth businesses such as belts, gloves, and silk scarves. Although the track was re-selected, the craftsmanship model that had been lost due to similar skills was eventually retained. This means that Hermes is still You can continue to shine in the field you are good at. Calling the change in the production of harnesses the production of bags is an important turning point in the history of Hermès’ development.

Even if the harness is no longer the main product line of Hermès, they still highlight the elements of harness and horses in the design of many products to commemorate Hermès’ first start with harness.

With these two important strategic changes, Hermès finally broke out in the cruel industrial period.

The era of economic globalization: Compromise with capital or defend the family
As time goes to the 21st century, Hermès has encountered a new opponent-Bernard Arnault (Bernard Arnault). How strong is this opponent? He established his own luxury empire, LVMH, when he was less than 40 years old, and once topped the world’s richest man.

Bernard never created a brand, but relied on capital leverage, and successively annexed Dior, LV Givenchy, Bulgari and other well-known big names. It can be said to be a giant “snake” in the luxury goods industry.

Hermès has been coveted by LVMH for a long time because of its outstanding performance in the luxury goods industry. When it was announced, Bernard was naturally added to the hunting list.

So since 2001, Bernard began to secretly swallow Hermès stock through a series of secret operations. By 2011, the Hermès family had been swallowed by the same company back and forth without knowing it. 22.6 % Of the shares, and at this time, Bernard’s LVMH jumped and became the largest single shareholder of Hermès, and proposed an acquisition from members of the Hermès family.

Compared with past sufferings, this test is full of “fog” and “temptation”. In fact, if members of the Hermès family sell stocks to LVMH, they can not only make a lot of quick money, but the company will also have dedicated personnel from then on. Responsible for taking care of it, don’t know if it’s well taken care of, you and your family can do everything you need to worry about in this lifetime. Because of the peer effect, most of the heads of luxury brands chose to transfer corporate shares to LVMH during this period.

However, it is not the style of Hermès to simply let LVMH be its own benefactor. Compared with the hand-offs of other luxury brands, they are unwilling to change Hermès to his surname, and even more unwilling to push their ancestor’s foundation into an uncertain capital market for their own sake, so they once again made a difficult Choice: Also in 2011, family heirs across three continents set off immediately and went to Paris to participate in a top-secret meeting. In order to fight against Bernard, more than 50 heirs put together 50.2% of the shares and established a company called H51. The holding company stipulates that these shares cannot be sold for the next 20 years.

How difficult is this decision? For shareholders, wealth can only be realized if the stocks remain liquid. Locking these stocks for 20 years means that before that day, these heirs can only profit from the company’s dividends. In other words, most of Hermès Family members, with 20 years of happiness in their lives, in exchange for the purity of Hermès blood.

History has once again commended Hermès for its determination to face the difficulties: Hermès, who regained the initiative, took Bernard to court, and LVMH was finally fined 8 million euros by the French Securities Regulatory Commission, and the shares of Hermès were returned in full.

Conclusion
So, why should we take the hardest path? When a ship is facing a storm at sea, the safest way to get through is not to turn back or choose a slant angle to evacuate, but to head toward the storm, because whether it is a U-turn or a slant, it will only increase the boat and the storm. The contact time, the longer the time, the greater the loss.

We can’t change the storm, so only by adjusting our route and confronting the storm head-on can we achieve a breakthrough in the shortest time. Hermes, a commercial giant ship, has decisively chosen to be difficult for ordinary people to walk in the face of every historical storm. Road, has become today’s uncrowned king.

If during the July dynasty, Hermès blindly reduced the quality of its products to adapt to the speed of the market, it might be able to cater to the needs of customers temporarily, but it will be difficult to make products with an attitude in the future.

If during the industrial revolution, in order to cater to the times, Hermès may become a leather factory, and ultimately it can only struggle in areas that it is not good at.

If, in the era of economic globalization, Hermès was handed over to the capital by the family business to make a quick profit, and others would intervene in the family business, it is likely that they would eventually become obsolete due to genetic difficulties.

Therefore, to find your own position, among the many roads, you can neither follow nor stop. Maybe in the near future, you will be able to see the sunrise.

Every time a major strategic decision is faced, it is undoubtedly a test of the soul for the entrepreneur, and every time he is reborn from the fire and heads to glory again under a difficult situation, it is only an external manifestation of the entrepreneur’s heart. The easy road will become harder and harder in the end as more people walk, but the difficult road will become easier and easier because of my bravery.