“You have to eat so much garbage in order to be a Gibson dealer that it’s not worth it”
George Gruhn- Gruhn Guitars, Nashville
“They are an iconic American brand but the people who ran the company got greedy and started doing things that weren’t what got them there. The problem wasn’t people not buying enough guitars; it was the way they were running their business,”
Stevie Salas- recorded with artists ranging from Mick Jagger to Justin Timberlake - music director and consultant on “American Idol.”
“Gibson simply rested on their laurels of the great models they had built decades past, and didn’t keep up with the innovation of the times both in the guitar-builder market, and broader cultural trends.”
James Wengrow, an Australian jazz guitarist and a member of the “Kinsmen and Strangers”
"I Left Gibson Because They Treat Artists Like S***. That Company Is Falling Apart"
Bill Kelliher- Mastodon
This installment is full of quotes that point to the wide range of information that you can easily find online- Search “Gibson Guitar Problems” and you will find a broad mix of real and perceived challenges. Search for “Business Transformation” and you will learn how tight user requirements, rapid change and global markets have disrupted a wide variety of small and medium businesses.
Combine the two together and the reason for this series is clear. The Saving Gibson series examines all of Gibson’s challenges and explores industry standard processes that help small and medium businesses grow and avoid becoming “Blockbusters”.
So far, the Saving Gibson series has covered:
Debt, competition and the product portfolio (Part I)
Customer-centric research and development (Part II)
Rebranding to increase visibility and reduce costs and confusion (Part III)
Research to open new markets and better serve traditional markets (Part IV)
Along the way, we learned that Gibson’s brand has been weakened, that competitors have plenty of guitars hanging on dealer walls and that Gibson has a short time window in which it will be relatively easy to transform the business. We outlined the work that needs to be done and demonstrated that if that work is done well, it’s likely that Gibson can rebuild their reputation and grow.
Today we’re looking at Leadership, one of Gibson’s biggest challenges. Interwoven throughout is the long term research, planning and processes that increase sustainability and reduce costs.
Seventh Priority – Real leadership requires knowledge-based decision making, clear communication and balance (instead of hunches and excuses).
If you’ve been keeping up with this series, you probably recognize that practically all challenges can be traced back to poor leadership. Good leaders proactively analyze the challenging strategic issues that we have examined including “If the guitar market is shrinking, what will it take to make it grow?” or “How is the competition increasing market share?” or “How has the competition increased quality and undercut our costs?”
At the same time, good leaders have to balance key operational issues including “How do I acquire and maintain the best and brightest workforce” and “How can I grow and reward dealers?”.
Gibson hasn’t won any points addressing these or related issues in recent history. Here’s examples of some of the key issues that they’ve emphasized over the last ten years:
The fact is, we don’t see ourselves as a guitar company, we see ourselves as a music lifestyle company."
Firebird X: "This is different. This is revolution. Nobody looks and spends the time to reinvent the guitar. This is a new guitar."
Technology is a wonderful thing,” Juszkiewicz said. “But technology doesn’t always sit well [with consumers], mostly because there’s not enough marketing dollars to let everybody know what it’s all about.”
“Retailers are fearful as can be, they're all afraid of e-commerce”
“My job is to help people have a good time, he said. “If they’re having a good time and they’re learning things, it’s a wonderful thing, and we should never lose sight of that.”
“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.”
“So the filing for Gibson in Chapter 11 is not because the company was troubled, was somehow struggling financially - it was a case of a major part of the enterprise was struggling and we are in a process of winding that down.”
We’ve addressed these opportunities and challenges throughout the series. It is clear that the guitar industry is changing; however, competitors have found many new and innovative ways to increase wallet share.
“My job is to help people have a good time” is probably a good idea, however, most of Gibson’s published thinking appears highly speculative- there is little discussion about the customer focused research that underlies strong R&D. This is crucial because data (about the customer) is ultimately king- not the CEO. From artisanship, to quality, to innovation and value, it’s extremely hard to prioritize when you don’t have a solid plan that’s built on strong data.
As far as leadership, it appears likely that Gibson embraced the historical myth that great leaders are born with the perfect mix of nebulous qualities that mysteriously lead to success- From Thomas Edison to Steve Jobs, the media (and the stars themselves) like to reinforce the myth that brilliant leaders simply know what’s important- it helps reinforce an other worldly, unknowable, genius persona.
The truth is that modern, successful businesses have embedded data-driven driven processes through the organization and good CEOs depend on that data for practically everything.
Behind the curtain, great minds from Edison to Jobs funded heavy R&D that converted hunches into easily measured ROI; balancing customer needs and costs, optimizing value to outperform the competition and using previous performance to better understand future opportunities. Of course they made mistakes; Edison’s preference for long distance DC current wasn’t based on data- he ignored the data because he had developed DC and he was highly invested.
But that just reinforces the point- ignoring the data only worked in the short term and history proved Edison wrong.
On the other side of that same coin, great leaders know how to avoid the "paralysis of analysis". As Lee Iacocca put it, “I have always found that if I move with seventy-five percent or more of the facts that I usually never regret it. It’s the guys who wait to have everything perfect that drive you crazy.”
It is important to avoid over analysis, but Gibson seems to be living at the opposite end of the spectrum.
SWOT exposes the naked emperor
When we consider leadership requirements, keep in mind that the processes that we’ve discussed throughout this series are relatively easy to implement. They require solid research, discipline and logical thinking, but they aren’t rocket science. Let’s take a fast look at one of the easiest and most effective tools that even the smallest of organizations can implement...
A SWOT review (Strengths, Weaknesses, Opportunities and Threats) is a simple, effective, low-cost strategic planning tool. In a SWOT review, management meets with key stakeholders who represent customers, products, IT, employees, channels, partners and finance to build a clear, honest and concise snapshot of “where we are” and a list of options regarding “things we need to explore to determine where we need to go and how to get there.”
SWOT requires a strong leader to bring everyone together, to avoid infighting, to protect whistleblowers and ensure realistic information. However, when done well, overarching goals are reviewed, Strengths Weaknesses, Opportunities, Threats are listed and logical follow up actions are debated in a single (3-4 hour) session.
If SWOT is correctly implemented, false assumptions and clouded thinking are very hard to hide. On the other hand, SWOT sessions can easily be "hijacked" if dissidents and stakeholders with contrary knowledge are locked out (or don’t exist in the first place).
Next steps depend on organizational maturity. A well organized company, that has quarterly or semi-annual SWOT reviews, may find few unplanned actions necessary. In that case, SWOT simply reinforces plans that are already underway.
However in Gibson’s case, an honest SWOT review should generate a long list of significant logical actions. Take a look at the SWOT Table in the Appendix to get a better understanding of how this simple exercise shines light on diverse opportunities.
The SWOT table we include was built with input collected from dealers, customers, previous employees and current employees and it’s the foundation for recommended actions that underlie the entire series.
Dig into SWOT and consider the problems that could have been avoided and opportunities that Gibson might have pursued if they had simply taken an honest look at their Strengths and Weaknesses.
Note that all of the recommendations in this series are logical applications of the Strengths Weakness, Opportunities and Threats listed in the linked SWOT table.
Top Leadership Skills
If leadership is crucial, what should Gibson be looking for?
1. Love of Industry and Market Knowledge
Modern CEOs invest time and resources to understand customers, competition and the total ecosystem:
Cross-organizational, deep core knowledge is necessary to achieve sustainable balance- Optimizing the tradeoffs between artisanship and technology is a great example.
Brand- This is one of Gibson’s most valuable assets and practically all of the work outlined in this series is necessary to reinforce and reposition brand.
Voice of the customer- Customer needs drives everything and Gibson appears to be out of touch, ranging from quality to product to competitive pricing. This is so important that you will see more details as the 8th Priority.
Providing inspiration and innovation to build new markets- Gibson has remained focused on historic markets and it’s important to grow additional markets, unless they choose to only focus on the boutique market.
A good CEO has the ability to see both ends of the continuum, identifying the strong "middle of the road" opportunities that integrate a wide range of ideas from multiple perspectives:
One of the greatest examples of the power of balance was Abraham Lincoln- Read Team of Rivals: The Political Genius of Abraham Lincoln to learn how to synthesize strong multilateral, multifaceted opportunities from unilateral opinions.
The same is true of the Wright brothers- They were famous for researching all aspects of a problem, advocating one side, switching sides and ultimately finding the truth hidden in the middle- “Often, after an hour or so of heated argument, we would discover that we were as far from agreement as when we started, but that each had changed to the other’s original position.” Orville Wright.
Although less exciting than the extremes, consistent "good" opportunities usually provide higher ROI than those aimed at “show stopping” performance.
3. Recognize that happy Employees and Dealers are supposed to be high priority assets
CEOs in practically every industry recognize that happy employees grow the company and churn wastes time, energy and knowledge capital.
Gibson has an additional challenge- dealers are one of the best ways to increase visibility and mindshare, however, they have been caught in the middle of Gibson’s pricing and quality challenges.
This is a major issue and is addressed in detail as the 9th priority.
4. Strong Communication Skills
Good CEOs must communicate clear objectives and strategies, the paths to reach those goals, and build clear communication channels to receive honest, objective feedback:
Messaging needs to be layered, consistent and well timed to motivate employees, partners, dealers and customers and synchronize their interactions.
Messaging that is based on wishful thinking usually backfires- In Gibson’s case they spent a lot of brand power on poorly targeted offerings, costly acquisitions and unneeded technology.
5. Converting Knowledge and Data and into Good Decisions
Good CEOs sponsor data-driven decision making, where process and measurement are used to prioritize high Return on Investment opportunities and rapidly identify poor performance:
Significant, proven, repeatable Key Performance Indicators (embedded in continuous improvement processes) are no longer optional for mass production manufacturers.
The product, marketing and business development processes we have explored throughout this series are excellent examples. Embedded KPIs reduce the risk of "gut decisions". If strong product business cases, persona driven positioning, roadmaps and Customer Life Time Value assessments (discussed in Part III) were in place, costly acquisitions (Onkyo) and weak development decisions (Robo tuners) would have been unlikely.
Considering Gibson’s large mass production offerings, industry standard manufacturing frameworks (like Six Sigma) are likely to reduce costs and increase quality and are covered as part of the 8th priority.
A good CEO totally understands the benefits and interconnectedness of the total product lifecycle and encourages processes that optimize the total cycle.
6. Desire to Optimize the Supply chain
When organizations don’t have focused product planning, they 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:
Considering the breadth and depth of Gibson’s other challenges, an incoming CEO would do well to order a supply chain audit.
7. Change Management
All organizations need to successfully manage change- However, Gibson has broad and wide challenges including selling assets, while modernizing processes, repositioning, revamping products and rebuilding networks. Strong program, process and change management is necessary to keep "the lanes open".
This is topic is so big that it is addressed in detail as the 10th priority. Customers and prospects learn from experience. Hubris and learning on the brand are not successful long-term strategies.
You may be surprised that Finance isn’t high on the list of qualities that a good CEO would bring to Gibson. The reason is simple; finance is a good CFO’s focus. A good CEO needs to remain a level above all departments to effectively prioritize competing internal priorities.
If the CEO is too focused on finance without balancing customer requirements, it’s very easy for an organization to get off track and it’s possible that this contributed to Gibson’s ongoing problems.
Just as a good Chief Customer Officer needs to be free to say “The data makes it clear that there is little demand for this offering”, a good CFO needs to say “I don’t see data that makes a case for long term Return on Investment.”
If the CFO isn’t free to provide objective information, or if the CEO believes that CEOs can make objective decisions while immersed in finance, there is no one at the top balancing and prioritizing opportunities.
Digital, Social, Ecommerce
Another “Not what a CEO should be doing” quality, ironically these are requirements in Gibson’s job description and may indicate that creditors still don’t understand how Gibson got off track and what they need to do to get recentered. https://execthread.com/listings/2018-8-greater-nashville-area-music-chief-executive-officer-ceo
Much like the previous CFO example, digital and ecommerce are the focus of a good Chief Marketing Officer.
Perhaps more important, technology can only expedite and sustain underlying processes. As we have discussed, Gibson processes need a major overhaul before technology is considered and marketing needs to develop the data that drives all things digital.
In their defense, the Gibson job description does mention brand, which is an extremely important focus. A good CEO will support marketing and product as they define an overarching story (based on actual customer requirements) and the CEO ultimately determines if that story and plans for the future are closely aligned.
Summing up this installment is simple;
Gibson needs new leadership that cultivates data and processes that help everyone better understand what it takes to make Gibson prospects happy.
Coming up next- protecting dealers and employees and changing attitudes. We will look at options ranging from selling Epiphone to being acquired and we will talk about acting as informed informed consumers who can help Gibson focus!
So what do you think? What’s your perspective on Gibson and the guitar market? Looking forward to your input because we learn from you!
And did you notice that we are deep into a series about products and marketing and we have just addressed CRM, Marketing Automation and other technologies for the first time? The reason is simple; Product, Marketing and Sales processes need to be established and adding value before systems and automation make sense- Learn more at: https://www.linkedin.com/pulse/three-good-reasons-put-data-analytics-ahead-else-michael-stierhoff/
Michael Stierhoff is the Chief Customer Officer at Lighthouse Marketing and Business Solutions; helping Lighthouse customers grow their business by better understanding their customer’s needs.
Perhaps more important for this article, Michael is the Chief Cook and Bottle Washer for the GuitarYouDreamAbout.com where we help guitarists “Find Their Perfect Sound".