What sort of business issue is it when a company has lost its `cool’? A recent WSJ article gives us a tantalizing scenario of executives meeting to discuss how their firm can regain its `cool.’
The article chronicles the troubled leadership of Frederic Cumenal, recently fired as CEO of Tiffany & Co. (https://www.wsj.com/articles/tiffany-hunts-for-path-to-regain-cool-1499621248). Attention to Smith’s ethics would have helped him. Fundamental strategy always engages moral questions. How he went about changing things was morally fraught.
To be fair, Cumenal was brought in to solve a problem created by prior management. In V&R Chapter 5 (paragraphs 15-19), I talk about the good and bad strategic decisions made by Tiffany in the past from Scheler’s perspective.
How did Cumenal fail to correct the on-going problems? This is a moral story for which Smith is well-suited. The core of Smith’s ethics is the claim that morality is a balancing of sentiments: an agent is judged to be bad if she fails to have emotional symmetry with those around her watching or good if her emotions align with the spectator.
The basic problem with Tiffany is one these pages have often discussed: the inequality built into the idea of the beautiful. If I am to be observed by the spectator I need to stand out. In commercial civilizations, as opposed to those centered on the hero or saint, I stand out by my vanity: the adornments that elevate me. Tiffany has a crisis of exclusivity: that is, nearly one half of their sales come from relatively cheap goods (under $500). As someone quips in the article: you’ll not find anything at Cartier for $500. The flood of cheaper products devalues the more expensive things Tiffany sells. If lots of people wear Tiffany how can it help anyone to stand out?
Cumenal lost both the boardroom and rank and file. Smith would counsel paying heed to the spectator. Cumenal wanted to mostly retire the famous Tiffany blue and this horrified staff. Maybe he is right that it is overexposed but it is much loved and surely not the essential problem. He broke the sympathetic circle with this demand.
The choice of a celebrity like Lady Gaga to enhance the brand also seems eccentric since by pop standards she is a bit old and falls between spectators: hardly a senior woman but certainly not an Instagram or Youtube influencer either. Cumenal here seems confused about who the spectator is, always the first and essential question in Smithian ethics.
The Englishman at the head of Supreme says somewhere that a brand cannot just be “we’re from New York” because all people are proud of where they are. I can well imagine that the staff at Tiffany is proud to work there: it is a storied brand. Cumenal brought in people from outside the company to shake it up. This runs counter to a recent trend of promoting from within – something Scheler would always affirm – and it immediately weakens the sympathetic bond. As Toyota has proven, rank and file often has excellent ideas: affirm them. For Smith, it is the moral thing to do.
To the board, he came off as “disdainful and aloof” and he pushed a contradictory management practice of simultaneously re-affirming hierarchies and demanding senior executives leave the field each month to spend one week in New York at head office. With hierarchy comes independence and liberty of action (subsidiarity, as CST puts it) not micromanaging. In this case, Cumenal broke the sympathetic circle of the upper echelons of the company.
One innovation does meet localist moral requirements. Blending design and production teams, Cumenal aimed to get products to market much faster. This practice has been perfected by Zara and would be welcomed by Scheler. Smith’s argument that what we most give sympathy to is complex objects also ratifies this approach.
However, in general, Cumenal failed morally. Again and again, he ignored the delicate problem of the spectator and the moral requirement that each of us align ourselves with its sensibility. There is no way to regain `cool’ with a broader spectator if leadership cannot even keep management and staff `onside.’ Senior management get paid enormous sums of money precisely to be imaginative and here Smith is the best teacher: morality is role-play.