Kim-Eva Wempe recently met with him at IWC headquarters in Schaffhausen to talk about watches, IWC’s success and Kern’s commitment to environmental protection.

In 2002, at the relatively young age of 36, Georges Kern became CEO of the longstanding International Watch Company (IWC). Located in Schaffhausen, IWC is the only company in Germanspeaking eastern Switzerland that manufactures exclusive watches.

Wempe CEO Kim-Eva Wempe recently visited Kern, a jeweller’s son who hails from Düsseldorf but loves Switzerland, at IWC headquarters near the Rheinfall, where the company was founded in 1868 by Florentine Ariosto Jones, an American watchmaker.

Kim-Eva Wempe (KEW): Do you remember that you began working as CEO of IWC at around the same time that we were celebrating our 125th anniversary at Wempe? You brought me a somewhat politically incorrect but charming present in the form of an ad that said “The fi rst woman to run the company in its 125-year history. Goodluck anyway.” That was really cheeky.

Georges Kern (GK): Oh yes, I remember. I’m glad you took it with a grain of salt and decided to meet me here today anyway (laughs). We got the idea for that ad from our “macho campaign” at the time.

KEW: Can I, as a woman, buy an IWC watch, or do I have to fi rst ask your permission?

GK: Actually, women account for around 25 per cent of our sales. In Italy, for example, 50 per cent of our Portuguese models are sold to women. To be honest, I find the idea of separating watches into women’s and men’s models rather strange. After all, there’s no such thing as women’s or men’s cars — only attractive cars and ugly ones. We also distinguish between attractive and ugly watches in our industry, although at the moment, I believe there are more attractive men’s watches than women’s models. But you can’t just take an appealing men’s watch, make it smaller, and expect to get an attractive women’s model out of it. Andbesides, most women today want to wear large watches that are cool and sexy.

KEW: My first IWC watch was the legendary Mark XII, which I got in 1994. When were you given your first IWC watch?

GK: When I was 24 or 25, my father gave me an IWC Ingenieur, which was a nice present for a young man. But I always had a lot of watches, due to the nature of the family business.

KEW: Both of us grew up with this industry, with jewellery and watches. Your father, René Kern, was a very important jeweller. Did that have anything to do with yourchoice of career?

GK: No, that was fate. My father always wanted us to have a good education. My brother ended up in the banking sector, and I first studied political science, beforeswitching to economics in St. Gallen. My first real job was at Kraft Jacobs Suchard, in the consumer goods industry. Then I went to work at Tag Heuer’s marketing department. In 2000, I joined the Richemont Group. I wanted to start out there on top, and the anecdote about how Nicolas Hayek of Swatch opened the door for me at Richemont is true. I initially worked for Franco Cologni, and after the acquisition of the Les Manufactures Horlogères (LMH) watch group, which included the IWC, Jaeger-LeCoultre, and A. Lange & Söhne brands, I was responsible for integrating the sales operations of the three brands.At that time, I was working under Günter Blümlein, the legendary founder and director of the LMH Group.

KEW: I remember that we didn’t even carry IWC in New York in 1990, and even in 2000 it was considered one of the “smaller” brands. So why did you decide to take up the challenge of managing it?

GK: The brand fits together with my lifestyle and interests, because it is sporty and technically sophisticated. However, it’s also true that IWC was relatively unknown to all of us at the time. The acquisition was carried out primarily in order to obtain Jaeger-LeCoultre and A. Lange & Söhne. IWC had strong roots, a great tradition, and also two very strong product lines in the Pilot’s Watch models and the Portuguese family. It was clear that the brand’s potential hadn’t been exhausted. It was like a Porsche that had always been driven in first gear. Today, we’ve got IWC up to third or fourth gear, but we haven’t reached sixth yet. Thebrand has an extraordinary history, so we didn’t have to reinvent anything, as you sometimes have to do with other brands.

KEW: What role did Richemont play here?

GK: A very important one. For one thing, it made it easier for us to establish an international sales network for IWC. In addition, it provided us — and continues to provide us — with a whole range of support services, including IT, legal consulting, and logistics. Finally, the tremendous wealth of experience at Richemont generated a great deal of input regarding brand strategy.

KEW: What was the first thing you had to change at IWC?

GK: The brand was like a rough diamond, and no real mistakes had ever been made with it over the decades. We used this firm foundation to bring the brand up to date, give it a clear statement, and provide it with a segmented structure. The product groups we have today refl ect the history of IWC, and the Vintage Collection we’ll be launching this year serves to very attractively illustrate the link between the past and present.

KEW: I’m always suspicious of companies that focus solely on marketing. In my opinion, those who wish to be successful need to have a good product and a goodmarketing strategy. The IWC Pilot’s Watches are cult items. According to a study conducted by Capital magazine, IWC — along with Rolex and Patek Philipe — was watch brand of the year in 2007. IWC had 225 employees when you took over in 2002. Today it has 800, and turnover is up signifi cantly as well. How did you accomplish this?

GK: We focused on three elements: first, our products were to be based on the brand’s roots — all we had to do was make them more modern and a little bit different. So, our products are much “warmer” now, so to speak, than they were six years ago. They are also divided into different thematic areas. Our Pilot’s Watches, for example, represent air; the Aquatimer line symbolises water; the Ingenieur line stands for earth, and the Portuguese and Da Vinci lines, along with our specialty watches, are the highest quality products in our portfolio. Every one of our customers owns an average of 2.5 IWC watches. That’s because we give them models that differ in appearance but are all unmistakably IWC products. Our second focus was on massively reinforcing our manufacturing operations. Today, nearly 60 percent of our watch movements, in terms of value, come from our own production. That fi gure was much lower in the past. We now have four different calibers, which is very important for ourimage and also gives us greater autonomy. The third element of our strategy was to focus communication activities on our core value of engineering. We use humour when presenting our products, and we try to be a likable brand. At the same time, we tell authentic stories within the framework of the thematic areas I mentioned before. That inspires our customers emotionally. The story of the writer and avid pilot Antoine de Saint-Exupéry, which inspired us to create special Pilot’s Watch models, is a great tale, as is that of our highly precise Portuguese watches, which were created in 1939 to commemorate Portugal’s historyas a seafaring nation. The Top Gun double chronograph is a reference to the US Navy’s elite fl ight school, which was made famous by the film of the same name starring Tom Cruise. Our stories are our testimonials.

KEW: You just showed me a father-and-son watch set. Was that your idea?

GK: No, basically it was my son’s idea, because he was always complaining that he didn’t have an IWC. So we created a fatherand- son set that includes a Big Pilot’s Watch in platinum and a much smaller Mark XVI in steel — like for a pilot and co-pilot. The idea here is for a father and son to each have their own IWC watch as a means of binding them together as partners. In any case, we try to include in every collection a watch with “star touch” — a type of “icon product,”
if you will. Examples here include the Kurt Klaus Perpetual Calendar in the Da Vinci line, the Cousteau Divers in the Aquatimer line, and the Big Pilot’s Watch in the Pilot’s Watches line.

KEW: I’m glad we’re one of your most successful sales partners today. Where does IWC actually sell most of its watches?

GK: Europe still accounts for more than half of our sales, with the biggest markets there being Italy, Germany and Switzerland. IWC now has a true global presence,
however, and our products are very well received all over the world.

KEW: You were once quoted as saying, more or less, that Europe will soon become a backwater — a kind of nostalgic Venice...

GK: The taste for luxury we now see all over the world originated in Europe. That’s why a country like Italy is so important to us — if we can succeed there we can be successful anywhere. Still, the key markets of the future very probably lie elsewhere. For example, people in the emerging markets in Asia are hungry for development; they want to work, get ahead and consume. China will soon have a middle class of 200–300 million people who will be able to afford luxuryitems. You can’t think exclusively in terms of geography today because people around the world have become similar, and they all want to be part of a club. Our customers, for their part, want to feel at home in their IWC world no matter where they are.

KEW: Aside from being a successful businessman, you also support the Cousteau Society, David de Rothschild’s “adventure ecology” organization and the LaureusSport Awards, which donates to children’s charities...

GK: We believe in meaningful communications. Consumers know why we do these things, as they themselves are aware of the major challenges our society faces. We don’t need to print our logo on every sport club T-shirt in order to sell watches. We can also “be successful by doing something meaningful” — like supporting the causes you mentioned. Schaffhausen is also important to us, and we therefore tend to favour local suppliers, even when they are more expensive. IWC is committed to climate protection as well. We are the world’s first CO2-neutral watch manufacturer and we also get our employees involved in environmental protection. We have, for example, a fund that supports employees who renovate their homes or apartments to make them environmentally compatible. We also subsidize the use of public transportation and support the purchase of climate-friendly cars. Put simply, we at IWC believe business should set an example. Consider the situation in the U.S., where companies like Timberland, Nike and General Electric are heavily involved in climate rotection issues and view their efforts in terms of gaining a competitive edge. They’ve even come up with the saying: “carbon down, profits up.” I’m alsoinvolved privately with this issue through work I do for a foundation dedicated to lowering CO2 emissions. If governments,business and consumers all pull together, we can succeed in overcoming the challenges of environmental protection.