Ilaria Resta: Leading Audemars Piguet by Balancing Tradition and Innovation | E148

We are in a business of relationship and passion for quality, because the moment we create a relationship, this relationship lasts for many, many years and beyond. We receive watches of dates hundred years ago and we service them and we repair them, we take pictures because we discover movements that we are not producing anymore. And you enter in our family, and we call our clients the AP family, most of them, because they really start getting to know us. We know their collection, we can curate it. The reason why we acquired our distribution network, which is quite an exception in the watchmaking industry, is exactly for the reason to invest in the relationship.

Thank you, Randy, for inviting me.

Well, they were the typical family from Napoli, extremely traditional. A family that used to live pretty much in the same neighborhood. So my mom was a teacher, for you say, kindergarten teacher, and my father was working as a teacher and then as support in a hospital. So I grew up in a family that was very, very traditional, very traditional values, and not much curiosity to leave the country, to speak new languages. I didn't know anything outside of my neighborhood existed for many, many years.

So my father worked in information systems for hospitals. He was managing the data and the IT for a hospital. He was a programmer.

Oh my God, you know everything about me. Yes, I was always—and this is what my mom told me, of course—always extremely high-demanding on myself, on my standards of precision and excellence. And I remember, that's what my mom told me, the teacher complained to my mom that I was too slow in giving back my drawings because I was aiming at perfection. So I kept on throwing away, redoing it until it was perfect, at three years old.

It's funny because in reality the dream started very late in my life. I was very much short-term focused. I wanted to have amazing grades at school, I wanted to excel at drawing, I wanted to excel in certain areas I was involved to. And then all of a sudden I realized there was a world outside of Napoli, and my dream was to travel. So very soon it became clear to me, whatever job that would take me out of Napoli, Italy, and make me discover, would be my dream.

Well, my parents were always supportive of me, especially in education. I had very good grades at school, but every time I could, I came home, my parents were asking me, 'Why not the maximum score? Why didn't you get even more than that?' And it was not a demand for perfection, it was really they wanted to understand what more could I have done to be better. And that was a great question, because I never felt the pressure. I actually felt the desire to really get to the top of my grades constantly.

I was passionate about beauty in general, beautiful things, and maybe it's because I was into drawing very early in my life. I spent my free time drawing. I'm not particularly good and I'm not a real artist—the world of art didn't miss anything with me not doing it professionally—but I was extremely involved in visual arts, and that led me to like bottles, shapes, colors. So I got into the world of perfume attracted by the colors of bottles. And Cas, this beautiful type of ceramic bottle with white and rose-pink roses, and it was my first perfume I opened and smelled when I was very young. And that was my gift for my birthday, and ever since, my mom felt I was in love with fragrances, which I ultimately became. And she kept giving me perfumes over the years.

So I went to study at Liceo Classico, classical languages, so I studied ancient Greek, Latin, and I avoided English big time and any other language that was modern. I was really fascinated by going back to the ancient times. And my teacher realized my potential and my passion for studying, for discovering, very early. So she was the one who realized the world was too small for me and the ambitions I had were too small. Because when she asked me, 'What do you want to do?' I said, 'Well, I guess I'm going to become a teacher, right?' Because my mom was a teacher, everybody around me was a teacher, and the idea was if you're a teacher, you can come home after lunch, you can be there for your kids when they come back from school, you can live in the same neighborhood. It's, in a way, a predefined life that made sense for all I knew at the time. And that teacher understood through my compositions that my strive was a desire to discover, explore, push myself outside of the boundary that I didn't know I had, because I didn't perceive any boundaries—if you don't know what's outside, you don't feel, you're just living in a small world. And so she opened my eyes. She gave me many more books to read, she gave me books about other types of jobs, and I realized, it's true, there is something else outside of what I knew, and I didn't know what I didn't know at the time.

I think all of us have met, in a way, other people who inspire us. And what we don't know—at least I never did—is ask proactively for help and advice. And I receive now so many emails from people, from kids, from younger students, to whom I give advice on which exam to give at university, as a major, where to go at university. They see me speaking at a graduation ceremony and that inspires them. And what I say to people, I always answer, so don't be afraid to go and ask people, because they will answer. And we limit ourselves to our small circle of people we know, about our professors. And you might not be lucky enough to have somebody who proactively helps you, but go out and search for the people and for all the persons that are nice enough to want to help you. I'm sure if you receive an email, if you have the time, you will answer to support.

Yeah, I am extremely random in the sense that I read all the subjects and I'm good at reading most of the emails. I do not reply to all emails because I was in that pattern of replying to every email and I became a slave of emails. So emails, I'm extremely selective to the ones I reply. I'm very good on WhatsApp or other tools like Signal to respond fast, and people know that if they need me for fast decisions, they can write me a text and I will reply fast, or they can come to my office. My office door is open when I'm not busy. But then there are emails that I normally receive from students, from even young kids who are passionate about watchmaking, and I normally reply to those. And I reply directly. So for instance, a young kid was about to decide which type of studies to make. He said, 'I'm not talented to study economics like you, but I would like to enter the world of watchmaking. What should I do?' I said, 'Why don't you come over to the museum and see what we do?'

Yeah. Now I'm creating a bad precedent—I will be bombarded. There will be a lot of bad questions.

No. First of all, I knew you for the podcast, right, so I knew your name, I respect you, so I open. The reason why I was excited is because exactly what you do here is giving a voice and answers to people to whom I will not have the time to answer personally, right? So if from this conversation we can help twenty people to get the answers that normally I would have given them one-to-one or through an email, I think we have actually given me a big help.

But I believe—I want to clarify—it's not only generosity. There is so much I get back by doing so in terms of proximity to people, to students, to understand what's happening. You mentioned how as a CEO we are in this ivory tower, and I'm trying to break the ivory tower. I really don't believe in this pyramidal approach to leadership. So for me, people thank me, but I thank them also to get in touch with me and letting me know the truth. Even clients that are extremely—we have many, many, many clients who are happy, but it could be that a few are trying to get a watch, they write to me directly. And I want to hear also from the negatives, right? So that's important to me.

So it was, at the time, a project to launch a new variant of a mayonnaise—it was a Kraft mayonnaise. At the time it was part of the group Philip Morris, it was Philip Morris, Kraft, Jacobs, all together, and they did a marketing contest for universities to launch new variants of this mayo. I was really not into marketing at all, because my major was financial mathematics and I was doing my studies more on the financial aspect. And marketing was for me an area of interest but not really a passion yet. But when you put your hands in developing a business plan, a business model, to launch something, it became very concrete. I did it with two other colleagues from university, and it was a wonderful opportunity to be on stage and present this business plan. And I realized by doing it—because my two colleagues were not really interested in marketing at the end, I was the one carrying forward the work—I fell in love. I started doing more research. It's always like that with me: I go into something accidentally and I make a big part of my life, because I start studying and preparing so much that then I fall in love. And I fell in love with marketing.

Oh wow, what a question. The importance of making fast decisions on your organization. That's the biggest lesson. As I grew, of course, you grow in the size of people you manage, and the tendency you might have—at least I had—was to protect and coach and develop all the people I had. And then you realize that you do a disservice to the people and the company by doing so, trying to salvage sometimes people that do not fit, do not perform in line with the expectation. But because by nature I'm a type of a motherly leader, at the very beginning I was the one insisting to crack the difficulty with some of my team members, while I didn't invest so much on the others that had big potential. And this is a waste of resources that we cannot afford, plus it doesn't help the people who don't fit, because they should rather leave earlier.

It's interesting, because you would say fragrances are extremely creative and they are—they are, how do you say, lifting your moods—you like them, and we all know that. There is an element of emotion that is triggered by art and fragrance. But fragrance works much deeper in the cognitive aspect of our brain because they enhance memories. So when you smell something and then you smell it again, even many years after, it's proven to reactivate that part of the brain where the memory is stored. And we have done multiple studies with MRI also, just to understand what type of ingredients trigger what type of emotion. And then we discover there's a plethora of other emotions that we can trigger—like stress release, or mood enhancer like happiness, or relaxation, sleep. There is even excitement—there are certain fragrances that give you the adrenaline and the excitement to go after a task. It's also in the basis of aromatherapy work that has been done. So it's amazing how fragrance is a word that is extremely scientific and chemical, but at the same time artistic and close to the world of beauty.

The romantic image of me being on the lake was actually driving to work, but joking aside—it was a call that surprised me, of course, because if you look at the watchmaking industry, it's not really known for opening positions, especially at high senior level, or CEO, from the world outside. So I was surprised, positively, because of course I respected and loved Audemars Piguet and the watch industry. And I started participating in the recruitment process thinking, okay, this is an interesting experience for me to get to know the family, to get to know the shareholders, but at the end of the day, I'm really the outlier in this process, for sure—and that's what I've been hearing from the advisors. But then, few interviews, few market tests later, here I am.

A Swatch. A Swatch.

And actually I didn't hide it, and just excused myself for not wearing an Audemars Piguet. And they were very kind. It was also a personal watch—it was a watch given to me by a colleague who gave it to me.

It's the number one reason before you join, that's why I believe. And I always tell people, when you go to an interview, you focus so much in convincing people to hire you that you forget asking yourself, 'Do I want to be hired by these people?' And ask questions to them to ensure you really understand the culture of the company you're going to. It's a marriage. And yes, you think you have less power in the negotiation because you really want to pass the interview, you really want to go there. But do the due diligence and understand: Do I belong there? Is the value system of the company aligned with mine? And importantly, is the way they work fitting with the way I work, and I can be at my best? There is nothing worse than making a hiring mistake, but it's so much worse for the individual who makes it. The company will survive, we'll go through it—it's not the best—but for the individual, making a mistake can be an issue, especially in the first years of the job, to your point, then you leave after two years too soon and then you jeopardize your CV because you look like a hopper, you look like somebody who couldn't survive in that work environment. So the advice is really: please make time for questions at the end of the interview, observe the behaviors, and get the information around you about the company you are interviewing with.

I actually asked them. Yes, I asked them the mission for me, and then I asked them all the things that didn't go well, which was incredible, because I realized how honest and straightforward they were to me. Because you know, sometimes you get all the amazing questions answered, and then what doesn't work is really, 'The canteen, the food'—not the real answers, right? It's sugarcoated. In that case, the board interviewing me, they were extremely honest and transparent, sharing with me the good and the bad and the expectations for me.

A lot, in the sense that I knew about the watch world. I also knew, suspected, that I was part of a cohort of candidates that knew much better than me, because they were coming from the industry. And I have bought watches myself throughout my life, but not with the mindset of a collector who studies watches, so I was ignorant in that regard. And throughout, I did multiple interviews—many were about me, my leadership style, but then of course a good part of interviews were on business cases for watches. They needed to check my learning ability, my ability to answer questions on different subjects on the watch industry, from marketing, from product, supply chain, distribution. And the conversation—it was a very, very long process of interviews. So I studied a lot, as I always do. I read, I went to visit the stores, I went to visit AP. I did a mystery shopping visit that lasted three hours.

No, no, no. I was just a candidate. I had never set foot on a store. In Geneva, I went there and I spent three hours interviewing, if you may, but actually interacting with one of the store managers. You were basically saying, 'I'm interested in a watch'—without—

A Royal Oak, yes, Jumbo 39mm, which of course I knew they didn't have—they couldn't offer me at the time, I was not a client. I knew it would have been a very difficult conversation, but I wanted to have a conversation about how these people treat newcomers in their store. I wanted to test them on the toughest part of their job, which is a newcomer not knowing the industry, asking very naive questions on purpose about the company or about the model I was offered. And it was a wonderful experience, I still remember. It was Julian who interviewed me—he gave me support in the boutique. He kept me three hours explaining to me the history of AP. He took a book, he gave me a book as a gift, he explained everything about watches, and we never spoke about any transaction. It was really a way for him to understand me so he could serve me better. And it was—I tell you, I've done many other visits of other watchmakers, of course, just to understand—it was the best visit ever to any brand in this sector and beyond. And so when I was announced, of course, Julian, this guy, wrote to me thanking me for the visit and saying, of course, you will get the watch you wanted, no problem.

Immediately. You spot it immediately in the vocabulary they use, because the vocabulary they use highlights whether or not they understood. Even the way we talk about our own business—we don't talk about customers, we talk about clients. We talk about timepieces or complications. We have a certain language and narrative, just that you can see from the website, that is very easy to grasp. Immediately you understand our values very, very easily. So if you don't do the minimum due diligence to check the website, or even also you don't know the names of the people you met before—I often ask, 'So who did you meet before me?' And they say, 'Yeah, the HR,' and this unpersonalized response already tells you—how could you not even remember the first name of the person who spent time with you? It denotes lack of interest, of depth. And then you get it immediately throughout the interview also by the type of question, because the other thing I try to test always is the level of curiosity. Are you somebody who's curious to learn more? Are you somebody who asks questions that are intelligent, questions that denote genuine interest to know more about us? Will you learn when you join us, or will you think, 'It's done, I got the job, this is it, I move on'? And you get it immediately throughout the interview.

It's fundamental, for sure, as a weigh-in. It's the entry price, let's say—it's the entry ticket to stay in the interview with a chance of success. Because many interviews—I guess you do the same, Randy—you get a candidate after five minutes, you already know the conversation is done pretty much, because he lacks the fundamental interest in the company and the preparation, to your point. Some people came to me saying even the wrong name of the watch we produce. I say, come on, you cannot really not know which model do we produce, right? There's not so many—we have four in our portfolio. So that is clear at the very beginning. But the preparation is also a double sword, right? Because then you are so stuck in trying to have your messages passed that you don't have this power of agility and following the conversation in a natural way. And I had these people who really wanted to insert their message, stuck in the conversation, ignoring—'You have this experience, let me move on, get with me in another level of the conversation, follow me.' And this power of mind agility is sometimes the flip side of extreme preparation and stubbornness to pass all the points.

Listen, this is the question I receive the most: 'How do you feel to fill the big shoes of your predecessor?' And I had so many predecessors, of course, in all the jobs I had. I had big shoes, small shoes—at the end I believe you wear your own shoes. You need to be clear of the journey your predecessor—all of them—have done, but you start a new part of the life of the company. Especially a company like AP, that yes, it exists for 150 years, but is on a development projection and change of business model that is constant. If you stay too much anchored to my predecessor, what he has done—a tribute to the legacy of the past—you forget what your mission is. Your mission is really to bring the company from point A you got it to point B, knowing that this point B needs to strengthen the future of the company. So I personally don't like thinking too much about who am I following, also because the context changed. What I also don't like is the approach of changing everything your predecessor has done, which I find clearly, honestly, irresponsible for the company, because there is so much ego in the change of leadership, especially at CEO levels. Because if you come in after a successful CEO, you really want to yourself compare to the other, you want to give an immediate visible proof that you're a good choice, you feel a sense of inferiority—all this needs to go away. What you need to do is, first of all, understand your mission. Your mission starts the day you take over, and you need to make the interest of the company, not your own ego, the reason why you're there. And you're not in a war or in a competition with predecessors before you. That's why when people ask me, 'What are you going to change?' I will change the necessary to be changed, but the intent is not to change for the sake of change, and especially because there are so many good choices that AP has done before. So I am extremely clear to people, and also people reporting to me who replace other people: focus on your journey, but please take the most time with your predecessor to learn. Because what we do in the turnovers, especially of CEOs, there is a very clear cut, the past and the old. Sometimes the CEO arrives, there is nobody there. You need to make an effort as a CEO to really reach out to your predecessor, one or many years before, to really go under the skin of the company, understand their choices, why they made certain choices, and then you make your own. But try to learn. This avoidance of the past for fear of a comparison, I find it extremely egocentric and childish. And it's not my approach.

Let me start by the mission, which is a very clear mission, extremely difficult, which is: guarantee the parity of the company as a family independent business. This is a big choice that I need to preserve and work on, and it's not easy, because the parity requires my view to be extremely telescopic, while normally the view of a CEO is microscopic and telescopic at the same time. You need to take care of—if you're publicly traded, I was obsessed in my publicly traded job on the quarterly results, on the yearly results, and so forth. I need to have both views, telescopic and microscopic, but the telescopic, even beyond my tenure, needs to be so strong and overtaking the short term. Why is that? Because the choices we are making are choices that we need to guarantee quality, we need to guarantee a certain mix of products. And this is my focus: innovation, product quality, and mix of watchmaking excellence. There are different types of watches, okay? There are watches with movements of different degree of complexity. What AP has always been known for historically is high-end complications—the complication that starts from a calendar, could be a perpetual calendar, like minute repeater, could be a grand complication, could be a chronograph—beyond, combination of complications—and we aim at pushing boundaries on complication. At the same time, there is another vector of innovation for us, which are the materials. You have gold, you have steel, you have many other materials, but we like also to work on new ones. That's why we launched new ceramics, we launched a material called forged carbon, we launched a new alloy of gold called sand gold. And for us, this aim at developing new materials, trademark new materials, is an exciting project for watchmaking. And then on top of that, you put the creativity, right? Because the watch has a dial, a face, a skeletonization that is possible inside the open work—there are so many aspects of watchmaking. We can produce a lot, or we can produce great, outstanding timepieces, and I put the accelerator and the accent on the quality. There is not only an element of production and selling, there is an element of the strategy, which is client centricity and client service. You spoke about the great service you get—for us, we are trying to create a relationship that goes beyond the transaction of buying and paying and taking a watch home. The moment we meet with a client or a prospect client, we establish a relationship. The example of my mystery shopping was the building of a relationship. What we try to do with new clients is understand what are their motivations, why do they want to buy a watch, how can I serve them as AP in a way that they will love the timepieces forever, and how can we build and curate their collection over time. This is a service that requires investment on people. Our visits are not ten minutes—'you come in, you buy, and you leave'—it's multiple hours, multiple days, multiple months. We do events. The reason why we acquired our distribution network, which is quite an exception in the watchmaking industry, is exactly for the reason to invest in the relationship, and that is something that is not possible if you want to produce much, much higher numbers of watches. So it's really because of innovation, client relationship, and the quality we're aiming at—we will not increase dramatically the number of watches.

Okay, let me answer on the onboarding part. I started—my first day, I will never forget, has been a tour of the lake by foot. So the first day was devoted to discovering the place where Audemars Piguet was born—the nature, the lake, the temperature, see the village—and that was a full day dedicated to that. Which, if you think about it, it was wonderful. I was impatient to go see the watches, and instead I spent one day visiting the lake. And then I realized how much of an investment, a positive investment, it was, because where we are defines who we are. Today we are in a place that is very secluded and difficult to reach, surrounded by mountains. For at the time, 150 years ago, it was so much covered in snow during the winter times that people were stuck there—stuck with very few resources. You had wood, you had water, you had very little to do. Mini-mechanical movements—that's the only thing they can produce. They didn't have enough quantity to do big productions of big pieces. So micro-mechanics was not a choice, it was a necessity and the only possibility for them. And then they started producing the parts. They were all farmers in the Vallée. They started to produce the small components that then they sold in Geneva, in Paris, in London, to do watches. That's how it all started. And when you visit the Vallée, you discover the attics where all the watchmakers were working, exposed to the north, protected by the wind. And that was an important tour for me to understand: this is it, that's how we exist, this way. And then you realize that all these houses of watchmakers, they were connected, very close one to the other, and that's how the watchmaking industry started as a system called 'système tablissier.' Tablissier is a group of families—they were each working on a component, specialized on specific components—and another was the project manager, the tablissier, bringing together the different expertise, the different components, into a watch. So for us, the Vallée is our birthplace, but is also our, if you want, community of suppliers, manufacturers, at the time, without whom we wouldn't be here. So the visit of the Vallée was necessary for me to understand: we are not alone. You cannot enter the office of Audemars Piguet believing I learn everything inside here. I learned first by observing, with the helicopter view, all that is happening around it. And then I did literally, at the atelier, bench by bench, every single watchmaker in all our production sites. I had a chance to spend a few words with most of them, to understand what they did, what was their job, the challenges of their job. I tried to assemble a watch myself—unsuccessfully. Already just taking a little screw—you know, 'brise' it's called in French—a little screw that is invisible for you to look at—it shows the dexterity required to do this job. So I did a lot. My onboarding was really observing a lot, talking a lot. And when you say how low you went in the organization, I would say I went extremely high in competence, because this is where the competence are: watchmakers, the people doing the work on our amazing timepieces.

No, we collaborate with strategic partners. Quite a few. I cannot name you the number, but we have certainly—I say twenty to thirty strategic partners we work with that provide key components. But we try to mix external to internal capabilities as well, because we like also to experience a production of components that we might continue even still buying, but we want to develop ourselves the capabilities to be able to produce them. So we are trying to train ourselves to do things that we buy, in order to make sure we understand the whole world of watchmaking.

What we do is, first of all, we have multiple quality control checks to ensure that—for every single watch that we produce—controls to avoid, for example, when we immerse them in water, that water does not come in and destroy the movement. We have drop tests, we have all sorts of tests, quality, visual tests—we have at every step somebody's checking, also because when we do the checks at the end, when the watch is assembled, it's too late, because then you need to disassemble. So at each stage there are multiple quality checks. If a caliber is a new caliber, what we do is we develop a prototype that our engineers, our conceptual developers, wear, and we believe that wearing the prototypes is important, because they live the life with you. And we simulate what would be the first months, or in some case even for one year, the life of the watch, in terms of: does it work, is it comfortable, the material is exposed to water, does it degrade, is there an issue with that? And then we launch it. So we have a very, very high standard of control.