Thoughts While Walking Along the Beach

Frank Dallahan, Publisher -- JCK Online, 9/1/2003 2:00:00 AM

In the jewelry industry, much has been said about the importance of relationships. On the corporate side of the business world, much continues to be said about the importance of "people assets." "People are our most important asset" is a phrase found in virtually every annual report. Yet we know that the driving forces behind every business are revenue generation, cost-and-expense control, and— ultimately—profitability. Profitability guides decision making, and people and business relationships are ultimately subject to this profitability analysis. When a person or business is not contributing to revenue generation or cost controls, a decision is made to end the relationship.

There are consequences to ending relationships. In the jewelry industry, changing suppliers is not difficult because there are many manufacturers to supply a retailer's needs. Similarly, manufacturers can select new retailers to sell their product lines. But sometimes decisions to begin and end business relationships turn acrimonious because of communication failures on both sides of the counter, and legal challenges sometimes result from the conflicts that develop.

We are becoming a more and more litigious society. We look to the law to protect us from capricious, uncompetitive, and unfair decisions made by those with whom we deal or those we believe have hurt us. If there is no existing body of law to which we can turn, we seek new laws to address the specific instance in which we believe we have been aggrieved.

The lesson the French business community is learning about abruptly terminating relationships should not be surprising. The overwhelming support the citizens of the United States demonstrated for the decision to oust Saddam Hussein from power should have signaled to the French that its leaders were skating on thin ice when they publicly humiliated the United States on the world stage.

In response, many American citizens are boycotting all things French—including travel. In France, American tourists account for 5% of the traffic but 15% of tourist revenue. Dr. Georgia Witkin, a psychologist and regular guest on Fox and Friends, recently discussed the French and relationships. She opined that the French violated a fundamental premise of any relationship: Never criticize or embarrass a friend in public. You may take them aside and tell them privately that you believe they are making a mistake … but never in public.

In the book The 22 Immutable Laws of Marketing, there is one law that should be No. 1: "Success leads to arrogance, and arrogance to failure." It's safe to say that, in the jewelry industry, no business has been more successful than the Diamond Trading Company/De Beers. It's the only real dominating force within what is essentially a fragmented industry.

The fear, awe, and anger felt by those whose relationships have been unilaterally severed by the DTC will linger for a long time … and the story isn't over yet.

fdallahan@reedbusiness.com