Puzzling Out De Beers’ Latest Reinvention

When I first started writing about diamonds, back in De Beers’ cartel days, I asked a more experienced trade reporter why the company had so many divisions under so many different names: The CSO, the DTC, Diamdel, the DPS. “That’s to confuse you,” he said. 

That may or may not have been true, but today’s De Beers is actively working to clear up that confusion. It announced last week that it was basically eliminating the term Diamond Trading Company from trade discourse—10 years after urging sightholders to use it. (I remember one client, at the dawn of Supplier of Choice, all but begging me to call him a DTC sightholder. “Write De Beers,” he said, “and I’ll lose my sight.” I didn’t and he didn’t.)

Most people I spoke to said bringing everything under the De Beers umbrella makes sense: It’s a far better-known name than Diamond Trading Company, both among the trade and consumers, although among the latter, the connotations aren’t always positive.  

What’s particularly interesting about all this is not the announcement itself—which I think we can all agree is not exactly earth-shaking—but the news that De Beers is going through one of its now-periodic rethinks, and may have bigger news to come. 

For now details are sketchy. In our interview last week, De Beers’ Varda Shine outlined some general principles but didn’t offer specifics. One idea apparently involves adjusting production to demand.

Back in the cartel days, De Beers was known for marketing based on production—if its mines produced a certain quality or size, those gems would be spotlighted in DPS ads. Now, executives suggest, that model can be flipped. Still, what makes diamond mining (and manufacturing) so tricky is that it’s fundamentally governed by the vagaries of nature. So we’ll have to see what’s possible here.

Looking at all this, it’s hard to not to have flashbacks of De Beers’ Supplier of Choice policy. That wholesale reinvention of the company involved bringing in outside consultants (then Bain, now McKinsey); jettisoning a familiar trade name (then, it was the cartel-ish Central Selling Organisation); vowing to be more responsive to its customers (post-SoC, the company instituted the Key Account Manager system); and supporting promising sightholder marketing plans. 

Supplier of Choice was meant to be a policy that dragged De Beers out of the monopoly era, but even today, the company still dwells in the shadow of its former all-powerful, all-controlling self. That history even infected SoC in many ways, with clients complaining that De Beers was as heavy-handed as ever. Chaim Even-Zohar writes the company has always had what he calls (quite accurately) a “we know better” culture. That culture has also been quite insular. Which makes it striking how many times over the past decade the company has turned to outsiders for guidance—including Bain, Mellier, and now McKinsey. 

De Beers executives have said two things this time that sound very promising. First, they vow to adjust the company attitude and “really listen” to clients and to the trade. They are also billing this as a more gradual process, as opposed to Supplier of Choice’s “big bang”—a form of shock therapy which ended up costing clients quite a bit of money.

Perhaps the biggest issue with Supplier of Choice was that many found it too theoretical, a plan that made sense on a PowerPoint but didn’t always equate to the “facts on the ground.” The principles of this new reinvention sound promising. But the key will be seeing how these nice-sounding phrases translate into action.

JCK News Director