In the early 1970s, the Swiss watch industry was hit by a disaster that was not really one disaster at all.

Today, people usually call it the quartz crisis. That name is convenient, but it hides the fact that three separate shocks arrived almost at the same time. Any one of them would have been dangerous. Together, they changed the nature of the watch business completely.

The first shock came from Japan.

Throughout the 1960s, Swiss watchmakers had been watching Japanese competitors improve from behind. For a long time, the Swiss knew Japanese watches could be cheaper. What surprised them was the speed with which Japanese watches became better. In 1968, Japanese makers swept the top places for mechanical watches at the Geneva Observatory trials. The message was impossible to ignore: Japan could now compete not just on price, but on performance.

The second shock came from currency.

Since 1945, the Bretton Woods agreement had kept many global exchange rates fixed, and the Swiss franc had been held at an artificially low rate against the dollar. When Bretton Woods collapsed in 1973, the Swiss franc rose sharply. By 1978, Swiss watches had become roughly 2.7 times more expensive for American buyers than they had been under the old exchange rate.

Even without quartz, this combination of stronger Japanese competition and a much more expensive Swiss franc would have badly damaged the Swiss watch industry.

But quartz was the final blow.

The Swiss were still trying to win the old game: making watches that were thinner, more accurate, and more beautifully engineered. Quartz movements changed the game itself. The thing that had once been expensive and difficult — knowing the exact time — suddenly became cheap and ordinary.

Between the early 1970s and the early 1980s, the number of Swiss watches sold fell by nearly two thirds. Many watchmakers became insolvent or nearly insolvent and were sold off. But a few survived as independent companies. They survived by doing something radical: they stopped being mainly makers of precision instruments and became luxury brands.

 

From Precision Instruments to Luxury Objects

The most expensive watches had always cost a lot of money. But the reason they cost a lot changed.

In 1960, an expensive watch cost a lot because it was difficult to make. The buyer was paying for one of the most accurate and refined portable timekeeping devices that could be produced at that size. The value was tied to performance.

Today, expensive mechanical watches cost a lot for different reasons. Brands spend heavily on advertising. They create desire through history, identity, and status. They limit supply. The buyer is still buying a watch, but what the watch mainly communicates is no longer the time. It communicates price, taste, belonging, and status.

This turned out to be a very profitable business.

The Swiss watch industry probably earns more selling brand than it would have earned if it had remained only an engineering industry. If you look at unit sales, the story looks like collapse. If you look at revenue, the story changes. Revenue flattened for a while, then rose dramatically in the late 1980s as surviving watchmakers learned the rules of their new world.

It took them about twenty years to understand what had happened. Watching that transformation is useful because it reveals one of the strongest forces of modern commerce: brand.

Brand is what remains when the real functional differences between products begin to disappear. And technology naturally tends to make real functional differences disappear. That is why the story of Swiss watches is not a strange historical exception. It is a story about our time.

The Golden Age Before the Fall

Jaeger-LeCoultre describes one of its current collections as inspired by “the classic designs of the golden age of watchmaking.” The phrase is polite, but it implies something present-day watchmakers understand: whatever age we are living in now, it is not the golden age.

The golden age of watchmaking ran roughly from 1945 to 1970. It began after the disorder of war, when Swiss watchmakers stood at the top of the industry, and ended with the triple shock that arrived in the late 1960s and early 1970s.

During that golden age, watchmakers cared most about two things: thinness and accuracy.

A watch is something you carry with you to tell the time. So there are two obvious ways to make it better: make it easier to carry, and make it better at telling the time. Accuracy mattered, but thinness may have mattered even more. Even in the era of pocket watches, the best makers tried to make watches as thin as possible. Cheap thick pocket watches were mocked as “turnips.” When men began wearing watches on their wrists during World War I, thinness became even more important.

Thinness was also harder to achieve than accuracy, which made it one of the qualities that separated the most expensive watches from ordinary ones.

There was another tradition in watchmaking: making a watch tell more than the time in the usual way. It might show the phase of the moon, or tell time with sound. Watchmakers call these features complications. They were popular in the nineteenth century and are popular again today. But during the golden age, aside from the useful complication of showing the date, they were not the main event.

In the golden age, the best watchmakers focused on the essential tradeoff. They made watches thinner and more accurate. They pursued the real problem beautifully. The finest watches of that era have a quiet perfection that has not really been matched since, and probably will not be matched again.

The Holy Trinity Loses Its Second Leg

The three most prestigious brands of the golden age were Patek Philippe, Vacheron Constantin, and Audemars Piguet — the so-called holy trinity.

Their prestige was not arbitrary. They had earned it through the quality of their work. By the 1960s, they stood on two legs: prestige and performance. During the next two decades, they learned that they would have to put nearly all their weight on prestige.

They could no longer win on the two qualities watchmakers had long pursued. Quartz movements were not only more accurate than mechanical movements; they could also be thinner.

The holy trinity at least had prestige to fall back on. Most other well-known Swiss watchmakers had sold mainly performance. Those companies did not survive intact.

Omega is the clearest example of what not to do.

Omega was the technical nerd of Swiss watchmakers. It made excellent, accurate watches. But it was not naturally comfortable with the idea of becoming a luxury brand. When Japanese makers became as good as the Swiss at accurate movements, Omega responded like Omega: it tried to make even more accurate movements.

In 1968, Omega introduced a movement that ran at a much higher frequency. In theory, this should have improved accuracy. In practice, the movement was fragile and damaged Omega’s reputation for reliability. Omega also tried to compete in quartz, but quartz led only to a race toward cheaper and cheaper products. By 1981, Omega was insolvent and taken over by creditors.

Patek Philippe did the opposite.

While Omega redesigned movements, Patek redesigned cases.

When the Case Became the Brand

To understand why this mattered, it helps to remember how unusual the Swiss watch industry was at the time.

The companies we now think of as watchmakers were often just the consumer-facing edge of a larger network of small specialized firms. Many of them did not make all their own cases or even all their own movements. The system was a tightly connected Swiss ecosystem of specialists.

In 1968, Patek Philippe launched a watch that shifted the center of gravity toward case design: the Golden Ellipse.

The name was slightly confusing because the shape was not truly elliptical. It was closer to what a user-interface designer today might call a rounded rectangle. The watch was successful, but more importantly, it pointed to the future.

Why would designing a distinctive case matter so much?

Because it turned the entire watch into an expression of brand.

The problem with many of the best watches of the golden age, if your goal was to impress people with the brand you were wearing, was that no one could tell what brand you were wearing. From more than a few inches away, the top makers’ watches looked similar. That is the nature of minimalism: there is often one best answer.

The watches were also small by modern standards. Watchmakers had spent centuries making them smaller and thinner, and by 1960 they were very good at it. The brand name printed on the dial might be only half a millimeter high. By taking control of the case, Patek expanded the visible surface area of the brand enormously.

Why did the brand suddenly need to shout after a century of whispering?

Because Patek knew it could no longer beat Japan on performance. It would have to rely more on brand.

Branding Against Design

Even in this early example, the cost of brand becomes visible.

The Golden Ellipse is not an ugly watch. It likely looked especially modern in the 1970s, when rounded rectangles were fashionable. But it was not an evolutionary improvement in watch design. Watches did not all become rounded rectangles, because watchmakers had already discovered the best general shape for a case that holds hands rotating in a circle.

Patek also made the crown unusually small to preserve the distinctive profile of the Ellipse. The crown is the knob used to wind the watch. Making it too small made the watch harder to wind.

This reveals something important about brand and design.

Branding is not merely separate from good design. In many cases, it is opposed to it.

Branding must be distinctive. Good design, like mathematics or science, tends to search for the right answer. And right answers tend to converge.

Branding pulls outward. Design pulls inward.

There is some room for variation, of course. Design does not have answers as precise as mathematics, especially when the audience is human. A distinctive choice is not automatically bad if the motives are honest. But the tension between branding and design is fundamental. You cannot escape it any more than you can escape gravity.

This conflict is visible far beyond product design. You can even see it in religion. If a religion wants its followers to stand apart, it cannot simply ask them to do what is convenient and reasonable. Others would do that too. To create distinction, it often asks for practices that are inconvenient or unreasonable.

Design works the same way. If you choose the best options, other people will choose them too. To be visibly different, you often have to depart from what is best.

When Brand and Good Design Can Coexist

There are two situations where brand and good design can work together.

The first is when the space of possibilities is extremely large, as it is in painting. Leonardo could paint as well as he possibly could and still produce work that was recognizably his. There were not millions of painters as good as Leonardo and Bellini competing in the same narrow territory, so their styles did not crowd each other out.

The second is when a field is still relatively unexplored. If you are the first to enter new territory, you can find the right answer and claim it as your own. At least for a while. If your answer is truly right, others will eventually converge on it, and the brand advantage will fade.

Watch design is neither enormous in possibility nor unexplored. As a result, branding in watch design often comes at the expense of good design.

That one sentence describes much of the present age of watchmaking.

Advertising the Price

Patek Philippe did not know at first whether visibly branded watches would work. It was one strategy among several. But it was the strategy that eventually succeeded, at least by the measure of revenue.

For the strategy to work, customers had to cooperate. Patek knew that not all of its buyers were purchasing watches purely for performance. Some were buying them because they were expensive. The question was how many such customers there were and how far the idea could be pushed.

To encourage this shift, Patek began doing something the holy trinity had not done much before: brand advertising.

And the ads talked openly about price.

A 1968 Patek advertisement advised buyers to invest perhaps half a month’s income in an Ellipse. It emphasized that each Patek was finished by hand, that the watches were costly to make, and that production was strictly limited. The ad still mentioned thinness, which shows that it belonged to an early stage of the transition. But it did not mention accuracy. That battle, presumably, was already lost.

Audemars Piguet made the next important move.

In 1970, Audemars Piguet hired Gérald Genta to design a new watch. The result, launched in 1972, was the Royal Oak — a steel watch priced like a gold one.

The advertising was even more direct. One ad introduced it as the costliest stainless steel watch in the world. The message was not that steel was practical. The message was that the watch was expensive despite being steel, and therefore somehow even more precious.

The Royal Oak expanded the surface area devoted to brand. The Golden Ellipse turned the watch face into an expression of brand. The Royal Oak integrated the face with a bracelet that carried the design around the wrist. Every square millimeter announced itself.

The Nautilus and the Loud Watch

The early results were promising enough. The holy trinity’s sales did not explode, but they also did not disappear. Some customers were responding to the new message. If the brands continued, perhaps more would follow.

So they continued.

Encouraged by the Royal Oak, Patek hired Gérald Genta in 1974 to design a similar watch. The Royal Oak had been inspired by a ship’s porthole. Patek’s new design would also be inspired by a ship’s porthole. It was called the Nautilus and launched in 1976.

The Nautilus shows the tension between brand and design even more clearly.

It was huge by the standards of the golden age. Expensive men’s watches at the height of that era were often 32 or 33 millimeters in diameter. The Nautilus was 42 millimeters. It also had protruding shapes on either side of the case, almost like ears.

But the important thing was this: you could recognize one from across the room.

Today, the Nautilus is one of the most desired watches Patek makes. It fits modern buyers almost perfectly because it is a loud expression of brand. But in 1976, it was still ahead of its time. It was not yet the watch that rescued Patek.

The watch that finally turned Patek’s fortunes around was the hobnail Calatrava.

The hobnail Calatrava was decorated with tiny pyramid-like spikes around the bezel. That was enough to make it distinctive, but otherwise it remained close to the golden age dress watch. It was not as aggressive as the Nautilus.

The model became especially popular among investment bankers in New York in the 1980s and 1990s, earning the nickname “the banker’s watch.” By 1987, after years of flat sales, Patek’s revenue was clearly rising.

The Audience Was Ready

It is hard to know whether the key ingredient was brilliant advertising or a newly receptive audience. The audience was probably more important.

The 1980s created exactly the kind of buyers who were ready to adopt expensive mechanical watches as a way to display wealth. These were the people for whom the word “yuppie” was coined. Living expensively was one of their defining traits.

If a new method of displaying wealth was going to take hold anywhere, it would take hold among them.

By about 1990, the transformation was complete. The custom of wearing expensive, heavily branded, conspicuously mechanical watches as status symbols had been firmly established.

Why did obsolete mechanical watch technology become a status symbol at all?

Because the wristwatch was the perfect vehicle.

It sits in a visible place. It can be seen in meetings, at dinner, across a table, in conversation. It is more socially acceptable than many other forms of male jewelry. A diamond ring or gold chain might have seemed questionable to an investment banker. A gold watch, by contrast, looked respectable. It connected new wealth to older ideas of business, ceremony, and adulthood.

Mechanical watches became, in effect, jewelry for men.

Women did not adopt them in the same way because women already had socially accepted jewelry. A rich woman could wear a Cartier Tank with a quartz movement and feel no need for a complicated mechanical status object.

Quality Becomes a Threshold

It still mattered that mechanical watches were accurate enough.

A Patek 3919 might lose or gain only a few seconds per day. That was far worse than quartz. Even cheap quartz watches could be much more accurate. But in practice, mechanical accuracy was good enough. If mechanical watches had been off by a minute per day, they would have seemed too obviously poor as luxury objects. But a few seconds per day was acceptable.

This reveals an important point about brand and quality.

When a product becomes something people buy mainly for its brand, quality does not stop mattering. But it matters differently.

Quality becomes a threshold. It no longer has to be so good that it sells the product by itself. Brand sells the product. But the quality must remain high enough to preserve the brand’s credibility. The brand must not break character.

The watchmakers were lucky that the yuppies appeared in time to save them.

Or perhaps unlucky.

The market evolution they represented did not stop. It intensified. Watchmakers were pulled along with it. If they did not make enormous, flashy watches for buyers in Hong Kong and Dubai, someone else would. So that is what many of them eventually found themselves doing.

What began as a relatively subtle conflict between brand and design became, over time, an open war on design.

The present era of mechanical watchmaking does not yet have an official name. But the obvious name is the brand age. The golden age ran from 1945 to 1970. The quartz crisis ran from roughly 1970 to 1985. Since around 1985, we have lived in the brand age.

What the Brand Age Looks Like

This will not be the only brand age. It is not even the first. Fine art has been living through its own brand age since the establishment of the modern canon in the twentieth century. Since we will probably see more fields move in this direction, it is worth looking carefully at what a brand age feels like.

Imagine bringing someone from the golden age of watchmaking into a luxury shopping district today.

The first thing he would notice is that the old famous names appear to be doing better than ever. Many have their own boutiques. They look powerful, independent, and prosperous.

This is partly an illusion.

Only a few watchmakers survived the dark years of the 1970s and 1980s as independent companies. Many others are now owned by a small number of holding companies. They are less like separate companies and more like brand names used to target different levels of the market.

This is why boutiques from supposedly different watch brands can feel strangely similar. The same thing is common in fashion. A luxury shopping district may look like a collection of independent brands, but many of them belong to a few large conglomerates. This is one reason these districts can feel sterile. They have the false variety of a suburb built by a single developer.

When the time traveler looks into the watch store windows, the next thing he notices is size.

The watches are huge.

This would shock him because, throughout the golden age and much of watchmaking history, large watches were associated with cheapness. Expensive men’s watches in the golden age might be 33 millimeters in diameter and 8 millimeters thick. Expensive watches today are often closer to 42 millimeters and 10 millimeters thick, which is more than twice the volume.

To someone from the golden age, these fancy shop windows would look full of cheap watches.

Why Watches Got So Big

The reason is simple.

When watches switched from telling time to telling brand, they grew larger so they could do the new job better.

They also became stranger in shape. Cases grew awkward protrusions. Crown guards became enormous. Shapes that once followed function became trademarks. A time traveler from the golden age, when form followed function, would find this confusing.

One brand would be familiar to him: Rolex.

Rolex did not have to adapt to the brand age in the same way because it had already entered it early. Rolex had once worked hard to make its watches better, but by around 1960 it had mostly shifted focus from mechanical research toward marketing watches as status symbols.

By the time quartz arrived, Rolex customers were already self-selected to care less about what was inside the watch than whether it was recognizably a Rolex.

Rolex had something Patek and Audemars Piguet were still trying to create in the 1970s: a case that announced the brand immediately.

Rolex also had bigger watches by golden age standards, though not originally because of marketing. Their size came from Hans Wilsdorf’s obsession with making waterproof watches. The Rolex Oyster was designed to be tough. It was a tool watch, like a Jeep.

But Rolex blurred the line between tool watch and dress watch. It made thick, tough watches in gold as well as steel. The result was a kind of luxury Jeep.

That phrase should sound familiar, because it describes much of the car market today. SUVs are luxury Jeeps. What happened to watches also happened to cars.

Artificial Scarcity

If the time traveler tried to buy a Patek Philippe Nautilus today, he would receive the greatest shock of all.

They would not simply sell him one.

To get a Nautilus, a buyer often has to prove loyalty over time by buying other models and waiting for years. This is one of the most extreme features of the brand age: artificial scarcity.

This strategy sells more watches, but it also supports retail prices by keeping desirable models from appearing too freely on the secondary market. If too many “scarce” watches leak into resale channels, they stop being scarce. The ideal customer buys and keeps the watch until death.

To maintain this, Patek pressures both sides of the sale.

It weeds out flippers by making the path to scarce models long, expensive, and inconvenient. It monitors secondary sales. Auction listings often reveal serial numbers, and when necessary, the company may even buy back its own watches to trace the leak. If a retailer’s customers sell too many watches in ways the brand dislikes, the retailer can be punished too.

The idea of a “rogue customer” would have sounded absurd in the golden age.

Back then, buying a Patek meant going to a jeweler and giving them money. Today, the company polices buyers to maintain scarcity and protect an asset-like market.

This is what happens when a series of small changes gradually leads somewhere strange. No one may have designed the whole system at once. But the result is bizarre: a watchmaker managing demand, resale, scarcity, and reputation almost as if it were managing a sustained asset bubble.

When Form Has No Function to Follow

The most striking thing about the brand age is its strangeness.

There are zombie watch brands that appear independent but belong to a handful of conglomerates. There are huge watches that reverse centuries of progress toward smaller and more elegant forms. There are companies buying back their own watches to catch customers reselling them. There is even the concept of a rogue customer.

All of this feels strange because there is no longer a practical function for form to follow.

Until the end of the golden age, mechanical watches were necessary. People needed them to know the time. That practical constraint gave watch design and the watch industry meaningful shape. There were strange watches even then, but when golden age watchmakers made them, they usually seemed aware that they were experimenting.

Brand age watches are strange for a different reason.

Their main function is to express brand.

Brand is a constraint, but not the clean kind of constraint that produces good design. The constraints of brand are rooted in some of the worst parts of human psychology: status anxiety, envy, scarcity, belonging, and the need to be recognized.

A world defined mainly by brand will naturally become a weird and often ugly world.

The Lesson Beyond Watches

There is an obvious lesson here: stay away from brand.

That does not mean only avoiding the purchase of brand. It may also mean avoiding the business of selling it. You might make money selling brand, though probably not as easily as it appears. But manipulating people’s brand instincts is not a good problem to spend your life solving. And it is hard to do good work without a good problem.

The subtler lesson is that fields have rhythms that individuals cannot easily resist.

Fields have golden ages and less golden ages. You are more likely to do good work in a field that is rising than in one that has already lost its central problem.

Of course, people do not call a golden age a golden age while they are living through it. That name comes later. During the actual period, the people inside it may not realize how fortunate they are. What a golden age feels like from the inside is simply this: smart people are working hard on interesting problems and getting results.

That is enough.

There is one principle that can both protect you from working on empty brand problems and help you find golden ages without trying to predict them.

Follow the problems.

The way to find a golden age is not to search for one directly. Historically, most people who ended up in golden ages found them by following interesting problems. If you are smart, ambitious, and honest with yourself, there is probably no better guide than your taste in problems.

Go where the interesting problems are.

If the problems are real enough, other smart and ambitious people will probably gather there too. And years later, people may look back at what all of you built and call it a golden age.

Notes

[1] Bretton Woods did not directly fix every currency against every other currency. It fixed currencies relative to gold, which indirectly fixed them relative to one another.

[2] The Golden Ellipse was not a true ellipse or a true mathematical superellipse. Its shape was closer to a rounded rectangle, probably refined by hand until Patek’s designer liked the result.

[3] The small crown on the Golden Ellipse was ironic because Adrien Philippe invented the modern crown. Later Ellipse models appear to have corrected the problem by giving the crown more prominence.

[4] Fine art can combine distinctiveness and quality because the space of possible work is enormous and because there are relatively few truly great practitioners in any one period.

[5] Patek’s investment language in advertising was not necessarily good investment advice. A watch might have risen in value, but other assets such as stocks or gold would often have performed better.

[6] The story of René Bittel and the 3919 shows how much influence advertising and brand positioning had begun to exert over product identity.

[7] If one had to name a precise turning point, 1986 is a reasonable candidate. Swiss watch revenue rose sharply then even though unit sales increased only slightly, suggesting expensive mechanical watches were rising again.

[8] People genuinely interested in mechanical watches do not need to buy modern branded status objects. Golden age watches often remain beautiful, functional, and much cheaper.

[9] Hand-wound watches may have hidden small accuracy errors because owners regularly reset them after forgetting to wind them.

[10] Many old watch brands are now owned by holding companies and positioned at different market levels rather than competing independently.

[11] In the golden age, a large watch was generally cheaper when accuracy was equal, because larger movements were easier to make accurate.

[12] Some features on modern watches once served practical purposes, such as diving, but many are now obsolete as functional tools and survive as brand signals.

[13] Rolex shifted earlier than most brands from technical competition toward marketing watches as recognizable status symbols.

[14] Rolex watches and SUVs share a related appeal: aspirational toughness mixed with luxury.

[15] Artificial scarcity works only when buyers want a specific brand more than they want a specific level of performance.

[16] The luxury watch bubble might continue as long as supply is managed carefully and mechanical watches remain socially desirable among wealthy buyers.