05.16.18

Ending on a Sour Note: Why Gibson Brands ultimately failed

KARL R. LAPAN, PRESIDENT & CEO, THE NIIC

Gibson Brands Inc. made headlines this month with news of its plans to file bankruptcy. Their financial woes are not unique, but what is, is the root of their failure. They likely went bankrupt because they were too fixated on innovation while not acknowledging the changing times.

Some experts believe the failure of the company was a matter of time once Gibson expanded into a broader musical lifestyle company and failed to bounce back from the 2008 financial crisis. CEO Henry Juszkiewicz wanted to innovate by turning it into what he referred to as a “music lifestyle company.” In other words, his vision was to lead a consumer electronics business that also happened to sell guitars. Citing consumer apparel giant Nike as his model, he concluded that, “like Nike, you couldn’t just sell to track guys, you had to sell to regular consumers.”

Gibson failed to stay in its lane, which ultimately turned off musicians and industry experts alike. As Henry Yates opines on the site musicradar.com, “Concentrate on the core models that made your legend, then build them to time-honored specifications and sky-high standards. Beg the Custom Shop staffers to come back and give them a pay rise.”

Speaking of staff, Gibson also faced issues with its distribution model. Retail stores have had trouble making guitar sales for quite some time. Why? Sales staff lacked enough training to know the ins and outs of the merchandise (contrast this with our local mega success story Sweetwater who has exceptional service, well-trained, knowledgeable and a passionate staff), and therefore the customer experience was not optimal. Professional musicians did not take them seriously, so they went elsewhere, in droves.

Pop culture has changed, too – which impacts sales. The electric guitarists of the 1960s and 70s were virtually gods in the minds of teens. Today, not so much. “Kids today have so many more choices,” as Juszkiewicz noted in a New York Times piece. In other words, electric may no longer be cool so oddly enough, kids today might be more interested in ukuleles than high-powered guitars.

It’s the end of an era for sure and one that’s ending on a sour note (no pun intended!). What can you take away from Gibson’s mistakes?

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