Change is Coming, Faster Than you Think

Are you ready to embrace it?

Change is coming, and it's coming faster than you think. Rather than fear it, we should embrace it as a gateway to opportunity. The key is being ready and willing to embrace change and to accept you don't know it all. Collaboration is key for the future of our industry.

This sentiment resonates deeply with forward-thinking leaders like Noam Taube, CEO of IDEX Online, and Dominic Hill, Founder and CEO of Loupe, who are at the forefront of transforming the industry through innovation and collaboration.

In a recent interview, we delved into the challenges and opportunities facing the diamond and jewelry industry, and how embracing change is the key to survival and success.

Noam, tell me a little about your background. What led you to IDEX Online? Why the diamond industry? And how does your prior experience help you now as you helm the transformation of IDEX Online? 

While most people in our industry have been in it their whole lives, and sometimes for generations of their family, my own background is not from the diamond industry at all. I come from the "high tech" world, where I've built my expertise in transforming and positively disrupting traditional industries such as textiles and dental.

These industries are similar to the diamond & jewelry industry in the sense that they are very traditional and often averse to change. 

"There is often a feeling of 'it's worked until now, so there's no need to change'. The problem with this common sense is that it often results in businesses 'missing the train' when the realization that it IS time to change comes too late to them."

In the diamond & jewelry industry, it is evident that current practices are no longer working. There are several significant forces at play now, major disruptors to the diamond industry, that are presenting an urgent need to change, and change now.

The major transformation we are undergoing at IDEX Online is led by this core belief. It is our desire to help those in our industry to constructively adapt and adopt changes to move into a successful future. 

What are the main challenges facing diamond and jewelry business leaders in the next 12-18 months?

I describe the current situation as the "perfect storm" and I believe there are three main challenges:

1.     The growth of lab-grown diamonds

Lab-grown diamonds, once a niche market, are now posing a significant threat to natural diamond companies. An alternative view is that they have managed to carve a new market niche for themselves, and so they are actually an opportunity more than a threat.

In any case, with more lab-grown diamonds available than ever before, natural diamond companies are feeling the squeeze, forcing them to rethink their business models.

2.           Disruptive technologies

New technologies like AI and advanced data platforms are shaking up the diamond and jewelry industry. Adoption of new innovative technologies usually begins with smaller companies, then incrementally spreads upward to larger ones, eventually reaching the top of the market. For example, look at what happened with Kodak and traditional photography. Flash memory cards (SD cards) eventually overtook Kodak's film-based highly successful business back in the day.

Similarly, AI is slowly but surely making its mark on the diamond and jewelry industry. While the change isn't as rapid at the moment, it has the potential to reshape the industry in profound ways, many of which we cannot even yet imagine fully.

Dominic Hill, CEO of Loupe, echoes this sentiment:

"In a world where technology is evolving faster than ever before, standing still means falling behind in real-terms. Prevaricating is the worst option."

3.       Supply chain disruptions

Supply chain disruptions, with related sanctions and regulatory changes, have placed enormous pressure on ethical sourcing, delivery, pricing, reliability of supply, and have extended to trust by the consumer as well as within the B2B sphere. This last issue of trust is perhaps the most threatening of all to the diamond industry as a whole. If consumers lose trust in the product, there is no business. And of course, the intervening delays and other issues put additional pressure on profitability for all the companies involved.

Again, from Dominic Hill, insight that demonstrates how interlinked these challenges are: "The most significant tech challenge the diamond industry faces is provenance . Until someone can master tying the physical asset to a blockchain [whichever one it may be], it's meaningless...until we can actually create - for example - a nano lattice through the rough, we don't have an enduring mechanism to tie the physical asset to the distributed ledger. All the while, consumer pressure [to transparently demonstrate and prove] provenance builds day by day.

4.        Environmental & sustainability considerations

Last but not least, and not unique to our industry, are growing awareness and concerns about environmental issues. This is coming not only from governments, but also from consumers and from the business and financial communities.

In our industry, we see lab-grown diamonds hammering the message about them being "environmentally-friendly", which is not necessarily the case but anyway poses another challenge for natural diamonds. The industry is already trying to partially tackle this, but I believe there is a lot more that should be done, and not just on the education and marketing fronts. 

"We at IDEX Online are firm believers in the creation of a secondary market for natural diamonds, or "recycled diamonds". They represent the best of both worlds - scarcity, uniqueness and value retention combined with zero current impact on the environment. We are developing unique technologies and applications to enable this change and have recently partnered with a unique technological solution that aims to create this 'circular economy' called 'Diamond Bar'. 

What opportunities are open to diamond and jewelry business leaders in the next 12-18 months? How can you leverage these opportunities?

From my perspective, I see three key areas of opportunity for businesses in our industry.

1.Create a mutually-beneficial co-existence between lab grown and natural diamonds

Lab grown diamond companies have an opportunity to create a completely different niche market. As the prices fall and supply continues to increase, I believe LGDs eventually will be seen as "consumable" products to be sold in Walmart and similar stores, in jewelry that is akin to "fast fashion" in the clothing industry.

So, what should natural diamond companies do? Focus on the emotional and aspirational aspects, unique experiences, scarcity and value retention of natural diamonds. See it as an opportunity because the lab grown diamond business may actually stimulate increased desire among consumers who start their diamond journey with lab grown, and eventually mature to desiring and acquiring natural diamonds later on.

2. Constantly revisit and adjust your business mode

Most of the businesses in this industry are small. They operate with limited financial means. But if they are open-minded and innovative, and lean into a higher risk tolerance, they can embrace change, not naively, but using technology, piloting small changes and measuring the results of each change, keeping those that are successful, discontinuing those that did not work well. One company that has used this to innovate a whole new business model is Spicer Greene, which has used the Diamond Bar solution to transform its business model and significantly improve its business financials. Another example that is related to a major pain in the industry is financing; IDEX Online has recently launched 'IDEX Financing', an innovative financing platform that consists of multiple financing solutions for various businesses needs within the diamond & jewelry industry.

"Larger corporations, which have more to lose and move slower, should be open to innovation and ideas coming from their employees who are 'in the trenches'. Empower your employees to take risks and bring their ideas forward. Test, monitor, measure - and close down those ideas that will not help you be successful, while integrating the successful ones into your evolving business model. This should be a constant process; waiting too long is just as risky as not innovating at all."

3. Embrace relevant technologies, e.g. to successfully tackle the constantly changing supply chain challenges. 

AI, and improving technological capacity to manage data and integrate with global systems, will be critical. In our industry, this change, which will require managing huge data sets, will happen surprisingly fast. At IDEX Online, we are fortunate to own a unique and comprehensive data set and it's part of our transformation into becoming a data and technology company. The flow across multiple countries, players, governments as well as businesses, is extraordinarily complex, demanding solutions that will take into account everyone from mines to consumers. Without technology, of course, this could never be solved, so we're leaning heavily into making sure our technology is well up to the task.

We're committed to driving innovative change that benefits all players in the industry. Our goal is to serve as a catalyst for progress, leveraging technology to underpin advancements and foster collaboration across the diamond ecosystem 

How do you take the first step?

Dominic Hill, Founder and CEO of Loupe, suggests that moving to cloud-based services should be the first step for most businesses. "[There is a huge opportunity for] improving turn & liquidity through connected systems that enable demand and supply-side players to share unprecedented levels of data… we think this is the single biggest consideration for every company: how do I turn my inventory faster?

 "...Address the issues head on, start by moving to cloud-based services; that is the foundation you can build upon to prosper in the modern economy regardless of your type of business."

You can read more from Loupe about the risk of remaining on premise here.

So what are your tips for business leaders when thinking about how to handle change?

Great question, and there is much that business leaders can do.

Step back from your day-to-day, talk to many others in the industry, and even in other industries. Bring the experiences of others into your own strategic thinking. 

"Whether it is hiring fresh new talent into your own organization - and I mean both tech and business talent - or collaborating with outside agencies and innovators, such as Hill & Co. and IDEX Online, gather intelligence, potential solutions and assistance as you implement the changes you feel are worth trying."

That doesn't mean you change everything you do, of course. Keep what's working best but don't be afraid to experiment and change. 

With so many changes and challenges, what excites you most about the future? 

As an innovator, I thrive on change. For me, that's exciting. I love to be involved with change, and to lead the change. For 20 years IDEX Online has been at the heart of our industry, that won't change. We will be keeping the critical, wonderful parts of it, and preparing for an even more exciting future, bringing on additional new talents, with different skill sets to complement the ones we already have. That's exciting to lead and to watch too.

"When I was at AGS Conclave recently, I was struck by the unique level of trust and family-like intimacy that our industry has. It is like no other industry that I've seen. It is critical to continue to nourish that, while integrating new technology into the business. For example, I was happily surprised by how central the topic of AI was at Conclave and the level of openness between various industry players about this strategic topic."

It's so exciting to try to envision what lies ahead of us, the scale of the opportunities and the fact that we can't even yet imagine the full grasp of this transformation!

Last, I'm excited and confident about IDEX Online's future of co-leading this upcoming technological transformation of our industry while keeping our core values of 'customer comes first' and 'serving our customers and industry'.

Change is inevitable, but it's how we respond to it that defines our future. By embracing innovation, collaboration, and a mindset of continual adaptation, diamond business leaders can not only weather this 'perfect storm' but thrive in the long term.

If you're ready to embrace change and unlock new opportunities for your business, reach out to the IDEX Online team today at usa@idexonline.com

We will also continue to keep you up to date with our latest developments through our newsletter and online communications.