Latest / The CEO Diary with Fexingo: Leadership Lessons, Executive Decisions, and Corner Office Stories / How Leica Defied Digital Disruption
Transcript
- Lucas: So, Luna, you know how I'm always carrying around a camera, right? Not the phone, an actual camera. Luna: You and that Leica. It's like a third arm. But I have to admit, it does take stunning pictures. Lucas: It's a M11, and it's part of a really interesting business story. Because when digital cameras hit, everyone thought Leica was dead. It's a tiny German company making mechanical rangefinders in a world of smartphones. And yet, here we are, 2026, and Leica is thriving. How did that happen? Luna: I remember reading that in the early 2000s, Leica was on the brink. Sales were collapsing, and they were bleeding money. What turned it around? Lucas: A big part of the answer is a guy named Matthias Harsch. He became CEO in 2020, but the turnaround actually started before him. The key was realizing that Leica couldn't compete with Canon or Sony on specs or price. They had to go the other direction—own the absolute top of the market. Luna: So instead of trying to be everything to everyone, they doubled down on being a luxury brand. Is that basically it? Lucas: Exactly. And it sounds simple, but it took a decade to execute. They streamlined the product line, killed off the cheaper stuff, and refocused on the M-series and the SL system. The M11, which I shoot with, costs around nine thousand dollars for the body alone. And people line up for it. Luna: Nine thousand dollars for a camera that doesn't even have autofocus. That's either crazy or brilliant. Probably both. Lucas: It's brilliant because it's not about the specs. It's about the craft, the heritage, the way it feels. Leica has this almost cult-like following, and they've managed to turn that into a sustainable business model. But the really interesting part is how they embraced digital without losing their soul. Luna: So they didn't just say 'we're mechanical purists and digital is the enemy'? They found a way to adapt. Lucas: Right. They partnered with Huawei on smartphone cameras, which gave them a massive reach into the mass market without diluting their brand. And they later did a deal with DJI for drones. These partnerships let them monetize their lens expertise and their brand name while keeping the core product line exclusive. That was a crucial move. Luna: It's like they got paid to be the cool older brother that young tech companies want to hang out with. And it probably funded some of those R&D projects that keep the M-series ahead of its time. Lucas: Exactly. And here's a number for you: in the fiscal year 2023-24, Leica reported revenue of over 500 million euros, which was a record. And their operating margin is something like 17 percent—that's higher than most consumer electronics companies. They've become a cash machine. Luna: Wait, 17 percent operating margin in hardware? That's insane. Most camera makers are lucky to get 5 percent. How do they do it? Lucas: It's all about pricing power. They have a monopoly on the Leica name, and they've built this ecosystem of accessories, leather cases, even a Leica watch that costs thousands. The camera is the entry point, but the whole lifestyle around it is where the profit lives. Luna: So they're not selling cameras, they're selling membership to a club. And the price tag is the velvet rope. That's a lesson in branding that goes way beyond photography. Lucas: And it's a lesson that's directly relevant to what we do here. If these conversations have moved your work forward in some small way, if you've picked up a framework or a mindset that helped you at your job, that's the whole point of the show. The way to keep that going, and keep this podcast ad-free, is simple. You can buy us a coffee, literally, at buy me a coffee dot com slash fexingo. It's a small gesture that keeps the lights on, and it means a lot. Luna: Yeah, it's the reason we can keep doing deep dives like this without a mid-roll ad for a mattress. Every little bit helps. Lucas: Absolutely. And it's because of that support that we can spend an hour reading annual reports and geeking out about margins. So, thank you. Now, back to Leica's playbook, because there's a really counterintuitive lesson here about growth. Luna: Counterintuitive how? Isn't growth always the goal? Lucas: You would think so, but Leica deliberately limits production. They don't make as many cameras as they could sell. That scarcity creates waiting lists and keeps the second-hand market strong. It also sustains their premium positioning. They'd rather sell fewer cameras at a high margin than flood the market. Luna: That's like the anti-Amazon strategy. Instead of 'everything, everywhere,' it's 'something, somewhere, for someone.' And it works because the brand is the product. Lucas: Exactly. And they've also been smart about not just relying on the old M-series. They launched the Leica SL system, a mirrorless camera aimed at professional and advanced amateur photographers. It's expensive, but it competes with Sony and Canon on specs, while still having that Leica feel. So they're not stuck in the past. Luna: So they're innovating, but on their own terms. They're not chasing every trend, but they're not ignoring the market either. It's a delicate balance. Lucas: And that balance is hard to pull off. Look at what happened to Kodak. They invented digital photography, but they couldn't bring themselves to kill their film business. Leica was in a similar position, but they made the leap—they just did it in a way that preserved their identity. Luna: So what's the takeaway for a CEO in any industry? If you're facing disruption, do you just pick a niche and double down? Lucas: I think the takeaway is more nuanced: you have to know what your core asset is. For Leica, it was never just the camera mechanics. It was the intangible brand equity—the history, the craftsmanship, the aesthetic. They leveraged that asset into new areas, like partnerships, rather than trying to build a mass-market digital business from scratch. That's a lesson in strategic focus. Luna: So it's not about being the biggest; it's about being the most distinctive. And if you can own that distinctiveness, you can charge a premium and build a moat. Lucas: Exactly. And Leica's moat is also reinforced by their retail experience. When you walk into a Leica store, it's like a museum with a cash register. They've opened these beautiful boutique stores in major cities, and they host photography exhibitions and workshops. It's not just a point of sale; it's a brand experience that deepens the connection. Luna: That's what I love about this story. It's not just about financial engineering; it's about creating real emotional value. People don't buy a Leica because they need a camera; they buy it because they want to be part of something bigger than themselves. Lucas: And that's the ultimate lesson for any business. If you can make your customers feel like they're joining a story, a tradition, a community, you've created something that can survive any technology shift. Leica has done that for 150 years, and they're still going strong. Luna: So if someone listening is running a company that's facing a disruption, what's the first step they should take, based on Leica's playbook? Lucas: I'd say the first step is to ask yourself: what is the one thing that my customers value that no competitor can replicate? For Leica, it was the brand heritage. For your company, it might be your proprietary technology, your customer relationships, or your distribution network. Once you identify that, you build everything around it, and you're willing to let go of the rest. Luna: That's a great note to end on. Lucas, thanks for sharing this story. And to our listeners, if this episode gave you a new perspective, you know where to find us. But no pressure, just a friendly reminder. Lucas: Exactly. Until next time, keep thinking about what makes your business irreplaceable.