The Success of the Swiss Watch

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In the early 80s, the watch industry of Switzerland was falling apart and was on the brink of losing some 20’000 jobs. At this point a Swiss entrepreneur and some investors took over. His name is NICOLAS HAYEK. He was the SAVIOUR OF THE SWISS WATCH INDUSTRY. He also created that little, unusual CAR, called SMART CAR, which you see a lot in Europe, especially in Rome. But let’s talk about the Swiss Watch for now.

Recently I read an interview with Hayek, which I would like to share with you, because it gives some precious hints how to lead a business.

Poor management and under-estimating the competition had led to the catastrophic situation of the Swiss watch industry.. Switzerland was resting on its laurels! Hayek thinks that we have lost the pioneering spirit of our grandfathers’ generation. For a small country we used to have more international companies than any other country in the world, plus the best airline. While in a number of areas we are now only average.

If I tell you that the quartz watch was invented by a Swiss, but not one Swiss watchmaker was interested in it. It came to the point where a Japanese company wanted to buy OMEGA and offered a large sum for it! They believed the Swiss were good at making chocolate and cheese, but were unable to produce industrial goods. Hayek rejected the offer. Then the Japanese offered to pay an additional royalty for every Omega sold. Hayek refused that, too.

When managers rather than entrepreneurs manage companies, things usually go wrong. A company needs to be managed by entrepreneurs, and not by financial experts. Hayek understood that he needed a watch with a large turnover, which couldn’t be achieved through luxury watches alone. So he created a NEW PRODUCT which embodied all the advantages associated with Switzerland: cleanliness, reliability, precision and quality: the SWATCH.

A good entrepreneur must continually create new products, new jobs and find new markets. Most managers are merely administrators without any clear strategic ideas. And when things go wrong, they still cash in, for their personal wealth. Nowadays profit is almost always maximised at the cost of JOBS. Jobs are shed because managers can’t think of any other way of increasing profit. But Hayek says that anyone who earns money by reducing jobs is a poor businessman.

That’s why Hayek is absolutely in favour of rewarding good businessmen with great salaries. He justifies this opinion with the comparison of a good footballer who earns millions and is treated like a hero, when he shoots 22 goals in a year.

When asked if the Swiss watch-industry is not suffering because Switzerland didn’t join the EU, he answered that as highly skilled producers and suppliers of first class watches we don’t need to belong to a bloc to ensure success. But he said we should provide TRAINING FOR ENTREPRENEURS rather than Masters of Business Administration. He also complained that POLITICIANS haven’t got a clue about the economy. They should liberalise the Swiss markets in order to prevent Switzerland from being only a location for banks, insurance companies and service providers.

Coming back to the Swiss watch: a watch is no longer a mere chronometer. It has become a piece of jewellery, a fashion accessory and a status symbol And NO OTHER COUNTRY can produce mechanical watches as good as the ones produced in Switzerland. NOT EVEN THE JAPANESE!

The SWATCH GROUP owns now brands such as Swatch, Blancpain, Omega, Rado, Longines, Tissot; Calvin Klein, Certina and many more. And Nicolas Hayek acts as a consultant to many European governments and has received numerous awards for his services.