The story is so well known that many details are now forgotten. For example that it was not Mr. Hayek who invented the idea of the Swatch but that he took it over two years after the launching. Or that Swatch, originally doesn’t stand for “Swiss Watch” but for “Second Watch”
Swatch began development in the early 1980s, under the leadership of the then ETA SA’s CEO, Ernst Thomke with a small team of enthusiastic watch engineers. The engineers of Swatch designed the case back of the watch as a movement main plate (platine). Technically the innovation was to drastically reduce the number of components from 91 to nearly 50. This concept led to the thinnest watch in the world– the Delirium, which debuted in 1979.
Conceived at the beginning as a standard timekeeper in plastic, a marketing consultant hired by Thomke to give the project an outsider’s consideration, soon led the project into what it has become: a trendy line of watches with a full brand identity and marketing concept– instead of developing just another watch collection, which could have soon been matched by the competition.
Swatch was originally intended to re-capture entry level market share lost by Swiss manufacturers during the aggressive growth of Japanese companies such as Seiko and Citizen in the 1960s and 1970s and to re-popularize analog watches at a time when digital watches had achieved wide popularity. The launch of the Swatch brand in 1983 was marked by bold new styling, design and marketing.
In this summary of the beginning of the Swatch success story one can read all the elements of a successfully “Innovation Management Process”, namely:
- Answer a crisis with a bold, game changing move – (plastic and technical sophistication vs. cheap but commoditized electronic components from Japan and Asia)
- Go for an oil-spot approach when you transform with very senior engagement and sponsorship – a small team of engineers
- Bring the outsider view – the outsiders bring you a fresh and far away industry view that will help you to re-position your products
- Improve the market product and bring value for the consumers – a cool and trendy time piece for less than 50 Sfr.
Is out there a candidate to became a Swatch Bank?
Why care to recall the Swatch story? Yesterday at a conference in Zurich, sponsored by one of the oldest and prestigious Swiss Newspaper, top executives, government and regulatory officials and even a prince gathered to discuss the uncertain future of their key banking industries, which have come under intense pressure in recent years.
Are there resemblances between the Swiss Watch Industry from the 80s and the current Swiss Banking Industry?
This is not just a rhetorical question. Nearly a dozen Swiss banks, for example, are under investigation by the U.S. Justice Department. The oldest Swiss Private Bank disappeared beginning of the year, the former president of the Swiss National Bank (SNB), Philipp Hildebrand, recently caused a stir when he predicted banking secrecy will disappear within a decade.
Some Swiss are opposed to giving up banking secrecy for an automatic exchange of information.In Switzerland, bankers fear for their jobs and, in come cases, cannot travel abroad for fear of arrest. Two teenage children of a Swiss banker were reportedly held and questioned by United States authorities earlier this year.
The witch hunting led by the USA IRS is just the tip of the iceberg for affected banks, which live in an already difficult time as the financial meltdown of 2008 changed the financial industry worldwide, leading to lower margins and much more regulatory tape. In the last months experts are predicting further consolidation in the Swiss banking sector.
While some Industry lobbyists turn their eyes towards the Government Authorities and look for defense against USA and other European Governments, other Bank leaders are looking to re-position in the Private Wealth Management Sector and keep a safe distance from the ill Investment Banking business. Some other are still looking for opportunities in the international waters, specially in Asia and South America. Finally, other will try to struck alliances with foreign big banks.
Are these initiatives bold and ambitious enough? Do they carry enough transformational energy and dynamic? Has it been the consumer taken into consideration: their new needs, their current reality? Or maybe is the situation of the Swiss Banking Industry not desperate enough as it was the watch industry in the 80s… not yet.. not yet.