Why Switzerland is not “Nokia-Land”

Predicting customer demand can be a tricky business Keystone

Switzerland tops the list internationally in terms of investment per person in new technology – but comes bottom in terms of making money from it.

That is one of the key findings of a new book by IT and telecommunications expert Xavier Comtesse, who heads the Geneva office of the country’s leading think-tank, Avenir Suisse.

In an interview with swissinfo, Comtesse says Swiss weakness in this key sector has substantial knock-on effects for the whole economy.

He points out that the new information technology (NIT) sector not only accounts for eight per cent of Switzerland’s gross national product (GNP), but also has far-reaching implications for the ways in which companies do business.

swissinfo: You talk about the “Swiss paradox”. What do you mean?

Xavier Comtesse: If you look at the international figures, you see that the Swiss are among the earliest movers and the biggest spenders when it is a question of buying a new technology. But when it comes to using it efficiently – productivity – we do very badly.

Investment is obviously important, but productivity gains also result from factors such as education system, research and development, venture capital, innovation and the extent to which organisations use NIT appropriately. For example, we would need more emphasis on using the internet for real economic activities, rather than just for information and presentation purposes.

swissinfo: What is the economic impact of this lack of productivity?

X.C.: The productivity link to the use of NIT is a key issue in most developed countries, because of both the size of the sector and the extent to which it drives the whole way business is done. For instance, customers today have a global choice – they can pick and choose which country they want to work with. The competition is getting tougher and tougher.

swissinfo: Finland is seen by many as “Nokia-Land”, and Sweden as “Ericsson-Land”, but Switzerland is not exactly “Ascom-Land”. What went wrong?

X.C.: During the late 1980s and early 1990s Ascom had exactly the same technology as Nokia and Ericsson and the other big players of today. However, they failed to make the right alliances and to go out into the marketplace with their technologies.

They were so focused on the technology, rather than the customers, that they simply missed the market. [That is bad news for Switzerland because] if a country wants to play a role in this large global market, it had better have one or two big companies.

swissinfo: What about Swisscom – has it also missed the boat?

X.C.: I think so. Swisscom is basically a service provider, not an equipment provider. Also, because it still has a kind of monopoly, it is not going [head up against] the competition.

Ask a CEO or an entrepreneur if he likes monopolies and he will always say yes – provided it is mine. You can make a lot of money, as Swisscom is doing today. But if the market opens up and you are still thinking like a monopolist, you will have huge problems.

swissinfo: On a more optimistic note, Switzerland has one notable success story in the field – Logitech.

X.C.: The Logitech story revolves around a product “discovered” in California in the 1960s – the “mouse”. Twenty years later, the PC hit the market, and demand grew accordingly. Switzerland had this small company with the technology and the design and, one day, Hewlett-Packard came along and asked them to produce 2,000 per day.

That is how Logitech began to be a global player. When you look at the history of a lot of successful companies, there is always a moment where they have to change something very suddenly, to react rapidly to a market opportunity.

swissinfo: Two smaller companies that also have interesting stories are online bank Swissquote and online retailer LeShop. Have they succeeded for similar reasons?

X.C.: They also started with the belief that the technology would make the difference. But, after a while, they discovered that customers wanted different products or services to what they had expected. As soon as they understood the real nature of demand, they became successful.

I think this is a key issue for the sector – if technology is too much the driving force, you are not heading in the right direction; you have to look much more closely at the demand side. Customers must come first, rather than products.

swissinfo: A related issue is leadership – is there a need for more professional leadership at the very early stages?

X.C.: There are different stages in the life of a company. In the beginning, it is an inventor or a scientist or an engineer who gets it going. Later on, you need a professional CEO. This was the case for Logitech – the founder is no longer in charge, and that is very important. The more you grow, the more you need other skills.

swissinfo-interview: Chris Lewis

Key facts

The book, an Avenir Suisse publication available in French and German, is entitled: Dartfish, Logitech, Swissquote And Co.
The first section outlines the main theoretical arguments, while the second section takes a closer look at ten individual company histories.
The author, Xavier Comtesse, heads the Geneva office of Avenir Suisse.

In brief

Comtesse says Switzerland needs to fundamentally rethink its approach to the use of new information technologies.

He says the Swiss NIT sector has missed its chance to produce a major global player – largely because it has focused on products rather than customers.

The Swiss don’t skimp on spending, but fail to create value with their investment.