pwc studie swiss champions e · swiss champions there’s a small group of swiss companies whose...

PwC study

Swiss Champions

There’s a small group of Swiss companies whose success story was written largely unnoticed by the

public. These companies are indeed the key drivers of the Swiss economy, but there’s far more to them

than just that. Who are these companies, you might ask, and what is it that makes them so special?

In this PwC study, we looked for answers to these questions.

www.pwc.ch/sme

3 The secret of Swiss world market leaders’ success

4 The DNA of Swiss Champions – four success factors

5 Core competence

5 Globalisation

5 Crisis management

5 Personalities

6 T � � � � � � � � � � � � � � � � � � � � �

7 Case study: Victorinox

8 � � � � � � competence based on excellence is the critical foundation for Swiss Champions

8 � � �

10 Leadership through innovation

10 Niche dominator

11 Case study: Sefar AG

12 Success factor 2. Only successful globalisation turns a very good SME into a Swiss Champion

12 Growth through internationalisation

13 Growth through product development

13 � � �

14 Case study: Belimo

15 Success factor 3. Swiss Champions overcome crises through resilience and purposeful countermeasures

15 External and internal crises

16 � � � �

16 Crisis management

17 Internal and external crises

18 Case study: SFS

19 Success factor 4. It’s the people who turn the Swiss Champions into champions

19 Loyal top specialists

19 � � �

21 Case study: Michael Pieper (Franke Gruppe/Artemis Holding)

22 L � � � � � � � � � � � � � � � � � � � � � � � � � � � � hold for Swiss Champions?

23 Contacts

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. / 0 1 0 2 3

whose success story was written largely unnoticed by the public. These companies

asserting themselves as global leaders

into a global winner – a champion?

and large corporations.

The secret of Swiss

world market

leaders’ success

123 Swiss Champions

15 interviews

characteristics

behavioural patterns

4 | PwC study – Swiss Champions

4 5 3 0 6The DNA of Swiss

Champions –

four success factors

5 | PwC – Swiss Champions Study

The DNA of Swiss Champions

People• Strong value-based culture

• Employees show high loyalty and commitment to the

43

21c

1b

1a

Focus on a niche• Strong focus on a niche where mass players initially shied away due to lack of scalability

• Focus is driven by competence

Customer centricity• Extremely customer centred and able to tailor services

clients’ needs

Innovation• Highly innovative culture attracting top talent

• Innovation driven by clients and their highly demanding needs

Crisis• Crisis management

• High resilience

• Invest countercyclically

Globalisation• Although locally rooted, champions have developed the ability to serve their niche globally

• Global market leadership as the ultimate criteria for true championship

Co

re c

om

pe

ten

ce

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highly

sustainable core competence

Core competence

. / 0

-on’s core competence can be traced back to

as new applications are developed. For

customers and having the desire to develop the best solution to a customer’s problem.

with a champions’ continuing success. And it is precisely these companies that the

Globalisation

7 8 9 9 0 3 3 : 8 ;

stage in a company’s development to

small to achieve sustainably high growth.

in global competition.

Crisis management

. / 0

crises that sometimes threaten their very existence as they develop. But in contrast

much stronger position.

Personalities

. / 0individuals makes a key contribution to a

to the employees in production. It’s when you encounter these companies personally

the amazing achievements. And why is

curiosity and restlessness.

successful globalisation

successful crisis management

people behind the

Swiss Champions


J < = > ? @ A > B = B > > @ A > C A D E = A F @ A C G B H I A

champion? How do companies manage

detail. In-depth discussions were held with

that there are clear basic success patterns which are common to all the companies we examined. But each individual company

both its history and its people – but mainly

competitive markets.

The methodology

of the study

Who are the Swiss

Champions?

satisfy the following three main criteria:

1. Their headquarters are located in

anchored within the company and are

key to success.

2.

enterprises. Their sales amount to 3 billion CHF at

most per year.

3. The company is considered to be a

market leader on a continent or is

counted among the world’s best in its

standards in innovation and quality,

and can therefore continuously build

on its dominant market position.

Typical characteristics

Public awareness of most of these

companies is rather low. At the same

time, they are often traditional

companies founded more than 50 years

ago. If we take a look at the sectors, we

can see that 59% of these

Swiss Champions came from industry,

represented compared with their shares

in the Swiss Performance Index (13%).

Mechanical engineering and technical

production are strongly represented.

of around 520 million CHF, so the

average SPI company is almost seven

times as big. More than half of Swiss

Champions generate sales of less than

250 million CHF each year. They employ

around 3,800 members of staff on

average. But in addition to a few large

Swiss Champions listed on the stock

exchange, around one quarter of them

have fewer than 250 employees. Posting

an annual sales growth of 6.6% between

2005 and 2012, Swiss Champions are

characterised by organic, sustainable

growth. Their average annual sales

growth since 2005 is considerably higher

than that achieved by the remaining SPI

companies and more than three times as

high as the corresponding GDP growth in

Switzerland.

Champions are to Switzerland.

Indeed, between 2005 and 2012, these

companies increased their number of

posts by 70% on average – with most of

them being abroad.

PwC study – Swiss Champions | 7

Victorinox, the globally renowned

knife manufacturer, lives and

breathes these typical values – a

passion for excellence and a sustain

able focus – like virtually no other

Swiss Champion. The story starts

with a small local knifemaker by

to equip the Swiss Army with army

knives, but does not

he went from one place

to the next to rally up

local cutlers for his

of Victorinox is also

he is the founder’s

children, nine of whom work in the

company, he was introduced into

the company at an early stage by

his father. Christian family values

are deeply embedded in Victorinox.

These include values such as grat

itude, humility and responsibility.

matters. It goes without saying that

the company operates economically

and does not pay out any exorbi

tant bonuses. In the year 2000, the

family members’ company shares

were transferred to a foundation,

without them being entitled to any

dividends or to take out any money,

except by working for the company.

believes that the most important

aspect is the employer’s responsibility

for his employees and the environ

ment. When pocket knife sales fell due

the 9/11 terror attacks, Victorinox

did ‘everything humanly possible to

safeguard jobs’. The company was as

good as its word – even though this

meant some of the workforce being

loaned out to surrounding businesses

for a few months due to a lack of

capacity utilisation.

this has very much shaped solidarity

within the company, as well as the

certainty of mutual trust and respect.

These include values such

responsibility


Success factor 1.

competence based

on excellence is the

critical foundation

for Swiss Champions

Having a highly specialised core compe-tence that is continuously developed

They guard and maintain this core competence like gold. But how and why do they develop a core competence in the

competencies with a view to developing

specialised products are the company

and engineers who want to provide their customers with only the best solution to their problems.

. / 0

the customer’.

Customer orientation not only plays a key role in direct customer contact; it is

development to sales and service.

that knowing the sector better than the customer themselves is absolutely

it will not be taken seriously.

which best meet customer needs have

customer loyalty too. A company’s aim

primary partner and then to remain in this position throughout the entire product

Customer knowledge in conjunction with

champion’s market share and securing his competitive advantage.

understand their market

a handful of key customers

maximum value for the

customer

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What is it exactly that

makes Switzerland the

ideal breeding ground for

champions

Swiss Champions which manufactures

compressors for materials and energy

generation is convinced that ‘Switzerland

is the most competitive country in the

world’. The high standard of education

plays a major role. With its combination

of theoretical and practical training,

the dual education system produces

technically well trained workers, who

make up the lion’s share of the workforce

employed by Swiss Champions.

Switzerland has been synonymous with

outstanding research performance and

innovation in many sectors for decades.

Nobel Prize winners. Swiss Champions

immigrants who come to Switzerland

from all over the world, attracted by these

outstanding general conditions and the

extremely high standard of living.

These ‘bright minds’ make Switzerland

the ideal business location for champions.

In addition to this, there is the low tax

partners and trade unions are open to

Despite the higher production and labour

costs, as well as the strong franc, essential

value creation (such as research and

development) takes place in Switzerland

due to the positive general conditions.

Added to the outstanding structural

conditions is a strong value system with

elements such as quality, reliability and

company secrets, sustainability and a

There is something of this ‘typically

refers to this label as his most important

advantage.

The Swiss Champion map shows that

many champions have settled in rural

areas as opposed to the major cities.

Often, this is due to their tradition. Over

the years, traditional, local businesses

have morphed into Swiss business

clusters, which have produced numerous

Swiss Champions.

10 K PwC study – Swiss Champions

reinvestmentandexperience

Leadership through innovation

M :

customers the best products and services

are not striving to create radical

optimisation. They believe that process

process innovations are key when it comes to reducing costs and thus enhancing

the entire company. Each and every employee is encouraged and inspired to

technological knowledge which comes

internal know-how as a treasure to be

innovation book and leads several innovation teams who contribute their innovations in a sporting competition with one another. Another champion

prototype to the development stage.

patents and/or new patent applications.

innovative companies categorically apply

large international companies.

them being technological leaders in their

the leading position they have achieved;

innovation possible to continuously improve their products. In addition to the

with institutes such as the ETH and the

remain highly sensitive to trends on the market and in the technological environment to ensure that they do not lose this position.

Niche dominator

N @ A C

They create increasingly specialised core

products and core competencies. In other

Artemis Group – is concise and to the point.

competencies at an early stage gives rise to

exponential penetrating power. Physicists

know that penetrating power increases

when any energy is narrowly concentrated;

it becomes more acutely concentrated.

competencies. Through reinvesting and

advantage that leaves their competitors in

to solve

level. There is simply no alternative to their

customers their products at competitive

champions’ products.

And the result is indeed champion-like:

products. Combined with constant process

cost leadership and market dominance.

8,692 patents technological

leaders


exclaims Christoph Tobler, summing

up his company’s core competence.

Sefar, based in the tranquil town of

Thal near Lake Constance. Thou

sands of even holes, mere micro

metres wide, can be

woven onto a space

cision woven fabrics are

used in a wide variety

of applications, from

and mobile phones, to graphics and

architecture. Practically all of Sefar’s

made to meet customer needs. Indeed,

the web geometry can be fully

adapted to individual requirements.

Sefar’s beginnings date back to the

year 1830, when the company was

still manufacturing silk bolting

which is still owned by the six found

ing families, has improved its core

competence since then. To further

optimise its own production process,

Sefar buys production machines,

its own components and reassem

bles them in such a way that meets

its own requirements. So it’s hardly

surprising that, nowadays, Sefar is

miles ahead of the competition and

other technologies in terms of product

But in spite of this, stopping is not

searches for new areas of application

such as ‘smart fabrics’, which can

measure temperature, for example.


O 8 1 Q R S

illustrated time and again that the champions have an astonishing appetite

Either they conquer new geographical sales markets with their core products

products.

Growth through internationalisation

U V 1

markets became more important than

national expansion starts in neighbouring

countries where there are no language

most champions concentrate their

established a strong position in its niche

production operations abroad. Popular

value creation such as

sales and quality

assurance remain in

suppliers.

Champions.

It is remarkable just how customer-

it comes to their internationalisation

to internationalise when there is demand

which can be built on at a later date. The

supplying the key components (such as

Success factor 2.

W X Y Z [ \ ] ] ^ [ [ _ \ Y

globalisation turns a

very good SME into a

Swiss Champion

crave growth

global player

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F A c G A c > = H c = C A c > G @ H I E = F c E ? = ` ? B > @ H < >

having to contend with long transport

expanding abroad is the logical next step in

Growth through product development

a ; 5 3 3 Q 9

that they use their core products’ core

core competence that’s suited to numerous

more applications have been added – so

are very much driven by their customers

ideas are created upon request or are even

developed together with customers.

b R ; d

build on the edge they have over global competitors by improving the competitive-

their cost structure with new production locations.

technologically superior and higher-quality

highly competitive on the cost side due to their international production locations and

‘soft’

highly competitive on the

cost side

technologically

superior and higher-quality

product


Belimo from Hinwil, a specialist in

electrical valve solutions, is a typi

cal niche dominator: ‘From the very

outset, the six founders set themselves

the goal of becoming world champi

ons in this discipline. New

areas of application – in

water and security systems,

for instance – were soon

being put to use in building

ventilation technology.

The core competence that

how relating to the technically very

sophisticated motor controller.

Belimo was determined to make it

abroad with these highly specialised

that attitude is rooted in Belimo’s

genes, because ‘growing is fun’. Since

the company was founded in 1975,

it has actively pursued the notion

of internationalisation. While this

countries to begin with, in the 1990s

it started expanding into Asia and

the USA, which are now its most

important markets. Today, Belimo

is the global market leader in valve

solutions, with an estimated market

share of 40%. 96% of its products

are sold outside of Switzerland. Its

production operations have been

largely outsourced, so Belimo is focus

ing on core processes such as design,

innovation and quality assurance.

But the suppliers only ever build

a key element missing for them to

create the entire transmission. Belimo

is therefore capable of manufactur

ing products in large quantities and,

despite this, producing the most

robust and technologically sophisti

cated valve solutions around, – which

are sold for up to 10,000 CHF per

unit.

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7 e Q 3 3

have experienced times when their very

that the company was saved was due to the bold steps taken.

External and internal crises

f Q g /

and export-oriented business model

them particularly vulnerable to external

Companies that are highly dependent on

to contend with their sales declining by

implementing measures such as short-time work or redundancies. Given that most are

these sectors very heavily due to their niche

order losses on to champions at a very early

only able to minimally increase their

double-digit growth rates over the last

peg is naturally

Champion’s core technology is replaced

-

Success factor 3.

h i j [ [ k l m n o j p X [

overcome crises

through resilience

and purposeful

countermeasures


with external challenges. Corporate internationalisation requires companies to

processes all have to change accordingly – and this change process never goes

are also vulnerable to a certain extent

structures. The generation change in

can threaten the company’s continued

power within the company is concentrated

make the company more susceptible to mismanagement and prevent a long overdue change in direction. In cases

comprehensive.

q > B = A = > H I B = @ B I r > @ A > F @ A C G B H I = F A I

typically absorb crises very well. In the

their business model and their internal structures.

and are never extravagant with their

dependent on banks or external donors as

over the decisions they make. They avoid making spectacular investments which

debt.

themselves vulnerable due to their

geographical sales markets.

establishing their core competencies in the

processing industries as opposed to the

due to their traditional and clearly distinguished identity. Because many

loyal and even stick by their companies in

Crisis management

s @ E = @ E E c t E > E c C B I A > B H I A I t

which enables champions to anticipate and proactively manage crises – by hedging or

but also have the courage to tackle it and recognise the opportunities it brings along

take time to develop the new corporate

they act decisively and are not hesitating to take radical steps. It is not rare to see them making counter-cyclical investments

crippled competitors or building up new economic pillars.

This rapid implementation process is only possible because the champions are

this is due to their slim structure and short

the executive managers are excellent and experienced crisis managers. Because

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> @ E c E B = A t E E G u v c H H > E t w A u < E = v = > E C

Champions abide by the sustainability

the core competencies and only laying

champions view crises as opportunities

champions state that they have perceived crisis situations as an opportunity to

areas. They are convinced that their present success would not have been possible without these course corrections.

regeneration and positive shrinking. This causes companies to return to their key values – even to their beginnings – to excellence and to customer orientation.

Internal and external crises

Crisis resilience = Favourable predisposition + Thought-out crisis strategy

External challenges

• Economic crisis

• Disruptive technology

• Competition from abroad

Internal challenges

• Succession

• Inactivity

• Employee motivation

Making counter-cyclical investments

Acquiring crippled companies, tapping into new markets

Refocusing

business units/products, refocusing on core competence

Streamlining/Cost-cutting

by optimising production processes or shifting of not vital steps in the value chain

Gro

wth

Management and employees

Owner structure

Business model

Values/Identity


The products made by SFS Group AG

are an integral part of, among others,

smartphones, windows, cars and

aeroplanes. But the general public is

not very familiar with the company,

because in most cases its products are

not visible to consumers. The Swiss

Champion based in Heerbrugg

moulded parts, such

as miniature screws,

or larger individual

parts and mechanical

fastening systems,

and thereby supplies

a global network of

customers. SFS has

perfected the cold working manufac

involves deforming workpieces at

high pressure and in several stages.

SFS can thus manufacture millions

of individual components highly

tolerances.

Following continuous, solid growth to

become a global market leader, SFS

and economic crisis, as it supplies

many of the industries that were

affected. In particular, the nosedive

in orders from the automotive sector

was so severe that the workload in

some areas fell considerably. But

rather than being immobilised with

shock, the company opted to take

the courageous way forward. SFS

responded in a decisive manner and

initiatives to boost productivity. It

moved away from those technologies

and projects where the company’s

core competencies were not being

time, SFS was excellently prepared

for the crisis. Indeed, it was very well

sales markets, which helped cushion

the effects of the crisis. As a result,

SFS was able, even in the crisis year

German rivet technology special

ist, and so strengthen what is now

Segment Fastening Systems. The

brave measures paid off for SFS, as

it recovered substantially in 2009.

emphasises that there was ultimately

a good side to the crisis, because

the company had been obliged to

make good things even better and

both make and justify long overdue

changes.

But rather than being

company opted to take the

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Loyal top specialists

7 e Q 3 3

attribute their success in recruitment to employees actively putting corporate values into practice and there being a

and every employee that they are making a

There have never been any job losses in his

it is extremely important to demonstrate responsibility towards our employees.’

Champions view their employees as

competencies – is indeed documented

executive managers try to turn their

training and developing their employees

introduce new recruits to demanding tasks at an early stage. It is clear to see

turnover rates are very low compared with large corporations.

7 e Q 3 3aren’t created

management expertise. Founders put their

a good example. They overcome hurdles

is a clear vision. They don’t just want

they want to be the best. It is certainly no

to do something and be optimistic’ is the

serial entrepreneur who has become very

Success factor 4. It’s the people

who turn the

Swiss Champions

into champions


provide a guarantee of

stability

The special type of corporate governance

and corporate culture implemented by

Swiss Champions is largely attributable

to family structures within the company.

70 out of 123 Swiss Champions are

still exclusively or partly owned by the

founding family. In around 60% of

Swiss Champions, the family sits on the

executive board or occupies managerial

positions, while in more than one third,

when the family puts the company’s

traditional values into the company. In

family’ applies.

these have created transparent and

clear governance structures which,

for instance, govern shareholders’

stability. Another popular strategy

is creating foundations – with a

view to guaranteeing the company’s

success. When it comes to succession

arrangements, Swiss Champions

generally recruit executive managers

from within their own ranks. Longer

transitional periods are scheduled

when managerial responsibility is

being handed over from one person to

the next, so the predecessor can hand

the corporate values and managerial

philosophy on to their successor as if

they were a baton in a relay race. The

owned Swiss Champions’ succession

arrangements. Also, family members

should therefore only work in the

and motivated to do so.

company’s well-being

over its own

traditional values

governance structures

exclusively or partly owned

by the founding family

recruit executive

managers from within their own ranks


the Artemis Group (whose subsidiar

ies include the Franke Group among

other companies), is an excellent

example of the type of leader who

make Swiss Champions so successful.

He is characterised by a high level

of curiosity, courage, an insatiable

appetite for entrepreneurial risk,

extreme discipline and excellent busi

ness sense. At the same time – being

earth and appropri

spite of his success.

Michael Pieper is one

of those rare excep

tional individuals

who are successful at

the highest level in

both their career as

an entrepreneur and

as an active investor.

Being an entrepreneur, he took over

the Franke Group from his father

and has consistently transformed the

company from a local into a global

champion, driven by his appetite

not only achieved organically, but

also through a series of more than

30 acquisitions. In keeping with

his motto, ‘Don’t be afraid and be

optimistic’, his company bought the

number 1 or number 2 in the target

markets – if they were available, of

course. Michael Pieper believes that

entrepreneurship is simply impos

sible unless you are optimistic and

have a positive attitude to risk. Fully

in line with his father’s principle of

‘If you’re buying something new,

then you might as well do it right’,

he multiplied the necessary invest

ment when buying industrial land,

for instance, so as to create space for

further growth. He is anything but a

during the crisis he didn’t hesitate

steps needed to be taken with a cool

head and implemented appropri

ate measures immediately. After

handing over his responsibilities to

more on his role as an active investor

in other Swiss Champions, where he

has built up an impressive portfolio

of industrial companies. His recipe

for success is conclusive and involves

identifying companies that are going

deal of potential, and then directly

leveraging this potential and letting

that his strong analytical skills and

instinct for companies with a strong

core and a certain need for restruc

turing come into their own. Last

but not least, this has provided both

investors and company value with

something of a boost.

At the same time – being

very down-to-earth and


f Q g /

less appealing as a business location due

the weak eurozone economy may become

In times when technological progress is

concern that technological innovations will render companies’ own core products or their customers’ products obsolete. Every

trends.

increased cost pressure in their respective industries. Competition and shrinking margins are having an impact on pricing.

creation aspects will be outsourced to low-income countries. Global competition

and responsive to ensure that they are

Globalisation will continue. Because champions will increasingly be working

in which countries will it be possible to achieve competitive production costs? The

progress.

position on the global markets is a clear

with what may be perceived as somewhat

the modern economic world.

Looking forward:

what does the

future hold for

Swiss Champions?

very well-

equipped

keep a watchful eye on the market

and respond very carefully to changes and trends

Globalisation will

continue

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Contacts

Norbert Kühnis

Partner

[email protected] ch.linkedin.com/in/norbertkuehnis

Partner

[email protected] ch.linkedin.com/in/marcelwidrig/en

www.pwc.ch/sme

x y z { | } ~ � � � � � � � � � � � � eserved. »PwC’ refers to PricewaterhouseCoopers AG, which is a member #rm of PricewaterhouseCoopers International Limited, each member #rm of which is a separate legal entity.

pwc studie swiss champions e · swiss champions there’s a small group of swiss companies whose...

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