Swiss Made: The Untold Story Behind Switzerlands Success

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I think a lot of the innovation in Switzerland is really below the radar stuff which is not particularly exciting and sexy but gets the job done. And of course, the very notable things. I mean Nespresso was a very large breakthrough.

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It broke down a lot of habits of housewives and people in the household of how they went about drinking coffee. Those factors that make Switzerland successful or have made it successful and continue to make successful, part of it I think is sort of inherent to small countries.

I think as a small country you feel more vulnerable and maybe a little bit more paranoid because of that. Probably another factor is that other small countries Denmark, Singapore, etc. I mean if you think about it, I grew up in America. Germany had its Bismarck. There is a fine line between pride and arrogance. I think another factor is being small is, you know as you probably know living here, there is probably a greater emphasis on the community here versus the individual.

Swiss Made: The Untold Story Behind Switzerland's Success by R. James Breiding

Behavior is more regulated by social norms than regulations. People have a tendency more to collaborate than to compete. Because of that, you have a greater sense of trust and probably lower friction cost and less cheating. That began to breakdown when you had the advent of these collective investment vehicles — mutual funds, ETFs and what have you.

I think Switzerland still has a kind of — still retains a lot of the old ownership features that we have in other Anglo — Saxon countries before World War II. That has led to, as you point out has led to greater longevity and probably just a greater engagement. A lot of these Swiss companies probably would have gone bankrupt had they been in Anglo — Saxon countries today. Nestle almost went bankrupt in ABB was bankrupt for a day in UBS was rescued by the Swiss government. The Swiss watch industry was bankrupt and had to be restructured.

Roche was almost bankrupt twice. So as you are researching some of these stories, I mean the industrial examples in the book, are there any that really stood out and really resonated with you either in terms of a huge surprise you thought it was one way but once you dug into it, it was very different or that just struck you as being a real characteristic of being Swiss. Any stories you can share with on that journey?

Well, I mean there is lots of them. By the way, I had a fellowship at Harvard in connection with the book so we had access to all the case studies that were ever written about Swiss companies. I think I was the first one to really have that, which was terrific. We have tons of supporters, like Jorge Paulo Lemann, these are quite famous Swiss people who studied at Harvard and —. They have such a high percentage of their own citizens that live and spend a good period of their life in other countries. It seems to be inbred into the DNA of formation that they recommend to young people to — Well, go to the army and then go spend five years abroad.

Because of that some people decide to stay and you have this sort of diaspora as like Jorge Paulo Lemann who live and become very successful in his case, Brazil. There are other countries that have that as well. Yeah, but the other uniqueness is the number of people. For religious reasons it was along the pathway of the route to Compostela, which was a requirement for Catholics to undertake once in their lifetime.

People just ended up coming and liking it and staying so there is a very long tradition of immigration in Switzerland. As you know, there is multiple languages. Whenever there was political upheaval — take the Huguenots for example, after the Edict of France was repealed and Huguenots were persecuted in France they left. They were very prevalent in the port cities of France.

They dispersed and came to Basel and to Geneva. Most of them came from the ship building and sort of watch making industry because at that time, the real key of telling time, the real value of telling time was having reliable clocks onboard ships so that people can measure longitude. The only way you could do that was — would be to install a clock that work reliably and you set the time to Greenwich and you have a degrees around the globe and each degree represents 12 minutes.

You could measure how far you were from Greenwich but imagine having a ship with the moisture and the going ups and down and rowing and water etcetera. It was very difficult to have a mechanical instrument which kept precise time. This is why they are sort of very rural place out in the middle of nowhere in Geneva, in Le Locle, and that region in Jura became — developed expertise in watchmaking.

Because of that political turmoil they were able to attract these Huguenots. The same can be said about the chemical industry in Basel which was a recipient of a lot of Jewish scientist from Germany, Poland — who were forced to leave their homes and come to Switzerland. Roche for example was the only company that was amenable to hiring Jews.

They set up a research facility in Nutley, to specifically house Jews. You mentioned watchmaking, maybe we can zero in on this Swatch story because it is remarkable that the industry nearly collapsed. So, can you just tell the story of as you were researching, what stood out in that sort of detail, if you like.

Yeah, I mean I think the Swatch story is illustrating a number of interesting aspects of Swiss society and leadership and change and what have you. I mean I just picked up a couple of them but one is success has been the heroes. And then really, I think Ernst Thomke who kind of empowered Mock and pulled out sort of from the dustbin, a very old patent that was really this idea of actually superimposing the watch structure within a plastic casing, which by the way still to this day has not been replicated in Asia.

Then having to go all the way to the other end of the continuum and come up with a watch which is holding back a niche based on an entire different technology. So yeah, I think…. The Swiss watch industry was pretty much designed to run the Swiss military so you had basically generals or colonels running either factories producing watch parts or running the markets.

It was very much geared around the Swiss military. With military you have bureaucracy and probably difficulty adapting to new conditions. Of course, when the Japanese came out with this battery operated watch which could tell time in a far superior manner, people just — the customers just went in droves.

They did two pilot projects for Swatch. One in San Antonio and the other one in Osaka. They had this sort of military looking watches. One of them was grey, sleek grey and the other one was black. It all was very precise and accurate. The pilot projects failed. Thomke was suffering in great despair. And so, Thomke and this fellow came back to Switzerland. It was a family operated business that was ran by the Myer family. They were on the verge of bankruptcy because of Asian competition. They actually turned it into a company producing lingerie and pantyhose.

The fellow that this family hired who was a designer of this lingerie came from Le Locle. I mean his father worked at the watch industry. So, when Thomke said — he went and talked to his family. That designer knew nothing about watches but he was the one that actually ended up doing the first models of Swatch.

Yeah, that was interesting. I think what would kind of surprise me about — Nespresso was how much Nestle senior management was against the innovation. Everyone at the senior level in Vevey was against Nespresso because they felt it would cannibalize their instant coffee, Nescafe which was their most profitable product. They basically put it on ice.

It took 20 years for them to, you know the patent effectively wore out before the fellow actually convinced them that there was actually an incremental market that would be available. People were completely dead against it. Helmut Maucher the chairman, refused to install a Nespresso machine until after he retired.

It just goes to show you that you often have resistance not just the market but just your own people. This is very interesting because a lot of our listeners are entrepreneurs or intrapreneurs in larger organizations wrestling with how to get their ideas adopted by those around them and by senior leadership. As you met some of these entrepreneurs who actually reshaped elements of Swiss industry, was there anything that sort of stands out about them that you — any behaviors, any characteristics that might help people who are struggling with this sitting in Novartis or in Syngenta or in Roche today for instance.

Anecdotally, I mean because I think I interviewed about people.

As you say, we did the research on key innovations. The book is basically a chronicle of all of these innovations. I mean I think the sort of things you find is that one… First of all, people — I think people underestimate just how costly innovation is. It takes a lot of attempts so you really do need a high tolerance for failure and you have to have a disposition to take risk. One has to be pretty honest about that going into it. I mean we talked about the immigrants. I mean if you look — and this is not just risk, but just about every innovation in Switzerland had at least one key immigrant involved.

Henry Nestle was an immigrant when he came to Vevey, Hayek was Lebanese, on and on and on. The founder of eBay was Algerian. Sergei Brin is Russian. This seems to be characteristic of innovation in all sorts of places. I think that they were — I remember Charles Weissmann, who was the cofounder of Biogen and is mooted to be a contender for a Nobel Prize on two fronts. He is a famous molecular biologist and cofounder of the second biggest, most successful biotech company. Hi is Swiss and was Professor of the molecular biology department in the University of Zurich.

There is that element of being a bit crazy, if you like. People are going to poo poo it and tell you, you are crazy. You are probably going to succumb to that. You have to probably be a bit autistic. Anyway, Nicolas Hayek was a pretty disagreeable fellow.

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I mentioned the example in Nespresso but anytime you are coming up with something new there is a status quo of resistance. Employees that are afraid of losing their jobs, or as professors are afraid of being discredited, there are investors that are afraid of losing their investment. One has to be pretty tough to work through all that.

As we said earlier on, the year life expectancy of a company on the SMI versus some near death experiences that these companies have faced. So there are a lot of forces that play here. The other thing that struck me, I think in Zurich — the Zooglers, you know the Google facility. That is the largest engineering group outside Silicon Valley, I guess.

Why did they choose Switzerland? Because this is another element to the theory, right?

Yeah, there is a chapter in the book called why multinationals live in Switzerland. The whole issue — the world is becoming much more like an aircraft carrier where people sort of pull into a port and that port is Basel, or that port is Zurich, or that port is London and they want their planes to be refueled, they want their children to go to that schools, they want decent tax regime, and infrastructure, they want to feel safe.

The whole package is a very important package in determining where capital will flow, into which countries, where people will be designated to work. And yeah, Google went through that assessment and that analysis and they chose Zurich because of — I mean to a large extent because of the ETH which is a fantastic and underrated university, sort of the MIT or the Cambridge of Switzerland. On the technical side, there is more per capita Nobel Prize winners from that university than anywhere else in the world.

And so that was the key ingredient to be able to sort of tap into that intellectual garden, if you like, but on top of that the spouses like Switzerland. These are all factors compared to Dubai or compared to Luxembourg or even London which compete pretty well. That of course is a very important comparative advantage that historically Switzerland has had.

Clearly, the other piece here is the ecosystem. Here in Basel, the center of the global pharmaceutical industry, there are lots of companies around the big players like Roche and Novartis that are attracted here. Also, the startup scene by the way which is becoming increasingly important. Can the Swiss continue to perform in a hyper-competitive global economy? Swiss Made offer Why has Switzerland—a tiny, landlocked country with few natural advantages—become so successful for so long at so many things? Swiss Made offers answers to these and many other questions about the country as it describes the origins, structures, and characteristics of the most important Swiss companies.

James Breiding is the founder of Naissance Capital. Hardcover , pages.

023 – Innovation Swiss Style: The Untold Story Behind Switzerland’s Success with James Breiding

Published December 6th by Profile Books first published July 17th To see what your friends thought of this book, please sign up. To ask other readers questions about Swiss Made , please sign up. Lists with This Book. This book is not yet featured on Listopia. In general, it was quite helpful for me to get familiar with the business environment in Switzerland, and the history behind the most successful business cases. However, I think the main claim of the author is misleading. To be more specific, the book is not really going to explain the dynamics and factors that made Switzerland such a great country, but it just exaggerates the reasons behind the success of large and well-known firms, a business approach that exaggerates achievements or reaching to conclusions not easily derived from evidence.

In other words, there are lots of factors present in other countries, and the author is not able to explain why the case of Switzerland is different from other countries. And sometimes it seems the author is a pro-Swiss and confuses this bias with the reality. For instance, in the case of Schmidheiny he asserts Swiss believe money is responsibility and they have built foundations to do their responsibilities, without addressing the role of foundations to avoid tax, or any justification that why money is different in other countries!

In controversial cases, such as Le Corbusier, I was expecting to see a more analytical approach and more comprehensive analysis of the achievements as well as controversies. But the book simply focuses on some of his well-known works and names a few more famous architects. In addition, there are lots of cases especially in the ICT chapter not even successful and it is not clear why there are included in this book. They just made the book so lengthy and tedious at some points, and its length could be half by only focusing on the most important cases.

Swiss Made: The Untold Story Behind Switzerland's Success

To sum, the book claims it wants to answer three questions as why Switzerland is successful, is this success sustainable, and what can the others learn? These are really difficult questions to answer, and maybe economists or political scientists can partially answer them partially. By providing the cases of achievements without delving into more structural factors, it would be difficult to convince the reader we have answered these questions.

Maybe the last chapter can be helpful, since the author addresses some of these issues, but the discussions and answers are not convincing. For instance, it does not explain the Swiss political system, and the mechanism or culture behind direct democracy; therefore, there is no systemic analysis or big picture to explain why this is a stable country. Some thoughts on selected chapters: The first chapters were really exciting. The chapter on the Swiss watch industry was very informative and insightful. The chapter on commodity traders was very thought-provoking.

Especially the case of Marc Rich, although the author does not take a neutral approach and simply scratches the surface of such a controversial case; but one can easily read between the lines and better grasp the complicated situation of Swiss firms during the colonial period and benefiting from the conflicts around the world. But these interesting chapters did not last until the end. The chapter on textile industry became repetitive, by explaining Switzerland was not in special position or even lost the game, but nowadays is the center of luxury businesses due to its current position.

The chapter on banking showed how bank secrecy and corruption helped Switzerland to brand itself as the center of banking in the world. And how Swiss competencies can be interpreted as political advantages and lobbying power.

The last cases are not even successful cases of a Swiss approach, and even the successful ones are just the results of an environment already suitable for the emergence of successful industries. Jun 05, Syed Gilani rated it liked it. It is a good book. It attempts to explain why Switzerland is a thriving economy and commercial destination for rich and powerful. The book is defensive but worth reading. Dec 14, Morten Greve rated it liked it.

For me, this book was a bit of a disappointment.

I find the case of Switzerland very interesting and wanted to get a better grasp of the social, political and economic underpinnings of all the Swiss successes. Essentially, the book plays out as a string of separate case studies dealing, industry by industry, with how Swiss companies have taken often dominant market positions at the most profitable forefront of each industry.

Episode Summary

Each of these case For me, this book was a bit of a disappointment. Each of these case studies are solid enough, if slightly conventional in style and superficial in content. If Breiding had included a more substantial analysis of the WHOLE, of the Swiss socio-politico-economic model, I would have read his book with considerably more interest. Sep 25, Patrick Pilz rated it it was ok. This book is for study, not for entertainment. The amount of facts collected and presented are impressive, but the stories are told with strange language at times and often pretty boring. If you start working for a swiss company or frequently conduct business in Switzerland, the book will provide some insight into the business culture in this country, and may be the best book of its kind.

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