Switzerland blazes innovation trail

A nearby flight instrument company, Flytec, approached Victorinox with a suggestion for a gadget geared to mountain climbers. Flytec now supplies the knife maker with electronics for an altimeter, barometer, thermometer and clock.

The company has made mistakes – a tool for in-line skaters that came with a separate pouch for different-sized keys wasn’t a success – but Victorinox continues to tinker and add new features to its products. Mr. Elsener’s top goal is to boost the appeal of Swiss Army knives among women, who tend to buy them more for the men in their lives.

In the global scheme of things, Victorinox is a small company. But like other Swiss firms – from online scheduler Doodle to Thermoplan, which supplies coffee machines to Starbucks – it has found its niche. And that’s reason to believe Switzerland’s economy may keep on thriving.

“I strongly believe in the future of Switzerland because of globalization, because open economies can play advantages in innovation even better than protected economies,” Mr. Gassman said. True, it costs more to make stuff there, but that “can be overcompensated by productivity – and even more innovative products and design.”

Victorinox logo.


IBACH, SWITZERLAND— From Saturday’s Globe and Mail

In a tiny town in central Switzerland surrounded by velvety green mountains and punctuated with whiffs of cow dung, a 126-year-old factory churns out 60,000 Swiss Army knives and other pocket tools each day for a hungry global market.

All the folding blades at Victorinox AG are still made in Ibach, population 3,500. The company is run by the founding Elsener family, now in its fourth generation. Its brand has, over the years, become synonymous with Switzerland itself: quality, precision, reliability.

Yet Victorinox is anything but static. Back in 1891, its main product was a heavy, wood-handled knife built for the Swiss army. Now, its knives come equipped with laser pointers and USB drives with biometric sensors. The factory has been upgraded to the latest high-tech gadgetry (machines that look like fingers do the finicky job of assembling the knives), leaving workers free to develop new tools. Sales are roughly $200-million a year, 90 per cent of its products are exported, and it is expanding into new markets such as Brazil, Argentina and China. All this, and employees still get 1½-hour lunch breaks.

Carl Elsener Jr., Victorinox’s approachable chief executive officer, proudly proclaims that his company has never outsourced production or axed jobs due to recession – in fact, it has a history of boosting investment, not cutting it, during economic downturns. He credits its endurance to innovation, which is helping Victorinox face its biggest challenge yet: competition from cheap Asian counterfeits.

“Innovation is in our blood here in Switzerland – since the beginning, we’ve always tried to make things better,” Mr. Elsener said in an interview at his company’s headquarters. “Maybe it’s because we were forced early to be global and to think about exports.”

Innovation seems to seep from Swiss pores. The Alpine nation of 8 million people was named the world’s most competitive economy in a recent ranking by the World Economic Forum, and regularly leads the world when it comes to innovation. The Swiss hold the most patents per capita in Europe – Albert Einstein once worked in the Bern patent office – and the country is a hub for global giants such as Swatch, UBS and Nestlé.

Canada, meanwhile, is still struggling to shed its hewer-of-wood image. The Conference Board of Canada slapped the country with yet another “D” in innovation this year, and it slid to 10th place in the WEC rankings. For Canada to thrive in a global, knowledge-based economy, it must focus on turning good ideas, of which we have plenty, into marketable products, which we’re not so good at. Switzerland offers plenty of lessons on how to do it.

“It’s about desire,” said Roger Martin, dean of the Rotman School of Management. “European countries are more practised in how to compete in sophisticated ways. They can’t chop down trees, dig out rocks, or fish. So they’ve been at it longer to upgrade their products.”

It’s tough to imagine it now, but in the late 1800s, as Victorinox founder Karl Elsener was training as a master cutler, Switzerland was one of the poorest nations in Europe. Its economy was largely based on agriculture, and robbers ruled the roads. It had no coal, steel or iron – no natural resources at all, in fact – and for a time, the industrial revolution bypassed the tiny mountain nation.

Out of necessity, much like Japan, it developed a knack for importing goods and putting them together in smarter ways, or copying other people’s products and making them better.

Over the years, said Oliver Gassmann, chair of innovation management at the University of St. Gallen, Switzerland developed a unique innovation policy.

“It’s bottom-up, science-based and market-oriented,” he said.

Education is key to the country’s position as an innovation hub. Its school system produces world-class scientists who are focused on the pragmatic implementation of new ideas, Mr. Gassmann said. And Swiss universities and technical schools collaborate with multiple partners, including businesses, to bring ideas to market. Leer más “Switzerland blazes innovation trail”