Swiss watchmakers respond to the drumbeat of time.
VISIT the Vallee de Joux in Switzerland and it is like stepping back in time. The streets are quiet, the people unhurried, the air clean, and the chocolate outstanding. It seems a little surreal. Sometimes, however, a step back in time can teach you lessons that may propel you forward.
I first visited the Vallee five years ago on a trip to the Manufacture of Jaeger LeCoultre, the factory of the 180-year-old watch company. It was in response to an invitation to meet the company’s rugby team and I have since become an ambassador.
I have grown to love watches. My first was passed down by Nonno, my Italian grandfather. Unfortunately that’s all it had in common with a Patek Philippe. I couldn’t even tell you the brand. It wasn’t digital, I had to wind it, and it wasn’t appropriate for a 10-year-old boy and his Boy’s Own pursuits.
Watches have always told me the time but since that first trip to Switzerland they have also taught me many lessons. Watch manufacturing is Switzerland’s third largest export industry behind gold and packaged medicaments, and its growth over the past decade has been phenomenal. While the country accounts for about 2 per cent of the billion plus wristwatches produced every year, it holds about 60 per cent of the value of the global market. According to a Federation of the Swiss Watch Industry report, the average price of exported Swiss watches was $US791 compared to China which exported more than 20 times the quantity but at a unit value of just $US3.
From my encounters with designers, through manufacturers and with retailers five key leadership lessons stand out from the Swiss watch industry:
Form versus function: The creation of a watch is the ultimate coupling of art and engineering, but the battles between those two disciplines are waged wilfully within a manufacturer. Designers behold beauty of increasing complexity while the engineers ensure, despite demand for innovation, their watches still keep time. The appropriately named “complications” – any function beyond the standard display of hours and minutes – only appear in the final product if they survive the problem-solving process between designers and engineers.
Precision matters: Though they rely on the human hand and not a mechanical production line for their construction, they must still be precise. The Controle Officiel Suisse des Chronometers only awards its official timing certificate when, over a minimum 15 days of monitoring, the watch averages between +6 and -4 seconds a day.
Competition and co-operation: In an industry with relatively few players, rival organisations must both co-operate with each other for greater efficiencies and compete. At various stages Jaegar LeCoultre has manufactured the core mechanisms, known as movements, for many other watch brands including IWC, Vacheron Constantin, Patek Philippe, and Audemars Piguet. In the same vein, Swatch Group owns the ETA company that supplies about 70 per cent of movements for the Swiss watch industry. To take on the world they must first engage with each other.
How the new saved the old: In 1978 the popularity of Japanese-led quartz watches began to overtake mechanical watches and exports of Swiss watches fell from 40 million in 1973 to just three million 10 years later. In 1983 the Societe Generale de l’Horlogerie Suisse launched Swatch, a quartz initiative to save the industry from impending devastation. Swatch is now one of the largest and most powerful watch brands in the world. It parked the pride of the industry and challenged norms to secure its future. Now, some of the oldest mechanical brands are as strong as they have ever been.
Leadership of brand: Swiss watchmakers have moved beyond commoditisation of their product to create luxury brands people love, understand and respect. Patek Philippe’s, “You never actually own a Patek Philippe. You merely look after it for the next generation”, cleverly marks a watch as a generational, timeless and even priceless investment.
The Swiss watch industry still faces many challenges. It will be interesting to see how it responds to the smart-watch trend, and the Swiss franc’s recent separation from the euro with the subsequent sudden price rise for their customers in many countries. However, the spirit of the Vallee has somehow remained relevant in the past, so there is no reason why we shouldn’t back it to do so again.