Swiss SMEs see more opportunities than risks in future changes

Changes have a great strategic relevance for companies, as they can positively or negatively influence the long-term competitiveness of companies. However, when things are going well in the company, many find it difficult to recognize changes. At the same time, it is even more difficult to take strategic measures that are perceived as disruptive or even painful today, even if they are intended to ensure competitiveness in the long term. Change is a constant companion of companies. The KMU-Spiegel 2018 of the University of Applied Sciences St.Gallen (FHS) investigated which opportunities and risks changes mean for Swiss SMEs.

The Swiss SMEs surveyed in this study perceive their market and competitive environment to be more volatile than stable. However, Prof. Dr. Rigo Tietz of the Institute of Corporate Management IFU-FHS and head of the study believes that there is good news in this perception, as the SMEs are aware that there will be a lot of changes in their industry within the next year, and around one third of the respondents even expect strong changes. "Within the next ten years, more than two-thirds of survey participants believe there will be very strong changes," Tietz said. Respondents cite technological change and changes in customer needs as the main drivers of change.

Swiss SMEs are generally rather optimistic about the near future

Even if it has become more difficult to be successful on the market in the long term, the study nevertheless revealed that more than half of all respondents tend to see opportunities in the expected changes, while for only around 20 percent do the risks predominate. The risks cited include points such as price erosion, cost pressure and falling margins, globalization and increasing international competition, declining customer loyalty and new customer needs, and the lack of qualified personnel. In terms of opportunities, aspects such as digitization and the use of new technologies, the focus on specific market niches or Switzerland as a location in conjunction with the very positive external perception as synonymous with quality and reliability were cited. SMEs thus have predominantly positive expectations with regard to most of the success indicators, such as sales development, while only the profit margin is expected to decline in almost all sectors. Only in the ICT sector do the positive expectations slightly outweigh the negative ones.

Manufacturing industry also cautiously optimistic

Representatives from manufacturing, ICT and the service sector are more confident about the future than the overall average, while companies from the agricultural sector are much more cautious. The situation of companies from the manufacturing sector in particular has improved noticeably. While the currency situation with the strong Swiss franc and the high location costs in Switzerland compared with other countries have dominated the discussion in the sector in recent years, positive signals such as good order backlogs and slight growth impulses are increasingly being perceived again.

Rigo Tietz explains this by saying that automation is perhaps not so scary for the manufacturing industry because companies can generally only hold their own in Switzerland as a location if they already achieve a high level of automation in their processes and are always one step ahead of the competition from abroad in terms of their products. What is already there can no longer be scary in the future.

Changing demands of employees

The more pronounced the changes in the company's environment, the more the company must also change and implement new forms and models of work in whole or in part. Employees in all sectors, of all company sizes and of all generations want more flexibility in terms of time, space and, increasingly, content in the workplace than is currently made possible by companies. Managers are seen less as authoritarian authorities than as coaches who can offer both content-related and personal feedback and support. Strong changes can already be seen today in the ICT sector, in the manufacturing industry and in the services sector, while there is less freedom in the construction sector, in the hospitality industry and in agriculture.

Meeting such employee wishes step by step can become an important criterion in the future for attracting qualified employees or retaining them in the company over the longer term. Exactly what a blueprint for a sustainable work and organizational model for companies can or should look like can hardly be answered across the board for all industries and types of companies. This is because the respective situations of companies often differ fundamentally from one another. Rather, a suitable form must be found that fits the respective company and the respective industry.

Nationwide online survey

The results presented in the SME Mirror 2018 are based on a nationwide online survey conducted between January and February 2018. The results were supplemented by expert interviews with representatives from professional and industry associations as well as various companies. The research also incorporated the findings and results of further studies and analyses by industry associations, institutions or companies. The result is a comprehensive, sector-specific and multi-faceted picture of changes in Swiss SMEs.

The special feature of the study is that different sectors, such as the dynamic information and communications technology sector, the manufacturing sector or the construction sector, which tends to be more stable, were scrutinized. This year, agricultural businesses from the primary sector were also surveyed for the first time. The SME Survey was supported financially and in terms of content by Helvetia Insurance and BDO Switzerland.

Source: University of Applied Sciences St.Gallen