Economic crisis: Swiss companies fare better in European comparison
Companies that have successfully come through the current economic crisis have one thing in common: They always keep innovation in focus, are agile in operations and were already strategically flexible before the pandemic.
Swiss companies have come through the economic crisis better than their competitors in Europe. They were already in a comparatively strong competitive position in 2019 and managed to increase their return on equity and operating profit during the pandemic compared to their European peers. This is the conclusion of the study "Switzerland's Top500 - Summit in Sight" published by Accenture Switzerland. If a company enters a crisis stronger, it also emerges from it more successful. The report shows the characteristics for precisely this entrepreneurial success. More than 200 Swiss and European companies from a total of ten industries were examined.
Even before the pandemic, signs of an impending economic crisis
The results already show a slowdown in sales development across all industries for the year before the pandemic. This compares to an average 3.5 percent increase in sales over the previous five years and no growth in 2019. However, the profit margins of different industries can be looked at in a more nuanced way. In chemicals, pharmaceuticals and healthcare, pre-pandemic profit margins were well above the national average of 9.5 percent. In terms of sales growth, they were also above the average of 2.5 percent growth over the past five years. Looking at Switzerland, it can be said that domestic companies entered the crisis with higher profitability than their competitors in Europe. In terms of market valuation, Swiss companies also performed better than their European counterparts in virtually all sectors, in seven out of ten industries. Only the operating margin was slightly lower. This is shown by an international comparison of the corresponding key figures.
Economic crisis, what now?
The increase in return on equity and operating margin shows how well Swiss companies have responded to the pandemic. This is particularly evident in the case of producers of consumer goods, industrial equipment manufacturers or even chemical companies, which further improved their relative performance figures compared with European competitors during the pandemic-related economic crisis. The opposite is true in other sectors. The Swiss retail trade has lost further ground because numerous retailers have been slow to follow the trend toward increased digitization and e-commerce. Even if the need to catch up is recognized and initiatives for digital transformation are being driven forward, the economic environment remains challenging regardless of the sector. The question therefore arises: Do criteria exist that can inspire success even in the face of the crisis?
Companies that invested in digitization before the COVID 19 crisis are emerging from it stronger and will further extend their lead compared with companies that managed their digital infrastructure exclusively before the crisis. One reason for this is that the COVID 19 crisis accelerated digitization. Consequently, this means that in addition to functioning business activities, these companies are promoting reforms in new business activities and scaling their digital business models there. The general focus on the customer experience in combination with a modern digital architecture will continue to be the basis for entrepreneurial success after the COVID 19 crisis.
Anchoring success characteristics - but how?
The focus on innovation as well as operational and strategic agility is a firm necessity for mastering the future. Only through "constant reinvention at speed", the foot-on-the-gas-pedal, constantly reinventing oneself, one achieves the desired state. In this way, one recognizes and avoids unnecessary costs and can redirect these freed-up financial resources into redesign. This way of thinking leads to a new culture of innovation in the company. By improving the digital infrastructure and the targeted use of modern technologies, skills, leadership and company culture as a whole can be realigned so that a new, coherent digital business model emerges within the organization. The keyword here: Creation through scaling. Because customer experience (CX) refers to the transaction with customers, but a product offering alone does not define a great experience, CX has evolved into BX: the business of experience. This holistic, customer-centric approach not only generates sustainable growth, but also enables innovation.
The New Digital Core is the heart
The resulting reimagined and end-to-end digitized company is based on a new competitive advantage. The "New Digital Core" is a digital image of a company. All applications, services and data are brought together in the cloud. This allows all company processes to be controlled centrally and in real time. This also includes processes involving partners and customers. The idea is to anchor collaboration and customer experience deeply in the structures and self-image of a company. The data required for this is available simultaneously, which shortens decision-making processes, enables performance assessment and makes complete transparency the standard. Cost-intensive and innovation-inhibiting barriers between processes, employees, suppliers and customers are thus eliminated. In combination with automation, robotics, AI or the Internet of Things (IoT), business processes, product innovation and supply chains are optimized and radically shortened. The New Digital Core ultimately leads to fully digitized value chains and sustainable ecosystems across company and industry boundaries.
Need to catch up with digital technologies
This focus on digitization is also noticeable in the workplace. The infrastructures built around the New Digital Core must now be used optimally to generate an appropriate payback on the investments. It is important to ensure the availability and acceptance of the employees by penetrating the digital technologies within the company to the smallest corner. The New Digital Core is the success-critical factor that makes all other changes necessary in the "post-pandemic world" possible in the first place and creates sustainable value for companies.
Swiss companies still have some catching up to do here. 41 percent have little or no experience with decoupled data. However, if they were used together with applications, they would increase flexibility and enable adjustments in real time and without affecting other systems. A third have barely experimented with cutting-edge cloud solutions. By integrating data analytics or AI, this key technology has become a catalyst for growth. According to the study, almost half of Swiss companies do not have adequate technologies to capture and analyze data in real time. However, the use, analysis and quality of data will become standard and will have to be incorporated into every decision-making process in the company.
Source: Accenture