Coming out of the COVID-19 crisis stronger for the future
Is Switzerland risking its prosperity and global position? This could happen if we allow ourselves to get so caught up in crisis management that we lose sight of the long-term challenges. Now is the time for companies and the government to set Switzerland's course for a sustainable future.
By Reto Savoia, CEO, and Nico Kleyn, Clients & Industries Leader
Innovative companies, world-class universities, political stability and social cohesion – Switzerland excels in many of these areas. Despite a small domestic market and lack of natural resources, Switzerland is one of the 20 largest economies in the world with one of the highest per capita incomes. Switzerland is a leading nation in the world – but for how much longer?
The corona crisis made it clear that companies need to increase their operational resilience.
Various international comparisons, such as the World Economic Forum's (WEF) Global Competitiveness Report or the World Bank's Ease-of-Doing-Business Index have recently shown that Switzerland is losing its competitive edge internationally. Economists have been warning for years about the negative consequences of weak productivity growth. The corona crisis has shown that the state and the economy are less innovative than many believed. The use of fax machines to transmit corona case numbers or the largely non-existent infrastructure to enable employees to work from home are just two examples.
Demographic challenges and international pressure
If overcoming the impending, deep economic recession caused by the corona crisis was not enough, Switzerland is facing significant long-term challenges for which the country urgently needs to find solutions.
Under our current model, we are struggling to continue to finance our old-age pensions, and we are slowly running out of skilled workers. Digitalisation puts companies and employees under constant pressure to change and also exposes them to cyber risks. International trade, vitally important for Switzerland, is increasingly becoming an obstacle course, and the tax reforms promoted by the OECD will undermine our locational advantages. If we don't address these challenges in a timely manner, we may see our country lose its top international position in just a few years.
It is therefore high time to do something about this insidious downward trend. On the one hand, politicians and the government need to determine the new regulatory framework to impact Switzerland's competitiveness positively. On the other hand, companies must do their part, as it is the quality of their products and services that reflect the innovative strength of Switzerland's economy.
Innovation, entrepreneurship and sustainability
But where should we start and what needs to be done? Based on a survey of more than 400 executives, we at Deloitte have identified eight areas of action where the government and companies can make a real difference. These areas centre on issues like innovation, entrepreneurship, international trade or sustainability. For each area, we propose numerous measures to strengthen the competitiveness of the Swiss economy and the companies based here – in line with the motto Power Up Switzerland. You can watch our short video with historical footage and an expert from a Swiss think tank.
Politicians should, for example, promote opening the economy to more international trade and reduce the regulatory burdens for businesses. They should also accelerate the digitalisation of public services, push for teaching more entrepreneurship in schools and adapt the labour laws for the digital age. We need to come together to shape and develop a vision of Switzerland as a hub for business, innovation and sustainability.
In our view, however, it is the private sector that has to step up its efforts above all. Companies need to increase their resilience and quickly switch from crisis management mode to sustainable growth.
The corona crisis has shown that the state and the economy are less innovative than many believed.
The corona crisis made it clear that companies need to increase their operational resilience: highly sensitive, time-critical supply chains were easily interrupted – a purely cost-oriented location strategy can easily backfire. The majority of companies are also aware that they have to make greater use of digital technologies. With mobile digital solutions, for example, companies can further improve their customer contacts. The systematic use of mobile technologies to process orders and projects, in conjunction with data storage in the cloud, gives rise to exponential potential.
Soft factors are essential
In addition, Swiss companies should focus on "soft factors". Many employees have had to improvise during these times, and many have shown personal initiative, which has helped them grow as individuals. These are ideal conditions to nurture a comprehensive culture of innovation and increased mutual trust. This also means that managers need to develop a positive culture towards failure and demonstrate that failure does not automatically lead to a career setback.
A change in culture should give employees more mobility, flexibility, a sense of responsibility, promote diversity and help to make better use of the untapped work potential among women or those in the 50+ age group.
Strong brands with an authentic corporate purpose provide stability and direction in times of crisis. To strengthen the company's reputation and build trust and confidence with regard to new laws and demands from stakeholders, an integrated sustainability strategy with measurable goals and transparent reporting is necessary. This should not be limited to a company's annual business report but should permeate the company's overall and ongoing impact on the environment and society.
Progress instead of a standstill
Switzerland has a unique success story. In the past two centuries, our country has become one of the most successful and innovative economies, bringing prosperity and security to many generations. However, slowly but surely, we are approaching a critical point. We run the risk of squandering our excellent position and successful past.
It is therefore crucial that after the corona shock, a second jolt jump-starts the economy. The extraordinary circumstances and the availability of state funding have opened a historically unique window of opportunity that we should not miss. Progress instead of inaction must be the motto, not only for the government but especially for the companies operating in this country. I am confident Switzerland will manage this!