The Swiss watchmaking industry wasn’t built in a day. But one can say it was saved in one, by force of vision and the mighty plastic Swatch.
Nothing is easier than going with the flow; basking in the security of having ideas and thoughts in the accepted ‘mainstream’, and sniffing at everything that isn’t in one’s cool kids club. But it takes out-of-the-box thinking when all chips are down, and resolute action to climb out of a slime pit. It wasn’t that long ago in the 1970s that today’s vaunted Swiss watchmaking industry found itself in just such a predicament, having had its knees cut from under it by cheaper, better performing imports from the East. It took no less than a visionary, iconoclastic entrepreneur – the late Nicolas G. Hayek – to save the day, with a watch that screamed everything the Swiss watchmaking industry was not.
Advisor to Industry
Nicolas G. Hayek was born in Beirut on 19 February 1928. His father, an American dentist, held a professorship at the American University of Beirut. His mother was Lebanese. Hayek attended the French Jesuit secondary school in Beirut. After passing his secondary-school leaving examination in France, he studied physics, chemistry and mathematics. He married a Swiss woman named Marianne Mezger, immigrated to Switzerland and began working in the mathematical division of a re-insurance company in 1949. Several leadership positions in the insurance industry followed between 1951 and 1957. He even temporarily took over the management of his ailing father-in-law’s foundry and machine-building business, which he left after his in-law’s recovery.
Hayek and a business partner ran a business consultancy in Zürich from 1957 until 1963, when he established his own industrial consulting business, which he registered two years later under the name “Hayek Engineering AG”. His company distinguished itself in the ensuing years as a renowned enterprise, both in Switzerland and beyond the confederacy’s borders. Among its approximately 300 clients in more than 30 countries, the Zürich-based consultancy served businesses in the steel, machinery and automobile industries, as well as public authorities. For example, Hayek was actively involved in restructuring AEG-Telefunken in 1979. Over the years, his advice was also sought by enterprises such as Alfa Romeo, Audi, BMW, Deere & Company, Digital Equipment, Dresdner Bank, Krupp, Mannesmann, Mercedes-Benz, Ministry of Metallurgy in China, Nestlé, Olivetti, Siemens, US Steel, Volkswagen, Voestalpine and the World Bank.
He served as advisor to the noble Thurn and Taxis family in Regensburg, and to former German chancellor Helmut Kohl, who, in 1995, invited Hayek to join a 17-person team tasked with research, technology and innovation for the future of Germany and Europe. One year later, the French government appointed him president of the “Groupe de reflexion sur l’innovation”, or France’s council on innovation. Other European governments likewise relied on his advisory services.
Taking the Helm
Hayek’s first contact with the watch industry occurred in the early 1980s, when he was commissioned to restructure the SSIH (Société Suisse pour l’Industrie Horlogère) and the ASUAG (Allgemeine Schweizerische Uhrenindustrie AG). At that time, both businesses were severely stricken by the Quartz Crisis that beset the entire Swiss mechanical watch industry. When Hayek arrived on the scene, he encountered ossified structures and managers who took action but lacked strategies. His approach toward solving the problems was different than the one that was usual among business consultants: rather than requesting the creditor banks to relocate the majority of the manufacturing to foreign countries and to reduce wages for the remaining Swiss employees to a bare minimum, he instead recommended the fusion of the SSIH and the ASUAG. In accordance with his suggestion, the two deeply indebted firms merged to form the SMH (Société Suisse de Microélectronique et d’Horlogerie). The idea that Hayek could perhaps personally participate in the new watch business was first broached during a lunch meeting with a banker.
Hayek must have instinctively sensed that the chance of a lifetime had arrived. He seized the opportunity and joined the business, bringing with him a large portion of his personal wealth. Together with Stephan Schmidheiny and other investors, he took over a majority of the shares of SMH, and soon afterward also chaired the presidium. With financial participation and strategic thinking, he began rescuing the moribund Swiss watchmaking industry.
Convention be Damned: Swatch Watch
Hayek chose an unconventional approach to refilling empty coffers and reviving production in the factories, which were now merged under the roof of the SMH. Hayek said, “In those days, everyone expected that I would begin by reviving the upper-price echelon with the Omega, Longines, Rado and Tissot brands.” Instead, he carefully searched throughout his ramshackle realm and discovered previously unappreciated and largely ignored plans that had been drafted by young engineers who had developed a watch which, unlike traditional chronometers, no longer consisted of 150 components, but needed only 51. The concept that was to become the world’s best-known Swiss watch had its genesis in the work of two engineers, Elmar Mock and Jacques Müller, who, under the direction of then ETA CEO Ernst Thomke, developed the notion of using the case as a movement plate (pioneered by the Concord Delirium) and adapted it to a quartz watch made with easily customized industrial plastics. Furthermore, these components wouldn’t be manufactured and assembled by watchmakers, but by industrial robots.
But it took Hayek to realize the full potential of this manufacturing technique to combat the onslaught of cheap quartz watches with an incredible new hyper-trendy, Swiss-made watch. His vision would bring about the first rebound of the Swiss watchmaking industry, combining the quality of Swiss manufacturing with the en vogue appeal of the colorful, design-oriented, plastic watch that would become known as the Swatch watch.
Hayek invited the right people to sit down together at a table to implement the project and he proved that among his other talents, he could also shine as a marketing strategist.
Back on the Offensive
Accompanied by a bombastic advertising campaign, the Swatch watch was presented to the world in Zürich on 1 March 1983, and rocketed to success right from the start. A mere two years later, four million Swatches had already been sold. The number swelled to 50 million by 1988. With the help of regularly changing collections and limited-edition Swatch models created by artists, Hayek invented the previously inconceivable trend for second and third watches and collector’s items. He continually nourished the Swatch hype with spectacular PR activities. For example, he arranged to have gigantic 13-ton Swatches hung on skyscrapers in Frankfurt, New York and Tokyo. Hayek once said that his Swatch has a message: “The highest quality, the lowest price, provocation, and fun in life.”
To celebrate the 100-millionth Swatch, he organized a lavish “Swatch the World Festival” on the Matterhorn in 1992. Swatch passed the 200-millionth mark in 1996. One can only guess how many more have been sold since then. Incidentally, the gleam of the Swatch brand later prompted its creator to rename the entire family of companies in its honor: Hayek officially renamed the SMH in 1998, when it became the Swatch Group.
The Swiss watchmaking industry today is mature, powerful; its biggest brand names are the shining lights of the consumer world. Yet all this is built upon the success of something that couldn’t be more different from the archetypal Swiss watch. As much as the latter is mechanical, wears a premium/luxury price tag and is made to last, the Swatch is unapologetically a creature of fashion rather than legacy – a cheap, disposable, second watch (hence “Swatch”) to be enjoyed on a whim. Today, as the industry faces deep new challenges that once again threaten the relevance of the mechanical wristwatch, we find ourselves thrumming our fingers for another Hayek, another Swatch. A disruptor to save us from disruptions.
Hayek passed away in 2010 of heart failure, while working at the the company’s headquarters.