“The ubiquitous Swatch watch is an example of a successful product family based on a common platform. The Swatch platform is a small set of timepiece subsystems linked together through a few electronic interfaces. This platform is, in effect, the innovation” (Luecke, 2003, p. 74). “[I]nnovative strategies also served as important models for the Swiss watch making industry as a whole and played a key role in the revival of the industry” (The Swatch Group Ltd, 2010). Through the timely launching of The Swatch Group Ltd’s (hereafter, Swatch) “low-cost, high-tech, artistic and emotional (second watch)– the Swatch” (The Swatch Group Ltd, 2010), the previously flailing company was able to take advantage of immediate market forces, evolving demographics’ interests (market segments), and the struggling company’s necessity for inexpensive manufacturing and marketing avenues. “Within five years, [Swatch became] the most valuable watchmaker in the world” (The Swatch Group Ltd, 2010). Innovation cannot rest on its laurels however; to survive in the modern economic capriciousness, constant evaluation and reevaluation of a company’s products and processes must take place. Swatch must continue its innovative momentum in emerging markets if it is to keep pace with its competition.
History of The Swatch Group
On June 28, 2010, The Swatch Group lost its CEO, Nicolas G. Hayek, a world leader in innovation and transformational technology for over 30 years (The Huffington Post, 2010); he was 82. Nicolas Hayek said of his company, “The Swatch Group has a very special emotional culture. We produce beauty, sensuality, emotionality in watches – and we also produce high-tech on your wrists. Both, emotionality or poetry and high-tech are part of what we feel towards our customers. We love them genuinely. We want them to be happy – we want YOU to be happy” (Hayek, 2010: as cited by The Swatch Group Ltd, 2010). The pioneering methodology of simple, interchangeable, and easy to manufacture pieces took The Swatch Group Ltd, a struggling amalgamation of several Swiss timepiece companies, from an obscure manufacturing conglomerate to largest watch maker in the world in less than five years (Swatch AG, 2010). “[Hayek’s] decisive leadership was critical to the launch of the Swatch watch in 1983, and subsequently drove the continuous development and improvement of all Swatch Group brands” (The Swatch Group Ltd, 2010).
How and Why This Innovation Was Successful
“Foreign competition, in particular the Japanese watch industry, with its mass production of cheap new electronic products and new technology, was rapidly establishing a strong foothold in the market. Eventually [several branches of The Swatch Group Ltd’s conglomerates] faced liquidation, and foreign competitors were offering to buy prestigious brands such as Omega, Longines, Tissot, and others” (The Swatch Group Ltd, 2010). Hayek became CEO at a critical time, recognized world economic tides at the right time, and made correct, brave decisions which rival companies either had not thought of, or had dismissed as unworthy of the risk involved from that level of innovation. “In the mid-seventies, the Swiss watch industry was in the midst of its worst crisis ever. Technologically speaking, the Japanese competition had been outclassed in 1979 with the launch of the ‘Delirium,’ the world’s thinnest wristwatch with a limited number of components. But the event that marked the upturn in the industry’s fortunes was the founding of SMH, the Swiss Corporation for Microelectronics and Watch making Industries” by Hayek and his team (Swatch AG, 2010).
The newly established SMH would innovatively seize control of its entire process from manufacturing to sales by producing “nearly all of the components necessary to manufacture the watches sold under its 19 watch brands and the multi-brand Tourbillon retail label, as well as the entire Swiss watch making industry. In addition, it operate[d] its own worldwide network of distribution organizations” (The Swatch Group LTD, 2010). Firmly grasping the entire process in this way was unheard of in the complex watch manufacturing industry at the time. By creating and maintaining the kind of socially-friendly (and therefore attractive to the clientele being sought) product line, Hayek was positioned to take advantage of lessons 3M had learned 20 years earlier when Joe Bailey joined their team in 1962. Bailey wrote, “The engine that drives innovation is technology, but understanding what people need and delivering the right product at the right price is equally important” (3M, 2002, p. 30).
“Swatch did this by putting its innovative new clockworks inside a long series of uniquely designed band-case-face configurations, producing many ‘different’ watches for different customer segments from a common base” (Luecke, 2003, p. 75). The inexpensive, customizable, colorful, and instantly trendy watch became the mainstay of cultures throughout the world almost overnight (Swatch AG, 2010). Marketing genius escorted to market innovative spin-off products (also by Swatch Group Ltd) from the popular watch brand; backpacks, clothing, purses and accessories, sports equipments, and variants of electronic merchandise were soon selling worldwide at record paces (Swatch AG, 2010).
The Swatch watch was nothing more than a “slim plastic watch with only 51 components (instead of the usual 91 parts or more) that combined top quality with a highly affordable price” (Swatch AG, 2010). However simple, the timing and innovative design made the Swatch watch affordable and accessible to a marketplace of people who previously had not taken buying a watch seriously before. Now, it was serious business. “[The Swatch] first went on sale in 1983. Since this time, it has gone on to become the most successful wristwatch of all time, and The Swatch Group [Ltd], the parent company, is the largest and most dynamic watch company in the world” (Swatch AG, 2010).
The Swatch Group Ltd Must Stay Innovative
Innovation cannot rest on its laurels; to survive in the modern economic capriciousness, constant evaluation and reevaluation of a company’s products and processes must take place. Swatch must continue its innovative momentum if it is to keep pace with its competition. Understanding this, the Swatch website reports that they “continue to develop high-tech components for the computer, telecommunications, medical applications, automotive and electronics industries. Swatch has taken advantage of the Group's vast experience, know-how[,] and production capacities in micromechanics and microelectronics to develop its activities in the telecommunications and internet sectors, where Swatch Access (wireless access control, internet access, e-commerce) is but one example of the brand’s remarkable ability to transform advanced technology into successful products” (The Swatch Group Ltd, 2010).
Often “the wisest course is to displace their current products and services; otherwise, competitors will step in to do the job” (Luecke, 2003, p. 74); but for Swatch this is not necessarily true. The Swatch brand itself has been marketed properly to mean what it is, rather than merely a brand of wristwatch (similar to when people call any soda a ‘Coke’). With the exception of continuing to offer new designs and artful creations to envelope the core gear-works of the basic watch, Swatch’s innovation efforts should seize the momentum of their late CEO, Nicolas G. Hayek, by maintaining his “very special emotional culture” (Hayek, 2010: as cited by The Swatch Group Ltd, 2010). Swatch’s future is in continued success in the wristwatch industry, which will foreseeably always be in demand, and in reaching developing markets in emerging philosophically similar outreaches and marketing strategies. A hypothetical innovation diagram (as assigned and similar to figure 5-3 in Luecke, 2003, p. 75) could be supposed on a new laptop computer product line.
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“In this figure we see how the platform of common elements can be joined with some unique elements to produce a product (or service) for a particular market segment” (Luecke, 2003, p. 75). Here, a Swatch base-model laptop is duel marketed for both private and industry use. Branching from these basic market elements Swatch would be able to offer customizable colors, logos, sounds, covers, mouse pads, accessories, short-cut menus (to social media, client-required software, or networking tools regularly used by the specific buyer). Because the employment of portable laptops is as varied as the customers who buy them, Swatch’s innovative wristwatch customizable covers, wrapped around a core technology, are ripe for this marketplace – if marketed properly in the form of Swatch laptops.
Ultimately, the success of companies like Swatch, or the previously studied 3M, rests in the ability to not only innovate, but in creating a solid culture of sharing and innovation wherein employees are encouraged (intrinsically and extrinsically) to innovate existing capabilities to anticipate and match current and future market trends. Swatch has proven its ability to do this for over 30 years under the leadership of Nicholas Hayek, the check will be whether or not the leadership given by their previous CEO was engrained enough to carry the current CEO (his son, Nick Hayek) and the entire staff through the next marketing and innovative question they face.
3M. (2002). A century of innovation: The 3M story. Retrieved from
Luecke, R. (2003). Managing creativity and innovation. Boston: Harvard Business
School Publishing Corporation.
Swatch AG (2010). The Swatch History. Retrieved from
The Huffington Post (2010). Nicolas Hayek, Swatch Founder, Dies At 82. Retrieved from http://www.huffingtonpost.com/2010/06/29/nicolas-hayek-swatch-foun_n_629260.html
The Swatch Group Ltd (2010). Homepage links. Retrieved from