Arjen Strijker

Innovation in Switzerland

Post By Arjen ~ 15th July 2010

I’m writing this article to point out that Switzerland, as a country, could (and should) improve how real innovation – today’s deciding factor for success – is being fostered and promoted. Being an entrepreneur in Switzerland myself, I know of just few local fellow entrepreneurs with game-changing ideas or business models. I know even less examples of those being backed by a VC or business angels. Why are there no more ideas explored and invested in? A change is needed … and fast!

My underlying aim of writing this is perhaps to somewhat provoke the Swiss government and the other institutions that have been cultivating innovation in Switzerland so far. As I consider myself part of the target audience, a contributor to innovation in Switzerland, I’m making suggestions throughout the article on how I think things could be improved.

Just google “innovation in Switzerland” and it’s surprising to learn that there’s hardly anything recent (in neither the German nor English language) on the topic popping up. One of the very first search results is a joint study of the Swiss–American Chamber of Commerce and the Boston Consulting Group dated from 2008. Their research doesn’t predict much good and I’m afraid things haven’t changed much until today. It carries confronting quotations in it like one from a member of the Swiss national council: “Considering the risk involved, it is not very appealing to become an entrepreneur in Switzerland.” Another Swiss entrepreneur mentions that “our wealth is our biggest enemy.”

So, what is innovation?

I consider innovation as any new way, product, or service that contributes to people’s happiness (not just to their financial success!). As excitement is the more practical synonym for happiness, something is only innovative when it causes excitement.

This is why innovation is intangible. Let’s take two definitions of sources I trust. Firstly, Seth Godin. Seth describes innovation as art. Innovation = art = “an original gift, a connection that changes the recipient, a human ability to make a difference”. He adds that art doesn’t follow instructions of a manual or a boss’s orders. Instead, art is the very human act of creating the uncreated, of connecting with another person at a human level” (from his latest book Linchpin). Wikipedia defines innovation as “a change in the thought process for doing something or new stuff that is made useful”. They add that it may refer to an incremental emergent or radical and revolutionary changes in thinking, products, processes, or organizations. Matthew May argues that innovation is not to be confused with invention (@matthewemay, via Guy Kawasaki’s blog).

Andreas Schönenberger (CEO Google Switzerland) thoroughly summarizes what needs to be done:

“Innovation is based on great ideas, an open environment and significant rewards. Those countries that are able to foster the spirit of start-ups, ease the financing, reduce the regulatory/administrative effort to a minimum and allow innovation leaders to capture proceeds from their efforts will see more innovation happening.” (from BCG study mentioned earlier).

Why is there a lack of real innovation in Switzerland?

Let’s take a closer look at each of the factors Andreas mentions in his quotation and let’s separately list possible reasons for why what is being done right now is not enough.

“Fostering great ideas and an open environment” is the goal. Then he continues with:

1. Fostering the spirit of start-ups

The Swiss way of “how we do things over here” is traditional and overall conservative. Because of that, things function well in terms of systems and processes. This is probably also a key factor for why the two main cities in Switzerland – Zurich and Geneva – rank amongst the highest quality-of-life cities in the world. Mercer’s yearly survey confirms this.

Focusing on the corporate environment though, conservatism means “hanging on to what is known”, which could indicate that there is not much room for innovation inside multinationals (those who eat startups), besides a traditional R&D branch. This is a constraint. I’m talking about business in Switzerland in general here. Innovation is about accelerating your formal research and development branches, about activating your most valuable asset: your employees. Why? Because they have better ideas than you have as being the management – and jointly they also have deeper insights, more experience, and many more ideas. One way to accelerate your formal R&D branch is through correctly using social media tools throughout your organization. This way your entire company could be set up as a think-tank for innovation, while at the same time you let your employees feel (more) valued! To do this, your organization would need to develop a social business strategy.

Main question still remains: where do start-ups and new ideas fit in such environment? Right now I see several initiatives that are just there so the initiators can tick this task off their to-do lists. One great example is the technopark in Zurich, and initiative realized by local government and business. I’ve worked there for about eight months and I can confirm that nothing is being done to “foster the spirit of start-ups”. The entire set up is wrong: it’s a large building with lots of offices with in the middle a canteen, auditorium, and copyshop. Inside you have the feeling you’re in a highschool gym. Neither their website, mission statement (“we run competencies”), venue, nor their events or employees contribute to facilitating an innovative climate to the residing startups. I fear it’s the opposite: innovation is not fostered but killed.

2. Ease financing

We’re currently looking into attracting a first round of funding for SOMESSO. For this, I’m in ongoing conversations with several proven entrepreneurs, some private bankers, and a couple of non-Swiss VC’s. Progress is going relatively well and I’m being invited for a personal talk with each person on my list.

Let me now share a relevant experience that made a lasting impression on me:  When I just started out with SOMESSO I wanted to raise capital from one local business angel in particular, as he was known for being a leading figure in the space. The entire encounter became a nightmare for several reasons:  a) it was very difficult to get in touch, even though I approached him via a close contact with the message that I had a great idea to share b) eventually in touch, he chose to not show up at the first meeting without warning c) once in front of each other, he chose not to listen and instead tell me off with motivations like “what you’re doing is international” and “this won’t work”. His rudeness shocked me, but in particular the way how he refused to accept a new idea into his little world made an impact on me. I will remember his behavior forever and it has taught me a wise lesson.

I’m trying to make clear that “ease financing” is not just a matter of cash itself, but just as much about the people behind the money. The visions and choices of just a few local VC’s and business angels have a large impact on opening up innovation in a small country as Switzerland. Moreover, if more wealthy people would dare to take more risk and invest directly into startups they think are cool and prosperous – things could look much better quickly. To market such a thing could be the responsibility of the Swiss government and if they don’t have the people who can do this, then it would be wise to hire smart and young people who can!

3. Reducing regulatory and administrative effort to a minimum

Administration and regulations slows down any process. This is the entire and obvious point: Innovation is trying to create something new, to provoke, enhance, and therefore change the system we live in.

The author of this (outdated) OECD research on productivity growth and innovation in Switzerland mentions that the conditions for creating new firms in Switzerland “are not as favorable as they could be”. To improve this, the report mentions that the Swiss need to revise their domestic market law, so that administrative and technical barriers to imports can be removed to reduce administrative burdens. This is also what BCG concluded in the report mentioned earlier.

4. Innovation leaders in Switzerland (allow innovation leaders to capture proceeds from their efforts)

Who are the people that could bring real innovation in Switzerland? I bet young people do. I also bet that thousands of seemingly ordinary people in large corporations do so too, only if they’d be given the chance… This means that companies need to revise how they do things, while loosening up controls to some extent. Most people are innovative, but our current system just does not really allow such creativity and excitement (=innovation, remember?) to happen. I really get fed up by living at the standards most people live by. First thing schools tell us is to unlearn to be creative and learn how we can be a “cog in a machine” as Seth Godin explains.

I think that the individuals who do choose not to be a cog in a machine should be rewarded for the ideas they have and how they execute them. These are the true leaders that push innovation forward and it’s the duty of everyone around them to help these individuals achieve their goals. It’s in your interest too, because new ideas and innovative leaders bring success to entire teams, communities, and organizations. I mean this in the broadest sense as possible. Let me give you some hints on how you could get started. You might fall within one of the two target groups:

Are you wealthy? à invest some of your money in startups directly. You can then tell your friends you’re a business angel and support entrepreneurship and on the other hand you really play a key role in enabling change and innovation. It’s like voting: it starts with you!

Are you a boss? –> continuously encourage your employees to think for themselves and ask them how they think they would improve the department or project you’re responsible for. You will get rewarded for it by your team (you value their input), as well as by your superiors (you deliver fresh approaches and remarkable results). If you’re a smart person, you’ve already hired just employees who are smarter than you are on your team.

So far the deciding factors on how innovation is achieved according to the quote of Andreas Schönenberger’s. I’d like to add two more factors that have not been discussed much yet.

5. Switzerland as a brand

This was a “picture of the day” from Facebook of a friend of mine. Clearly, she’s an artist (thanks Elena!). You should take the image above with some irony, but the text is kind of true. Even though “Made in Switzerland” stands for quality, Switzerland is not known for its openness or attraction (and retention!) of intellectuals from abroad, nor are the Swiss themselves famous for being emotional (in public at least). Cultural factors like these could explain the absence of a truly open, entrepreneurial, and innovative Switzerland. You can’t blame people for having a conservative attitude or culture, but you can blame the existing institutions that are responsible for boosting innovation for not doing a better job. If there are really no insiders that want to step up and make it their life-mission to really open up and pave the way to a truly innovative Switzerland, then why not buy the right knowledge = hiring foreign top talent and let them go wild in key decision making positions. Everyone will benefit!

6. Corporate mindset

I have already discussed some (dis)advantages of corporate and Swiss conservatism, that innovation is about accelerating your formal R&D branches, and that innovation should not be mistaken for invention. Another decisive factor for what I believe is blocking innovation in the corporate environment is what I call copycatting. Corporate people know it as the process of gathering peer “best practices”, or “benchmarking”.

Innovation is the only way how companies can gain a competitive edge these days. With SOMESSO we work with quite a few global brands on social business and strategies and we see that banks and insurance companies are always keen to obtain “best practices”. No one seems to object that this is a waste of time and that this way is not efficient gaining a competitive edge. Best practices are nothing more than benchmarking what your competition is already doing and therefore do not provide added value at all, except for some minor insight into what you don’t want. Conducting best practices slows you down too, because once the report lies on the table of the manager (and then what?), competition has moved on with new initiatives already and once again you are again lacking behind.

It’s entertaining to learn that the so called Swiss Innovation Forum – search result nr 3 in google on “innovation in Switzerland” – has literally written in their mission statement that they exist as a platform to offer entrepreneurs best practices and benchmarking strategies. If you type in their website address without www in your browser, the website doesn’t load….how’s that for cutting edge innovation! I don’t think that the TED forum should be afraid for competition from this corner.

7. Who are the existing players?

Besides the above mentioned Technopark, there’s the Amt für Wissenschaft und Arbeit, some local venture capitalists like Redalpine, Mountain Partners, and Brains to Ventures. Have a look on their websites: I like brains to ventures as at least the team members smile on their profile pictures. The others do not look very approachable to me (serious men in suits and no single woman on their teams!), even though I respect some of the names listed there. It seems that there is hope though: this EIS report from 2009 compared innovation performance in Europe and concluded that Switzerland has risen in being innovative due to its very rapid growth in venture capital.

Other associations that contribute to innovation in Switzerland in certain ways are startzentrum.ch, the SECA, the IFJ (consists of venuturekick, venturelab, startup.ch, and some others, but it’s one organization), gründen.ch and the already mentioned Innovation Forum.

My personal selection of organizations and individuals that I believe really contribute to a more innovative Switzerland are the Gottlieb Duttweiler Institut with their mission, event content, and “next practice” (not best practice) researches. Also Alexander Osterwalder pulls together a lot of innovation from all over the world. While Alexander is Swiss, Switzerland benefits. Also, Brainstore in Biel is another great example, but I’ve heard from several ex-employees that the company is not doing too well and might be dissolved. The Brainstore concept on its own is a great one though, as they mix business with art. I’d love to be involved in a company like that (if you have a suggestion, let’s discuss it).

How can we make Switzerland more innovative?

Being an entrepreneur myself, my mission is to improve the ways corporations communicate and do business today. When I founded my first company I was (and still am) frustrated about the way people communicate and blindly accept corporate culture and politics in the organization at the instants they start working there. Below are some of my suggestions how innovation in Switzerland could be fostered in Switzerland.

1. Listen, Ask & Synergize. Government bodies, venture capitalists, business angels, and the above mentioned associations, please listen to the entrepreneurs you are providing a service to. Lars Hinrichs (CEO of XING AG) has just started out with a great new venture that does exactly that: listening and fostering innovation. It’s called Hackforward. This video explains it all. I think VC’s and business angels could definitely learn from this friendly, open, and clear approach to tackle new projects. Try to understand the world of today’s entrepreneurs and what makes them tick; take the lead in this by organizing meetups throughout the country on a monthly basis, twitter what’s happening both online and offline to strengthen your community / network, collaborate with your end users and learn from each of them. Remember, virtual always fosters physical. Hire young entrepreneurs into the above mentioned government bodies and associations, listen to them and allow them to make mistakes. When giving them a budget and responsibility and perhaps let them lead the entire unit, you’ll be surprised about the results. Age doesn’t matter – ideas and persistence matters.
2. Focus on sustainable profit. Forget direct ROI and see the broader picture. Innovation is not invention. Instead, innovation is sustainable profit, while invention is short term profit. It’s not the great food served at Google HQ (prepared by Hiltl catering) in Switzerland that makes Google such a wanted employer; it’s the amount of freedom and mandatory amount of “thinking along”. Here’s one funny initiative of how Google does this. People are happier, which results in less problems, loads of free mouth-to-mouth marketing, and an ever-sustainable company that adapts with time and trends.
3. Don’t be an island. Collaborate with the rest of the world. Look at how Alexander Osterwalder wrote a book with 470 co-authors, or at what kind of international speakers and themes the GDI fills their agenda with (hey, I even did the very first SOMESSO conference there!). The Internet has fast forward this trend – now make use of it.
4. Foster controlled chaos (diminish bureaucracy). Less control = more chaos = room for ideas = environment for innovation. Invest in innovation without knowing the exact outcome! Go for gut-feeling – it will feel good! Think think-tank, think real incubators (no technoparks) that encourage innovation through cutting-edge workplace design, or through personalized design like in the former soap factory where I work. On the other end, decrease the amount of rules and bureaucracy, while allowing the rules and regulations to be loosened up to encourage entrepreneurship in the country. Government should take the lead in this. Provide easily accessible information in both English and German. You might want to start with entry and exit points, like current unemployment rights and bankruptcy laws. A leading company that only experienced financial growth since its initiation in 1958 is Gore-Tex. Here’s an amazing interview article with their CEO Terri Kelly. They have no hierarchy and use social media to synergise and accelerate collaboration inside and outside the company. In short, they benefit financially and socially from allowing controlled chaos to happen. Chapeau!