Swiss Watchmaking’s Comeback: Create a New Dimension of Competition

Swiss watchmaking’s fightback against Japanese quartz watches Switzerland was once a mechanical-watch powerhouse. How could it compete against Japan’s inexpensive, accurate quartz watches? ---- Quartz watches were invented by the Japanese, who developed a more accurate timepiece than mechanical clocks and watches for the 1964 Tokyo Olympics. As quartz watches emerged as mature commercial products in the 1970s, Swiss watchmakers felt a tremendous threat. Quartz watches offered several advantages over mechanical ones: 1. Greater accuracy. 2. Convenience: no daily winding, and no worry that a watch will stop when not worn. 3. A price advantage. Swiss watchmakers’ situation resembled that of traditional-product businesses suddenly disrupted by the internet while still operating under traditional business models. Their business predicament: They considered a price war and making quartz watches to compete with Japanese companies. But production costs were difficult to reduce in high-welfare Switzerland. In quartz watches, they had no technological, manufacturing, or cost advantage over Japan. Swiss watchmaking found a hero: Nicolas George Hayek, Swatch’s founder and chairman. 1. Assess the situation Hayek knew Swiss quartz-watch production was expensive. Competing with Japan solely on basic functionality—telling the time—would trap Switzerland in a battle over value for money it could not win. He therefore had to rediscover and redefine the watch. 2. Cultural advantages Europe possessed a distinctive advantage: culture. As Japan’s economy rose, Europeans pushed back against its economic model. The French, for example, called the Japanese “economic ants”: they knew only work, not enjoyment, and did not understand a world beyond work and money. Led by France, Europeans criticized Japan’s economy and lifestyle while becoming more conscious of the cultural advantages of their own ways of living and their products. 3. Find a new dimension for watches Inspired by French fashion, Hayek brought French fashion designers together with his own designers to redesign inexpensive quartz watches, giving them a new dimension: fashion. Swatch closely linked each watch’s shape and color to particular garments or clothing styles. By fitting watches to fashion, it quietly gave them a fashion function. Swatch’s characteristics Become part of an outfit and its finishing touch. Follow fashion’s logic and rhythm, releasing multiple Swatch designs in spring and fall. Follow the fashion industry’s unwritten rule of constantly introducing new designs, deliberately making existing styles dated. Swatch transformed watches from durable consumer goods into fashion products. Redefining them added a new dimension. Women who had not worn watches began wearing them, even several different watches within a year. As they changed clothing styles, they changed watches to match. Japanese quartz watches might be inexpensive and function well, but they failed to appeal to fashion-conscious women. By adding this dimension, Swatch gained an advantage through a higher-dimensional approach within the very category Japan had invented. 4. Find a new dimension for mechanical watches Born in Lebanon in the Middle East, Hayek drew inspiration from Middle Eastern culture to give mechanical watches a new dimension: luxury. The Middle East has a strong religious character. Many wealthy men must wear traditional clothing, with little variation. Clothing alone is therefore insufficient to signal identity and distinguish oneself. Men like watches but rarely wear jewelry. In a sense, watches are men’s jewelry. At the time, Swiss watch pricing was disorganized. Even long-established brands with exquisite craftsmanship and fine construction were not fully differentiated in price from relatively ordinary watches. Their designs were not always clearly distinct either. Jewelry should reveal its value at a glance. Turning a watch into jewelry therefore required substantial design work and strict price segmentation, allowing different watches to signal clearly different identities and status. The luxury logic of men’s mechanical watches: Practical utility accounts for a very small share of total value. Consequently, timekeeping becomes less and less important among the watch’s overall functions. Price is part of value. It distinguishes me from others; wearing the watch signals membership in a particular circle. Swatch Group made numerous acquisitions to create a complete portfolio. A group known for relatively inexpensive quartz watches thus established a mechanical-watch system spanning large price differences and varied product forms. Highest price tier: Breguet, Blancpain. High tier: Longines, Rado… Middle tier: Tissot, CK… Affordable tier: Swatch… --- Europe’s medieval knightly tradition In the age of knights, each knight had a shield showing the kingdom and people he served, his identity, and whether he held a junior or senior position. Modern armies have rank systems. Officers at different levels wear corresponding badges and uniform insignia, making their status immediately apparent. Each Swiss watch functions like a badge, clearly displaying its wearer’s identity and status. People choose their place in this product system according to the standing they wish to convey and their financial means, buying the corresponding product. --- Swatch Group created a protective barrier for Swiss mechanical watches against Japan’s formidable quartz challenge. When Japanese quartz watches attacked with tremendous momentum, Swiss watchmakers were driven to discover a new dimension: clearly defined luxury and jewelry. Swatch persuaded people who had not worn watches to wear not just one but several. It also persuaded men—who rarely wore jewelry—to wear jewelry in the form of a watch, or, if you prefer, a knight’s badge. Put simply, Swiss watchmakers established a new dimension and used it to compete against Japanese watches operating on fewer dimensions. The outcome was self-evident. #得到吳伯凡日知錄 (Wu Bofan’s Daily Record of Knowledge on Dedao, descriptive title) ----- Robin’s commentary When stronger competition emerges—such as Japanese quartz watches challenging handmade Swiss mechanical watches with traditional strengths of accuracy, low price, and convenience—the Swiss did not seek to compete on price. Instead, they created new competitive dimensions: fashion, status, luxury, and more. When facing competition, do not battle to the bitter end on just one existing dimension. Take stock of your strengths and find a new dimension. You may achieve a comeback as complete as that of Swiss mechanical watches.