RESEARCH REPORT

In brief

In brief

  • We highlight the pandemic as a change catalyst, mark future priorities, and reveal how establishing a New Digital Core drives sustainable success.
  • In 2019, it seemed successful companies would continue developing proactive business models to maintain growth. COVID-19 changed everything.
  • Some companies managed the crisis, while others struggled to sustain momentum and lost out. We sought to find the secret recipe.
  • Swiss companies Syngenta, Zehnder, Lonza, and VAT share a common success factor. They kept innovation in focus and navigated the crisis effectively.


A calm before the storm?

If 2020 showed anything, it’s that outdated business processes are vulnerable and the future is uncertain. But that’s not all. Through our study, we have realized that companies which came out of the crisis unscathed share common characteristics. They were — and are — focused on innovation and demonstrated enough operational agility to push on despite the crisis.

From our sample, Swiss companies Syngenta, Zehnder, Lonzo, and VAT managed to do just that, and that aforementioned strength to innovate lives on and will continue to live on in the post-pandemic world. But for many other companies, changes that COVID triggered should be embedded enduringly in company culture and in all activities.

Again, based on our sample, the medical technology industry, consumer goods manufacturers, and construction companies were the best performers – in terms of growth and profit – in the pre-pandemic year of 2019. That said, turnover had somewhat dwindled across all industries compared with previous years.

In 2019, turnover was smaller than in previous years. This applies to many industries. Yet things look a little bit different when referring to profit margins.

The chemical and pharmaceutical industries, were far above national average profit margins and growth rate in 2019.

Companies which have come out of the crisis unscathed share common characteristics. They were – and are – focused on innovation and demonstrated enough operational agility to push on despite the crisis.

Examining the Swiss macroeconomy

It was expected to shrink by 3.3 percent in 2020. However, Switzerland’s GDP will not suffer as once thought, especially given other European countries’ forecasts. The average EU state’s GDP is expected to decline by more than 7 percent in 2020: in Germany the predicted decline is 5.5 percent, and in Italy and France – more than 9 percent. This shows that despite the repeat lockdowns and contact restrictions, the Swiss economy is showing its traditional resilience.

The ultimate game changer

Overcoming the crisis is one thing: But it’s just one stepping stone on the path to a secure post-pandemic future. One thing is certain. COVID-19 will prove to be an important catalyst for change. The following trends, which gathered steam during the crisis, should remain in focus.

The customer is digital

Consumers in emerging economies shifted to online shopping and contactless payment during the pandemic, contributing 22 billion Swiss francs.

The workplace is becoming decentralized

Around 40 percent of those in employment worked from home during the pandemic. A combination of remote and on-site work is now a growing trend.

Business processes are vulnerable

Many companies witnessed disrupted supply chains, which led to dependencies on individual suppliers whose inventories quickly diminished.

The future remains uncertain

Post-COVID uncertainties could halt decision making. Only the most courageous will come out on top.

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Fight or flight? How Swiss companies responded

Drawing from over 200 Swiss and other European companies’ financial data for 2020, we have discovered that Swiss companies have responded comparatively well to the crisis. They increased their return on equity and profit. But, naturally, things look different sector by sector.

For example, consumer goods and industrial equipment manufacturers alike improved performance values in spite of the crisis, whereas the retail sector lost ground compared to other European economies. The fact that retail was in a weakened position before the crisis didn’t help matters. A lack of digital scaling and unwillingness to develop ecommerce solutions is also to blame here.

Nevertheless, it seems as though many companies have recognized the need to catch up and initiatives are being rolled out to drive the digital transformation of the Swiss retail sector. The graphic below puts things into perspective.

Top-performing industries during 2020 were the chemical industry and consumer goods industry.

In the first half of 2020, Swiss companies performed above the European average (100) on all accounts displayed.

Through relentless innovation, Basel-based agrochemical group Syngenta increased its EBIT margin at an above-average rate in a rather low-margin industry and outperformed competitors.

Lonza shifted from specialty chemical production and into pharma during the pandemic. Within eight months and investments of CHF 70 mil, a site was built in Valais to manufacture 100 mil vaccines per year.

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Into the new normal

The world has changed significantly, and lessons learned during 2020 and the first half of 2021 should provide a foundation for sustainable growth in years to come. A strong focus on innovation and operational and strategic agility are such prerequisites, as they show that it is possible to capture new markets and thrive – even in a downturn.

We have gathered valued requirements for future success. Developing a digital core brings innovative models to life through cloud adoption, forming the digital heartbeat of your company. By combining the cloud with other digital technologies such as AI, analytics and IoT, it is also possible to make far-reaching decisions in radically less time and implement measures correspondingly faster. This greatly increases the operational speed and strategic agility of any company.

With a New Digital Core

The New Digital Core is the true prerequisite to unlock hidden corporate value and deliver new value propositions. It is in essence a digital representation of a company in the cloud: connecting applications, services, and data end to end. In that way, automated and intelligent processes can be developed to create a common thread in all business areas. Partners and customers can be integrated into the New Digital Core as well, bringing companies closer to their customers and creating long-term loyalty. A holistic transformation of both processes and principles holds the key to new forms of internal collaboration and of working together in business ecosystems.

The graphic below shows which approaches will be of most importance in the post-pandemic world and reveals how a New Digital Core contains all the necessary ingredients for long-lasting success.

Combining technology, value creation, processes, and principles, the New Digital Core is at the heart of the digital transformation.

The New Digital Core: The concept

Marco Huwiler

Country Managing Director – Accenture Switzerland

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