The first wave of digitization is already redefining the global economy. Artificial intelligence, automation, digital labor and the mobile economy are a reality. And there’s more on the horizon. If Switzerland is to master the digital revolution and secure a leading role for the future, it must face and manage major disruptive forces.
What’s at stake?
Digitalization set Industry 4.0 in motion with the epicenter of innovation situated in Silicon Valley. This places the Swiss economy at risk of losing its autonomy and threatens its ability as a business location to attract multinationals. In the coming years, Switzerland must learn not only to circumvent digitalization’s disruptive forces but also to make the best out of them. To do so, Switzerland can apply its strengths, but will also have to overcome its weaknesses.
Facing the challenges: Drawing on strengths and overcoming weaknesses
These five major disruptive forces will impact business globally in the future:
- Race for the customer as consumer demographics, behaviors and expectations drive businesses to become more customer-centric
- Mobile economy based on a combination of high-performing and low-cost devices, high-speed wireless connectivity and apps, often leveraging cloud computing
- Internet of Things as networks of sensors in machines and actuators in machines and other physical objects act on, monitor, collect and exchange data
- Digital labor as knowledge and expertise-intense (white-collar) professions are disrupted by cognitive systems, artificial intelligence and robotic process automation
- Platform business models that facilitate the exchanges between interdependent parties, reducing transaction costs and enabling innovation.
Switzerland must leverage these forces to secure a leading position by taking advantage of its well-known strengths as a business hub – strengths such as its political stability, direct democracy, competitive taxation and effective data protection laws.
On the other hand, it’s not all smooth sailing. Switzerland will also have to successfully overcome its weaknesses, such as its risk-aversion mentality and disapproval of entrepreneurial failure, the widespread lack of confidence to think big regarding business ventures and its comparatively high labor costs.
Seven visionary business ideas for a sustainable future
In our most recent white paper “Shaping Switzerland’s digital future” we’ve outlined seven visionary business opportunities that could position Switzerland center stage in the digital world.
1. Digital labor hub
The global digital economy will radically reshape value chains. As demand grows for digital and tech-savvy competency areas such as data analytics, outsourcing to low-cost countries may lose appeal. Switzerland offers outstanding conditions for serving as a global labor hub including its well-developed infrastructure, political stability, competitive taxation and effective data protection laws. Still, to secure this role, Switzerland must increase its investment in education and research.
2. Data custodians to the world
Data is the currency of the digital age. Boasting an international reputation as a trustworthy and reliable partner, Switzerland ranks second in Europe in terms of gross data-center surface area per capita with 1400 private or public data centers based here already. In order to position the country as the world’s data trustee, policy must create an ideal framework for growth while striking the right balance between data protection and transparency.
3. Fintech valley
Years of experience in the banking and insurance sectors combined with technological expertise means that Switzerland has the right stuff to be a leading provider of digital financial services. Currently, however, fintech development is primarily geared towards the small national market and has yet to make more of an impact internationally. At the same time, the high cost of labor and lower productivity is dampening Switzerland’s competitiveness in this field.
4. Robust industrial controls
Industry 4.0 is built upon functional control and defense mechanisms. Without these security systems, malfunctions or cyberattacks on critical infrastructure such as power plants threaten catastrophe. Today, cyber security know-how is scarce and monopolized by global leaders. In order to prevent a critical shortage of highly specialized engineers in the future, now is the time to promote a more liberal approach to education and immigration policy.
5. Robotics in healthcare
Technical progress in robotics and changing demographics of an ageing society are already redefining healthcare. The increased use of robots in hospitals and nursing homes could turn the tide of the rising cost of caring for an ageing population. Already a leader in robotics research, with forerunners such as the ETH Zurich and Lausanne, Switzerland must now successfully channel its institutions’ innovation towards the future of healthcare.
6. Switzerland as an incubator for design thinking and global innovation
Creativity, collaboration and constructive problem solving will also be highly sought after in the digital future, perhaps increasingly so. Switzerland has a solid reputation as a location for different international organizations and events such as UNO and WEF. To grow its position as a creative hub, Switzerland needs to continue to facilitate the exchange between business, politics and science. However, finding ways to monetize this effort remains the greatest challenge.
7. Direct democracy as an export
The Swiss system of direct democracy is even more relevant in a time characterized by campaigns that can either be made or broken by social media. A model for other countries, Switzerland can export its successful model of democracy “Democracy as a service” (Daas) – in combination with new technologies. Before doing so, Switzerland must first ramp up its credibility in e-government and push for its national Digital ID.
More innovation, positive business culture and pragmatic regulations
Major forces are radically reshaping our world and the role we play—creating not only uncertainty, but also unprecedented opportunity. While we cannot always predict what the future will bring, we can envision what’s possible, prepare and take bold action. To play a central role, fostering cutting-edge research and education is essential. Moreover, Switzerland will need to align its attitudes and policies to convince the world’s brightest minds to pursue their big ideas in Switzerland.
KPMG’s whitepaper: Shaping Switzerland’s Digital Future