Study of Innovation Switzerland: How innovative is the Swiss industry?

Editor: Franziska Breunig

The Swissmem association has conducted a study on the innovative capacities of the mechanical and electrical engineering industries (MEM). The results show that highly innovative companies have a clear strategy.

In order to be highly innovative, a clear innovation strategy and innovation partnerships are required.
In order to be highly innovative, a clear innovation strategy and innovation partnerships are required.
(Bild: MEM)

The economic situation in the MEM industry still remains weak in many places. In many companies the profit situation remains unsatisfactory. As many as 23 per cent of MEM companies have closed the last year with a loss at EBIT level. However, adequate profit margins are essential for survival because this is the only way companies can have resources to invest in the future. For companies manufacturing in Switzerland the path leads to profit above all the innovations.

The report «Research and Innovation in Switzerland 2016» prepared by the State Secretariat for Education, Innovation and Research confirms that Swiss MEM companies are successful in innovation. To get a clear picture of the success factors of innovation as well as the tips for improvement, Swissmem together with the University of Applied Sciences of North-West Switzerland interviewed the member companies about their innovation activities.

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Innovative capacity of MEM industries

In MEM industries, companies from mechanical engineering, electrical and electronics fields often bring outstanding product innovations to the market. Companies in the metal industries, on the other hand, on average are more successful in process innovations. The number of innovations is dependent on the size of the company. The bigger the company is, the higher is the number of innovations. In the years between 2014 and 2016, six out of ten SMEs have introduced new products with revenues of up to 5 million francs. For companies with revenues of more than 50 million francs, more than 90 per cent have introduced innovations in the market.

Ideas come from all departments

The primary source for new product ideas is the internal research and development (R&D).

Companies that create product innovations, moreover, have significantly more R&D employees than companies without product innovations. Other important idea providers are the top management, people from marketing, sales and product management and the customers.

Business strategy and culture are essential

The study clearly shows that innovations do not come about by chance. A clear innovation strategy and long-term planning of the innovation activities correlates with both product as well as process innovations. The more the management manages to create an environment for promoting innovation and higher the commitment of employees to the company's innovation strategy, the more the companies will have successful innovations introduced in their enterprises and markets.

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Balancing between freedom and severe management

In order for the commitment to innovation to come into effect, it requires distinct cooperative operating processes. These should be accompanied by an effective control system. Such a system creates transparency and ensures that the objectives and benefits of the innovation activities are achieved. Thus a good balance between freedom for employees and severe management is important for the innovation success. Companies that achieve this balance are distinguished by a significantly higher innovation performance.

Importance of innovation cooperation

Companies that enter into innovation cooperation, have twice the chance to innovate products than those which do not. In the period 2014-2016, nearly 50 per cent of the responding Swissmem member companies collaborated with third parties in innovation activities. This percentage is comparable with other industries.

According to a survey, the most valuable collaborating partners are the customers, followed by universities, R&D institutes as well as suppliers.

The greatest obstacles to co-operation are the lack of financial or human resources. This is a problem with 23 per cent of the MEM companies, with another 45 per cent suffering from it. The size of the company also plays a role. The smaller the company, the more likely the resource problem is an obstacle for cooperation.

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