Switzerland’s Top500Capturing the Digital Opportunity

In association with

Introduction 3

Executive Summary 4

Switzerland’s Growth Champions 5

Digitization Survey and Financial Analysis 7

Industry-level Findings 8

Company-level Findings 11

Digital Showcases 15

Conclusion 16

References 17

Sources 18

Contents

IntroductionFor the fifth time since 2012, Accenture has identified and analyzed the top-performing companies from among the 500 largest in Switzerland. This year’s analysis focuses on how Switzerland’s Growth Champions outperform their industry peers in business environments that are increasingly shaped by digital technologies.

Unique opportunities exist at the threshold of the digital age. The rapid development of digital technologies during the last 10 years has enabled entrepreneurs and incumbents alike to transform business models that were created under the constraints of the industrial age. Digital innovation has moved beyond the preserve of information and communication technology companies to become a bare necessity for any company.

The stakes are high. Digital innovators are disrupting the status quo and taking over market shares from companies that lag behind in adopting digital technologies.

The growth and performance levels digital innovators can achieve are extraordinary—as demonstrated by the technology giants Google, Apple, Amazon, and Microsoft, which now all rank at the very top of the world’s most valuable companies and brands.

Capturing this digital opportunity is particularly important for Switzerland and its business community to counter the negative economic effects of the appreciation of the Swiss Franc.

The IMD World Competitiveness Center and Accenture teamed up to explore how the digital strategies of Switzerland’s fastest growing large-cap companies fared against those of their competitors. We identified 44 Growth Champions—companies that achieved an average annual growth rate of 6.1 percent in 2010–2014.

By surveying these and other large Swiss companies, we have found that Growth Champions, compared to other companies, have more advanced digital strategies, attribute larger proportions of their sales and profits to digital activities, and have better governance structures in place to benefit more from digital.

We have used the responses of leaders from all sectors of the Swiss economy on their perception of digital to provide a snapshot of how digital is transforming the competitive landscape. While there are few developments that apply equally to all industry segments, our findings confirm a consensus among respondents that digital fundamentally reshapes companies’ value-creation strategies and business models. In some industries, there is also a digitally induced acceleration of the overall pace of innovation and a more pressing need for novel digital products.

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Executive SummaryDigital transforms business. This is increasingly apparent both in the strategies of Switzerland’s largest companies and in the Swiss economy as a whole. Product innovation cycles shorten, digital services abound, and the way customer value is created is continually revised. Switzerland’s Growth Champions fare better in this challenging environment. Does this mean Switzerland’s best-performing businesses are also better at being digital?

Working closely with the IMD World Competitiveness Center, we have identified 10 key findings on how digital technologies impact the competitive landscape and business strategies of Switzerland’s largest companies. Of these findings (see Figure 1), four stand out as being the most applicable across various sectors of the Swiss economy.

• Digital technologies are fundamentally transforming the way business is done.

• Successful Swiss companies take a lead in the disruption of their industries.

• Successful Swiss companies make digital an essential part of their business strategy.

• For successful Swiss companies, digital strategy is a C-level responsibility.

Detailed explanations and implications of these findings are outlined in the following part of this study.

Figure 1: Key Findings of the Digitization Survey

Perspective Effects and Areas Findings

Digitization

Competitive ContextSwitzerland

Differentiators of Growth Champions

• Digital products and services are on the rise• Industry clockspeeds increase as product innovation cycles become shorter

• Entry barriers erode • Several industries feel digital pressures to “rightsize“• Value-creation strategies are revised along digital lines in all industries

• New competitors increase pressure to transform

• More Growth Champions are disruptors • Growth Champions make digital an essential part of their business strategy

• The C-level shapes the digital strategy of Growth Champions

• Growth Champions have more ambitious targets for digital revenuesPerformance from digital

activities

Digital business strategies

Governance of Digital

Digitization of products

Arrival of new players

Industry transformation

4

Switzerland’s Growth ChampionsThe 44 Growth Champions we have identified this year are from diverse industries. They grew at an average annual growth rate of 6.1 percent in 2010–2014, leaving both their direct competitors and the overall economy far behind.

Table 1: List of 2015 Growth Champions

Company IndustryRevenue CAGR

2010-2014Average Profit Margin

2010-2014

Ems-Chemie AG* Chemicals 5.4% 15.7%

Sika AG* Chemicals 6.0% 6.4%

Syngenta AG* Chemicals 5.1% 11.7%

Lindt & Sprüngli AG Consumer Goods 6.9% 10.0%

Richemont* Consumer Goods 8.7% 14.8%

The Swatch Group SA* Consumer Goods 10.8% 19.0%

Agta Record AG Electronics & High Tech 4.3% 7.7%

Sonova Holding AG* Electronics & High Tech 5.9% 15.6%

u-blox Holding AG* Electronics & High Tech 24.4% 11.7%

ABB Ltd. Engineering 4.3% 7.2%

Belimo Holding AG* Engineering 3.7% 13.5%

Bucher Industries AG Engineering 8.4% 6.0%

Bühler Holding AG* Engineering 5.2% 6.6%

Burckhardt Compression AG* Engineering 8.2% 13.0%

Endress+Hauser AG* Engineering 7.9% 10.4%

Rapid Holding AG Engineering 4.8% 12.7%

Schindler Holding AG Engineering 3.1% 7.8%

SFS Group AG Engineering 3.6% 7.3%

Flughafen Zürich AG Logistics & Transport 3.8% 15.9%

Jungfraubahnen Holding AG* Logistics & Transport 4.8% 17.6%

Bachem Holding AG Pharma & Healthcare 4.7% 12.9%

Galenica Holding Pharma & Healthcare 4.3% 8.0%

Lonza Group AG Pharma & Healthcare 8.0% 6.0%

Octapharma AG Pharma & Healthcare 6.5% 12.2%

Bossard Holding AG* Retail 6.7% 9.2%

Mobilezone Holding AG Retail 6.7% 6.9%

Bad Schinznach AG Services 3.3% 6.2%

Interoll Holding AG* Services 4.3% 6.1%

MCH Group AG* Services 5.1% 7.5%

SGS SA* Services 5.5% 11.3%

SIX Group AG Services 2.7% 15.3%

Energiedienst Holding AG* Utilities 6.2% 8.5%

Border Case (Average of all eligible) 1.6% 5.8%

The benchmark used for identifying the Growth Champions was the same as in previous years. We consider a company to be a Growth Champion when its average revenue growth (CAGR) and profit margins over the last five years are higher than the respective averages of both the overall sample and direct competitors in its industry.1 Table 1 lists this year’s Growth Champions.

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Compared with other companies in the sample, the 2015 Growth Champions are consistent outperformers. When looking at the non financial service (FS) organizations, the top-line CAGR of 5.7 percent2 stands in sharp contrast to the -0.3 percent the other companies achieved on average.

Similarly, they boast of a profitability margin that is, on average, twice as high as that of their peers—not only in 2014, but also in the four preceding years.

Figure 2 compares the performance of Switzerland’s 2015 non-FS Growth Champions with the performance of the other largest Swiss industrial companies.

Note: Companies marked with an asterisk (*) have also been Growth Champions in last year’s study. Bold printed companies have been Growth Champions throughout the last five years.

6,000

5,000

4,000

3,000

2,000

1,000

02010

3,177

5,054

3,366

4,799

3,710

4,990

3,851

4,963

3,967

4,993

2011 2012 2013 2014

Other companies2015 Growth Champions

+5.7%

-0.3%

654

3

210

4.7 %

10.5 %10.0 % 9.9 %

11.1 %11.7 %

Return on Sales (%)

3.9 %3.4 %

4.5 %

5.5 %

Avg: 10.7 % Avg: 4.4 %

121110

9

87

Data source: Bisnode/Dun & Bradstreet, S&P Capital IQ, Annual Reports Note: Chart excludes financial service companies

2010 2011 2012 2013 2014

Revenues (in CHF mn)

Figure 2: Performance of 2015 Non-FS Growth Champions Versus Other Companies

BanksTotal Assets CAGR

2010-2014Average Profit Margin

2010-2014

Bank J. Safra Sarasin AG Banks 18.4% 0.5%

Banque Cantonale de Fribourg* Banks 9.7% 0.7%

Basellandschaftliche Kantonalbank* Banks 6.2% 0.6%

Basler Kantonalbank* Banks 5.0% 0.5%

Graubündner Kantonalbank* Banks 4.9% 0.9%

Schwyzer Kantonalbank* Banks 5.7% 0.6%

St.Galler Kantonalbank AG Banks 5.7% 0.5%

Zuger Kantonalbank Banks 6.6% 0.5%

Zürcher Kantonalbank Banks 5.8% 0.5%

Border Case (Average of all eligible) 4.5% 0.5%

Insurance CompaniesGWP CAGR 2010-2014

Average Profit Margin 2010-2014

AXA Versicherungen AG Insurance 2.9% 9.4%

Schweizerische Mobiliar Insurance 3.4% 11.9%

Swiss Re AG Insurance 9.8% 13.2%

Border Case (Average of all eligible) 2.9% 7.5%

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Digitization Survey and Financial AnalysisUnlike earlier versions of Accenture’s Top500 study of Swiss companies, this year’s study does not explore the wide range of factors that may explain why Switzerland’s Growth Champions fare better than their peers. Instead, it focuses on the companies’ digital expectations, strategies and practices.

The empirical foundation of this year’s study is a survey we conducted jointly with the IMD World Competitiveness Center. The survey questions were derived from prior Accenture research on the strategic impact of digital technologies.

The questions ranged from industry- level to organization-level and captured perceptions about both the digital future of industries and individual company’s digital practices. The survey was sent to 7,387 executives of the largest Swiss companies, taken from the executive database of the IMD World Competitiveness Center.

Of the 396 executives who responded, 111 represented companies we identified as Growth Champions and 285 were from other companies.

To identify Switzerland’s Growth Champions, we studied the financial key performance indicators (KPIs) of the 985 largest Swiss companies, as given in the Top500 list compiled by Handelszeitung.3 301 of these companies are from the banking and insurance industries, while 684 represent 18 other segments of the Swiss economy.

From this overall sample, we considered companies as potential Growth Champions if their financial data for the period under consideration (2010–2014) could be retrieved, if they were headquartered within Switzerland, and if they were not significantly influenced by extraordinary events (for instance, we discarded Calida AG as its revenue doubled on account of a M&A). Real estate companies were not included because of their highly volatile results.

Our analysis then identified companies as Growth Champions if their average revenue growth (CAGR) and profit margins in 2010–2014 were higher than the corresponding averages of the overall sample and direct industry peers.

Companies’ top-line results were measured as assets under management for banks, gross written premium for insurance companies, and revenues for all other companies. Profit margins were calculated from the companies’ net incomes and corresponding top-line results.

“Communicating to the right people at the right time and with the right message is crucial in today’s business world. This is a key aspect of digitization for us. We need to reach our target groups through their preferred digital channels. We need to understand the requirements of our customers and prospects, align our strategies, and make use of tools to meet those needs.

We also support the megatrend of digitization with our products. We, focus on the “Internet of Things that Really Matter” – business critical IoT applications. Our wireless and GNSS semiconductors and modules enable people, vehicles, and machines to locate their exact position and communicate wirelessly over cellular and short range networks.” Sven Etzold, Senior Director Business Marketing, u-blox AG

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Industry-level FindingsDigitization is affecting industries in various ways. For Switzerland, our survey suggests that digital technologies are driving an increased demand for digital services, shorter innovation cycles, broad changes to value-creation architectures, and strong efficiency/productivity gains. The transformation pressure is high and new market entrants keep the momentum going in many industries.

Digital technologies can be deployed in many ways. To provide a structured framework for our findings, we identified three groups of industry impacts from previous research:

a. Product-related impacts, such as shortening of innovation cycles

b. Structural impacts, such as decreasing entry barriers

c. Impacts on the competitive landscape, such as the arrival of non-traditional competitors

The digitization survey included questions on all these impacts. We grouped the respective answers according to

Accenture’s industry classification scheme and derived insights into how digital technologies are penetrating and transforming Switzerland’s industries. Figure 3 presents a heat map of the respondents’ expectations with regard to product-related and structural industry changes.

Figure 3: Heat Map of Anticipated Industry Impacts

Note: A cell is marked black if more than 66% of the respondents checked the industry effect in the survey, dark grey if the rate was between 33% and 66%, and light grey if the rate was below 33%; N = 396. For indicating the “external pressure to transform” a different approach was applied: Cells are marked black if many new competitors with major or disruptive impact entered an industry, dark grey if some new competitors arrived with major impact, and light grey if only few competitors entered the industry with little to no impact (see Figure 4 for details).

Industry

Digitalproducts and services

Increased product complexity

Shorter innovation cycles

Lower entry barriers

Lower costs and market prices

Industry rightsizing

Revision of value creation logic

Convergence with other industry

Ecosystems center/platform to others

External pressure to transform

Automotive

Chemicals

Communications

Construction

Consumer Goods

Electronics & High Tech

Energy

Engineering & Machinery

Insurance

IT

Logistics & Transport

Media & Entertainment

Retail

Services

Utilities

Other Industry

Pharma & HealthcareResources / Raw materials (incl. trade of those goods)

Banking

mediumlow

high1 Digital products and services are on the rise

2 Product innovation cycles become shorter

3 Entry barriers erode

4 Digital pressures to “rightsize” arise 6 New competitors increase pressure to transform

5 Value creation logics become revised

Digitization of products Industry transformation New players

1

1

1

1

2

2

3

3

3

4

4

4

1

6

6

6

6

6

6

5

5

5

5

5

5

5

2

2

8

1. Digital products and services are on the rise Expected to materialize particularly in automotive, banking, communications, insurance and retail industriesThe digitization of products and services is high on the agenda of many industries in Switzerland. No matter what the product—be it a car, machine or service of any kind—a digital layer can be added that creates customer value. Customer value can take many forms, from individual customization over affiliation programs to the integration of traditional products or services with complementary digital offerings.

The latter form of value is particularly versatile and rich since it allows companies to create holistic solutions that more effectively meet the ultimate needs of the customer. Flughafen Zürich AG provides a compelling example of such a digital enhancement of a traditional service:

“Flughafen Zürich AG seeks to make seamless travel possible for all passengers and visitors of the airport. Therefore, we develop tools to guide them through all touchpoints from home to the gate (including parking, check-in, boarding pass control, security check, shopping and restaurants) and vice versa. This includes apps (for iOS and Android), mobile, website and desktop website, but also newsletters, push notifications etc.”Christian Bärlocher, Head Digital, Flughafen Zürich AG

2. Industry clockspeeds increase as product innovation cycles become shorter Expected to materialize particularly in automotive, communications and media & entertainment industriesDigitized operations and more open innovation platforms, which capture talent and ideas from a variety of sources, improve the ability of companies to innovate. New product innovations, therefore, tend to be both cheaper and better than earlier products. This decreases the economic half-life of products and accelerates the average rate of new product introductions. Larry

Downes and Paul F. Nunes of the Accenture Institute for High Performance found that digital technologies are driving this effect and paraphrased its most disruptive form as Big Bang Disruption in a 2013 Harvard Business Review article.4

The Top500 Digitization Survey suggests that Swiss executives, particularly from the media & entertainment, communications and automotive sectors, are experiencing an industry acceleration driven by digital technologies. Following the arguments by Downes and Nunes, media & entertainment, which is a sector strongly driven by ideas and creativity, benefits greatly from capturing outside knowledge and can, therefore, accelerate innovation by using digital technologies.

3. Entry barriers erode Expected to materialize particularly in communications, media & entertainment and retail industriesAnother often-cited effect of digital is the blurring of industry barriers.5 Of the multiple (digital) reasons for this phenomenon, the most obvious and easy to grasp is the growth of the Internet and its mobile companion, the smartphone, as a channel that provides access to each and every customer—to any company irrespective of the company’s original industry affiliation or legacy.

Switzerland’s retail, media & entertainment, and communications companies are the most exposed to this development. Their traditional distribution networks and other largely fixed cost assets, which were once their industries’ main entry barrier, have become, in the best case, complementary channels to the digital ones, or, in the worst case, heavy liabilities that need to be trimmed to a viable scale.

4. Several industries feel digital pressures to rightsize Expected to materialize particularly in banking, energy and resources industriesDigital technologies enable companies to establish smart processes that steer themselves efficiently. Smart processes come in many forms—from agile customer care processes, rule- or artificial

intelligence-based systems that take meaningful action on their own to platforms that eliminate excess production or slack. Digital smartness is bound to grow exponentially as the major limitation of its advancement will be overcome by the contextual data that the Internet of Things will produce.

Among the respondents of the Top500 Digitization Survey, those from banking, energy and resources see a digitally driven efficiency spike coming. They expect a “rightsizing” of their industry as their new technological foundations (driven by smart processes) materialize.

One specific example of a digitally driven rightsizing phenomenon can be seen in the rise of peer-to-peer solutions in the banking industry. Opposing money transfers from large numbers of participants are cancelled out against each other on platforms such as TransferWise by privately exchanging the funds rather than having banks involved in trading the currencies, and an increasing number of peer-to-peer lending platforms such as Prosper threaten to steer large parts of the global loan business right past the banks.

5. Value-creation strategies are revised along digital lines in all industriesExpected to materialize in most industriesGiven the breadth of opportunities companies can pursue to put digital to work, today’s ultimate challenge lies in developing creative and well-planned value-creation strategies that exploit the unique characteristics and benefits of digital.

This imperative is evident in most industries of the Swiss economy. As many as 57 percent of the survey participants agree that their industry’s way of creating value will be revised. Agreement rates were highest in media & entertainment (100 percent), insurance (91 percent) and banking (86 percent).

The insurance industry may serve as an example. The Internet of Things—with its battery of sensors and amount of real-time data—fundamentally changes when

9

and how insurers can assess risks. This has several implications. First, it allows pricing rules that accurately track the actual risk profile. Second, and more disruptively, it enables risk-mitigation measures that prevent losses. While identical in its outcome for the customer, loss prevention implies a massive change for the business models of insurers.

Further, from an operational standpoint, insurers need to turn their business from one operating on isolated stacks of data to one that operates on real-time data flows. Overall, digital forces insurers to redefine their customer value proposition and shift their paradigm from loss recovery to risk reduction.

6. New competitors increase the pressure to transform Expected to materialize particularly in automotive, banking, communications, IT, retail and utilities industriesTransforming a business to take advantage of new possibilities is not easy, despite the now clear motivation for incumbent companies to do so. Often, it takes different sets of capabilities to re-imagine value-creation. While the industrial age was geared for stability, the digital age is geared for innovation.

Incumbent companies often lack the capabilities and assets that are becoming core to digital business models (for instance, command of customer interfaces, data and analytics, and the ability to innovate digitally). While incumbents embark on the challenge of running the old and the new business side by side, entrepreneurs jump at the new and take the lead in transforming industries.

Figure 4 depicts the survey respondents’ perceptions of the new entrants and the transformative impact of these new players on their industries.

Which are the companies that flex their digital muscles to enter established industries? Our respondents named 229 companies that are disrupting their markets. Figure 5 lists them by frequency and reveals a clear power law distribution. It comes as no surprise that respondents see established and new companies with uniquely digital capabilities as their main challengers.

The now-mature American startups of the early computer and Internet years—Google, Apple, Amazon and Microsoft—are seen to challenge the status quo of most of the Swiss industry landscape. These leaders are followed by their younger siblings, today’s FinTech companies and startups. The only established Swiss large-cap company named among the main contenders is Swisscom.

Times mentioned

Company rank

25

20

15

10

5

00 20 40 60 80 100 120 140 160

Company Times mentionedGoogle 23Apple 14FinTechs 12Amazon 8Microsoft 6e-commerce companies 5Startups 5Aggregators 3Asian competitors 3LinkedIn 3Local companies 3Swisscom 3IBM 2

Figure 5: The New Competitors

“We are convinced that digital transformation will enable Bossard in creating innovative solutions which improve productivity of our customers. This is exactly what we mean by Proven Productivity.” Tee Bin Ong, Vice President Group Sales & Marketing, Bossard Group

Figure 4: The Competitive Impact of Digital on Swiss Industries

Impact of new competitorsTruly disruptive

Number of new competitors

External pressure to transform:

Communications

ITPharma & Healthcare

Energy Automotive

RetailUtilities

Banking

Insurance

Services

Chemicals

Resources/Raw materials (incl. trade of those goods)

Logistics & Transport

MajorOther Industry

Construction

Little to none

None Some Many

Consumer Goods

Electronics & High Tech

Engineering & Machinery Media & Entertainment

medium lowhigh1 2 3

12

3

10 10

Company-level FindingsThe digital transformation of industries is characterized by the changes organizations make to their strategies. By definition, the 2015 Growth Champions outperformed their competitors. The aim of this section is to investigate whether digitization has helped these champions achieve higher growth and profitability.

The findings at the company-level show how Growth Champions make digital a strategic priority not only in terms of shaping a digital strategy, but also from an organizational and financial perspective. Digital activities already contribute remarkably to Growth Champions’ revenues, and will do so even more in the future. From an organizational perspective, these companies have established an adequate governance model by making digitization a C-level responsibility.

Accenture’s Digital Strategy FrameworkThe digital revolution’s rampant speed and disruptive potential has forced companies to initiate a large number of change initiatives. However, these initiatives are often chosen opportunistically and lack an overarching strategic frame.

At Accenture, we developed a Digital Strategy Framework to guide companies in designing their portfolio of change initiatives in such a way that it leads them toward a digital business model. Figure 6 depicts this framework and illustrates the three value areas companies need to work on to make a successful transition to the digital age.

As the framework suggests, digitization is not an easy task. It calls for a transformation of the existing legacy business and, at the same time, a revamp of the business model along digital lines. Initiatives designed to transform legacy businesses focus on digitizing existing operations (x-axis) and the customer experience (y-axis). Initiatives aimed at revising business models target nothing less than the reinvention of the value-creation strategy of an industry. This is a totally different exercise that typically falls into the realm of entrepreneurs, rather than one that draws on the expertise of incumbent companies.

Figure 6: Accenture’s Digital Strategy Framework

Value Areas

1

3

2

Partial

Digitization

Do Nothing

External Focus

Digital

Customer

Digital

Business

Disrupt

(Sub-)Market(s)

Digitize

Customer

Experience

Digitize

Operations

Digital

Enterprise

Internal Focus

Accenture Digital Strategy Framework

Do Nothing: Risks for existing business model through digital activities of

competitors

Partial Digitization: Realization of EBITDA opportunities through

digitization of existing value chain

New Business Models: Realization of EBITDA opportunities through

development of new revenue streams enabled by a new value chain

Digital Consumer: Apply digital technology to address customers in a more

sophisticated way

Digital Enterprise: Apply digital technology to the existing value chain

(e.g. R&D) as well as support functions (e.g. HR) to increase productivity

Digital Business: Digitize your current business model or develop new

business models, generating profits based on digital technology

Three Strategic Options

New Business

Models

11

7. More Growth Champions are disruptors As today’s industries are transformed by digital technologies, organizations need to adapt their way of planning and implementing corporate strategies.6 In our survey, we found that Growth

Champions play a more disruptive role within their industry than their peers (see Figure 7). However, none of the insurance companies and merely 4 percent of the participating banks would describe themselves as disruptive. According to Mackenzie7, the challenge for the

Financial Services industry today is that technology entrepreneurs are entering the market and trying to fundamentally change it, which puts large corporates and their revenue streams at risk.

Figure 8: Digitization as an Element of the Business Strategy

Figure 9: Way of Embedding Digitization in the Business Strategy

8. Growth Champions make digital an essential part of their business strategyFor 86 percent of Growth Champions, digitization seems to be a more prevalent component of their business strategies than for companies with less growth (75 percent) as shown in Figure 8. Also, as illustrated in Figure 9, Growth Champions tend to

be more active in promoting digitization within their companies, and they develop business models accordingly. Nearly all companies (83 percent) see efficiency gains as the most important aspect of digitization, followed by the expansion into new business areas (44 percent) as shown in Figure 10.

Figure 7: Self-assessment on Being a Disruptor

18 %

82 %

21 %

79 %

All companies Growth Champions

83 %

17 %

Other companies

N = 357 N = 95 N = 262YesNo

Do you consider your company as a disruptor within your industry?

N = 393

Growth Champions Other companies

Is the topic of digitization an essential component of your business strategy?

Yes

No

75 %86 %

14 %25 %

If so, how is digitization embedded (or organized) in your company’s business strategy?

I don’t know/not applicable

Company reacts to digital competitive pressure within the industry

It is somewhat different

Company reacts to digital customer requests

Digitization is actively promoted within the company

Digitization is actively promoted within the company and new business models are developed

11 %

3 %

7 %9 %

14 %

2 %

22 %24 %

15 %

13 %

38 %

23 %

3 %

38 %

16 %12 %

40 %

10 %

Overall

Growth Champions

Other companies

385N

107

278

12

Figure 10: Aspects of DigitizationAccording to Accenture Strategy research8, digital front-runners show three main characteristics in how they define their digital strategies: They aim for revenue growth and new business models; they seek external inputs by actively involving customers and other stakeholders; and they set up an organizational structure geared for speed and adaptability.9

Among all respondents, the most common reason for not taking digitization into account when developing their business strategies is a lack of understanding and readiness for the topic among internal (employees, management) and external (customers, suppliers) stakeholders.

However, developing a digital culture and thereby ensuring successful growth of the business needs to start from within the company.10 Also, some organizations assume that their products are not yet ready to undergo digital transformation. Finally, for some companies, digital is not yet a priority since its impact and consequences cannot be fully anticipated.

9. The C-level shapes the digital strategy of Growth ChampionsFor 69 percent of the Growth Champions, the CEO and/or the CIO is responsible for the planning of the digitization strategy,

compared with 56 percent for their peers (see Figure 11). This suggests that the development of digital strategies is also more likely to be managed at the C-level. Building a digital culture starts at the top of an organization by leaders who serve as digital role models and promote a digital mind-set within the company.11 The relatively high ranking of CIOs, however, suggests that either digitization is being delegated to this function (rather than being a group management topic) or, less likely, that the role of the CIO is becoming a more strategic one.

“At Sonova we historically always had a high digitization degree, driven by available technologies and solutions for our customers. Radically new is the fact that Sonova has a dedicated Digital Transformation team and strategy, ensuring this is the highest priority in the future roadmap of the organization. The objective is to empower consumers and professionals by providing new digital solutions and opening up more options for future business opportunities and models.” Francois Julita, Principal Digital Health Solutions, Sonova

Overall

Growth Champions

Other companies

393N

109

284

Which of the following aspects of the digitization do you consider as particularly important for your industry?

Data monetization

Don’t know/not applicable

Digitization of products

Expansion into new business areas

Increase of efficiency

17 %

1 %

44 %

1 %1 %

20 %11 %

29 %39 %

83 %83 %

43 %45 %

83 %

32 %

Overall

Growth Champions

Other companies

381N

106

275

Which person or organizational unit is responsible for the planning of your company’s digitization strategy?

Other organizational units (e.g. Digital Lab)

Other members of the board

Head of strategic planning

Chief Digital Officer (CDO)

Shared responsibility of board members/senior executives

Chief Executive Officer (CEO)

Chief Information Officer (CIO)

29 %26 %

8 %6 %

34 %40 %

25 %

32 %

9 %

17 %18 %

16 %

11 %8 %

12 %

16 %17 %

15 %

18 %16 %

19 %

Figure 11: Governance of Strategy Planning

13

Figure 12: Proportion of Net Revenue Through Digital in 2014 and in Three Years

Figure 13: Proportion of Profit Through Digital in 2014 and in Three Years

Figure 14: Investment in Digitization in 2014 and in Three Years

10. Growth Champions set ambitious digital net revenue targets Overall in 2014, around half of the companies surveyed realized merely 0–5 percent of their net revenues through digital activities. Taking the future perspective into account, the growth of digital’s net revenue contribution looks more promising. As illustrated in Figure 12, 30 percent of Growth Champions expect digital to contribute more than 15 percent of their net revenue in three years’ time, compared with 16 percent of organizations that are not Growth Champions. Looking at investments, we observed that Growth Champions not only invest more than their peers in digital today, but will continue to do so in the future (see Figure 14).

From a profitability perspective, the survey indicates that Growth Champions have considerably higher profitability ambitions, especially when taking a three-year horizon into account. Accenture research12 shows that for most companies, revenues from digital13 are capped at around 15 percent of total revenues.14 That suggests that extraordinary strategies will be needed to overcome that threshold and to transform digital activities into profitable revenue streams.15

GrowthChampions 2014

GrowthChampions in three years

Othercompanies2014

Othercompaniesin three years

0%-2% 2%-5% 5%-15% 15-60%>60%

1% 3%

24% 11%

I don’t know/not applicable

21% 19% 23%

11%

0%-2% 2%-5% 5%-15% 15-60%>60%

20% 13% 32% 7%

I don’t know/not applicable

29%

29% 30%26%

6% 26%25% 14% 28%

1%

0%

0%

N (2014) = 281 N (in three years) = 297

GrowthChampions 2014

GrowthChampions in three years

Othercompanies2014

Othercompaniesin three years

0%-2% 2%-5% 5%-15% 15-60%>60%

35% 5%

I don’t know/not applicable

21% 17% 19%

3% 3%

11% 29% 27%27%

7% 16%24% 17% 34%

3%

1%

0%-2% 2%-5% 5%-15% 15-60%>60%I don’t know/

not applicable

24% 7%27% 23% 18%

1%

N (2014) = 294 N (in three years) = 313

GrowthChampions 2014

GrowthChampions in three years

Othercompanies2014

Othercompaniesin three years

N (2014) = 271 N (in three years) = 295

4% 1%

7% 27% 30%32%

10% 13%31% 17% 27%

1%

0%-2% 2%-5% 5%-15% 15-60%>60%

27% 21% 12% 11%

I don’t know/not applicable

29%

1%

0%-2% 2%-5% 5%-15%15-60%

>60%

46% 4%

I don’t know/not applicable

22% 15% 13%

2%

14

Digital Showcases AXAAxa Winterthur is part of the Axa Group,16 a leading global insurance and asset management company with 161,000 employees in 59 countries.17 According to Accenture’s Swiss Digital Index, Axa Winterthur is the digital champion in all four areas of the index (strategy, sales, service and enablement) among Swiss insurance companies.18

Axa’s ambition is to become the leading digital insurer.19 Leveraging its digital capability is one of the company’s key strategic priorities.20 As early as 2013, Axa founded the Axa Lab, which aims to foster innovation and digital culture companywide.21

Just one year later, Axa established strategic partnerships with digital champions such as Facebook and LinkedIn.22 From its alliance with Facebook, Axa expects to not only build a strong brand in the social network arena, but also educate its marketing and digital teams.23 The relationship with LinkedIn is about recruitment, distribution and marketing.24

In addition to these first-class partnerships, the insurer has introduced digital products and services that aim to make their customers’ everyday lives more convenient.25

One example is the My AXA app26, which integrates information from various sources and allows customers to handle all their insurance policies over the smartphone.27 Furthermore, the AXA Drive app, known in Switzerland as the Drive Recorder App, supports customers in improving their driving behavior.28 In 2008, with its Crash Recorder app Axa Winterthur earned the first place in the “Innovationspreis der Schweizer Assekuranz” ranking.29

This case study highlights the pole position of Axa as a truly digital insurer.30

As digital becomes an increasingly necessary prerequisite for insurers, it will be interesting to observe how Axa will continue to lead the way as a digital champion.31

“The digital revolution is having a long-term effect on the insurance sector, because with new electronic possibilities and technologies our customers can get better information and obtain individual solutions that are tailored to their needs.

As Switzerland’s largest all-lines insurer, we consider digitization to be an opportunity to learn even more about our customers’ requirements and to put them at the center of all that we do. Our digitization strategy is therefore meant to not only boost our innovation power and ability to bring about change but also to consistently pursue our vision of giving our customers the freedom they need, in addition to financial protection.”Antimo Perretta, CEO of AXA Winterthur

SIKASika is a specialty chemicals company with more than 17,000 employees and annual sales of CHF5.6 billion in 2014.32 Sika describes its organizational structure as decentralized and has 90 subsidiaries globally.33

“The Sika Growth Model ensures the long-term success and the profitable growth of our company. In this context, digital communication and digital processes steer a world of stakeholder networks that are interconnected, dynamic, and powerful. Sika therefore invests both in internal and external digital tools and activities. Those investments pay out: In the Comprend

web ranking 2015/16, the Sika internet website is placed third among all Swiss websites. It’s our ambition to continuously come up with innovative ways to add value for customers and all stakeholders. Here, digital platforms such as internet and intranet websites are reflecting information and communication but also entire processes that are aligned with the five pillars of the Sika Growth Strategy: Market Penetration, Innovation, Emerging Markets, Acquisitions and Values.”Dominik Slappnig, Head of Corporate Communications and Investor Relations

SIX Group SIX Group operates Switzerland’s financial market infrastructure and also offers infrastructure and information services to international markets. The Group is the result of a triple merger in 2008, when the former Swiss stock exchange SWX, clearing and settlement provider SIS, and international provider of payment transactions and financial information Telekurs joined forces.

SIX’s business is inherently digital and offers some insights into the economics of digital. Professor Peter Gomez, the former Chairman of the Board of Directors of SIX, stated in 2012 that the company’s business is a fixed-cost business with declining marginal cost.34 Adding volume to SIX’s platforms through international growth was, therefore, high on the company’s strategic agenda in the subsequent years.

Besides driving market efficiencies, SIX Group has been seeking to bring innovation to financial markets. With the recent surge in the number of FinTech companies, SIX Group has established its F10 FinTech Incubator in Zurich. The incubator’s mission is to make Zurich a global hub of FinTech innovation and innovative solutions.

“Consistent orientation towards digital banking is integral to the strategy of Graubündner Kantonalbank. Digitization not only impacts on how we interact with customers, however, but also on internal processes. Ultimately this will ensure our procedures become more efficient and geared more effectively to our customers’ needs.” Daniel Jörg, Head Product & e-Business Management, Graubündner Kantonalbank

15

ConclusionSwitzerland’s Growth Champions fare better than other companies in this new digital environment. They perform better because they use digital to drive their industries’ transformations, not just to defend their current positions.

The technological foundation of businesses is changing by leaps and bounds. With these technical advances comes the need for strategic change. Specifically, there are two paths companies need to navigate. First, they need to build a digital enterprise that drives efficiencies and serves the customer through all possible digital means. Secondly, they need to reinvent their industry’s value proposition and deliver value in a new and superior way.

These two directions are highlighted in Accenture’s Digital Strategy Framework in Figure 6 (see page 11) as Partial Digitization and New Business Models. They are also reflected in the responses of the participants of our Digitization Survey: On one hand, respondents stressed the role digital plays in increasing efficiencies; on the other, they broadly agreed on the need to revise the value-creation strategies and business models in their industries.

To master this dual challenge, companies need to embark on a journey that will transform them into a truly digital businesses—one that is directly tied to digital base trends and benefits from the further progression of digital technologies. The Internet giants are ideal examples of digital businesses. They offer valuable insights into the assets and capabilities that will drive success in the digital age. Mastery of customer interfaces, data and analytics capabilities, and the ability to smartly connect parties seem to be increasingly important differentiators.

How can companies better prepare for the digital future? From the above arguments and the insights provided by the 2015 Top500 Growth Champions, we can make the following recommendations: 1. Digitize operations with a focus on

reducing costs and increasing flexibility.2. Develop more holistic customer value

propositions.

3. Think beyond your organization and (A) engage in ecosystems for product/service manufacturing, innovation and distribution and (B) systematically integrate outside knowledge flows (e.g. through Open Innovation) to boost innovation.

4. Do not shy away from cannibalizing your own business.

5. Ground your initiatives in the rapidly advancing digital technologies.

The 2016 Top500 study will show to what extent their better ‘command of digital’ will help this year’s Growth Champions stay on top of the Swiss economy, despite the increasingly challenging economic conditions, partially triggered by the abandoned franc-euro peg. As for now, it is reasonable to assume that a strategic approach to digitization produces the business agility that allows companies to better adapt to rapidly changing economic realities.

“The Schwyzer Kantonalbank (SZKB) designed her business strategy 2014–2018 three years ago and identified already then that digitization affects solutions for customers and also internal processes. Numerous recommended follow-up actions such as the mobile banking-App, the online portal e-hypo.ch, the advisory tool eVoja or the personal finance assistant are already implemented, others are still in project status.” Dr. Peter Hilfiker, CEO, Schwyzer Kantonalbank

16

References1 For banking and insurance, industry-specific revenue and performance figures were analyzed. 2 The top-line results CAGR averages 6.1 percent when banks and insurance companies are included.3 Handelszeitung, http://www.handelszeitung.ch/produkt/top-500-pdf4 Downes & Nunes (2013), Big Bang Disruption, Harvard Business Review, 91(3), p. 44–56, 20135 Hettich, Schimmer & Müller-Stewens (2015), Die Wiedergeburt der Diversifikation,

Harvard Business Manager, 2015(1), p.54–61, 20156 Berthon, Pearson & McDonald, 2015: 3-4.7 Mackenzie, 2015: 50.8 “Early in 2015, Accenture Strategy interviewed 700 business leaders in the United States, China, Japan and the European Union.

We wanted to understand how business leaders and policy makers can take advantage of digital technologies to accelerate growth and competitiveness. In addition, we sought the views of more than 2,500 European employees in five countries—France, Germany, Italy, Spain and the United Kingdom—on the impact of digital technologies on the future of work” (Berthon, Pearson & McDonald, 2015: 11).

9 Berthon, Pearson & McDonald, 2015: 9.10 Behar, Fuchs & Thomas, 2015: 2.11 Behar, Fuchs & Thomas, 2015: 2-5.12 Results from the Executive Survey, European Business Summit Report, 2015 (McDonald, 2015: 3). 13 ”Digital revenue means revenue from new products and services based on digital resources” (McDonald, 2015: 3). 14 McDonald, 2015: 3. 15 McDonald, 2015: 3-4.16 Axa Winterthur, 2015.17 Axa, 2015b; Axa, 2015c; Axa Winterthur, 2015.18 Axa Winterthur, 2015; Meyer, 2015.19 Weill (n.d.) as cited in Axa, 2015a: 18.20 Axa, 2015a: 13, 18. 21 Axa, 2013.22 Axa, 2015a: 1, 18.23 Axa, 2015a: 1, 18.24 Axa, 2015a: 1, 18.25 H. de Castries (Interview, n.d.) as cited in Axa, 2015a: 8.26 In Switzerland “My AXA” is an online customer portal where customers can access their insurance documents

from everywhere and anytime (Axa Winterthur, 2016a). 27 H. de Castries (Interview, n.d.) as cited in Axa, 2015a: 8.28 H. de Castries (Interview, n.d.) as cited in Axa, 2015a: 8; Axa Winterthur (2016b). 29 Innovationspreis der Schweizer Assekuranz (n. d.). 30 See Meyer, 2015.31 See Meyer, 2015.32 Sika, 2015a.33 Sika, 2015a; Sika, 2015b.34 http://www.six-group.com/dam/about/downloads/media/conferences/2013/media_conference_2013_speech_gomez_de.pdf

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SourcesAxa (2013), Axa Lab: Fostering innovation and digital culture, http://www.axa.com/en/news/2013/F1A097vWO1pXn59s4ZWL.aspx, accessed on December 19, 2015

Axa (2015a), 2014 Activity and Corporate Responsibility Report, http://www.axa.com/lib/en/uploads/acr/group/AXA_Activity_Report_2014_VA_b.pdf, accessed on December 19, 2015

Axa (2015b), Axa has completed the acquisition of Genworth Lifestyle Protection Insurance, http://www.axa.com/lib/en/uploads/pr/group/2015/AXA_PR_20151202.pdf, accessed on December 19, 2015

Axa (2015c), Profile and key figures, http://www.axa.com/en/group/profile-and-key-figures/, accessed on December 19, 2015

Axa Winterthur (2015), Innovation und Transformation: Axa Winterthur stärkt Innovationskraft und Transformationsfähigkeit, https://www.axa-winterthur.ch/de/ueber-uns/medien/medienmitteilungen/Seiten/20150512-axa-winterthur-staerkt-innovationskraft-und-transformationsfaehigkeit.aspx, accessed on December 20, 2015

Axa Winterthur (2016a), Kundenportal myAXA: Vorteile, https://www.axa-winterthur.ch/de/kontakt-service/myaxa/Seiten/myaxa.aspx?gclid=CPymt9zNksoCFYoEwwod87gAdA&tab=2&ef_id=VhOKwwAAAEPr@VIj:20160105115127:s, accessed on January 5, 2016

Axa Winterthur (2016b), Drive Recorder App, https://www.axa-winterthur.ch/de/kontakt-service/information/Seiten/drive-recorder-app.aspx, accessed on January 5, 2016

Behar, D., Fuchs, R. & Thomas, R. J. (2015), coauthor C. Örtel, Digital leaders: Moving into the fast lane, Accenture, 1–7, https://www.accenture.com/t20151124T000721__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Technology_10/Accenture-Being-Digital-Fast-Track-Culture-Change.pdf#zoom=50, accessed on December 23, 2015

Berthon, B., Pearson, M. & McDonald, M. (2015), contributors R. McManus, P. Gera, N. Singh, J. Hakanen, M. Halvorsen, C. Oertel, J. Cassidy, E. Jusserand, G. Tedeschi, M. Vergara, Being digital: Fast-forward to the right digital strategy, Accenture, 1–12, https://www.accenture.com/us-en/~/media/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_16/Accenture-Being-Digital-Fast-Forward-Report-2015.pdf, accessed on December 23, 2015

Downes, L., & Nunes P.F. (2013), Big Bang Disruption, Harvard Business Review, 91(3), p. 44-56, 2013.

Gomez (2013). Annual Media Conference, SIX Group, 27 March 2012, http://www.six-group.com/dam/about/downloads/media/conferences/2013/media_conference_2013_speech_gomez_de.pdf, accessed on December 17, 2015 Hettich, E., Schimmer, M., & Müller-Stewens, G. (2015), Die Wiedergeburt der Diversifikation, Harvard Business Manager, 2015(1), 54-61.

Innovationspreis der Schweizer Assekuranz (no date), Bisherige Gewinner, http://www.innovationspreis-assekuranz.ch/gewinner.php, accessed on January 5, 2016

Mackenzie, A. (2015), The Fintech Revolution, London Business School Review, 26(3), 50-53.

McDonald, M. P. (2015), contributors J. G. Burrowes, L. A. Henneborn, P. Tanguturi, Being digital: Breaking through the digital ceiling, Accenture, 1-12, https://www.accenture.com/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Technology_10/Accenture-Digital-Ceiling.pdf, accessed on December 23, 2015

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Meyer, T. D., Tueck, B., Fuerth, S., Bastian, B. & Cheret, D. (2014), Switzerland’s Top500: Sustainable success in times of change, Accenture (In association with IMD, IMD World Competitiveness Center, Handelszeitung), 1-24, https://acnprod.accenture.com/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Local/de-ch/PDF/Accenture-Switzerland-Top500.pdf, accessed on December 20, 2015

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18

“Lindt & Sprüngli, leader for premium chocolate, is constantly keeping up with the latest trends of the industry and business operations. The launch of our first webpage in 1998 marked just the beginning of a faster, more individual and more targeted communication with our consumers. With currently 12 e-commerce sites and different Facebook-pages, YouTube-Channels and Twitter-accounts, digitalization opened up additional sales channels as well as a platform building brand awareness on a global level.” Sara Thallner, Corporate Communications, Lindt & Sprüngli

www.accenture.ch/growth

Copyright © 2016 Accenture All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

About AccentureAccenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

AuthorsThomas D. MeyerFrederic BrunierMarkus SchimmerChristine Wetli

About the IMD World Competitiveness CenterThe IMD World Competitiveness Center is the world pioneer in the study of how nations and enterprises compete to lay the foundations for future prosperity. The center focuses on supporting government and corporate decision-making, through special reports, executive programs and its reference publication—the IMD World Competitiveness Yearbook, published since 1989 and recognized as the leading annual report on the competitiveness of nations. The center is based at IMD— a top-ranked business school located in Lausanne, Switzerland. www.imd.org