Which Terrain Is Yours?

Swiss SMEs must answer two questions simultaneously in a changed geopolitical and technological environment: Where do we compete? And how do we redesign our work to create lasting value there? Anyone who asks only one of them has drawn the wrong lesson from history.

In the 1970s, the Swiss watch industry lost 60,000 jobs, even though it knew the technology that threatened it.

In the early 1970s, the Swiss watch industry faced a problem that initially appeared technological. Japan brought quartz watches to market, more precise and cheaper than mechanical movements. Switzerland was not uninvolved: the Centre Electronique Horloger had co-developed the technology and launched one of the first quartz movements with the Beta-21 calibre. What the industry lacked was not knowledge of the technology, but a clear answer to the real question: Where do we compete?

The answer the industry eventually found under Nicolas Hayek was not a technological one. Swiss companies would not try to beat Seiko or Casio on their own terrain. Instead, they occupied two distinct fields simultaneously: Swatch turned the quartz watch into a design object, a fundamentally different product from the Japanese mass-market piece. And luxury mechanics positioned mechanical movements as craftsmanship that cannot be competed with through technology alone. Patek Philippe did not compete with Casio. Looking at this today, one sees a decision, not a foregone conclusion.

Between 1970 and 1983, the number of Swiss watch companies fell from 1,600 to 600, and employment dropped from 90,000 to 28,000. The cost of lost time was real.

AI behaves differently from quartz. The more accurate historical comparison is electrification, and it reveals why many companies today are setting the wrong priority.

Manfred Elsig, Deputy Managing Director of the World Trade Institute (WTI), has framed the current situation clearly: "Almost all of the major players in new technologies are located in the US or China."

Swiss SMEs will not be developing the next generation of AI language models. The infrastructure, capital, and geopolitical preconditions for that lie elsewhere. This raises the same strategic question as before: How do we position ourselves in a world where the central technology does not come from us?

But AI behaves differently from quartz. Quartz watches replaced mechanical ones in certain market segments. AI does not disrupt a segment, it changes the foundation on which work is organised. The more accurate historical parallel comes from Howard Yu, Professor of Strategy and Innovation at IMD in Lausanne. When electrification reached American manufacturing in the 1890s, factory owners bolted electric motors onto the same belt-driven production lines they had inherited from the steam age. It took thirty years before they understood what distributed electrical power actually made possible: completely redesigned factories in which every machine could be operated independently. Only then did productivity truly take off.

This pattern is repeating itself today. An NBER study of 6,000 executives across four countries found that the average CEO uses AI for roughly ninety minutes a week, about as long as a lunch meeting. A survey of 750 CFOs by Duke University and the US Federal Reserve Banks shows that the productivity gains from AI reported by CFOs are substantially higher than those reflected in actual revenue data: reported gains of 1.8 percent in 2025 compare to revenue-implied gains of 0.4 to 0.8 percent across sectors.

Leaders spending ninety minutes a week with AI are simultaneously making far-reaching decisions about which roles to cut, which competencies to outsource, and which knowledge carriers to let go. Circuit City fired 3,400 of its most experienced employees in a single morning in 2007 because the spreadsheet made it look sensible. Wall Street cheered. Less than two years later, the company filed for bankruptcy. The people who had left carried the institutional knowledge that had actually kept the business running.

Companies cutting headcount today without redesigning the work are bolting AI motors onto the old belt drive. And in letting go of experienced employees, they are losing the institutional knowledge that would make genuine redesign possible.

The geopolitical environment in which these questions must be answered is also shifting. The NZZ SME Barometer 2025 shows that two thirds of Swiss companies count international tensions, originating from the US, among their three greatest concerns. 54 percent of SMEs expect the US to lose importance as an export market. 63 percent expect Europe to gain. Supply chains are being realigned, markets reweighted. For some companies this opens new ground; for others it narrows the accessible terrain further.

Three forces are acting simultaneously, narrowing the window in which these questions can still be answered deliberately.

The first is cyclical. The Federal Expert Group on Economic Forecasts lowered Switzerland's growth forecast to 1.0 percent on 18 March 2026. The Swissmechanic SME-MEM Business Climate Index has been negative for eleven consecutive quarters, and 26 percent of surveyed companies cannot carry out planned investments due to insufficient funds. Companies without investment headroom today are not just deferring expenditure. They are delaying the capability-building that would make deliberate redesign possible. An earlier article explored how this logic becomes an exploitation trap.

The second is technological. The KOF ETH Zurich study from October 2025 shows that the number of jobseekers in highly AI-exposed occupations has risen by an average of 27 percent more than in less exposed ones since autumn 2022. Job postings in those same areas now stand at 60 to 70 percent of pre-AI levels. Particularly affected are software developers, systems analysts, HR professionals, and marketing specialists, precisely the profiles companies would need for deliberate AI integration.

The third is demographic. The KOF Economists Survey from March 2026 projects a structural labour shortage of around 400,000 people over the next ten years, with 87 percent of surveyed economists citing demographic change as the main factor. According to a ZKB study, almost a third of Zurich-based SMEs face a generational transition within the next five years. By 2029, there will be 30 percent more retirements than new entrants to the Swiss labour market.

Each of these forces pulls resources and attention into the operational present. Together, they narrow the window in which both questions can still be asked actively, before pressure answers them by default.

In most leadership teams, they are still not explicitly asked.

Knowing all three forces and managing them operationally does not answer the real questions. Introducing AI without clarifying on which terrain it makes a lasting difference, and how the work must be redesigned for that, repeats the pattern of factory owners in the 1890s: electric motors bolted onto the old belt drive, structure unchanged, productivity gain absent.

The two questions leadership teams must ask today are: Where do we create value that neither AI nor geopolitical shifts can simply replace? And how do we redesign our work to become durably better precisely there?

Hayek did not only ask them. He answered them and saw the answers through. Peter Spuhler draws the same conclusion in different words: "Me too is not a strategy." Anyone who does not occupy a terrain of their own is competing on someone else's and that is not a position you can hold. What unites both is not their analysis, but their willingness to decide under uncertainty. The watchmakers who survived the 1970s did not analyse longer. They decided which terrain was theirs and aligned everything accordingly.

The positioning question is not a decision any single team can answer alone.

When Hayek rescued the watch industry, it was not a company decision but a structural decision at the industry level: the merger of ASUAG and SSIH, a shared production platform, a coordinated segmentation strategy across dozens of brands. Without that institutional architecture, no individual watchmaker would have survived, regardless of how clear their positioning was.

The same applies today. Swiss SMEs do not answer the question of their terrain in a vacuum. The Innovation Park Zurich, the research infrastructure at ETH and EPFL, the deep-tech ecosystems currently forming: all of these co-determine which terrains are accessible and defensible for Swiss companies. A leadership team that ignores this level is navigating with half a map.

The positioning question therefore requires both: a leadership team that creates internal clarity and makes a decision, and leaders who remain connected outward, to industry initiatives, to institutional developments, to the ecosystems that co-shape the terrain. How organisational transformation and strategy development interact in practice is the starting point for this work.

What is concretely required now

1. Has your leadership team explicitly decided where AI creates competitive advantage for you, and where it does not? An implicit answer exists in almost every company. The relevant question is whether it was made deliberately or emerged under cost pressure on its own.

2. Which of your core competencies are strengthened by the geopolitical reordering of markets, and which are losing accessibility? 63 percent of Swiss SMEs expect Europe to gain importance as an export market, according to the NZZ SME Barometer 2025. For some companies that is an opportunity; for others it is a further narrowing of reachable terrain.

3. Who in your organisation carries explicit responsibility today for the question of where you will compete in three to five years? If that responsibility is not explicitly assigned, it will be answered under pressure by operational urgency rather than strategic clarity.

The next step after these questions is not further analysis. It is a conversation within the leadership team that does not wait for certainty, but develops a shared position: What is our terrain, and why do we believe that? This position does not need to be proven. It needs to be bold enough to guide the next decisions. Hayek had no guarantee in 1983 that Swatch would work. He had a conviction and the willingness to commit resources to it.

New terrains do not emerge through optimising what already exists. They emerge because individual leaders set a direction before the organisation is ready, and before the industry understands it. The history of the quartz crisis shows this on both sides: the companies that decided too late waited for consensus. Those that survived had someone at the top who knew earlier than others where things needed to go, and who held that conviction against resistance.

Where the leadership team cannot find a shared position, the real work begins. How Ambiflow can serve as a diagnostic framework for that conversation is laid out in detail on the model page.

Der Strategy Flight-Check gibt in 10 Minuten ein erstes Bild, wo Ihre Organisation heute steht. Und wenn Sie bereit sind, die Positionierungsfrage im Führungsteam zu klären, freue ich mich über ein Gespräch.