For Nicolas Hayek, Time is Money
By Ghada Harb
July 25, 2003
Some businesses make a profit, others seem to do pretty well, and then there are those that simply excel. What is it that makes some businesses rise above the rest? Innovation and expertise. These are the qualities that Nicolas Hayek, founder, chairman and CEO of the Swatch Group, has brought to the Swiss watchmaking industry.
Always someone who refused to accept that the way something had always been was the way it must be forevermore, Hayek saw new relationships between seemingly unrelated things. Even as a child, he’d painted trees orange and grass purple, and hung fire trucks from clouds. Swatch’s fashionable plastic watches with their endless array of colors and designs represented a truly revolutionary idea for Swiss watchmakers. Alarmed by such a break from tradition, many rejected Hayek’s idea outright.
Invention is seeing what everybody has seen and thinking what nobody has thought. Why does your receptionist sit behind a desk? Why do you? Why does your product look the way it does? As we can discover from Hayek’s story, the market rewards people who think differently.
“The Swatch Group has a very special emotional culture,” explained Hayek. “We produce beauty, sensuality, emotionality in watches – and we also produce high technology on your wrist. These things are part of what we feel towards our customers. We love them genuinely and we want them to be happy.”
Time to begin
Hayek was born in 1928. He’s the son of an American dentist who was a faculty member at the American University of Beirut, and a Lebanese lady who bore the vast majority of the responsibility for his upbringing.
The family moved to France where Hayek earned his baccalaureate degree and went on to study math, chemistry and physics at the University of Lyon. Upon graduation, Hayek and his family moved to Switzerland. It was there that he was destined to take the world by storm.
Time for business
By the early 1980s, the lower-priced segment of the Swiss watchmaking industry had begun to suffer due to competition from Japan. To see whether Swiss watchmaking still carried any prestige in that part of the market, Hayek carried out a little experiment. He took three identical watches and had one marked “Made in Switzerland”, another “Made in Japan” and the third “Made in Hong Kong”. The price tags were different, too – $110, $100, and $90 respectively.
The watches were put in shops in Europe, the United States and Japan. Meanwhile, Hayek continued to monitor consumers’ reactions. What he discovered was that Swiss watches still commanded a premium price based on nothing more than their origins.
Thus convinced the Swiss watch industry could regain its lost glory, Hayek merged two existing Swiss watchmaking firms (ASUAG and SIHH) to form the Swatch Group. Within one year, the Swiss watchmaking industry got a new, modern face and by 1986 Hayek had become the group’s chairman and CEO.
Hayek intuitively knew it would take more than just Swiss craftsmanship to compete with the low-priced watches from the likes of Timex, Seiko and Casio. They had used (at that time) innovative digital technology to gain leverage in their market sector. Hayek recognized the importance of innovation and looked beyond the watchmaking industry for inspiration. It was clothing manufacturers such as Benetton and Nike that provided the key.
It occurred to Hayek that he could produce eminently stylish plastic watches in an ever-changing range of colors and styles, to be marketed to newly emerging fashion- and lifestyle-conscious consumer groups. This was a concept that made Swatch a household name in any language. Profits skyrocketed and people from all around the world began collecting Swatch watches and changing them like socks. But still Hayek wasn’t satisfied.
Hayek launched an ambitious and drastic modification of all Swatch Group watch brands, fueled by the major success of the Swatch brand. He then started positioning his watches in every price segment. Having a key brand for every segment of the market has allowed Hayek to protect the company from competitors.
Just as a watch’s origins affect what consumers will pay, so too do brand names. That’s why, when he acquired the many brands that now make up the Swatch Group (160 factories), Hayek resisted the temptation to rename them all Swatch. “Brand names are the most important factors for many customers,” explained Hayek’s daughter, Nayla Hayek. That’s why each brand has retained its name, while its links to Swatch are indicated in catalogues with nothing more than “Member of the Swatch Group”. “We are all one family,” she continued, “but each brand has a history that is vital to keep.”
Today, Nicolas Hayek is the sixth wealthiest person in Switzerland, with a fortune of $2.4 billion. His name sits at No. 168 in Forbes magazine’s rich list. Hayek’s empire now encompasses several of the world’s leading watch brands. The list includes Breguet, Blancpain, Léon Hatot, Omega, Rado, Longines, Balmain, CK, Tissot, Hamilton, Certina, Swatch, Endura, DYB, Les Boutiques Swatch Group and more.
Time for success
Hayek played a leading role in reviving the Swiss watch industry by supplying watch movements and other components to fellow Swiss watch companies. Especially for this reason but also as a sign of gratitude for maintaining and creating new jobs and production centers in Switzerland as well as in Europe, and for the development of the Swatch brand, Hayek was awarded honorary Doctorates in Law and Economics by the Faculty of Beni Culturali of the University of Bologna in Italy in 1998 and the University of Neuchatel, Switzerland, in 1996.
At the beginning of 1995, then-German Chancellor Helmut Kohl appointed Hayek as the only non-German member of his Council for Research, Technology and Innovation. In 1996, the French Government nominated Hayek as president of the Groupe de Réflexion, a body that carries out strategic economic planning. He is also a consultant to several European governments and was named Advertiser of the Year at the 49th International Advertising Festival held in Cannes in June 2002, an honor that recognizes his creative and innovative talents, which took him to the No. 1 position in worldwide watch sales.
Time to diversify
Hayek is also the founder, chairman and CEO of Hayek Engineering Inc., which has its headquarters in Zurich. Founded in 1963, this company employs some 250 highly qualified professionals in a variety of sectors including iron and steel, the automotive industry, and telecommunications. They undertake engineering, project management, optimizations and feasibility studies, strategic planning, sales and marketing.
During the last 40 years, Hayek has gained a leading reputation throughout the world, as well as a list of international clients from over 30 nations, including the Sultan of Oman, the German government, Volkswagen AG, U.S. Steel, Daimler-Chrysler, Siemens, AEG Telefunken AG; Digital Equipment Corp., Ministry of Metallurgy of China, Olivetti SpA, BMW, Thyssen-Group, Dresdner Bank, Alfa-Romeo, Nestlé and more.
Now at 75, Hayek is still constantly in transit. He constructs non-polluting cars, he presents his environmental strategies in front of the UN in New York City, he plays tennis, he conquers new overseas markets and he advises large firms or even whole state governments around the globe on corporate matters. Hayek is still full of dynamic ideas and still has the thirst for action.
Some 50 countries, more than 440 reporting units, almost 20,000 partners – that’s the Swatch Group today. With a presence in so many parts of the world, the Swatch Group is set to make its mark in the Middle East as well, with plans to open an office next November. Time to wait.