News Stories · Digital - Competitiveness

Switzerland must be bolder in innovation and investment to keep pace with the digital revolution

Experts at the 3rd Digital Competitiveness Summit call for more ambitious and smarter policymaking and investment to enable Switzerland to compete with global digital leaders such as the United States and Singapore.
October 2020
 - IMD Business School

Switzerland is “well positioned” to challenge the global leaders the digital revolution, according to Director of the IMD World Competitiveness Center Arturo Bris, but there are signs that a lack of ambition in investment and innovation is stifling its digital economy.

Switzerland fell one place to 6th out of 63 nations in this year’s IMD World Digital Competitiveness ranking, coming in third for knowledge, 11th for technology and fifth for future readiness. The United States topped the ranking for the third year in a row, with Singapore in second and Denmark leapfrogging Sweden to claim third.

“Over the last few years, the percentage of companies engaging in R&D in Switzerland has been falling,” Bris said at the virtual Digital Competitiveness Summit, which is co-organised by digitalswitzerland, EPFL and IMD.

“Innovation should be at the heart of the economy, yet there is some inertia evident in Switzerland,” he said.

Digital competitiveness is seen as a crucial factor in driving economic transformation, prosperity and quality of life in business, government and society.

While Switzerland leads in areas such as scientific research legislation, country credit rating, international experience, foreign highly-skilled personnel and knowledge transfer, it scores less well in enforcing contracts, female researchers, tech exports, and starting a business.

Tilt the playing field in favour of innovation

Drawing on the example of the public-private collaboration that enabled the moon landing, UCL Professor Mariana Mazzucato, a panellist at the summit, argued that public sector policies must be re-designed to support long-term investment and demand-driven innovation, but not through inefficient means such as R&D tax incentives.

“What we lack in Europe is that kind of long-term, patient finance. We lack ambitious procurement policy,” Mazzucato argued.

“We need to pick the problems then, tilt the playing field in that direction,” the Director of the Institute for Innovation and Public Purpose said. “It will help solve inequality if we really direct our thinking around specific problems that it might help – the digital divide is the most obvious.”

Swiss digital start-ups need more investment

Lakestar venture capital firm founder Klaus Hommels argued that, in the digital age, Europe had to fight harder to protect and support its digital economy – and its value systems – from global competitors in China or the United States.

“The big players have to obey your ethics framework that we ourselves define in Europe,” he said.

Hommels, an early investor in Facebook and Spotify, warned that Europe could lose governance of its most promising start-ups because of a lack of finance, calling for private capital to be far more ambitious if Switzerland wanted to emulate the success of digital champions such as Google or Alibaba.

“If we want to reinvigorate the ecosystem, we need to get massive money into the market,” he said.

Responding to the digital crisis

This year, the digital readiness of companies and countries has been tested to the limit, as the COVID-19 pandemic forced a sudden change in the lives of billions and the world of work.

IMD President Jean-François Manzoni said the Swiss system had reacted well, arguing tha this approach to managing a crisis could be applied to challenges posed by the digital revolution.

“What the Swiss system showed is that it is actually a system that can react remarkably effectively and efficiently in a crisis,” he said. “Unfortunately, the Fourth Industrial Revolution – or digital revolution – has not been labelled an official crisis.”

“This digital revolution will happen. The questions are at what speed: at what speed around the world and at what speed in Switzerland?” he questioned, urging leaders to take “tough and courageous decisions to ensure that Switzerland remains at the forefront of a world that is evolving extremely rapidly.”