Digital transformation is here to stay. We must therefore constantly foster dialogue to increase awareness for all that is and will become digital. Digitalization brings not only opportunities, but also risks that need to be addressed and taken seriously. In my series “Dialogue Interviews” I discuss these topics with leaders in Switzerland, from our member organisations to digital shapers and the brightest minds in the fields of technology and innovation.
In this edition, I talked to Michael Hilb, an entrepreneur who serves on various boards and teaches strategy, entrepreneurship and corporate governance at universities in Europe and Asia. The conversation focuses on small and medium-sized enterprises (SMEs) and what challenges they face in times of digital transformation.
Nicolas Bürer: Michael, you are an expert in digital transformation and especially dedicated to defining and evaluating skill sets for board members. How would you rate the average digital skills of Swiss SME board members?
Michael Hilb: As digital transformation is an overused term these days, let’s try to briefly define its meaning. To me, it is all about two key developments that will eventually affect most companies and industries: platformization, i.e. the redrawing of industrial boundaries, and datafication, i.e. the emergence of data as the key asset of economic value creation. In respect to these phenomena, I observe a growing interest and a determination to better understand these underlying trends. While, at the same time, maintaining a healthy level of skepticism toward digital fads.
Nicolas Bürer: How can SME board members improve their digital skills and better understand the importance of the current digital transformation for their companies?
Michael Hilb: First, I observe the emergence of an increasing number of training programmes focused on digital transformation specifically tailored to board members. Second, I see tremendous potential to learn from each other. There are a number of very impressive digital pioneers among Swiss SMEs who can teach a lot to the rest of world – and not just to other SMEs. And finally, and most importantly: practice, practice, practice. Successful digital transformation has a lot to do with having the courage to think and act outside the box.
Nicolas Bürer: There are certain pessimistic forecasts with regards to the current digital transformation and its potentially disruptive influence on SMEs. What is your stance on this?
Michael Hilb: A majority of SMEs, the backbone of the Swiss economy, have always shown a strong determination and ability to adapt to change. Just think back to the “Frankenschock” four years ago. They have proved to be highly resilient not out of desire but out of necessity. Let’s not forget, many Swiss SMEs compete in global markets and therefore have to be able to constantly think one or two steps ahead to survive. I am confident that most Swiss SMEs see and realise the opportunities of digitalisation to become stronger and more competitive. SMEs often have a strong advantage over bigger companies: Agility and entrepreneurship are embedded in their DNA.
Nicolas Bürer: What do you consider be the most important nationwide measures to execute in order to sensitise a majority of Swiss SME board members about the digital transformation they face?
Michael Hilb: Apart from the critical measures, such as world-class infrastructure, future-proof education and smart regulation, I see a fourth set of actions that can help empower Swiss SMEs but also requires the involvement of all parties: to establish a common understanding and a strategic position of Switzerland in light of the two dominant digital superpowers, the USA and China. A smart and unique positioning of Switzerland as a global digital hub will ensure that Swiss-based SMEs can enjoy a competitive advantage in a global race.
Michael Hilb: To foster dialogue, digitalswitzerland has done a fabulous job in bringing together leading companies, start-ups, civic organisations and public institutions all committed to one mission: Digitalisation. How could SMEs best tap into this highly valuable network?
Nicolas Bürer: I want to state two things to answer this question: first, about 30 SMEs are members at digitalswitzerland and can benefit from all activities and connections within our initiatives. Of course, we hope to welcome many more SMEs in the coming years. Secondly, we are also thinking about launching projects specifically tailored to Swiss SMEs. We do not offer consulting or transformation services, but rather act as enablers: by addressing topics and sensitizing SMEs. One example is our project “Atelier adapt” that launched pilot projects in Romandie this year. More project will follow, hopefully.
Michael Hilb: You are meeting many colleagues from all over the globe at international conferences: What role do SMEs play in other digital ecosystems? What could Swiss SMEs learn from their peers?
Nicolas Bürer: Leading hubs like Israel, the Silicon Valley and the Shenzhen Area are focused on enabling start-ups to globally scale. They are trying to influence political frameworks to make this possible, acquire venture capital volume, crown unicorns and realise IPOs. Those are fine initiatives, and also to a lesser degree true for Switzerland: our start-up ecosystem is growing well. But the country also has a strong SME tradition. I am talking about businesses with a high innovation level, owned by their founders or managers and without Venture Capital Investments. For this reason, we cannot just focus on enhancing the start-up ecosystem, because we have too much to lose if our SMEs struggle. Every initiative supporting Swiss SMEs in digital transformation is therefore welcome. Because it can affect about 500’000 companies all over the country and 70% of our jobs! I know there are many such initiatives in the country, which is encouraging, but the journey is still long.
Prof. Dr. Michael Hilb is entrepreneur, serves on various boards and teaches strategy, entrepreneurship and corporate governance at universities in Europe and Asia. He is also on the faculty of the Swiss Board School and teaches in the new Executive MBA program focused on digital transformation at the University of Zurich starting this Fall.
Further reading: Michael Hilb’s NZZ article on the role of SMEs in digital transformation.