Swiss Digital Competitiveness: Room for improvement despite solid performance

Last week, the second edition of the “Digital Competitiveness Summit” was held in Lausanne. This event was jointly organised by IMD and digitalswitzerland. Representatives from academia, politics and business were invited to interpret and evaluate the latest results of the “IMD World Digital Competitiveness Ranking” for Switzerland. Switzerland was able to defend its 5^th place overall. However, participants agreed that this was no time to be resting on our laurels. On the contrary, it is now critical to further improve these scores and take the country to the next level, because there is still much to be done.

By far, the most frequently mentioned factor during the Summit on how to improve Switzerland’s position was education and lifelong learning: “If we are not able to educate the next generations of children to be digitally ready, if we are not able to engage productively with the education system, then we will not have the impact that this topic deserves and requires in a modern society like Switzerland”, declared Martin Vetterli, President of EPFL. Marcel Salathé, Professor at the EPFL joined the chorus: “Digital upskilling is key. A digital illiterate society is one that’s at higher risk. Thanks to organisations like digitalswitzerland and others, this awareness is now widespread. We must advance lifelong learning.”

The shortcomings that currently strain Switzerland’s digital competitiveness are in the areas of training and education, regulatory framework, business agility and capital.

The Digital Competitiveness Ranking seeks to assess the capacity of an economy to adapt and explore new technologies that change businesses, government practices and society. This is measured by three factors:

1. Knowledge (the capacity of an economy to understand and learn technologies)
2. Technology (reveals the competencies of an economy to develop new technologies)
3. Future readiness (evaluates how prepared an economy is for new technologies)

Switzerland ranks 5^th among 63 countries. This can be broken down as follows for the three categories: Switzerland came in second in the category of “knowledge” and in the categories “technology” and “future readiness”, Switzerland is in 10^th place. Looking at the sub-factors, Switzerland performs well in terms of the scientific competencies that are available in the country and IT integration (7^th place). The flip side of the coin shows how difficult it is to set up a company in Switzerland within the regulatory framework. Immigration legislation is also not very technology-friendly. As in many other European countries, the market capitalisation of IT-related companies is very low.

“Europe does not have the power that Asia or North America have. With regard to Switzerland, there may be problems related to the regulatory framework and also doubts, especially among individuals, as to how they can use this technology”, said Christos Cabolis, Chief Economist & Head of Operations at IMD World Competitiveness Center.

The capital available for digital progress is more moderate compared to other countries. The use of big data in the private sector is also inadequate. In the area of training and education, Switzerland is only in the upper midfield (15^th).

Cabolis explained that there is not one strategy that actually makes an economy competitive in the digital world. But every economy must invest and draw its strengths from its own competencies. Education is undoubtedly a very important component. The five leading economies (USA, Singapore, Sweden, Denmark and Switzerland) invest heavily in education and knowledge is a very strong factor.

Eastern Asia, North America, and Western Europe are the regions that have been able to adapt to and explore technological innovation. North America and Western Europe are high in respect of ranking but they have remained more or less unchanged. In contrast, Asia is growing much faster in terms of understanding and using these technologies.

Fathi Derder, National Councillor also pointed out the enormous competition, especially from Asia, and how Switzerland must react quickly. “With everything changing so rapidly, we must be able to modify regulation in less than one to three years. That is almost impossible today. If we want to stay number five, or better become number one. We don’t have any other choice than to focus on strategic issues, talent, venture capital and we need to be more agile and invest more than we do today. First and foremost, in education.”

Kamila Markram, CEO and Founder of Frontiers referred to the challenge, that there is a lack of talent in Switzerland. Universities have a great opportunity to train more people in big data analytics and artificial intelligence. It is extremely important that there is also the free movement of talent across borders. In addition she also emphasized that technological innovation is not enough. Only business model innovation can take full advantage of performance and technology.

Nicolas Durand, CEO Abionic expressed his regret about the state not investing more in research and development. “They want to cut the research budget but R&D is the core of every single company. If you cut the R&D budget, you try to kill the company.”

Nuria Gorrite, President of Canton de Vaud shared the digital strategy of Canton de Vaud. Three principles are of central importance: sovereignty, security and solidarity. For the digital transformation to be accepted by the population, it must be legitimate. Therefore, the e-ID or the protection of personal data must remain within the framework of public legislation. It must also be ensured that those who are less able to participate in the digital transformation are protected from possible negative side-effects. Education should be harnessed so that the population has the necessary competences to act in this digital world. “Digital transformation must not remain an issue that is shared by the privileged few. To be sustainable, digital change must be just. The benefits of digital transformation must be redistributed across social classes, age and gender. This is ultimately also in the interest of business and enterprises.” In addition, data protection, the necessary infrastructure, people and business support as well as funding innovation are crucial.

Martin Vetterli, President of EPFL dismissed the participants by punctuating the following circumstances that urgently need to be improved in order for Switzerland to stay ahead: “Although Switzerland remained number 5, some of the results are alarming, not only since this year. I am very concerned about talent. The EPFL is a place where we try to foster talents who enter the Swiss or global economy. This presupposes that Switzerland remains a very open country. We also really need more entrepreneurs. We need more gross funding and we must achieve gender equality.”

EPFL will be hosting the third Digital Competitiveness Summit on 1 October 2020 in collaboration with digitalswitzerland.