Lord of the watch: Nicolas Hayek 1928-2010

Two decades ago, Nicolas G. Hayek launched the Swatch watch, single-handedly saving an industry. COLEBY NICHOLSON cajoled, conspired and colluded to get a one-on-one interview with the ‘Godfather’ of Swiss watches.

Many people become well known in their chosen fields. Some make major contributions and a rare few leave indelible impressions. There are not too many, however, who rebuild and rehabilitate an entire industry, revolutionising it in the process. Nicolas Hayek is one such person.

As head of Swatch Group, Hayek is widely credited with saving the Swiss watch industry from the Japanese onslaught of the early 1980s. By developing the watch as a fashion accessory, he ensured its usefulness well into the technological age, alleviating fears that timepieces would no longer be necessary with the addition of clocks to mobile phones and computers.

At 77 years of age, and with such a distinguished résumé, one might have expected Hayek to seek retirement somewhere in the Swiss Alps. Instead, Hayek remains at the helm of the world’s most influential watchmaker, busier than ever.

How do you view the Swiss watch industry’s last two years?

Hayek: There have been a lot of developments and progress. It has been a very successful period as I expected.

Did Swatch exceed your expectations?

Hayek: It would have been difficult to exceed expectations given the world’s problems like the war in Iraq, the SARS situation and the US dollar going down. Regardless of these problems, we have been very satisfied.

Are there too many watch suppliers generally and are there too many Swiss brands?

Hayek: There are not too many suppliers. There are very few. In fact, Swatch is the main supplier of the Swiss watch industry. There are many people who buy supplies and make watches and try to sell them but I don’t think there will be too many because the market will decide which ones are going to survive.

Everybody now thinks they can make money by entering the watch business even if they make ladies underwear, cigarettes or anything else. Most of these people will disappear at some point.

How long do you think it will take before there’s a “clean out” of the number of brands in the watch industry?

Hayek: A period of three or four years.

How will the world watch market change in the next 10 years?

Hayek: I am a billionaire. If I knew the answer to that question, I would be a billionaire-billionaire! Nobody knows.

Yes, of course, but as one of the preeminent leaders in the industry, you must have some expectation of where things are headed.

Hayek: Sure I do. I have my visions but I cannot give you my expectations because such a fantastic magazine as Australian Jeweller is being read by our competitors.

All I can say is that, as an indication, go back 10 years and look at what happened and then forecast for the next 10 years.

What will the Japanese makers be doing differently in the next five to 10 years given how successful the Swiss have been?

Hayek: You probably need to ask them that question. We are very friendly with the Japanese - we like the people at Seiko and Citizen. The president of Seiko came up to me [at Basel] patted me on the back and said “Congratulations.” There is one thing for sure: they’ll be making nice watches.

Do you think the Japanese need to change much of what they’re doing?

Hayek: [With a wry smile as if to indicate the exact opposite of what he is about to say] No, no. They’re doing very, very well!

China offers an ironic dilemma. In a few years it will be your largest competitor and yet it also offers the greatest growth opportunities. Do you agree?

Hayek: Yes, very much so.

How can the Swiss brands capture increased sales in China? Do you need to do things differently to elsewhere?

Hayek: We don’t do it differently. We market our brands in China as we do everywhere else. We love China because they now make and sell many millions of watches worldwide and make a lot of money. They can then afford to buy our Swiss watches.

When the Chinese sell watches to Australia, to the United States and anywhere else they become wealthier. Then we sell them a Breguet. China is a big exporter of watches and now a big buyer of our watches and we like both these things.

Do you have to position or market your watches differently in China compared to the rest of the world?   

Hayek: No. We are in a global world. Communication is instant. If we have a watch in China that costs less or is presented differently it will be known in Australia two seconds later. And in Singapore, one second later and in South Korea even quicker!

Would that have been different five or 10 years ago?

Hayek: No, we have always been very consistent. We have always given the same message to the consumer with every one of our brands. It’s the same message always, regardless of the country we are in.

Looking back over the last 20 years of your time at Swatch, what one thing would you have done differently?

Hayek: Nothing differently. We are very lucky to have put our finger on the right spots at various times.

So you ran a perfect operation?

Hayek: No. Nobody is perfect. What we have managed to do is run an operation that has less imperfections than our competitors. That’s why we are number one.

So there’s nothing that you would have done even slightly differently?

Hayek: No.

Okay. Tell me about the latest thing you’re doing with Microsoft: the Paparazzi.

Hayek: We’re doing a radio-communication watch and you pay Microsoft a monthly fee to receive [just like a telephone] and you get all of the information you need wherever you are in the US. It’s been very successful. Bill Gates and my son, [Nicolas Hayek Jr] have created this and it’s running very well.

[Editor's note: nothing ever came of the Paparazzi, radio-communication watch]

Do you think there’s a clash between designs of technological watches and the beautiful designs that you’re able to produce with mechanical watches?

Hayek: We are a large group. We employ about 20,000 people with 700 engineers and physics doctors working on technology.

And on the other side I have the designers and watchmakers who are artists. They are the ‘painters’. In between the technology and the artists, we have fashion.

It’s my job as an entrepreneur to combine them and to help them understand each other, to talk to each other and to understand what the market wants.

How do you think retailers can improve the way they market and sell watches?

Hayek: It’s not just about how they market and sell watches. The retail business worldwide has been completely revolutionised in the past 10 years.

If you take the US, for example – I know a little less about Australia – many big retailers have lost a lot of their power by trying to give cheap product and bad service to the client.

They have tried to be always cheaper, always cheaper, always cheaper. People do not buy just because is cheaper. You don’t go to a restaurant with the cheapest food if you are going to be poisoned.

Retailing has changed into specialised malls, specialised distribution centres and a concentration of retailers that has resulted in less services for customers.

The retailer has not invested: he is not an entrepreneur; he has not taken any risks. That has meant that companies like Swatch [and others] have been forced to invest in retailing ourselves.

But when specifically selling watches, how can retailers better market themselves given all of those changes?

Hayek: There are some basic things, like having a much better shop, having a good selection and having staff who understand watches and are smiling when the customer comes in.

Service is most important, along with the customer feeling that he’s getting value. Many stores are dark, very badly organised and rely on telling the customer they are the cheapest.

It’s basic stuff, isn’t it? It’s nothing revolutionary.

Hayek: Nothing revolutionary. The human being stays the same. You and I, we have the same feelings, the same love and the same emotions that our great grandparents had. We dress differently, we have much quicker communication, and we have many more facilities but we’re essentially the same.

When we love a woman, we love her the same way. When we love a child it’s the same way, when we defend our country, it’s the same way.

The big difficulty is that lots of retailers are scared of death - not knowing where to go and how do it. They take the easy way out and try to sell the cheapest items. Now, with commodities, you can do this. If you’re selling oil, silicone or calcium, for example, then you have to be cheapest for the same quality. But when you’re selling emotions, it’s different.

Should the industry still be concerned with the “copy” watches ...      

Hayek: [interrupting the question and laughing loudly] Sure. My God, this is the biggest concern!

... or has their production been reduced over the years?

Hayek: No, no! It’s increasing.

They’re even trying to copy toubillion from Breguet now. No, it has been increasing. The Chinese are now starting to act. They have put lots of them in jail and it is becoming more dangerous to copy in China. Previously you didn’t get any punishment if you copied.

Today when we catch them, they get everything confiscated, they lose money and they go to prison for a few weeks. And when they will get the same thing as the United States – seven years in prison – they won’t do it anymore.

Is there anything else that needs to be done by the watch industry as a whole?

Hayek: Yes, we’re doing more now. We’re putting special detectives in the market, investigating and following the distributors of copy watches. We also trace the watches offered on the Internet.

I want to ask a few questions about you. What’s the best thing your father taught you?

Hayek: He never taught me anything. He was an example. If a father tries to tell his son something, he will do the opposite.

I never tried to teach my children: I never told them you should not take drugs, you should not do this. I just was an example to them. I didn’t take drugs, I didn’t get drunk at home and beat my wife and I didn’t do things that I didn’t want them to do.

Was there any particular example that stood-out from your father?

Hayek: Yes. [Hayek rummages through two desk drawers and takes-out a crumpled piece of paper.]

I’d like to read it to you. [He begins to read from Rudyard Kipling’s poem “IF”]:

   If you can keep your head when all about you

   Are losing theirs and blaming it on you;

   If you can trust yourself when all men doubt you,

   But make allowance for their doubting too:

   If you can wait and not be tired by waiting,

   Or, being lied about, don’t deal in lies,

   Or being hated don’t give way to hating,

   And yet don’t look too good, nor talk too wise;

[Hayek continues to read the whole poem and then places the paper back in his drawer. He looks back at me nonchalantly as if he regularly re-reads the classic poem.]

And your father presented that to you?

Hayek: Yes. [The answer was terse and it was obvious there should be no more questions about his father.]

Can you think of something where you’ve been a good example to your son if and when he takes over Swatch?

Hayek: [Again in a terse manner] You should ask him that.

But I am asking you.

Hayek: [laughing loudly] I don’t know. You always fool yourself by thinking that you’re the nicest guy on earth and the nicest looking and most attractive guy for all women and have the nicest haircut and so on, but other people think differently sometimes.

So you have to ask them.

If you were told tomorrow you could not work for Swatch, or the watch industry for two years, what other industry would you like to make an impact on and why?

Hayek: First of all, I have never “worked” in any industry. I have fun all the time. I amuse myself. I am 77 years old so I’m not working, I’m having very much fun.

Secondly, nobody would ever dare tell me I’m not going to work for Swatch or the watch industry, so there’s no use thinking about anything else.

Ok, I’ll ask the question another way. What other industry would you like to go and have some fun?

Hayek: The automotive industry. I’d reform it completely. I’d make better quality cars to serve humanity much better instead of having it being destroyed by the cars we have today.

You have been called many things over the years, like the “Godfather” and the “King”. What nickname have you heard that brings a smile to you face?

Hayek: [laughing] Something I have never been called – and it happened two days ago – is the “Seigneur” of watches. 

“Seigneur” is French for “Lord”. But we should keep that for God.

POSTSCRIPT: 

The next day, I happened to see Nicolas Hayek Jr as he walked to a meeting. Remembering that his father had told me to ask his son the question I had asked of him, I approached Nicolas Jr. He was somewhat startled. I introduced myself and mentioned that his father said that I should ask him;  what has you father taught you?

After a momentary reflection, he answered, “I have never looked up to my father as a genius or a ‘God’. He has his strengths and weaknesses just like anyone else. He did not try to ’teach’ me. But I have learned a lot from him. And probably the best thing is this: Never be afraid to ask a question. Do it even if you think people might think you are stupid for not understanding. That is the best lesson I learned from him.”