Carl Elsener is the fourth-generation leader of the family firm Victorinox, a world leader in producing the iconic Swiss Army knife (35% of sales), cutlery and travel gear (each close to 25% of sales), watches (15% of sales) and fragrances (3% of sales). Selling in over 120 countries through 14 subsidiaries and with 2,100 employees worldwide, the Victorinox group generated a turnover nearing 500 million Swiss francs in 2018. The company was founded in 1884 by Carl Elsener’s great-grandfather of the same name. The first soldier’s knife was delivered to the Swiss Army in 1891, and the company’s relationship with this long-standing customer remains strong to this day.
The milestones of Victorinox’s century-long history include:
1909: The world-famous “cross and shield” emblem was patented.
1921: The name Victorinox was adopted.
1989: The firm entered the watch business.
1999: The company entered the travel gear business.
2000: The family foundation was established. 90% of all shares in the company are owned by this foundation, which is controlled by the Elsener family. 10% are in a charitable foundation.
2001: Sales of the Swiss Army knife dropped by 30% in the aftermath of the 9/11 terrorist attacks. Diversification gained momentum.
2005: Victorinox acquires its main competitor, Wenger (Delemont), and enters through this acquisition also the fragrance business.
2017: The firm discontinued the fashion business, to focus on its core categories.
2020: Opening of the new European distribution center.
When asked about Victorinox’s success factors, Elsener pointed out the following:
Employees. Employment at Victorinox is on a long-term basis. Employees are encouraged to speak up, seek continuous improvement and stay innovative. Training is emphasized.
Customers. The key here is to be customer-oriented and to bring them products they consider to have superior value. Therefore, it is essential to build upon the positive perception of Swiss design and quality.
Products. Since its inception, Victorinox has continuously focused on always innovating and pushing for improvements. The brand’s value is thus based on superior quality, functionality, innovation and iconic design. Sustainability is a central part of the products and the firm’s production processes.
Brand. The Swiss Army knife clearly seems to be a driver of the firm’s brand. For instance, it has won several awards and is used in NASA’s space missions.
Corporate values. The organization as a whole feels committed to its values: “honesty, trust, gratitude, respect, modesty, courage and responsibility.” Elsener added that “serving our fellow human beings around the world with practical, functional and competitively priced quality products gives our lives a deeper meaning and enjoyment and is at the heart of Victorinox’s job satisfaction.”
Carl Elsener joined the company at the age of 20 and became the CEO at 49. He is the second oldest of 11 siblings. As noted, in 2000, all of his family members transferred their shares in the company to the company foundation that controls 90% of the company. 18 family members currently work in the company. The identity of Elsener’s successor remains to be determined, but it will probably be a family member who is fully motivated; has the necessary talents to run a large, complex and multinational corporation; shares the family’s values and long-term focus, especially regarding a strong team orientation; maintains family unity; and is genuine and modest. Only family members who work in the company receive financial compensation (i.e., salaries). The executive board consists of five family members and six nonfamily members.
Elsener emphasizes the key importance of learning from experience, especially regarding the firm’s internal workings. He points out the critical importance of improving internal best practices. His father played a key role here, with a strong focus on “how to make good even better.” Thus, adapting to market changes entrepreneurially is perhaps equally important. Input from global customers is critical here and thus another key source of learning. It is a matter of balanced learning!
As noted, a long-term financial perspective underpins Victorinox’s core values. A related aspect of this long-term focus is to invest relatively heavily during recessions while perhaps holding back on investments during economic booms. This approach has manifested itself in several ways. One has to make do with spending more or spending less on the following six factors as a consequence of the stages of economic cycles:
For instance, when Victorinox’s own business activities dipped after the 9/11 terrorist attacks, some employees were outsourced to other companies that were fortunate enough to have good order backlogs. However, the employees were still being provided salaries from Victorinox, which in turn billed these other companies for this “service.” The results were not only to secure job stability for Victorinox but also to improve employee motivation and loyalty and to benefit from learning from other firms.
While counter-cyclical investments were routinely made by Victorinox, at the same time, there were strong sentiments against taking too high of a risk (i.e., always try to avoid overinvesting). Such financial overextension from Victorinox’s competitor Wenger was perhaps the main reason why Victorinox was able to take it over in 2005.
Victorinox's strong long-term focus was also demonstrated when the company took over its US “partner” (originally in Shelton, CT, and now in Monroe, CT). When this partner company went public in 1980 and subsequently abandoned its obligations to Victorinox – the partner cited short-term profit motives – Victorinox started purchasing available shares. After having acquired around 30% of its shares, Victorinox made the decision to acquire the rest of this company. General economic conditions also blew in the Swiss company’s favor. This entity has since become Victorinox’s wholly owned subsidiary. Long-term economic thinking prevailed at Victorinox!
Mr. Elsener also considers many banks that do not in effect support a counter-cyclical strategy. They often seem keen to provide funds during good times but are not equally committed to stand by clients during difficult times. Accordingly, Victorinox is very restrictive when it comes to drawing on bank loans.
The firm’s location in Ibach, a relatively small community in central Switzerland, is seen as a stabilizing factor. This valley, surrounded by high mountains, seems to create a positive outlook among the firm’s working population. However, as noted, it is also key to maintain an open mind so as to spot global shifts and new trends. Once again, balance is essential – stay grounded but be open-minded! This attitude is perhaps reflected in what is sometimes labeled “the Swiss way” of hard work, strong discipline and a modest character.
Mr. Elsener emphasizes two factors as particularly important in becoming a good leader:
Being a role model (modesty, open-mindedness, fairness, etc.) Above all, this is perhaps a function of the fact that a good leader must like people.
Being authentic! Above all, how can this trait help innovation in a family business? Authentically gauging, meeting and exceeding the customers’ expectations is key (by discovering new things in new cultures and interacting with new groups of young people!).
Victorinox has developed a business model that, in many ways, might be seen to reflect the best of family-owned firms:
A long-term focus
Counter-cyclical behavior
Strong teams (“we, we, we”!)
“Family is all,” in contrast to the “me, me, me” attitude
A focus on quality toward design, production and marketing
In sum, I left my meeting with Mr. Elsener highly impressed by the corporate culture pervading at the Victorinox headquarters in Ibach, Schwyz.
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