An entrepreneurial fable, with a fairytale creative leadership ending starts in a small town in Switzerland. Karl Elsener, supported by his mom Victoria, opens a cutler with the dream of growing it to scale. The company, Victorinox, is named after his mom+Inox, the french word for steel.
Wait. Here is my satisfactory nod to the credit given to Karl’s mom in this story. Carry on.
Then, Karl creates an association to build up an industry in an attempt to keep jobs local instead of the mass emigration from the area.
He sees a problem. The Swiss Army is paying German cutlers to make a folding knife for their troops. Obviously, Karl covets the contract, but can’t maintain the price to compete with the Germans and loses the contract. Defeated? No! Karl improves upon the Swiss Army design, adds a spring and in marketing genius calls it the “Officer’s Knife” which sells privately and is an instant hit.
Through other innovations, Karl gets the attention of consumers and saves the company.
A tragic and economic blow
Over the next 100 years, Swiss Army knives from Victorinox were found around the world. Victorinox diversified into luggage and travel gear, ultimately buying out their main competitor Wegner in 2013 and expanding into fragrance. If you travelled in the 80’s and 90’s, you likely saw a Swiss Army store at every airport. Then, 9/11 devastates the world.
In one tragic day, the knife ban drops Victorinox sales by 30%.
A difficult decision faced this family-owned company, one that plagues many leadership teams in tough times. What to do with all the employees? The CEO, Mr. Elsener in an interview stated “”We have never made a worker redundant for financial reasons“
What did they do? In an act of creative leadership, Victorinox leased out their employees to other companies. Not only did leasing out employees ensure the staff were taken care of, it gave Victorinox time to recover. This strategy helped them avoid any layoffs, but also allowed them to regroup and double down on innovation.
Carl Elsener IV, who drives a smart car and has no assistant, describes a strategy that makes sense to every household in the world: build up reserves in a boom and focus on innovation when things are lean. This strategy has worked well, in addition to a creative structure for the company. The current CEO makes 6x the lowest employee wage. Also, ninety percent of the shares are in a company foundation. The rest? Invested in a charity foundation.
I love this story of Victorinox for the passion behind the brand, the courage in the face of adversity to try something new, and the perseverance to respond and adapt to changing conditions.