The death of Nicolas Hayek this week is the passing of a legend. He will forever be credited with engineering the rebirth of the Swiss watch industry. He had his admirers and detractors as a dynamic entrepreneur, but he undeniably possessed a gift for envisioning possibilities in products that others would never even consider.  In the early 1980s, the Swiss watch industry faced looming catastrophe as it failed to realize the importance of quartz watches, even though the quartz watch had been invented in Switzerland in 1967. The Japanese were undercutting Swiss manufacturers with a glut of inexpensive but accurate and reliable watches, reducing Switzerland's global market share to 20%. Industry analysts argued that with its high labor costs Switzerland could never compete.  With the country's two largest watch manufacturers close to financial collapse, the Swiss bank UBS ( UBS - news - people ) turned to Nicolas Hayek as a consultant. He eventually managed to consolidate much of the industry into the highly successful Swatch Group, deploying a unique combination of business insight and organizational and people management. Drawing on a business school case study I authored, here are some management lessons from Hayek's professional life that can serve as examples for leaders in any industry.  Hayek quickly realized that no one doubted the quality of Swiss watches but the industrial landscape was chaotic and ignored the changing global environment. He was initially asked to assess the problems of two leading Swiss watch manufacturers, SSIH (Societé Suisse de l'Industrie Horlogère) and ASUAG (Allgemeine Schweizerische Uhrenindustrie AG), and he concluded that Swiss watch companies had become absorbed in the technology of producing watches rather than thinking comprehensively about what made a customer actually want to buy a watch. In short, the manufacturing process had become detached from a clear understanding of the market.  The high price of Swiss watches had been based on a promise of exceptional accuracy and reliability. It was assumed that accuracy required complex, finely tuned engineering that justified high pricing, but Hayek realized that the quartz watch had erased that advantage. He decided that the customer had to be sold on the idea of wearing a watch as a personal statement. If an astronaut wore an Omega watch, a consumer could identify with the adventure of walking on the moon by wearing the same watch. For Swiss watches, the message counted more than functionality.  He drafted an analysis that was eventually accepted, and then he was asked to manage the newly formed consolidated company that was to become the Swatch Group. It would control 18 leading brands, including Blancpain, Breguet, Longines, Omega and Rado.  He realized from the start that turning the industry around would require effective control over management. In 1984 he was offered and accepted the chance to buy a stake in the merger of the two largest Swiss watch companies. After lengthy negotiations he put up a third of his personal fortune, and he persuaded other investors to join him so he could gain a 51% controlling interest. He intentionally avoided going to banks for financing, because he didn't want interference from people not directly associated with the business. In 1985 he became chief executive officer.  Beginning with the Swatch, which was based on a new "slim line" watch that had been developed by AUSAG before the merger, Hayek invested heavily in automation and the standardization of parts and tooling. This produced economies of scale and improved quality. Production was centralized, and parts were designed to be interchangeable. The various brands continued to maintain fiercely independent marketing and sales departments, but they no longer handled their own manufacturing, which was centralized directly under Hayek's control. The different brands now had to submit competing bids to get their watches produced, and large orders required Hayek's personal signature.  Consolidating the process eliminated production overruns and made it possible to get a clearer picture of what was actually happening. Hayek soon realized that 80% of Omega's sales came from only 15% of its models. He had the number of models reduced from 2,000 to 130.
The man who saved the Swiss watch industry has died. His career holds lessons for people in every industry.