COO Insights "Growth through transformation" - Roland Berger

COO 

INSIGHTS 

THE MAGAZINE FOR 

CHIEF OPERATING OFFICERS 

JANUARY 2013 ISSUE 

TRANSFORMATION 

DON'T GET STUCK 

Everyone knows about Nokia: fi rst rubber boots, then 

cell phones. But Bostik? A leading subsidiary 

of the French oil and gas company Total, Bostik started 

out producing shoe adhesive and now – under CEO 

Bernard Pinatel – has come up with the smart diaper. 

What is the true story behind growth through change?

FIGURE IT OUT 

63 % 

of managers worldwide 

would take a pay 

cut in exchange for an 

interesting task* 

(*See page 6 to find out what that task might be) 

Source: Egon Zehnder International 

2 

COO Insights | 01.2013

EDITORIAL 

Dear readers, 

The great economist and political scientist Joseph Schumpeter 

summed up his life's work as follows: "Early in life I 

had three ambitions. I wanted to be the greatest economist 

in the world, the greatest horseman in Austria, and the 

best lover in Vienna. Well, I never became the greatest 

horseman in Austria." 

Schumpeter was quite a man. Born in 1883, he introduced 

modern concepts such as "innovation" and "venture 

capital" to the business world. He added a fourth factor of 

production to land, labor and capital: entrepreneurship. 

However, he is perhaps best known for his idea of "creative 

destruction". He argued that it is not size that determines 

the strength of companies, but their ability to adapt; it 

is not readiness to change that makes good managers, but 

their determination to actively shape that change. 

This issue of COO Insights bears the title "Transformation". 

We present you with a challenge, but also provide you 

with guidance and courage. Courage for what? In the 

words of Schumpeter: For the inexhaustible energy of the 

"capitalist machine" and the "eternal storm" of economic 

change. 

Thomas Rinn, Partner 

thomas.rinn@rolandberger.com 

Martin Erharter, Partner 

martin.erharter@rolandberger.com 

COO Insights | 01.2013 

3

CONTENTS | ISSUE 01.2013 

12 

GLOBAL 

PERSPECTIVE 

Good examples. 

Traditional 

companies around 

the world are 

reinventing 

themselves – on an 

ongoing basis 

29 

PRODUCT OF 

THE FUTURE 

Small but 

powerful, and often 

underestimated. What 

exactly are LEDs? 

39 

OUTLOOK 

In the next issue: 

Material 

bottlenecks: Dealing 

with shortages 

TITLE 

6 


Better now than too late 

Transformations are an endurance test for businesses. How can firms 

institutionalize change and make it permanent? 

16 

INTERVIEW 

Bernard Pinatel 

The Bostik chief on lessons learned from the radical Pegasus cure 

24 

CARVE-OUTS 

The art of separation 

What traps do firms fall into when spinning off parts of the business? 

And how can they best avoid them? 

30 

HR MANAGEMENT 

Thomas Tomkos talks about departures 

Companies often have an easier time letting people go than the other way around. 

Why? And when is the best time to say goodbye? 

WORKSHOP 

33 

WORTH KNOWING 

Facts & fi gures 

Petrochemicals, automotive suppliers, risk controlling and the power 

of innovation in developing countries 

37 

KIOSK 

Essay: Thinking about limits 

Book tip: On Good Management. The Corporate Lifecycle. 

Three thoughts on key issues 

38 

7 QUESTIONS FOR... 

...Eberhard Sieger 

Fresenius Medical Care's COO coordinates 20 production facilities around the globe, 

each of which has as many as 2,000 employees. How does he do it? 

14 

VOICES 

"Let's have a look…" 

The serious – and 

less serious – things 

that famous people 

have to say about 

change 

23 

RECYCLING 

A different type of 

transformation. 

What happens to 

aluminum? 

2 

FIGURE IT OUT 

3 

EDITORIAL 

39 

IMPRINT 

4 


TITLE 

| MAIN TOPIC | 


>Noun (Lat. transformare, "to change 

the shape or form of"): A basic change of 

shape or structure without the loss 

of substance or content. A business 

transformation involves redefining all 

the company's relationships

TITLE | TRANSFORMATION 

BETTER A 

FEASIBLE SOLUTION 

NOW THAN A 

PERFECT SOLUTION 

TOO LATE 

Transformations push companies to their limits. What appears to 

be the right step today may turn out to be the wrong 

step tomorrow. Successful transformation means institutionalizing 

change in the organization 

AAT FIRST SIGHT it looks simple. A fi rm's "operating 

model" is, in broad terms, defi ned as its chosen 

operational and organizational structure for the 

process of delivering goods or services. This can 

be limited to its core operating processes or it can cover all 

the business processes, including distribution and crossdivisional 

functions. Firms use their operating model as a 

tool to secure their business and strengthen their position 

in the value chain. Make-or-buy questions, striking the 

right balance between centralization and decentralization, 

choosing between direct and indirect sourcing and delivery 

of products, deciding whether to integrate a supplier 

or sell a business to a competitor – in times of constant 

globalization and dynamic markets, these are everyday 

matters. 

But the reality is far from simple. How can fi rms achieve 

growth in mature markets and concentrating industries? 

What opportunities do niche markets offer? How should 

companies deal with increasingly strict regulation? And 

above all, how should they respond to pressure from 

developing nations and aggressive competitors? These are 

the questions that fi rms face on a day-to-day basis – and 


7


"If you want to shape 

the future MARKET, 

simple organizational repairs 

and optimizations 

are not enough." 

that for many represent their greatest challenge. Recent 

years have seen deep, painful restructuring processes in 

the business world. Yet few top managers are really happy 

with how things have turned out. Focusing solely on 

cutting costs and streamlining the organization whittles 

companies down to their bare bones and compromises 

their strategic fl exibility. New growth based on innovation 

rarely results from cost-reduction or effi ciency-boosting 

programs – frequently carried out chiefl y for the sake of 

being seen to be doing something. 

Many businesses are now able only to react; they are 

no longer able to take action. Never has uncertainty been 

greater: Conditions can suddenly worsen and business 

complexity grow overnight. For many companies, managing 

in times of hyper-volatility means simply taking things as 

they come. The road ahead has become impossible to 

foresee. 

Roland Berger Strategy Consultants has helped many 

successful companies through processes of transformation. 

What can we learn from these companies? How did former 

incumbent monopolists such as the German power 

companies E.ON and RWE manage to turn themselves 

into global players? How did they successfully integrate 

their acquisitions? How did a number of separate national 

companies become the leading aerospace fi rm EADS? In 

other words, where should we look for examples of 

successful transformation? 

MANAGEMENT – 

THE ART OF THE IMPOSSIBLE 

T 

The legendary head of US conglomerate General 

Electric (GE) and American management star Jack 

Welch elevated the art of the impossible to a 

guiding management principle. His motto was 

"fi x, close, or sell". Under his leadership, a permanent mood 

of crisis became the key feature of GE's corporate culture. 

Welch rigorously pruned the organization back to its core 

competences, sold off unprofi table or unpromising parts of 

the organization and spent billions buying up dozens of 

new businesses. He also spearheaded a cultural revolution 

that swept old traditions out of its path. Fortune magazine 

and its German equivalent manager magazin named him 

"the world's toughest boss". His nickname? Neutron Jack. 

Welch's key achievement was to transform a somewhat 

ragtag GE into a lean, mean growth machine, focused on 

one thing and one thing only: customer satisfaction. In the 

1980s, Motorola developed the Six Sigma program. Welch 

made it his religion. 

The name "Six Sigma" is a reference to standard 

deviation, represented in statistics by the Greek letter 

sigma. Sigmas are used to measure the spread of process 

results around a mean. Three sigmas indicate roughly 

67,000 defects per million opportunities (DPMO). In realworld 

conditions, Six Sigma quality means 3.4 DPMO, or 

99.99966% defect-free. 

At fi rst sight, Six Sigma looks like cost management in 

a new guise. But although Six Sigma does involve saving 

costs, it involves much more besides. It means profoundly 

transforming a fi rm's character to achieve operational 

excellence – without signifi cantly changing the business 

model in the process. 

The principle is as relevant today as it ever was – more 

so, in fact. According to Volkmar Denner, CEO of Robert 

Bosch, the world's biggest automotive supplier, the 

company is in the midst of a paradigm shift and fundamental 

transformation process. 

Denner is busy transforming Bosch into a broad-based 

technology concern. True, the company recently acquired 

the Service Solutions division of US multi-industry 

manufacturing fi rm SPX Corporation for a cool USD 1.15 

billion with the aim of exploiting growth opportunities in 

its core car business and strengthening its profitable 

repair shop business with new diagnostic machines and 

other equipment. But at the same time, Denner looks to 

the future, talking about ideas such as "the Internet of 

things and services" – a new world in which machines 

communicate with each other largely independently and 

intelligently. 

"Networking via the Internet is one of the most 

powerful global trends, still greatly underestimated by 

many businesses," says Denner. For Bosch, it's all about 

connecting the virtual and physical worlds. That means 

not just producing things, but making sure that they are 

connected via the Internet and offer customers added value 

via supplementary online services. 

The Internet has experienced many technological leaps 

since its creation. Denner again: "Today, we can assume 

that the power of computers, the bandwidth available for 

data transmission and the memory capacity of cloud 

computing will double every two years or so." This is the 

basic driver for the technological road forward – a road 

that ultimately leads to "the Internet of things and services". 

Time is of the essence. "Above all, we must be fast enough 

to keep up with the rapid development of the market long 

term. Only by doing so can we master the challenges that 

technological progress brings in its wake. And only then 

8 


can we make the most of the great opportunities that this 

offers for our customers, our employees and the Bosch 

Group as a whole," says Denner. 

SETTING THE BAR THROUGH 


I 

If you want to shape the future market, simple 

organizational repairs and optimizations are not 

enough. Firms must systematically reorganize their 

business systems, intelligently linking restructuring 

and innovation, cost optimization and growth. Keeping up 

with the best in the industry is not suffi cient: You need to 

constantly reset the bar. The key word is transformation; 

the goal is a company that continuously transforms itself. 

If it decides to go down this road, it needs to reformulate 

and restructure its strategic and operating processes. 

This process must involve every part of the company, 

including marketing, management, structures, strategies, 

resources and processes. Successful transformation means 

institutionalizing change in the organization, thereby 

securing the very future of the business. Transformation 

is not an isolated management tool. 

In its most effective form, it is a practical combination of 

various methods and approaches. Fundamental portfolio 

adjustments, innovative market strategies, business 

process reengineering and organizational realignment 

are combined with tools from sustainable change 

management, implementation and steering. 

Transformation is not just about optimizing or adding 

things, either. Sticking to the old structures or adding new 

elements does not always lead to success. Ultimately, 

transforming an operating model is about swapping 

something old for something new. Physical assets need to 

make room for new elements. New competencies need to 

be incorporated. The firm's culture, traditions and IT 

systems must evolve. 

Continuous transformation streamlines the company's 

processes, but reshaping the operating model can go much 

deeper. It can be painful, too, involving shutting down 

factories, changing the value chain model, spinning 

off traditional activities and outsourcing former core 

competencies. Transformation doesn't just mean careful 

optimization: it means transitioning to a radically new 

operating model. 

Sometimes transformations can go wrong. French 

electronics company Technicolor (formerly Thomson) tried 

FROM SHOCK AND DENIAL TO ACCEPTANCE AND INTEGRATION: 

Dealing with major change always follows a certain pattern 

MOTIVATION/ 

PERFORMANCE 

>Good management 

helps people understand 

change, accept it 

and make the necessary 

adjustments faster 

TARGET 

TARGET 

Denial 

With change 

management 

Integration 

ACTUAL 

Acceptance 

Shock 

Anger/guilt 

Trial 

Depression 

TIME 

Source: Roland Berger

to leave its former core area of entertainment and enter the 

digital video business – with disastrous results. Between 

2000 and 2006, it acquired a number of companies in 

line with its ambitious new strategic direction. But 

limited integration, little strategic transparency and a 

horrendous level of debt led the company to the brink of 

collapse. Only fi nancial restructuring managed to save 

the fi rm's neck. 

TIMING IS EVERYTHING 

CCorporations rarely transform themselves 

proactively – they are afraid of the costs involved, 

the complexity, the risk, or all of the above. It 

comes as no surprise, then, that fi rms frequently 

take action only when their backs are against the wall. 

This is particularly damaging when managers lack the 

proper set of tools required for the transformation process, 

leading to indecision and costing valuable time. The longer 

the transformation lasts, the more diffi cult it will be. 

The right moment for transformation is when the pressure 

on the fi rm is so great that there appears to be no alternative 

to tough action, but the company still has the time 

and the resources needed to carry it out. Ideally, one 

should never put off making a transformation: It may 

deliver an advantage over competitors who are facing the 

same or similar issues. Unfortunately, the signals for 

identifying the right moment are not always the same. A 

key task of managers is to systematically scan competitors, 

customers, suppliers and new technologies and spot 

whether the game is changing or about to change. 

The indicators they use need to be comprehensive, 

sophisticated enough to allow the fi rm time to react, and 

suffi ciently accurate for management to know where to 

take action. 

10 



This is very complex, of course. Take the aerospace industry. 

First, there was a period of "design anywhere, build 

anywhere". The aim was to reduce labor costs and avoid 

exchange-rate fl uctuations. Then companies started reinternalizing 

their activities to protect their innovations 

from overly inquisitive competitors. 

A similar process took place for global iron and steel 

producer ArcelorMittal, which has gradually shifted its 

business from manufacturing products to extracting raw 

materials. 

Their rationale was that iron ore was becoming 

more expensive, so the profi t pool was shifting toward 

extractors. However, lower demand from Asian 

infrastructure programs and the proliferation of new 

mining projects could soon reverse this trend, forcing 

ArcelorMittal to reposition itself once again. 

SEVEN BASIC RULES FOR 

SUCCESSFUL TRANSFORMATION 

T 

The examples above make it clear that transformation 

must be an ongoing, constantly reiterated 

process. As such, it needs to be carefully planned 

and prepared for. Setting transformation processes 

in motion and then steering them is one of the greatest 

managerial challenges of our time. To ensure success, 

managers must follow seven basic rules: 

1. Align all the transformation processes with a 

clear vision 

2. Demonstrate top-management engagement and 

commitment 

3. Ensure a professional, comprehensive project design 

4. Quantify targets (including intermediate targets) 

and assign clear responsibilities 

5. Fully involve the workforce early on 

6. Invest in communication 

7. Create a framework for results-oriented work 

For many managers, defining strategic goals for the 

transformation and then dividing them up into different 

modules feels like a herculean task. But doing so helps the 

organization understand the path to be followed and 

achieve ambitious goals. 

Managers should start with three simple questions: 

What are the reasons for the transformation? Who is 

affected? And what is the end goal? All too often, managers 

overestimate the ability of their company to understand 

the basic concept behind the transformation. 

They pay insuffi cient attention to planning, detailing 

and communicating the change. The best transformation 

plans consist of four to fi ve different modules: Implement 

a new organizational setup, reshape assets, transform 

1 

PHASE ONE / 

Develop a target 

business concept: 

Transformation is a conscious 

act of will on the part of the 

company. The initiative and 

impetus must come from top 

management. A robust business 

concept, based on a clear 

vision, provides the strategic 

direction and framework 

for the transformation. When 

it comes to the innovations 

on which the subsequent 

transformation process builds, 

the company doesn't have 

to reinvent the wheel: Many 

innovations are simply ideas 

that have been transferred from 

other companies or industries. 

2 

PHASE TWO / 

Implement the target 

business concept: 

The vision and strategic 

direction should now be 

fl eshed out to form a concrete 

operating model, ready for 

implementation. At the same 

time, the company should 

address a variety of specifi c 

issues – process optimizations, 

realigning the structural 

organization, product and 

process innovations, and so 

on – so that the design goals 

THE THREE PHASES 

OF TRANSFORMATION 

defi ned in Phase One can be 

realized. Two matters must 

take top priority: implementing 

as many levers as possible 

from the business concept, 

and radically rebuilding 

the company itself and the 

business system. Making 

superfi cial changes or 

optimizing only details will not 

have the desired effect here. 

3 

PHASE THREE / 

Ramp up the 

transformation: 

Lasting change is impossible 

without the help of the 

company's employees. The 

entire workforce must 

be involved in rebuilding the 

company, actively participating 

in team-based problemsolving. 

A comprehensive 

change management process 

is needed, including intensive 

communication, workshops 

to cascade expertise down 

through the organization, 

and training to teach staff 

new skills. Active employees 

contribute creativity and 

knowledge of problems, 

sharpen their awareness of 

issues and are able to 

grasp the thinking behind the 

transformation process. They 

need to accept the changes 

in order to implement them 

long term. In this way, they can 

become the cornerstone of a 

learning organization. 


11

TITLE | KNOWLEDGE 

Companies around the globe are searching for a 

new future – and making dramatic breaks with their past. 

GLOBAL 

PERSPECTIVE 

"PHILIPS" 

NETHERLANDS 

>As TV business declines and 

Asian competitors increasingly 

enter the market for household 

appliances, Philips – Europe's 

biggest supplier of consumer 

electronics – will be turning its 

focus to medical technology. 

"VATTENFALL" 

SWEDEN 

>In the past, Swedish energy 

company Vattenfall hit the 

headlines with breakdowns at 

nuclear plants and the 

construction of new coal-burning 

power plants. In the future, it 

will be making new investments 

only in renewable energy plants. 

"TOYOTA" 

JAPAN 

"NEW YORK TIMES" 

USA 

>The New York Times has shown 

that earning money with digital 

media is possible after all. 

Its online pay scheme has given 

it a completely new source of 

revenue and is considered a 

model for ensuring the survival 

of the industry worldwide. 

"COMMERZBANK" 

GERMANY 

>Commerzbank hopes to 

increase the profitability of its 

retail business with the help 

of new products and modern 

technology. Its objective is 

to create a multichannel bank 

with a more flexible branch 

network, providing customers 

with products and services 

anytime, anywhere. 

"SAP" 

GERMANY 

>SAP's acquisition of the US 

sourcing platform Ariba gives 

the German group a further 

foothold in "cloud software", 

where software is no longer 

located in the computer 

itself but can be accessed 

as needed via a network from 

a desktop computer, laptop 

or cell phone. 

>Toyota's future focus will be 

on electric vehicles driven by fuel 

cells rather than by batteries. 

To cover development costs, 

Toyota is working on the fuel 

cell together with Honda, on 

the hybrid technology with 

Ford, and on building compact 

cars with Renault-Nissan. 

12 



the supply chain, adjust enterprise resource planning – 

capital, operating assets and people must be deployed as 

effi ciently as possible – and so optimize the steering of 

business processes, say. These modules generally cover all 

the main areas for transformation. They help everyone 

understand where the priorities lie and are a great aid to 

communicating the change. 

ENGINEERING THE TRANSFORMATION: 

DESIGNING A ROADMAP 

AND CHANGE MANAGEMENT PLAN 

AA roadmap is needed to ensure a smooth transformation. 

This roadmap should be divided up 

into "milestones" – the more extensive and diffi 

cult the transformation, the more detailed the 

plan should be. Ideally, the fi rst step is to evaluate the mood 

of the employees. What are their expectations? Are they 

likely to accept the changes? And how easy will it be for 

them to change? 

On this basis, the fi rm can then develop an incentive 

program, communication plan, and coaching and training 

plan, especially for those parts of the workforce most 

affected by the change. Every minute and every employee 

counts. A fi rm undergoing transformation is fragile, and 

stakeholders – starting with the management – will be 

constantly on the lookout for any signs of success or 

failure. If anything goes wrong, the whole transformation 

process may immediately be called into question. 

This is exactly what companies need to avoid. Managers 

need to be able to inspire their teams. Transformation 

requires end-to-end communication, on all levels. Trust is 

golden. Employees are the most important ambassadors of 

change. Customers, business partners and shareholders 

must also maintain their belief in the solidity of the fi rm, 

the necessity of the transformation, and the likely success 

of the project. 

People must have faith that the transformation plan is 

the work of someone who knows what they're doing. The 

"A firm undergoing transformation 

is FRAGILE. Everyone involved 

will be constantly on the lookout 

for any signs of success or failure." 

project should be led by someone on the Board, supported 

by a central Transformation Offi ce and a Project Offi ce. 

Steering the transformation is only one part of the job: Top 

management should support the project with a special 

management committee whose role is to examine missioncritical 

modules and assign tasks and responsibilities. 

Transformation specialists should also support the actual 

work, on all levels of management. 

A QUESTION OF CREDIBILITY: 

MAINTAINING PERFORMANCE DURING 

THE TRANSFORMATION 

T 

The more levels of the organization the transformation 

process affects, the more important it 

is to monitor actions and results. Especially with 

bigger projects, it is a good idea to have a special 

controlling system. Results should be expressed in terms 

of what they mean for the fi rm's accounts – additional 

revenue shown as marginal contribution, say, faster processes 

reflected in less tied-up capital, fi nancial innovations 

shown in the costs of capital, increased productivity in the 

personnel costs. 

Yet as important as the ability to measure and plan 

change is, fi rms need to strike a balance. The transformation 

process must not get bogged down in planning bureaucracy. 

It needs a constant impetus. It thrives on the swift 

implication of actions. Ultimately, it is better to implement 

the second-best solution quickly than the ideal solution when 

it is already too late. 

3BUSINESS 

1 

TIPS 

The three rules 

of thumb at a glance 


/ 

Never put off a 

transformation – 

you risk losing 

advantages over 

your competitors. 

2 / 

The more levels of 

the organization 

the transformation 

process affects, the 

more important it is 

to monitor actions 

and results. 

3 / 

The more extensive 

and diffi cult the 

transformation, the 

more detailed and 

better structured the 

plan must be. 

13

TITLE | VOICES 

WHAT THEY 

SAY ABOUT 

CHANGE 

From Kaiser Wilhelm to Henry Ford, from 

Steve Jobs to soccer legend Franz Beckenbauer, 

it seems like everyone has something to 

say about change. Their observations are smart, 

thought-provoking and witty – and at times 

anything but politically correct 

2 / 

JOHN F. KENNEDY 

US PRESIDENT 

The problems of the world 

cannot possibly be solved 

by skeptics or cynics whose 

horizons are limited by the 

obvious realities. We need 

men who can dream of 

things that never were, and 

ask why not. 

3 / 

FRANZ BECKEN- 

BAUER 

SOCCER PLAYER 

Let's have a look, 

then we'll see. 

5 / 

JOHN SCHAAR 

US POLITICAL 

SCIENTIST 

The future is not a 

result of choices 

among alternative 

paths offered by the 

present, but a place 

that is created – 

created first in the 

mind and the will, 

created next in 

activity. The future 

is not some place 

we are going to, 

but one we are 

creating. The paths 

are not to be found, 

but made. And the 

activity of making 

them changes both 

the maker and the 

destination. 

1 / 

STEVE JOBS 

FOUNDER OF APPLE 

Death is very likely the single best invention of life. 

It's life's change agent. It clears out the old to make 

way for the new. (...) Sorry to be so dramatic, but 

it is quite true. Your time is limited, so don't waste 

it (…). Don't be trapped by dogma – which is living 

with the results of other people's thinking. Don't 

let the noise of other people's opinions drown out 

your own inner voice. And most important, have 

the courage to follow your heart and intuition. (...) 

Everything else is secondary. 

4 / 

JOHANN W. 

VON GOETHE 

POET 

When a great idea enters the 

world as a gospel, it becomes 

an offense to the multitude, 

which stagnates in folly; 

and to those who have much 

learning but little depth, it is 

folly. Every idea appears at fi rst 

as a strange visitor, and when 

it begins to be realized, it 

is hardly distinguishable from 

fantasy and illusion. 

6 / 

KAISER WILHELM II 

OF GERMANY 

I believe in 

the horse – the 

automobile is 

just a temporary 

phenomenon. 

14 


7 / 

CARLY FIORINA 

BUSINESS LEADER 

Strong leadership has to 

do with change. You have 

to seize opportunities. 

8 / 

ST. FRANCIS 

OF ASSISI 

Lord, grant me the 

serenity to accept 

the things I cannot 

change, the courage to 

change the things I 

can, and the wisdom to 

know the difference. 

9 / 

LAWRENCE J. 

ELLISON, CEO, 

ORACLE 

CORPORATION 

Behind most great 

and successful 

products or businesses 

are entrepreneurs 

who were turned 

down a hundred times. 

12 / 

JACK WELCH 

FORMER CE0, 

GE 

10 / 

ANDY WARHOL, ARTIST 

When people are ready to, they change. 

They never do it before then, and 

sometimes they die before they get around 

to it. You can't make them change if 

they don't want to, just like when they 

do want to, you can't stop them. 

11 / 

ALAN MULALLY, CEO, 

FORD MOTOR COMPANY 

As demoralizing as a slide down may be, the ride up 

is infinitely more exhilarating. 

We knew what it meant 

to be a great company. 

A great company 

can do nothing worse 

than "administer" its 

greatness. Greatness sets 

you free or it inhibits 

you. We tried to remind 

ourselves every day 

that our greatness gave 

us the freedom to travel 

new paths. 

13 / 

HENRY FORD 

AUTOMOBILE PIONEER 

Anyone who stops learning 

is old, whether twenty or 

eighty. Anyone who keeps 

learning today is young. 

The greatest thing in life is 

to keep your mind young. 

14 / 

BERTHOLD BRECHT 

PLAYWRIGHT 

Little changes are the 

enemies of great changes. 

15 / 

CHARLES DARWIN 

BRITISH 

NATURALIST 

It is not the strongest of 

the species that survives, 

nor the most intelligent 

that survives. It is the one 

that is most adaptable to 

change. 


15

Bostik chief and 

Member of 

the Board at Total 

Bernard Pinatel took 

the helm of the French 

adhesives specialist in 

2010 – and has since 

left no stone unturned 

16 COO Insights | 01.2013

TITLE | INTERVIEW 

"WE MUST 

AWAKEN 

A GIANT 

FROM ITS 

SLUMBER" 

When he fi rst took offi ce, Bernard Pinatel, CEO of France's 

Bostik Group, prescribed a radical cure for the innovative 

adhesives specialist. The Pegasus transformation project sets 

an example for other companies as they move into emerging 

economies. In what way? 

Monsieur Pinatel, over a 

century ago, Bostik started 

out as a manufacturer 

of shoe adhesive. What 

remains of that business 

today? 

Not very much, I fear. 

Shoe adhesive is a mature 

technology from which we 

have long since moved on. 

One thing has remained, 

though: the Bostik brand. Our 

venerable tradition makes us 

an institution in the fi eld of 

adhesives. The name Bostik is 

synonymous with quality and 

fi rst-class service. 

Where does Bostik operate 

today? 

In three large markets. The 

fi rst are our retail customers. 

Then there is the building 

trade. Lastly, we partner with 

large industrial customers, 

including prominent 

automotive companies and bigname 

manufacturers of 

hygiene products. To serve 

these customers, we have 

identifi ed three technology 

platforms in which we are 

number one or two worldwide 

and which give us a critical 

edge over the competition: 

elastic adhesives for tough and 

fl ex i ble b ond i n g ; pr e s s u r e - 

sensitive adhesive technologies 

that can be repositioned and 

reused; and adhesives that use 

hydraulic bonding agents and 

polymer dispersions for the 

The company 

in figures 

4,800 

1.5 

3 

BOSTIK 

EMPLOYEES 

in more than 50 

countries (from France 

to New Zealand). 

BILLION EURO 

(2012 sales) make 

Bostik the global market 

leader for high-tech 

adhesive and sealing 

solutions for construction, 

transportation, hygiene 

products and packaging. 

IN-HOUSE R&D LABS 

and 11 centers of applied 

research. Bostik's 

worldwide R&D spend is 

set to double over the next 

fi ve year s. 


17


About 

BERNARD 

PINATEL 

>Bernard Pinatel studied 

at the Ecole Polytechnique 

engineering school, the 

Paris Graduate School of 

Economics, Statistics and 

Finance (ENSAE) and the 

Institut d'Etudes Politiques 

(Sciences Po). 

>He also has an MBA from 

the INSEAD Graduate 

Business School. He began 

his professional career 

as a strategy consultant at 

Booz Allen Hamilton. 

>In 1991, Pinatel joined 

Total subsidiary Hutchinson 

as an analyst in the 

Strategy Department, 

subsequently becoming 

Vice President Production 

in Germany. A three-year 

spell with Synthron 

preceded his return to 

Total in 1999. 

>Pinatel was appointed 

CEO of Bostik France a 

year later, and of Bostik 

Europe in 2003. 

>In 2012 he assumed 

global responsibility as 

CEO of the Bostik Group, 

and was also appointed 

to Total's Management 

Committee a year later. 

construction industry. We 

want to concentrate our 

resources on these platforms. 

That sounds like a 

complete overhaul. 

We are in the middle of a 

transformation process. The 

very name "Pegasus" is a sign 

that we are pressing ahead 

energetically toward our aim 

of technology leadership. We 

want this vision to take wing, 

so to speak. 

Why? 

Bostik has grown constantly 

through acquisitions, evolving 

into a federation of small and 

medium-sized companies with 

sales of over EUR 1.5 billion 

and 4,800 employees. 

We have incorporated around 

30 medium-sized companies 

into the group since 2000. 

Today we operate in over 40 

countries, where we sell a 

comprehensive portfolio of 

modern technologies. In the 

long run, however, that will 

push our decentralized 

organization to its limits. 

Up to now, Bostik has been a 

generalist with a rather 

narrow focus. It has been 

unable to translate its size 

into genuine competitive 

advantages. The challenge 

now is to awaken the Bostik 

giant from its slumber. 

What was your initial 

focus when you began at 

Bostik in 2010? 

The fi rst thing was to take 

stock. On the assets side, I 

noted Bostik's enormous 

potential: good technologies, a 

strong brand, international 

staff with an entrepreneurial 

mindset and solid fi nancing. 

On the liabilities side, I saw a 

lack of focus and slow growth. 

That was no longer acceptable. 

"MY PRIMARY 

TASK IS TO CHART 

THE COURSE, 

STAKE OUT THE 

DIMENSIONS 

AND PUT THE RIGHT 

PEOPLE IN THE 

RIGHT PLACES" 

Working from the conviction 

that our company possesses 

excellent growth potential, we 

concentrated on our strengths 

and developed a clear-cut plan 

of action: global expansion 

based on specialized 

technology platforms and 

central marketing. 

The company was set up in 

the US, then taken over by 

French oil and gas giant 

Total in 1990. How would 

you describe Bostik's 

corporate culture today? 

Is it American? French? 

International? 

Defi nitely international and 

multicultural. That is the glue 

that binds us together. We 

operate a fl exible model that 

commits us to entrepreneurial 

initiative. It is built around a 

small holding company with 

sovereign functions such as 

HR, fi nance, central 

management and purchasing. 

Our operating units are close to 

our customers around the 

world, with the result that we 

are often perceived as a local 

company. We know our endcustomer 

markets very well. 

How strong is Total's 

influence? 

With our growth-driving 

acquisitions, Total has been 

instrumental in Bostik's 

positive development. A year 

ago, Total reviewed our 

transformation strategy and 

gave us the thumbs-up to go 

ahead and implement it. In 

return, Total expects 

convincing fi nancial results – 

which is perfectly natural. 

Henkel, Germany's market 

leader in adhesives, posts 

sales that are six times 

those of Bostik. That's not 

an easy position for you to 

be in. What weapons do 

you have at your disposal? 

First of all, we have our 

innovative strength. We know 

how to make intelligent 

adhesives: functional products 

that can do a lot more than 

just stick things together – 

and that are also sustainable. 

Products that are less than 

three years old currently 

account for 11% of sales. By 

2016, we aim to increase that 

to 15%. Then there are 

emerging markets such as 

18 


TRANSFORMATION THROUGH INNOVATION 

The Roland Berger approach focuses on six levers to achieve sustainable 

corporate transformation 

Goal – To activate growth 

1 

STRATEGY 

Focus growth/ 

investment 

Goal – To optimize costs 

6 

RESOURCES 

Knowledge/fi nance 

2 

MARKETING 

Products/services 

Systems (sales, etc.) 

GOAL-ORIENTED 


TROUGH 

INNOVATION 

5 

PROCESSES 

Differentiation 

Time/costs 

3 4 

MANAGEMENT 

Motivation 

Compensation/rewards 

STRUCTURE 

Centralization/decentralization 

Leaner hierarches 

Source: Roland Berger 

>KEYWORD: BUSINESS TRANSFORMATION 

A fundamental change in a company's relationship with 

its business and social environment. A business 

transformation involves redefining all the company's relationships. 

China and Brazil, where our 

multicultural corporate DNA is 

a promising growth driver. In 

2008, we had 900 employees 

in the Asia-Pacifi c region. 

Today, we have 1,500. Three 

years ago, only 13% of our 

sales came from emerging 

markets. By 2013, the fi gure 

will probably have doubled. 

But our real objective is even 

more ambitious: We want to 

generate more than a third of 

our sales in high-growth 

regions. Only recently, we 

took two new facilities into 

service in Cairo and Ho Chi 

Minh City. We have now 

launched production in 

Shanghai, our third site in 

China. And the takeover of 

Usina Fortaleza reinforces our 

presence in the Brazilian 

market. We have another 

strength, too, which should 

not be underestimated: our 

operational excellence. We are 

launching an assault from all 

sides – service, quality, and 

competitive cost structures. 

The need for transformation 

is a matter of heated debate 

right now. What do you 

understand by this phrase 

at Bostik? 

Transformation is not an end 

in itself. Its aim is to help us 

tap our tremendous growth 

potential. The focus is on our 

vision: To sell intelligent 

adhesives – adhesives with 


19

additional functions. Diapers 

are a good example because 

they are easy to understand. 

We have developed adhesives 

that not only stick, but also 

change color when the diaper 

is wet. Smart products of this 

kind lie at the heart of what 

we are doing. We want to 

leverage them to transform 

ourselves from the inventor 

to the manufacturer of 

pioneering products. 

Not all at once 

Bostik's Pegasus 

transformation 

project comprises 

four stages, spread 

over five years 

What exactly do you mean? 

We are transforming our 

organizational structure from 

a local model to one with a 

more global orientation. As I 

see it, the development of new 

materials in scientifi c 

laboratories is one of the most 

important trends of the 21st 

century. We have set up three 

central laboratories for this 

purpose – for the Americas, 

Asia and Europe respectively. 

In addition to the US 

laboratory in Milwaukee, we 

are currently building a large 

research center at Compiègne, 

France, that will go into 

service in 2014. The third 

laboratory, in Shanghai, 

opened recently. Each of these 

facilities works like a global 

center of excellence for our 

technology platforms. That 

shows how far we have 

already progressed along the 

road from generalist to 

specialist. Maybe we no longer 

sell everything, but what we 

do sell is world-class. 

You have opted for a 

multi-stage transformation 

process. Why? 

Right from the outset, we felt 

that this approach was the 

most sensible one. At a 

very early stage, we realized 

that we didn't want to do 

everything at once. 

We felt that a slower approach 

would give the company room 

to absorb the changes step by 

step without compromising 

the high standards of which 

we are rightly proud at Bostik. 

In spring 2011, we staked out 

the framework for the four 

stages of transformation. After 

that, we defi ned and further 

divided up action packages for 

all fi ve years of the Pegasus 

project. 

An entrepreneurial 

vision is one thing, but 

the specific need for 

transformation is another. 

How do you link the two? 

The vision comes fi rst, and the 

strategy fl ows from that. Every 

guideline imposes principles 

that must then be broken 

down into action plans. For 

example, the Pegasus project 

involves doubling our 

worldwide R&D spending over 

20 



"WHETHER OR NOT 

A MESSAGE 

IS RELEVANT AND 

COMMANDS 

CREDIBILITY IS 

JUDGED BY WHETHER 

MANAGERS BEHAVE 

APPROPRIATELY 

IN THEIR DAY-TO-DAY 

WORK" 

the next fi ve years. We are 

redefi ning our R&D 

governance from scratch 

at the global level. And in the 

process, we are completely 

redefi ning the organization, 

the processes and tools, the 

activity profi les, the way we 

develop and train our 

engineers, and the interface 

with marketing. 

What is your verdict so 

far, halfway through the 

Pegasus project? 

2012 was a very good year for 

Bostik. We were able to 

increase our sales by 10%. 

We are growing despite the 

diffi cult climate, which is 

encouraging for our teams. 

Many transformation 

processes fall at the hurdle 

of communication. 

How do you mobilize the 

organization? 

We launched Pegasus with a 

worldwide road show. A global 

conference with our senior 

managers was followed by 

meetings with the managers 

from the major regions, where 

we talked about strategic 

action areas and the metrics 

we would use to measure our 

success. One example is what 

we call our Innovation 

Performance Indicators. 

We keep our teams regularly 

informed via newsletters and 

videos. The end-of-year Global 

Innovation Forum, at which 

we present prizes for 

exemplary innovation, also has 

an important part to play. 

We created the Bostik 

University in partnership with 

the Vlerick Business School in 

Belgium, drawing up a series 

of training programs that 

include fi nance, strategy and 

leadership modules as well as 

case studies taken from our 

companies. Interestingly, the 

broad consensus among our 

people is that globalization 

means that we have to change, 

too. The fact that we invest 

heavily in developing talent, 

recruiting and marketing is 

undoubtedly another powerful 

5 x Pinatel 

INSIGHTS 

1 / 

GROWTH 

"Transformation is not an 

end in itself. It is intended 

to help us tap our growth 

potential." 

2 / 

PRODUCTS 

"Maybe we no longer sell 

everything, but what we do 

sell is world-class." 

3 / 

STRATEGY 

"The vision comes first, 

and the strategy flows 

from that. Every guideline 

imposes principles that 

must then be broken 

down into action plans." 

4 / 

PERSONNEL 

"We are adopting an 

international approach to 

the personnel build-up 

in order to further enrich 

our cultural diversity. 

Diversity is a key part of 

our strategy." 

5 / 

COMMUNICATION 

"Barrier-free contact and 

communication with top 

management is essential 

to the way we work." 

motivator. Coupled with the 

support Total has given us for 

our growth policy, this 

confi rms the wisdom of our 

strategic vision. 

Has Pegasus changed 

the style of management 

at Bostik? 

Bostik has always had an 

informal, open management 

style. That has not changed at 

all. Barrier-free contact and 

communication with top 

management is essential to the 

way we work. My door is 

always open, and that goes 

for all the other doors at topmanagement 

level in our 

headquarters as well. 

But there are still areas 

that you need to develop, 

aren't there? 

Yes, our personnel, which we 

are currently doubling at 

strategic locations. We are 

doing that for production, but 

also for our fi nance and sales 

units in fi ercely competitive 

markets. We are adopting an 

international approach to the 

personnel build-up in order 

to further enrich our cultural 

diversity. Diversity is a key 

part of our strategy. 

And the CEO? What part 

does he have to play? 

My primary task was to chart 

the course, stake out the 

dimensions and put the right 

people in the right places. I 

also believe that it is important 

to be a role model. Whether 

or not a message is relevant 

and commands credibility is 

judged by whether managers 

behave appropriately in their 

day-to-day work. It is also 

important to communicate 

the messages that you have 

defi ned, again and again. And 

it was crucial that our teams 


21


Adhesives from Bostik 

EXAMPLES 

INDUSTRY: HIDDEN 

FROM VIEW, BUT GREAT ON 

PERFORMANCE 

A tall order: Diapers are expected to keep 

baby's skin dry, but also to stand up to the 

wild climbing and sliding exploits of adventuresome three-year-olds. 

They mustn't leak, hurt, draw attention to themselves or damage 

the environment. That's where hygienic adhesives come in, sticking 

together the parts that belong together. Bostik has pioneered the 

development of adhesives in bodycare and hygiene. The fi rst ever 

patent-protected affi xing adhesive for women's hygiene products 

comes from Bostik. Today, the company's adhesives can be found 

in many products: diapers, incontinence products of all types, 

non-woven products, handkerchiefs, wet towels and wipes for 

home and industrial use. Bostik also has a strong presence in the 

automotive, transportation, aviation and shipping industries. 

CONSUMERS: DO IT YOURSELF 

Crisis? What crisis? Generally speaking, 

DIY and home improvement stores are as 

upbeat as ever. In Germany alone, every 

passing year sees more people leave more 

money in the country's 2,500 or so stores. And no wonder: Doing it 

yourself – if it works – is far less expensive than forking out for a 

professional tradesman or -woman. Germany's DIY and home 

improvement stores turned over nearly EUR 10 billion in the fi rst six 

months of 2012, and the uptrend has yet to peak. Bostik is reaping 

the rewards. PVC glue, tile and parquet adhesives, wallpaper 

adhesives and removers, sealants, foams – you name it, the French 

specialist has everything you need for bonding and sealing when it 

comes to building, renovating and modernizing. The company's 

motto? Professional quality for all. 

CONSTRUCTION: DON'T 

SCREW IT – STICK IT 

In almost every area of construction and 

industry – from fi rst-time building 

to modernization – traditional joining 

processes such as welding, riveting and screwing are being 

complemented or replaced by the use of adhesives. Modern 

adhesives are simple to use, don't make a mess and can bond all 

kinds of materials without diffi culty. Bostik claims to sell the industry's 

most comprehensive array of innovative, professional-standard 

adhesives for the construction industry. The spectrum covers everything 

you need for bonding, durability, fl exibility, water resistance 

and resistance to the elements. Bostik's recipe for success? 

Experience, the ability to innovate even in supposedly mature 

product areas, and all-round support – including technical advice, 

training, specifi cation and on-site analysis – for professional users. 

"ONE OF MY DAILY 

TASKS IS TO 

SAY NO, TO EXPLAIN 

THAT YOU CAN'T 

DO EVERYTHING 

YOURSELF" 

successfully communicated 

all these changes to Bostik's 

partners, customers and 

suppliers. In addition, I am 

personally responsible for 

keeping our major shareholder 

informed of the progress of the 

project. 

How do you maintain 

consistent operational 

performance during such 

a transformation? 

It's not easy. Doing the same 

things again and again – 

drilling them into our people's 

consciousness – helps a lot. It 

keeps our teams from falling 

back into their old ways and 

wanting to do everything 

themselves. One of my daily 

tasks is to say no, to explain 

that you can't do everything 

yourself. In the course of the 

transformation, we have also 

rolled back and prioritized 

certain projects. 

Our challenge is to continually 

devote our full energy to the 

work of developing the 

technologies of the future. The 

fact that our teams have a clear 

roadmap and clearly defi ned 

responsibilities makes them 

much more effective. 

Aren't you afraid that 

centralizing your strategy 

could pose a threat to the 

authenticity of your brand? 

Not at all. On the contrary, we 

are strengthening our brand. 

And the human factor will 

continue to play a pivotal role 

at Bostik in the future. The 

challenge for us is to keep our 

enterprising spirit and our 

ability to acquire and provide 

optimal service to customers 

alive in the long term, and 

at the same time to translate 

our strengths into success 

around the globe. Ultimately, 

the bottom line is always the 

measure of your success. 

In light of your experience, 

what advice would 

you give to a company 

that is thinking about 

transformation? 

The most diffi cult thing is to 

mobilize the company and its 

people. Compared to that, 

developing a transformation 

concept is easy. It is very 

important to communicate a 

clear, coherent and consistent 

message. And then, above all, 

you have to ensure that the 

message is heard, understood 

and put into practice. Your 

people and your teams need to 

know that the management 

gives its unreserved backing to 

the project, that everyone 

will be pulling in the same 

direction. 

22 



Aluminum: A special kind 

of transformation 

RECYCLING 

70 % 

Aluminum is the most-recycled 

packaging material in the world. 

Around the globe, nearly 70% 

of all aluminum cans are recycled. 

60 95 

Aluminum casings can also be 

recycled comparatively quickly. Within 

60 days, the material is 

back on store shelves in a new form. 

% 

100 % 

Aluminum recycling requires 

95% less energy than 

manufacturing primary aluminum. 

4 

3h 

WASHINGTON 110 000 000 000 

Recycling a single aluminum can 

save as much energy as a television 

uses in three hours. 

If all of the nearly 110 billion cans made in the US every year 

were recycled, a city of the size of Washington, D.C. 

could be supplied with electric power for almost four years. 

Additionally, aluminum 

recycling can "save" nearly 

170 million tons of 

greenhouse gases worldwide. 

1880 

Industrial production 

of aluminum 

began in the 1880s. 

75 % 

Some 75% of the aluminum 

that has since been manufactured 

is still being used. 


23

TITLE | CARVE-OUTS 

We have lift-off! 

Crashes, failed acquisitions, 

integration problems: 

The reasons for carve-outs 

are many and varied – 

as are the rules for handling 

the separation successfully 

24 COO Insights | 01.2013

THE ART 

OF SEPARATION 

A painless farewell? Carve-outs are essential to ensure 

a healthy portfolio. But spinning off parts of the company can be 

a tricky business. What traps can fi rms fall into? 

COO Insights | 01.2013 25


WWHAT 

A TURNAROUND: Leverkusen-based chemical company 

Lanxess had a diffi cult birth in 2004, consolidated its 

position and is now – since last September – one of the most 

valuable fi rms in Germany. The company has risen to 

the heady ranks of the DAX-30 with panache: Profit (EBITDA) 

has almost doubled in just seven years to EUR 1.1 billion, 

sales are up by a quarter, and headcount is expanding at a 

giddy rate of 10% a year. It wasn't always like that. The fi rm 

started out with weak returns, painful losses and a whopping 

EUR 1 billion in debt. 

In 2004, weakened by the withdrawal of its cholesterol-lowering 

drug Lipobay and an ailing economy, Bayer decided to spin off its 

unpopular chemicals and polymer business and fl oat it on the stock 

exchange under the name of "Lanxess" – a combination of the 

French word for "to launch" and the English word "success". The 

skeptics had a fi eld day. Deutsche Bank described the move as 

"mission impossible". Journalists called the new fi rm "junk". Meryll 

Lynch described it as "the least profitable chemicals firm in 

Europe." Today, they've changed their tune. 

In 2004, CEO Axel Heitmann laid down the line for the 

managers of the new fi rm: clear hierarchies and processes, simple 

reporting structures, a focus on problem-solving and innovation. 

It worked. Lanxess has long since overtaken its former parent 

company in terms of its share price development and return on 

equity. Today, the spin-off is considered one of the most successful 

in modern German economic history, a model for all carve-outs 

to come. 

Carve-out. The word suggests something faintly unpleasant. 

But for investors, a carve-out is simply a great opportunity to take 

over the lucrative parts of a company rather than an often ailing 

whole. Private equity fi rms with a long-term orientation are always 

on the lookout for lines of business that could be profi table but 

that lack strategic value for their parent company. Carve-outs are 

about putting part of a fi rm that has been split off from the rest 

solidly on its own two feet. 

There are many reasons for carve-outs. Sometimes they are 

the result of a failed acquisition. Sometimes they follow on the 

heels of a crash. Sometimes fi rms are forced to get 

rid of their problem children as a result of mistakes 

by management, portfolio streamlining, debt, or 

simply a change of strategic course. Often a number 

of factors come together – as in the case of Lanxess. 

Corporate crises can demand major sacrifi ces. 

And on occasion, the owners decide that the 

core business has more growth potential and value 

than a ramshackle assortment of subsidiaries and 

shareholdings. 

No one is immune. Generally, however, 

carve-outs are easier at medium-sized companies 

than in big corporations. As a rule, the changes 

there – especially those with major consequences 

for stakeholders – meet with less resistance. 

But whatever the size of the company, carveouts 

are never easy. 

From the outside, a company may look like 

a single, closed entity. But the reality can be 

very different, especially in the case of international 

players. Such corporations often turn 

out to be highly complex formations consisting 

of structured networks of shareholdings and 

subsidiaries, with countless interconnections 

and interdependencies. The greatest challenge 

is identifying as many of the formal and – even 

more difficult – informal relationships as possible and 

severing them in a controlled manner. If the operation is successful, 

both parent and offspring thrive. If it fails, the consequences 

can be dire. 

At fi rst glance, it looks like a walk in the park. Take the 

necessary action with regard to the organizational structure, follow 

the right legal steps and voilà, you have all the necessary conditions 

for a carve-out. The former business unit or division fi rst becomes 

an independent entity, separate from the parent company. Only 

then is the exact type of separation defi ned: IPO (as in the case of 

Lanxess), spin-off or sale. 

The diffi culties start with the transaction costs, however. 

Carve-outs often overburden the organization. That means less 

time for other jobs. And if core aspects of corporate planning 

are neglected – product or market development, say – the 

consequences may be fatal. 

Carve-outs require clear management. The whole process needs 

to be carefully orchestrated. Ideally, the fi rm begins by defi ning a 

carve-out strategy. It follows this with an "exit due diligence", 

which looks into the various strategic options and the conditions 

they require. Next the fi rm calculates the key fi nancials and makes 

forecasts. Then comes the planning of the carve-out and divestment 

projects. Finally, on the transfer date, the legal process is 

completed and the appropriate governance structures put in place. 

All in all, it's a mammoth task for management. And the 

complexity of the divestment is only one of the traps that fi rms 

can fall into. 

26 


Managing complexity 

Carve-outs are a mammoth 

task for management. 

The complexity of the 

divestment is just one 

part of the challenge; the 

other is communication. 

HERE ARE THE MOST COMMON TRAPS THAT 

FIRMS MUST WATCH OUT FOR: 

1. The carve-out is not planned from beginning to end 

Corporate structures often seem set in stone. Parts of the business 

are perceived as non-strategic but, at the same time, nondivestible 

– areas that the fi rm cannot easily dispose of for antitrust 

reasons, say. Often the fi rm fails to draw up a systematic carve-out 

program. 

Spinning off one area of business may not be enough: It could 

be that several areas need to go. This was the case with Bayer/ 

Lanxess: fi rst the subsidiary became fully independent, then it 

spun off certain of its own divisions, such as textile chemicals. 

2. The carve-out is delayed 

The decision-makers in M&As often try to drag out the process. If 

they receive a good offer for the part of the company that is up for 

sale, they hold out for an even better one. If they only receive offers 

below the asking price, they abandon the sale altogether. Firms 

often fail to recognize that the entity offered for sale must be 

attractive for the buyer long term, and at least self-supporting. The 

timing of mergers or acquisitions – making the right decision at 

the right time – plays a major role in carve-outs. 

3. The focus is solely on financial aspects 

Investment bankers and auditors play an essential role in 

acquisitions. Their advice is vital – and comes with a hefty price 

tag attached. Financial and operational due diligence are 

considered something of a silver bullet in the acquisition process. 

Yet there is disagreement about the contribution made by 

fi nancial advisors when it comes to spin-offs. 

The reason is not hard to fi nd. The operational aspects of 

the carve-out are often left to the auditors and their transaction 

teams, whose assessments skirt over strategic aspects such as 

sustainable growth and operational effi ciency. 


27


4. Parent company and subsidiary are bound together 

by long-term agreements 

Carve-outs have two objectives: to spin off operating units 

entirely and to give them independence from the moment 

ownership is transferred. 

The problem? Supply and service agreements between the 

parent company and the subsidiary sometimes remain in place, 

removing any pressure to bring the company into line with the 

new reality. Planning exits carefully and sticking to a strict 

timetable can reduce this danger. Even so, there is a risk that the 

parent company will slip into the role of external service provider. 

In practice, this is not a role that the parent company will fi nd 

easy: It lacks the necessary experience. What is more, long-term 

contracts can scare off potential buyers. 

5. Expert knowledge is lost 

Companies don't just lose plants and machinery during a carve-out, 

they also say goodbye to people and their expertise. This can be 

a problem. Particularly in countries with few raw materials, fi rms 

rely on the knowledge and innovative capacity of their employees. 

Their future is in the heads of their staff. Employees maintain 

relationships with customers, suppliers, former colleagues – and 

competitors. 

Like mergers and acquisitions, carve-outs can generate 

massive insecurity among staff. The greater this insecurity, 

the more likely people will consider leaving the company. This is 

particularly true in the case of high performers, who have no 

difficulty finding new jobs. Staff need to be well informed 

"Companies don't just 

lose plants and machinery 

during a CARVE-OUT, they 

also say goodbye to people 

and their expertise." 

about the changes. Indeed, the importance of proper internal 

communication prior to a carve-out cannot be overstated. 

Credibility and openness on the part of top management are the 

key to trust and continuity. 

6. Complexity is underestimated 

Carve-outs require a profound understanding of the fi nancial 

dependencies that exist between the parent and its subsidiary 

companies. These dependencies are particularly critical for the 

company that is sold or spun off, as the split can threaten its 

survival. 

The new entity can suddenly fi nd itself cut off from internal 

IT systems, logistics structures, IP rights, expert knowledge, 

marketing apparatus or supply and delivery channels. Internal 

structures are usually built around specifi c solutions that have 

developed over years. Replacing or reconstructing them can be 

both diffi cult and expensive. 

New growth from old 

Carve-outs demand 

sacrifices. But spinning 

off a business division 

can ultimately help the 

company blossom 

7. The operating ecosystem is overlooked 

Big corporations tend to have their own ecosystem based on 

collaboration. They rely on partnerships between entities that are 

separate legally or operationally, for whom the whole is stronger 

than the parts. Ignoring these networks makes for unhappy 

customers and partners. In the worst-case scenario, it can lead to 

serious legal disputes. 

Conclusion: Ignore the complexity of carve-outs and risk 

paying the price later on. 

The truth is that carve-outs are an extremely tricky business. Yet 

successful companies need them to manage their portfolio 

successfully, even if they are a massive drain on resources. The 

keys to success are drawing up a strategy, preparing the ground 

early on, planning thoroughly and paying careful attention to the 

interests of employees and the operating ecosystem. Experience 

can play a major role. 

Firms that ignore the complexity risk heavy costs further down 

the road. But those that follow the right strategy will reap the 

rewards of stable long-term growth and healthy earnings. Lanxess 

shows that this is possible. Indeed, the company hopes to double 

its operating results again by the year 2018. 

28 



BRIGHTNESS: Unlike many energysaving 

lamps, LEDs work at full strength 

immediately – they don't need to 

warm up fi rst. The color of the light – 

red, blue, white, etc. – can also be 

accurately controlled. That annoyingly 

dim, yellowish light from energyeffi 

cient lamps? A thing of the past. 

Small but powerful. 

What exactly are LEDs? 

LIFETIME: LEDs typically 

have a lifetime of up to 

50,000 hours, even in diffi cult 

conditions. By comparison, 

incandescent light bulbs last 

between 1,000 and 4,000 

hours, and energy-saving lamps 

up to 10,000 hours. Another 

advantage of LEDs is that they 

don't contain any lead or 

mercury, making disposal easier 

and protecting the environment. 

PURCHASE PRICE: An LED as bright 

as a traditional 60-watt lamp is 

about twenty times more expensive. 

One reason is that LEDs require cooling 

systems to prevent damage to their 

electronic components, which makes 

their production more expensive. 

However, almost all LEDs pay for 

themselves in the medium term thanks 

to their lower operating costs. 

TECHNOLOGY: LEDs – "light-emitting 

diodes" – are semiconductors whose 

resistivity depends on temperature. When 

switched on, electrons recombine with 

electron holes in the device and generate 

light. Because a single diode gives little light, 

many LEDs are combined in each device. 

POLITICS: Customers are still reluctant to 

pay the higher prices associated with 

LEDs (they cost up to 20 times as much as 

comparable incandescent light bulbs). But EU 

policies mean that in the future they will have 

little choice. Since 2009, the EU has placed 

increasingly tight restrictions on non-energyeffi 

cient lamps. And in September 2012, when 

the sale of even 25- and 40-watt bulbs was 

banned, the lights went out for traditional light 

bulbs for all intents and purposes. 

LED 

EFFICIENCY: As the incandescent 

light bulb disappears from our daily 

lives, so does a much-loved unit 

of measurement: the watt. In its place 

comes the "lumen" – a measure of the 

amount of light emitted by a lamp on 

all sides. An old 60-watt incandescent 

light bulb emits around 710 lumens, 

or about 12 lumens per watt (12 lm/W). 

LEDs emit ten times this amount. 

POPULARITY: Automobiles are 

driving the popularity of LEDs. 

In 2007, Volkswagen was the 

fi rst manufacturer to fi t a seriesproduced 

vehicle – the Audi 

R8 – with LED headlamps. Now 

almost all Audi models are 

available with LED technology. 

By 2020, the share of LEDs 

in the global market for vehicle 

lighting should reach 34%, 

compared to 12% in 2010. 

GROWTH MARKETS: Thanks to 

state subsidies, China currently has 

the fastest-growing market for LEDs. 

European fi rms are under pressure to 

keep up. Research and development 

in the area of LEDs requires 

expertise in semiconductors, chips 

and software. However, the market 

leader for memory chips – Samsung 

– is in South Korea. 

OUTLOOK: The next generation of LEDs is 

already with us: organic LEDs (OLEDs). OLEDs 

produce high-quality diffuse light and have even 

greater output than LEDs. OLEDs will initially 

be used in display systems: they are very thin 

and use less energy than LCD displays as 

they require no backlighting. By 2020, they will 

represent 60% of energy-effi cient lighting. 


29

TITLE | HR MANAGEMENT 

YOU CAN NO 

LONGER COUNT 

ON STABILITY 

Timing is everything 

Quit while you're 

ahead? According to 

Tomkos, "continuing 

success" is the best time 

to think about who 

should take over next 

HR consultant Thomas Tomkos talks 

about departures, management 

continuity and when to call it a day 

Mr. Tomkos, when was the 

last time you had to say goodbye to 

something important? 

Oh, I've often had to say goodbye to 

important things, personal things. 

Leaving people is the hardest. But I've 

also said goodbye to points of view, 

preconceptions or how I do things. You 

cannot count on stability anymore – 

I accept that. 

Is that easy to do? 

Not at all! You're always getting in your 

own way. You go on for a little bit and 

then you see that you've gotten carried 

away and now you have to make a break. 

But that doesn't mean that you're 

automatically able to do it. 

Why do we find change so difficult? 

Because it means having to contradict 

yourself a bit. You suddenly have to prove 

that what you said yesterday is no longer 

the case today. We are creatures of habit. 

Much of our effi ciency is based on routine. 

There's a reason that successful companies 

have the motto "Never change a winning 

strategy". That's not necessarily wrong, 

but the point is, what is a winning 

strategy? And when does it stop being the 

right choice? 

30 


Are managers who find it easy to 

change course better? 

Certainly not! People want their 

managers to be predictable. Once they've 

adjusted to something, they want it to 

stay like that for a while. If managers are 

constantly changing their minds and 

always distancing themselves from their 

supposed principles, they automatically 

lose credibility. 

So flexibility is a core qualification 

for a modern manager? 

Yes, they have to be able to be fl exible. 

But the emphasis here is on "be able to". 

They don't always have to be. It's not a 

bad idea to critically question changes. 

The pressure on companies to move 

on from the old way of doing things is 

increasing every day. 

Managers nowadays have to cope with 

extreme levels of complexity. 

Developments are not always easy to 

comprehend. Uncertainty and volatility 

make their lives diffi cult, and time plays 

a major role. Decisions made today 

could already be obsolete by tomorrow. 

Managers have to be able to deal with this 

by moving away from one-dimensional 

planning toward evaluating scenarios. 

This provides them with more options. 

They have to be able to jump into this 

way of thinking, although not recklessly. 

How many managers are aware of this? 

More than before, but it's not something 

you can take for granted. The crux of it is, 

many young managers have experienced 

few major upheavals, or in some cases, 

none at all. The only recent ones are the 

fall of the Iron Curtain and the bursting 

of the dot com bubble – and those were 

already some time ago. Yet such dramatic 

changes are formative experiences. You 

need to have them to be able to cope with 

uncertainty, change or departures. 

On average, board members are 

well over 50 years of age. Board 

chairmen frequently take over as 

head of supervisory boards. Women 

are virtually non-existent at the 

top levels. If you retire before your 

| Ranking | 

THE 

BIG FIVE 

1 / 

KORN FERRY INTERNATIONAL 

680* 

2 / 

EGON ZEHNDER INTERNATIONAL 

644 

3 / 

SPENCER STUART 

604 

4 / 

HEIDRICK & STRUGGLES 

528 

5 / 

RUSSELL REYNOLDS ASSOCIATES 

464 

*Annual revenue worldwide in USD 

million. Source: HSZ Media 

time, you're seen either as a failure 

or an eccentric. Do we in companies 

have more of a "hold on" than a "let 

go" mentality? 

I personally see top management getting 

younger and younger. But when have 

you ever seen anyone willingly give 

up fun, power and infl uence? Or someone 

who admits that he is the reason for 

the company's stagnation and decline? 

In middle management, where the 

transformation of companies actually 

takes place, there is often in such 

situations a major reshuffl ing of people, 

which I think goes a bit far. By contrast, 

leadership succession at the top of 

companies is an extremely diffi cult topic. 

Do companies need a "departure" 

culture? 

We need a discussion culture that 

puts thinking about succession and 

transformation on the agenda. 

Quitting while you're ahead requires 

a quiet strength that we often lack. 

We put too much stock in values such 

as perseverance and endurance. 

You can't just throw in the towel; you 

have to stay in the game. 

That's ultimately not a bad mindset. Steve 

Jobs from Apple wouldn't have become 

what he was if he had behaved differently. 

Great strides in science and business 

are made by people who doggedly 

persist in spite of all obstacles. The real 

question is: Where and when do 

you create stumbling blocks for yourself? 

But not finishing something that 

you've started is still often seen as 

a failing – or career suicide. 

What's so terrible about managers 

realizing that they're heading 

in the wrong direction? Isn't true 

strength knowing when to 

stop chasing unattainable goals? 

The critical question here is, what was 

really happening? Why did that 

person leave? Did he do anything wrong 

when considering changing jobs? And 

what exactly happened after he left? If 

the answers to these questions are 

coherent and I have the impression that 

the manager has learned something, 

then I am willing to back him in the 

future. But if, over a short period of time, 

somebody gives me three reasons that 

sound "too" convincing, then my gut tells 

me something's not right. 

Some managers thrive on rapid 

change. 

Oh yes, and rightfully so. They take on 

one project after the other, for example 

in private equity, and they're extremely 

successful. There are also people who 

don't last long in personal relationships. 


31

TITLE | HR MANAGEMENT 

But then I wonder, why do they have to 

go and get married? 

Companies let people go, and people 

leave companies. How do you know 

when it's the right time? 

When you see continuing success. 

What do you mean? Failure would 

seem to be a better reason. 

Sure. But by then it's usually too late. The 

best time for the supervisory board to 

>Some industries appear 

to lead a charmed 

existence. Even in the 

darkest of times, they 

prosper and thrive. HR 

consultants the world 

over know exactly what 

we're talking about. 

Whatever happens in the 

economy, the sun almost 

always seems to shine on 

the glamorous executive 

search industry. When 

things are going well for 

companies, business also 

booms for HR consultants. 

When things are going 

badly, companies more 

than ever need good 

quality managers who 

can weather the storm. 

No surprise, then, that in 

2010, in the midst of the 

fi nancial crisis, when the 

world was teetering on 

the edge of a global 

economic catastrophe, 

HR companies recorded 

their third-best results 

worldwide since records 

began, according to data 

from the Association 

of Executive Search 

Companies (AESC). 

Revenues were up 28.5%, 

at around USD 9.6 billion, 

just 13% below their alltime 

high of 2008. 

The strongest growth was 

seen in the Asia-Pacifi c 

area (up 31%), followed 

by North America (27%) 

and Europe (17%) – 

where the UK, Germany 

and France led the pack. 

Even the beleaguered 

fi nancial industry 

experienced growth, albeit 

at just 0.9%. According to 

a study by the Federal 

Association of German 

Management Consultants 

(BDU), companies are 

particularly on the lookout 

for engineers, designers, 

IT directors, IT specialists 

and members of control 

and supervisory boards. 

Some 87% of the HR 

consultants surveyed 

expect to see particularly 

strong demand for middle 

managers with 10 to 

15 years' experience. Two 

factors are driving the 

business: demographic 

think about who should take over in top 

management is during the success phase. 

I'm not saying that there must then 

necessarily be a parting of the ways. But I 

do think that this is precisely the point 

where you have to have a discussion. The 

departure will come, sooner or later. By 

the way, it doesn't always have to be about 

replacing current managers with new 

ones. There are also more moderate ways 

to make personnel changes, such as by 

hiring new people. 

THE SUN ALWAYS SHINES 

Whatever happens in the economy, the sun almost 

always shines for headhunters 

change and the expected 

generation shift in business. 

Money also plays an 

important role: Two out 

of three managers change 

jobs in order to increase 

their pay packet and 

boost their retirement 

funds. But money is by no 

means the only reason. 

Many managers are 

looking for a better work 

environment or to escape 

from challengers. 

Of course, there is no 

such thing as a perfect 

manager: In the fi rst 

place, there is no reliable 

way of measuring what 

makes a good manager; 

and in the second 

place, fi nding the top 

people actually means 

looking for the most 

suitable candidates 

currently available on the 

market. Plus fi rms often 

overestimate how 

attractive they are. What 

remains is always a 

compromise – and sometimes 

simply a matter of 

luck. 

Are there other indicators? 

Yes. There are indicators that have to do 

with the success of the individual, and 

others that have to do with the company 

as a whole. For instance, when the 

business model changes and you have to 

ask yourself if your team can really handle 

the change. This applies to, say, the brutal 

transformation in the media industry, 

the radical changes in automotive 

manufacturing or a new dawn in the 

fi nance sector. There is another indicator 

for the individual: How many new ideas 

do you get from your immediate 

environment? Or how often and with how 

much enthusiasm do your people still 

come to you? If you take the time to give 

this careful thought, you'll notice 

differences over the years. In the end, you 

might discover that you're rarely being 

inspired anymore. That means something 

is seriously wrong. 

There's a certain amount of evidence 

that companies have an easier time 

letting people go than the other way 

around, although the reasons are 

usually the same. Why is that? 

It's diffi cult for individuals to recognize 

when they are at the apex of their 

careers and now need to ask themselves if 

they're ready and in the right place to 

change course. 

Is this difficulty explained by the 

fear that they can no longer 

define themselves by their position 

or function, but are instead "just" 

a person? 

Naturally, nowadays we rate people based 

on what they've achieved professionally. 

Our jobs defi ne us, unfortunately to the 

extent that we hardly ever ask: How much 

of that is truly me? And what is left over 

if I no longer have this job? 

If you could give companies one 

piece of advice about letting go, what 

would you say? 

As an HR consultant, I would say: If 

companies could manage to let go of the 

idea of recruiting what they know and 

start recruiting what they need, then they 

would defi nitely be making progress. 

32 


WORKSHOP 

14 % 

| FACT | 

>Intelligent risk management boosts 

corporate results by up to 14%. 

More about this and other studies 

on the following pages.

WORKSHOP 

COO Insights 

Issue 01.2013 

WORTH KNOWING 

Increase in demand for polyolefin* by region (in millions of tons) 

NORTH 

AMERICA 

28 

31 

33 

CAGR: 

2000-2015e 

1.1% 

EUROPE 

22 

25 

25 

0.8% 

MIDDLE 

EAST 

5 

16 

25 

11.4% 

ASIA 

27 

47 

61 

5.5% 

2000 2010 2015 

*Indicator for general demand for petrochemical products 

Source: Deutsche Bank 

| Global petrochemicals | 

WHO IS REALLY 

BENEFITTING FROM 

THE GROWTH IN 

THE NEW WORLD? 

Rising oil and gas prices, growing demand from emerging economies and strong global 

competition are presenting petrochemical companies with new challenges. Long-term reliable 

access to feedstock, technologies and global markets is becoming increasingly important. At the 

same time, capacity within Europe is becoming less competitive and losing significance. 

To remain successful going forward, companies can strengthen their market position in 

three ways: expansion, acquisition or cooperation. Our study analyzes the current situation 

across the industry and outlines possible solutions for the global petrochemicals market. 

http://rbsc.eu/U99RhC 

34 


COO Insights 

Issue 01.2013 

| Innovation – Products – Engineering | 

OUR APPROACH 

India 

USD 40 bn* 

*R&D expenditure 

(2012) 

"Promoting innovations, 

repositioning their own products 

for greater value, significantly 

improving technical efficiency – 

these things have become a 

strategic imperative for our clients." 

China 

USD 200 bn* 

Max Blanchet, Partner at Roland Berger 

IPE 

| Global topics | 

EMERGING MARKETS 

ARE CHANGING THE GLOBAL 

INNOVATION AGENDA 

Promotion of 

innovations 

Product optimization 

http://rbsc.eu/VKMYXn 

Technical efficiency 

Global innovation and change processes 

are increasingly being shaped by emerging 

markets. Some Western managers see 

these countries simply as exciting new 

markets. But as they develop, so will 

competition and the pressure to innovate. 

The global R&D map is changing 

dramatically. New centers of innovation 

are emerging. China and India, for 

example, already export more R&D services 

to the EU than they import from it. The 

new competitors are particularly strong 

in a new category of products developed 

specifically for the lower and middle 

market segments and priced accordingly. 

This segment, with its simple innovations, 

is one of the fastest growing in many 

markets and industries. In the latest 

publication in our GLOBAL TOPICS 

series, we analyze this process and show 

how firms can best profit from the 

transformation. http://rbsc.eu/PPXR7S 

| Mastering product 

complexity | 

Product complexity has increased dramatically. Almost 

all industries have to respond to consumers' wishes for 

differentiation. The number of different products has more than 

doubled in the last 15 years, while product lifecycles have shrunk 

by around 25%. Managing complexity has become a key 

success factor as fi rms are forced to cut their production and 

distribution costs. Our study presents four different approaches 

and shows the savings that can be achieved. 

http://rbsc.eu/RV9sUg 

€ 

Machinery 

EUR 46 bn 

€ 

Chemicals 

EUR 39 bn 

Potential 

global savings 

from complexity 

management in 

different industries 

(figures rounded) 

€ 

Pharmaceuticals 

EUR 7.5 bn 


35

WORKSHOP 

WORTH KNOWING 

COO Insights Issue 01.2013 

| Rebound of the 

US automotive 

supplier industry | 

After two difficult years, in which sales 

of passenger vehicles dropped by 35%, US 

automotive suppliers appear to be on the road to 

recovery. Our latest study captures the pulse of 

the industry, analyzing current developments and looking at the challenges 

facing an industry undergoing fundamental change. The study also looks at 

how automotive suppliers' stocks are performing – most are down, despite the 

fact that the industry is in better economic shape now than ever before. 

http://rbsc.eu/VKNFjt 

| Boosting company performance | 

SUPPLY CHAIN RISK CON- 

TROLLING AND WORKING CAPITAL 

AS SUCCESS DRIVERS 

14 % 

USD -23 bn 

Decline in market 

capitalization of the 

US automotive supply 

industry over the last 

20 months 

Businesses that actively manage risks in their supply 

chain perform 14% better than those that do not. This 

is the key fi nding of a new study carried out by Roland 

Berger, the University of Hohenheim and the Swiss 

Federal Institute of Technology Zurich, based on an 

analysis of 274 manufacturing companies and more 

than 20 interviews with top executives. The report also 

suggests strategies for directing the drivers of operating 

excellence (with regard to corporate policy and 

organizational structure) toward processes and their 

implementation. http://rbsc.eu/UwZ6GU 

Economic uncertainty hinders entrepreneurial activity 

Confi dent 

Very confi dent 

54% 

21% 

TOTAL 

62% 

23% 

CHEMICALS / 

PHARMACEUTICALS 

55% 

21% 

MACHINERY AND 

PLANTS 

52% 52% 

33% 39% 34% 29% 37% 25% 

23% 

CONSTRUCTION 

15% 

CONSUMER GOODS 

47% Avg. 

22% 

AUTOMOTIVE 

54% 

The percentages 

refer to the share of 

firms that feel "confident" 

or "very confident" with 

regard to entrepreneurial 

activity in 2013. The 

automotive industry 

is noticeably uncertain 

about short-term 

developments; chemicals 

and pharmaceuticals 

much less so 

| Operations 

Efficiency Radar 

2013 | 

In a joint study, Roland Berger Strategy Consultants 

and the International Controllers Association 

(ICV) surveyed more than 100 CFOs and executives at 

manufacturing companies. 

The result is the new Operations Efficiency Radar, 

a decision aid for the CFO agenda in 2013. One of the 

most alarming findings is that, in less than a year, 

confidence in the economic situation has fallen even 

further. Priorities for the CFO agenda have shifted 

accordingly. Further enhancing cost efficiency is now 

one of the main goals for 2013, as is improving working 

capital management. http://rbsc.eu/SKVLnS 

36 


WORKSHOP | KIOSK 

Readers' corner: Recent publications from 

Roland Berger Strategy Consultants 

KIOSK 

THINKING ABOUT LIMITS 

How do companies manage to stay in business for 

decades? How do they deal with the growing 

complexity in the world around us? And what are 

the implications for good management? Three 

thoughts on these issues by Burkhard Schwenker, 

Chairman of the Supervisory Board of Roland 

Berger Strategy Consultants* 

First: Corporate management is growing 

more complex 

When it comes to corporate planning, uncertainty 

has become virtually ubiquitous. This has several 

implications for good management. It means that 

business acumen is once again coming to the fore as 

predictability wanes. It means that it is important for 

leaders to know where they stand and to be able to make 

up their own mind about the future. And it means that 

the ability to reflect on things and the willingness to think 

in interdisciplinary terms is at a premium. After all, if 

we as entrepreneurs want to successfully overcome 

uncertainty, we need to look beyond our own backyard 

and build bridges between business management 

concepts (What is the right way to organize the 

company? How do you gain lasting competitive 

advantage?), economic concepts (How does growth 

work? How is economic policy changing?), sociopolitical 

concepts (What values are important? What attitudes 

will shape future societies?) and geopolitical concepts 

(Where do security risks exist? What significance will 

regional alliances have?). 

Second: The validity of our traditional 

strategy and planning concepts is eroding 

We have all learned that the unit cost of a product can 

be reduced by 20% to 30% every time the cumulative 

production volume is doubled. Or rather, that this is 

true when growth rates are high and the business 

environment is stable. But what do you do when the rate 

of growth shrinks to just 3%? Or when new technology 

suddenly enables new production methods? Or when 

growth of any sort is so volatile that reliable growth 

forecasts are no longer possible? In such circumstances, 

what was previously useful cost information is worse 

than obsolete: it can actually be dangerous. Of course, 

as far as good management is concerned, that doesn't 

mean that we should do without modern quantitative 

models and concepts altogether. But we must be aware 

of the assumptions and limitations that underpin them. 

If trends are no longer reliable, numbers will be of limited 

use as a basis for planning and decision making. If 

numbers cannot help us, we must wave goodbye to 

the idea of wanting to quantify every entrepreneurial 

decision. And if the people in our companies are 

unsettled by complexity, trust in the capabilities of 

management will play a pivotal role. 

Third: We need a new understanding of what 

management means 

Communicating a sense of security is very important to 

good management. I see org charts, for example, 

as symbolic of how we strive for this security. The 

challenge today is that no truly responsible manager is 

in a position to say how long any org chart will remain 

valid. We need something new to replace the security 

that we have lost. To my mind, this can only be anchored 

in the personality of managers and leaders. Managers 

must be able to explain their convictions and how they 

see the future. The good news is that this approach once 

again makes management more entrepreneurial, more 

enterprising. The challenging news is that, on its own, 

that's not enough. Managers also need to cultivate 

an interdisciplinary mindset if political and social 

developments are to be factored into their business 

decisions. That's why analytical skills are still paramount: 

For all the complexity that surrounds us, identifying 

patterns will be as necessary as ever in the future. 

*This is an excerpt from the book "On Good 

Management. The Corporate Lifecycle. 

An essay and interviews with Franz 

Fehrenbach, Jürgen Hambrecht, Wolfgang 

Reitzle and Alexander Rittweger". 

Professor Burkhard Schwenker and Mario 

Müller-Dofel, BrunoMedia Verlag, 

EUR 19.80 http://rbsc.eu/UwZ6GU 

think:act 

CONTENT PVM 

The balancing act 

between product 

performance and 

product cost goes into 

the next round. Our 

taC issue on product 

value management 

shows you how you can 

make products more 

profi table, raise prices, 

cut costs – and make 

your customers happier 

at the same time. 

think:act STUDY 

Innovation 

The global race for 

the lowest costs 

has given way to the 

race for the best 

innovation. Emerging 

countries are investing 

more of their GDP in 

R&D. And their product 

innovations are 

catching the eye of 

customers in industrialized 

countries, too. 

think:act MAGAZINE 

Comeback 

Our latest edition 

of think: act explores 

the secrets of a 

successful comeback. 

No one likes to admit 

to setbacks and defeat. 

Yet mistakes must 

be understood as a 

necessary prerequisite 

for innovation – an 

opportunity to do things 

better in the future. 


37

WORKSHOP | IN CONVERSATION 

EBERHARD SIEGER 

COO Fresenius Medical Care 

1 / Why does Fresenius Medical Care 

need you? 

We manufacture dialysis machines and 

disposable products around the world. 

I oversee the Europe, Middle East and 

Latin America region, in which we 

operate 20 production facilities with as 

many as 2,000 employees each. That's 

a big playing fi eld. My job is to coordinate 

these activities and manage growth. 

One aspect is quickly integrating new 

production facilities wherever it makes 

sense. We distinguish between three 

types of plants. Our "lead plants" drive 

innovation. "Contributor plants" operate 

close to the market, manufacture 

components and cushion each other's 

risks. And our "sales booster plants" are 

of strategic importance in countries 

such as Russia, where local production is 

required if you want to gain signifi cant 

sales advantages. These plants are often 

What is life like as a COO? 

7 QUESTIONS 

FOR... 

brownfi eld investments in which we 

acquire existing factories together with 

the associated sales channels. In some 

cases, that makes integration much more 

diffi cult than managing new greenfi eld 

plants. 

2 / How do you define your role? 

The company expects continuous 

improvement in production costs. The 

problem is that we have largely exhausted 

our economies of scale. Innovation is 

therefore the magic word – and not only 

on the product side. We need to be 

always thinking about how we can offset 

rising costs with intelligent solutions. 

Automation is one way. Using more 

technology to ensure quality in mass 

production is another. In an ideal world 

I wouldn't have to be around and 

all the production processes would still 

run perfectly. 

3 / Does production in Germany 

have a future? 

Certainly! Our lead plants are in Western 

Europe, in Germany, and they will 

stay there. Lead plants need to be close 

to product development. They also need 

highly trained people. Individual 

components can naturally come from 

elsewhere – that's simply a question 

of cost benefi ts. Final assembly can then 

take place where the markets are. 

Aqueous solutions are a good example. 

The bags with the connectors come from 

our plant in France, but they are fi lled 

at microplants on location. That keeps us 

from having to carry water over long 

distances. 

4 / As COO, do you find yourself caught 

between several roles? 

Yes, and I hope it stays like that: that's 

what I am there for. But I don't just sit in 

each role: I am very active. I get around 

and communicate at the key interfaces 

within the company. There is the interface 

with Sales, the interface with Marketing 

and Product Development, the interfaces 

with external suppliers. In organizing 

purchasing, we have just made sure 

that we have R&D-savvy buyers on site at 

our plant in Schweinfurt – people who 

can help shape the product and production 

technologies. 

5 / What takes up most of your time? 

Trying to achieve a balance between 

decentralized responsibility and the right 

dose of central coordination. I naturally 

have a lot of day-to-day business to deal 

with, too. But I much prefer to look ahead. 

In fi ve or ten years' time, what am I going 

to be annoyed about not having set in motion 

today? Ultimately, that's what matters. 

6 / How do you use your resources? 

My most important resources are my 

people. Then having suffi cient capital for 

investments. I try to fi nd people who 

are enthusiastic about their work. Without 

such passion, we can never realize our 

ambition to be the innovation leader. 

7 / What do you stand for? 

For delegating responsibility to the people 

who have the knowledge to get problems 

solved. And for never sweeping problems 

under the carpet. In the value chain, 

every problem is a gift. It's an opportunity 

to continually make things better. 

Brief bio: 

>Since 2004, Eberhard Sieger has been 

responsible for production facilities in the 

EMEA/LA region as Executive Vice President 

at Fresenius Medical Care (FMC). He studied 

Mechanical Engineering at the University 

of Stuttgart and in 1985 took up a post as 

Research Associate at the Fraunhofer Institute 

for Manufacturing Engineering and Automation. 

His career in industry began at TRW Chassis 

Systems in Düsseldorf. Before joining FMC, he 

served as head of spectacle glass production 

facilities at Carl Zeiss in Aalen. 

38 


IMPRINT | OUTLOOK 

COO INSIGHTS 01.2013 

PUBLISHERS 

RESPONSIBLE FOR CONTENT 

IN ACCORDANCE 

WITH GERMAN PRESS LAW 

PROJECT MANAGER 

EDITORIAL ADVISORY BOARD 

DESIGN 

COPYRIGHT NOTICE 

DISCLAIMER 

PHOTO CREDITS 

Thomas Rinn/Martin Erharter 

Roland Berger Strategy Consultants GmbH 

HighLight Towers 

Mies-van-der-Rohe-Str. 6 

D-80807 Munich 

Tel.: +49 (0)89 9230-0 

COO_Insights@rolandberger.com 

Dr. Michael Zollenkop (V.i.S.d.P.) 

Dr. Katherine Nölling 

Dr. Wilfred Aulbur, Carsten Becker, Max Blanchet, Dr. Carsten Bock, Emmanuel Bonnaud, 

Bernd Brunke, Georges de Thieulloy, William Downey, Martin Erharter, Dr. Sebastian Durst, 

Dr. Mehdi Farhadi, Oliver Herweg, Morris Hosseini, Dr. Jaap Kalkman, Dr. Alexander Keller, 

Oliver Knapp, Dr. Thomas Kwasniok, Ambroise Lecat, Per I. Nilsson, Walter Pfeiffer, Thomas 

Rinn, Prof. Dr. Burkhard Schwenker, Benno van Dongen, Thomas Wendt, Dr. Michael Zollenkop 

rb Media Design 

The articles in this magazine are protected by copyright. All rights reserved. 

The articles in this magazine do not necessarily refl ect the opinions of the publishers. 

Questions for the editorial team? Interested in studies by Roland Berger Strategy Consultants? 

Please e-mail us at: katherine.noelling@rolandberger.com 

Cover: Pascal Barreiro, p. 2: Daniel Horowitz, p. 3: Roland Berger Strategy Consultants, 

p. 6, 10: Daniel Horowitz, p. 14, 15: Ralph Zimmermann, p. 16, 20: Pascal Barreiro, 

p. 22: iStockphoto, Fotolia, p. 26, 27, 28: Corbis, p. 29: GIPhotoStock, p. 30: Russel Reynolds 

Associates, Inc., p. 38: Ralph Zimmermann 

Published in January 2013 

COMING UP 

IN THE 

NEXT ISSUE: 

MATERIAL 

BOTTLENECKS 

THE RAPID INCREASE IN PRICES for rare earths has proven a burden to the 

profitability of many companies. The price rise of the 17 rare earth elements has 

slowly been losing momentum. But prices remain high – a problem mainly for 

high-tech companies. High prices are a problem particularly for suppliers of 

magnets for e-mobility and wind turbines, LED lamp makers and providers of 

batteries and catalytic converters for cars. 

How can companies secure the supply of these raw materials? 

What strategies are effective? 

And what questions remain unanswered? 

We answer these questions and others in the next issue of COO Insights 

"Material bottlenecks". 


39

READ THIS 

ISSUE ON YOUR 

TABLET! 

USE THE QR CODE to go directly 

to the Roland Berger Kiosk on your 

tablet or search for "Roland Berger" 

in the App Store. To download the 

Kiosk App, click the "Free" button. 

You may have to sign in with your 

personal iTunes account.

COO Insights "Growth through transformation" - Roland Berger

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?