issue 9 - Roland Berger

ROLAND BERGER STRATEGY CONSULTANTS
Issue 9
The global magazine for decision-makers
What is the world’s most successful region?
Jorma Ollila demands more competition and deregulation.
José Manuel Barroso explains why corporate social responsibility pays.
The “Best of European Business” competition awards Europe’s top companies.

IMPRESSIONS FROM THE “BEST OF EUROPEAN
BUSINESS” AWARD CEREMONIES
1 London: Robert James Thomson, Editor of the media partner The Times, in discussion
2 Zurich: Martin Wittig (left), member of Roland Berger Strategy Consultants’
Executive Committee 3 Paris: Vincent Mercier, also a member of the Executive
Committee, explains how companies are driving European unification.
4 Paris: At the French BEB event, Jacques Delors, former President of the EU
Commission, outlined the central role business plays for political integration.
5 Rome: “Motivazione,” motivation to perform excellently, could well have been the
title for the Italian event. 6 Berlin: Roland Berger (Chairman of the consultancy’s
Supervisory Board) and Burkhard Schwenker (CEO) with award winner Jochen Zeitz,
the CEO of Puma 7 Lisbon: António Bernardo, Deputy CEO of Roland Berger
1 2
3 4 5
6 7

think: act the global magazine for decision-makers by roland berger strategy consultants issue 9 first views f
What factors turn an economic region
into a success story? Around the globe, this question occupies
the minds of policy-makers and entrepreneurs—and nowhere is
there a greater diversity of opinion than in Europe. How is the
Continent positioned economically? How good are its companies,
and which ones are the very best? And is there anything that
business executives can learn from the “Old World”?
In this special edition of think:act, we want to deliver some
answers. In cooperation with leading personalities from the
worlds of business and academia, we analyzed 8000 companies
in Europe and then selected the “Best of European Business” in
the strongest economic regions. The examples of the winners
and nominees, and the stories behind their success, are cause
for optimism. The winning companies set worldwide standards
for growth and profitability.
Our special “Corporate Social Responsibility” award demonstrates
that companies taking their social responsibility seriously can
even develop new business opportunities from it. Manuel Barroso,
President of the European Commission, in his essay for think:act,
says that this is where one of Europe’s strengths could lie.
Other exclusive articles for this Europe issue come from Jorma
Ollila, who calls for more innovation in Europe, and from
Timothy Garton Ash, who is looking for Europe’s identity. George
Clooney, Zaha Hadid and Rupert Murdoch share their vivid
memories of Europe with us.
I hope that, with this magazine, we were able to open up some
interesting perspectives on Europe for you.
Dr. Burkhard Schwenker
CEO Roland Berger Strategy Consultants
3

p contents
think:act appears in five languages (English, German, Chinese, Russian and Polish).
Cake for the masses, recommended Marie Antoinette—without giving
them any. For modern companies, talk is no longer enough. They have to act
responsibly, argues EU president Barroso. Page 40
The US magazine Fast Company called Puma boss Zeitz “one cool
cat.” And his brand is cool too: Puma and other European brands are setting
new standards in the battle for fashion-conscious customers. Page 46
Redefine yourself, historian Timothy Garton Ash tells the Europeans.
In an interview, he wants to start a debate on the old continent’s identity.
But is it sufficient to be diverse? Page 12
It’s quite possibly the richest square mile in the world: the City
of London. Now, it seems that the UK capital’s business center might also
become the most important place for the global finance industry. Page 54
4

contents f
food for thought
6 Viva globalization!
While skeptics don’t believe in the
opening of markets, globalization
can actually benefit everyone.
8 Old continent, new vitality
Europe doesn’t do enough R&D,
says Nokia Chairman Jorma Ollila.
The Finn still remains optimistic.
11 Mandate for policy-makers: stay out!
Two scientists at a Japanese think
tank are voicing their criticism of
Brussels’ policies.
12 Shopping on the bazaar of identities
Timothy Garton Ash demands that
Europe reinvent itself. Globalization
turns identity into an asset.
15 Snapshots of Europe
For George Clooney, it’s la dolce vita;
for Zaha Hadid, cold outdoor cafés.
How does the world view Europe?
20 Don’t stop now!
Companies are telling Brussels
that the reform process must
continue—and faster than before!
dossier
24 50 global benchmarks
What makes companies worldclass?
The “Best of European
Business” award provides clues.
27 CEOs demand more Europe, not less!
An exclusive survey among 430
decision-makers indicates what
companies expect of the EU.
30 All global roads begin at home
Why a mere strategy does not suffice
for the world market
32 Gala for the best
The CEO community honors top
companies in Brussels.
36 Bringing people together
Award winner easyJet pursues a
quintessentially European strategy.
40 Assume more responsibility!
EU commission president José
Manuel Barroso views CSR as
Europe’s competitive advantage.
44 Best of European Business
The national winners at a glance
46 Back in fashion—finally
Puma and others redefine what it
means to be a lifestyle brand.
48 It pays to be green
Eco-business is thriving. And
Europe’s position is strong, according
to Roland Berger research.
51 Back to old strengths
Engineering companies demonstrate
modern management.
industry report
54 Forget New York
The global finance industry is
heading to London. Liberal
regulation attracts big money.
business culture
60 Meetings in the Tower of Babel
Globish is conquering the world—
and a US linguist issues his protest.
62 Hardworking, but gaps in education
An Indian IT entrepreneur intends
to conquer Europe—and encounters
a location with weaknesses.
64 One currency, many problems
The monetary union might be
his dream come true. But Jacques
Delors wants even more.
regulars
3 First views
58 The shape of things to come
66 Service | Credits
Dossier
How good are European companies? The “Best of European
Business” competition offers some answers. Starting on page 23
5

p food for thought
two-thirds of european industries are not threatened by low costs elsewhere
Viva globalization!
Fear of the opening of markets abounds in industrialized nations. But are low-wage countries
and companies’ appetites for outsourcing actually a threat to European business
locations? Is globalization really a job-killer? Not if countries and companies know how
to use it. And, provided that regions such as Europe face the competition, the economic
integration offers primarily opportunities.
Minus one-third
According to the Institute for International Economics,
prices for IT hardware dropped by one-third
between 1995 and 2002 thanks to offshore production.
For one, the savings in this period benefited
all companies that use IT hardware—thereby improving
their profits. That in turn creates and safeguards
jobs in Europe. Inexpensive manufacturing abroad
not only benefits businesses, but private consumers
also save money.
Source: Institute for International Economics
32
of the top 50 transnational corporations are
based in Europe. In other words, European companies
are at the front of the pack in terms of globalization.
Source: United Nations Conference on Trade and Development
€34 billion
1995 2002
is how much it would cost, according to a study by India’s National Association of Software and
Service Companies (NASSCOM), if the UK economy chose not to outsource 272 000 jobs to offshore
locations (outside of Europe) by 2010. The reason for the high cost is a drop in productivity and the
associated decrease in gross domestic product (GDP). On the other hand, if outsourcing does take
place, productivity increases, as does the GDP. However, there are also costs of outsourcing: The
country has to spend €5.7 billion, primarily to absorb the social impact of job losses.
Source: NASSCOM
2 3
/
For more than two-thirds of European industries
(measured by total value added) the rise
of the BRIC (Brazil, Russia, India, China)
countries represents no threat, but rather an
opportunity for growth. According to a Goldman
Sachs study, these industries manufacture
products that are not produced in the BRIC
countries, where lower wages therefore are no
competitive advantage. The biggest winners in
globalization include pharmaceutical companies,
engineering firms, energy companies and
the aerospace industry, as well as producers of
scientific instruments. Generally, northern
European companies profit the most.
Source: Goldman Sachs
2006
2005
Kuehne+Nagel
employees offices
45 000 830
25 000 620
Expansion in logistics
countries
103
98
The figures above describe the impressive network of the Swiss logistics company
Kuehne + Nagel in the last year. One year before that, it only had 25 000 employees
in 620 offices throughout 98 countries. The company benefits when greater international
production requires more goods to be shipped around the world.
Source: Kuehne + Nagel
6

highly qualified people profit from globalization
food for thought f
1000 000
The total number of investments that will
be required in Southeast Asia in the next
several years to expand roads, bridges,
telecommunications networks, port facilities
and airports. For that reason also, the
boom in this region is an opportunity for
European suppliers to generate sizable
profits by means of operations run directly
by them or by local subsidiaries.
Source: Asian Development Bank
Booming trade…
Value of goods exported from the
EU-25 to China between 2000 and
2004 (in thousands of euros)
2000
25 758 363
2002
34 869 433
2001
30 554 226
2003
41 169 881
2.6 %
According to a current study,
salaries for highly qualified individuals
in a given economy
increase by this much if only 1
percent of the production from
that economy is moved to lowwage
countries. Globalization
offers good prospects for highly
skilled people—and that includes
those in Europe, too.
Source: Institute for International Economics, FU Berlin
…and booming ports
Gross weight of goods that were moved in all
seaports of the EU-15 countries between 2000
and 2004 in billions of metric tons
2000
2.9848
2002
3.071284
2001
3.027999
2003
3.188830
Internationalization generates jobs
Top 10 growth sectors in terms of employment in the
EU-15 from 2000 to 2005 (by number of jobs, in thousand)
1. Health care and
social work: 2261
2. Company-related
services: 2143
3. Education: 1176
4. Hotels and restaurants: 885
5. Construction: 828
6. Retail: 595
7. Private households: 523
8. IT and related segments: 448
2004
48 188 598
$1 that US
companies spend in India…
Those who say that globalization is not worth it for the West should rethink the matter right away.
The US example shows how developed economies can benefit. For every dollar that US companies
spend in India, for instance, Indians create $1.46 in added value. Of that, $1.13 goes back to the US.
Source: Journal of Management Studies
$1 $1.46
$1.13
goes back to the US.
2004
3.304564
… generates
$1.46 in added value.
$0.33 goes to wages and salaries for Indians, profits
made by Indian contractors as well as taxes in India.
Source: Eurostat
9. Transportation and travel: 352
10. Recreation and sports: 308
Many industries are growing and creating jobs—also thanks
to international production. Internationalized markets thus
create new jobs in service-oriented industries (e.g., consulting or
accounting), the IT sector, or transportation and travel.
Source: European Labour Force Survey
15 %
Of all the layoffs that European companies
announced in 2005, only 5.34 percent can be
attributed to the internationalization strategies
5.34%
of these companies, or in other words to the relocation
of jobs to countries abroad. In comparison,
bankruptcies were responsible for nearly three
times as many job losses: 15 percent. Job losses
due to globalization are significantly lower than
many people might believe.
Source: European Monitoring Centre on Change
7

p food for thought
in an exclusive for think:act, jorma ollila describes his vision of europe

deregulation and competition have granted us more freedom
food for thought f
Old continent, new vitality
Few decision-makers represent the vision of a strong Europe more vividly than Jorma Ollila.
He turned Nokia into a world market leader. Now Ollila applies his drive to Europe’s economies.
His credo in this exclusive essay: more competition, less nationalism!
:
It’s all about competitiveness—that much
is clear. Improving Europe’s competitiveness
has been a top priority for European
policy-makers for years. However, it remains
a concept that is often misunderstood. It is
seen to solely benefit business and ignore
environmental and social concerns.
But making Europe more competitive is
about more than checking off boxes by the
important issues listed in the Lisbon Agenda.
Competitiveness is about an attitude, an
approach to life that benefits everyone. It
may be best embodied by the degree of
dynamism displayed in economy and society.
The question is how we will increase the
dynamism of our societies.
CHINA’S R&D SPENDING MIGHT PASS
THE EUROPEAN UNION IN FOUR
YEARS, THE UNITED STATES IN SEVEN
This is not to say, of course, that economic
thinking does not matter. A dynamic society
is also economically successful. Dynamic
societies will prevail economically. The Lisbon
Agenda has a clear economic vision—
one that is defined by research and development
(R&D). This makes sense, as there is an
inextricable link between R&D spending
and competitiveness. Hence, the agenda
includes the very specific benchmark of 3
percent of the GDP spent for R&D. Competition
is intense.
The OECD finds that R&D spending is rising
by more than 20 percent a year in China,
and by 4 percent a year in the United States.
In the EU, it is only roughly stable. If current
trends continue, China’s R&D spending will
pass the European Union in four years and
the United States in seven. Numbers of the
Department of Trade and Industry in the
United Kingdom also indicate that the
trans-Atlantic technology gap has widened
in the past year, as American companies
continue to increase R&D faster than their
European rivals. Corporate R&D rose by
5.8 percent in Europe over the past year
compared with 8.2 percent in the United
States. Here, more needs to be done.
However, while the EU has only been able to
achieve mixed results so far on implementing
the Lisbon Agenda, it is encouraging to see
that economies and societies across Europe
have become somewhat more dynamic. This
has contributed to improving Europe’s competitiveness
already and should have an
exponential effect in the future, if accompanied
by the right policy framework. Apart
from implementing the Lisbon Agenda, this
means avoiding economic nationalism and
ensuring economic openness.
Much of Europe’s new dynamism has been
sparked by increased competition. Some of
this competition was voluntary, some was
enforced. Some resulted from external pressure,
some from internal pressure. Some was
JORMA OLLILA is Chairman of both
Nokia and Shell. From 1992 until 2006, the
studied engineer and economist was CEO of
the Finnish mobile phone company. In addition,
Jorma Ollila serves as the head of The
European Round Table of Industrialists (ERT),
an association of European top executives.
controlled, some not. All of it is beneficial for
Europe. Here are the main improvements:
Deregulation, driven mainly by EU policies,
has led to more innovation and technological
development. The liberalization of the
telecommunications sector has forced
companies to bring about innovative new
technologies and services that have added
a great deal of dynamism to people’s lives.
Today, we can all do more things while
spending less time and money. We can structure
our daily lives much more according to
how we would like to lead them than we
could just a decade ago. In part, this is
thanks to technology that allows us to do
several things at once, such as travel and
talk on the phone or access our e-mail from
anywhere. Other forms of deregulation and
competition have given us greater freedom
by reducing our dependence on others. In
many countries, we can now go shopping
whenever we want—or even do it over the
Internet.
LIBERALIZATION OF AIR TRAVEL HAS
LED TO INNOVATIVE NEW SERVICES
AND A NEW WAVE OF MOBILITY
Thanks to the Internet, too, students need
no longer wait for a week to get a book from
the library. Families can stay in touch over
long distances thanks to cheap telephone
calls or via the Internet. Equally, liberalization
of air travel has led to innovative new
services that have brought a new wave of
mobility to Europe, also contributing to its
new dynamism. These examples of deregulation
with practical impact on our lives
9

p food for thought
reforms on the way
“The current upturn may
create a favorable
environment for reform.”
Jorma Ollila
often remain unnoticed as they have
become so self-evident. We definitely need
to continue on this path in many sectors.
EU enlargement saw the accession of 10 relatively
dynamic new countries, most of
them growing faster than the Union’s average.
Their generally business-friendly policies
have led to the adoption of some business-friendly
policies in the older members
of the club, for instance in corporate taxation.
Old Europe is learning from its new
members—a good development. Even with
heavy restrictions on the movement of labor,
the EU as a whole has gained from the new
members’ additional and well-educated
workforce.
Reforms have finally begun to be implemented
throughout the EU. The current
cyclical upturn, if sustained, may create a
more favorable environment for reform.
Competition can work here, too. As reformers
reap the benefits, laggards are exposed,
increasing the pressure for action.
The single currency has created a common
monetary policy that ensures a low inflation
rate, safeguarding the value of money. It has
also brought lower interest rates that have
made investments cheaper. The euro and
the associated monetary policy thus form
the essential basis for a dynamic economy.
Europe is moving away from a subsidy culture.
The European public has long misunderstood
the economic effects of subsidies,
mistaking them for something socially
valuable. They are not. A subsidy for one
sector is always a tax on the others. And the
higher a tax, the more difficult it is to build a
viable economic activity. In this respect, the
recent reform of the EU’s Common Agricultural
Policy was a step in the right direction.
With enlargement, the overall amount of
subsidies has remained more or less stable,
but the number of farms has increased substantially.
The planned abolition of export
subsidies will reduce trade distortions in the
global market and should bring fairer competition.
More such steps will have to follow.
But what is this new dynamism doing for
Europe and Europeans? It is contributing to
increasing employment among all parts of
the population. Unemployment rates are
beginning to fall. This is encouraging, and
even more so as overall growth rates in the
European Union remain low in global comparison.
The disappointing rates of growth
highlight an unsolved problem, but also the
vast potential Europe still holds.
Flaring dynamism should be an encouragement
to policy-makers to enact further bold
reforms. Much remains to be done. Many of
the policy prescriptions vary between individual
countries and call for individual solutions
that provide sustainable conditions. It
is imperative that we build on Europe’s new
dynamism to ensure that it lasts. But if we
all understand that dynamism is economically
necessary and culturally productive,
then I absolutely believe in this continent.
RISABURO NEZU is a senior managing
director at the Fujitsu Research Institute. He is
responsible for various activities in the field of
ICT, science and technology, industry, and a
variety of corporate management questions. He
is also a board member of the Research Institute
of Economy, Trade and Industry. Nezu
joined Japan’s Ministry of International Trade
and Industry in 1970. He is an economist by
education and holds an MBA from Harvard
Business School.
MARTIN SCHULZ is a research fellow at
the Fujitsu Research Institute. He is responsible
for research and consulting on international
economics, finance and industrial restructuring.
Schulz’s work on Japan and Asian economies is
widely quoted in international media, while his
research on European integration is regularly
used by Japanese government institutions.
Before joining the Fujitsu Research Institute,
Schulz was a visiting researcher at the Bank of
Japan and the University of Tokyo.
10

europe has the real opportunity to become a champion
food for thought f
Mandate for policy-makers: stay out!
Europe is gaining confidence. Yet not everybody shares the optimism. Risaburo Nezu and Martin
Schulz from the Japanese Fujitsu Research Institute express their doubts. The two Tokyo-based
researchers do not believe in the effectiveness of top-down initiatives such as the Lisbon Agenda.
:
Economic integration and production
networks are the driving forces behind
current growth and productivity gains in
Europe and Asia. Europe is now enjoying
the returns on its overwhelming success in
promoting economic integration and stability.
The euro is up, stock market valuations
have surpassed the United States, and
Europe has become the world’s foremost
FDI location. Europe has been the largest
recipient of Japanese FDI since 1998.
But Europe is also well known for wasting
potential by allowing governments to play
with “grand designs” while important work
remains stuck in layers of government that
look bewildering to outsiders. One example
is the stunning 2000 “Lisbon Agenda” to
make the EU the most productive economy
(within 10 years) by means of regional
benchmarking, scientific networking and
further education.
Europe’s real problems, however, were to
make regional governments open to foreign
investment and ideas, and not to boss them
with simple benchmarks; to raise overall
R&D and tertiary education levels by making
them more profitable, not by looking for
elite networking. Last but not least, Europe
needs to win the competition for talent, not
by looking abroad but by offering opportunities
to its young people who are still hit by
exceptionally high unemployment rates.
SERVICES DO NOT IMPROVE
THROUGH GUIDED EFFORTS FOR
BETTER VALUE CHAINS
Few in Asia would hold Europe up to
ridicule for failing to reach a lofty goal. In
today’s high-productivity world, however,
getting the work done does count. And getting
the work done here means improving
services. Services, however, do not improve
through guided efforts for better “value
chains” or research networks. They react to
deregulation in labor markets, the free flow
of capital from “old” sectors to new opportunities,
upgrades in IT infrastructures and
the fast dispersion of innovation. On most of
these accounts, Europe still has only a few,
strictly regional, paragons of virtue.
Overall labor productivity in the EU-15
increased only a meager 1 percent per year
in 2000–2005, while even crisis-prone Japan
managed to achieve 1.9 percent and the
United States breezed ahead with 2.6 percent.
“EU labor productivity
increased only a meager
1 percent per year.”
Risaburo Nezu & Martin Schulz
Even worse, the main culprit for this poor
performance is one of the most important
ones: Innovation in highly regulated market
services (especially wholesale and retail
trade, securities trading, and banking) has
been very close to zero. Hopefully, the current
spark of M&A activity across Europe
will do more to invigorate these dormant
potentials than we can expect when reading
the EU services directive.
It seems to us that the biggest risk to the
EU is the persistent belief that integration
success comes from the “top”; Asian corporations
humbly labor to connect their production
networks in a “bottom-up” process.
When viewed from outside, Europe seems to
have fared the best when it tried to bind the
hands of its governments. The euro, for
example, was born after the harmonizationoriented
single-market project seemed to
fail in the 1980s—and it now does its integration
miracles without any possible government
intervention.
FUJITSU RESEARCH INSTITUTE
is a policy-oriented think tank that conducts
private, independent research on economic
issues that face Japan and Asia in the 21st
century. By combining a long-range perspective
with analysis of current economic, social
and industrial issues, the institute plays a
crucial role in drafting proposals for corporate
strategies and for future governmental
policies in Japan.
Similarly, enlargement freed not only many
economies in the East and added a healthy
dose of regional competition from the bottom
up. It also stopped a top-down movement
for political integration (the constitution)
when a simple treaty to fix voting
rights in the European Union’s Council
would have been sufficient to get more integration
work done.
DESPITE ITS PROBLEMS, EUROPE STILL
HAS THE CHANCE OF BECOMING A
CHAMPION OF GLOBALIZATION
Europe’s main attractiveness comes from its
gains in size and the lively tension between
dynamic production centers (in the East)
and excellent service centers (in the West)—
not from elite brilliance or spectacular productivity.
If Europe manages to support
these regional dynamics on the ground, it
has a real chance to become a champion, a
champion not only of regional integration,
but of globalization.
11

p food for thought
bottom-up, europe works
Shopping on the bazaar of identities
Can political structures such as Europe create identities? Yes, says historian Timothy Garton Ash. In
this exclusive interview, Garton Ash proposes that this initially requires a sense of togetherness. In
Europe, this is evolving through a shared idea of the future.
THINK: ACT Professor Garton Ash, in an article
for the British magazine Prospect, you
quoted the old saying that Europeans are a
group of people united by a common hatred
of their neighbors and shared misunderstanding
of their past. How do you want to
change that?
GARTON ASH This quote is a description of the
traditional European nation, the French, Poles,
or Germans, who defined themselves through
their differences from each other. Obviously,
this is not the Europe we want to live in. My
point is that we must not repeat this mistake on
the European scale. There is a danger of defining
Europe by its differences from others, mainly
the USA, but also Islam. Jürgen Habermas
and Jacques Derrida defined Europe as the
Not-America. This is the wrong way.
What is your alternative?
We have to get rid of this kind of “nostalgia for
our enemy”—even if the alternative is more difficult
to realize. I ask what we have achieved,
where we came from, but most of all: Where do
we want to go?
Are there examples in history where a country
has created such a kind of “identity from
the future”? We can’t think of any.
There has been nothing quite like this, but that
does not condemn us to failure. There had not
been anything like the European Union before
in history, and yet, the EU does exist. But there
is one example which comes quite near to my
model of a political community defining itself
from its vision of the future, and that is the
United States. The USA has always been a project
for the future. Herman Melville once said:
The past is the textbook of tyrants, the future is
the bible of the free. I would not go quite so far,
but it is definitely possible to define us from the
perspective towards what does not yet exist.
You launched the Web site www.europeanstory.net,
where everyone can discuss
your suggestions. Most contributions so far
seem to fall back to the old model, discussing
the differences between Europe and
America. Does that not prove you wrong?
They also discuss Europe as being not-Muslim,
the other great alternative. I think it is too
early to judge. My experience shows that if you
write anything in the Internet on Europe, the
first people to contribute are anti-European
Americans. Give it a couple of months. If the
discussion does not evolve, then this would
show that indeed my suggestion may not work.
In that case we would have to get by with a
very weak identity.
Maybe that is our destiny—a problematic, a
weak identity?
That thought is too dialectical for me. We will
have a weaker Europe if we don’t have a shared
sense of what story we want to tell. We all
know that our history is checkered, problematic,
and that Europe does not do well in many
aspects, for instance economically. But what
counts is the will to tell a different story. Germany
is an example of that. You can also construct
identity from a bad past—if you develop
a will to move away from it. Countries like Germany
or Spain did that.
You claim the end of old grand narrative on
Europe. But is your story not the beginning
of a new grand narrative?
It is not a grand narrative. What I am suggesting
is rather that the European story will be
told differently in different countries. The Polish
have their European story, the Greek have
theirs. The first chapters of each story are different—hopefully,
the last chapters might be
similar.
How far advanced is the project?
People say, Europe today is a top-down project.
This is true; but is also bottom-up. Millions of
ordinary European people have their own stories
on Europe: the week I spent in Barcelona,
the great time I had in Venice, the job I did in
Berlin… Europe works well on some levels, very
badly on others—but the level it works best on
is the individual one, the human contacts and
personal experiences.
Really? The people in Britain, for instance,
seem a bit Eurosceptic sometimes.
But even the British or the Polish Euroscepticism
is schizophrenic. The personal stories are
very positive, only the political narratives are
negative. We intellectuals have to plug into
these personal narratives and develop our
vision of Europe from there. If we manage to do
this, it will be a huge step forward.
Does that not mean we have to stop the
macro, the political project? Because, apparently,
it is not well accepted.
Some political decisions are accepted very
well. Why can we fly so cheaply around
Europe? Because of decisions by the Brussels
institutions. Football clubs have players
from different countries, we can work where
12

no more grand narratives, claims timothy garton ash
food for thought f
13

p food for thought
europe has lost its vision
we want in Europe. We have to re-establish
this connection.
Should the political deepening go on as fast
as it did in the past?
If we ask whether the future narrative of Europe
should be built primarily on big, big political
steps forward, then the answer is probably no.
We need a time of political consolidation.
For people to catch up?
To work out what we want the union to be, and
what not. In 1987 most people could have told
you what the union was for. In 2007, they can’t
any longer.
Maybe because we cannot name the one
value Europe stands for—like wealth for
America.
I mentioned the value of prosperity…
But prosperity is associated rather with
the US.
What about diversity?
That seems to be the only European value—
but also a non-value...
Tolstoy famously wrote: All happy families are
the same, and each unhappy family is unhappy
in its own way. If we are happy it does not matter
if others are happy in the same way. I am
not arguing that there are uniquely, superior
European values.
The fact that we share our values with others
does not mean that they don’t exist. It is the
combination that makes the difference. And the
story of diversity, of a managed, peaceful, creative
diversity, is really European.
But does that create an identity?
It does—although I argue that the European
identity cannot be the same as our national
identities. It is not as coherent, not as binding.
Nor does it need to be. We don’t spend 40 per-
TIMOTHY GARTON ASH is author of
eight books of political and historical writing,
charting the transformation of Europe over the
last quarter-century.
He is Professor of European Studies at the
University of Oxford, Isaiah Berlin Professorial
Fellow at St. Antony’s College, Oxford, and
a Senior Fellow at the Hoover Institution,
Stanford University.
His essays appear regularly in “The New York
Review of Books,” and he writes a weekly column
in the British newspaper “The Guardian,”
which is widely syndicated across Europe, Asia
and the Americas. In his most recent book,
“Free World,” he demonstrated why the world
needs Europe and the USA to work together.
cent of our national income on Europe, rather
1 percent. No one is going to “die for Europe”—
and no one has to. Europe is a secondary, a
cooler identity—but still important.
So we have to deal with a more complex
identity construction.
Exactly. The national identities will never disappear.
I as a Kantian see Europe as a steppingstone
towards a global citizenship.
If we look at Europe today, what we see is a
strengthening of national identities, though.
In the UK, there are loads of books about
Britishness or Englishness. Germany celebrates
itself as host of the World Cup. Polish
national pride is on the rise.
I don’t see a strengthening of the national so
much as the rise of the region. People think
about Welshness, Scottishness, about Catalan
or Basque identities. And the claim of the Scottish
nationalists is “Scotland in Europe.” There
is a strengthening of regional identities at the
expense of the nation state. What we have
today is an identity bazaar. People are crying
out their offers from their stores. And my offer
is the European one.
So we have to deal with complex identities.
Is that what business thinkers would call a
“competitive advantage” for the Europeans?
If the future is about multiple identities, then
we should have a head start—by the way, along
with the Indians. People in India live with multiple
identities in an admirable, even if sometimes
tense way. So do we.
You recently quoted an old saying that
nations are built on shared memory and
shared forgetting, saying that we cannot do
it within Europe. But there is one bit of our
past that we all want to forget: colonialism.
A very sharp point. But if you keep in mind
that many European countries, like Britain,
France or Italy, have a large population from
former colonies, then we cannot forget it. Intellectuals
like Tariq Ramadan or Ayaan Hirsi
Ali, with roots in colonies, won’t let us forget
our colonial past, even if we want.
We are a business magazine. What is the
role of globally operating companies in the
construction of Europe?
I just came back from Davos. My impression is
that business leaders think of themselves
increasingly as global leaders. They assume
social or political responsibility—but always on
a global scale. This is the part they have to
play: To help us understand what it means to
be a citizen of the world. Europe should be a
steppingstone to that.
Europe needs to define a picture of itself,
even if this picture will turn out heterogeneous.
But what is European has always
also been influenced by the view from the
outside. So—what is the picture that non-
Europeans have of the old continent? The
next pages are a gallery of a colorful continent,
as seen from the outside.
14

george clooney likes la dolce vita
food for thought f
Snapshots of Europe
The Old World is seeking its identity. Europe and its mythos conjure up
so many different meanings depending on whom you ask, especially if they
are non-Europeans. What comes to mind for the world’s movers and
shakers when they think of Europe? A picture tale of a diverse continent.
GEORGE CLOONEY
“I love the Italian lifestyle. They celebrate life and every noonday meal.”
The 45-year-old actor, screenwriter, producer and director bought a 17th-century pink-hued palace on Lake Como.
It previously belonged to Clifford Heinz of the Heinz ketchup dynasty. Since purchasing the property, he takes every
opportunity to rave about his love for Italy.
15

p food for thought
how european is bureaucracy?
RUPERT MURDOCH
“A horrible bureaucracy has established itself that discourages investing
in Europe and paralyzes everyone with its regulations.”
The 76-year-old Australian is founder and CEO of News Corporation and its subsidiary, Fox Entertainment Group. He studied
at Oxford University in England. His two English newspapers, The Sun and News of the World, are known for their anti-European
and especially anti-German viewpoints.
16

from good old bavaria to the new world: nicolas cage
food for thought f
NICOLAS CAGE
“My mother’s ancestors are from good old Bavaria, and I like the gigantic
forests they have there.”
In 2006, the 43-year-old actor bought a castle in Bavaria called Schloss Neidstein. Ancestors of Cage’s mother, dancer and choreographer Joy
Vogelsang, originally come from Bavaria. The nephew of film director Francis Ford Coppola, Cage made a name for himself in the late 1980s
starring in the comedy “Moonstruck” and then later in David Lynch’s “Wild at Heart.”
17

p food for thought
green thinking: profitable, but also good for europe’s image
TIAN LIPU
“The main thing that comes to mind when thinking of Europe is the
protection of the environment. People there pay a lot of attention to a
harmonious coexistence of humanity and nature.”
53-year-old Tian Lipu is commissioner of China’s State Intellectual Property Office. After earning a master’s degree in natural science, he
worked as a researcher for two years at the Max Planck Institute for Foreign and International Patent, Copyright and Competition Law.
18

ad weather as a source of identity?
food for thought f
ZAHA HADID
“Northern Europeans like sitting outside at street cafés, even in February.
I saw that 10 years ago in Soho, London, and couldn’t help thinking, ‘You’ve
got to be kidding me.’”
The 56-year-old architect is originally from Baghdad, Iraq. She attended European boarding schools, and then went on to study in Beirut
and London. Her projects include the Peak Leisure Club in Hong Kong; the Guggenheim Museum in Taiwan; and a fire station in Weil am Rhein,
Germany, designed for the furniture company Vitra.
19

p food for thought
cut the red tape, foster growth and innovation!
20

how much regulation is necessary?
food for thought f
“ The internal market needs to be reinvigorated by further liberalizing
markets and completing trans-European networks.”
Don’t stop now!
Europe’s companies are mobilizing: With this declaration, business is calling upon the EU for more
reforms. But much remains to be done, especially in innovation and the battle against protectionism.
An abridged version of the declaration was presented at the European Business Summit.
:
The Treaty of Rome laid the foundations
for one of the most prosperous and safe
regions in the world. Business has always
believed in the European project and has
supported it because of the benefits it brings
to society as a whole.
Peace; stability; creation of an internal market
in which persons, services, goods and
capital can move freely; political and economic
integration; common currency;
international standing—these are some
of the benefits of Europe, and they speak
for themselves. But Europe is confronted
today with a series of challenges that
require concrete actions. In a context of
increasing globalization and fast technological
changes, it is necessary for Europe
to focus its actions on restoring its competitiveness
vis-à-vis those other regions
of the world which are undergoing tremendous
developments.
This is why business demands actions to
reinvigorate the European Union. A European
Union capable of swift and decisive
action, when required. A European Union
more capable of coordinating national initiatives.
A European Union that can disseminate
best practices in one member state to
other member states. A European Union that
takes action to achieve the objectives of
tomorrow. To move forward and make the
appropriate and needed reforms of its governance
and policies, Europe needs strong
support from all the actors which are key to
its success. The political declaration to be
adopted on the occasion of the 50th anniversary
of the Treaty of Rome must be the occasion
to reaffirm strong support for Europe
and the projects on which it must deliver.
Business calls for a boost to Europe which
must concentrate its future actions on
the following priorities.
New York–based illustrator Melinda Beck provides us with her view on
Europe on the left page and throughout the magazine. Her works have been
published in Rolling Stone, The New York Times, Time and ID. Beck has
received awards from numerous groups, including the US Art Directors
Club, the Society of Publication Designers and the Society of Illustrators.
REFORMS FOR GROWTH AND JOBS
More growth and jobs continue to be the
central challenges for the EU. There is a
need for a stronger political will and commitment
if the European Union wants to
meet the Lisbon objectives. The European
Union must put in place effective EU surveillance
of national reform programs.
Among many other actions, Europe must
strengthen the links between research, innovation
and education in order to strengthen
its competitiveness.
Less and, when needed, better regulation is
necessary. EU intervention must be justified,
explained and proportional to the objective.
Subsidiarity must be fully respected. Impact
assessment, better regulation and less red
tape are vital for doing business in Europe.
Member states on their side must refrain
from gold-plating EU legislation.
REINVIGORATE INNOVATION
The internal market is one of the great successes
of European integration and the foundation
stone for growth and jobs in the
European Union. But the internal market
is not yet complete, and it needs to be
21

p food for thought
european businesses want politicians to set and pursue clearer objectives
“ From a business perspective, enlargement has been a genuinely positive
contribution to growth and jobs in Europe.”
reinvigorated by further liberalizing markets,
by completing trans-European networks
and by eliminating obstacles to
cross-border provision of services. The
immense potential of the internal market of
27 must be used by integrating the new
member states as quickly as possible.
But the most pressing hindrance to crossborder
business activities is the nonchalance
of member states in implementing internal
market directives they have agreed on at the
EU level, as well as insufficient enforcement.
In areas such as energy, transport and
intellectual property, the European Union
has put in place initial building blocks to
develop policies for addressing current challenges,
but the scale and strategic vision of
these initiatives must be strongly enhanced.
EU GOVERNANCE
Efficient functioning of the EU institutions
is key for the success of the enlarged EU.
Taking appropriate actions to improve the
efficiency and transparency of the EU institutions
while preserving the “Community
method” must be a priority of the EU. The
EU decision-making process must be adapted
to its current membership.
The Commission must remain strong, independent
and a guardian of the treaties. It
must keep the right of initiative to propose
actions to the Council and Parliament in the
interest of the whole Community. The stability
of the EU Presidency must be ensured.
The credibility of Europe in foreign affairs
requires a stronger voice.
FIGHT PROTECTIONISM
Thanks to an open market economy with
free competition within the EU, national
markets have opened up to each other. However,
notwithstanding the free movement of
persons, goods, services and capital, protectionist
reflexes can still be observed. Yet
member states must not adopt an attitude of
economic nationalism and protectionism
which would equate to “less Europe.”
Europe must strongly combat this tendency.
The European Union must also remain committed
to international trade liberalization
by strengthening the WTO trading system
and by facilitating trade and investment
relations with major trading partners.
ENLARGEMENT AS OPPORTUNITY
Enlargement has breathed new dynamism
into the internal market. This is a major
opportunity to sustain European competitiveness
in the face of fast globalization.
From a business perspective, enlargement
has been a genuinely positive contribution
to growth and jobs in Europe. Recent
BUSINESSEUROPE is a Brussels-based
organization that unites 39 leading national
business federations. It started in 1958 as the
Union des Industries de la Communauté
européenne (UNICE). As economic cooperation
within Europe broadened, the organization
grew. It was renamed BUSINESSEUROPE, The
Confederation of European Business, this year.
Its members today come from 33 countries,
and the current president is Ernest-Antoine
Seillière. BUSINESSEUROPE works on implementing
reforms for growth and jobs, integrating
the single market and governing the EU
efficiently. It also wants to fight protectionism,
take advantage of the enlargement opportunities
and help reform European social systems
to make them sustainable.
independent studies demonstrate that the
enlargement from the EU-15 to the EU-25
has contributed to economic growth and
jobs in both the “old” and “new” member
states. Europe must communicate better
the positive economic and social impact
of enlargement.
SUSTAINABLE SOCIAL SYSTEMS
Employment is the best way to ensure cohesion.
The European social policy agenda’s
first priority is the creation of new jobs and
integration of more people in labor markets
rather than trying to protect activities which
are no longer competitive or enhance the
rights of those already employed. Europe
must concentrate on encouraging necessary
labor market reforms, adapting pension systems
to demographic aging, empowering
individuals to adapt their skills throughout
their working lives, encouraging companies
to develop competences, and ensuring that
education and training systems respond to
labor market needs. Social partners are well
placed to find flexible solutions; reconciling
economic and social needs of labor market
players and the autonomy of the social dialogue
must be respected by all institutions.
European business supports a strong European
Union capable of action and able to
deliver reforms. But it is essential to set
clearer objectives, to focus more strongly
on priorities and to show a stronger political
will and support for these reforms. By
doing this and progressing on the above
actions, we can make a success of a reinvigorated
Europe.
Declaration by BUSINESSEUROPE’s
Council of Presidents
22

Dossier #09
BEST OF
EUROPEAN BUSINESS
TOGETHER WITH INTERNATIONAL EXPERTS, ROLAND BERGER
SEARCHED FOR EUROPE’S STARS IN GLOBAL COMPETITION.
THEY FOUND STRONG PLAYERS IN MANY INDUSTRIES. COMPA-
NIES HAVE CAUGHT UP IN MARKETING AND SERVICE THINKING.
1 2 3 4 5
6 7 8 9 10

DOSSIER #09 Best of European Business
nSERCO
The company specializes in services
for the public sector. Serco is active in
36 countries.
20% average
growth rate was
achieved in the last
several years.
»Despite varying
frameworks in different
countries,
governments are
increasingly exploring
how they
can incorporate the
private sector.«
CHRISTOPHER HYMAN, CEO, SERCO
GROWTH PER YEAR
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2001 2002 2003 2004 2005
Serco
50 global benchmarks
SERVICE CULTURE, WORLD-CLASS MARKETING AND SELECTIVE OUTSOURCING ARE THE FACTORS THAT MAKE
COMPANIES SUCCESSFUL TODAY, AS REPRESENTED BY THE ROLAND BERGER “BEST OF EUROPEAN BUSINESS”
COMPETITION. A PRIMER THAT ALSO APPLIES TO BUSINESSES OUTSIDE OF EUROPE.
s
“THE WHOLE DIFFERENCE between construction
and creation is exactly this: that a thing constructed
can only be loved after it is completed; but a thing created
is loved before it exists.” It’s difficult to imagine
that one could apply this quote by Charles Dickens to
buses—low-floor buses, to be exact. Yet Krzysztof
Olszewski is able to. The bus entrepreneur believes in
Dickens’ words of wisdom. And he loves his job.
Olszewski is your quintessential businessman.
What originally started as a small family business
called Solaris Bus & Coach evolved within 10 years to
become one of Poland’s most successful export companies.
Eighty percent of its production goes abroad,
mainly to Germany and France.
The company principal believes that hard work
pays off. His wife, with whom he runs Solaris, even
wanted to collect success stories for a book about companies
that “built something based on diligence and
hard work, and not on dubious business deals,” as he
explains. “We wanted to encourage young people by
showing them that these values are not extinct.”
Olszewski is proud that his young company
prevailed—despite a stagnating market and established
competitors. “We are successful in taking some
business away from larger companies,” he says. While
quality is obviously essential, Olszewski puts his faith
especially into the strict service orientation of
his team. Contrary to some negative stereotypes,
the company is well ahead of many Western
European competitors in the service sector. Even after
the purchase contract has been signed, his employees
are always at the ready to assist customers. And
the service offensive from new Europe is paying off:
Olszewski claims that four out five Solaris customers
are repeat customers.
Service is fine and good, but not everything.
Olszewski also relies on innovation. Last year, Solaris
built a hybrid vehicle. “I’m always trying to look past
the horizon,” he says. “As fuel prices rise unchecked,
we had to invest in new technology.”
The Polish company’s growth strategy received
an award from the national jury in the “Best of European
Business” competition organized by Roland
Berger Strategy Consultants. “Best of European Business”
(BEB) recently recognized European companies
that set an example within their home countries.
Seven pan-European winners were selected from
50 laureates overall (see page 32).
THE RESULT OF THE SECOND ROUND of the competition:
The Continent’s diversity creates real competitive
advantages. Europe represents a heterogenous
environment that stokes the competition in both
corporate and technological innovation. This diversity
is exemplified by the winners in, so far, nine countries,
including Switzerland as a non-EU member. Awards
went to companies that strategically benefitted from
the European domestic market, be it by means of
cross-border mergers and acquisitions (the category
BEST OF EUROPEAN BUSINESS,
the annual contest undertaken by Roland
Berger Strategy Consultants, selects the mostsuccessful
companies of Europe, looks for
best-practice models and specifies the Continent’s
competitive advantages. In the second
round, Roland Berger distinguished top companies
in the categories of growth, “Europeanness,
cross-border M&A activities, as well as
Corporate Social Responsibility. Following
national award ceremonies in the 10 strongest
economies of Europe, the organizers honored
the Europe-wide winners in March during an
event held in Brussels. (see coverage beginning
on page 32).
24

Diversity is not necessarily an advantage DOSSIER #09
»Bureaucracy has been hampering
the growth of the European Union.«
Jordi Canals
Dean, IESE Business School
of “Crossborder Mergers & Acquisitions”), a strong
Europe-oriented business strategy (“Europeanness”),
or solid sustained growth.
Both the national and Europe-wide winners
showed that there are certain key criteria that will be
decisive for continued growth over the long term, and
thus also for success in the international market.
These are the same key criteria that have enabled
many companies to take on global competition, and
the same ones in which Europe as a whole sometimes
still limps behind. The problem lies, as it does so often,
in the structure. Quite a few of basic conditions just
aren’t right yet. One prime example is economic integration.
Only greater competition on the European
domestic market, especially in the service sector, can
ensure sufficient innovation in the long term.
NEVERTHELESS, ONE WOULD HAVE to say that
Europe has come a long way in creating an integrated
market. The expansion of the European Union to
the current 27 member countries has given tremendous
impetus to commercial activity and domestic
trade. The EU is the world’s biggest export region, and
it is currently experiencing a marked, sustained
upswing. Investments have gone up significantly in
the last two years and are igniting the economic
cycle’s self-boosting mechanisms. As a result, economists
are expecting increased confidence among
consumers that will also have its own positive and
strengthening effect on the trade cycle.
Yet, there are still a number of obstacles that
must be overcome. “Even if the EU project is deemed an
overall success, the EU’s growth has been hampered by
bureaucracy, sluggish decision-making by the Brusselsbased
authorities who are far removed from European
citizens,” says Professor Jordi Canals, dean of the IESE
Business School in Barcelona and member of Spain’s
BEB jury. Examples range from a service guideline
rendered virtually ineffective by changes from the EU
parliament, to the rejection of the European constitution
in the referenda held in France and Holland in 2005.
Europe’s continuing weaknesses also came to
light when the Commission back-pedaled from the
ambitious Lisbon Agenda. Seven years ago, the EU
had announced its vision to make Europe the most
powerful economic region in the world by 2010. However,
when the mid-term report was presented, the EU
was forced to realize that it had not in any factual way
come closer to that objective in the first five years.
And diversity is an advantage only when used
properly. Still, Klaus Spremann, professor at the University
of St. Gallen and the scientific expert behind
BEB, sees pros and cons in Europe’s heterogeneity
and strong internal competition. While competition
between the countries is a driving force behind technical
innovation, the European economy occasionally
fails to penetrate into foreign markets—something
that can be partially attributed to its non-uniform
makeup. The US is considerably more proficient in
terms of marketing, performance and pushing—all
based on a self-confidence that stems from its huge
homogeneous domestic market.
»The key factors are competition
and competitiveness.«
David Rae
head, European studies department, OECD
EUROPE’S VARIOUS FACETS thus simultaneously
strengthen and weaken it: While competition among
its countries enables the region to proficiently breed
innovation, it still sometimes lags behind in terms of
aggressive, outward-oriented market penetration.
On the other hand, greater uniformity would
jeopardize Europe’s reputation as an inventive entity.
The solution: The Continent must invest more in
research. Only those pairing the trend toward a more
homogeneous market with investments in research
and development, can avoid the competitive disadvantages
in the race for the best ideas.
A strong domestic market is a prerequisite to
becoming or remaining a leader in global competition.
25

DOSSIER #09 Best of European Business
nNORBERT DENTRESSANGLE
The logistics and transportation service
provider posted sales in the amount of
€1.6 billion last year.
650 Channel
crossings are overseen
by the enterprise
daily.
»For a service
provider, two factors
are essential: the
staff and a corporate
culture that takes on
challenges and is
passionate about
innovation.«
JEAN-CLAUDE MICHEL, CEO,
GROUPE NORBERT DENTRESSANGLE
SHARE PRICE (IN EUROS)
72.5
70
67.5
65.0
62.5
60.0
57.5
55.0
Sep. Oct. Nov. Dec. Jan. Feb.
According to Michael Heise, chief economist for the
Dresdner Bank, high unemployment is putting the
brakes on the European economy when compared
with the US and Asia and “of course is caused by high
wage costs and strict regulations, among other
things.” Another disadvantage stemming from the
political framework is the somewhat underdeveloped
competition, especially in some service sectors,
despite fundamentally good conditions.
”THE KEY FACTORS are competition and competitiveness,”
emphasizes David Rae, head of the European
Studies department of the Organisation for Economic
Co-operation and Development (OECD) in Paris
and author of the study “Economic Survey of the Euro
Area 2007.” “Competition is the most effective way to
increase productivity and the quality of innovation,”
he says. This competition is also due to finally reach
the service sector. Until that happens, Rae is expecting
“little growth and low quality” overall.
Thus, the service sector holds a key to Europe’s
future—even if there is still a lot more work to be done.
The success of certain service companies that operate
successfully beyond their domestic markets
despite obstacles. One example is the British company
Serco. In the same way that Solaris won the “Growth”
award in Poland, Serco won top honors in the same
category in the United Kingdom for its expansion strategy
and profitable sales growth from 2001 to 2005.
Serco is a support-services company specializing
in the public sector, with a reach way beyond
the UK. The British company operates partially privatized
prison facilities, and provides flight safety and
road traffic management systems. The jury praised
the company’s ability to apply its business model in
diverse markets besides Europe, such as the Middle
East, Southeast Asia, Australia and North America.
AND THIS IN THE FACE of the company operating
in an area that not only has challenging basic conditions,
but causes many European citizens to initially
react with suspicion. A significant number of Europeans
still believe that “public services like transport,
health or safety should only be provided by civil
servants,” says Christopher Hyman, CEO of Serco.
Throughout Germany, for instance, social services are
often provided by traditional non-profit organizations.
Others are more advanced. France and Spain, for
example, have been using the concession model for
years in regard to their public water supply. Many
countries in Europe have had their own toll roads for
decades. In France and Sweden, the private sector has
a stronger hand in hospital-related services than in
the UK. “I believe public perception of service delivery
is changing,” says Hyman. He adds, “People begin to
experience private service companies contributing to
better quality and more cost efficiency in public infrastructures
like school, hospitals or prisons.” In that
way, they become customers—and disseminate a
new service mentality throughout Europe.
AS FOR OVERALL PERCEPTION, however, Hyman’s
optimistic statement is not yet reflecting reality.
Many Europeans are still notoriously critical of the private
sector’s commitment to public services. A
change in attitude is a necessary condition for service
companies to succeed in this sector. Given their tight
financial constraints, public authorities are increasingly
dependent on the private sector. Hyman
believes that the markets are developing and will offer
opportunities for service companies like Serco “that
are able to translate and adapt valuable experience
and credibility from one market to another”.
And yet, Europe isn’t just Europe. “A basic
requirement to export public-sector services to Europe
is to understand the different political cultures and to
respect their traditions,” says Hyman. In other words,
to be successful in Europe necessitates dealing with
entrenched political structures.
Companies that follow this example stand a
very good chance of being successful on a worldwide
basis. Mike Page, dean of Post-Experience Programs
at the RSM Erasmus University in Rotterdam,
believes that the European economy is not yet fully
aware of these inherent competitive advantages.
“The resilience and creativity that exist within the
European economy give us a strong but occasionally
still underestimated foundation,” he says. Those
companies that have actually ventured across
national borders and figured out how to deal with a
variety of different markets “are much more conscious
of the problems they might encounter in India,
26

Companies are more successful that European societies DOSSIER #09
CEOS DEMAND MORE EUROPE, NOT LESS!
EUROPE’S TOP EXECUTIVES are strong supporters
of the European project. That is projected
by a comprehensive CEO survey conducted
by Roland Berger Strategy Consultants
on the occasion of the BEB competition. Twothirds
of top decision-makers want a stronger
Europe. At the same time, 85 percent think
that the EU’s current enlargement to 25 member
nations is a step forward. However, most
executives are viewing further enlargement
with skepticism.
In general, the national politics pertaining
to Europe are evaluated positively, however.
French and British CEOs seem somewhat
disappointed by their country’s Europe policies,
while 71 percent of the French view their
goverment’s past Europe policy skeptically.
Looking elsewhere, all is not rose-colored
in Europe. Especially when it comes to
the deregulation of markets, CEOs are very
critical of Europe’s policy-makers. No other
European policy topic is more important to the
company executives, with nine of 10 managers
wishing for a faster modification of market
and product regulations. And 82 percent
are hoping for additional liberalization of the
sensitive service industry. This indicates that
governments wishing to protect their domestic
industries via competitive barriers, should
actually consider asking the companies first.
The decision-makers expect something
else from governments and especially from-
Brussels, namely the support of alternative
energy—70 percent demand that the EU promote
alternative forms of energy. About half
believe in regulation in this regard. The fact
that environmental issues can also be lucrative
business is also shown by the BEB competition
(also see the story on page 48).
In the environmental sector, companies
are developing a quality that is all too often
lacking in Europe: infelt and executed entrepreneurship.
Here Europe needs a change of
mentality, whereby additional reduction of
economic hurdles can help. Forty-six percent
of CEOs demand that cross-national consolidation
should be alleviated, which strengthens
competition. Result: Among Europe’s companies,
hardly any defensive stances or protectionism
can be found.
Read an interview on the study on page 29.
WHAT THE CEOS THINK
ON WHICH ISSUES HAS THE COALESCENCE
OF EUROPE HAD A POSITIVE EFFECT?
(in percent)
Europe’s economic influence 68
Competitiveness 59
Europe’s political influence 48
Development of major companies 47
Social progress 43
R&D 38
Other 4
CONCERNING EUROPEAN ENLARGEMENT, WAS THE
STEP FROM EU-15 TO EU-25 A GOOD DECISION?
No 11
No specific opinion 4
think:act chart, source: Roland Berger
Yes, definitely 43
Yes, but not as good as the step to EU-15 42
think:act chart, source: Roland Berger
for example, than companies that operated exclusively
in their domestic markets.”
Last, but not least, companies that utilize
these advantages tend to come from the service sector.
France, just like the UK, also offers up a service
provider that won the award for best growth strategy.
The Norbert Dentressangle Group, which specializes
in logistics and transportation services, demonstrated
consistent and sustained growth despite strong
international competition. In the past 20 years, the
company has focused on organic growth and acquisitions
in equal measure. “The most important thing for
us is to always combine growth with profitability,”
says CEO Jean-Claude Michel. Indeed, he refuses to
accept growth as an end to itself.
NEVERTHELESS, ORGANIC growth alone is often
not enough. For that reason, the BEB competition recognizes
companies that have proven themselves
especially adept at cross-border mergers. In Spain,
the telecommunications giant Telefónica was awarded
first prize after already picking up an award last
year. The jury viewed Telefónica’s acquisitions of O2
and Cesky Telekom as an intelligent move in the direction
of reinforcing the company’s European presence.
In the past, Telefónica had placed greater emphasis
on countries in Latin America.
THE RISE OF TELEFÓNICA coincides with Spain
catching up economically. Generally, however, it is a
fallacy to equate the success of companies with the
success of European economies. “Generally, European
companies are far better off than the European
economies,” says Jordi Canals, dean of the IESE Business
School. The paradox can be explained by the fact
that the successful companies, once they have their
sights set on the world market, quickly invest outside
of the European Union.
“The challenge is to make the European
economies a stronger platform for competition among
the European companies,” says Canals. In the last five
decades, Europe truly was the most critical platform
for globalization. “It’s only natural that companies
have seized the opportunities that globalization has
27

DOSSIER #09 Best of European Business
nABN AMRO
The roots of the internationally active
bank can be traced back to 1824. It is
currently represented in 53 countries.
4500
offices around the
world are run by
the Dutch bank.
Rijkman Groenink,
CEO of ABN Amro, is,
in his own words,
“an enthusiastic proponent
of European
bank consolidation.”
He has been so successful
at it that ABN
Amro itself is now
being taken over.
RIJKMAN GROENINK, CEO, ABN AMRO
NET OPERATING PROFIT
(IN MILLIONS OF EUROS)
5250
4500
3750
3000
2250
1500
750
0
2001 2002 2003 2004 2005
opened to new unregulated markets,” says Canals.
And naturally, it also helps when such companies
have their head offices in Europe. Nevertheless, the
more they grow in other parts of the world, the less
influence headquarters will have over managing the
global company. One could say that globalization
makes Europe’s companies less European.
A MAJOR PLAYER that continues to achieve a lot
of its success on the European continent is the Dutch
bank ABN Amro. In the Netherlands, it won an award
in the “mergers and acquisitions” category for its purchase
of the Italian bank Antonveneta. Banks, insurance
companies and consulting firms are less affected
by the rigid regulations of the European service
market. The competition is tough in this sector. And
the Dutch are holding their ground.
As Rijkman Groenink, CEO of ABN Amro,
explains, the company’s growth strategy is aimed primarily
at “expanding our customer base among medium-sized
companies and business clients in our key
markets in the United States, Brazil, the Netherlands
and Italy, as well as in selected Asian markets.” For
years, Groenink has been, as he himself points out,
“an enthusiastic proponent of European bank consolidation.”
In this area, his actions were so successful
that ABN Amro itself has become, in the meantime, a
highly attractive candidate for takeover.
It is certainly clear that takeovers must also
move a company forward strategically and add new
competencies. Pernod Ricard, a wine and spirits company,
might provide an insight on how that might
work. By acquiring Allied Domecq, Pernod Ricard
expanded its clout in the US market and its sales network
as well. The Allied network enables Pernod Ricard
to supply its customers with established brands such
as Ramazzotti, Chivas Regal, Ballantine’s, Havana Club
and Mumm champagne.
Patrick Ricard, the 61-year-old son of the inventor
of the beloved French aperitif with cult status,
considers the purchase of the British company “a
decisive new stage because it has allowed the Group
to move into the number two position worldwide in the
wine and spirits industry.”
Pernod Ricard successfully made the transition
from a family business to a stock-exchange-listed
company, whereby organic growth and shrewd acquisition
decisions complemented each other. Sent
around the world by his father to learn the ins and
outs of the business, Patrick Ricard studied the operations
at US-based Seagram, then the world market
leader. Then, six years ago, Pernod Ricard swallowed
up its competitor in an acquisition deal.
Beyond service orientation, sales networks
and successful takeovers are some of the factors for
success exhibited by Europe’s best companies. One
other criterion is the willingness to take risks. Mike
Page, member of the Netherlands BEB jury, believes
this is where some European companies still have a
mentality problem.
“As a South African in Europe, what I notice here
in comparison with North America is a tendency to
avoid risk and to have little tolerance for failure,” he
says. However, “making mistakes, getting back up,
dusting yourself off and continuing on” are part of
entrepreneurship. Those experiences lumped together
are the seed from which grows the ability to create
innovation. The Dutch exemplified this capability in
the special “Innovation” category.
INDEED, THE VALUE OF INNOVATION is quite
accepted in Europe. Yet often, innovation is considered
synonymous with technological creativity. This
does not take into account the courage to implement
new business ideas. How a company deals with market
conditions can also be innovative. Indian-born
Nirmalya Kumar, professor of marketing and director
of the Centre for Marketing at the London Business
School, finds it regrettable that European companies,
with a few exceptions, are technologically ambitious
but could stand a little improvement in their
marketing skills.
“In Europe, marketing is considered to
be something dealing with this fuzzy sense of intuition.
It’s not perceived as a scientific discipline,” says
the expert. This despite the fact that technological
innovations become real bestsellers only when
paired with equally innovative marketing. It is about
better understanding existing customers in a systematic
fashion and gaining new ones; not only
through technological creativity, but also through
new marketing concepts.
28

Only service elements make companies fit for the future DOSSIER #09
“The companies have
done their homework”
BURKHARD SCHWENKER, ROLAND BERGER CEO, EXPLAINS WHAT THE CEO SURVEY MEANS
FOR EUROPE.
THINK:ACT: Mr. Schwenker, every third European
company wants more regulation. Are
businesses not as liberal as we thought?
BURKHARD SCHWENKER: They are very liberal.
What they primarily expect is not protection
of their markets, but a clear framework
which supports free trade and competition.
They urge politicians to further liberalize markets
and product regulations.
Still, even in a not fully liberalized environment,
it seems to be possible to create worldclass
companies.
Yes, the BEB competition has shown this.
What strikes me particularly is that our companies
strive in areas where you would not
expect it.
For example?
Europeans have caught up in terms of marketing
and service orientation. The idea that
suppliers of physical products have to develop
hybrid solutions with strong service components
has taken hold. What also struck me
was the high level of competitiveness of old
companies, or many small businesses.
If everything looks bright for us, why is
Europe still not growing as fast as the US has
been in the last years?
On the one hand, not all companies are as
strong as the BEB winners. In addition, there
seems to be a widening gap between Europe’s
companies and Europe’s societies. The companies
have worked on their competitiveness,
whereas, politically, a lot remains to be done,
primarily in the area of fostering service competition.
The survey seems to show that companies
from different countries take advantage of different
things from Europe.
Yes, each country and each company develops
its own Europe strategy. If British companies
use Eastern European labor forces, then
they respond to their very particular needs.
What our results have shown, however, is that
integrating Europe into business strategies
creates significant opportunities.
EVEN THOUGH EUROPEANS specialize in technological
creativity, Bernard Ramanantsoa, a professor
of strategy and business policy at the Hautes Études
Commerciales Paris and member of the French BEB
jury, sees room for improvement here, too. “The winners
of the BEB competition invest heavily in research
and development. However, overall, Europe is lagging
behind in this effort.” If Europeans want to maintain
their standard of living, they will need to invest considerably
more in the high-tech segment.
Investments made in the areas of research and
development, as well as education, are becoming
increasingly important, and companies need to put
more effort into drawing top-notch talent. “In Europe,
companies invest considerably less in education than
the United States,” says Page with the Rotterdam
School of Management.
A new tack in attitude is necessary. “We believe
that work in the traditional sense of getting things
done represents a value. But the meaning of work has
actually shifted more in benefit of generating knowledge
and implementing that knowledge,” says St.
Gallen professor Spremann. In the US, it is commonly
understood that a society’s prosperity and growth are
based on a society’s knowledge, and not on its production
capabilities.
Global competition is based on the management
of knowledge. Spremann fears that Europe is
losing more knowledge than it actually creates anew
because it does not take on this management
task and does not sufficiently appreciate the
value of knowledge. This also sheds new light
on the trend toward outsourcing. “Outsourcing
production is causing the drain of knowledge.
In the past, we had a solid layer of knowledge
spread throughout Europe. Now that layer
exists merely in spots here and there.” And that
is how Europe is giving up its competitive
advantages. Apart from the economy losing
out overall, individual companies are at risk of
having their expertise drained, as skilled individuals
head off to other, more competitive
regions that have greater ambitions. “Knowledge
must be continuously nurtured because
the recurring application of knowledge is
important,” says Spremann.
FOR THAT REASON, the worldwide portfolio
needs to be carefully investigated to ensure
that management is not outsourcing an excessive
number of expertise areas, and thereby
really just giving it away. Only when Europe
properly assesses the future value of every
expertise area, “then society as a whole as well
as the individual companies will make an effort
to nurture and protect these areas—just as
in the past, when physical asset positions were
guarded rather jealously.”
29

DOSSIER #09 Best of European Business
All global roads begin at home
HOW IMPORTANT IS THE DOMESTIC MARKET? VITAL, ACCORDING TO THE JURY OF THE BEB COMPETITION. THE “EUROPEANNESS” CATEGORY
AWARDED SUCCESSFUL STRATEGIES FOR EUROPEAN PROVENANCE. COMPANIES SUCH AS PORTUGAL’S MOTA-ENGIL SHOW HOW A DOMESTIC MARKET
STRATEGY CREATES THE IDEAL STARTING POINT FOR GLOBAL COMPETITION.
s
ACTUALLY, WE ARE ALL GLOBAL. Companies at
least seem to know but one direction—the world
market with its all encompassing rules. Yet does
this also mean that the individual place of origin
becomes irrelevant as a strategic element? Not
at all, or so says the thesis of BEB competition
organizers. For that reason, the jury looked for
companies that deliberately and proactively integrated
Europe in their strategies and lent their
corporate policy a strong flair of “Europeanness.”
Yet what precisely makes a strategy European?
How does a company benefit from originating
in a particular region, a certain cultural background?
And which companies consciously incorporate
their origin into their strategies?
FIRST OF ALL, the nation—and, more broadly,
the region that is home to a company—still
plays a strong strategic role. Completely global
strategies are “rare,” says Subramanian Rangan, a
professor of strategy and management at the
INSEAD Business School. The world’s cultures are
just too different.
However, the opposite approach of adopting
a tailor-made strategy for every country, he
says, is also “economically infeasible” because it
is too expensive. A successful and also costeffective
strategy should indeed be adapted to a
region—specifically a region that is broader in
geographic scope than a given country. Precisely
that makes Europe so interesting. “Let us imagine
that Europe only consists of three countries,”
Rangan says. “Call them A, B and C. Our firm is
active in country A and wants to expand into
countries B and C. These countries are ‘not A’ and
the company will therefore have to modify certain
elements of its strategy.” This is where Europe
and the European Union come into play. The more
a company’s policies are in agreement with the
basic economic conditions in A, B and C, the easier
it will be for the company to stabilize the various
elements of its strategy in the three countries.
“This rationalization will increase the efficiency
of the company and enable it to serve
European consumers at lower prices,” says
Rangan. A concept that can also be applied to
other regions in the world, be it North America or
Southeast Asia. Here the strategic category
“region” also offers rationality benefits.
A EUROPEAN strategy can thus unquestionably
form the basis for a company’s success, but
what would this foundation look like? Stefan
Collignon, a professor of European political economy
at the European Institute of the London
School of Economics, believes that a European
business strategy makes sense when it directly
addresses which boundaries will remain crucial
despite encroaching globalization. “Globalization
is not a wave that takes over everything,” says
Collignon. “Beyond regulatory barriers, there are
also other limitations such as transport costs or
the demands of various markets.” Such demands
may even be determined by cultural differences.
Bio-engineered foodstuffs, for example, are more
»Globalization is not a wave
that takes over everything.
Beyond regulatory barriers,
there are also other limitations
such as transport costs or the
demand of various markets.«
Stefan Collignon
London School of Economics
readily accepted in the United States and Asia
than in Europe. A regional strategy must also take
into account numerous other parameters, among
them production requirements and raw materials
just as much as the expertise of the labor force.
All these must be seen in the context of political
and institutional requirements, which for one
make quick changes in Europe unlikely, while
actually helping companies to generate long-term
strategies.
THE CONTINENT OF ORIGIN thus serves as a
starting point for many European companies in
terms of international expansion strategies. Not
all businesses are proceeding alike in this regard,
says Collignon. “In Southern Europe, most companies
are utilizing the strategy of expanding
beyond the country’s borders toward Europe as
well as strengthening and expanding their position
in the region,” he adds. In Central and Northern
Europe, Europeanization is virtually equivalent
to globalization. “The companies from this
area use Europe as a platform to be competitive
worldwide through economies of scale.”
THIS APPLIES PARTICULARLY to the major
automotive manufacturers, as well as companies
in the chemical industry. One of them, Sika AG, a
producer of specialized chemicals and based in
Zurich, Switzerland, was recognized for its Europeanness
in the BEB Awards because it operates
23 of its 55 production facilities in Europe and
employs more than half of its 11000 personnel
worldwide on the Continent. Sales of this special
chemicals manufacturer amount to €2.4 billion
annually. “Europe does play a major role in our
international strategy,” says CEO Ernst Baertschi.
“The most advanced technology here and in
30

Standards make the difference DOSSIER #09
THE 500 LARGEST COMPANIES
(by market capitalization in 2006)
DISTRIBUTION AMONG CONTINENTS
North and South America 231
14 %
Europe 167
Asia 91
Australia 9
Africa (South Africa) 2
DISTRIBUTION WITHIN EUROPE
United Kingdom 34
France 28
Germany 21
Switzerland 13
Italy 13
Netherlands 12
Spain 10
Sweden 7
Russia 7
Others 22
One-third of the 500 largest companies come
from Europe. The UK hosts the most global
players, followed by France. The relatively low
value for Germany, Europe’s largest economy,
shows the dominance there of small and
medium-size companies.
think:act chart; source: own research
Japan is applied in the construction and industrial
sectors. That forms a stable foundation for us
to build upon so that we can act globally and continue
to grow. We are attempting to apply the
strategy that brought us success in Europe in
other regions such as the United States, Latin
America, Asia and India.” Here Europe provides the
starting point for worldwide expansion.
Experts agree on one clear advantage that
Europe has over other regions: standards. Accord-
ing to the European Committee for Standardization
(often known as CEN, Comité Européen de Normalisation),
a total of 10 712 standards were registered
in December 2006. While that sounds like
a lot of red tape, the standards make commercial
activities much easier. According to a study sponsored
by the British government in 2005, European
standards increase annual work productivity
in the UK by up to 13 percent. Germany’s institute
for standardization (DIN, Deutsches Institut fuer
Normung) estimates the cost savings to the German
economy to be on the order of €16 billion per
year, about 1 percent of the GDP.
In the United States, the lack of national
standards causes the economy to lose $20 billion
to $40 billion per year, according to a study from
the Johns Hopkins University. Sometimes, differing
standards also lead to absurd results. For
example, fire trucks sometimes cannot cross
state lines to put out fires because their hoses
may not compatible with hydrants in neighboring
states. Notoriously, NASA lost a $125 million Mars
orbiter in 1999 because one engineering team
used metric units while another used US Customary
units for a key spacecraft operation.
IN ADDITION TO UNIFORM STANDARDS, the
euro is another major factor shaping the European
economy and Europe-centered company strategies.
A common currency is necessary for the single
market to fully deploy its positive effects. The
euro was the result of European companies fighting
tooth-and-nail for a common currency. With
the expansion of both the euro zone and the
Union, numerous other prospects are opening up
for companies whose strategies rely on Europe as
the primary sales market.
Proximity to the new growth markets in
Eastern Europe is another location-related advantage
for European companies. Here, two strategies
make sense, explains Collignon. “On the one hand,
companies can use their location-related advantages
in smaller countries, in regard to corporate
tax or wage costs, for example,” he says. “On the
other, the interest in bigger countries such as
Poland or Hungary tends to be new markets.”
»The European element in our
strategy is the need of
infrastructure in Eastern Europe.«
António Mota
CEO, Mota-Engil
The company Mota-Engil, of Porto, Portugal,
has demonstrated how to take advantage of the
opportunities that are presented by a converging
Europe. As Portugal’s biggest construction company,
it was recognized for its Europeanness, and
it also impressed jurors with its presence in
Eastern Europe. The European element of its strategy
“is the need of infrastructure in Eastern
Europe,” says CEO António Mota. “Poland, for
instance, needs to build up some 8000 kilometers
of new highways. And in the next seven
years, the EU’s construction-related funds will
flow primarily eastward.”
MOTA-ENGIL IS bringing its successful business
model to the new EU countries, thus creating
new markets for itself. As Mota says, “A strong
infrastructure adds to political and economic stability
that we profit from. So in the future, we can
progressively expand the scope of our other business
areas like waste management and infrastructures
concessions in these regions.”
AS A FRENCHMAN, whose country’s motto
after all is “Liberté, Egalité, Fraternité,” Collignon
also hopes that, with all the pan-European freedom,
companies from EU member states will grow
in Eastern Europe from a desirable motive that
seeks equality, or that they will at least allow a
minimum degree of fraternity to enter their management
strategies. “The important thing is that
the West does not absorb the East, but integrates
it,” he says. “Networks should be set up, and
smaller companies should be strengthened.”
That would be real Europeanness—
because it would not flow into a one-way street,
but would lead to more exchange for all companies
and long-term stability.
31

DOSSIER #09 Best of European Business
Europe’s best businesses—together with António
Bernardo, Deputy CEO of Roland Berger (left),
and CNN anchorman Charles Hodson (right)
Gala for the best
IT WAS AN IMPRESSIVE AMBIANCE. IN BRUSSELS, IN FRONT OF 2000 GUESTS,
ROLAND BERGER PRESENTED THE “BEST OF EUROPEAN BUSINESS” (BEB)
AWARDS TO ALL OF EUROPE’S WINNERS. AT THE SAME TIME, THE GALA AFFAIR
WAS THE CONCLUSION FOR THE NATIONAL BEB COMPETITIONS. FOR THESE,
ROLAND BERGER—TOGETHER WITH TOP-CLASS JURIES AND SCHOLARS—
SCREENED 8000 EUROPEAN COMPANIES BEFOREHAND, AND CHOSE 50
NATIONAL WINNERS IN EUROPE’S STRONGEST ECONOMIES. THE INTRODUCTORY
SPEECH IN BRUSSELS WAS GIVEN BY THE FORMER DUTCH PRIME MINISTER
WILLEM “WIM” KOK, WHO IN 2004 HEADED UP AN INTERIM REVIEW OF THE
LISBON AGENDA FOR THE EU.
THE GALA EVENING WAS ALSO THE CULMINATION OF THE EUROPEAN BUSINESS
SUMMIT. AT THE SUMMIT, AROUND 3000 MANAGERS, DIPLOMATS, EU COMMIS-
SIONERS AND MEDIA REPRESENTATIVES DISCUSSED, OVER TWO DAYS, THE
FUTURE OF THE EUROPEAN ECONOMY—INTENSELY AND CONTROVERSIALLY.
32

Davos in Brussels: The European Business Summit DOSSIER #09
Vincent Mercier,
member of the
Executive Committee of
Roland Berger Strategy
Consultants
Jorma Ollila, chairman of
Nokia, in conversation with
Burkhard Schwenker. It
was just such informal
exchanges between decision-makers
that made the
Brussels event so valuable.
Together with CNN journalist
Charles Hodson, António Bernardo
(pictured), Deputy CEO of Roland
Berger Strategy Consultants,
conducted the awards ceremony.
José Manuel Barroso (right) talks with Burkhard
Schwenker and other company leaders about
where Europe needs further reform.
From flags to acrobats: the evening’s program featured several
performances to banish Project Europe’s oft-criticized intangibility.
Roland Berger evening reception
33

DOSSIER #09 Best of European Business
The Brussels event center Tour et Taxis was an impressive and exceptional architectural setting for the European
Business Summit. The gigantic complex previously housed, among others, a rail station and a customs office.
Acrobats symbolized Europe’s
difficult path to finding itself.
34

A continent on the path to itself DOSSIER #09
Specially commissioned classical soloists
sang “Freude, schöner Götterfunken.”
Europe can indeed inspire euphoria!
35

DOSSIER #09 Best of European Business
The European Winners
A. Growth
Benteler
Gamesa
B. Europeanness
easyJet
Sika
C. Cross-border M&A
Pernod Ricard
Grupo EDP
D. CSR Award
ABN Amro
Bringing people together
AS ONE OF THE FIRST LOW-COST AIRLINES, EASYJET REVOLUTIONIZED THE AIRLINE INDUSTRY. NOW THE BRITISH COMPANY HAS BEEN SELECTED
AS A MEMBER OF EUROPE’S CORPORATE ELITE. ROLAND BERGER AWARDED EASYJET, ALONG WITH SIX OTHER COMPANIES, THE “BEST OF EUROPEAN
BUSINESS” AWARD. IT’S AN AWARD THAT ALSO RECOGNIZES THAT EASYJET IS HELPING EUROPE NOT JUST TO GROW, BUT TO GROW TOGETHER.
s
ABSTRACT, OUT OF TOUCH WITH real life—
this is how skeptics like to characterize the European
project. But the citizens in the individual
countries are further along—Europe functions
best when it comes to these normal citizens and
their needs. One of those needs is mobility across
borders. And this mobility has received a significant
boost thanks to the ascendancy of low-cost
airlines. So it makes sense that easyJet, which
is one of these budget air carriers, would win one
of the prizes at the European final event of the
“Best of European Business” competition. easy-
Jet brings Europeans together—and thus brings
Europe to life.
The BEB awards were given out as the final
event at the two-day European Business Summit
(see pictures on previous pages) in Brussels. The
top-class conference showed that in a globally
networked economy, the search for European
benchmarks is more topical than ever. This was
also documented by the fact that, as a rule, the
CEOs of the winning companies accepted their
awards in Brussels.
With their business models, the BEB
winners are setting worldwide standards. For
example, Germany’s Benteler AG and Spain’s
Gamesa—a manufacturer of windpower stations—presented
growth strategies that also
gave them advantages globally. Portugal’s Grupo
EDP and France’s wine and spirits producer
Pernod Ricard demonstrated how a company can
accomplish more with transnational mergers than
solely increasing company size: Their fusions
generated real strategic added value. The Dutch
banking corporation ABN Amro received a prize
for its CSR ethos that is anchored deeply in the
company’s structure.
For the European element in its corporate
strategy, international jurors awarded a prize to
Switzerland’s Sika AG. The company shows it is
possible to use a European production strategy to
succeed in globally competitive industries.
easyJet as well was recognized for incorporating
the “Europe” element into its strategy.
“easyJet’s entry into the European airline
industry contributed substantially to this segment
undergoing fundamental changes,” emphasized
António Bernardo, the deputy CEO of Roland
Berger Strategy Consultants. This is a unifying
trait of many of the winners of BEB awards: They
not only delivered an impressive performance,
but also, at the same time, reinvented the rules
in their industries.
easyJet and its main competitors changed
the behavior and expectations of consumers:
They made flying into an affordable consumer
good. The increasing desire to travel means that
these types of air carriers can expect a relatively
stable demand—as long as they can control their
costs and really be able to provide “low-cost” travel.
In its decision, the jury also praised easyJet’s
“ability to turn around costs in their own industry
and forge a strong European identity.”
36

Business travelers accept the no-frills approach, says easyJet boss Andrew Harrison DOSSIER #09
The environment as selling point
EASYJET BOSS ANDREW HARRISON THINKS THAT THE NO-FRILLS AIRLINE SECTOR WILL CONTINUE TO GROW, BUT WITH FEWER PLAYERS.
CUSTOMERS ARE BECOMING MORE CONSCIOUS OF THE ENVIRONMENT, HE BELIEVES—AND EASYJET IS RESPONDING WITH NEWER PLANES.
THINK:ACT Mr. Harrison, what is the “Europeanness”
in your strategy?
ANDREW HARRISON easyJet is the classic
European airline, an invention of the European
Union’s Open Skies initiatives. We
have a handful of routes to North Africa and
Turkey, but almost all of our 270 routes are
wholly within the EU.
Will that be enough in the future?
We see no need to change this strategy. The
arrival of 10 new countries in May 2004 and
the recent accession of Romania and Bulgaria
simply give us more route opportunities
over the coming years. At present about
30 percent of our routes are outside the UK
within Continental Europe, and I expect this
to increase over the coming years.
You purchase Airbus jets. Are you sticking
to that strategy, despite the recent turmoil
at Airbus?
We have an order with Airbus that will last until
about 2014, and they will be our preferred aircraft
supplier until that date. The recent troubles
are political and do not affect us. Beyond 2014
we will be looking at a new aircraft type with significant
reductions in noise and CO 2 emissions—
that aircraft could come from Airbus, Boeing or
any other credible manufacturer.
What makes winners in no-frills competition?
Success will be based upon providing safe, ontime,
low-cost flights to places that people want
to fly. There is also a growing number of people
who want to fly but are concerned about the
environmental impact of flying—those people
should be flying with easyJet, which operates a
fleet of 125 aircraft with an average age of 2.2
years, making us one of the most environmentally
efficient airlines in the world.
Do you expect further mergers or takeovers?
Yes, there will be consolidation.
Will you buy someone, too?
We have a policy of never commenting on
mergers.
Where will future growth mainly be—intercontinental
and business trips?
Growth will be in all segments of the market
—especially in the business-travel market,
as executives find it impossible paying
hundreds of euros to fly when easyJet can
get you to the main city-center airports for
a fraction of the price.
But will business travelers accept the nofrills
approach?
They already have—20 percent of our passengers
are business travelers. They look
for affordable, direct flights to main airports,
and that’s what we provide. We have
also introduced a number of new services
that make our product more appealing, such
as online check-in and Speedy Boarding.
Andrew Harrison joined easyJet as
Chief Executive in December 2005. He
was previously at the head of the British
car service company RAC prior to its
acquisition by Aviva earlier this year.
37

DOSSIER #09 Best of European Business
EUROPEANNESS
When sales are in line
with production strategy
Swiss-based Sika AG won the award
for intelligent Europe strategies by medium-scale
companies. Over the last five
years, the company has posted an average
annual growth of 13.4 percent in Europe. Of
its 55 production locations, 23 are in
Europe, where more than half of its 11000
employees work. The specialty chemicals
company is the market leader for processing
materials used for sealing, bonding,
damping, reinforcing and protecting loadbearing
structures in construction- and
industry-related areas.
Silvio Ponti,
Deputy CEO, Sika
The balanced relationship between
sales and production facilities was one of
the reasons Sika received the prize. In addition,
it is taking full advantage of the currently
favorable trend in the construction
industry. That’s important because the
company takes in 75 percent of its revenue
from the construction industry.
Overall, the company achieved sales
equivalent to €2.4 billion in the financial
year 2006, exceeding the preceding year’s
level by 33.6%, organic growth accounting
for 16.9% of the gain. The rise in sales was
broadly supported geographically.
Hubertus Benteler,
CEO, Benteler
GROWTH
The hidden champion
Benteler AG impressed the European
jury with its growth strategy. The German
company was declared the winner among
large-scale companies in the “Growth” category.
Core business areas of the international
supplier are reflected by its
Automotive, Steel/Tube and Distribution
divisions. Between 2001 and 2005, Benteler
was able to increase its sales by
an average of 15.6 percent annually,
despite fierce competition in its core markets.
In 2005, a 19 percent growth
increase translated to €5.3 billion in total
sales. That figure shows that Benteler, like
many other German B2B providers, has
moved out of the traditional medium-sized
company category.
According to the jury, growth was
made possible by focusing on the “right
products” and developing innovative solutions
for an international customer base.
The company generates 72 percent of its
business through automotive supplies.
Based in the medium-sized German city of
Paderborn, Benteler currently has 150
locations in 34 countries.
Another plus for Benteler is that it
has its spending under control. By purposefully
streamlining its costs, the company
has become more flexible. “Familyowned
company Benteler has impressively
demonstrated its strengths in innovation
and organic growth in a hard-fought market.
Its performance is impressive and
sets a great example,” explained António
Bernardo, Deputy CEO of Roland Berger
Strategy Consultants.
Guillermo Ulacia
Arnaiz, CEO,
Gamesa
GROWTH
Gamesa rewarded for its
boldness
The award in the “Growth” category
for medium-sized companies went to the
Spanish company Gamesa. The Vitoriabased
firm is among the leading providers
of products and services in the renewableenergies
industry (see also the article on
page 48). Gamesa grew by 24 percent
annually between 2001 and 2005. Its
sales for 2006 amounted to €2.4 billion.
That was a boon for shareholders whose
commitment to the company was rewarded
with a 30 percent return between 2000
and 2005.
Gamesa is the top supplier of wind
power facilities in Spain and China. With its
5420 employees, the company is also
present in the US, France, Germany and
Portugal. The jury was particularly swayed
by Gamesa’s “bold” foray into new energy
fields and markets. In fact, the company
wants to expand beyond wind energy projects
and into other renewable-energy segments.
Particularly relevant here are solar
and biomass power.
38

Pernod Ricard’s takeover of Allied Domecq convinced the European jury DOSSIER #09
M&A
Wind from the south
Portugal’s Grupo EDP is the thirdlargest
energy company on the Iberian
Peninsula and one of the top three private
energy suppliers in Brazil. It won the BEB
award in the category of “cross-border
mergers and acquisitions.” These types
of M&A activities throughout southern
Europe’s energy-supply sector received
high marks from the jury.
EDP’s core focus is wind power, but
the company is seeking to expand significantly.
For example, it took over energy
supplier Nuon España for €478 million,
and it also acquired five wind parks from
various providers.
The Portuguese company was able
to visibly increase its installed capacity
over the last several years through its
growth strategy. For example, installed
capacity climbed by 23 percent between
2004 and 2005 alone. It’s fair to say that
Grupo EDP is currently one of the world’s
biggest wind energy suppliers.
António Mexia,
CEO, Grupo EDP
M&A
Jean Rodesch,
Vice President,
Government
Affairs, Pernod
Ricard
Big plus big spells
business success
The French wine and spirits producer
Pernod Ricard was also awarded the
M&A prize. Thanks to strategic mergers
and acquisitions, the company is one of
the world leaders in the production and distribution
of wine and spirits.
When Pernod Ricard and Allied
Domecq merged, two heavyweights in the
international wine and spirits market consolidated
their power to become the number
one in Europe. The French company
paid a hefty €11 billion for the UK competitor.
But the investment is paying off
already: synergistic effects had a favorable
impact faster than many analysts had
expected.
Pernod Ricard is the world’s secondbiggest
supplier of spirits, and it posted
sales of €6.1 billion in FY 2005–2006. With
a sound acquisition strategy, the company
expanded its brand portfolio and improved
its competitive position to boot. Of the 100
best-known spirit brands, the Paris-based
group owns 20 of them, including Chivas
Regal, Havana Club and Ballantine’s.
CSR
ABN Amro: transparency
pays off
Global banks are not often praised
for their social consciousness. So it’s all the
more remarkable that ABN Amro was chosen
by a special jury as a financial group to
receive a prize for corporate social responsibility
(CSR). “As a strategy consulting
firm with European roots and an international
presence, we are convinced that corporate
success and social responsibility
are closely linked,” said António Bernardo,
explaining the reasons for the special CSR
award.
According to Bernardo, a strong
commitment to transparency and good
risk management, as well as the creation
and promotion of new business fields, are
hallmarks of “good” European companies.
Petra van Hoeken,
Head of Group
Sustainable Development,
ABN Amro
Jury members were most impressed
with ABN Amro’s ability to integrate
CSR and sustainability-oriented
strategies closely in its day-to-day business.
Jurors agreed that the company was
exemplarily successful in incorporating
CSR as a critical component into its strategy.
It also goes to show that EU Commission
President José Manuel Barroso is correct
in his guest article on page 40, when
he says that CSR is no longer a mere fig leaf
or a ‘nice-to-have’, but an essential element
of successful management.
39

DOSSIER #09 Best of European Business
40

More trust in business will make young people more entrepreneurial DOSSIER #09
Assume more responsibility!
DISTRUST IN BIG BUSINESS IS GROWING WORLDWIDE. JOSÉ MANUEL BARROSO, PRESIDENT OF THE EUROPEAN COMMISSION, THEREFORE
URGES COMPANIES TO STEP UP THEIR CSR EFFORTS, WHICH IS ALSO IS IN THEIR OWN BEST CORPORATE INTEREST. IN THIS GUEST COLUMN,
THE EMINENT EUROPEAN WARNS THAT POLICY-MAKERS AND BUSINESS MUST COOPERATE MORE STRONGLY.
s
José Manuel Barroso, President of the European Commission,
PRESENTS HIS CSR VISION EXCLUSIVELY TO THE THINK:ACT COMMUNITY
CREATING THE RIGHT CONDITIONS for economic
growth and for job creation is a top priority
for the European Union. Only by achieving the
objectives of the Lisbon Strategy for Growth and
Jobs can we defend and advance those goals
that are so important to us as Europeans—sustainable
development, the abolishment of social
exclusion and a better quality of life for all.
A greater commitment to corporate social
responsibility (CSR) plays an essential role in the
drive for a more competitive Europe. This is why
the G8 summit to be hosted by Germany this
June has growth and responsibility as its twin
themes. The two go together. I would like to welcome
the initiative of the European Business
Summit and think:act magazine to put the spotlight
on CSR. Social responsibility should be
regarded as one of the core challenges for companies
in today’s Europe.
IN MARCH 2006 the European Commission
called on the European business community
to further intensify its commitment to social
responsibility and provided strong backing to the
launch of the European Alliance on CSR. It has
long been proven that social and ecological
engagement can go hand in hand with commercial
success. With CSR, businesses can attract
the attention of employees or motivate them,
just as it can help to support brand image and
build consumer loyalty. Growing attention to
social and environmental issues, and increasing
cooperation with other stakeholders, are catalysts
for companies to develop new products and
new business models. Investors and consumers
have good reason to encourage a greater adaptation
of CSR.
Corporate Social Responsibility can also
help to address the growing lack of public trust
in the business world, as indicated by alarming
studies. Businesses are unlikely to thrive in the
long term if, collectively and individually, they do
not command the trust of citizens.
How are young people to develop more
entrepreneurial spirit if they are brought up in a
society where the very trust for enterprises is on
the wane? Credible and transparent CSR practices,
properly coordinated with other stakeholder
groups, are one possible answer.
COMPANIES THAT EXERCISE CSR can contribute
to important public policy objectives.
Good examples of this are qualification, lifelong
learning and maintaining employability. Investments
made by companies in the skills development
and ongoing training of their employees are
evidently in the company interest. But they also
serve a wider social and economic purpose,
namely helping us to remain competitive in the
global knowledge economy.
Similarly, enterprises with diversity policies,
whereby they are actively recruiting more
people from disadvantaged groups, also create
job markets. In these markets, the groups are
integrated and social exclusion is reduced.
Another example is investments in ecologically
motivated innovations and environmental management
systems that allow for a more rational
use of natural resources and reduced levels of
pollution at the same time.
41

“We believe that a specifically European point of view can very effectively
contribute to social responsibility.”
JOSÉ MANUEL DURÃO BARROSO
has been President of the European Commission
since 2004. To serve in this capacity, Barroso had
to step down as prime minister of Portugal, a position
he had held for two years. Barroso had been
elected as leader of his party, the Partido Social
Democrata, in 1999. He holds a degree in Political
Science, is married and has three sons.
The behavior of European companies outside
of Europe is also crucial. The European Union
and its member states are spending rather large
amounts of money on poverty reduction,
accountable political governance and human
rights in developing countries. Irresponsible
action by European companies could possibly
undermine this work. There is a growing recognition,
however, that business, government and
non-governmental organizations can work
together constructively to promote respect for
core labor standards, for example, or to make
progress toward the United Nation’s Millennium
Development Goals. The Commission, for its part,
is definitely committed to this objective.
AS WE CONTINUE TO PROMOTE CSR, we will be
guided by three important principles. Firstly,
companies cannot do CSR alone. Cooperation
with all relevant participants is required, and the
Commission will continue to help, with the European
Multi-Stakeholder Forum on CSR at the forefront.
Secondly, CSR is not about a legal obligation
but rather about voluntary business activities.
When managers take responsibility, it is just
part of a better regulation philosophy. And, last
but not least, CSR concerns every single company.
What small and medium-sized enterprises
(SMEs) are doing in the field of CSR needs to be
better recognized, in order to encourage them to
do more in this regard. Larger companies can
assist here by working closely with the SMEs in
their supply chain.
In this scenario, we believe that a specifically
European point of view can very effectively
contribute to social responsibility. The result will
be generally beneficial—for both business and
for society at large.
42

Want to reduce your risk? Invest in CSR! DOSSIER #09
HEADLINE HEADLINE
How much for doing good?
BEST OF EUROPEAN BUSINESS IDENTIFIED THE CONTINENT’S STRONGEST COMPANIES. ECONOMIC SUCCESS, HOWEVER, IS INCREASINGLY
LINKED TO SOCIAL RESPONSIBILITY. REASON ENOUGH FOR ROLAND BERGER TO BE LOOKING FOR ENTERPRISES THAT PLACE A
STRATEGIC VALUE ON CORPORATE SOCIAL RESPONSIBILITY AND INTEGRATE IT IN THEIR ACTIVITIES THE RESULT: MORALS PAY OFF.
s
IN JANUARY 2007, UNILEVER CEO Patrick Cescau told his peers at the
World Economic Forum: “Globalization is worth defending. It is also worth
explaining.” And the best explanation, for him and for many other Davos
visitors, is this: Businesses that pay attention also to those so far excluded
from the benefits of globalization—and realize a profit from doing so.
If they succeed, it shows that globalization can be a good thing for everyone.
And that companies can truly reflect an image as corporate citizens.
One company that takes its citizen role seriously is ABN Amro. The
Dutch bank has, among other things, introduced a micro-financing program
in Brazil that supports local communities and has the aim to reduce
environmental pollution. This engagement garnered the Dutch the
special “Corporate Social Responsibility” award in the Best of European
Business competition.
Only companies that had previously won one of the other BEB
awards were contenders for the CSR award. The CSR level of the distinguished
companies was high overall, which shows that good deeds and
corporate success indeed match. Top companies are often leading the
pack in their social and environmental commitments. Corporate Social
Responsibility is not a fig leaf, but rather part of doing business.
ABN Amro was not the only company recognized in this regard; the
point was also proven by the Switzerland-based Geberit AG. The provider of
sanitary technology scored points with, among other things, initiatives
that reduce the usage of electricity and water. The jury was impressed by
how Geberit strategically integrated economic progress, social development
and environmental issues.
STRATEGY IS THE KEY factor here. Nowadays, CSR may not merely
present an additional element of an existing strategy, but must be part of
strategy formulation per se. This is precisely what companies such as ABN
Amro or Geberit are doing. ABN Amro, for example, has issued an agenda
obligating the entire top management to integrate sustainability issues
into the core business activities. These examples indicate a correlation
between a company’s social behavior and its success. A research team
led by Deutsche Bank and the University of Hamburg recently proved that
especially companies with a broad, strategic approach to their social
responsibility are less threatened by risks. “It seems that a complete
rejection of CSR engagement exposes a company to unnecessarily high
risk,” write the researchers.
If CSR is seen as a strategic asset, then this perspective will
prevent critics from taking over. There really is a backlash against the
social redefinition of a company’s real task. “Capitalism does not need the
fundamental reform many corporate social responsibility advocates wish
for,” wrote The Economist. If, on the other hand, CSR is seen as an economic
necessity, then a redefinition would be superfluous anyway.
43

DOSSIER #09 Best of European Business
Best of European Business—
THE NATIONAL AWARDS
It was a race to success. In nine countries,
Roland Berger Strategy Consultants brought
together leaders and innovators from business,
politics and culture to award each
nation’s most successful companies (see
pictures on pages 2 and 63). In prestigious
locations such as the Paris Louvre, top managers
from the winning companies talked
with leading journalists from the media
partners about the insights from the competition
and the future of their businesses.
The juries brought together those who have
a say in leading European companies: decision-makers
like Klaus Kleinfeld (Siemens
CEO), Sir Nigel Rudd (Chairman, Alliance
Boots) or Rolf Doerig (Group CEO, Swiss Life).
The global media partner this year was the
TV giant CNN. The other partners: ABC
(Spain), Bilanz (Switzerland), Borsen (Denmark;
award still running), Enjeux les Echos
(France), Financial Times Deutschland (Germany),
Harvard Business Review Polska
(Poland), Il Sole 24 Ore (Italy), Journal de
Negócios (Portugal), manager magazin
(Germany), Puls Biznesu (Poland) and The
Times (United Kingdom).
Growth
Europeanness
Crossborder
Mergers &
Acquisitions
Grand Prix
France
Norbert Dentressangle Group
Somfy International
PSA Peugeot Citroën
International Metal Service
Pernod Ricard
Dassault Systèmes
Vallourec
Italy
Diesel
Geox
INDESIT
ALI Group
UniCredit Group
Gruppo Campari
Lottomatica
Germany
Netherlands
Growth
Benteler
Puma
Mittal
TomTom
Europeanness
Franz Haniel & Cie Group
Vaillant
DSM
Stage Entertainment
Crossborder
Mergers &
Acquisitions
E.ON
ABN Amro
TenCate
44

Europe’s most successful companies DOSSIER #09
the national winners at a glance
Poland
Solaris Bus & Coach
Spain
Gamesa Corp. Tecnológica
Cosentino
United Kingdom
Enterprise Inns
Serco
Inter Groclin
Gruppo Ferrovial
Ficosa International
easyJet
Aviva
PKN Orlen
Telefónica
Fertiberia
Yell
Ineos
Gruppo Villar Mir.
Portugal
Galp Energia
Logoplaste
Switzerland
Geberit Group
Stadler Rail
For more information about the European
Summit in Brussels, the national and European
award winners, and the results of the
“Best of European Business” competition,
visit these Web sites:
www.best-of-european-business.com
www.rolandberger.com
www.ebsummit.org
Mota Engil
Renova
SIKA
Grupo EDP
Holcim
45

DOSSIER #09 Best of European Business
Back in fashion—finally
THE POWER OF BRANDING IS CURRENTLY PRESENTING CONSIDERABLE MOMENTUM FOR EUROPE’S LIFESTYLE COMPANIES. AS THEIR
MARKETING STRATEGIES AND CONCEPTS BECOME MORE SOPHISTICATED, FIRMS SUCH AS GEOX, DIESEL AND PUMA ARE CLOSING IN
ON THEIR AMERICAN COMPETITORS. THEY INVEST IN INNOVATION, BUT DO NOT STOP AT THE GREAT IDEA. INTELLIGENT DISTRIBUTION
STRATEGIES ALSO PUT EUROPEAN LIFESTYLE LEADERS AHEAD OF THE PACK.
s
IF YOU WORE PUMA SHOES and a Puma jogging
outfit in the schoolyard 15 years ago, chances are
someone had stolen your normal clothes during
gym class. Nowadays, however, even Madonna is
seen wearing the brand on stage. Puma is a major
lifestyle company with a loyal following. And
because being “in” pays off, the company has
posted more than solid growth in recent years,
which attracts investors like the French Pinault-
Printemps-Redoute. Now, Puma has now been honored
as a prizewinner in the BEB competition.
Puma’s cult status is no coincidence. Europeans
are discovering that lifestyle can be a driving
force behind growth. In fact, there are several
fashion and lifestyle companies among the BEB
winners. Wielding intelligent branding strategies,
companies such as Puma, Diesel, Geox and Campari
seem to be closing in on previously unchallenged,
leading American brand powerhouses.
Consumers in developed economies are increasingly
seeking out the possibility of gaining a piece
of identity via emotionally charged brands or cult
products. Brand managers are using this opportunity.
Apparently, the more advanced of Europe’s
marketing experts have developed the ability to
not just accept the evolution of cult brands as a
cultural phenomenon, but to actively influence it
with brand management measures. The companies
are acting authentically—and thus succeed
in creating brand images that consumers perceive
as one-of-a-kind.
As a result, Europe is increasingly becoming
a lifestyle trendsetter. “Just 10 years ago, people
used to say that it would be a disadvantage for
a company to have its head offices in Europe,” says
Puma CEO Jochen Zeitz. “At the time, almost all the
industry’s trends originated in the United States.
But it’s different today. In a unified Europe, we
happen to have an integrated yet diversified market
that is getting a lot of attention, especially in
the fashion segment.” Buyers and retailers are
also not solely focused on the United States. Especially
the diversity of cultures and ways of living is
continuously creating new content for lifestyle
brands, thus assisting in their positioning.
MAURIZIO DALLOCCHIO, dean of the elite university
SDA Bocconi, which is located in the fashion
capital of Milan, Italy, also confirms that a
base in Europe is actually a competitive advantage
for lifestyle companies. A heterogeneous culture
can only help in this regard. As a juror in the
Italian awards, he believes that a high level of
innovation, optimized distribution channels and
a strong brand image are the paths to success for
all winners in the lifestyle market segment.
Yet the corporate backgrounds of Puma,
Geox and Diesel could hardly be more different.
Puma was founded in the 1920s as an offshoot of
the Dassler shoe company, which also spawned
Adidas. Puma was successful for many years in
the sports segment, especially because prominent
athletes such as Jesse Owens, Diego Maradona
and Boris Becker were customers. However, in the
1980s, Puma shoes were increasingly delegated
to the “has-been” pile.
This trend continued until Jochen Zeitz
took over in 1993 and turned the company
around. He started placing Puma-emblazoned
articles in fashion stores and expanded the product
line. Zeitz had anticipated that sportswear and
lifestyle would converge. Today, the Puma brand
is positioned where sports, lifestyle and fashion
intersect—in the middle of lucrative consumer
trends. “Last year, we were able to exceed our
objectives with a record result of over 30 percent
growth in sales, and this year we’re shooting for
another record-breaking performance,” says
Zeitz. Puma continues betting on testimonials.
Well-known figureheads don’t appear artificial, as
the Herzogenaurach-based company has been
using them for quite some time. The VIP in Puma
sneakers is a match for the brand.
Founded in 1978 by CEO and owner Renzo
Rosso, Diesel operates differently. Rosso did not
think much of the image-bolstering provided
by celebrity models. He is the type of company
founder who considers market research rather
irrelevant. Instead, he relies on a creative design
team whose mission is to define both fashion and
a new lifestyle at the same time. The key to his success
is investing in marketing and communications.
“Right from the beginning, Diesel had an
excellent strategy of communication, which Renzo
Rosso himself represents,” says Dallocchio. “Diesel
not only sells a brand, but a whole new view of life.”
Rosso confirms that philosophy. People at
Diesel, he says, share a mentality “of being brave,
being confident with oneself, wanting to innovate
and never being satisfied.” To him, Diesel is more
than a company, but rather an attitude.
While Diesel has always been betting on
the power of branding, the founding of Geox was
preceded by a technical innovation. In the mid-
1990s, current chairman Mario Moretti Polegato
applied for a patent on the breathable shoe sole.
The company was found in 1995, and went public
in 2004. To date, Geox shoes are known for
their intelligent soles. As Dallocchio says, “it is the
exceptional innovation that makes the otherwise
rather conventional Geox shoes an extremely
46

Distribution is what really matters DOSSIER #09
DIVERSITY MEANS PROFITS
CEO Jochen Zeitz explains why he likes being in
the small German town of Herzogenaurach.
Mr. Zeitz, what makes Europeans so strong in
the lifestyle market?
The European market is very fashion-conscious,
and gathers much attention here. We
have been very successful as a brand and
company in the last few years, and other European
enterprises have become increasingly
self-confident. For quite some time now, the
orientation of buyers and retailers is no longer
restricted solely to the United States.
Does Puma benefit from its European location?
Just 10 years ago, people said it would be a
disadvantage to have a head office in Europe.
But it’s different nowadays. In Europe, we
have a common but diversified market. We
can unite various cultures in one company and
thereby create a basis for creativity. As a
globally active enterprise, however, it is especially
important to utilize the advantages of
every continent.
successful product.” In 2005, Geox recorded
growth of 34 percent. It seems paradoxical that
the focus on innovation and seemingly little
regard for superficial marketing makes for the
uniqueness of the Geox brand. Thus, it makes
sense that the focus in Geox’s strategy will
remain on technology. “We’re concentrating our
energy on developing new patents to improve
people’s quality of life,” says Polegato.
In his view, it is not just a matter of how
large the investments are, but also of their quality.
“Success depends on the kind of investments
and how they are implemented.” Sound investments,
in Polegato’s opinion, are primarily geared
toward the future, and toward research and development,
rather than toward production. He
believes this is where many fashion companies
miss the point. “A good, innovative idea is worth
more than a production plant.” Geox lives up to
that principle by annually investing 3 percent of
its sales in R&D. At the company headquarters,
15 engineers work together in a research lab
and “cooperate with major Italian and European
universities to test the latest technology before it
hits the market,” says Polegato.
PUMA’S JOCHEN ZEITZ is also banking on his
company’s creativity. “Our innovative designs—
combined with a corresponding functionality—
enable us to create a bond between our customers
and our brand and company,” he says.
“We thereby also successfully combine the areas
of sports, lifestyle and fashion.” The company
also benefits from Europe’s diversity. “Our
strength primarily is human capital,” adds Zeitz.
“Today it’s easier than just a few years ago to
employ people from different countries. It lets us
blend various cultures in one company to set a
foundation for creativity.”
Besides catchy concepts such as innovation
and brand, Dallocchio counts a more staid
ingredient: distribution. This is where Dallocchio
sees Europeans as having a decisive advantage.
Indeed, Europe’s diversity has turned its companies
into experts in this area. “While in France, the
large chains of stores are crucial, in Italy for example
small stores tip the scales,” he says. “European
companies have to know these different distribution
channels.” Accordingly, says Dallocchio, they
are better equipped than competitors from the US
or Japan that are used to a homogeneous market.
Polegato believes that Europeans are leaders
in terms of originality. However, the Geox
founder warns about good ideas falling by the
wayside and the dangers posed by brand piracy.
“We have proven that innovation is possible in
every area—even in already saturated market
segments. “The key, however, is to protect ideas
by means of patents so that they represent added
value that cannot be copied. It is the only way for
a product to stand out from all the others.”
An age-old problem: The potential is there,
but Europe is still not taking full advantage of it.
47

DOSSIER #09 Best of European Business
48

Growth needs to be top priority for the green entrepreneurs DOSSIER #09
It pays to be green
INCREASINGLY, COMPANIES ARE MAKING MONEY WITH ECOLOGICAL PURSUITS. IN SPAIN, WIND POWER PROVIDER
GAMESA IS THE MOST DYNAMIC OF THE BUNCH. STILL, THERE’S NO TIME TO REST FOR CEO GUILLERMO ULACIA.
s
THE STOCK MARKET is unforgiving. Non-performers
are dropped by the wayside without a
second thought, while investors snap up companies
with successful strategies and reap the
rewards. A former fringe sector will know its day
has come when its players suddenly figure prominently
on the floor of stock exchange. In 2006,
the International Economic Platform for Renewable
Energies voted Gamesa Corp. Tecnológica,
which specializes in the construction and operation
of wind energy facilities, stock of the year
from among 60 listed renewable-energy companies.
“Given strong international competition,
Gamesa’s management was able to maintain the
company’s market value in leading positions for
all of 2005, as well as over the long term, better
than its competitors,” praised the forum’s director
Norbert Allnoch.
The competition rates the market capitalization
per trading day. However, Gamesa also
won over jurors with its increased sales. With an
average growth of 24 percent in four years, the
wind catchers could point to impressive performance,
thereby garnering the BEB award in the
Growth category. Its subsidiary Gamesa Eólica
had claimed the prize for itself last year.
Considering Spain’s geography, it is predestined
to spawn successful wind power companies.
The country features a long coastline and
broad, high-altitude plateaus swept by constant
and strong winds. In addition, the formerly agrarian
country initiated its economic upswing in the
mid-1980s, thus at a time when wind energy was
only just put to the test on a larger scale. A small
group of young companies was looking for fertile
future business sectors to operate in—and discovered
wind power. The result: Spain has more
rotors turning per capita than in any other European
country.
Gamesa is one of the companies that is
benefiting from the boom in the green industries.
Overall, the Continent seems well-prepared in the
area of alternative industries. And European top
executives believe that Europe can achieve significant
growth through the green industries. Consequently,
a current CEO survey of Roland Berger
shows that 70 percent of those questioned support
the EU’s playing a role in subsidizing
providers, at least for some time. This does not
indicate belief in government as much as it does
the conviction that investments in some forms of
green industry are economically prudent.
ESPECIALLY THE WIND ENERGY industry
serves as a good example. Decision-makers at
Gamesa have long since realized that environment
is lucrative. The company holds a market
share of 50 percent in Spain and still 13 percent
internationally. However, the Spanish eco-innovators
are presently going through a critical
phase. “International operations and growth need
to be the top priority in environmental technology,
as well,” warns Burkhard Schwenker, CEO of
Roland Berger Strategy Consultants. “Otherwise,
imminent consolidation will soon transform current
technology leaders into future subsidiaries
of international environmental companies.”
Two factors in particular will have an
impact on the industry in the future: the
construction of large-scale, onshore and offshore
wind power facilities with an output of more than
6 megawatts, and the increasing demand coming
from the US and Asia. In addition, eastern Asia is
increasingly discovering the green industry, as
49

DOSSIER #09 Best of European Business
»In the past five years, India has
recorded the highest growth
rates in the wind energy market.
We are therefore seeking cooperation
with Europe in order
to sustain this growth.«
Shri V. Subramanian, Secretary
India’s Ministry of New and Renewable Energy
EUROPE’S MAJOR WIND-POWERED COUNTRIES
the ecological problems resulting from growth can
no longer be ignored. In this scenario, China’s and
India’s growing hunger for energy are just as
much further stoking demand, as are the most
recent environmental commitments made by US
President George W. Bush .
Europeans might benefit from growth on
the Indian subcontinent in particular. Shri V. Subramanian,
the secretary of India’s Ministry of New
and Renewable Energy, has confirmed that by
saying, “In the past five years, India has recorded
the highest growth rates in the wind energy market.
We are therefore seeking cooperation with
Europe in order to sustain this growth.”
GAMESA WANTS TO to meet these and similar
requests for cooperation with a product-strategy
offensive. The Spanish company wants to
develop a 10-megawatt, G10x wind power facility
for use offshore by 2015. For comparison’s sake,
conventional onshore facilities generate no more
than 2 megawatts, while initial offshore prototypes
are configured to put out a maximum of
6 megawatts.
In addition, Gamesa will continue to make
considerable investments abroad. Companies
INSTALLED OUTPUT (MW) 2003 2004 2005 CHANGE 2003–2005 (%)
Germany 14 609 16 629 18 428 26.1
Spain 6203 8263 10 027 61.6
Italy 904 1265 1717 89.9
United Kingdom 648 907 1353 108.8
Netherlands 910 1079 1219 34.0
Portugal 296 522 1022 245.3
Balance 4998 5706 6638 32.8
EU-25 total 28 568 34 371 40 404 41.4
The installed output in the wind energy sector is by far highest in Germany. However, other countries are
catching up. If Spain keeps up its pace, it might overtake the Germans within several years.
think:act table; source: European Wind Energy Association
that want to sell ever-larger wind turbines overseas
must also be prepared to manufacture them
there, if not just for logistical reasons. Wind turbines
whose diameters easily exceed 100 meters
are difficult to transport from the production plant
to a given location. For that reason, Gamesa has
gotten a head start in opening up manufacturing
plants in China and the US. The company, along
with its respective foreign partners, is building
300-megawatt facilities for the Chinese market
and 600-megawatt systems for the US. The strategy’s
success is already evident. While the company
earned 17 percent of its sales abroad in
2003, that figure jumped to almost 50 percent
two years later. The company presently has market
leadership not only in Spain, but in China as
well. In 2005, one-third of all wind energy facilities
in China were built by Gamesa. More and
more of China’s citizens enthusiastically support
renewable energy.
INTERNATIONAL POWER-SUPPLY COMPANIES
have had their eye on the fast-growing companies
in the wind power sector for some time now. The
driving forces behind this trend are energy companies
such as France’s Areva Group, or Grupo
EDP, the third-largest energy provider on the Iberian
Peninsula and Portugal’s biggest industrial
company. Grupo EDP is building its future to a
large extent on renewable energies and acquisitions
abroad. It is doing so well in this endeavor
that it won top honors in the “Mergers & Acquisitions”
category in Portugal within the scope of the
2006 BEB competition.
One of its takeovers occurred in 2005,
when Grupo EDP subsidiary Novas Energías do
Ocidente (NEO) acquired Nuon España, which
claims 1400 megawatts of installed and projected
wind energy output. The company was also
able to establish a foothold in France by purchasing
a number of smaller wind farms, thereby
completing the initial phase of its international
expansion. The company announced that, “by the
end of 2010, NEO is expecting an additional 500
megawatts of installed wind energy output in
other European markets.”
50

Traditional companies are on the road to success DOSSIER #09
Back to old strengths
DESPITE MUCH ADO ABOUT THE SERVICE SOCIETY, TRADITIONAL ENTERPRISES ARE STRONGER THAN EVER. PREVIOUSLY
CONSIDERED A DISCONTINUED MODEL, OLD INDUSTRIES ARE SETTING BENCHMARKS—INCLUDING IN MANAGEMENT.
s
IT’S ONE OF THOSE COMEBACKS few had
expected. Until just a few years ago, industrial
economists tended to predict a dire future for
Western economies. The traditional automotive,
chemical, engineering and energy industries
seemed to be in slumps, and it only seemed like a
matter of time until competition from other
regions of the world would sweep them from the
market place.
But that is not what happened at all.
The “old economy” is back. Despite increasing
competitive pressures, many companies in oldeconomy
industries are seeing their traditional
strengths in a new light and are expanding these
competitive advantages. “The assumption that
Europe was transitioning into a service-based
society and that the traditional industries had no
future can no longer be supported,” says Klaus
Spremann, director of the Swiss Institute of Banking
and Finance and professor at the University
of St. Gallen, Switzerland. “The engineering-based
industries in Europe are well positioned on the
world market.”
One can no longer assume that Western
industry is knocking out blueprints for successful
products while mass production takes place in
low-wage countries. In many sectors, movement
of trade from Europe to Asia that defined the
“new economy” has reversed direction. However,
industry in Europe has not remained unchanged.
Many companies have gone down the path of
determined restructuring and have partially redefined
themselves. Accordingly, they are well positioned
today.
INDUSTRY’S COMEBACK must also be considered
from a macroeconomic perspective. “In
some countries, such as Germany, for example,
restraint in wage increases over the last 10 years
have certainly had a favorable impact on industry’s
positive development,” says Spremann. “In
addition, the global upswing that we are seeing
now disproportionately favors countries whose
economies are industry-heavy.”
IT IS ALL THE MORE LOGICAL that among the
winners of the Best of European Business competition,
there are many firms from traditional
sectors, such as Logoplaste, a plastic packaging
manufacturer based in Portugal. As a supplier
for companies such as Danone, Coca-Cola and
Nestlé, Logoplaste was able to tap new markets. It
operates 42 plants and 240 machines in Portugal,
Spain, the United Kingdom, France, Italy and
Brazil. Last year, sales of 5.160 billion manufactured
plastic packaging products hit €260 million.
And that figure is bound to increase. “We
EMPLOYMENT BY ECONOMIC SECTOR, EU-25, 2002
(PERCENTAGE OF NON-FINANCIAL BUSINESS)
1) Manufacturing
28.9%
2) Distributive trades
23.9%
3) Business services
18.4%
4) Transport and
communications 9.7%
2
1
8
6
7
5) Construction
10.4%
6) Hotels and restaurants
6.8%
7) Electricity, gas and
water supply 1.3%
8) Mining and quarrying
0.6%
think:act chart; source: European Commission, Statistical Pocketbook 2006
3
4
5
51

DOSSIER #09 Best of European Business
FASTEST GROWING/DECLINING INDUSTRIAL ACTIVITIES, BY AVERAGE ANNUAL CHANGE IN TURNOVER, EU-25, 2000–2005 (%)
-4 -2 0 2 4 6
Mining and quarrying of energy-producing materials
Coke, refined petroleum products and nuclear fuel
Mining and quarrying, except energy-producing materials
Basic metals and fabricated metal products
Transportation equipment
Chemicals, chemical products and artificial fibers
Rubber and plastic products
Machinery and equipment not elsewhere classified (n.e.c)
Food products, beverages and tobacco
Wood and wood products
Other non-metallic mineral products
Manufacturing n.e.c.
Pulp, paper and paper products, publishing, and printing
Electrical and optical equipment
Textiles and textile products
Leather and leather products
think:act chart; source: European Commission, Statistical Pocketbook 2006
anticipate growth rates of more than 15 percent
annually,” says Filipe de Botton, Logoplaste’s CEO.
“I don’t see any restrictions for further growth in
our core markets Europe, NAFTA and Brazil.”
THE VENERABLE, FAMILY-OWNED, German
company Vaillant, is growing, too. Known for its
140-year history of manufacturing heating appliances,
gas-fired water heaters and thermostats,
Vaillant is applying a textbook approach: countering
increasing competition with a proactive, technology-based
strategy. Its superior products in
the areas of heat-output systems, air-conditioning
technology and renewable energy have made
Vaillant Europe’s current market leader, with €1.8
billion in sales over the course of 2006.
Yet where does the growth of companies in
supposedly “non-innovative” industries come
from? What they all have in common is a corporate
culture that is truly committed to research
and development. Logoplaste, for example, has
32 engineers working full-time on researching
new technologies. In late 2006, the Portuguese
introduced the lightest PET mineral water bottle
in Europe. In order to continue responding quickly
to future market and customer demands, the
company invests more than 3 percent of its sales
annually into research and development.
VAILLANT ALSO RELIES on innovation. Of its
70 production locations, seven of them in seven
European countries are dedicated to research and
development. The 350-person R&D division is the
company’s largest, and it submits about 100 new
patent applications each year. The knowledge
society and the industrial society are merging.
52

Asia: a place to grow, not a threat DOSSIER #09
“The knowledge we have in Europe is a bona fide
jewel,” says Spremann. “We need to ask ourselves
how we intend to guard and look after this jewel.
Investments in research and development will
always pay off for a company.”
Unfortunately, not all companies are
investing effort into strengthening their knowledge
base. In the EU as a whole, investments in
research and development currently amount to
1.96 percent of GDP. In other words, Europe is lagging
behind its true potential. The European R&D
investments are “well below those of other industrialized
countries,” according to an EU Commission
report from October 2006. In comparison,
the United States invests 2.59 percent annually,
and Japan 3.12 percent.
ON AVERAGE, COMPANIES don’t do enough in
this area—even though investments pay off,
according to Fátima Barros, director of the School
of Economics and Business Administration at the
Universidade Católica Portuguesa in Lisbon. “In
the specific case of Logoplaste, R&D investments
allowed this company to develop a strategic
advantage in the European market.”
And yet: Managers should always bear in
mind that innovation alone is not sufficient. Logoplaste’s
de Botton believes that another competitive
advantage is a short time-to-market period.
“You need to have ideas and be able to realize them
quickly, because only the first ones in line will be
able to earn money from the product,” he says.
Spremann also thinks that a prompt and
well-conceived time-to-market period is a decisive
criterion for success. The best R&D department
is useless, he says, “if products cannot be
successfully placed on the market.” He means
the world market. “The international market is creating
new prospects, and medium- and largescale
companies have recognized the opportunity,”
he says. “Alas, the global market is also unforgiving.”
Companies that do not use these
opportunities end up on the losing side of globalization.
Logoplaste impressed jurors with its international
strategy, especially through its acquisitions
in Europe and Brazil.
In early 2007, Vaillant inaugurated a new
production facility in Wuxi, a city in eastern China
near Shanghai. “It’s another building block in our
global growth strategy,” said managing director
Claes Goeransson. This year, the plant in China is
expected to manufacture up to 10 000 units, and
total capacity can be cranked up to 200 000.
Sales in China are expected to double within the
next three years. In addition, Vaillant was also
successful in placing newly developed products
on the markets.
THAT ALSO APPLIES to Somfy International,
which emerged as a winner in France’s BEB competition.
With 3500 employees, Somfy manufactures
remote control units for rolling shutters,
blinds and garage doors, and occupies the position
of world leader in this segment. Its business
success is based on product innovation and a
global presence. As early as 1969, Somfy opened
branches outside of France—and expanded its
global network between 2002 and 2005 through
strong growth.
However, internationalism is only good if
employee skills remain consistently excellent.
Companies such as Logoplaste benefit from
Europe’s standards, despite all the critical voices
finding fault with it. “Our educational systems are
a strong comparative advantage that we utilize
but also need to foster,” says Spremann. Even
after school and training are completed, learning
must still continue. Logoplaste’s employees are
benefitting from 40 000 hours of training and
continuing education annually.
Logoplaste and other companies demonstrate
that globalization can be an advantage for
them, as long as they do not rest on their laurels
and instead continue to grow through research
and development. As Barros says, “It does not
matter if your business is just a niche, the crucial
factor is to gain a competitive advantage that
must be sustained by a continuous and ambitious
innovation process.” Spremann confirms
the importance of innovation and adds, “Europe
will continue to provide blueprints, but the future
cannot be built on innovation alone.”
53

p industry report
the 2002 sarbanes-oxley act has been a headache for wall street

the 1986 “big bang” launched london’s success
industry report f
Forget New York
For years, New York has been seen as the dominant city of world finance. Think again, bankers!
Signs are increasing that London might be re-emerging as the world’s financial center. Investors
and corporate banks are moving shares of their activities to the shores of the Thames. A good
sign for the rest of the Continent: The world’s financial heart might soon be beating in Europe.
55

p industry report
in 2006 london had more 1pos than new york and hong kong combined
:
Even by the city’s exalted standards, the
London Government Dinner is a grand
affair. The magnificent Egyptian Hall of
Mansion House, a Georgian building in the
middle of the financial district, is ceremoniously
lit. A banquet for 400 is laid out
beneath the hall’s imposing white columns.
The Lord Mayor of the City of London and
his officers wear traditional gowns.
The dinner at Mansion House brings together
everyone who has a say in running the
United Kingdom’s capital, and they are
many, from British government ministers to
members of the Greater London Assembly.
The multi-layered structures of power and
responsibility, new and ancient, make it a
minor miracle for the metropolis to develop
coherently—but that is exactly what has
happened lately. London has leaped ahead,
and the City of London, as the financial district
is called, has turned into a boomtown.
Its latest icon, Sir Norman Foster’s Swiss Re
building, also known as “The Gherkin,” will
soon be joined by three new high-rise buildings.
In addition to the now fully functioning
outpost around Canary Wharf, the skyscrapers
are testament to an old-new claim:
London, capital of the world.
The numbers are indeed impressive. There
are now more than 550 international banks
and 170 global securities houses based in
London, compared with around 280 in
Frankfurt, 270 in Paris and 250 in New York.
According to figures from the Corporation
of London for 2006, London turned over
$753 billion in foreign exchange every day,
which represents a global share of 31 percent,
while it held 43 percent of the global
foreign-equity market. Seventy percent of all
Eurobonds were traded in London.
It is in the realm of IPOs, however, that the
upswing has been most dramatic. Only five
years ago, NYSE (and NASDAQ) dwarfed the
LSE and its then new Alternative Investment
Market (AIM). In 2006, however, London
took the lead, as the LSE reported at the
end of the year. At the end of November,
the number of IPOs had reached 319, compared
with the 274 carried out on the NYSE,
NASDAQ and Hong Kong combined. The
other European exchanges achieved the
same number, 274, which pointed to a particularly
good year for Europe’s—or Europeanbased—financial
services as a whole.
At the same time, IPOs at the LSE reached a
volume of £25.8 billion, ahead of the Hong
Kong exchange (£19.3 billion), the NYSE
(£18.4 billion) and NASDAQ (£6.7 billion).
According to estimates for the whole of 2006,
London’s volume of $55 billion beat both
New York exchanges for the first time. They
raised a total of $47 billion. This points to a
basic shift in global gravity. Until very
recently, European or Asian companies that
wanted to become global players had to list
in New York to attract the attention of
investors who mattered—not anymore.
No wonder that NASDAQ eagerly eyes the
LSE, tabling a hostile bid in December.
Clara Furse, the LSE’s chief executive, has
fought it vehemently, and so far successfully.
In the traditional financial district, the
atmosphere has changed significantly.
There is a buzz around the City’s old streets,
the ones that carry evocative names like
Cheapside, Poultry, Lombard or Threadneedle
Street. “It’s a great time for the leaders of
London’s Government,” John Stuttard, the
Lord Mayor of the City of London, says in
his after-dinner speech at Mansion House.
“Some say that London is the only truly global
city. Certainly, it is the prime international
financial service center.” There are cheerful
shouts of “hear, hear.”
Among London’s movers and shakers, two
have a special claim to having steered
London on its present path. One is, surprisingly,
Mayor Ken Livingstone. As leader of
the Greater London Council (GLC), Livingstone
fought Margaret Thatcher’s neoliberal
revolution. However, since taking over the
mayor’s job six years ago, he has proved a
more pragmatic politician. Some observers
were surprised by the relaxed attitude the
Labour politician developed toward the
financial services industry.
The other part of the pair is the Lord Mayor
himself. The title “Lord Mayor” goes back to
the Middle Ages. The Lord Mayor heads the
Corporation of London, which administers
the financial district. John Stuttard had a
career in finance. The Lord Mayors of late
have cleverly worked to preserve, and
extend, the City’s independence, and its
famous “light-touch” regulation through the
Financial Services Authority (FSA).
THE CITY LEAPED AHEAD
AND LEFT BEHIND THE COMPETITION,
INCLUDING NEW YORK
London’s latest success started in 1986. The
“big bang,” when the City rid itself of many
of its old, suffocating, clubby rules, marked
the starting point for London’s re-emerging
as the world’s financial center. London was
slow, however, in catching up with developments
elsewhere, such as electronic trading.
When the euro was introduced in 1999, and
the UK stayed out of it, many predicted a
creeping loss of significance. The opposite
has happened. The City leaped ahead and
left behind the competition. “London is
ahead in the international side of financial
services,” John Stuttard says, “in terms of the
number of foreign companies listed on the
London Stock Exchange, the percentage of
Eurobonds traded, the percentage of foreign
currency traded. And the numbers are much
higher for new products like freight
derivates, or trading carbon emissions. London
is way out, with something like 90 percent
of the global volume.”
To some extent, London’s rise is the result of
New York’s fall. Since the Enron scandal and
the terrorist attacks of 2001, things are not as
they were in Manhattan. With tightened
border controls, immigration has become
more difficult, and short-notice international
56

wall street banks still dominate—from london
industry report f
“ People can come from all over the world to work here, very innovative
people who develop new ideas and new products.”
John Stuttard, Lord Mayor of London
business meetings are now easier arranged
elsewhere—not least in London. Designed to
prevent future corporate scandals, the
Sarbanes-Oxley Act of 2002 has burdened
listed firms with extensive new auditing
requirements. These result in higher costs.
The act also created a new oversight body,
in addition to the Securities and Exchange
Commission (SEC).
Investors and firms also worry about the culture
of class-action litigation and lack of
shareholders’ rights. In the United States, for
instance, company boards vote on executive
pay. In Britain, shareholders control this
vote, and they also have a say in electing
company boards.
In the autumn of 2006, New York mayor
Michael Bloomberg started a major initiative
to give Wall Street back its competitive
edge. With Charles Schumer, a New York
senator, Bloomberg also wrote an op-ed article
for the Wall Street Journal in November,
titled “To save New York, learn from London.”
Some observers are already assigning
Wall Street’s long-held superiority to the
dustbin of history. “New York’s days of glory
will never return,” Financial Times columnist
John Gapper pronounced recently.
For some, predictions like these, and breastbeating
down on Wall Street, are overblown.
“It’s not at all clear that London is actually
beating New York on much except the IPOs,”
says Julia Vitullo-Martin, Senior Fellow at
the Manhattan Institute, New York’s influential
think tank, and an expert in the development
of cities, “though London has enlisted
its media brilliantly to argue its case.”
However, neither media excitement nor Wall
Street’s woes alone have paved London’s
way to the top. No doubt, the “light-touch”
regulatory framework has contributed
greatly. The key, however, has been consequent
internationalization. In fact, the City
of London is no longer British.
This process has been going on for quite a
while, but it has only recently developed
fully. This is best illustrated by the different
ways in which Deutsche Boerse failed to
merge with the LSE in recent years. When
then Boerse chief executive Werner Seiffert
first tried, in 2000, to fuse LSE and the
Frankfurt Stock Exchange into an International
Exchange (iX), he failed partly
because of nationalistic, if not jingoistic,
feelings then still around in the Square Mile.
When he returned in 2004, such sentiments
were no longer in evidence, and did not play
a role. Ultimately, that attempt failed, too—
but because Deutsche Boerse shareholders
crossed Seiffert’s plans.
LONDON IS PROBABLY THE ONLY PLACE
IN EUROPE WHERE YOU CAN EARN
£1 MILLION WORKING FOR SOMEONE ELSE
Another aspect of the City’s internationality
is the workforce. More than 200000 foreign
nationals are working in the financial sector
in the UK, a large part of them in the Square
Mile, where overall employment figures are
presently around 310 000. “This skill base is
really key,” John Stuttard explains. “People
can come from all over the world to work
here, very innovative people in their 20s and
early 30s, who can develop new ideas and
new products, in particular in areas that are
quite complicated.”
There’s also much money to be earned in the
City. The average City salary recently rose to
£100 000 a year, up by 21 percent compared
with 2005. End-of-year bonuses rose to the
mind-boggling figure of £19 billion in 2006.
“London is probably the only place in Europe
where you can earn £1 million a year working
for someone else,” says Professor Tony
Travers, an expert on the capital’s economy
at the London School of Economics. The
Treasury has made some noises toward
tightening the “domicile/non-resident”
clauses that allow international managers to
pay income tax on salaries only, but nothing
much has happened. There are some ironies
in London’s rise. One is that the City, with its
traditions reaching back to the Middle Ages,
seems presently best equipped to serve a
globalized economy. “What we take from
those times are values,” the Lord Mayor says,
“like integrity, fairness, common sense and
flexibility.” He quotes the Saxon King Alfred,
who ruled England at the end of the ninth
century and consolidated the English laws.
Alfred wrote that he had not introduced as
many new laws as people would have
wished during his lifetime, because he did
not want “to leave a sort of rules with which
my successors might not agree”—which is,
for Stuttard, “a visionary comment.” This is
the spirit with which the City greets much
that comes from the European Commission
in Brussels.
Another irony is that Wall Street’s great
investment banks such as Merrill Lynch,
Goldman Sachs, Morgan Stanley and
Lehmann Brothers, or the world’s largest
bank, Citigroup, have been instrumental in
London’s good run. Over recent years, they
have shifted many of their activities from
the Hudson to the Thames, from where they
run much of their operations not only in
Europe, but also in the Middle East and Asia.
The majority are presently earning greater
profits in those markets than in the United
States. In other words, Wall Street banks
dominate, even if they now no longer operate
primarily out of Wall Street.
There is something about London that
seems increasingly heard to beat. “I noticed
in my 20s—somewhere in the later 1980s—
that London started to change. Now it is
very international,” says John Micklethwait,
editor of The Economist. “This is a big thing.
There is a culture now, which especially
attracts young people. One could call it the
soft power of London.” The British capital
has managed, simultaneously, to foster its
old traditions and re-invent itself. This “soft
power” can be observed in splendid action
at the grand dinner at Mansion House,
where past and future are bridged.
57

p industry report
trends and sectors
The shape of things to come
Europe is creating future markets: chips can be printed, windows no longer lose warmth, steel
can be produced with less CO 2 release, and the climate killer might soon be buried in the earth.
Heat conductivity coefficients for various window
Double-insulated window, old wood frame 2.74
Double-paned, thermally insulated window, standard frame 1.81
Double-paned, thermally insulated window, plastic spacer 1.46
Triple-paned, thermally insulated window, plastic spacer 0.80
Vacuum window (depending on frame) 0.70
Exterior wall 0.35
think:act table; source: BINE information service
vacuum brings warmth
print your own chip!
The top exporters of
electronic products
1 China 247 761
2 USA 165 513
3 Germany 135 509
4 Japan 128 721
5 Hong Kong* 116 876
in million €, * incl. re-exports
think:act table; source: ZVEI
The manufacture of electronic components is a complex
process. Printed chips would accelerate it. So far, inorganic
materials such as semiconductors and insulators remain
unsuitable for this “printing.” Attempts to produce printed
electronic components with the aid of organic substances
have been made. “Since 2000, components and simple circuits
have been printed based on organic polymers,”
explains Roland Schmechel, professor of nanotechnology at
the University of Duisburg-Essen. “However, performance,
such as the response time, has been too low until now to
result in commercial products.”
Modern nanotechnology could be the fix and allow the
use of inorganic semiconductor crystals as the “ink.” When
the crystals are ground into tiny particles, they can be converted
into a stable suspension
that can essentially be
used for printing purposes.
Experts estimate that by
2015 the market for printed
electronics will be about
€30 billion. Chemical companies
such as Merck and
Degussa have already
begun research on organic
and inorganic semiconductor
inks.
Light comes in, heat goes out. From an energy-based
perspective, windows have been like holes in a wall. So far.
Researchers now think they may have had a breakthrough
by placing a vacuum between the panes. In the past, air
or inert gases served as a thermal buffer; now a vacuum
will assume that role, eliminating heat conduction and
improving the insulation of vacuum-glazing by a factor
of two. Windows would almost have the insulating value
of masonry walls.
To ensure that the glass panes do not shift toward each
other to form a thermal bridge, plastic spacers no more than
1 mm thick are glued in a slot between the panes once the
air is suctioned out. Since transparent spacers could cause
reflections when exposed to direct light,
they are manufactured in different colors
depending on where the window
is located. Skylight spacers
would have lighter colors.
Researchers and the window
industry expect that
the first vacuum windows
made in Europe will be
available on the market
in three years. In addition
to their thermal
advantages, their slim
design will make
them especially
appealing.
58

tackling the climate change
industry report f
surface mining
electricity
climate-friendly
The world talks about climate change.
Energy suppliers have a new idea to reduce
CO 2 : Instead of releasing it back into the atmosphere
when burning fossil fuels, why not put it
back where it came from—underground? This
concept is called CO 2 capture and storage (CCS).
Energy suppliers plan on developing it for the
market over the next few years. Vattenfall
Power generation using fossil fuels - Efficiency
Brown coal power plant (state of art) 43%
Mineral coal power plant (state of art) 47%
Mineral coal power plant (under development) >50%
Gas and steam power plant (state of art) 58%
think:act table; source: own research
Europe intends to start
up a pilot plant by 2008
in Schwarze Pumpe, in
eastern Germany, that
CO 2
will be the world’s first
CO 2 -free, coal-fueled
power generating facility.
CO 2 will be filtered
out of the exhaust gases,
liquefied on site and then
stored deep under the earth’s
surface or under the sea floor. In Berlin,
the EU’s CO 2 SINK project is currently studying
how this can be accomplished. E.ON has announced
the construction of a coal-fired generating station. Construction
of the station is to begin in 2010.
making steel a better way
One cause for CO 2 production has
been coal used in the steel industry. Coal
is essential here: when it burns, it removes
oxygen from the iron ore. But the coalfueled
process releases CO 2 . Forty-eight
European companies and organizations
formed the ULCOS (Ultra Low CO 2
Steelmaking) consortium in 2005 in order
to find new ways to manufacture steel.
Four ideas are just now being closely
reviewed:
1. Carbon capture and storage: How
can the gas formed in the blast furnace be
cleaned so that the purified CO 2 can be
compressed in subterranean storage
chambers? An experimental facility in
Luleå, Sweden, may provide information.
2. Smelting reduction: How can steel
be manufactured in a liquid bath consisting
of iron, coal and oxygen without combusting?
An initial project is slated to start
in 2008.
3. Pre-reduction using natural gas:
To what extent can CO 2 emissions be
decreased if the iron ore is repeatedly prereduced
using gas?
4. Electrolysis: How can iron ore be
reduced using electricity instead of coal?
“By 2012, we want to know what is
realistic before we put the first commercial
prototype facilities into operation,”
says ULCOS spokesman Jean-Pierre Birat.
By 2030, the program anticipates steady
commercial implementation, and the steel
industry intends to have halved its CO 2
emissions then.
59

p business culture
english is the most forgiving language on the face of the earth
Meetings in the Tower of Babel
The world speaks Globish. As economies and societies grow together, the necessity for transnational
communication increases. The result is a weird, improvised and, well, impoverished version of
today’s global tongue: English. American Linguist Steven Donahue does not like it.
:
Faster than an SMS, able to leap borders
in a single syllable, a new bastard language
now threatens Anglo-American linguistic
dominance of the business world.
Henceforth, English is fired; Esperanto is
expired; Interlingua is tired; Globish is now
allegedly wired for the world of the third
millennium.
Globish owes its genesis to Madhukar
Gogate. Back in 1998, he built a simplified
version of English predicated upon a subset
of high-frequency vocabulary. In 2004,
Frenchman Jean-Paul Nerrière took up
Gogate’s language mission and published
a French language book entitled “Parlez
Globish.” (Full title: “Don’t speak English:
Parlez Globish!”) “Parlez Globish” approaches
English from a business angle that
springs from Nerrière’s past employment
with IBM. Globish is English-light without
the cholesterol of cumbersome spelling,
vocabulary, idioms and pronunciation.
“DON’T SPEAK ENGLISH
PARLEZ GLOBISH INSTEAD,”
SAYS JEAN-PAUL NERRIÈRE
In fact, Nerrière’s main intent seems to
be on curbing the influence of “Coca-Cola
English” throughout the world. On
Nerrière’s Web site (www.jpn-globish.com)
the following example is presented as the
standard English sentence: “Jean-Paul
Nerrière lays out that theory, and everyone
can play with it as they wing and hop
around the world.” Transformed into Globish,
it becomes: “Jean-Paul Nerrière builds
and demonstrates that theory, and everyone
has a chance to experiment with it as soon
as he or she travels a lot around the world.”
The site also offers a clutch of Globish books
for people whose native languages are Italian,
Spanish, Japanese or Korean and who
want to master Globish.
Mercy beaucoup, Mister Nerrière—but why
the hassle? Maybe there is no need for Globish.
English is the most forgiving language
on the face of the earth, a language which
allows any conceivable error in pronunciation,
syntax or even semantics. Why go to all
this trouble to simplify a language that can
be mangled without penalty?
People get along all the time with real
English, even when it is rough around
its edges. I hail from the American city of
60

does the world need another lingua franca?
business culture f
“ The single biggest problem in communication is the illusion that it has taken place.”
George Bernard Shaw
Miami, Florida (or as Globish would have it:
I coming from Miami), where the rough-andready
approach is on constant display. It
even seems as if even immigrants develop a
remarkable interest in linguistic questions. I
recently saw a Haitian walk up to the counter
at a gas station and tell the Hispanic clerk,
“Give me $15 on pump two.” The clerk
responded, “Fifteen or fifty?” The Haitian
angrily retorted, “Why don’t you learn English?
Who wants $50 in gas?” Forgive me if I
sound conservative, but to me this seems to
show that there is a genuine interest in correct
English—and not a need for a new, simplified
Globish tongue.
Given that the urge to tinker with English is
probably irresistible, what does a Globish
sentence look like? The sentence “Two fine
cats quickly went to the city” is rendered, in
Globish, “too faain kaets kwikli went tu thuh
siti.” Note that capital letters are only used
for abbreviations and periods become
triplets. Spelling is a phonetic free-for-all.
Can native English speakers understand
Globish? Of course they can. At New York’s
JFK airport I overheard a Korean and a
Japanese conversing in what was at first an
indistinguishable tongue to me. Fortunately,
like listening to Scots jabbering at a pub, I
was eventually able to tune in my ear
enough to comprehend the strained English.
But then, who wants to feel like being in a
pub all the time?
Of course, the appeal of Globish fits perfectly
with the economic fad of globalization:
Learn English quickly and make a ton of
dough just as fast. Its proponents claim it
can be learned in a mere 182 hours. While
the expansion of Globish may offer its
users a method of simplified communication,
Globish advocates should note that in
the more than 100 years since Esperanto’s
invention, it has noticeably failed to become
the lingua franca of global business. The
same fate, I am sorry to predict (or, well,
maybe not so much), awaits Globish.
During a vexing business meeting at the
tony Mandarin Oriental hotel in Miami,
over bottles of a California mystery wine,
the conversation devolved from its primary
focus on the British OFEX market to a slur
of babble in this trendy Globish.
GLOBISH MAKES BUSINESS
MEETINGS MORE EFFECTIVE? NOT REALLY,
SAYS STEVEN DONAHUE.
I closed my eyes to the sparkling water of
Biscayne Bay, and heard a jangle of clashing
tongues. The Spanish participants were
inserting “claro,” “tiqui-tiqui” and “cono” into
every other sentence; the French speakers
were doing their best to keep English on the
back burner by speckling it with a stock of
French phrases; the Italian was engrossed in
speaking mostly to the waiter about the best
Vespa scooter, in his native language. Effective?
Definitely not. In the end, the meeting
failed almost as surely as if it had been hosted
at the Tower of Babel.
STEVEN DONAHUE is the features
editor for the US-based Language Magazine.
He is a professor of English as a second language
at Miami Dade College, in the US city
of Miami, Florida. Donahue has also developed
Web-based approaches to teaching
and works on language and technology
interfaces.
Advocates of Globish are pushing something
that is increasingly beside the point. English
is a language with so little grammar that it
steals vocabulary wherever it can. There is
no point in simplifying it. Native speakers
are working on that aspect of the language
continuously. Their children are pushing
these trends even further.
Nerrière’s favorite examples involve using
slang-laden English to show off the supposed
superiority of Globish. For example,
“This erstwhile buddy of yours is a weird
duck who will probably put the kibosh on all
of our good ideas.” In Nerrière’s decaffeinated
Globish, the speaker utters instead: “Your
old friend is too strange. He would ruin all
our efforts.” Of course, that is what good
native English communicators would do
anyway—come down to the appropriate
level for the persons they are conversing
with, and strip away the slang and idioms.
Many non-native speakers outperform
native speakers in their fluent and careful
use of English. NATO’s secretary-general,
Jaap de Hoop Scheffer, came to Washington
in October 2006 for talks with top American
officials. His English was practiced, nuanced
and finely tuned. Some observers rated it
better than the version spoken by his American
counterparts. But the de Hoop Scheffer
phenomenon is an exception. Most interactions
between native and non-native speakers
are a matter of muddling through.
In conclusion, there is no need for Globish.
The proof is in the pudding. Recently, I met
with a group of Indian programmers, speaking
English about an intricate software coding
project. While the English was different,
there was no doubt we were on the same
page. After a long day together, one of them
expressed the wish that I have a “tight
sleep,” apparently intending the idiom
“sleep tight.” Did the programmer’s mistake
matter? Not in the least. I got the drift and
did in fact have a wonderful sleep after a
productive day’s work.
61

p business culture
europeans are industrious but risk-averse
Hardworking, but gaps in education
Indian entrepreneur Suhas Gopinath needs employees in Europe. He finds top quality primarily in
management, but IT skills are somewhat lacking. Gopinath founded his software company at age 14.
THINK:ACT Mr. Gopinath, you weren’t
allowed to run a company in India until 18
years old. The USA was more tolerant
regarding your age. What about Europe?
GOPINATH There is a lot of skepticism. When
we started marketing our products to European
companies, they seemed not to believe it: How
can someone only 14 years old run a company?
What did you do?
Quite simple: We offered them our products or
services for free. That was enough to raise their
initial interest. Once they saw that our products
worked, we started doing business together.
As of now, the majority of our customers
come from Europe, and we make 50 to 60 percent
of our revenue here.
Many Europeans have a lot of respect for the
growing Indian strength. Is being an Indian
an advantage when doing business here?
No, never. We Indians might have technical
reputation. But as a whole, our new European
partners are initially always a bit hesitant.
Many Europeans think that the Indians take
away their jobs…
Yes, and that is completely understandable.
Outsourcing away from Europe indeed means
that Europeans lose their jobs. I see that globalization
brings a new degree of insecurity to
Europe. But of course, it also has positive
effects for everyone.
Which are?
Look at our company. We are creating jobs in
Europe. In our Moscow office, we employ only
Russian people. The same policy prevails in all
our global offices. That means that, often, outsourcing
is the first step to the creation of jobs.
Do you find the people you need in Europe?
It was easy for us to find suitable business and
management experts. Finding excellent IT people,
people with technical knowledge, proved
much more difficult. This is why we associated
directly with the technical universities. As a
whole, I have decided that we will build up
European manpower mainly in the areas of
strategy, marketing and finance.
And keep the technicians elsewhere…
Yes.
Why are there not enough top-class IT
experts in Europe?
I think the universities and colleges are not
focused enough on information technology.
Very few technical universities, for instance,
really concentrate on IT. You have a huge
amount of talented car engineers, and much
fewer IT experts. Universities need to change
their thinking here, they need to face international
competition. Also, the knowledge of the
IT students from many European universities
seems to be slightly outdated.
Still, you work a lot with European students.
Yes, and as a whole, it is big fun being associated
with them. I was surprised by their positive
attitude towards India. It was easy for us to
find people who like to work for us in Bangalore—and
they only did internships there. They
wanted to go to India, work hard, see how our
country is making progress and to be part of it.
For me as a manager, this was a great opportunity
to set a benchmarks for my Indian colleagues:
The Europeans were punctual, hardworking—and
they took everything they did
very seriously.
So the Indians learned from the European
way of doing business. What can the Europeans
learn from the Indians?
First of all, there is something that both Europeans
and Indians can learn from the Americans:
Young Americans, university graduates,
for instance, think more entrepreneurially than
we do, and pay less attention to what their families
say. Families don’t like their kids to take
risks. But you have to take risks if you want to
succeed as an entrepreneur.
You are being too modest. What can we
Europeans learn from the Indians?
There is one thing that I have observed: When
an Indian starts a company, he remains in an
entrepreneurial mindset all the time. He tries to
expand, he is in for higher ambitions. This is
why he won’t sell his business quickly. My company
had problems in India when we wanted
to take over other companies. In Europe, on the
other hand, I feel that sometimes entrepreneurs
want to sell their business as quickly as possible.
They don’t see the fun in being an entrepreneur,
in seeing their company grow.
Did you have offers for your company?
Many, but I don’t want to sell it. I never started
this business only to make money. I don’t have
a family I need to feed. So I have no need to sell.
62

average age: 25
business culture f
“ When an Indian
starts a company, he
remains in an entrepreneurial
mindset
all the time.”
Suhas Gopinath
A position that also comes with your young
age. What about your company—is your age
a problem internally?
No it isn’t. Our HR policy is to hire young people.
Of course, not all of them are as young as
myself. I suppose it works because we are all a
big family.
But even in a family, it is weird when the
dad is younger than the kids.
True. But there is no egoism in our firm. I don’t
want people to address me as sir. We speak very
informally and friendly here.
But sometimes, you will have to criticize
your people.
Yes, and I never compromise on anything when
it comes to work. With our work, I can be really
strict. If my people are not obeying our organizational
disciplines, then there will be effects.
Suhas Gopinath has been the
focus of many international
media. Journalists like the
idea of a very young entrepreneur.
Many European
customers did not.
SUHAS GOPINATH founded his software company,
Globals Inc., at the age of 14. Not allowed to set
up a company in India at his age, he decided that the
headquarters should be in Silicon Valley. Only when
he was 18 did he move his company back to Bangalore.
Today, his company has more than 400 employees
in 11 countries. Globals Inc. specializes in software
solutions for companies and educational institutions,
but the 21-year-old Gopinath increasingly
wants to offer standardized software products.
Did you have to fire people yet?
Yes, of course. We had instances where someone
did not accept my directions. The persons I am
thinking about were about 15 years elder than
me. This is why I prefer young employees. The
average age in my firm is 25.
How old is your oldest employee?
31.
Does it seem funny to you when European
university graduates, your interns, are
around 27, 28 years old?
Yes, that clearly is a problem. I think people
should not graduate from universities at that
age, but rather have their own company.
63

p business culture
twenty years after
One currency, many problems
Jacques Delors is the father of the euro. The common currency is here, and global central banks
believe in its stability. But economically, it is way too early to lie back, thinks Mr. Euro. The former
EU president urges European politicians to do more to foster competition.
:
It started as a dream—a common European
currency, money as a link among
countries that had long been hostile. When
the euro became reality, it was the fulfillment
of one man’s political life: Jacques
Delors. As head of the European Commission,
he introduced the Delors plan, preparing
Europe for the common currency.
However, all is not won. The euro is still not
popular. According to a poll by the Financial
Times, two-thirds of French, Italian and
Spanish citizens, and more than half of all
Germans, believe that the single currency
has had a negative effect. In France, only
5 percent think that the euro has had a positive
impact on the economy. Indeed, more
than half of survey responders wanted their
national currencies back. From the standpoint
of public opinion, that would seem to
be a devastating outcome for the great economic
experiment.
It started all so well. On New Year’s Eve
2001–2002, the mood was euphoric in major
European public spaces. Overnight, the euro
became official legal tender in 16 states—the
twelve members of the European Monetary
Union, plus Andorra, Monaco, the Vatican,
and San Marino. Within a few days, bills
worth about €221 billion and 52 different
coins worth €13 billion were distributed—
an unparalleled logistical triumph. The currency
was supposed to be the symbol of an
economic expansion that would create prosperity,
growth and new jobs.
Has this vision been fulfilled? Without a
doubt, the community of European nations
is different than in Delors’ time in office.
The European Community has grown from
12 to 27 members, but recession made the
euro soft for years on end, strengthening the
position of the euroskeptics. The EU Constitutional
Treaty is dead in the water. Delors’
own assessment of the Economic and Monetary
Union also sounds pessimistic: “The
euro protects, but does not energize.”
Little progress has been made in deregulating
markets; the EU Services Directive was
enacted much too late. Delors deplores both
shortcomings. He advocates a more transparent
competition policy for the single
market. “For the well-being of consumers
and employees, we need a vigorous debate
on competition, on finality, and on balanced
and healthy competition,” he says.
JEAN-CLAUDE TRICHET BELIEVES THAT
WAGE RESTRAINTS CREATE JOBS—STILL A
CONTROVERSIAL POSITION IN EUROPE.
Numerous businesses complain that many
bureaucratic obstacles to free trade have not
yet been eliminated. Guenter Verheugen,
EU Commissioner for Enterprise and Industry,
estimates that administrative expenses
of European businesses total €600 billion
per year. Verheugen wants to work with the
member countries to simplify or entirely
eliminate one-fourth of all laws and directives
by 2012. Thus far, the plans have met
with little success. The modest goal of simplifying
54 EU directives by the beginning of
2007 has barely been achieved.
Despite all this, the integration of the European
financial market is praised as a success
story by executives such as Deutsche Bank
CEO Josef Ackermann. In his opinion, the
EU’s Financial Services Action Plan (FSAP),
with its introduction of the euro, provided
the foundation for a dynamic European
financial market. Moreover, the Single Euro
Payments Area (SEPA), which is slated to go
into effect at the beginning of 2008, should
create the legal framework for standardized
payments throughout Europe.
Such measures are expected to boost the
economy on the micro level. On the broader
scale, the EU can already point to successes.
The European Central Bank gives the euro
high marks. In January 2007, President Jean-
Claude Trichet told the European Parliament,
“Since the euro was first introduced in
1999, 11.7 million jobs have been created,
compared to only 2.6 million in the eight
years preceding the currency union.
Employment has risen by about 9 percent,
while unemployment has dropped by about
2 percent.” He renewed a call for restrained
wage increases, which he believes will contribute
to employment.
To keep inflation in check, he has increased
the prime lending rate to 3.5 percent. Financial
markets expect a further increase.
JACQUES DELORS is considered one
of the important trailblazers in the story of
European unification. From 1985 to 1995 he
served as the president of the European Commission.
Prior to that, from 1981 to 1984, the
Socialist politician was France’s Minister of
Economics and Finance. During his presidency,
he oversaw important budgetary reforms
and laid the groundwork for the introduction
of a single market. The Delors Plan, which he
presented, was the impetus for the formation
of the European Monetary Union.
64

international central banks are buying euro
business culture f
“ Success requires a common political vision, a concrete plan and functioning
institutions. At the current time, none of these prerequisites are met.”
Jacques Delors
Only time will tell whether the euro will
remain a success story. Trichet sees risks
particularly in the serious, real divergences
among European economies. In addition,
growth of productivity in the euro zone still
lags behind that of the United States.
The success of a currency, however, must
also be measured by its international role.
Joaquín Almunia, EU Commissioner for Economic
and Monetary Affairs, emphatically
states that “the euro is the second-most
important currency in the world after the
US dollar.” This status is also evident in data
from the Bank for International Settlements,
which is based in Basel, Switzerland. In
2006, bonds worth $3839.4 billion were sold
in international markets for debt instruments.
Of this amount, 47 percent were
issued in euros, and only 34 percent still in
US dollars. The euro has also taken on a
greater role as a reserve currency. According
to the International Monetary Fund, in mid-
2006 the central banks of the world held foreign
currency reserves worth $4582.3 billion,
with the euro’s share being about 25 percent.
In 1999, by contrast, its share was only 17
percent. Many central banks are diversifying
their foreign currency reserves away from
US dollars. The Chinese central bank has
accumulated huge euro reserves after
uncoupling its currency from the dollar.
One market, one currency? It will take more
time before Jacques Delors’ vision becomes
the reality everywhere in Europe. Today,
Delors pins his hopes for the revitalization
of Europe more on politics than on the market
economy. “Revival of Europe can only
succeed in the political arena,” he says. “Success
requires a common political vision, a
concrete plan and a functioning institutional
apparatus. At the current time, none of these
prerequisites are met.”
65

p service
credits
Additional insight
Follow-up
In Free World, historian
Timothy Garton Ash
explains why Europe and
the US need to work even
closer together—a conclusion
from his reflections on
European identity (see
page 12). We also recommend
two current issues of
think:act content. One is on
the digital future, while the
other (relevant to the guest
commentary on page 40)
concerns the opportunities
for profit that corporate
social responsibility offers.
TIMOTHY GARTON ASH:
Free World
In think:act 3 we introduced you to RB Profiler, a set of brand and
marketing tools. A cooperative partnership with the Burda publishing
house now offers future opportunities to extend this toolset’s
application significantly: Burda Community Network and Roland
Berger Strategy Consultants have combined the RB Profiler with
Burda’s “Typologie der Wuensche” (TdW) (Typology of Wishes).
TdW is the benchmark of the German marketing and media environment,
while RB Profiler is one of the central methodologies for
the development of brand and marketing strategies. Together they
offer a new and probably unique set of tools, enabling companies for
the first time to create direct links between their market segmentation
and customer groups, their brand strategy and their marketing
and media planning, putting all these on the same data foundation.
The marketing experts at Burda and Roland Berger expect that this
will make it significantly easier to plan brand and marketing strategies
effectively and implement them efficiently.
THINK:ACT CONTENT:
Talking shop: reaping the
benefits of the digital economy
THINK:ACT CONTENT:
Profitable corporate
social responsibility
The RB Profiler measures value and requirement profiles of customers
and brands in one value system. If one compares resulting
market and customer segmentation with current brand profiles,
attractive brand-positioning possibilities can be derived. If the RB
Profiler is backed up with sociodemographic and socioeconomic
data, companies can precisely evaluate the strategic attractiveness
of their new positioning. The integration of the RB Profiler methodology
with the survey of the “Typology of Wishes” creates a foundation
of this kind, based on multiple levels of data, and makes it possible
for companies to realize holistic brand and marketing strategies.
Contact: Kai Howaldt, kai_howaldt@de.rolandberger.com
MASTHEAD
PUBLISHER
Dr. Burkhard Schwenker, CEO
Roland Berger Strategy Consultants
Am Sandtorkai 41
20457 Hamburg, Germany
Tel.: +49 (0)40 3763100
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EDITORIAL
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AUTHORS
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Gruenberg, Prem Lata Gupta, Axel
Heuber, Henning Hoff, Lena Rosenthal,
David Selbach, Florian Sievers, Olaf
Wittrock
CONTRIBUTING AUTHORS
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Steven Donahue (Miami), Risaburo
Nezu (Tokyo), Jorma Ollila (Helsinki),
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ENGLISH EDITION
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PHOTO CREDITS
p. 8 Paul Schirnhofer/Agentur Focus; p. 13–14
Karen Robinson/Camera Press/Picture Press;
p. 15 Scatê Stefano/huber-images, gettyimages;
p. 16 Stefan Enders/Bilderberg, Redux/laif;
p. 17 Katja Hoffmann/laif, gettyimages; p. 18
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vario images; p. 19 Stefan Boness/Ipon, Heidi
Brandner/laif; p. 32–36 Roland Berger Strategy
Consultants; p. 37 Thiel/images.de; p. 38–39
Roland Berger Strategy Consultants; p. 41
Christian Plambeck/laif; p. 42 Reporters/laif;
p. 47 Stefan Pielow/Stock4B; p. 54 www.bilderbox.de;
p. 55 Stock4B/mauritius images; p. 58
Degussa PR, Photononstop/mauritius images;
p. 59 Vattenfall PR, Michael Urban; p. 60
Anthony West/corbis; p. 63 EBS/Ute Schmidt –
bildfolio (1); p. 65 Legouhy-Capital-Gamma/
laif; inside front cover, inside back cover:
Roland Berger Strategy Consultants;
Illustrations p. 20, 23, 40, 43, 48 Melinda Beck
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66

THE BEB CELEBRATIONS
1 Warsaw: Artur Pielech, Managing Partner in Roland Berger’s Warsaw office, welcoming
the guests in the Royal Castle. 2 Paris: Panel discussion in the Louvre. Top
managers, such as Baudouin Prot, General Director of BNP Paribas, discussed the
importance of European cross-border mergers. 3 Rome: Roberto Crapelli, Managing
Partner of Roland Berger Italy, welcomes the winners of the Italian awards.
4 Berlin: Impressions of the German awards ceremony at the Russian embassy.
5 Madrid: Juan Miguel Villar Mir accepts the Grand Prix for his company, Grupo
Villar Mir. 6 London: David Stern, Partner at Roland Berger Great Britain office.
7 Amsterdam: Crème de la crème of Dutch business at the luxury hotel Inter-
Continental Amstel. 8 Berlin: Dirk Reiter, member of Roland Berger’s Executive
Committee, at the German BEB event in Berlin.
1 2
3 4
5
6 7 8