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Arne Allée & Konstantin WronaGrowth in the Eye of the Stormpage35To adapt to a more Central and Northern European financephilosophy, the German style, as some have put it.All were in agreement, however, that this should not resultin too much domination.The well-publicized euro calamities might hide the weaknessesof others. So, it is unclear whether the US dollaris doing that much better. The participants expect theexchange rate to remain between 1.2 and 1.3, so, exactlywhere it is today.The German “energy turnaround”:Oil to the fire or turbo for innovation?As the euro crisis distracts from other world affairs,the question remains whether the German decision todrastically switch from nuclear power and fossil fuels torenewable power generation will isolate Germany withinEurope. There was a strong suggestion that oil prices willrise dramatically by 2020. Fifty-two percent sees realprices soaring by more than 50 percent whereas only 9percent sees them shrinking (see figure 4). And, still, theeffects of subsidies versus technological progress on renewableenergy prices are undecided (see figure 5). Therewas a strong call for ensuring the latter by fostering privateenterprise instead of planned government programs. Theoverall perception, however, is undeniably optimistic.Although energy saving programs started well over 30years ago, only 6 percent expects no progress in that sector(see figure 6). The large majority is expecting more or lessconsiderable progress. What’s more, the positive impacton the market position and jobs ranks highest amongall (see figure 7). Even with its regulatory downside andstate intervention, 54 percent of the audience still sees thedevelopment as the right framework for German business.The disagreeing minority, however, was comprised ofthose who have to provide the technical solutions to meetthe demand. So, this question will remain an open topicfor years to come.figure 41. Despite the very difficult economic situation, oil prices remain atrecord-high levels. What do you think will be oil price by 2020?Oil price in 2020 compared to today(in real € terms)Response+100% 15%+50% 37%+20% 31%0% 8%-10% 6%-25% 3%-50% 0%figure 52. Do you think the cost of electricity generated from renewableenergy will be higher by 2020?Renewable energy price in 2020(in real € terms)Response+100% 6%+50% 10%+20% 34%0% 5%-10% 10%-25% 28%-50% 6%figure 63. On a like-for-like basis how much scope do you think there is foryour business to reduce your energy consumption by 2020?Energy saving potential by 2020figure 74. How would you rank the following in terms of what theGerman „Energiewende“ should be aiming to achieve?The impact on the perception ofGermany as the global leader ingreen technologyThe impact on jobs in the economyThe impact on the environmentThe impact on the cost of energyThe impact on the security ofenergy supplyimportanceResponseNone at all 6%0-10% 25%10-20% 46%20-50% 21%>50% 2%122.02.52.83.3ranking4.13 4 5rating average (scale 1-5)
page36Arne Allée & Konstantin WronaGrowth in the Eye of the Storm»The subsidies in the oil-exportingcountries dwarf [those] in Germany onrenewable energy.«Growth opportunities and the roleof financeThe economy is fueled by cash but banks have been and inpart still are a major source of concern. “Eighty-five percentof liquidity in the US is generated by commercial, only 15percent by central banks”. While a majority of 87 percentsees more bank regulation such as Basel III, half of thosefeel that there will eventually be workarounds limitingthe effect (see figure 8). A large majority of the summitparticipants (61 percent) opts for splitting up banks intocommercial and investment banks and calls for additionalcapital-providing sources such as insurance companies.However, when it comes to securing financing, operationalmeasures to optimize the operating cashflow outweighfinancing techniques. And when it comes to growth,financial requirements rank behind the more importantsourcing restrictions.provide growth opportunities because they are at thecenter of innovation. The panel favored the approachwhereby more effort is spent taking an in-depth look atcompany-specific markets, applications and industries.Growth is everywhere as one put it and even “good oldEurope still has a lot of world class companies”. “Growth iseverywhere not just in BRIC”, “BRIC is out” and otherstatements showed that business leaders were lookingmore at their company’s individual growth opportunities.Bigger and more complexorganizations?How should growth and market shifts be managed? Here,the adaption of business models reaches highest scores,leaving second place for performance excellence measures,only (see figure 9).figure 95. Which are key instruments to make your organization moreadaptable to market swings?rankingShift towards after sales /servicesSupply moves /plant relocations5.55.9figure 81. More regulation (as Basel III) will make the financial industry ...Outsourcing /reduced value added4.744%43%13%SAFERbecause banks will have to maintain higher core equity ratios andsufficient liquidity which will lead to less risk taking.More secureonly for a very short period of time, because money has alwaysfound other business not affected by regulation.Less secure,as banks will then only be able to offer just a few alternativesof financing which will lead to new risk concentrations.importanceOrganizational structuresPeople developmentAdvanced planning /forecast systemsLabor agreements (e.g. moretemporary work, pay schemes)Diversification ofbusiness activities3.43.74.14.14.0123 4 5 6 7 8rating average (scale 1-8)Focusing too much on BRIC countries alone doesn’t seemto be reasonable. In general, growth occurs everywherenot only in acronym regions and for reasons that even gobeyond demographics and urbanization. The panel agreedthat aging regions such as Europe or Japan, for example,»It’s all about cost efficiency. You haveto be better than the others. The problemwith the cost of complexity is thatyou can’t see it.«
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