Winter 2014

Tomorrow’s Leadership – Creating Shared Value at the CorePeter Brabeck-Letmathe,Chairman, Nestlé S.A.

Draghi’s Def lation DilemmaPaul Donovan,Chief Economist & Managing Director, UBS Investment Bank

Humanitarian Action in the Next DecadePeter Maurer,ICRC President

STRATEG

Y

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Winter 2014 – 3

St. Gallen Business ReviewEditorial

Beloved readers.

Every human being is embedded in a reference system. Within this lie an infinite

number of pursuable paths. But what connects these and the system they are

existent in? They are being encountered proactively, coincidentally or due to

pure passivity. In whatsoever manner they have been sought for, there is always

an underlying decision. Even if this decision implicates not to seek.

Let’s reduce the system of references to the most abstract degree, only allo-

wing for points between utmost activity and the subjection to being driven by

the system’s forces. Here the individual has to ask itself the question: to what

extent do I want to tend towards one of the edges?

This is where strategy comes into place, defining influences, estimating pay-

offs and determining the other players strategy, is something we all do, even if

unconsciously. We all want to optimize our notion of life, no matter by which

benchmarks we measure it.

Teddy Roosevelt once said that there’s only one principle to follow both in life

as in football – “always hit the line hard”. Nevertheless, hitting hard does not

necessarily imply force, much more dosed and coherent effort.

Initiatives such Mr Brabeck’s Creating Shared Value effort, Mr Donovan’s incor-

poration of emotions when analyzing the ECB’s strategy, or the ICRC’s thoughts

on humanitarian aid in the next decade emphasize this notion we just developed.

We hope you will enjoy reading this magazine. It is a summer of passion and

hard work we put into it.

Outlook_Imagine a perfect circle, or the

sectio aurea. Imagine a piece of Caravaggio

in all its beauty, with its perfectly accen-

tuated shadows and lights accompanied by

his utmost attention to the most minuscule

details as soon as it comes to proportions.

These constructs of human minds and the

human being itself, they both st r ive for

per fect ion and beaut y, one might say for

harmony. With the next issue we aim to en-

counter less obvious facets of daily business

life, less obvious facets of how we shape our

societ y and decisions are made. We want

to examine the underlying pursuit for har-

mony, may it be in design, supply chains,

organizational structures or stock markets.

Jonas Gartenmeier and Henry Galis,Editors-in-chief

St. Gallen Business Review

4 – Winter 2014

Inhalt

Draghi’s Def lation DilemmaPaul DonovanGlobal Economist & Managing Director, UBS Investment Bank

6

Inhalt

Tomorrow’s Leadership –Creating Shared Value at the CorePeter Brabeck-LetmatheChairman, Nestlé S.A.

11

The Chief Strategy Officer as the Master of ParadoxesDr. Tim ZimmermannSenior Partner, Roland Berger

Prof. Dr. Markus MenzAssistant Professor of Strategic Management & Executive Director Bursiness Management, University of St. Gallen

16

Humanitarian Action in the Next DecadePeter MaurerICRC President

22

Interview with…Alexander OsterwalderBusiness Model Innovator

26

Winter 2014 – 5

St. Gallen Business ReviewInhalt

Innovation Networks:Rethinking the Company

Peter SchwarzenbauerMember of the management board, BMW Group

32

Making Deals SuccessfullThomas Menzler

Partner at PwC

38

Persönlichkeiten fördernDr. Annette Julius

Generalsekretärin der Studienstiftung des deutschen Volkes

42

Father and Daughter:A Good Team for a Company

SuccessionMarie-Christine Ostermann

Managing Shareholder, Rullko Großeinkauf and Supervisory Board of Fielmann AG

46

Interview mit…Dirk Müller

Finanzexperte, Spiegel-Bestseller Autor, Vortragsredner, Politikberater – Cashkurs

50

STRATEG

Y

6 – Winter 2014

Draghi’s Deflation Dilemma

Chief Economist & Managing Director, UBS Investment Bank

Paul Donovan

At the US Federal Reserve‘s Jackson Hole Symposium, Pre-

sident Draghi of the European Central Bank indicated a

growing concern about the threat of deflation within the

Euro area. He identified market measures as signalling falling infla-

tion expectations. This concern has also been voiced by investors

in more general terms, with a fear that the Euro area start to

resemble the Japanese experience of the past quarter century (a

persistent deflation bias interspersed with episodes of outright

deflation). The focus on market expectations as a lead indicator

for inflation is problematic, because

However, inflation expectations can have important economic

consequences, even if they turn out to be wrong, and no doubt

this has influenced the views of the ECB president. Indeed, some

areas of the Euro area are already experiencing deflation, with

prices falling for at least some part of 2014 in Cyprus, Estonia,

Greece, Portugal, Slovakia, Spain and Italy. So how big a threat is

deflation in the Euro area, and what are the problems the European

Central Bank might face in responding to that threat?

The Euro area has if not a deflation bias (negative inflation),

then certainty a disinflation bias (falling inflation) in its structure.

In economic terms the economies are too disparate, there is no

credible banking union to smooth the operation of monetary policy,

and there is no fiscal union or fiscal confederation to blunt the

damage that the wrong monetary policy can do in a dysfunctio-

nal monetary area. This means that at any given moment some

countries will be experiencing weak growth with too restrictive a

monetary policy, and some countries will be experiencing strong

growth with too loose a monetary policy.

financial markets are not very good at forecasting

inf lation.

The Euro, as a monetary union,

does not work.

Unfortunately, the weak growth countries are also likely to ex-

perience poor fiscal balances, constraining their ability to grow.

The structure of the Euro resembles that of Bretton Woods, in that

and not the stronger economies. While Germany may be urged

to stimulate its economy for the greater good of the Euro area,

there is no mechanism by which Germany can be compelled to

stimulate its economy. The bond market cannot punish Germany

for not spending enough money. The political structure of the

Euro was set up to impose fiscal deficit limits, not government

spending targets. In contrast a weak economy with a fiscal deficit

is at risk of bond market weakness on concerns about government

debt. It is also subject to sanctions, or at the very least political

disapproval from its peers in the Euro area. The unbalanced nature

the pressure for correction is dispro-portionately applied to the weaker, deficit

economies

Winter 2014 – 7

St. Gallen Business ReviewGentechnologie stillt den Hunger nicht – Tina Goethe

of growth in the Euro area therefore puts the burden

of correction on the weaker economies, which must

reduce government deficits and therefore contribute

to deflation risks.

The structural bias for disinflation is, however,

partially countered by two key points with regards

to the current Euro area inflation outlook. The first

is that domestic unit labour costs in the Euro area as

a whole continue to rise. This is extremely important

in considering the risks of Euro area deflation, as

While it is not impossible to have deflation with a

rising unit labour cost environment, sustained defla-

tion with rising unit labour costs would be considered

very peculiar. Some countries within the Euro area,

like Spain, have falling unit labour costs. As a rule

it is these countries that are subject to deflation

pressures. For now, however, the Euro aggregate

measure of unit labour costs is rising, and the Euro

aggregate is supposedly what the ECB is looking at.

Second, when Euro CPI is broken down into dif-

ferent categories it is clear that

The prices that economists with their characteristic

precision call „sticky“ prices are not changing very

much. Volatile prices are things like food bought in

supermarkets, clothing, and fuel for the car. Sticky

prices are things like housing costs, utility bills and

food bought from restaurants. Sticky prices amount

to roughly sixty percent of the overall inflation bas-

ket. For there to be a sustained deflation threat,

economists would expect sticky prices to be very

low, and in all probability falling. Where deflation

is the result of variable prices, as at the moment,

there is always the possibility that the causes of

disinflation will reverse quickly; volatile prices have

a habit of reversing quickly, which is why economists

call them „volatile“. The current very low inflation

rate in the Euro area therefore has something of a

temporary feel about it.

While structural deflation seems a relatively remo-

te prospect for the Euro area, the bias to disinflation

that is built into the Euro‘s structure accompanied

by below trend economic growth and a low overall

inflation rate has spurred the ECB into action.

(a territory previously dominated by the Swiss Nati-

onal Bank in splendid isolation). The ECB has taken

the discount rate negative – the rate charged by

the ECB to banks that keep excess deposits with the

central bank. The idea is that by imposing a cost on

banks for holding too much cash, the banks have an

incentive to lend some of the money to companies

just under two thirds of the Euro area‘s in-

f lation is derived from domestic labour costs.

President Draghi has boldly begun to splash his way across the monetary

policy Rubicon, taking the Euro area into the territory

of negative interest rates

nearly all the def lation pressures are occurring in

volatile prices.

St. Gallen Business Review

8 – Winter 2014

Draghi’s Deflation Dilemma – Paul Donovan

and consumers. In fact the tendency

of banks has been to buy short term

government bonds with the money in-

stead, which has helped governments

rather than the private sector.

The ECB has also pledged to increase

the amount of liquidity in the financial

system, but not through quantitative

policy. Quantitative policy implies an

open ended commitment to print mo-

ney until an external policy objective

is met: „We will print until inflation

hits 2%“ for example. This is unlikely

to be credible in the Euro area, as any

attempt at quantitative policy would

almost certainly result in a legal chal-

lenge, raising doubts about how open

ended the „open ended“ commitment

could actually be. Instead the ECB has

been less dramatic, with a promise to

buy a wider range of assets, but up to

a predetermined amount.

This additional liquidity may pre-

vent things from getting worse in the

Euro area, but it is unlikely to act as a

strong stimulus for growth – at least

not yet. The advent of the ECB as a

single bank regulator for the Euro area

means that there should a more har-

monised approach towards Euro area

bank regulation. Associated with that,

Euro area banks assume that there will

be an increase in the capital require-

ments that Euro area banks are likely

to face. This means that

banks are reluctant to lend out money – not

because there is a lack of cash to lend, but because there is a concern about future regulatory risk.

Winter 2014 – 9

St. Gallen Business ReviewDraghi’s Deflation Dilemma – Paul Donovan

In fact the increase in liquidity and

negative discount rate could add a

further strain within the Euro area.

ECB may coincide with an increase

in inflation in the German economy.

Germany has less spare capacity than

other economies in the Euro area. The

introduction of a minimum wage is

likely to raise labour costs in lower

skilled sectors of the economy. Finally

volatile prices will be volatile – and

with a weaker Euro pushing up the

price of imported commodities, a po-

tentially difficult situation may arise.

Consumers, as a rule, are not very

perceptive about inflation.

– everyone remembers the price in-

crease of a chocolate bar, because it

is a regular purchase and therefore

the price increase is constantly pre-

sented to the consumer; the price of

a television is not often remembered.

The problem is that high frequency

purchases tend to be flexible prices

rather than sticky prices; they tend

to have a higher import content (food

and fuel are high frequency purchases;

they tend to have a high low-paid la-

bour content (food, again). Therefore

an economy like Germany runs the

risk of experiencing a faster level of

inflation for high frequency purchases

than for the average inflation rate in

the coming year.

If high frequency purchases have

higher price increases, consumers

will believe, entirely wrongly, that

inflation is higher than it is in reality.

It is perfectly possible that German

consumers will believe that inflation

is running at 4% or more, even if it is

running at a rate below 2%. (In 2001

Italian consumers believed inflation in

Italy was running at around 18%. It

was around 2%).

It is not hard to see why the German

middle class may be especially con-

cerned by that. Germany had two

hyperinflation episodes in the twen-

tieth century, and the economic scars

of those experiences have lingered on

society.

The ECB‘s risk is that German sup-

port for the Euro ebbs further in the

face of the combination of perceived

inflation and actual liquidity injec-

tions. There is little that the Germ-

ans can do directly with regard to the

ECB – the Bundesbank can object to

policy stimulus, and may very well be

objecting to policy stimulus already,

but it cannot singlehandedly veto po-

licy. Rather the risk is that the German

government exerts restraint in those

areas where it does still have influen-

ce. Those areas include fiscal policy

(refusing to countenance a relaxation

of fiscal rules) and further banking

union (specifically giving the ECB ad-

ditional authority so as to be able to

bail out or close Euro area banks).

The ECB therefore faces a difficult

problem. There is a structural deflation

problem in parts of the Euro area, but

not in the Euro area as a whole. ECB

attempts to stimulate the Euro area

economy risk alienating the voters

of the largest economy in the Euro

area. Deflation may actually be the

least concerning challenge that the

ECB faces today.

Paul Donovan joined UBS in 1992. He is respon-

sible for formulat ing and present ing the UBS

Invest ment Research global economic vie w.

Mr. Donovan co-authors the Global Economic

Perspectives publication and writes Global Eco-

nomic Specials. He regularly appears on CNN,

Bloomberg TV, and CNBC television stations.

Mr. Donovan took a degree and was a scholar

in Philosophy, Politics and Economics at Oxford

University. He holds an MSc in Financial Econo-

mics from the University of London. Mr. Donovan

is a co-founder of the Peter Culverhouse Memo-

rial Trust, a charitable f und that raises money

for cancer research, and an economic adviser to

the East London Business Alliance.

Paul Donovan,Chief Economist &

Managing Director,UBS Investment Bank

Consumers tend to rely on the price of the

things that they buy frequently to judge

inf lation

This creates a potentially

toxic situation for the ECB.

The central bank is visibly

printing money with negati-

ve rates. German inf lation is

rising. German consumers

believe inf lation is rising far

faster than it actually is.

St. Gallen Business Review

10 – Winter 2014

Gentechnologie stillt den Hunger nicht – Tina Goethe„Wenn Par spielen nicht mehr ausreicht...“

www.espritsg.ch

Esprit St.Gallen, Ihre studentische Unter-nehmensberatung an der HSG

Winter 2014 – 11

Tomorrow’s Leadership – Creating Shared Value at the Core

Chairman, Nestlé S.A.

Peter Brabeck-Letmathe

In a medium-horizon future where over 9 billion people could be making greater demands on finite resources, business leaders must resist the temptation to sacrifice long-term success and value creation for short-term gains, warns Nestlé Chairman, Peter Brabeck-Letmathe.

Corporate Social Responsibility has now moved from being

a hot topic to a globally accepted business practice. This

is very positive. But, if we are honest, I don’t think there

are many businesses out there that are really delivering the scale

of returns for society that they have the potential to. And I think

there are two main reasons for this: the prevalence of short-ter-

mism, and the fact that few companies have taken engagement

with the societies they serve deep enough into their organisations.

We have done things a little differently at Nestlé and, while we

still have a long way to go until we achieve the impact on society

that I believe we can have, we have made a very positive start by

making these topics integral to our global business strategy th-

rough an approach to business called Creating Shared Value (CSV).

Creating Shared Value, not giving back

I remember not so long ago becoming involved in a discussion

about corporate social responsibility at the World Economic Forum.

Over a number of days I heard pleas from CEOs and prominent

movie stars to “give back to society”. This frustrated me. I kept

thinking: “Why should I give back? – I haven’t stolen anything!”

When I stood up at the end of the forum and stated this, the

St. Gallen Business Review

12 – Winter 2014

Tomorrow’s Leadership - Creating Shared Value at the Core – Peter Brabeck-Letmathe

audience fell silent. But I was convinced that many businesses

were looking at CSR in a rather superficial way, and a more robust

approach was needed, one that is in tune with the way business

can and should really work.

Not long afterwards, I had the opportunity to speak with Mi-

chael Porter and Mark Kramer from Harvard Business School about

this idea and how I firmly believe that it is only by integrating

societal objectives into your business strategy that you can have

the level of impact that society needs, because then responsibility

becomes sustainable and scalable –and not just a one-off project

funding approach.

For example, we have been working for decades with rural

communities to help them improve the quality and yield of their

produce and adopt sustainable farming methods. This means that

farmers can enjoy higher and more sustainable incomes and, if the

farmers choose to supply to us (which they are not obliged to,

even if they accept our technical assistance and support), then

it means that we have sustainable access to better quality raw

produce, which is key to our long term business success. It’s hard

to see how philanthropic contributions could continually support

more than 690,000 farmers a year in this way – which is the

number of farmers who supply Nestlé directly.

So, in fact, Creating Shared Value behaviours had already been

practiced for some time in our company before the CSV theory

and terminology were articulated. After our discussions, Michael

and Mark agreed to work with Nestlé to determine how we could

create mutual benefit for our company and for the societies it

serves part of the way we did business…and Creating Shared

Value at Nestlé was born.

Winter 2014 – 13

St. Gallen Business ReviewTomorrow’s Leadership - Creating Shared Value at the Core – Peter Brabeck-Letmathe

Making strong values last

Henri Nestlé founded our company in 1867, when he developed

a life-saving infant cereal.

He gave our company a vision about the importance of good

nutrition and a set of values that still guide us today. These were

based on respect: respect for people, respect for cultures, respect

for the environment and respect for the future of the world we

live in.

In the recent past, companies have had a tendency under pres-

sure from the financial markets to focus on maximising sharehol-

der value, but what this really means, if you analyse it well, is

short-termism. And using tools like quarterly share price targets to

drive growth only serves to destroy long-term value and weaken

the company’s chances of continued success into the future. That

is why Nestlé does not offer quarterly reports – and protects our

creating shared value focus, proving that working to longer-term

targets can be a better alternative.

Creating Shared Value at Nestlé

At the heart of Creating Shared Value is the belief that as a

company, we have a clear responsibility to deliver value for our

shareholders over the long-term by conducting our business in a

way that creates sustainable value for the society in which we

operate and which we serve.

To ensure that Creating Shared Value could be fully integrated

across our organization, we conducted an analysis of our core activi-

ties and identified where the future needs of society intersect with

the future needs of our operations and where we could, therefore,

have the most impact on society while building a strong business

for the future to deliver superior shareholder value.

We identified three areas of focus: offering products and services

that help people improve their nutrition, health and wellness becau-

se we believe that good nutrition will play an ever more important

role in the health and wellness of individuals and society. Next, we

focus on water, not only because water is a human right, because

water scarcity is a very serious issue in many parts of the world

and water is quite simply the linchpin of food security. Finally,

we prioritize rural development, because the overall well-being

of farmers, rural communities, small entrepreneurs and suppliers

is intrinsic to the raw material supply and thus to the long-term

success of our business.

CSV provides us a clear framework on which to determine how

to focus our investments to secure benefits to society that make

a lasting difference and help create the conditions necessary to

sustain and expand our business,

to develop products and distribution systems which help im-

prove the lives of consumers, and to run our business in a way

that also benefits the communities in which we operate. It also,

crucially, ensures that we use resources efficiently and contribute

to preserving the environment.

Creating Shared Value has a natural fit within Nestlé as it echoes

the values our company was built on nearly 150 years ago. This

has been demonstrated by the speed at which our decentralized

businesses around the world have not only taken CSV on board,

but made it their own, giving it strength and making it an indelible

part of our current and future business strategies.

Creating Shared Value – the tip of the iceberg

We recognise that our position in society brings both oppor-

tunities and responsibilities: to do business in compliance with

national laws and international standards as well as our own values

and principles, as expressed in our Code of Business Conduct,

Corporate Business Principles and Management and Leadership

Principles. These principles have been enriched through our in-

volvement in the United Nations Global Compact in many ways,

including alignment on human rights, labour rights, environmental

sustainability and corruption.

For a company like ours to prosper, we must take a long-term

view, framed in a robust set of principles and values with respect at

their core. We must go beyond mere compliance and live the values

that form the foundation of our actions in Creating Shared Value.

St. Gallen Business Review

14 – Winter 2014

Tomorrow’s Leadership - Creating Shared Value at the Core – Peter Brabeck-Letmathe

Seek answers widely

While Creating Shared Value is proving to be an

excellent articulation of our strategy to create value

for society and shareholders simultaneously, it does

not provide us with all the answers.

Being serious about CSV means that we have

to tackle some extremely difficult issues that we

cannot hope to address alone. We have also made

many commitments to society that extend beyond

our own factory gates and beyond the reaches of

our own influence. To help us address some of the

more perplexing challenges, we are engaging with

a wide range of stakeholders with specific experti-

se and local networks, understanding or influence.

Together, we are starting to make a real difference.

Communicate transparently

To support our engagement with partners and

other external stakeholders, we are making our com-

munications ever more transparent and responding

to stakeholder encouragement to take leadership

positions on key issues.

Our latest Nestlé in Society report, released in

March 2014, is a good example of the progress we

are making in this respect. The document shares 35

forward-looking commitments that we have made

to ourselves and to external audiences. In so doing,

it provides a clear sense of the strategic direction in

which we are heading and the standards to which

we hold ourselves accountable. It reports on our

achievements, as well as where there is more work to

be done and where real and potential challenges lie.

By openly sharing information, we of course leave

ourselves open to criticism.

I see strength in such transparency; this allows us

to get feedback and build on it. This is an important

part of Creating Shared Value and an important part

of our journey. It gives our stakeholders a chance

to hold us accountable for our actions, to offer us

guidance and even to join us in our journey.

Making CSV happen

To align the organisation to the idea of Creating

Shared Value we started at the top. Engaging the

Winter 2014 – 15

St. Gallen Business ReviewTomorrow’s Leadership - Creating Shared Value at the Core – Peter Brabeck-Letmathe

Board of Directors and the Executive Board in the concept was

key; they had to embrace it before they were willing to support

its integration into our business strategy. We then shared this

new idea with managers, and then with the whole organisation. It

took time, conviction, a lot of communication and finally, we had

to deliver concrete, demonstrable actions in the three focus areas

in order to provide the proof of concept and to set the example

for our own people.

To continue engaging people in the concept over time and con-

firm that CSV is the right approach to take, we have had to put

clear measures in place. This is key for any new idea; you have to

prove it to move people from having a passive understanding to

being a passionate advocate. That is one of the reasons why we

are a partner of the Shared Value Initiative, a global community

of practice committed to driving adoption and implementation of

shared value strategies among leading companies, civil society, and

government organisations.

And while it is far from over, our journey is well underway. As I

mentioned earlier, in just five short years CSV has been enthusia-

stically adopted across all our markets and while nutrition health

and wellness is ‘what’ we do, CSV is ‘how’ we do it.

Every market has looked for the areas where they can optimise

CSV within the local context, and they are building stronger more

vibrant businesses as a result. This penetration is important. Sit-

ting at the top of the company, the Chairman and the CEO must

continuously drive to ensure that CSV becomes part of the DNA

of the company and is integrated in our business strategies. The

real value creation however happens in the factories in all our daily

operations in every part of the world by our more than 330000

people, willingly embracing the opportunity to make a difference

for the communities around them, and creating long term value for

our shareholders. And for nearly 150 years we leave been able to

do so and our legacy is to continue to do so for the next 150 years.

Peter Brabeck-Letmathe started his career with

Nestlé in 1968 and has held various roles inclu-

ding Salesman, National Sales Manager, CEO of

Nestlé Ecuador and Venezuela. In 1987 he joined

the headquarters as Senior Vice President, then

was appointed Executive Vice President, and in

1997 Chief Execut ive Of f icer of Nestlé S.A. In

2001 he was elected Vice Chairman of the Board.

Mr. Brabeck-Letmathe is Vice Chairman of the

Foundation Board of the World Economic Forum.

He holds a degree in Economics f rom the Uni-

versit y of World Trade in Vienna.   In 2012 he

received an Honorary Degree of Doctor of Laws

f rom the University of Alberta in Canada.

Peter Brabeck-Letmathe,Chairman,Nestlé S.A.

16 – Winter 2014

The Chief Strategy Officer as the Master of Paradoxes

Dr. Tim Zimmermann and Prof. Dr. Markus Menz

This article is based on the study report „Menz, M., Scheef, C., Müller-Stewens, G., Zimmermann, T., Lattwein, C., & Lang, A. 2013. Masters of Paradoxes, Key Findings of the Chief Strategy Officer Survey 2013. St. Gallen/Munich. University of St. Gallen/Roland Berger Strategy Consultants.

The CSO – Chief Strategy Officer – is a relative newcomer to the C-suite. The role has quickly established itself as a formal member of the top management team or head of the central strategy department. Alongside the COO, CFO, CIO and CMO, the CSO now has a secure place among the top functions in firms across Europe.

Winter 2014 – 17

St. Gallen Business ReviewThe Chief Strategy Officer as the Master of Paradoxes – Tim Zimmermann & Markus Menz

In our extensive annual study, in cooperation with the University of St. Gallen, we examine

the role of the Chief Strategy Officer in European firms. For this year’s CSO survey, we

contacted the chief strategists of the 500 biggest firms in Europe. Of these, 156 agreed

to take part in our survey – a response rate of 31%. Among those are CSOs from firms in Ger-

man-speaking countries (Germany, Austria, Switzerland), Benelux (Belgium, the Netherlands,

Luxembourg), the Nordic countries (Norway, Sweden, Finland, Denmark) and Latin Europe

(France, Italy, Spain, Portugal). The participating firms have an average headcount of 25,000

and most are listed on the stock exchange. This sample was then subdivided by industry, region

and KPI-based performance which revealed some surprisingly clear differences with regard to

strategic topics and approaches. The data we were able to gather allowed us to identify a

number of success factors which form the basis for our seven statements below.

Statement 1 – The Bar has been raised

In last year’s survey, we noted that the relevance of CSOs grows in times

of uncertainty, but the size of their strategy department does not grow to

the same extent. Our forecast was correct: Compared to 2011, the median number

of employees in the strategy department of firms in German-speaking countries

(DACH) remained 7 full-time equivalents (FTE). For firms in Europe as a whole, this

median was 5 FTE. If requirements are growing faster than resources, then the bar

has been raised. The strategy process therefore needs to be highly efficient. CSOs

must now achieve more with the same resources. This varies depending on industry

and region. CSOs working for financial services companies and in the Nordic coun-

tries, for example, have seen above-average growth in both their importance and

the resources at their disposal. CSOs working in retail and in the Benelux countries,

by contrast, are a long way behind.

The CSO must now

achieve more with the same

resources.

61%

16%

15%

8%41%

10%

13%25%

11%

PARTICIPANTS PER INDUSTRY PARTICIPANTS PER REGION

Life sciences

Services

Financial services

Retail

Industrial Sector

DACH

Latin Europe

Nordic countries

Benelux

St. Gallen Business Review

18 – Winter 2014

The Chief Strategy Officer as the Master of Paradoxes – Tim Zimmermann & Markus Menz

Statement 2 – Knowledge and networks are key

What qualifies a CSO for his position? When it comes to personal back-

ground, CSOs have a number of things in common: They are typically

younger than 50 (four out of five respondents), have a degree and a disproportiona-

tely large number of them studies at a top international university. It is clear what

companies are looking for in a CSO: They want someone who is a breath of fresh

air but not inexperienced. Six out of ten CSOs have gained expertise in strategy

or general management in previous positions. Firms appoint people already in the

firm (“insider”) and newcomers (“outsider”) in roughly equal proportions. Broadly

speaking, in many industries and regions the job of CSO is a springboard for highly

qualified, ambitious professionals with strong process and methodological skills. But

the door is not closed to well-connected insiders. Two types of CSOs thus exist: young

dynamos and seasoned old hands. Both types can be successful, but both need the

right education and a good network behind them.

Statement 3 – Good strategists act as mediators

The traditional field of strategy formulation remains high on the CSO’s

agenda, as does acting as a sounding board for the CEO or board of direc-

tors. But the clearest gains in importance in German speaking-countries, compared

to the previous year, are in M&A and synergy management – areas where close

cooperation with other functions is called for. Across Europe, realizing synergies is

even more important. More and more, a priority task for CSOs is to create a corporate

business model, leverage synergies at the firm level and optimize cross-functional

processes. CSOs have the chance to become the central coordinator in the corporate

headquarter, working closely with other corporate functions and operating units.

CSOs appear to be in a good position to perform this coordinating, interactive role.

They already see themselves as playing a leading role not just with regard to the

key strategic decisions in their firm, but also in areas such as M&A and expansion

into new markets. They say that they work closely and on an equal footing with the

finance, marketing & sales and operations functions. Not surprising that CSOs have

to continually come up with convincing arguments and demonstrate these requi-

rements becomes a mediator between corporate functions and protector of higher

interests – and thus a true strategic leader.

Two types of CSOs thus exist: young dynamos an seasoned old

hands.

Winter 2014 – 19

St. Gallen Business ReviewThe Chief Strategy Officer as the Master of Paradoxes – Tim Zimmermann & Markus Menz

Statement 4 – Growth is not enough

Our results show that the most important strategic decision of the past

year was mainly in portfolio management (41%), followed by growth

(22%), costs (19%) and strategy implementation (16%). Once again there are inte-

resting differences between industries and regions. Portfolio management is by far

the most important topic for financial services, the industrial sector and services,

while growth issues are high on the agenda for firms in retail and the life sciences.

Not surprisingly, growth is also (once again this year) an important topic for firms

in German-speaking Europe and the Nordic countries, as well as for high-performing

firms, while it has almost no importance at all in Latin Europe. New this year is the

fact that growth and efficiency topics overall rank about the same. In other words,

the traditional cycle of phases of growth followed by phases of consolidation no lon-

ger applies. The current concept is one of profitable growth through smart portfolio

management and maximum efficiency gains. The new core challenge for successful

organizations is ambidexterity: the ability to combine contradictory characteristics.

This is perhaps the most serious conflict of objectives that today’s CSOs must manage.

Successful firms act from a long-term perspectiveLength of strategy cycle, high vs. low performers

1 YEAR

2–3 YEARS

4–5 YEARS

TRIGGERED BY FUNDAMENTAL

CHANGE

St. Gallen Business Review

20 – Winter 2014

The Chief Strategy Officer as the Master of Paradoxes – Tim Zimmermann & Markus Menz

Statement 5 – Pacemaking pays off

The CSOs are in agreement that time pressure is growing and uncertainty

continues unabated. That means it’s a good time for strategy – but is

it a good time for CSOs too? Chief strategists have always had to be two things at

once: able to take fast and decisive action while being thoughtful and aware of the

risks. What is particularly important today, however, becomes clear when we compare

high-performing with low-performing firms. Successful firms make bold strategic

decisions from a long-term perspective. Speed is important, but is not the be-all

and end-all. Most CSOs, especially those in successful firms, say that they act (and

react) faster than the competition. But three out of four firms take at least three

months over their most important strategic decisions. Financial services companies are

above-average in terms of the speed of their decision making, while firms in the life

sciences and services industry and in the consensus-oriented Nordic countries weigh

up strategic decisions particularly carefully. Surprisingly, high-performing firms take

longer on average to make decisions than less successful firms. Despite increasing time

pressure, high performers are not so much faster when it comes to implementation

as more comprehensive. Typically, a strategy cycle lasts two to three years – rather

less in the industrial sector and for retailers, and rather more in the financial sector

and life sciences. Low performers are more than twice as likely to have strategy

cycles of less than a year – a further indication that taking a perspective of longer

than a year pays off. Clearly, today’s CSOs find speed important but the avoid taking

action for action’s sake.

Statement 6 – Conflicts are useful

The openness with which strategic discussions are carried out today, ac-

cording to many CSOs, can lead to conflict or in the worst-case scenario

even split the top management team. Once again, the chief strategists of financial

services companies appear to be particularly active in discussing while the CSOs of

retail firms and companies in the Nordic countries are more consensus-oriented. Con-

flicts can help expand one’s field of perception and boost creativity. However – and

this seems to be the secret of success of high-performing firms – rational disputes

should not be allowed to tip over into emotional conflicts or interpersonal problems.

Our evaluation shows that firms which make high-quality decisions are particularly

good at solving conflicts in a matter-of-fact manner, without people taking things

personally. Conflict management is thus another hot-button issue where CSOs must

increasingly prove their worth.

Most CSOs, especially

those in suc-cessful firms, say that they

act faster than the com-

petition.

UPCOMING TOPICS

Dr. Tim Zimmermann,Senior Partner, Roland Berger

INNOVATIONMANAGEMENT

CSR

Winter 2014 – 21

St. Gallen Business Review

UPCOMING TOPICS

The Chief Strategy Officer as the Master of Paradoxes – Tim Zimmermann & Markus Menz

The seven statements above show that today’s

firms need a new type of strategic leadership.

This is the core message of our study in 2013.

The informal, get-up-and-go CSO of yesterday no

longer fits the bill: What firms need is a careful-

ly calculating, thoughtful, mediating CSO with a

cross-functional, interdisciplinary mindset who ne-

vertheless can make decisions fast and implement

them effectively. As the title of our study puts it:

CSOs have to be the “Masters of paradoxes”.

Statement 7 – Business agility is critical

The CSOs in our survey are clear Business agility will shape their agenda

most going forward, meaning the ability to adapt quickly to changes in the

business environment. Innovation, business model design and fast execution are also

at the top of their list of priorities. At the bottom of the list come three topics that

are paradoxically receiving great media attention at the moment: big data, real-time

strategy and corporate social responsibility (CSR). Despite this strong move in the

direction of business agility, the strategy of most CSOs is very risk-aware and rather

careful. There is no clear appetite for risk except in the financial sector. Indeed, quite

the opposite: CSOs prefer to act slowly and approve project step-by-step. The bottom

line is that strategy must strengthen business agility without taking unnecessary risks.

Here, again, CSOs must resolve a conflict of objectives and achieve the right balance.

Dr. Tim Zimmermann is a lic. oec. of the year

1988 of the HSG. He received his Doctorate also

f rom HSG for his studies on strategic early war-

ning systems. As a research fellow he worked with

Prof. Bleicher and Prof. Gomez on the new edition

of the St. Galler Management model. Since 1991

he is Senior Partner in the strategy consulting

business at Roland Berger Strategy Consultants.

His special expert ise is focusing on corporate

headquarters, f unctional leadership issues and

overhead ef f iciency as well as corporate trans-

formation programs.

Dr. Tim Zimmermann,Senior Partner, Roland Berger

Prof. Dr. Markus Menz is an Assistant

Professor of Strategic Management and the

Executive Director of the Master ’s Program

in Business Management at the University

of St. Gallen. Before, he spent a year as a

Visiting Fellow at Har vard University. He

received a Ph.D. in Strategic Management

and an M. A . in Banking & Finance f rom

the University of St. Gallen. His research

focuses on strategic leadership and corpo-

rate strategy. His work has been published

in leading academic and practitioner jour-

nals, such as Strategic Management Jour-

nal, Journal of Management, The European

Business Review, and Har vard Business

Manager.

Prof. Dr. Markus Menz,Assistant Professor of

Strategic Management & Executive Director

Business Management, University of St. Gallen

FastEXECUTION

BUSINESSMODEL

DESIGN

DYNAMICCAPABILITIES

BIGDATA

LEARNING ORGANIZATION

REALTIME

NETWORKERS AND

COOPERATION

22 – Winter 2014

any established early-warning process. The proximity and inter-

connectivity of social networks coupled with the use of information

technology also is already reshaping the way humanitarian response

is planned and implemented, and casts doubts on the relevance of

traditional coordination and mobilization mechanisms.

Challenges ahead

Humanitarian assistance has seen continuous, significant ex-

pansion over the last decade. The global budget reached USD 22

billion in 2013- up from approx. USD 5 billion in 1993 (an increase

of over 400% in the last 20 years). Despite a decreasing frequency

of conflicts, humanitarian needs remain high. The world may have

enjoyed relative stability over the last four decades, but the policy

of containing rather than solving emerging or protracted crises will

likely remain the Leitmotiv of the international community‘s crisis

management and hence perpetuate needs for humanitarian action.

Simultaneously, governments may be less and less inclined to em-

bark on large-scale, risky peacekeeping or stabilization operations.

The assumption that demand for humanitarian aid will continue to

grow for years to come is unfortunately quite realistic.

Humanitarian Action in the Next Decade

ICRC President

D ie Zukunft ist ein ungeschriebenes Blatt says the popular wis-

dom. Imagining the state of the humanitarian landscape in

10 years’ time is a hazardous exercise even for practitioners

directly witnessing its transformation. From our vantage point

we nevertheless anticipate that the power shifts challenging the

current world order will deeply influence the way humanitarian

action is conceived and delivered.

Three key areas point to lasting changes of humanitarian action:

First, the development of new weapons and weapon technology

will inevitably change warfare, and therefore change how com-

munities will be affected. Second, the emergence of new huma-

nitarian actors and new technologies will have an impact on both

the reasons and means with which the sector operates. Finally,

diminishing support among both States and armed groups for in-

dependent and neutral humanitarian action means less stability for

the functioning of the humanitarian system and more insecurity

for humanitarian workers.

All of these developments are taking place in an environment

where information about humanitarian suffering moves faster than

Peter Maurer

Winter 2014 – 23

St. Gallen Business ReviewHumanitarian Action in the Next Decade – Peter Maurer

In the face of global trends and changes the current

humanitarian system is likely to become increasingly

fragmented. The coexistence of more and more diverse

actors and forms of aid seems likely, including initiati-

ves led by the private sector, deployment of military

assets, bilateral State aid, UN-designed comprehensive

operations, and neutral and impartial humanitarian ac-

tion as provided by the ICRC. Fragmentation could also

occur between Northern and Southern organizations,

between emergency and development actors, between

secular and faith-based organizations, between charity

and business-oriented aid, between civil society initia-

tives and State-supported action. Western States may

well lose their monopoly on humanitarian funding, and

emerging competitors will propose or impose their own

agendas. States that until recently were aid recipients are

becoming aid providers. We must seek to build bridges

between all different actors, as chaos will only serve those

violating the law and increase vulnerabilities.

Pressures to control or direct humanitarian aid as a

conduit for political crisis management are unlikely to

disappear. Issues such as sovereignty of States, regional

stability, the importance of local responses and equal

partnerships must be balanced against the duty to take

humanitarian action in conflict and disaster situations.

Economic inequalities play at least some role in the

development of conflicts, as well as the factor of State

fragility. Today, one third of people surviving on less than

USD 1.25 per day live in States classified as fragile. In

only three years’ time, the majority of the world’s poor

will be living in fragile States.

Furthermore, the outlook for aid providers is daunting:

the largest crises today, from Syria and the Democratic

Republic of the Congo to Somalia and the Central Afri-

can Republic, all feature poorly trained armies, militias,

paramilitaries, gangs and loosely organized rebel groups

rather than organized armies which used to be bound

to recognize the mandate and guarantee the safety of

humanitarian organizations.

Regional power shifts, climate change, domestic or po-

pular discontent, social and economic problems or sectari-

an strife will continue to breed tension and violence. The

volume of assistance and protection needs generated by

armed conflict and other situations of violence, the rising

incidence and risk of disasters and crises linked to extreme

climatic events, increased competition over scarce natu-

ral resources, and economic and political instability will

likely put increasing pressure on humanitarian operators.

Paradoxically, these situations are far from new; many of

today’s major conflict situations have been at the very

least simmering for several decades. Generations of men,

women and children have lived under recurring threats

from armed hostilities in Afghanistan, the Democratic

Republic of the Congo, Sudan, Columbia, Israel and the

occupied territories or Iraq, to name just a few places.

Populations have faced types of abuse that are centuries

old, such as direct targeting, forced displacement or rec-

ruitment, extortion, arbitrary arrest, sexual violence or,

sometimes, summary execution. While new challenges

are arising in terms of the globalization of armed groups

and hostilities, or the development of technologies such

as drones, the core problem remains largely the same:

the lack of security and safety of people not or no longer

participating in hostilities.

Although the principles of international humanitarian

law apply universally, constant efforts are necessary to

ensure that they continue to be upheld. If a principle is

regularly violated without consequence, it is likely to

lose its status as a principle over time, with incalculable

effects for victims of armed conflict. This is why the

ICRC and Switzerland in 2012 launched talks with all

States on the best ways to strengthen compliance with

international humanitarian law.

St. Gallen Business Review

24 – Winter 2014

Humanitarian Action in the Next Decade – Peter Maurer

The future of humanitarian response

Over the past decade, we have witnessed a rise of emerging powers

as humanitarian donors, seeking to influence global humanitarian issues.

Some may wish to demonstrate that they are responsible regional and

global leaders and naturally want a greater say in shaping humanitari-

an policy and practice. With new actors come new approaches, often

pitted against what is perceived as traditional Western models. Besides

differing approaches, different security and economic interests can

affect perspectives of humanitarian issues.

The humanitarian sector’s number one challenge is to obtain access to

people in need and it is likely to become greater in the future. Looking

ahead, the ICRC estimates that it will have to be equipped to deploy in

large-scale emergencies while simultaneously having the know-how to

address the recurring needs of populations caught up in low intensity

conflict. We aim to design smart programmes for upcoming crises and

to link emergency action with development policies, to prevent the

re-occurrence of crises and make local communities more resilient.

There will not be one recipe but many: like most other humanitarian

organisations, the ICRC will continue to develop contextualized actions

rather than impose pre-designed responses and, given the unpredic-

tability of many contexts, to adopt a capacity-based rather than a

scenario-based response.

The potential role of the private sector

According to the latest Global Humanitarian Assistant Report, cont-

ributions from individuals, trusts, foundations and corporations rose to

an estimated USD 5.6 billion in 2013 (35% increase from 2012 levels) in

comparison with the USD 16.3 billion of public funding. Over the past

five years, assistance from such private sources has accounted for more

than one-quarter (26%) of the international humanitarian response,

with a rising tendency.

In addition to increasing financial contributions, the

trend of leveraging companies’ expertise, innovation ca-

pacity and networks to help advance humanitarian objec-

tives could fundamentally alter humanitarian functioning.

The involvement of business actors takes the shape of

partnership ventures, whereby solutions to specific hu-

manitarian challenges are designed through joint projects

involving a humanitarian actor and a business company.

This type of partnership can bring added value and sus-

tainability compared to mere donations, but also carries

some risks notably in terms of perception.

Seeking to absorb best practices from the corporate

world, the use of sophisticated financial instruments

(such as impact investing) or methods as a way to develop

new sources of financial support for mid- to long-term

humanitarian projects could broaden the scope of action.

Some reasons to be optimistic

The expanding humanitarian sector has brought more

actors and a greater diversity in humanitarian response.

Although some approaches have effects that are detri-

mental to the acceptance and perception of humanitarian

actors, we consider diversity an opportunity, not a curse.

Diversity and complementary roles are probably the best

response to the complexity we will have to deal with in

the future. The ICRC is confident that emerging actors

will be the drivers of a new consensus in aid architecture

and ethical frameworks. The ICRC is ready to listen, to

learn, and to build cooperative relationships, based on

solid foundations and on respect for existing law and

principles.

Working together in a spirit of complementary part-

nership and with respect for existing mandates and com-

petences is the best guarantee for aid effectiveness. The

risk remains that competition and contradiction between

aid operators will prevail. Each organization has received

or developed its own mission or mandate. We follow diffe-

rent models, different objectives, different priorities and

strategies. Financial resources are scarce by nature and

our sector is constantly trying to boost its effectiveness

and relevance. This creates frictions and duplications, and

also serious gaps leaving sometimes many people without

the support they need.

Programmes that perform poorly and wasted resources

continue to be closely scrutinised, publicly and internally.

From an ethical point of view, refraining from counter-pro-

Winter 2014 – 25

ductive competition when the survival or protection of

civilian populations is at stake is a categorical imperative.

In order to respond to growing needs, achieving optimal

synergies between local and international actors will be of

paramount importance. We are convinced that solutions

to this challenge have to be crafted through open dialo-

gue, creative initiatives, meaningful consultations and

good will from all parties involved. It is our duty to build

a common language and design a response that meets

the needs of the people we are trying to help and that

also corresponds more closely to what they themselves

want. To this end it is indispensable to retain proximity to

the victims. While outsourcing to third parties (“remote

control” operations) can help circumvent problems of ac-

cess, it can by no means obviate the need for established

presence based on local acceptance.

In an unpredictable environment, aid providers can no

longer work in isolation. New, more effective ways of

tackling humanitarian challenges and development issues

will inevitably transcend traditional sector boundaries. To

achieve this, aid actors will not only have to innovate in

order to adapt successfully but also make sure that their

new practices and techniques fit into a robust ethical

framework. In this environment, the International Red

Cross and Red Crescent Movement, acting in accordance

with its Fundamental Principles (including in particular

humanity, impartiality, neutrality and independence) and

connecting international response to local capacity, will

play a major role in maximizing the delivery and impact

of humanitarian assistance.

If you cannot predict, be prepared

History teaches us that trends predicted by experts

do not necessarily materialize. Surprises and unexpected

developments will continue to shape the international

order, just as they have in recent decades. This conclusion

is also valid for the humanitarian sector. The aftershocks

of the fall of the Berlin Wall, the long-term impact of the

so-called war on terror or the current meltdown in the

Middle East were hardly predictable. At the same time,

organized violence engendered by political ambitions,

ethnic rivalries, radical ideologies, greed or grievances

will persist under various forms and will necessarily bring

new humanitarian emergencies. Aid operators will have

to respond to the pleas of the people affected from new

angles. The test for organizations like ours will be to find

new solutions to old problems. To this end, we have to

improve our political reading, our understanding of arms

carriers on all sides, and our ability to forge relationships

with them in order to influence their behaviour to gain

support for our presence.

In conclusion, normative adaptations, dynamic ope-

rational strategies and technical innovations and new

alliances will be key to the continued relevance of hu-

manitarian endeavour. Our new institutional strategy

adopted this year is aimed at exactly that: preparing

the ICRC to carry out its mission in an uncertain future.

Peter Maurer was born in Thun, Switzerland,

in 1956. He studied histor y and internat ional

law in Bern, where he was awarded a doctorate.

In 1987 he entered the Swiss diplomatic ser vice,

where he held various positions in Bern and Pre-

tor ia before being t ransferred to New York in

1996 as deputy permanent obser ver at the Swiss

mission to the United Nations. In 2000 he was

appointed ambassador and head of the human

securit y division in the polit ical directorate of

the Swiss Department of Foreign Af fairs in Bern.

Peter Maurer,ICRC President

26 – Winter 2014

Please explain in three sentences, what the Business Model Canvas is.

The Business Modell Canvas is, simply said, a way of visually depicting business models. It is a broad

tool that can also be used for already existing business models. The interesting thing about this too is its

applicability both for startups and major enterprises like GE, Gazprom or P&G. This offers a broad range of

possibilities. In In the beginning it was intended to facilitate drafting new business ideas. Nowadays, its

mainly used to evaluate already existing business models of corporations. It is crucial to understand the

difference between a framework, respectively a concept, and a tool. We consider the Business Model Canvas

as a tool, since it can be directly implemented in a meeting or a working session. The „Tool-Aspect“ here is

extremely important, because it directly increases the efficiency of a meeting, conference or conversation.

What triggered the development of the Business Model Canvas and the Business Model Innovation?

The journey started with my PhD thesis. My thesis supervisor Yves Pigneur also coauthored “Business

Model Generation“. He asked himself how a business model could be simplified to fit one page. We didn’t

pursue coming up with a business plan. The actual question was rather how to model a business model.

Further, we asked ourselves whether we could make it a computer-aided designed, if we were able to model

it. So basically, our vision was to conceptualize computer-aided designs for business models, like an architect

so to say. After publishing my thesis in 2004, we made a book out of it. In the end our vision came true:

today we use our company “Strategyzer” to develop those computer-aided designs.

Interview with

Alexander Osterwalder is an entrepreneur,

speaker and business model innovator. Together

with Professor Yves Pigneur he co-authored Busi-

ness Model Generation, a global bestseller on the

topic of business model innovation. His Business

Model Canvas is used by leading organizations

around the world, like GE, P& G and Ericsson.

Alexander is a f requent keynote speaker and has

held guest lectures in top universities around the

world, including Stanford, Berkeley, MIT, IESE

and IMD. Alexander holds a PhD f rom HEC

Lausanne, Switzerland. He is recipient of the

Innovation Luminary Award 2013. He is also a

founding member of The Constellation, a global

not-for-prof it organization aiming to make HIV/

AIDS and Malaria history.

Alexander Osterwalder,Business Model Innovator

Winter 2014 – 27

St. Gallen Business ReviewInterview with – Alexander Osterwalder

What is the BMC’s main value? Do you see any threats that it might over simplify and suggest too much line-arity?

We did some research and asked ourselves: „Why is the Business Model Canvas so successful?“. We weren’t

the first ones elaborating ideas on that topic developing such a model. However, no single model has had

the same reach as the Business Model Canvas. More than one million books in thirty languages have been

sold. The question is, why? We conducted a survey with more than 3000 participants and interviewed

businesses and managers. It was surprising that the answers were quite simple and straightforward. The

difference to other models was the component on drawing it onto a sheet of paper, not simply talking

about it.

The Business Model Canvas allows us to quickly communicate the idea behind a business model. If that

only happens in words, it is rather difficult to understand the different links and correlations. One will most

likely talk about the product, notify it and think about how to get money out of it. But the fundamentals

of business models are much broader than that, which the BMC tries to explain with its nine building bo-

xes. The Business Model Canvas helps people to better lead strategic conversations about existing business

models and to implement new ones. People also mentioned that ideas could be implemented better via

the BMC because they become more tangible.

A person works way more efficient when using a tool. I always do the analogy: If I gave you a nail and

told you to hammer it into the wall with your bare hand, you would realize right away that this doesn’t

St. Gallen Business Review

28 – Winter 2014

Interview with – Alexander Osterwalder

make any sense. In business it is the same thing. We don’t use tools, but rather try again and again to

hammer this nail into the wall with our bare hands. The BMC is a tool, which is supposed to help in these

situations. In general, when tools are needed, one most likely won’t cut it. Many people like to say “the

BMC doesn’t do this and that“. But the BMC only has one goal: Sketching business models. If you want to

do other things such as formulating a Value Proposition, another tool has to be used. This is one reason

why we also invented the “Value Proposition Canvas” (VPC). In the future we will have many more tools,

for instance a tool for corporate culture. Today there is none, but sooner or later there will be a tool that

enables us to work on corporate culture, to draw an outline for it and to change it.

Considering the question whether it is too simple: I don‘t think so. If it was too complicated, people would

not use it anymore. We have tried to make the notion of the business model as simple as possible, but not

too simple. A well-known adage by Albert Einstein says: “Make it as simple as possible but not simpler.”

That‘s what we tried and I think we succeeded, taking the amount of people using this tool into account.

At the moment it seems linear only creating a picture; but that‘s as linear as a business plan. It always

depends upon how tools are being used. For instance, launching a new idea or a startup like Strategyzer,

I start with a model. I test different aspects of this model in order to see what works and what doesn‘t

work. Then I adapt my model. That means that I have a series of different BMCs and continue testing.

Especially at university, students are being taught that there are different models. But only all methods

and processes together have the potential to develop better business models. An example: when giving

a workshop people often ask me “Where is the competition?” But this is not the goal of the model. The

goal is to depict the business model. The competition is part of the business model environments (BME),

another tool. The BME and the VPC, as a second tool. That allows us to zoom into blocks and define more

precisely how to create customer value. For different processes different tools are needed.

Winter 2014 – 29

St. Gallen Business ReviewInterview with – Alexander Osterwalder

How can findings of the BMC be implemented afterwards?

There are different opportunities. In the past you had to write a business plan. Today there are existing

teams that think about business models, integrate and immediately test them in a real market environment.

This is one way to apply the BMC. The other way of application is, for instance, seen at Mastercard. They

use the BMC for a coherent language in teams developing new products. This means you don’t draft new

business models, but at the launch of a new product you outline how the adding value appears within the

business model. It needs a coherent language to approach the topic. There are companies that draft every

single “business unit” in order to have

prospect about different types of business models. At a workshop, which I was guiding, people needed a

model for M&A transactions. Reasonable as well as the BMCs’ target is to make a business model clear. If I

pursue M&A activities, I have to evaluate whether those two models fit together to an extent which would

justify a dea. In return, the BMC creates clarity. So there are many different possibilities how the BMC can

be implemented. SAP, for example, needs the BMC to draft the business model of their clients. Why? After

understanding how the business model of their clients works, they can explain them how SAP products can

help them with their business model. This was an interesting assignment, because the BMC wasn’t used to

picture their own business model, but rather to reproduce the business model of their own B2B customer.

Speaking of M&A: For years the internet has taken the center stage when it comes to new business ideas and startups. Do you see a danger of engorgement or a se-cond dot com bubble?

The internet has given us countless opportunities to create value

and the market is far from being satisfied. Quite to the contrary,

I think we are only at the beginning. Yet, acquisitions of a num-

ber of companies have been rather highly valuated. Just think

of Facebook’s acquisition of WhatsApp for 19 Billion $ – that’s a

staggering price. It is interesting to think about alternatives: How

much would it have cost Facebook if a competitor had undermined

its business model? It’s always difficult to measure the exact value,

which is why many investors get a nasty surprise nowadays. Take

Zynga as an example. Very few people actually thought through

their business model which had only very few entry barriers leaving

them vulnerable to competitors. Apple’s business model also has

only very few entry barriers, yet it is robust: Even if they didn’t

innovate their products over the next few years they’d still be

rather successful. That being said, I expect Apple to surprise us

with a new business model: their project “Carplay” for example

sounds interesting and visionary.

St. Gallen Business Review

30 – Winter 2014

Interview with – Alexander Osterwalder

Do the rules of Business Model Innovation also apply for online companies as they do for corporations in estab-lished industries?

There are profound differences. Therefore, I wouldn’t differentiate between Online- and Non-Online

companies, but between companies with new ideas and more established ones. Imagine a company with a

successful business model. It will try to realize profitability by further improving efficiency. These companies

grew considerably and introduced some new products that had been compatible with their existing business

models. These companies have become averse to bearing the risk of revolutionary ideas. In other words, it

is much more difficult to launch new ideas in a corporate environment than in a startup. The latter is easier

to handle as it suffers less constraints than established corporations. Big companies will have to adapt to

this way of thinking, as the life cycle of a business model today is shorter. Kodak is virtually non-existent

at this point, Alcatel-Lucent is barely surviving and Nokia has also seen better days. They are all examples

of established companies who failed to proactively innovate themselves while being successful. Right now,

the whole pharmaceutical industry is experiencing what I described. The life cycle of their business model

already ended some years ago: Many important patents are about to expire and the industry is struggling

to find potent replacements. This will cut heavily into their revenues and threaten the existence of some.

Which industry do you think needs a basic innovation at most?

Basically, all industries are desperately trying to innovate themselves at the moment. Almost all major

companies increase their R&D budget. However, many of them still have to become aware of the fact that

R&D, in terms of new products, will not be enough, but the best business model will win. They are struggling

to successfully combine both – a new business model and existing products, which I partially account to

the structure of these companies. In this context, some industries, the telecom industry for example, are

further than others, but still not quick enough. Just think about how WhatsApp and Skype have damaged

their previous business model. This has taught them to handle innovation better than the banking industry

for instance. Banks have not been able to introduce effective processes to build new business models and

value propositions as they are lacking a tradition of innovation.

St. Gallen Business ReviewInterview with – Alexander Osterwalder

Winter 2014 – 31

You gained experiences with startups in Europe and the U.S.A. What distinguishes these enterprises and the people standing behind them?

It is always very dangerous to generalize such questions. I recognized that a global culture of startups

seems to be evolving. I met a lot of different people that want to execute new tools to be able to develop

new ideas. A ‘global movement’ exists. However, we have to draw a general difference between the Silicon

Valley and the rest of the world. The Silicon Valley is interesting to look at, because you find many young

people who act naive and think they can change the world with really fatuous ideas. If hundreds of people

pursue this behavior and only one of them succeeds, it always seems like everyone were to succeed. Those

people exist and they don’t have any qualm to continue their dream. The fear of standing there with egg

on one’s face isn’t around. I partly like the European approach, since people act less greenly. It is important

to find the correct mixture between those two cultures. Fascinating to see - whether it is the US, especially

Silicon Valley, Europa or Asia - is that there is always a small group of people who perform better in certain

things than others. Today you are most likely to find such people in the US though, because there are more

people who try very hard. In Europe you sense and recognize a wave of companies with new startup ideas.

The benefit for these corporations clearly is that new ideas are less naively proceeded which therefore

decreases the risk.

Which advise would you give students interested in founding to take along?

Last year I was in the jury of the “International Business Model Competition”. In this competition the

students do not develop a business plan and present it. No, they show how they started with their business

model and how they have strengthened it. It was impressive for the jury to see how the students went

through their business models in a process after BMC, Business Model Design and Customer Development,

since they have started without any experience from a very naive point. That was eye-opening for the stu-

dents. They are quickly content and think they know how the world works. The winners of the competition,

“Owlet”, showed us how rigorously they tested their ideas and how often they have failed by doing that.

Since they have tested it in a process they haven’t lost money, but time. So my advice is quite simple: we

should use the tools and processes we need in entrepreneurship. Writing business plans is non-sense. It’s

not entrepreneurship. If an investor asks you for your business plan and decides to invest in you based

upon that business plan, I would not choose him as an investor. This investor is investing in a fantasy you

can’t prove. An investor believing in you as a team and your capabilities to spread ideas is likely to be more

successful than an investor blindly investing in absurd numbers. There are still investors that want business

plans. Nevertheless, this process slowly ceases. We all know these business plans are made up. The real

thing is to try out things. My advice to students is: try it out! And then test it, test it, test it! Important

in this case is to slightly fall flat on one’s face. To fall heavily on one’s flat face is easy. Taking small steps

in this case is much more exhausting, but it leads to success. Many young entrepreneurs think they have

succeeded as soon as they have acquired funding. But success determines itself upon how many customers

want to pay me in the long run.

32 – Winter 2014

Innovation Networks: Rethinking the Company

Member of the management board, BMW Group

Peter Schwarzenbauer

1. Introduction: Companies need to rethink themselves

When are large companies formed? Ultimately, whenever there are clear requirements in society,

for which clever people develop appropriate solutions. With these solutions in massive demand,

the organisational units that provide them – companies, in other words – grow.

Companies provide answers to the questions of society. That is undoubtedly an important role. But perhaps

it is also precisely the reason why companies themselves are not particularly good at asking questions. Simon

Sinek sums this up in his book, in which he appeals to companies to “start with why”. What he means by this

is: they should stop taking the status quo as a given, and instead ask themselves, over and over, why they

actually do what they do. Why do we exist as an organisation? What is our “mission”? Why are we needed?

According to Sinek, these questions must be answered first, before addressing secondary questions, such

as: which processes do we need? What kind of product do we want to deliver?

Quoting Sinek at the start of my article doesn’t mean that I advocate a philosophy that does not, or no

longer, values products. On the contrary, great products are important and will be even more so in the

future. It takes a great deal of inspiration and enthusiasm to create products that in turn inspire customers.

However, in order to create those kinds of products we must know the answer to the question “why”. Only

then are we and our customers sure that this is a great product. We can be sure it’s right for the times, we

can be sure it’s of value to society and fulfils a mission.

This article will focus on these missions and how they are formed, showing that we must throw some

of our established operational routines overboard. Businesses must reinvent themselves – because simply

managing routines is no longer enough. Companies must open up and be prepared to acknowledge the in-

novative power sprouting in different areas of society and to connect with it. They must understand that,

in the words of sociologist Manuel Castells, we are living in a network society. For companies, this also

means thinking in networks. And whether they want to or not, it means increasingly transforming into

network-like structures themselves.

I would like to explore the consequences of this shift for a company like the BMW Group. I will demons-

trate that we are no longer at the very beginning of the process of becoming a network. Specifically, I’ll

discuss the many networks we as a company are currently forming with small, innovative start-ups all over

the world. I will look at why they can be beneficial for both sides, and I will argue that they show the way

for the reinvention of the company I call for in this article.

Winter 2014 – 33

St. Gallen Business ReviewInnovation Networks: Rethinking the Company – Peter Schwarzenbauer

2. The BMW Group start-up offensive: the company as network

As a company, we regard networking with small, smart inno-

vators as part of our corporate strategy. This is not actually a new

approach, but our active involvement in innovation networks has

intensified significantly in recent years. And we also consider that

large cooperations can also set up small operations, projects or

indeed business units that act as startups. Today, our network is

based on three pillars.

First, our three Tech Offices worldwide: Since 1998, the BMW

Group Technology Office USA has been an established location in

Silicon Valley – where many of the trends of tomorrow originate.

The main function of this location is to identify the latest relevant

technologies and trends for the BMW Group at an early stage and

translate them to products as quickly as possible. Researchers

here benefit from the unique Silicon Valley environment. Where

else can you find market leaders from all different industries, out-

standing universities, innovative start-ups, venture capitalists and

business analysts all in such close proximity? The team is currently

conducting research in the following five areas: trend-scouting and

technology partnerships, sustainable mobility, in-car connectivity,

driver assistance systems and user experience.

We operate additional Tech Offices in Shanghai and Tokyo. At

these “idea centres”, we have been working with start-ups for

some time and have established an effective process. Through

this, we have already gained hands-on experience of how to

transform vague ideas into real innovations – and an under-

standing of what can disrupt or even derail the process that

leads to market maturity.

The second focal point of our network strategy is our main

location in Munich, where we work very closely with the

local Technical University. The heart of the collaboration is

“UnternehmerTUM”, the University’s Centre for Innovation

and Business Creation, which promotes the formation of in-

novative businesses from within the University’s intellectual

environment. We are now helping UnternehmerTUM expand

an entrepreneurship centre at a research campus in Garching,

just outside of Munich.

The Californian start-up TechShop also plays an important

role. TechShop provides rooms and facilities for innovators

to realise their ideas. We are now bringing this approach to

Germany with UnternehmerTUM, because we believe that

TechShop’s Silicon Valley innovation culture can give a major

boost to entrepreneurship in Germany. In addition to existing

training and consulting services, the new spacious centre will

also provide a high-tech workshop infrastructure of machines,

tools and software for prototype construction and small-series

production. TechShop will establish its first German workshop

in Garching.

Peter Schwarzenbauer, 55, has more than 30

years of international experience with premi-

um automotive brands, including BMW, Porsche

and Audi. He began his professional career at

BMW AG in 1984, in various sales and marketing

f unctions. Af ter leaving the company in 2004,

he pursued a number of managerial posit ions

within the automotive industry, including Pre-

sident and CEO of Porsche Cars North America

Inc. In 2008, he was appointed to the Board of

Management of Audi AG, with responsibility for

sales and marketing. In 2013 he returned to the

BMW Group as Board of Management member

for MINI, Rolls-Royce, BMW Motorrad, Af ter-

sales and Mobility Ser vices.

Peter Schwarzenbauer,Member of

the management board, BMW Group

St. Gallen Business Review

34 – Winter 2014

Innovation Networks: Rethinking the Company – Peter Schwarzenbauer

This high-tech workshop will be open to the public and is desi-

gned, in particular, for use by creative people, start-ups and BMW

Group employees, as well as other companies. The Entrepreneurs-

hip Centre is geared towards innovators and those starting their

business at both national and international level. We believe it

will provide new impetus for innovation in Bavaria and strengthen

Munich’s standing as a high-tech location. The initiative also aims

to boost local networking between the city, universities, start-ups,

businesses and the local creative scene. A network philosophy al-

ways entails a process of permanent growth – because a network is

only as good as the growth processes it implements. Our initiative

is committed to this objective.

This basic idea also shapes the third pillar of our network stra-

tegy: our New York-based idea incubator “BMW i Ventures”, a

venture capital company through which we invest in promising

businesses in the field of mobility. In this area in particular, there

are currently many exciting ideas about how to offer people faster,

more convenient mobility. These are the approaches we look for

with BMW i Ventures. The alliances that arise from this combine

the resources of the BMW Group with the pace and flexibility of

successful start-ups.

However, we are not merely looking for quick wins. Our goal is

to form long-term strategic partnerships. We have already screened

more than 700 businesses and initial direct investments have been

made. The focus here is on actively shaping all aspects of individual

mobility for the future.

As mobility gradually centres more on urban scenarios, it also

means that companies like the BMW Group will increasingly become

active urban players. BMW i Ventures is an important factor in

this development, and this approach could be called a strategy of

urban innovation.

Through BMW i Ventures, we now have direct involvement in

seven start-ups, including “Park-at-my-House”, which started out

with the realisation that many parking spaces are not used on

weekends – either by private individuals or, especially, companies

– while drivers spend considerable time looking for somewhere

to park. “Park-at-my-House” brings supply and demand together

in a virtual marketplace. It works, and is also performing well as

a business.

A second example is “Chargemaster”, the largest provider of

charging stations in the UK. Having invested in this company,

we have launched a joint project under the name “ChargeNow”.

Winter 2014 – 35

St. Gallen Business ReviewInnovation Networks: Rethinking the Company – Peter Schwarzenbauer

ChargeNow is a mobility service offered by BMW i,

which makes it fast and easy to locate and operate

public charging stations, the “ChargeNow card” en-

ables cashless payment.

This service naturally also supports the market

launch of our first purpose-built electric vehicles,

the BMW i3 and our plug-in hybrid sports car, the

BMW i8. It is a further example of the importance

of viewing products in a more integrated manner

within their social context.

These business ventures also show that we never

consider individual innovation projects in isolation.

Projects like this allow us to network totally different

investments and ideas from within our company and

from start-ups. I firmly believe that the future lies

in this kind of integrated thinking – and not just

for the automotive industry.

This is why we have decided to take our com-

mitment to innovation one step further: beyond

individual mobility. Our new “BMW Impact Ventures”

unit is tasked with taking up the mission of BMW i

and broadening it – to make sustainable urban living

more enjoyable. Focusing on people, their habits and

preferences, we search for innovative solutions that

improve their daily lives in major cities. Connecting

to start-ups around the world and setting up a sup-

portive environment in locations in the U.S. and

Germany, the team’s aim is to help these solutions to

be realised, to grow and to be successful in the long

term. We strive to provide individuals with better

urban experiences, so we invest in promising smart

hardware, believing, as we do, that after the boom

in software and social media, hardware is poised

for a revolution. The engines that make a city run

– energy, food, buildings, water, transport, waste

management – are physical. A revolution in hardware

creates an opportunity to alter our built environment

and change our fundamental experience of cities.

And as something of a hardware expert, we believe

the BMW Group is well positioned to play a role in

this trend – and eventually extend our reach and

relevance to both start-ups and customers.

3. Networks and the ideal company: three essential features

What do these points tell us about a successful com-

pany today? To what extent can they be applied to

other industries? And to what extent can engagements such as

these contribute to a new understanding of what a company is? I

would like to discuss what defines the ideal company of the future

for me, with reference to three key concepts: “high speed”, “high

profit” and “high relevance”. This is where I believe competitive

success will be decided in the next 20 years and beyond.

3.1 High Speed_It may be something of a cliché, but there

is one particularly crucial development in the automotive sector

currently: The economic world we live in is moving faster all the

time, creating a new culture of speed that we as companies must

accept. This requires us to abandon our long-established habits.

We see this with innovation cycles in particular, as they become

shorter and more numerous, forcing companies like the BMW Group

to innovate on a permanent basis. This demands a culture of speed,

especially in the field of innovation. In other words: We need a

culture of innovation – under rapidly changing market conditions.

Here, in particular, we can learn from the start-ups we work with.

Start-ups are ultimately force fields, whose very existence depends

on their speed of innovation. They came into being because they

were able to transform vague basic ideas into market products

quickly. With a partner like the BMW Group at their side, they

also have access to the necessary process expertise and – there

is no reason to deny it – the funding they need. In return, we at

our company can emulate their culture of innovation – as long as

we allow this to happen. As a result this requires a company like

the BMW Group to be willing to constantly evolve and challenge

the status quo.

Risk is another important concept in this context. Almost 30

years ago, sociologist Ulrich Beck noted that we live in a risk

society. However, his meaning has often been narrowed down to

the idea that risk is an aspect of capitalist culture we should be

critical of. But Beck never intended the term to be reduced to

this. He regards risk as a basic element of modern society – which

consequently makes the idea of risk-taking sound very modern:

That was true 30 years ago, and even more so today.

When we talk about operating in conditions requiring speed,

a risk-taking culture becomes an important success factor. Swift

and consistent action requires tolerance of certain risks. This has

nothing to do with a gambling mentality. It is about consciously

taking controlled risks, charting new territory and viewing what

initially appears unfamiliar not as something dangerous, but as

an opportunity to create something new – new ideas, services

or products.

St. Gallen Business Review

36 – Winter 2014

Innovation Networks: Rethinking the Company – Peter Schwarzenbauer

Once more, we can learn from the world of venture

capital, which already contains the idea of risk in the

word “venture”. Here, capital is invested in exciting, but

ultimately uncertain, ventures – ventures that are them-

selves highly risk-tolerant. In many cases, it is precisely

this basic attitude that generates new ideas for products

or previously unthought-of solutions to problems. This

would appear to me to be a very appropriate and modern

attitude – particularly in the context of mobility, itself

an inherently volatile field. (Mobility is, after all, the

complete opposite of standing still.)

3.2 High profit_There is one area where all of these

considerations, possibly contrary to popular belief, do not

require any kind of change, and that is in companies’ need

to remain profitable in order to grow. The new type of

business described in this article is no less geared towards

generating profit. In fact, profits are necessary. Profits

finance new products, create new jobs and contribute

to positive change in society.

But how do companies remain profitable? I believe

that one of the key answers is to dare and see the world

through the eyes of our customers in all areas of the

company. Of course, that is easier said than done. And

of course, there are many other factors that affect a

company’s profitability. Why the customer? We know that

classic segmentation models no longer apply to the extent

they used to. Who is this mythical creature that goes by

the name of “customer”? To generate profit means also

to know what the customers want before they do. That

means to anticipate their expectations and figure out

how a company can constantly exceed them. Moreover,

we must always be accessible towards having an open

dialogue with customers, and we must create new plat-

forms for exchange with them. Through such endeavours

we can offer products and services that are meaningful

and valuable to our customers’ personal experience and

lives. And we must give our customers the opportunity

to interact with us wherever they choose to do so –not

just where we feel it suits our internal processes.

At the same time, we must respond to the real-life

issues our customers face. We must discover or, even

better, anticipate, where challenges lie. This is another

area in which trail-blazing start-ups are ahead of large

corporations, since they themselves are usually founded

in response to a very specific everyday issue – often one

the entrepreneurs have encountered themselves. That

is what makes their products so marketable. Companies

like the BMW Group also need the kind of marketability

that comes from consistent customer focus. We believe

we are on the right track, but complacency and standing

still are fatal, and are rightly punished by customers and

can result in destroying the value of a company instead

of creating more of it.

3.3 High relevance_That final point brings me to the

third element of a new understanding of companies: the

aspect of “high relevance”. Businesses and brands can only

thrive today if they do more than just make functional

products and indifferently satisfy clearly defined material

needs. They need to create added value for society by

being relevant. I call that “human emotional branding”

instead of “product branding”. That is the only way to

answer Sinek’s opening question of “why?”

This involves an expanded concept of the company

that goes far beyond what is generally understood as

Corporate Social Responsibility. Rethinking the company

above all means identifying social challenges and sup-

plying the appropriate solutions – independent of purely

commercial goals. Corporations must therefore make their

expertise, infrastructure and resources available to serve

a meaningful purpose and make a valuable contribution

to the public good.

In her speech on “Continuity in change – corporate

values in the 21st century”, Susanne Klatten talked about

people and the common good as the focus of a higher

form of economy. She advocates “a common position”

of economy and society to “direct their efforts to serve

a meaningful purpose and achieve the satisfaction of

worthwhile pursuits.” The only way to make the eco-

nomy important and relevant to each and every person

is through the enhanced understanding of companies

discussed here – in the sense of the cooperative culture

described in part 2 as a network culture. Only then will

society be pleased to have companies at its heart.

Winter 2014 – 37

St. Gallen Business ReviewInnovation Networks: Rethinking the Company – Peter Schwarzenbauer

4. Start-up campaign and open innovation

When all these considerations are correct, it becomes clear that

people play a crucial role in the innovation process. Traditionally,

marketing theory believes consumers are easy to influence. But

this thinking – along with traditional marketing – is changing.

It is no longer enough for companies to innovate quietly behind

closed doors and then suddenly emerge onto an unprepared market

with new products. Instead, they must open up their innovation

process – to partner companies, as described above in the BMW

start-up campaign. Or to the people who buy their products and

will ultimately shape their lives with them.

The academic community refers to this as “open innovation”

(Reichwald and Piller 2009), a form of interactive value creation. It

is no longer the brilliant single developer who lays the foundations

for innovation at a company. Rather innovation – and therefore

value creation – occurs in a collaborative process between company,

institutional partners (such as start-ups) and customers.

That is why it is so important to create the right culture within

the company. The work it takes to achieve this should not be

underestimated. For companies used to a closed-door policy on in-

novation, “open innovation” represents a major cultural revolution.

However, if a company succeeds in integrating its customers into

the value creation process, it can tap directly into a social trend

that is gaining more and more ground, referred to in the U.S. as

a “makers’ culture”. This is based on the simple truth that people

want to do more and more things for themselves (Dougherty 2012).

It is not necessarily opposed to the role of companies, but rather

to them telling customers what to do. People want to shape their

lifestyle for themselves – and they want to be involved in creating,

refining and individualising products. Smart companies give them

the opportunity to do so.

5. Concluding remarks

I have argued that companies must totally rethink who they are.

They must think of themselves as a network and pursue networking

strategies to share their expertise in collaboration with start-ups.

They should include the aspect of relevance in their target system,

which may have been geared towards profit and speed in the past.

They should acknowledge their responsibility as a “good corporate

citizen” within civil society and make their expertise available. And

they should open up their innovation process to external input.

All of these aspects are an extension of our classic understan-

ding of companies. In the automotive industry, rethinking also

means that the quantitative parameter used almost exclusively

in the past – namely, volumes in the sense of sales volumes – is

no longer sustainable as the sole criterion for success. Up until

now, a smooth process that sells as many cars as possible has

been the predominant measure of success. But a business that

defines itself as a partner in the process of individual mobility, as

outlined here, thinks beyond that. It regards the selling of vehicles

as one factor in an encompassing strategy that contains societal

as well as economic elements. Its target system focuses on the

individual and his or her need for mobility. Clearly, the vehicle is

no longer the sole solution here. However, as a key element in a

comprehensive strategy for a mobile future, it will continue to play

a pivotal role in promoting economic development and growth in

society going forward. .

Literature

Castells, M. (2011)_The rise of the network society: The information

age: Economy, society, and culture (Vol. 1).John Wiley & Sons.

Chesbrough, H. W. (2006)_The era of open innovation. Managing

innovation and change, 127(3), 34-41.

Dougherty, D. (2012)_The maker movement. innovations, 7(3), 11-14.

MacInnis, D. J. (2012)_“Brands as Intentional Agents”: Questions and

extensions. Journal of Consumer Psychology, 22(2), 195-198.

Klatten, S. (2013)_Kontinuität im Wandel – die Werte des Unterneh-

mens im 21. Jahrhundert. Rede im Rahmen des Neujahrsempfangs der

Evangelischen Akademie Tutzing am 16.01.2013.

Reichwald, R., & Piller, F. (2009)_Interaktive Wertschöpfung: Open

innovation, Individualisierung und neue Formen der Arbeitsteilung.

Springer DE.

Sinek, S. (2009)_Start with why: How great leaders inspire everyone

to take action. Penguin.

38 – Winter 2014

Making Deals Successfull

Partner at PwC

Thomas Menzler

We found some bad news and some good news. The good news

first: Our survey demonstrates that acquirers usually have

a clear vision for the merged companies. Another positive

finding: Value-creation methods in transactions are constantly evolving.

Now to the bad news: In practice, many deal-makers still underestimate

the time and effort a synergy-offering integration process will take.

Laying the foundations for a successful deal

Why do companies decide to buy a competitor or merge with another

firm? The participants in our survey stated strategic, financial and syn-

ergy objectives as their most important success factors. When it comes

to strategic objectives our survey results are encouraging: Those goals

are often achieved. When it comes to generating synergies, however,

many companies have room for improvement.

Buyers generally focus on “external growth” as their main strategic

transaction objective. The prospect of integrating new products into

their portfolios and the desire for new customers are the main strategic

drivers for deals. And in many cases, deal-makers achieve those objecti-

ves. This is hardly surprising, as strategic objectives are often met the

moment the deal is closed and do not need further integration efforts.

To reach new levels of strategic and operational excellence, however,

buyers need to undertake distinct actions post-deal.

Achieving financial objectives seems a lot harder than meeting strate-

gic goals. According to our survey, the most important financial success

factors are sales and profitability. More than half of all respondents

indicated that they only partially achieved set targets or did not achie-

ve them at all. This finding shows that building a combined company

alone does not increase profitability – one has to change and optimize

processes, systems and structures. In order to boost sales, one needs

to be aware of cannibalization effects within the newly-combined pro-

duct portfolios and increased needs to achieve cross-selling potential.

The path to success: Detailed planning, stringent execution and constant monitoring

Many integration activities are planned pre-deal

but are not actually approached during the integ-

ration. Our survey results show that management

commitment and sponsorship are planned initial-

ly, but are often not fully implemented. The same

holds true for a clear project structure or setup,

responsibilities and governance. In order to make a

deal successful it is very important to focus on your

individual value-drivers.

The vast majority of deal-makers start their integ-

ration planning before signing during due diligence,

allowing them to thoroughly plan and prepare all of

the integration activities necessary to perform a

transition. However, most companies underestimate

the overall time needed for integration with a delay

of approximately six months. For the majority of

managers we spoke with, it took between seven and

18 months post-closing to complete their integration

activities.

Why do certain transactions pay off and others don’t? Is integration success blind luck or a manageable and transparent process? These were the questions we wanted to answer when we launched the 3rd edition of our survey on M&A integration. We interviewed M&A experts who realized deals from a wide range of industries in order to explore the trends, challenges and triggers of M&A integration in a rapidly changing deals environment.

“In order to make a deal

successful, it is vital to focus on your indivi-

dual value drivers.”

Winter 2014 – 39

St. Gallen Business Review

Understanding the complexity of integration

So what is it that makes integration so complex? Two-thirds of respondents

(67%) report that the greatest complexity stems from “complex (legal) struc-

tures”. 64% mention “cross-border integration” as the most complex hurdle,

followed by “complex business models of the integration parties” (58%) and

“cultural differences” (56%) as more and more deals are completed on the Asian

market. Multinational teams of experts are required to successfully overcome

these challenges.

What gets measured gets done

Every deal-maker should use ongoing and frequent tracking to measure success

during integration. The most commonly used financial-based metrics are profi-

tability, revenue development and one-off integration process costs. I recom-

mend that companies also use non-financial success metrics such as employee

satisfaction and fluctuation or customer satisfaction to measure the success

of their integration. Our survey shows that the best-performing deal-makers

concentrate more on the “people-side” of the deal and focus on customer and

employee satisfaction rather than on financial-based factors.

Another important issue to consider is whether it makes sense to use external

consultants to support integration. Only a small minority of deal-makers plan for

professional support upfront. From my experience, however, companies that do

not rely on external advisors often face problems during the integration process

due to a lack of experience with deals and integration. Among the most-requested

consultancy services are professional integration management and support with

finance and accounting functions, operating models and IT.

Diligence makes the difference

Clients sometimes ask me: What is the first thing to be completed during

the transaction process? The answer is simple- a thorough due diligence. Future

success depends on getting a comprehensive picture of what you are buying.

Most deal-makers are aware of this. More than 90% of respondents either ex-

tensively or selectively used the results of the due diligence post-closing. Four

in five respondents started to develop integration and synergy plans during the

due diligence process.

Making Deals Successfull – Thomas Menzler

“Building a com-bined company alone does not

increase profitabi-lity or boost sales.”

“A thorough due diligence is key: Future success

depends on getting a comprehensive

picture of what you are buying.”

“Every deal-maker should use

on-going and frequent

tracking to measure suc-

cess during in-tegration.”

St. Gallen Business Review

40 – Winter 2014

Making Deals Successfull – Thomas Menzler

Customized approaches are required to integrate different functions

Deal-makers often focus on support and administrative functions, such as

finance and IT, when conducting integration activities. Support functions ge-

nerally require shorter timeframes for integration. It is far more challenging,

however, to integrate value-adding processes that cause fundamental structural

changes within the organization. Integrating core processes such as research

and development, sales, and production will also require more time. When it

comes to integrating different functions, deal-makers have to be aware that a

“one-size-fits-all” approach does not lead to ideal results.

IT presents a particular integration challenge. Harmonizing and integrating the

IT infrastructure and landscape can take longer than any other business process.

In my experience, it can require a company several years to fully harmonize the

IT functions of two merged companies.

Patience will pay off

We find deal-makers to be far too optimistic in estimating when synergies

will take effect. A time delay of six months in synergy realization is the rule.

Most respondents are able to realize their planned synergies between 13 and 18

months post-closing.

Also, it takes many organizational and structural changes to achieve positive

effects and even longer until these are reflected in the company’s finances. Our

survey indicates that synergies are usually strongest in core processes such as

sales, procurement and production. In these functions it is more difficult to

realize ‘quick wins’, but once synergies are achieved, they have the greatest

financial impact.

The rocky road to synergy realization

Our study reveals a discrepancy between the relevance of synergies as a success factor for

transactions and the actual achievement of the desired synergies. More than three-quarters

of respondents say synergies are a success factor, yet less than half claim they achieved them.

The vast majority of acquirers – 96% of the deal-makers we interviewed – even pay a premium

for target companies because they expect synergies.

In practice, however, many companies not only fail to obtain the synergies they had in mind,

in the worst-case scenario they even suffer from dissynergies, with costs increasing instead

of falling. Employees are dissatisfied with the working atmosphere and leave the company,

rather than being motivated by new opportunities and challenges.

So why is it that so many deal-makers fail to reach planned synergies? Is it poor planning or

inappropriate measures? Slow execution or frictional losses? I think it is probably a mixture of

all of these factors. Synergies usually don’t just happen. Their achievement has to be planned

thoroughly in advance, ideally during the pre-deal phase and certainly before signing. The

way synergies are planned in the pre-deal phase is crucial to the extent to which they are

achieved afterwards.

“We find deal-makers to be far too opti-mistic in esti-mating when synergies will

take effect.”

Synergies as a success factor

76%

24%

0%

40%

20%

30%

10%

1– 6months

7–12months

19 –24months

13–18months

Winter 2014 – 41

St. Gallen Business Review

>36months

31–36months

25–30months

19 –24months

PLANNED TIMEACHIEVED TIME

Making Deals Successfull – Thomas Menzler

Synergies achieved

There is a discrepancy between the importance of synergies over the course of an integration and the actual achievement.

Deal makers are too optimistic in assessing the timing when synergies become effectiveWhat was your planned timeline to realise the full synergy effects and how long did it actually take?

54%46%

Thomas Menzler is Par t ner at Pr iceWater-

houseCoopers (PwC). He is responsible for M&A

integration. In addition to M&A, he also is in-

volved in Car ve-out issues. 

Before joining PWC, Mr Menzler was MD of a

mid-sized company in the medical sector. He

started his career in management consulting.

Thomas Menzler,Partner at PwC

PEOPLE• Involve your employees in the integration process and keep

them informed during the transitional period.• Ensure that key employees are retained and that there is

a high level of employee satisfaction.• Establish a structured change management process.

VALUE• Enhance the value of your integration by focusing on

the success factors that matter most to your individual transaction.

• Apply customized integration approaches for different business processes.

• Actively manage the synergy process from due diligence to post-closing.

RISK• Align your integration strategy and choose sound guiding

principles.• Constantly monitor your integration process even after

returning to your normal day-to-day business.• Install efficient metrics and key performance indicators

to measure your integration performance.

42 – Winter 2014

Persönlichkeiten fördern

Generalsekretärin der Studienstiftung des deutschen Volkes

Dr. Annette Julius

1. Begabten- und Exzellenzförderung: eine Positionsbestimmung

D ie nach dem Zweiten Weltkrieg gegründeten (oder, wie im

Fall der Studienstiftung des deutschen Volkes: wiederge-

gründeten) Begabtenförderungswerke verbindet, dass sie

kompetenz- und persönlichkeitsbezogene Kriterien gleichermaßen

in ihre Auswahl- und Förderarbeit einbeziehen: gefördert wird,

wer eine herausragende wissenschaftliche oder künstlerische Be-

gabung im Bereich des eigenen Studienfaches mit der Motivation

verbindet, diese Begabung auch wirksam werden zu lassen – im

eigenen Fach und über die Grenzen des eigenen Faches und des

persönlichen Lebensumfeldes hinaus. Aufgabe der Förderung selbst

ist es, die im Auswahlprozess identifizierten Potentiale und An-

lagen bestmöglich weiterzuentwickeln – durch Anregungen und

Vertiefungsmöglichkeiten auf fachlicher Ebene ebenso wie durch

die Stärkung der allgemeinen Urteils- und Entscheidungskompetenz

und Verantwortungsbereitschaft der Geförderten.

Wesentlich für Begabtenförderung ist dabei erstens eine explizite

Orientierung an einem demokratisch fundierten, wertegebunden

Pluralismus, ihr ideelles Ziel ist somit die „Bildung zur Pluralität“

– durch die Konfrontation mit konträren Perspektiven, konkur-

rierenden Wertehaltungen und unterschiedlichen Biografien und

Lebensentwürfen. Diese Zielrichtung spiegelt sich auch in der plu-

ralen, nicht-staatlichen Trägerschaft der unterschiedlichen Begab-

tenförderungswerke selbst und ist letztendlich ein Gegenentwurf zu

den „gleichgeschalteten Eliten“ in der Zeit des Nationalsozialismus,

als Deutschlands Intellektuelle und Führungspersönlichkeiten dem

Totalitarismus nicht nur (zu) wenig entgegengesetzt haben, son-

dern ihn fast flächendeckend begrüßten.

Zweitens und hiermit zusammenhängend ist Begabtenförderung

wesentlich auf einzelne Personen und deren Entwicklung ausge-

richtet: Schon in der Aufnahme in ein Begabtenförderungswerk

steckt die Aufforderung und Ermutigung, sich der eigenen Poten-

tiale bewusst zu werden und sie zur Entfaltung zu bringen, aber

auch das eigene Verhältnis zu Leistungsorientierung als Teil der

Persönlichkeit kritisch und realistisch zu reflektieren. Die Förderung

bestärkt und unterstützt Stipendiaten darin, sich Ziele zu stecken,

die über den Tag und über die eigenen persönlichen Belange hinaus

reichen, und diese Ziele dann auch engagiert zu verfolgen. Bestärkt

werden Stipendiaten und Stipendiatinnen zudem darin, ihre eigene

Urteilskraft zu entwickeln und am Ende eigenständige,

von der Förderorganisation nicht vorgegebene, (selbst)

kritische Urteile zu fällen. Anders als in vielen anderen

Ländern, ist Begabtenförderung daher auch nicht mit

bestimmten Hochschulen oder gar Ausbildungsgängen

verknüpft und orientiert auch nicht einseitig auf einge-

spielte Aufstiegsmuster oder Karrierewege.

Begabtenförderung unterscheidet sich daher auch sub-

stantiell von neueren Ansätzen in der Forschungs- und

Bildungspolitik wie etwa der Exzellenzinitiative: So hat

die „Exzellenzinitiative des Bundes und der Länder zur

Förderung von Wissenschaft und Forschung an deutschen

Hochschulen“ ebenso wie die seit ca. zehn Jahren geführte

Diskussion über „Brain Drain“ in der Öffentlichkeit zwar

eine gewisse Akzeptanz dafür geschaffen, dass Förderung

und dauerhafte Bindung von Nachwuchstalenten von ho-

hem öffentlichen Interesse ist – eine Akzeptanz, von der

auch die Begabtenförderung profitiert. Auf der anderen

Seite ist die Exzellenzinitiative aber auf den Wirkungsbe-

reich der Forschung beschränkt, für den sich in der Regel

auch leichter überprüfbare Ziele definieren lassen als für

eine auf das Individuum und seine Potentiale orientierte,

ergebnisoffene Begabtenförderung. Vor allem aber geht

es in der Exzellenzinitiative eben nicht in erster Linie um

die Förderung von Personen, sondern vor allem um die

strukturelle Stärkung und Profilierung von Institutionen

sowie die Bündelung von Ressourcen zur Erforschung

und Bearbeitung als relevant erkannter, übergreifender

Fragestellungen.

Mit der hier vorgenommenen Abgrenzung soll weder

Notwendigkeit und Wirksamkeit dieser Art von Ressour-

cenbündelung in Zweifel gezogen noch die prinzipielle

Unvereinbarkeit der beiden Fördersysteme postuliert

werden. Natürlich studieren zahlreiche Geförderte, etwa

der Studienstiftung, an DFG-geförderten und -ausgezeich-

neten Hochschulen oder Fachbereichen, während andere

Stipendiatinnen und Stipendiaten sich aus ebenfalls guten

Gründen für Fächer oder Fachbereiche entscheiden, die

Winter 2014 – 43

St. Gallen Business ReviewPersönlichkeiten fördern – Annette Julius

sich nicht in den neu entstandenen Strukturen staat-

lich-institutioneller Förderung wiederfinden, sei es, weil

sie schlicht zu klein sind, sei es, weil sie Fragestellungen

nachgehen, die (noch) nicht im Mainstream der Forschung

angekommen sind oder weil sie besondere Stärken in

der Lehre oder ihrer internationalen Vernetzung auf-

weisen – Stärken also, die für die forschungsbezogenen

Wettbewerbe keine Rolle spielen. Ausdrücklich gefördert

wird mithin ein interessengeleitetes, autonom gestaltetes

breites Studium.

Eine auf einem umfassenden Bildungsbegriff aufbauen-

de Begabtenförderung ist mithin weitaus mehr als eine

bloße Komplementärstrategie zu den projekt- und institu-

tionenbezogenen, zentral gesteuerten Förderprogrammen

des Bundes. Insofern kann sie auch nicht darauf zählen,

dass ihre eigene Rolle und Relevanz, gewissermaßen im

Windschatten von Exzellenzinitiative und Forschungsför-

derung, bereits hinreichend plausibilisiert ist. Vielmehr

muss sie ihre eigenen, übergreifenderen Ziele – mit Blick

auf das Gemeinwohl und eine lebendige, leistungsfähige

Demokratie – klar formulieren und sich an ihnen messen

lassen. Erste Schritte in diese Richtung hat die Studi-

enstiftung mit der von ihr in Auftrag gegebenen Evaluati-

on ihrer Auswahlverfahren gemacht, die u.a. Studien- und

Abschlussnoten, Qualität des Berufseinstiegs, Häufigkeit

von sozialem Engagement u.a.m. von Geförderten und

Alumni der Studienstiftung mit denen abgelehn-

ter Bewerber und der Gesamtheit der Studie-

renden vergleicht.

Gerade weil Begabtenförderung aber so

zentral auf die einzelne Person und deren in-

dividuelle Gestaltungsfähigkeit setzt, sind No-

tenstatistiken, Promotionsquoten, Preise und

Auszeichnungen sowie weitere quantitativ zu

erfassende Daten immer nur Teil-Indikatoren

für die Validität der Auswahl und die Wirk-

samkeit der Förderung. Wichtig sind darüber

hinaus überzeugende und vielfältige Werde-

gänge von Geförderten und Alumni, die den

oben genannten Ansprüchen nachvollziehbar

gerecht werden. Wer Pluralität und die indi-

viduelle Persönlichkeit in den Mittelpunkt des

Förderhandelns stellt, dessen Glaubwürdigkeit

hängt nicht zuletzt davon ab, dass die eigenen

Auswahlverfahren fair und offen für Talente und

Begabungen aus allen Teilen der Bevölkerung

sind. Ob die Studienstiftung des deutschen Vol-

kes diesem Anspruch gerecht wird oder auch nur

gerecht werden kann, hat in den vergangenen

rund fünf Jahren wie wenige andere Fragen die

Debatte über Anspruch und Voraussetzungen

der eigenen Arbeit bestimmt.

St. Gallen Business Review

44 – Winter 2014

Persönlichkeiten fördern – Annette Julius

2. Begabtenförderung und Chancengerechtigkeit

Den Zusammenhang zwischen der sozio-öko-

nomischen Herkunft von Studierenden und

den Chancen für ihre Aufnahme in die eigene Förde-

rung hat die Studienstiftung 2007/2008 mit einer

Analyse zum sozialen Profil der Stipendiaten erstmals

systematisch untersucht. Diese ergab u.a., dass 79%

der Geförderten mindestens ein Elternteil mit einem

akademischen Abschluss hatten, wodurch sich die

Stipendiatinnen und Stipendiaten der Studienstif-

tung deutlich vom Durchschnitt der Studierenden

an deutschen Hochschulen unterscheiden, von de-

nen lediglich 49% aus einem „Akademikerhaushalt“

stammen.

2009 legte das Hochschulinformationssystem

(HIS) im Auftrag des Bundesministeriums für Bildung

und Forschung eine Analyse des sozialen Profils aller

Begabtenförderungswerke vor, aus der hervorging,

dass einerseits auch in den anderen Werken mit im

Mittel 66% ein überdurchschnittlich hoher Anteil der

Geförderten aus Akademikerelternhäusern stammt,

von dem wiederum u.a. die Studienstiftung mit dem

oben zitierten Anteil von 80% Akademikerkindern

noch einmal besonders deutlich abwich.

Die Interpretation dieser Ergebnisse sorgte sowohl

studienstiftungsintern wie in der Öffentlichkeit für

Kontroversen: Die ungleichgewichtige Repräsentanz

unterschiedlicher sozio-ökonomischer Gruppen in der

Studienstiftung sei (ausschließlich) ein Resultat von

Selektions- und Benachteiligungsprozessen in viel

früheren Bildungsstadien, für die die Studienstiftung

nicht verantwortlich gemacht werden und die sie

auch nicht ausgleichen könne – argumentierten die

einen. Das Auswahl- und Vorschlagssystem der Stu-

dienstiftung selbst und insbesondere die Tatsache,

dass „weiche“, persönlichkeitsbezogene Kriterien in

den Auswahlverfahren eine Rolle spielen, verstär-

ke die ohnehin herrschenden Ungerechtigkeiten im

Bildungssystem und sorge dafür, dass „das deutsche

Bildungsbürgertum sich selbst reproduziere“ – so die

anderen. „Je mehr Persönlichkeit einfließt, desto un-

gerechter wird das Verfahren“ fasste der Soziologe

Michael Hartmann diese Position zuletzt kurz und

knapp zusammen.

Träfe dieser Vorwurf in der hier for-

mulierten Absolutheit zu, wäre der die

Studienstiftung seit ihrer Gründung

prägende Anspruch in Frage gestellt,

Individualförderung mit Werte- und

Gemeinwohlorientierung zu verbin-

den. Eben weil nicht nur Leistung,

sondern auch „Initiative“ und „Ver-

antwortung“ explizite Erwartungen an

die Geförderten sind, nennt schon das

Ergebnisprotokoll des „Zentralen Ar-

beitsausschusses“ der Studienstiftung

von 1925 als zentrale Auswahlkriterien

sowohl die „Tatsache ausnahmswei-

ser wissenschaftlicher Begabung und

Tüchtigkeit“ als auch „menschliche

Bewährung sowie charakterliche Eig-

nung“. Und in der aktuellen Satzung

der Studienstiftung heißt es: „Die

Studienstiftung fördert die Hochschul-

bildung junger Menschen, deren hohe

wissenschaftliche oder künstlerische

Begabung und deren Persönlichkeit

besondere Leistungen im Dienste der

Allgemeinheit erwarten lassen.“

Für die Studienstiftung war es mit-

hin keine Alternative, ihre Ansprüche

an Persönlichkeit und Engagement ih-

rer Stipendiaten aufzugeben. Sie hat

sich stattdessen in den vergangenen

Jahren intensiv mit der Frage der Chan-

cengerechtigkeit auseinandersetzt und

dieses Anliegen systematisch in die

eigene Arbeit integriert: Neu einge-

führt wurden u.a. die Möglichkeit der

Selbstbewerbung, ein stipendiatisches

„Botschafterprogramm“ ins Leben ge-

rufen und die vorschlagsberechtigten

Schulen und Hochschulen ebenso wie

ihre Kommissionsmitglieder intensiv

auf Grenzen und Möglichkeiten so-

zialer Herkunft sensibilisiert. Heute

liegt der Anteil von Erstakademikern

in der Studienstiftung bei knapp 30%,

Stipendiatinnen und Stipendiaten mit

Migrationshintergrund machen rund

15% der Geförderten aus, womit die-

ser Anteil in beiden Fällen inzwischen

höher ist als derjenige unter den Ab-

iturbesten. Auch die o.a. umfassen-

Winter 2014 – 45

St. Gallen Business ReviewPersönlichkeiten fördern – Annette Julius

de Evaluation von 2012 bestätigte in

eindrucksvoller Weise die Validität,

Reliabilität und Fairness der Auswahl-

verfahren.

All dies bedeutet ausdrücklich nicht,

dass die Studienstiftung ihre Ansprü-

che an das Kriterium „Leistung“ rela-

tiviert hat. Im Gegenteil: Erst indem

zusätzlich zum aktuellen Leistungs-

stand die Wegstrecke berücksichtigt

wird, die zum Erreichen desselben

zurückgelegt wurde, können Potenti-

ale realistisch eingeschätzt und so der

Auftrag erfüllt werden, Menschen zu

entdecken und zu fördern, die einen

herausragenden Beitrag für unsere Ge-

sellschaft zu leisten versprechen.

Trotz dieser Erfolge bleibt noch viel

zu tun: Dass Begabtenförderungswer-

ke existieren und welche Chancen sie

jungen Menschen bieten, ist noch zu

vielen Menschen unbekannt – daran

können und sollten wir etwas än-

dern. Den oben aufgezeigten engen

Zusammenhang zwischen Elternhaus

und Bildungserfolg in Deutschland

aufzubrechen, ist nicht zuletzt eine

Aufgabe, die Begabtenförderung ihren

eigenen Geförderten antragen kann

und sollte: Als langfristige Zukunfts-

aufgabe, die es an unterschiedlichsten

Stellen in der Gesellschaft zu gestalten

und voranzubringen gilt, aber auch als

unmittelbares Handlungsfeld während

der Förderzeit.

Ein bislang noch vernachlässig-

tes Potential für Begabtenförderung

in Deutschland stellt schließlich die

Gruppe der „Bildungsausländer“ dar,

also derjenigen ausländischen Studie-

renden, die erst zum Studium nach

Deutschland kommen. Ihr Anteil an

deutschen Hochschulen hat sich seit

Anfang der neunziger Jahre von rund

4% auf ca. 8% mehr als verdoppelt,

einen weiteren Anstieg auf mindes-

tens 20% innerhalb der nächsten fünf

Jahre forderte kürzlich der „Aktions-

rat Bildung“. Diesen Studierenden,

auch wenn sie von außerhalb der EU

kommen, formal den Zugang zu den

3. Fazit

Herausragend begabte junge Menschen zu Eigensinnigkeit und Gemeinsinn

zu ermutigen und dabei ihre Offenheit auch für alternative Lebensentwürfe

und Denkmodelle zu fördern – das sind Kernziele von Begabtenförderung, die

damit über die Lösung konkreter Problem- und Fragestellungen hinaus auf

die Zukunftsfähigkeit und Festigung einer solidarisch und plural verfassten

Demokratie zielt. Um selbst zukunfts- und in dieser Demokratie zustim-

mungsfähig zu bleiben, sind faire, auf Diversität ausgerichtete Zugangswege

ein Schlüssel. Nicht zuletzt müssen wir auf die Geförderten selbst setzen,

darauf, dass sie sich auf dem Gebiet der Bildungs- und Zugangsgerechtigkeit

nicht mit dem Status quo abfinden, sondern sich auf die ihnen eigene Weise

für eine nächste Generation engagieren.

A nnet te Julius i st seit September 2012 Ge-

neralsekretärin der Studienstif tung des Deut-

schen Volkes. Zuvor war sie 12 Jahre lang f ür

den Deutschen Akademischen Austauschdienst

(DA AD) tätig. Ihr Lehramtsstudium in den Fä-

chern Russisch, Englisch und Deutsch hat sie

an der Universität zu Köln, der Universit y of

Dundee sowie am Puschkin-Institut in Moskau

absolviert und anschließend promoviert. Nach

Abschluss der Promotion war sie 6 Jahre lang

wissenschaftliche Referentin beim Cusanuswerk,

dem Begabtenförderungswerk der katholischen

Kirche. Annet te Julius ist Herausgeber in der

zehnbändigen DA AD-Reihe „Die internationale

Hochschule“ und Mitherausgeberin und -über-

setzer in der Anthologie „Nur Sterne des Alls.

Zeitgenössische russische Lyrik“.

Dr. Annette Julius,Generalsekretärin

der Studienstiftung des Deutschen Volkes

Begabtenförderungswerken

zu eröffnen, wäre ein wich-

tiges Willkommenssignal für

die jungen Menschen selbst

und dürfte ihre Bindung an

Deutschland verstärken; um-

gekehrt trüge diese Gruppe

dazu bei, dass sich die Be-

gabtenförderungswerke und

deren Bildungsarbeit auch im

Inland internationalisieren.

46 – Winter 2014

Father and Daughter: A Good Team for a Company SuccessionThe company succession process at Rullko Großeinkauf GmbH & Co. KG

Managing Shareholder, Rullko Großeinkauf and Supervisory Board of Fielmann AG

Marie-Christine Ostermann

According to the IfM Bonn [German institute for research into

SMUs] between 2014 and 2018 approx. 27,000 companies

will be looking for a successor in Germany every year. Only

just over a half (54%) of owners hand their companies on to their

own children or other family members. A further 29% of companies

are handed on to external managers or other interested parties.

Approx 17% of family businesses hand on the business internally

to members of staff. However, over a third of entrepreneurs have

problems finding a suitable successor.

There are numerous reasons why only about a half of family

businesses continue to be run by the family. Some children do

not have enough interest in the company, they lack the skills to

lead a company or their parents cannot let go of their leadership

responsibilities in the company. It is sometimes the case that the

parents do not have enough confidence in their children or that

family quarrels endanger the survival of the company. Nevertheless

a corporate succession can also work very well as can be seen from

our family business Rullko.

In 1923 Carl Rullkötter, a trained trader, opened a grocery who-

lesalers in Hamm together with his wife Elly. In 1973 his grandson

Carl-Dieter Ostermann joined the family business and took over the

management a few years later. Today Rullko is among the leading

companies in North Rhine-Westphalia and is specialized in sup-

plying food to nursing homes and hospitals. In 2006 I, Carl-Dieter

Ostermann‘s eldest daughter Marie-Christine, joined the company

as managing partner. Since then my father and I have managed the

company together: a company which today has an annual turnover

of approx. 75 million euros and a staff of approx. 150.

Voluntary succession without pressure from parents

When I was only 16, I told my father that I wanted to be the

fourth generation to run our company. The company fascinated

me even then probably because my parents never put pressure on

Winter 2014 – 47

St. Gallen Business ReviewFather and Daughter: A Good Team for a Company Succession – Marie-Christine Ostermann

me to force me to take over the company later. Instead,

they told me that I should do what I was interested in

and what made me happy.

I was able to fulfil my childhood wish at an early age

and joined Rullko as managing partner at the relatively

young age of 28. As my father called me into management

from the very beginning and also made me a partner im-

mediately, a clear signal was given to staff and business

partners that I am not a colleague but the boss who will

run the company in future. This clear message facilitated

my appointment within the company even though it is

often a challenge to change old established procedures

and to convince the senior partner of new ideas. I reach

my targets not only by being patient and having a lot of

empathy but also thanks to my tenacity, drive and deter-

mination. For example, it took several years of hard work

to persuade my father that our fresh meat division, which

had been leased out for decades, would be better run

by ourselves. Eventually I was able to convince him and

today’s figures show that my decision was the right one.

It is gratifying that my father, looking back, is pleased to

openly admit that the changes were necessary and that

today we are well-positioned in the fresh meat sector.

Systematic preparation for a fu-ture role in the company

All in all the succession process in our company has

been very harmonious. One reason for this is that, since

my Abitur [university-entrance qualification], I have been

systematically preparing for my future role. I trained as

a banker at the Commerzbank and then went on to stu-

dy Business Administration at St. Gallen University. My

studies, of course, also included periods of time abroad

and placements. After that I worked for the discount su-

permarket Aldi Süd as divisional manager. The theoretical

and practical experience I gained during my time at Aldi

gave me the best background for my new job as managing

partner as I really got to know all processes in the food

business from scratch. When I first joined the family busi-

ness, I followed an induction plan which I tailor-made for

myself based on the Aldi induction plan. This plan took

me through all departments where I worked everywhere

including in logistics and in freezing temperatures in the

frozen-food department. At the same time this process

enabled all members of staff to build up trust in me and

to see that my training had made me very well qualified

for the job. My father, who was delighted that his

daughter had joined the family business, allowed

me as much free hand as possible during this time.

At the beginning I had to rely on myself very much.

However my father was and still is there for me when

I have questions and would like to discuss something

with him. I can always speak to him about every

topic openly and without reservations.

Management experience out-side the family business

However, the reason that the succession process

ran smoothly from the beginning was that I had had

management experience outside the family business:

as divisional manager responsible for the organiza-

tion of branches for Aldi Süd I was responsible for

the management of 6 to 7 Aldi branches with a

total of approx. 70 employees. This meant that I

had to take on a lot of management responsibility

from the very start. It was very important for me

to gain management experience in an external com-

pany where, as I was not the boss’s daughter, I was

not inevitably in the spotlight and could therefore

work more anonymously and even make the odd

mistake. After joining Rullko I was actively involved

with “DIE JUNGEN UNTERNEHMER BJU” [the Federal

Association of young Entrepreneurs] and president

of this association for three years. This enabled me

St. Gallen Business Review

48 – Winter 2014

Father and Daughter: A Good Team for a Company Succession – Marie-Christine Ostermann

to develop my own public profile independently

from my father and during my presidency I was

able to put my own mark on this association.

The network and respect for my work which I

built up during this time are still very useful

for me today in dealing with customers and

business partners.

Harmonious cooperation between father and daugh-ter

I have no problems with my father and only

occasionally do I have a slight feeling of infe-

riority. When there are differences of opinion,

we discuss these privately with each other. We

always put on a united front in public in order

to be credible and to act with authority. Never-

theless my management style is very different

to that of my father. I pass on more informati-

on, include our employees more in important

decisions and delegate more responsibility. This

motivates the staff and relieves me.

Ultimately it is my father who has the majori-

ty shareholding and who can therefore overrule

me in important decisions. At the moment I

have one third of the shares. It is not quite

certain when I will take over the majority of

company shares. I am patient in this res-

pect and am not putting any pressure on

my father as I am very satisfied with one-

third shares. It is important in our compa-

ny that one family member has the main

decision-making power. This organization

helped Rullko once in the past when, after

insurmountable differences of opinion with

his former co-managing director, my father

was able to dissociate himself very quickly

from him as the second managing director

owned only 10% of company shares. Pro-

tracted court battles would have seriously

damaged our company. Therefore in future

I shall have the majority shareholding in

the company and the main decision-making

power. My younger sister, who is a doctor

and is not interested in the operative ma-

nagement of Rullko, shall receive a minority

share-holding without being included in

the company’s management decisions.

Smooth transition

The transition is now proceeding “piece-

meal”. At the moment there is no fixed date

when Carl-Dieter Ostermann, who is now

Winter 2014 – 49

St. Gallen Business ReviewFather and Daughter: A Good Team for a Company Succession – Marie-Christine Ostermann

66, will finally leave the company. But he

is successively withdrawing from the busi-

ness. It is often the case that he does not

spend the whole day in the company and

does not take part in all decisions. I have

already taken over many responsibilities

such as finances, controlling, personnel and

training. However some areas overlap with

those of my father and important decisions

such as on new investments are still taken

together. I like having my father by my side

because I benefit from his experience. So-

metimes, however, there are also situations

where I would like to take decisions on

my own - then some things would happen

a little quicker and there would be more

changes. However the bottom line is that

we have the same or similar opinions on

most things. All in all I feel that I am well

prepared for a complete takeover which I

anticipate with respect but without fear.

In future I will strive to continue to focus

Rullko on supplying nursing homes and to

establish ourselves more nationally. Future

changes will in no way be carried out with

a sledgehammer. When I joined the compa-

ny, a member of staff said to me: “Please

don’t immediately turn the whole place

inside out!” Until now I have not turned

the whole place inside out. Nevertheless

Rullko is continuing to develop consistently

so that we have extended our profile as

purely a food supplier to being a provider of

integrated solutions to our customers’ pro-

blems thanks to innovative EDP services:

from clearly structured online ordering

systems to an inventory service and menu

planning, nutritional value calculations and

cost transparency for canteen kitchens. The

corporate succession process works well in

that all participants treat each other openly

and respectfully and always keep an eye on

what is the most important thing: to assure

a long-term future for our family business.

Marie-Christine Ostermann, 36, has been the

Federal Chairperson of the German Association

of Young Entrepreneurs f rom 2009 to 2012. In

2006 she joined the foodstuf fs wholesaler Rullko

Grosseinkauf GmbH & Co. KG as a managing

shareholder. In 2010 she was appointed to the

SME advisory board of the German Federal Mi-

nist r y of Economics and Technology and also

belongs to the super visor y board of Fielmann

AG. Since 2013 she is a member of the executive

committee of the BGA, the Federation of German

Wholesale, Foreign Trade and Services. She also

belongs to the executive committee of the German

Association of Family Entrepreneurs.

Marie-Christine Ostermann,Managing Shareholder,

Rullko Großeinkauf and Supervisory Board of Fielmann AG

50 – Winter 2014

Bei der EZB-Konferenz am 26.05.2014 kündigte Mario Draghi die neue Politik der europäischen Zentralbank an. Unter anderem mit negativen Einlagezinsen. Herr Müller, welcher Gedanke kam Ihnen nach den ersten Minuten in den Sinn?

Mein erster Gedanke war: was soll das bringen? Wir haben bereits jetzt historisch niedrige Leitzinsen.

Es herrscht eine völlige Verzerrung der Zinsniveaus und der volkswirtschaftlichen Naturgesetze vor. Diese

niedrigen Zinsen bringen keine Belebung der Wirtschaft in Südeuropa. Der zur Zeit gestörte Transmissionsme-

chanismus funktioniert in der Theorie so, dass die Zentralbank billiges Geld zur Verfügung stellt, die privaten

Banken sich dieses Geld günstig bei der Zentralbank leihen bzw. als Basis für ihre Geldvergabe nehmen und

damit Kredite an Endverbraucher aufgeben. Je günstiger sich die privaten Banken diese Geldbasis besorgen

können, umso freudiger geben diese Kredite aus und umso niedriger sind die Kredite für die, die sie entgegen

nehmen. Allerdings herrscht das Problem vor, dass in Südeuropa niemand ist, der die Kredite entgegen neh-

men könnte. An wen sollen die privaten Banken also die Kredite vergeben? Die 25% Arbeitslosen bekommen

keine Kredite, weil die Bank bei einer solchen Ungewissheit der Kredittilgung, kein Geld verleiht. Ganz egal

wie billig das Geld der Zentralbank ist, private Banken werden bei derartigen Unsicherheiten das Geld nicht

verleihen. Dies gilt für Arbeitslose, für Arbeitnehmer deren Jobs wackeln und auch für mittelständische

Unternehmen, denen das Wasser bis zum Hals steht bzw. deren Produkte nicht verkauft werden. Folglich

ist niemand da, der die Kredite aufnehmen kann. Den Effekt des Transmissionsmechanismus eliminieren wir

somit auch nicht mit noch niedrigeren Zinsen. Selbst wenn Banken Strafe zahlen müssten, ist es diesen

immer noch lieber die Strafe zu akzeptieren, als Geld an bonitätsschwache Leute zu vergeben.

Interview mit

Dirk Müller   i s t Finanzex per te, mehr facher

Spiegel-Bestseller Autor, Vortragsredner, Poli-

tikberater, Gründer des Medienhauses Cashkurs.

com – und gilt als „Dolmetscher zwischen den

Finanzmärkten und den Menschen außerhalb

der Börse“. Sein Weg an der Börse begann 1992,

heute zählt er zu den bekanntesten Gesichtern

des Börsenparketts. Von vielen Medien wird er

daher auch gerne Mr. DAX genannt.

Dirk Müller,Finanzexperte,

Spiegel-Bestseller Autor, Vortragsredner,

Politikberater– Cashkurs

Winter 2014 – 51

St. Gallen Business ReviewInterview mit – Dirk Müller

Nach dieser Argumentation wäre ja die Behauptung, die EZB wolle Inflationstendenzen bekämpfen, quasi invalide?

Richtig, da dieser Mechanismus nicht funktioniert. Er unterstützt natürlich diejenigen, die noch Kredite

aufnehmen können bzw. noch bonitätsstark sind, wie beispielsweise Deutschland. Dort führt das tatsächlich

zu Kreditexistenzen - wie im Immobilienbereich. In den Ländern, in denen das Geld tatsächlich ankommen

sollte, entsteht dieser Effekt jedoch nicht.

Die Aufgabe der EZB ist es, die Banken so aufzustellen, dass diese Kredite auch an schwache Schuldner

vergeben werden können. Hierbei fällt immer wieder der Begriff der „Asset Backed Securities“: Banken

sollen die Kredite an schwache Unternehmen in Südeuropa vergeben und ohne Rücksicht auf Verluste diese

Kredite bündeln und als Kreditpakete bei der EZB abliefern. Am Ende findet eine indirekte Finanzierung der

schwachen Unternehmen Südeuropas durch die EZB statt - behaftet mit dem Risiko für europäische Steu-

erzahler. Die EZB zieht dies momentan offenkundig als letzte Möglichkeit in Betracht. Es könnte durchaus

zu einem Boom in Südeuropa führen, aber um den Preis extrem gefährdeter Kredite und einer möglichen

Kreditblase mit „Schrottkrediten“.

St. Gallen Business Review

52 – Winter 2014

Interview mit – Dirk Müller

Amerika hat sich in einer ähnlichen Situation befunden wie Europa heute, wobei es strukturell gesehen und mit Bezug zum System der Zentralbank natürlich anders ist. Doch wieso haben sich dort die Banken besser erholt?

In den USA wurden die Banken entschuldet, indem ihnen die „faulen“ Kredite abgenommen wurden und

dem Steuerzahler direkt übertragen wurden. Viele Immobilienbesitzer sind schlichtweg durch das Verlas-

sen ihres Hauses von ihren Schulden befreit worden, sodass die amerikanische Notenbank dies mit ihren

Maßnahmen wieder ausgleichen musste. Auf diese Art und Weise wurden die Banken wieder kapitalisiert.

Das hat in den USA zwar funktioniert, dennoch muss in Frage gestellt werden, ob dies dass Richtige war.

Sie werden häufig mit Vollgeldsystemen in Verbindung gebracht. Sehen Sie das tatsächlich als eine umsetzbare Option an?

Absolut. Ich halte es sogar für zwingend notwendig, dem Geldprimat der Banken die Möglichkeit zur

Geldschöpfung zu entziehen. Ein ganz einfaches Beispiel hierzu: im Augenblick verleiht die EZB das Geld

zu null Prozent an die Banken, die dieses Geld für drei bis fünf Prozent an die Staaten weiter verleihen.

Warum können diese Staaten das Geld nicht direkt für jene 0,1% bei der EZB aufnehmen? Weil die Bank

der Gesellschaft erzählt, dass sich dadurch inflationäre Tendenzen entwickeln, wenn die Zentralbank dem

Staat das Geld direkt leiht. Gibt die EZB dieses Geld jedoch an die Bank und die Banken den Staaten, folgt

offensichtlich keine Inflation. Diese Begründung ist somit ausgesprochen „bescheuert“ und dient lediglich

dazu, den Banken die Taschen mit Geld zu füllen. Dieser Prüfmechanismus ist offenkundig nicht standhaft,

da die gesamte Verantwortung und Haftung schon jetzt bei der EZB liegt. Herr Draghi sagt, er kaufe alles

auf. Dies kann er zwar auch direkt machen, jedoch kassieren dann die Banken nicht diese drei bis fünf Pro-

zent. Das von den Banken eingegangene Risiko wird ohnehin auf die Staaten und somit den Steuerzahler

abgewälzt. Letzten Endes macht dieses System also keinen Sinn. An diesem momentanen Beispiel erkennt

man den momentan existierenden Wahnsinn des Geldsystems. Ein besseres Argument für Vollgeldsysteme

als die aktuelle Sachlage, kann nicht gefunden werden.

Historisch betrachtet ist jedes Fiat-System bislang zusammengestürzt. Was bleibt dem Kleinanleger in-nerhalb dieses Rahmens eigentlich übrig? Jeder Wirt-schaftsraum von China bis zu den Vereinigten Staaten und Europa scheint im Moment ja von Blasenbildungen betroffen zu sein.

In China gibt es eine extreme Blasenbildung, ohnehin in den Schwellenländern. Das ist normal, in Boompha-

sen gibt es immer Fehlentwicklungen. Je heftiger ein Boom ist und mit je mehr Geldmitteln er ausgestat-

tet ist, umso extremer werden die Exzesse in der jeweiligen Volkswirtschaft, da diese Geldströme jeden

Schwachsinn ermöglichen und die Probleme überdecken. In dem Moment aber, in dem sich dieses Geld wieder

zurückzieht - wie es momentan in den Schwellenländern passiert - ist es wie bei einer Überflutung. Am

Anfang sieht man diese wunderbare Wasserlandschaft, am Schluss den ganzen hässlichen Schlick, der sich

abgesetzt hat. Diesen gilt es dann von den Straßen zu räumen. Im Moment beginnt sich die Überschwem-

mung langsam zurückziehen, so dass man den Schlick bislang nur erahnen kann. Sobald wir diesen Schlick

in seiner ganzen Ausdehnung sehen, kann das ziemlich bösartig enden. In den letzten Jahren der Flut hat

sich in China ziemlich viel abgesetzt.

Winter 2014 – 53

St. Gallen Business ReviewInterview mit – Dirk Müller

Gibt es im Rahmen dieser Flut dann überhaupt Trends, die sie für nachhaltig halten?

In diesen Phasen wird man kaum etwas finden, womit man vernünftig Geschäfte machen kann. In einer

Landschaft, die von einer Überschwemmung betroffen ist, werden manche Stellen mehr und andere weniger

betroffen sein. Dennoch werden die Aufräumarbeiten deren Geschäftsmodell beeinträchtigen, sodass eine

Investition in Schwellenländern momentan ein absolutes No-Go ist, da das Wasser dort momentan abfließt.

Ich warte ab, bis das Ausmass der Sedimente zu Tage kommt.

Momentan herrscht ein enormes Aufblähen von Schat-tenbanken in den Vereinigten Staaten von Amerika, da ganze Transaktionen per Regulierung verboten sind und dort hin abfliessen. Wie schätzen sie dort die Risiken dieses Systems ein?

Ich erkenne nicht nur in den Vereinigten Staaten von Amerika sondern insbesondere in China ein riesiges

Schattenbankensystem. Vor allem behaftet mit extremen Gefahren, da dort Zinssätze im hohen zweistel-

ligen Bereich vorherrschen. Bei einem jetzigen offiziellen Wirtschaftswachstum von 7% - real sind es wohl

deutlich weniger - und wesentlich höheren Zinssätzen in diesem Schattenbankensystem, ist es nur eine

Frage der Zeit bis das System diese Zinssätze nicht mehr bedienen kann. Das Wirtschaftswachstum kann

diese schlichtweg nicht mehr hergeben. Die Gefahr eines Kollapses dieses Schattenbankensystems wird von

Tag zu Tag größer. In den U.S.A herrscht die gleiche Gefahr, da sich abseits ebenfalls viel getan hat: grosse

Finanzhäuser lagern ihre bisher üblichen Geschäfte aufgrund von Regulierungen aus. Die Bank für internati-

onalen Zahlungsausgleich hat sich zu dieser Situation sehr deutlich geäußert und sagt dass die Finanzwelt

und die Banken weniger stabil sind als vor der Krise und es solch große Gefahren gibt, dass es durchaus

wieder zu starken Verwerfungen der Finanzmärkte kommen kann.

St. Gallen Business Review

54 – Winter 2014

Interview mit – Dirk Müller

Das Gespräch hat viele politische und finanzregulatori-sche Themen angesprochen. Können überhaupt wirklich profunde Einschätzungen gemacht werden oder sind Börsen einfach ein Glücksspiel, das viel zu komplex zu verstehen ist?

Da haben Sie vollkommen Recht. Personen, die wüssten wo der Dax am Ende eines Jahres steht, reden

Scharlatan. Sie werden niemanden auf Gottes Erdboden finden, der in der Lage ist, die gesamte Komplexität

unseres Finanz- und Wirtschaftssystems zu erfassen und zu kalkulieren. Es ist eine unendliche lange Kette

an Variablen. Nur von sehr wenigen dieser Variablen kennen wir eine absolute Zahl und selbst von diesen

Wenigen wissen wir noch nicht einmal, wie belastbar sie sind. Bei vielen Zahlen wissen wir sogar, dass sie

gar nicht stimmen. Ebenso wenig wie ein Bundestrainer sagen kann - obwohl er sich intensiv damit beschäf-

tigt - wie das nächste Spiel ausgeht, da schlichtweg zu viele Variablen im Spiel sind, die man im Vorfeld

nicht kalkulieren kann. Was die volkswirtschaftlichen Abteilungen ausschliesslich machen können, ist zu

versuchen, sich auf Grundlagen von Erfahrungen der Vergangenheit Hilfsbrücken zu bauen. Konstellationen,

die schon einmal miteinander vergleichbar waren, haben in der Vergangenheit dies oder jenes Ergebnis

gebracht. Davon muss abgeleitet werden, ob es diesmal vielleicht ähnlich sein könnte. Natürlich haben

sich in der Zwischenzeit unzählige andere Parameter verändert, so dass man immer nur mit einer grossen

„Demut“ benennen und sagen kann, es gebe eine gewisse Wahrscheinlichkeit dass ein jener Fall eintreten

wird. Behauptet jemand, eine sichere Prognose abzugeben, so ist das Scharlatanerie. Es kann nur versucht

werden, Wahrscheinlichkeiten abzustecken.

Abschlussfrage: Ein Student hat 1000 Franken – was sollte er Ihrer Meinung nach derzeit damit anstellen?

Seine Freundin schnappen und schön’ Party machen.

Wir danken für das Gespräch Herr Müller.

Winter 2014 – 55

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