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Monday, July 9, 2012

Global Business Leaders Conference : The Future of European Competitiveness

The Future of European Competitiveness
I got a good opportunity to be part of the “Global Business Leaders Conference” on Fri 06 Jul 2012, in Paris. The topic of discussion was “The Future of European Competitiveness”. The conference was in English, so my involvement was deep.

To begin with, I am thankful to INSEAD for inviting me.
I am writing an account of the conference and a brief summary of the key take away. Refer official Link


1. Introduction & Opening
By Claude Janssen – Honorary Chairman of the INSEAD Board
The Master of Ceremony was Peter Zemsky – Acting Dean of INSEAD
The conference started with a brief of the agenda.


2. Dialogue with Jean-François Copé
By Mayor of Meaux, MP (Seine-et-Marne), and General Secretary of the Union for a Popular Movement (UMP)
Jean-François is a good orator, with good knowledge on Macro Economics and a superb on-stage confidence. He energized the audience with his key message which served as good context setting for the day.

The key message was
1. We all understand that Artificially pushing the Purchasing power in Europe (by funding countries with bail out money) is not the solution
2. Federal Europe, which many are talking as “one solution” is not possible in the middle term. Few countries need to take the lead like France, Germany, Italy, Spain and the Scandinavian countries
3. The only way of growing Economy is by increasing competitiveness in Europe
Refer the GDP of European countries here

In the near term, the following three things should be done
1. Stabilize Financial sector
2. Limit public spending (slowly as acceptance in public is difficult, and it’s easy for politicians to lose in elections, if this is not managed well, e.g. people are not willing to cut basic necessities, like hospitals and schools)
3. Rebuild Competitiveness in Europe so that we get real GDP growth by
 a. Reforming Labor Legislation
 b. Implement Structural reforms
 c. Supporting Research and Innovation
 d. Support for SMEs ( Small and Medium Enterprises) so that we have a ecosystem which supports Entrepreneurship (key factor lagging in Europe)



3. Solution Innovation – A European Game?
By Markus Christen – Research Professor of Marketing, INSEAD

Question: Why Europe is broke today?
Answer: Europe = High Cost + Low Innovation

Innovation is not just new Products and Technology.
Significant GDP growth is often realized by finding new ways of doing old business, in particular by providing broader solutions to customers. See the following examples where organizations achieved this.
IBM - Good transition from Products to Global Services provider
Rolls Royce – From maker of Aircraft engines to doing end-to-end Aircraft engine maintenance
Xerox – Good transition from Products to providing Office Solutions

How well placed are European firms to make this transition from product sellers to solution providers?
From a Customer’s perspective; “A solution is a relationship that creates value for me”. And to achieve this Service Providers need to do the following
1. In-depth Problem Identification of the Client(by being with the customer and not sitting in R&D labs)
2. Customized offer integrating Products and Services
3. Solution Implementation
4. Post- deployment support

Successful firms have developed this by
- Extreme closeness to Customers(Customer Relationship is the basis of Competitive advantage)
- Great ability to listen to Customers
- World- class Products
- Close Relationship with workforce

Europe should leverage on the following strengths (some need to be more developed)
 1. Leverage diversity
 2. Leverage lower labor mobility (attrition is very low in Europe)
 3. Leverage education and on-job training ( Education is good, on-job training needs development)
 4. Leverage Global mindset (needs to be developed)


4. European CEO Panel
Jon Fredrik Baksaas – President and CEO, Telenor Group
Thierry Breton – Chairman and CEO, Atos
Jim Hagemann Snabe – Co-CEO, SAP

This was the view of key Business Leaders after a Politician’s and a Research scholar’s view. Some facts1. See the Global Innovation Index 2012. There are many European organizations in the top here.
2. Among Fortune 500 there are many big ones in Europe. Look at some Services organizations below. All are Eurepean and as a side note all have French CEO. :-)
o Accenture
o CapGemini
o Atos
The above three mentioned organizations plan to hire 80,000 engineers this year. But they are finding it difficult to find good available talent.

There is a key dilemma in some European countries
- While some organizations are laying-off people to manage cost, others are finding difficult to find talent.
- There is a big problem of managing supply-demand of talent. In countries like China they manage to do this very fast and in countries like France it takes ages and even then it’s not done. So it’s just mismanagement.
- Sometime employees are laid-off as they do not have the right talent required for the organization. Instead of laying-off organizations should re-train and redeploy talent. This is missing in Europe.

Four key take-aways
1. We are beyond denial of the European crisis. This is the biggest crisis after World War II.
2. Crisis is an opportunity to reinvent and do things differently.
3. Europe can be competitive; the feeling of Europeans for Europe needs to be re-ignited.
4. The need of the hour is greater level of consensus in European countries e.g. look at the consensus they have in Scandinavian countries in-spite of the key differences in Economy in each country.

The key message of the top CEOs was,
- “The European Crisis is a terrible thing to waste! It’s a big opportunity!”
- Young people should be trained first and employed. Rising unemployment in youth can be the biggest threat for the socio-economic stability.



5. Youth Panel
Valerie Coscas, MBA'08D - Strategy Director - Strategic Partnerships, France Telecom Group
Emilie Cousteau - CEO, One World Lingerie
Steven Eichenberger – Managing Director, Euforia
Myriam Oufella Ferran, Vice President, State Street Banque
Mads Jensen, MBA'09J - CEO and Co-founder, Sefaira

Some facts
Top companies: Fastest growing – Very few European on top. Refer
Global 500 : Worlds largest corporations – Few European on top. Refer
Global - Ranking of countries where it’s easy to start a new Business. Rank by "Starting a Business". – Very few European on top. Refer
New Zealand - 1
Australia - 2
Canada - 3
Singapore - 4
USA - 13
....
Germany - 19
France - 29
Spain - 44
Italy - 87
Greece – 100
India - 132

Key Message
Ecosystem for Entrepreneurship is not good in Europe. This needs to be developed so that, “creative ideas from young entrepreneurs is not wasted”



6. International CEO Panel
David Arkless – President of Corporate and Government Affairs, Manpower
Elena Panaritis, – CEO and Founder, Panel Group
Markwart von Pentz – President John Deere

Among other things discussed the International CEOs were asked to site areas of improvements in Europe, as they have the International view. And the list is big…
- Very high transaction cost (Bureaucracy)
- Ageing population coupled with stupid Immigration policy
- Weak Education and Technology link
- Supply and Demand of jobs not managed well( we have seen this earlier)
- Slow Reforms
- Poor Governance


7. Reflections
After a long day of heated debates, it was clear that they are many agreements, and there are some disagreements as well, which is not surprising consider the complex social fabric of Europe.

If we have to summarize then they key messages are
1. Financial system has become too complex to be managed, and its difficult to anticipate risks and mitigate them (word of caution for bankers, governments and regulators)
2. 50% of youth unemployed in a country; this is the biggest threat for the socio-economic stability (word of caution for governments and policy makers)
3. Supply and Demand of jobs is not managed well ( simple statistics and government will required)
4. The only real way of growing GDP is by increasing competitiveness in Europe
5. Ecosystem for Entrepreneurship is not good in Europe. This needs to be supported and eased.

What are your thoughts on this ? Do leave a comment with your top 3 solutions…


Mahtab SYED
Paris, Jul 09 2012

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