Europe's companies grow faster and more persistently than their international rivals. They are also more profitable and have a larger global footprint
What sets the European management model apart?
A long-term strategic focus, differentiation, cultural diversity and a commitment to society and sustainability
The recent financial and economic crisis showed that the European management model is superior to the American one. Europe's strengths, on the other hand, are rooted in a long-term mentality, excellent manufacturing skills, the ability to set products and services apart and the ability to translate diversity into creativity. Weaknesses in the American style of management include a bias toward short-term gain, an inordinate focus on capital markets and finance, a misunderstanding of the concept of shareholder value and a systematic tendency to underestimate complexity. Roland Berger's analysis reveals ways to improve corporate management – ways that are essentially rooted in a superior approach to strategies, structures, the capital markets, values and education. The better shape Europe itself is in, the more European companies will be able to exploit their superior management style and realize their full potential on the global stage. These are the key hypotheses expounded by Professor Burkhard Schwenker, Chairman of the Supervisory Board of Roland Berger Strategy Consultants, in his new book in the rethink:CEO series: "Europe shows the way! The case for a superior management model".
"In the economic and the social contexts, we desperately need to spend more time talking about the opportunities, prospects and potential to which Europe opens the door," Schwenker writes. "This positive approach is important, if only to consciously counter the tenor of current debate about the 'old continent'," he continues, adopting a resolute stance against what he sees as the often "europessimistic" mainstream.
Europe's leading position in global competition
According to Schwenker, the forceful economic upturn that has followed the crisis is due in part to the buoyancy of China and India, but also – and primarily – to the strengths of Europe and its superior management style. The key attributes of this style include a long-term strategic focus, the ability to set products and services apart, and what is already a very international and decentralized footprint. Schwenker states that the strength of Europe's economy and the success of its companies are eminently measurable: A comparison of the world's 3,000 biggest capital market-oriented companies from 1998 through 2008 found European firms to be the true global players. Of the 3,000 companies analyzed, 27% are European, accounting for 34% of total revenue and 42% of total profit in the defined corporate universe. Schwenker sees these numbers as proof positive that European enterprises grow faster and (above all) more profitably, have a more international footprint and have a more long-term focus.
Drawbacks of the American management model
Schwenker believes Europe's "culture of skilled crafts" keeps it down to earth, ensuring strong social integration and fostering a long-term mindset. By contrast, North America focuses more on efficiency, speed and high returns, and has consequently developed a "trading mentality". The recent economic crisis, he says, made the weaknesses of the American management style – a myopic, short-term focus and a fixation with the capital markets, for instance – plain for all to see. The author adds that many American managers are increasingly foregoing investment in industrial production, preferring instead to pump money into supposedly lucrative "business activities".
Toward a superior management model
Having compared and contrasted the two management styles, Schwenker's new book sketches the outlines of a superior management model. This model involves developing and implementing corporate strategies that systematically develop competitive advantages, seek to safeguard resources and focus on the long run. Schwenker also gives his backing to the greater decentralization of corporate organizations, as well as advocating closer cooperation between supervisory and executive functions. Management, he says, must be rooted in values, while education must become more interdisciplinary.
Europe's companies need European integration
The corporate sector cannot be left alone to tread the path of European management, however. For Schwenker, this seminal idea is inextricably linked to European integration. Europe's companies have the creativity they need to intelligently combine manufacturing and services. Moreover, Europe's shared values lay a firm foundation for sustainable growth. Accordingly, the author urges business leaders and governments alike to launch ambitious new projects: "What is missing is a new project that births a stirring dynamism of its own, as did the single market under Jacques Delors in the mid-1980s – a project that very specifically targets economic benefits for every European." Such projects, he believes, are needed to create a climate within which European companies can leverage and fully exploit their strengths.
The important thing, Schwenker asserts, is that European projects must empower European companies to rise to the four major challenges and trends of our day: A new single market strategy and energy policy must reinforce our manufacturing industry. Green technology must be perceived by the corporate sector as a new opportunity in the battle to halt climate change and conserve natural resources. The consequences of demographic change must be mitigated by migration and mobility. And the threat of future financial crisis must be countered preemptively by insolvency standards and a monetary fund at European level.
A long-term strategic focus, differentiation, cultural diversity and a commitment to society and sustainability
The recent financial and economic crisis showed that the European management model is superior to the American one. Europe's strengths, on the other hand, are rooted in a long-term mentality, excellent manufacturing skills, the ability to set products and services apart and the ability to translate diversity into creativity. Weaknesses in the American style of management include a bias toward short-term gain, an inordinate focus on capital markets and finance, a misunderstanding of the concept of shareholder value and a systematic tendency to underestimate complexity. Roland Berger's analysis reveals ways to improve corporate management – ways that are essentially rooted in a superior approach to strategies, structures, the capital markets, values and education. The better shape Europe itself is in, the more European companies will be able to exploit their superior management style and realize their full potential on the global stage. These are the key hypotheses expounded by Professor Burkhard Schwenker, Chairman of the Supervisory Board of Roland Berger Strategy Consultants, in his new book in the rethink:CEO series: "Europe shows the way! The case for a superior management model".
"In the economic and the social contexts, we desperately need to spend more time talking about the opportunities, prospects and potential to which Europe opens the door," Schwenker writes. "This positive approach is important, if only to consciously counter the tenor of current debate about the 'old continent'," he continues, adopting a resolute stance against what he sees as the often "europessimistic" mainstream.
Europe's leading position in global competition
According to Schwenker, the forceful economic upturn that has followed the crisis is due in part to the buoyancy of China and India, but also – and primarily – to the strengths of Europe and its superior management style. The key attributes of this style include a long-term strategic focus, the ability to set products and services apart, and what is already a very international and decentralized footprint. Schwenker states that the strength of Europe's economy and the success of its companies are eminently measurable: A comparison of the world's 3,000 biggest capital market-oriented companies from 1998 through 2008 found European firms to be the true global players. Of the 3,000 companies analyzed, 27% are European, accounting for 34% of total revenue and 42% of total profit in the defined corporate universe. Schwenker sees these numbers as proof positive that European enterprises grow faster and (above all) more profitably, have a more international footprint and have a more long-term focus.
Drawbacks of the American management model
Schwenker believes Europe's "culture of skilled crafts" keeps it down to earth, ensuring strong social integration and fostering a long-term mindset. By contrast, North America focuses more on efficiency, speed and high returns, and has consequently developed a "trading mentality". The recent economic crisis, he says, made the weaknesses of the American management style – a myopic, short-term focus and a fixation with the capital markets, for instance – plain for all to see. The author adds that many American managers are increasingly foregoing investment in industrial production, preferring instead to pump money into supposedly lucrative "business activities".
Toward a superior management model
Having compared and contrasted the two management styles, Schwenker's new book sketches the outlines of a superior management model. This model involves developing and implementing corporate strategies that systematically develop competitive advantages, seek to safeguard resources and focus on the long run. Schwenker also gives his backing to the greater decentralization of corporate organizations, as well as advocating closer cooperation between supervisory and executive functions. Management, he says, must be rooted in values, while education must become more interdisciplinary.
Europe's companies need European integration
The corporate sector cannot be left alone to tread the path of European management, however. For Schwenker, this seminal idea is inextricably linked to European integration. Europe's companies have the creativity they need to intelligently combine manufacturing and services. Moreover, Europe's shared values lay a firm foundation for sustainable growth. Accordingly, the author urges business leaders and governments alike to launch ambitious new projects: "What is missing is a new project that births a stirring dynamism of its own, as did the single market under Jacques Delors in the mid-1980s – a project that very specifically targets economic benefits for every European." Such projects, he believes, are needed to create a climate within which European companies can leverage and fully exploit their strengths.
The important thing, Schwenker asserts, is that European projects must empower European companies to rise to the four major challenges and trends of our day: A new single market strategy and energy policy must reinforce our manufacturing industry. Green technology must be perceived by the corporate sector as a new opportunity in the battle to halt climate change and conserve natural resources. The consequences of demographic change must be mitigated by migration and mobility. And the threat of future financial crisis must be countered preemptively by insolvency standards and a monetary fund at European level.
Here you can order the book (in German)
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