The future of European consulting
In an increasingly globalized world, continental strategy consultancies excel at using diversity, creativity and cross-cultural knowledge to their best advantage, according to Burkhard Schwenker.
European companies account for 38% of exports worldwide, and are global leaders in many industries. Europe is home to 23 of the 50 companies with the highest revenues in the world; only 15 are based in the United States. Germany alone has eight of the top 50, two more than five years ago, and now more than Japan.
Europe's companies are also globally positioned and are profiting from globalization. The question is, why is this, and what does that mean for European strategy consultancies? Besides excellent management, the success of our companies is based on three factors. First of all, Europe represents diversity, and with it cultural sensitivity. These qualities are key for internationalization. Several elements have contributed to the extensive experience European companies have in dealing with cultural diversity: over 20 official languages, at least three political approaches to regulation, the most diverse tax and social systems and consumer behavior. The same applies to within the companies themselves as well as to new markets. This is not an empty claim: our studies show that more than two-thirds of Europe's top executives recognize the diversity of the European market as a competitive advantage. This cultural sensibility is also important for successfully continuing the boom of cross-border mergers and acquisitions.
European companies account for 38% of exports worldwide, and are global leaders in many industries. Europe is home to 23 of the 50 companies with the highest revenues in the world; only 15 are based in the United States. Germany alone has eight of the top 50, two more than five years ago, and now more than Japan.
Europe's companies are also globally positioned and are profiting from globalization. The question is, why is this, and what does that mean for European strategy consultancies? Besides excellent management, the success of our companies is based on three factors. First of all, Europe represents diversity, and with it cultural sensitivity. These qualities are key for internationalization. Several elements have contributed to the extensive experience European companies have in dealing with cultural diversity: over 20 official languages, at least three political approaches to regulation, the most diverse tax and social systems and consumer behavior. The same applies to within the companies themselves as well as to new markets. This is not an empty claim: our studies show that more than two-thirds of Europe's top executives recognize the diversity of the European market as a competitive advantage. This cultural sensibility is also important for successfully continuing the boom of cross-border mergers and acquisitions.
Dr. Burkhard Schwenker
Secondly, diversity fosters creativity. The latest studies indicate that diversity –measured roughly by the ratio of foreign employees in a region – does in fact empirically lead to more innovation. The convergence of various skills and experiences that arise directly from a cultural background can be a clear competitive advantage. Essentially, this confirms the paradigm described by American economist Richard Florida, who ties the sustainability of regions to their technology, talents and degree of tolerance. From this perspective, it's hardly surprising that Europe's companies are also strong technologically. Furthermore, 6.9% of our workforce is employed in research-intensive industries, compared to 4.9% in the USA.
A third factor for the international success of European companies are their sustainable corporate strategies, which differ from the quarter-by-quarter thinking of the shareholder value approach. Many of these companies have had decades of success, surviving crisis after crisis. Several have even been owned by the same family for generations. In their own inimitable way, they have managed to flexibly respond to changes in their markets. A management style oriented toward sustainability can also work well in other regions of the world. China is one example, but the United States has recently shown distinct interest as well.
Europe's strengths today will become even more important on the global markets of tomorrow. Increasing complexity demands creative solutions. Working in various different global markets requires differentiated approaches. Rapid technological change makes new ideas and their rapid implementation on the market a decisive economic factor. All this ultimately puts an end to the illusion of long-term planning security and generates considerable willingness to adapt and improvise. Above all, it produces the management quality of making courageous decisions under conditions of uncertainty and risk.
A third factor for the international success of European companies are their sustainable corporate strategies, which differ from the quarter-by-quarter thinking of the shareholder value approach. Many of these companies have had decades of success, surviving crisis after crisis. Several have even been owned by the same family for generations. In their own inimitable way, they have managed to flexibly respond to changes in their markets. A management style oriented toward sustainability can also work well in other regions of the world. China is one example, but the United States has recently shown distinct interest as well.
Europe's strengths today will become even more important on the global markets of tomorrow. Increasing complexity demands creative solutions. Working in various different global markets requires differentiated approaches. Rapid technological change makes new ideas and their rapid implementation on the market a decisive economic factor. All this ultimately puts an end to the illusion of long-term planning security and generates considerable willingness to adapt and improvise. Above all, it produces the management quality of making courageous decisions under conditions of uncertainty and risk.
The implications for consultancies are therefore clear: Europe's strengths are also the strengths of consultancies. Good consulting is characterized by good ideas, diversity, creativity and sustainable, bold strategies. In this way, European consultancies possess excellent qualities for global success. However, this success also requires the ability to provide these qualities all over the world. The number of multinational clients who required our presence in five or more countries has grown by 75% over the last two years. A few projects involved 10 to 15 of our international offices. With Europe's companies at the forefront of globalization, the ability to provide services all over the world remains a must for consultancies as well.
Dr. Burkhard Schwenker is CEO of Roland Berger Strategy Consultants. An abridged version of this article first appeared in the Frankfurter Allgemeine Zeitung.
If you have questions or comments regarding this, or any other article, please do not hesitate to contact us:
Dr. Burkhard Schwenker is CEO of Roland Berger Strategy Consultants. An abridged version of this article first appeared in the Frankfurter Allgemeine Zeitung.
If you have questions or comments regarding this, or any other article, please do not hesitate to contact us:
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