"Good managers can handle complexity"
Prof. Dr. h.c. Roland Berger
In a recent interview with French publication L'Expansion, Roland Berger, Chairman and founder of the consultancy that bears his name, reflected on how management has changed over the past forty years.
You are celebrating 40 years of Roland Berger. Were you a true European pioneer in 1967?
After finishing my MBA, I spent five years working as a consultant for a major US strategy consultancy. I quickly became partner. But contrary to other young managers back then, my dream was not to have a career with a major company, which I found too bureaucratic. So I founded my own company with a secretary and an assistant in Munich, and I specialized in an innovative sector: strategy and marketing. In Germany, the notion of management consulting was practically unknown at the time. It was a burgeoning profession. The big American consultancies had just set up shop in Europe, which was transitioning from post-war reconstruction to a period of more sophisticated management. I founded my consultancy at this key moment, with all the opportunities and risks that this entailed.
What were your client's concerns in 1967?
Many companies were focused on their national markets and extremely diversified. They needed to bring clarity to their activities, focus on their core business and restructure their organizations into divisions. They also had to become more transparent in their management systems and cut their production costs.
You are celebrating 40 years of Roland Berger. Were you a true European pioneer in 1967?
After finishing my MBA, I spent five years working as a consultant for a major US strategy consultancy. I quickly became partner. But contrary to other young managers back then, my dream was not to have a career with a major company, which I found too bureaucratic. So I founded my own company with a secretary and an assistant in Munich, and I specialized in an innovative sector: strategy and marketing. In Germany, the notion of management consulting was practically unknown at the time. It was a burgeoning profession. The big American consultancies had just set up shop in Europe, which was transitioning from post-war reconstruction to a period of more sophisticated management. I founded my consultancy at this key moment, with all the opportunities and risks that this entailed.
What were your client's concerns in 1967?
Many companies were focused on their national markets and extremely diversified. They needed to bring clarity to their activities, focus on their core business and restructure their organizations into divisions. They also had to become more transparent in their management systems and cut their production costs.
What have been the major management developments in Europe?
There were two phases. From 1967 to 1990, in the bipolar world that we lived in at the time, competition was soft and mainly between high-cost protagonists, namely Europe, Japan and the United States. From 1990 onward, in a more globalized world, low-cost regions like China, India, Eastern Europe and Latin America burst onto the scene, making competition more intense. At the same time, capital markets imposed their power all over the world and shareholder value management became essential. New actors like private equity and hedge funds also emerged during this period. As a result, groups were obliged to become more productive. They began to abide by precise governance rules, such as minority shareholder protection. Rationalization, cost reduction, reengineering, innovation, customer orientation and a proactive attitude became the order of the day and a major challenge for many managers. In facing low-cost countries, we were forced to rely on the human commodity "brain," on creativity and innovation.
What were the origins of marketing in Europe?
Marketing really took off around 1970. In his 1958 book "The Affluent Society," Harvard economist John Kenneth Galbraith explained that companies could no longer sell their products without taking consumer preferences into account. It was a real revolution!
There were two phases. From 1967 to 1990, in the bipolar world that we lived in at the time, competition was soft and mainly between high-cost protagonists, namely Europe, Japan and the United States. From 1990 onward, in a more globalized world, low-cost regions like China, India, Eastern Europe and Latin America burst onto the scene, making competition more intense. At the same time, capital markets imposed their power all over the world and shareholder value management became essential. New actors like private equity and hedge funds also emerged during this period. As a result, groups were obliged to become more productive. They began to abide by precise governance rules, such as minority shareholder protection. Rationalization, cost reduction, reengineering, innovation, customer orientation and a proactive attitude became the order of the day and a major challenge for many managers. In facing low-cost countries, we were forced to rely on the human commodity "brain," on creativity and innovation.
What were the origins of marketing in Europe?
Marketing really took off around 1970. In his 1958 book "The Affluent Society," Harvard economist John Kenneth Galbraith explained that companies could no longer sell their products without taking consumer preferences into account. It was a real revolution!
How did the corporate world adapt to these changes?
Until the end of the 1960s, employees made money in order to satisfy their basic needs: food, clothing, housing, domestic devices and a car. But then they developed new aspirations, including the desire to achieve a true work-life balance and to be more empowered by their employers. The way companies are organized today reflects this evolution. Hierarchical structures have given way to flatter organizations. Companies are now more decentralized, team work has become more common and each small unit has begun to function as a profit center.
How have managers evolved?
Radically! They now also face increasing intellectual, physical and psychological pressure. After all, the risk of losing their jobs is getting worse every day. In the past, the average manager held his position for 10 to 15 years, compared with about 5 years today.
How does this pressure manifest itself?
The manager of yesteryear worked from his office and traveled mainly for pleasure, with occasional business trips. Today, he spends two days in London and New York with investors and three days in China to sign a joint venture agreement. In the past, bosses spoke to their employees and clients. Today, they spend a third of their time explaining their strategy to analysts, media and politicians. While managers must think in the long term, they also need to satisfy the short-term needs of capital markets. New actors, such as private equity and hedge funds, put even more pressure on them. Nevertheless, these actors may well enable a manager to make new choices: A manager might sell these new players parts of his company or restructure his portfolio with their money. What's more, today's manager understands the importance of communication, change and mastering marketing strategies. He's learned the art of delegating power and responsibility rather than giving orders.
Until the end of the 1960s, employees made money in order to satisfy their basic needs: food, clothing, housing, domestic devices and a car. But then they developed new aspirations, including the desire to achieve a true work-life balance and to be more empowered by their employers. The way companies are organized today reflects this evolution. Hierarchical structures have given way to flatter organizations. Companies are now more decentralized, team work has become more common and each small unit has begun to function as a profit center.
How have managers evolved?
Radically! They now also face increasing intellectual, physical and psychological pressure. After all, the risk of losing their jobs is getting worse every day. In the past, the average manager held his position for 10 to 15 years, compared with about 5 years today.
How does this pressure manifest itself?
The manager of yesteryear worked from his office and traveled mainly for pleasure, with occasional business trips. Today, he spends two days in London and New York with investors and three days in China to sign a joint venture agreement. In the past, bosses spoke to their employees and clients. Today, they spend a third of their time explaining their strategy to analysts, media and politicians. While managers must think in the long term, they also need to satisfy the short-term needs of capital markets. New actors, such as private equity and hedge funds, put even more pressure on them. Nevertheless, these actors may well enable a manager to make new choices: A manager might sell these new players parts of his company or restructure his portfolio with their money. What's more, today's manager understands the importance of communication, change and mastering marketing strategies. He's learned the art of delegating power and responsibility rather than giving orders.
In your opinion, what is the ideal manager like?
In Germany, Josef Ackermann, the CEO of Deutsche Bank, has successfully created a truly new bank in a complex environment. In the US, Bill Gates is a genius not only due to his intelligence, but also thanks to his vision of the world, his ability to motivate, his aggressiveness and his drive to win every battle. Jack Welch was also a leader with an exceptional personality: he was able to convince not only the financial markets, but also his clients, his people and politics. In France, among others, Jean-Louis Beffa, Bertrand Colomb and Anne Lauvergeon come to mind as people who are doing an excellent job.
Have you observed any new forms of management in India, China, Brazil or Russia?
No. Managers there are above all first-generation entrepreneurs. They are brilliant deal makers, but their approach isn't particularly managerial. Deripaska, a veritable Russian Bill Gates, comes to mind, as do the heads of Wipro or Infosys in India, for example.
Is American-style management experiencing its downfall, as nay-sayers have predicted?
We should never underestimate Americans, as they have all necessary financial and technological resources. They are exposed to extreme competition that Europe cannot even fathom. For the past 15 years, they have faced strong market pressure, and have gone from being an industrial to a high-tech and service-oriented economy. They have the most progressive and developed economy in the world. I think that Americans will continue to hold the golden standard with regard to global management for a long time to come.
The interview was conducted by Isabelle Hennebelle.
©L'Expansion. All rights reserved.
If you have questions or comments regarding this, or any other article, please do not hesitate to contact us:
In Germany, Josef Ackermann, the CEO of Deutsche Bank, has successfully created a truly new bank in a complex environment. In the US, Bill Gates is a genius not only due to his intelligence, but also thanks to his vision of the world, his ability to motivate, his aggressiveness and his drive to win every battle. Jack Welch was also a leader with an exceptional personality: he was able to convince not only the financial markets, but also his clients, his people and politics. In France, among others, Jean-Louis Beffa, Bertrand Colomb and Anne Lauvergeon come to mind as people who are doing an excellent job.
Have you observed any new forms of management in India, China, Brazil or Russia?
No. Managers there are above all first-generation entrepreneurs. They are brilliant deal makers, but their approach isn't particularly managerial. Deripaska, a veritable Russian Bill Gates, comes to mind, as do the heads of Wipro or Infosys in India, for example.
Is American-style management experiencing its downfall, as nay-sayers have predicted?
We should never underestimate Americans, as they have all necessary financial and technological resources. They are exposed to extreme competition that Europe cannot even fathom. For the past 15 years, they have faced strong market pressure, and have gone from being an industrial to a high-tech and service-oriented economy. They have the most progressive and developed economy in the world. I think that Americans will continue to hold the golden standard with regard to global management for a long time to come.
The interview was conducted by Isabelle Hennebelle.
©L'Expansion. All rights reserved.
If you have questions or comments regarding this, or any other article, please do not hesitate to contact us:
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