Leveraging the Crisis

Leveraging the Crisis

Leadership Summit 2009 report Leveraging the crisis – new models, new methods, new mindsets 

Rotterdam, September 2009 --- The worldwide credit crisis has brought profound and devastating changes to the international business arena. In the wake of the crisis and with everyone looking for signs of recovery, leading thinkers in business were brought together to exchange ideas for strategies to drive business forward. The Leadership Summit was organised by Rotterdam School of Management, Erasmus University and took place in the World Trade Centre in Rotterdam on 10 September. It was opened by RSM’s dean Prof. George Yip. In his opening address, the dean underlined the leadership role of RSM in preparing future managers to connect and lead business across regional and cultural differences. 

What can we expect?  

Following a series of bailouts and stimulus packages, is the worst over? And what can we expect as we move forward? These questions were raised by Prof. Dirk Brounen as he introduced the first speaker Dr. Wim Boonstra, Executive Vice-President and Chief Economist of the Rabobank Group.

According to Boonstra, the global economy seems to be recovering, but its recovery is weak and fragile, and a redesign of the global financial architecture is needed. The dollar is adding to the instability of the global economy with the misalignment of exchange rates being a fundamental problem. But with no logical successor for the dollar, a greater role for the IMF is needed.

As to the future of banking, Boonstra sees a renaissance of ‘classic banking’ and ‘back to customer’ orientation. There is added value in diversity in financial systems, and co-operative banks add stability and have shown themselves to be relatively crisis-proof in Europe where they have suffered less than commercial banks. According to Boonstra, this is attributable to a combination of factors in their inherently conservative approach to banking. 

The business model of the Rabobank Group is basically sound, and is founded on a strong customer focus, strong balance sheet and good governance, with financial discipline anchored in the bank’s AAA rating, said Boonstra.

Strategies for sustaining growth

After Boonstra’s presentation, two companies with strategies for sustaining growth took the platform; both have ridden the storm of the economic crisis and both maintain long-term strategies while surviving in the short term. The success of Wolters Kluwer in the Netherlands is attributable to deep vertical market positions based on strong customer insights and value-enhancing solutions for customers, said Chief Financial Officer and Executive Board member Boudewijn Beerkens. The key to success for Sonae in Portugal lies in its fostering of entrepreneurship to nurture a diversified business portfolio, its access to capital for expansion, and acting locally in local markets, explained Founder and Chairman Belmiro Mendes de Azevedo

Wolters Kluwer is a global information company with revenues of 3.4 billion euros in 2008 and 20,000 employees in 35 countries worldwide. According to Beerkens, decisive action is required to emerge strongly from the recession. Sustaining the business in tough economic times requires a rough strategy to be best in class in organisation and people, which implies continuous upgrading. It also means moving the portfolio to the higher added value. Strong financial discipline is required to build and maintain a strong balance sheet, and continuous operational excellence to deliver structural cost improvements.

Sonae is Portugal’s largest and most globally active non-financial holding company with annual sales of over 5 billon euros and 37,000 employees, and a presence in 16 countries in Europe and South America. According to Mendes de Azevedo, the company is based foremostly on entrepreneurship and over 50 years of nurturing a diversified business portfolio. Growth is based on innovation and ambition; innovation in launching new businesses and ambitious international acquisitions in Spain and Brazil.

Competing in a multi-polar world

Professor Steef van de Velde introduced two speakers to discuss competing in a multi-polar world. First was Mark Foster, Chief Executive of Accenture Management Consulting and Integrated Markets, who presented his views on positioning for the upturn in a multi-polar world.

According to Mark Foster, uncertainty about upturn in the global economy is no reason to stand still. The best companies are using this period to get the basics right – cost management, cash flow, customer retention. They are taking structural steps to position themselves for the upturn, including aligning the operating model to business strategy; focusing on medium-term cost structure to enhance global competitiveness and making strategic market moves to drive growth. 

He stressed that the key drivers underpinning globalisation have not gone away, but that the economic downturn has affected the pace, decelerating it some areas and accelerating it in others. These forces will return with vengeance when the upturn comes in an environment characterised by chronic volatility in some areas and chronic stability and regulatory intervention in others. 

Organisations need to position themselves to manage risk and find strategic options, to be authentically local in their markets and to create a networked global organisation. They also need to reflect on the impact of new technology trends such as webification, cloud computing and mobility, on industry convergence and new business models. 

The remaining downturn should be used to establish operational excellence and structural competitiveness; to actively position for the upturn in current and new market areas; and to adapt business and operating model to new realities.

Doing business in emerging markets in the economic downturn 

The second speaker to consider doing business in emerging markets was Ronald de Jong, CEO Emerging Markets at Philips Healthcare. He is responsible for accelerating profitable growth in the key emerging markets of China, Latin America, India and Russia. According to De Jong, the crisis should be used as a catalyst for change. 

Philips sees many opportunities for our global healthcare business, particularly in emerging markets, said de Jong. Even with lower growth in these times of economic downturn, emerging markets are engines for economic growth. GDP is not the only indicator of economic growth, in these times economic stimulus plans are drivers of growth. 

De Jong summed up by stressing the key to unlocking these opportunities is partnership: joining forces throughout the entire care cycle – from prevention and screening to diagnosis and treatment – and with all parties involved. By working closely with doctors, hospital administrators, government representatives and insurance companies the common objective of delivering high quality, affordable healthcare for all can be achieved.