Report EVERESTAnnual WITHIN 2009
Annual Report 2009 Annual Report 2009
Copenhagen Consulting Company
CONTENT
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Message from the board
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Everest within
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Developments at CoCoCo
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NORDIC EXPANSION ++
15 17 23 27 31 35 39 43 47 48 50 54
CASES VESTAS – The most relentlessly committed wind power provider in the world statnett – Preparing for the next generation energy markets in Europe Carlsberg – Stepping up the game DSB – From transportation company to service provider GRUNDFOS – Building the bridge as we cross it CPH – Introducing a new and more customer-centric mindset PFA pension – Turning strategy into reality Themes Carbon on the strategic agenda THE ANATOMY OF TOMORROW’S WINNERS MANAGING GLOBALISATION
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ONwards
CONTENT
5
Message from the board
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Everest within
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Developments at CoCoCo
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NORDIC EXPANSION ++
15 17 23 27 31 35 39 43 47 48 50 54
CASES VESTAS – The most relentlessly committed wind power provider in the world statnett – Preparing for the next generation energy markets in Europe Carlsberg – Stepping up the game DSB – From transportation company to service provider GRUNDFOS – Building the bridge as we cross it CPH – Introducing a new and more customer-centric mindset PFA pension – Turning strategy into reality Themes Carbon on the strategic agenda THE ANATOMY OF TOMORROW’S WINNERS MANAGING GLOBALISATION
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ONwards
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Annual Report 2009
Copenhagen Consulting Company
MESSAGE FROM THE BOARD
The story behind Copenhagen Consulting Company (CoCoCo) is in many ways a story of believing in a few, but for us, vital ideals. Consider the following: • What was the reason for starting this company back in 2002? After all, the Nordic consulting industry was crowded and in the midst of a crisis. Furthermore, the high-end of the consulting industry, where we wanted to position our company, was dominated by American consultancies with strong brands and global reach • Why have we never posted a job advertisement? After all, we were in the same “war for talent” as other consultancies and industries in the years before the economic crisis and wanted to grow, and we still do • Why did we choose a delivery model that differs from the industry standard? After all, the strongest consultancies in the world were all built on a pyramid structure, allowing partners in the top to gain significant leverage through numerous young consultants at the bottom • What is the purpose of this report? After all, there is no legal obligation to publish information to stakeholders, and the industry is characterised by secrecy and the belief that professionalism means armslengths distance.
with less need for standard methodology and more focus on truly giving advice based on experience and insight. Furthermore, we wanted to demonstrate that we believe relationships to be our most valuable asset. Our internal relationships with each other and our external relationships with clients and other stakeholders. Consequently, we recruit through relationships and not through advertisements. And we interact as closely as we can with clients, engaging them in ongoing dialogue about their situation, expectations and needs. Our decision to publish this report, and the reports before it, should be seen as a part of this effort. Obviously, with this emphasis on client relations, it is a great joy once again to share a number of case stories from selected clients in our annual report. It is our hope that you will enjoy reading their own stories about the mountains they expect to conquer. We would like to take this opportunity to thank the CoCoCo team as a whole for an impressive year with great challenges, but fortunately also numerous professional and cultural highlights. And most importantly we would like to extend a warm salute to our clients for the trust they have shown our company.
We made these choices, and a few others, not because they were easy, but because they were necessary. CoCoCo was established because we felt that we could bring something new to the industry. Not a copy but instead an original. Offering clients a new and flexible delivery model
Christian Hvidt (chairman)
Jørgen Vig Knudstorp
Peter Lorange
General Rtd, Former Chief of Defence
CEO, The LEGO Group
Dr., former President of IMD
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Climbing to Camp II, Advanced Base Camp, at 6,500 metres MOUNT EVEREST
Copenhagen Consulting Company
EVEREST WITHIN 2009
The year gone by was a remarkable one – for CoCoCo and for many other companies. It represented the end of the single-digit decade, and the end of the double-digit growth rates. It was a hard year, possibly the toughest in CoCoCo history. But it was without a doubt also a fantastic year in many accounts. The recession proved to be a unique opportunity to demonstrate that the Board and employees of CoCoCo are prepared to stand by our values, even when there is a price to pay – we decided to stand by our employees during the first half of the year when demand was weak and the industry was downsizing.
“It is not the mountain we conquer but ourselves” Edmund Hillary First man to reach the summit of Everest (with Tenzing Norgay)
We would have been happy with this decision even if demand had remained weak but fortunately we worked our way up Everest – and saw a strong third quarter, and a fourth that turned out to deliver the best performance ever. In my mind, the entire CoCoCo civilisation climbed Everest during those six months. Indeed a fantastic year. Besides the strength of the values that hold this company together, and the power of a unified, talented and prepared team, we will remember 2009 for the on-going cooperation with a wide range of the most interesting and prestigious clients in the Nordic region. For the publication of two highly successful business books – not least the “Climate Agenda”, which rocketed to the second place on the business bestseller list in Denmark, it is now close to a fourth edition and has just been released in Norway. For the “Leading in turbulent times” seminars in Copenhagen and Oslo, conducted by our board member Professor Dr. Peter Lorange. For the “Carbon Management on the Strategic Agenda” seminar which was a milestone in CoCoCo’s history with an impressive line-up of speakers
including Deputy Prime Minister Lene Espersen as the most prominent, and an equally impressive line-up of people in the audience. For massive press coverage in Denmark as well as in Norway. And for all the fun. Some of the most fun and memorable moments include our trip to Venice in late summer and our stay at the San Clemente Island off the coast, where Pilgrims to Venice have been welcomed since 1131 – many of us will remember not only our stay and the workshop at the island, but the spectacular view of one of the world’s most beautiful cities. The two classic “Club CoCoCo” evenings at the Copenhagen office, both with over 400 guests, will also be remembered. And as it was the case last year, 400 people with cocktails might seem as a challenge. It is easily manageable compared to the 84 children we had stampeding the offices during the traditional Christmas celebrations with our families. We came out of 2009 stronger than ever, not only in financial terms, but also in mental and cultural terms – we conquered our inner Everest and now it is onwards, perhaps to the moon.
Torsten Hvidt Managing Partner
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Annual Report 2009
Developments at CoCoCo
2009 has become a year to remember. If not for the financial results achieved, then for the unquestionable proof of the CoCoCo business model and the strength of our client portfolio. If not for the remarkably sluggish demand in the spring of 2009, then for the all-time high activity level experienced during the autumn. And finally, 2009 will be remembered, if not for the discontinuation of our small Middle East operations, then for the continued success of our successful “Nordic Presence, Global Reach” strategy. Compared to the record year 2008, our top line dipped in 2009. But it could have been much worse in a year where most businesses and consultancies experienced just how quickly demand can dry up and how quickly management can become disoriented. A reminder of the old truth that success is critically dependent on management’s ability to anticipate market developments, be close to customers and translate these insights into actions that can confront and cope with reality. Recovering At CoCoCo, we decided to adopt the following countermeasures in order to manoeuvre through the crisis: • Discontinuation of our ventures in the Middle East • Reiteration of our Nordic presence, Global Reach strategy • Launch of a Pan-Nordic Refuse-to-Lose sales strategy Underpinning our recovery strategy was the objective of winning market share in a shrinking market and solidifying our position with blue chip clients across selected industries that were either resistant to or hit hard by recession. The recovery strategy proved successful and in the second half of 2009, we experienced record high activity with clients in retail, energy, transportation (incl. shipping, rail and aviation), media, telecom, manufacturing and finance, among others. Most of the work was delivered for and
with global organisations and as such proved that our approach to management consulting resonates with the requirements of clients who prefer seniority and experience over consulting engagements based on standard methodology. Focusing Throughout 2009, the market developments have led to an increased focus on assisting our clients succeed with their most critical business endeavours. Similarly, developments have led us to reiterate our fundamental values, coined “Relationships & Results” – at CoCoCo both these terms have a profound internal and external meaning. We are certain that our employees, our approach and our values constitute a winning formula, not least in strong headwind and in particular if coupled with sound management decisions and actions. The focusing of our efforts has only enhanced and sharpened our fundamental business model and did not lead to lay-offs in order to protect margins. We are continuing on the same trajectory that we set out to follow at the company’s inception in 2002. We continue to believe in rigorous analysis, reflection and originality: Pre-fabricated processes? No! Advice based on insight, experience and client closeness? Yes! By organising ourselves around well-defined industries and client teams in a network of expert teams, we ensure that our clients always work with experienced and profoundly engaged consultants that possess in-depth and cutting edge knowledge. We continue to believe in client relationships rather than client transactions. And we continue to believe in results and relationships as fundamental values both in relation to our clients and to our employees. During 2009, we have experienced a tremendous magnetic force as a top-tier employer brand, and we have managed to strengthen our team of experts with best-in-class experienced consultants within our focus areas. In 2009, we recruited more than 10
Copenhagen Consulting Company
SECTOR
Transportation 19% retail 18% energy 14% MEDIA & communications 11% manufacturing 11% finance 10% pharma/biotech 6% public 5% other 6%
27 partners / 3 new
14 level 4 consultant / 1 new
12 level 3 consultant / 4 new
12 level 2 consultant / 5 new
12 level 1 consultant / 5 new
1
2
3
EMPLOYEES PER LEVEL at the end of 2009
2008/09: 102, 15
2007/08: 114
2006/07: 86
2005/06: 80
cococo innovation
2004/05: 39 2003/04: 32
2002/03: 9
Revenue in MDKK
4
Partner
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Annual Report 2009
service lines strategy 34% commercial exellence 26% execution 20% operation 17% transactions 3%
new top consultants, 5 new business analysts and enrolled 3 new partners in the CoCoCo partnership. Finally, we continue to serve our clients within five key areas: Strategy, Operation, Execution, Commercial Excellence and Transactions, covering a spectrum of disciplines to effectively develop and drive issues on the top management agenda. 2009 proved that 34% of our revenue stems from pure Strategy work, whereas the Operational practice grew significantly compared to 2008 to make up 17% of revenue. Our Commercial Excellence practice also grew significantly to represent 26% just as our Execution practice, helping clients getting their large-scale transformation across the finishing line, now accounts for 20% of total revenue. The demand for our award-winning and renowned transaction practice was low in 2009 with only 3% of our revenue as a result of the all-time low M&A market activity. Growing With an enviable client portfolio of global clients in key growth sectors, our business model has proved its worth in the strong headwinds of 2009, and as such we feel strongly equipped to leave our current plateau and start the next ascent in our “Nordic Presence, Global Reach” strategy. This next journey has been defined as “Small Nordic Giant 2015” – a natural extension of our “Breaking Away Strategy 2010” which has now been realised.
This next step will require CoCoCo to strive for a leadership position in Denmark, grow to become a household brand for selected clients in Norway, develop into a serious challenger to US-based consulting firms in Sweden and grow with our global clients in the markets where they require our permanent assistance. It is a considerable ambition, an uphill climb in rough weather that we are relentlessly committed to undertake. Our latest move in Norway, merging our Norwegian activities with the strategy consultancy Innovation, is a step that sets us off to a good start on a long journey. However, size is not our goal. Relevance is. If we aspire to be the best, we need to be relevant to the best. To our clients, our people and the market as a whole. We picture a Small Nordic Giant growing globally with our key clients and industries – linked together as close partners like mountaineers climbing Mount Everest.
Copenhagen Consulting Company
Resting at Camp IV (7,920 metres) before the final ascent MOUNT EVEREST
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Annual Report 2009
NORDIC EXPANSION + + Our Nordic growth strategy has continued to gain momentum throughout 2009, culminating in a merger with Innovation, one of the leading strategy consulting companies in Norway. Since our entry into the Norwegian market in 2007, we have built a solid position in our traditional stronghold industries: Telecommunications, media, retail and private equity, and we have had the privilege to work for leading Norwegian clients within these industries across our service lines.
Oslo office 22 employees (early 2010)
Consolidating our position in Norway Cph office 70 employees (early 2010)
The merger with Innovation, which was established in 1992 and for many years considered one of the leading strategy consulting companies in Norway, has consolidated our position as one of the premier advisors to the largest businesses in Norway and established a significant bridgehead into the growing and dynamic energy sector. At CoCoCo, we are proud to attract such high-calibre partners and consultants, many with former senior positions at blue chip consulting companies. The merger will strengthen our company both in terms of industry insight in the energy sector, including the oil and gas sector, and in terms of building our base of experienced Norwegian consultants. As such, the merger affirms our philosophy of always having more senior consultants than juniors. Innovation’s clients represent key players within their respective industries – very similar to CoCoCo’s client base.
The merger with Innovation represents a perfect match, and we believe our clients will benefit strongly from our combined knowledge and expertise. Our Norwegian client portfolio now encompasses blue chip companies like Telenor, Siemens, TINE, Norges-gruppen, Statnett, NSB, as well as many Norwegian private equity funds. Further, this move also strengthens our foothold in Sweden with clients like Göteborg Energi and Ratos. The Oslo office in Inkognitogate counts 22 high-calibre consultants at the beginning of 2010.
Copenhagen Consulting Company
CoCoCo and the European energy sector CoCoCo’s energy capabilities now encompass several key market segments: • • • • •
Power utilities (based on power generation, downstream gas and alternative energy sources) Electricity grids – both national, regional and local Oil and gas exploration and production Oil and gas equipment suppliers Offshore services.
Over two decades of dedicated work within the energy sector, both through executive management positions in the industry and through a large number of strategy consulting assignments, the energy team at CoCoCo has worked with some challenging themes: • • • • •
Strategy for national and regional grid operators Strategy development for regional power utilities Strategy development for players within the oil and gas industry Consolidation of key players within oil and gas supplier/service sectors Entry and growth strategies for national and international players on the NCS (Norwegian Continental Shelf).
Supporting one of the leading Swedish energy companies With a turnover of SEK 5.7 billion, Göteborg Energi is the leading energy company in the western part of Sweden, providing customers with energy services, broadband, district heating, cooling, natural gas as well as the electricity supply network. CoCoCo’s energy team has been working for Göteborg Energi since 2005, supporting the company in developing a sourcing strategy for natural gas, participating in
negotiations and providing analytical support in relation to the establishment of long-term gas supply contracts. The work has also included assessments of the European market development and dynamics for small and large scale LNG (Liquefied Natural Gas) providers, as well as various studies related to European gas market developments. Following the EU’s announced economic stimulus programmes for cleantech energy programmes and the 20-20-20 targets that bind EU member states to produce 20% of their power with renewables, the industry players as well as the energy investment community will need to optimise their energy portfolios and transition their production to renewable energy sources such as wind, solar, nuclear and other sustainable energy sources. With CoCoCo’s deep spike in the energy sector, we expect to increase our foothold as one of the premier advisors on critical business issues to the energy sector, its suppliers and its carbon conscious customers. Advising a Norwegian private equity company During recent years, CoCoCo’s energy team has also supported the Norwegian private equity company HitecVision with post-merger management support to a majority of their portfolio companies. HitecVision is a leading private equity investor specialised in acquisitions and growthstage investments within the oil and gas sector in Europe and North America. The company currently manages two funds with a total committed capital base of USD 1.1 billion. The projects have focused on: • • • •
Corporate strategy development Strategy implementation Commercial due diligence Post-merger integration.
Accelerating our Nordic expansion The expansion in Norway demonstrates commitment to our “Nordic Presence, Global Reach” strategy. By the end of 2010, CoCoCo aims to establish an office in Stockholm as a response to the growing request for local people from our Swedish clients. In the period from 2011 to 2015, we plan to grow internationally to stay relevant to our global and international clients whose value chains are becoming increasingly fragmented and globalised in these years.
Cities such as Madrid, Zurich, and Hamburg in mainland Europe, as well as Bangalore/India and Shanghai/China are subject to evaluation with our largest and most important clients, following the growth tradition and client intimacy that has made CoCoCo one of the fastest growing management consulting companies in the Nordic region since our inception in 2002.
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Annual Report 2009
Copenhagen Consulting Company
cases
CoCoCo Clients take Centre Stage Exclusive stories of the “mountains” that our clients have set out to conquer to adapt to new competitive realities and increase their share of the global market place.
Some of CoCoCo’s most prominent clients have agreed to share their individual stories of the business challenges they have set out to tackle and how they have structured their projects and businesses to respond effectively to market changes. The stories range from how the world’s leading supplier of wind power solutions is transforming from a technologydriven company to a customer-focused company based on world-class capabilities in customer excellence, to how Norway’s leading grid owner is preparing for the next generation energy markets in Europe. There are stories of how one of the world’s leading breweries is launching the largest business transformation programme ever seen in the Group’s history, and how the leading Danish railway company is managing its transformation into a modern, competitive and customerfocused service provider.
You will also find the story of how the world’s largest manufacturer of circulator pumps has been forced to increase productivity and adjust to rapidly changing market conditions and how one of Europe’s largest airports has designed a strategy to accommodate the new world order in the airline industry with rapid growth in the low-cost carrier segment. And last, but not least, we bring the story about how Denmark’s leading provider of corporate benefit plans has launched their strategy execution programme in a unique and all-embracing way that will help them make the most of their strategy and turn it into reality.
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Copenhagen Consulting Company
case: vestas
Vestas is the world’s leading supplier of wind power solutions Vestas’ vision is to put wind on par with oil and gas to ensure that the world’s future energy needs are fulfilled in a sustainable way. By doing so, Vestas is determined to claim the position as the most relentlessly committed and commercially focused wind power provider in the world.
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Annual Report 2009
By morten albæk, Senior Vice President, vestas
VESTAS – the most relentlessly committed wind power provider in the world With a 20% market share in 2008 and more than 40,000 wind turbines installed in 63 countries across five continents, Vestas is the world’s leading supplier of wind power solutions. A new Vestas turbine is installed every three hours worldwide and the total installed base generates more than 60 million MWh a year – enough power to provide electricity for every household in nine countries the size of Denmark. In the recent FY2009 announcement, Vestas presented an all-time high revenue of mEUR 6,636 (DKK ~ 50 billion) and an EBIT of mEUR 856 (13%), which makes Vestas one of the largest and most profitable global businesses with HQ in Denmark.
“By fundamentally changing the commercial culture in Vestas, we will demonstrate to our customers that no other wind power provider in the world is more committed to delivering business value from wind” With the world increasingly looking towards renewable energy to substitute conventional energy sources in the quest to find sustainable solutions to meet the planet’s increasing energy consumption and dramatic climate changes, Vestas is placed in the epicentre of one of the most high-profiled global growth industries. –––––––– As the wind industry matures, we at Vestas are facing strong head wind from our competitors and from increasing demands from evermore sophisticated customers, primarily the large utilities investing in wind solutions. The
competitive pressure stems from both large scale global conglomerates such as GE and Siemens and from new Asian-based giant corporations such as Samsung and Hyundai entering our industry. Changing market dynamics resulting in sophistication of requirements The increasingly sophisticated customer requirements are a result of changing customer dynamics and consolidation among the biggest and fastest growing buyers of wind. A situation which puts immense pressure on our sales and operational performance to demonstrate return on billion euro investments and more than ever to prove the business case for our wind solutions. Faced with pressures from heated competition and changing customer dynamics, we have embarked on a journey to lead the renewable revolution by relentlessly committing to wind as the primary energy solution to the global challenges and to transform Vestas into a truly customercentric firm. We aspire to build a company and a brand with an unmatched ability to anticipate market requirements that stimulate and create new markets, and translate customer strategies into competitive priorities. A journey that started years ago, but was manifested by the establishment of a new corporate centre function (Group Marketing & Customer Insight) on January 1, 2009, charged with the mandate to orchestrate and drive Vestas’ commercial transformation from a product- and technology-oriented company to a successful customer-centric market creator. Multiple key initiatives launched in parallel to accelerate transformation The approach we have taken has entailed the following major elements: • Ramp-up of globally managed, locally anchored Market & Customer Insight organisations across seven Strategic Business Units worldwide • Internal customer excellence focus (development of touch point guidelines and customer excellence roadmaps) to introduce customer-centrism in front and back office functions
Copenhagen Consulting Company
Morten Albæk
To lead Vestas on the journey and as a direct response to the new customer-centric strategic agenda, a new corporate centre function named GMCI (Global Marketing & Customer Insight) was established in early 2008. Senior Vice President Morten Albæk was recruited to lead this critical journey for Vestas. Supported by Morten’s philosophical background, forward-looking mindset and strong business acumen, GMCI has emerged as
a strong catalyst for delivering the needed transformation and as a catapult for a change of the commercial mindset across Vestas. In addition to the direct reports from the GMCI management team, the VPs of the Marketing & Customer Insight department in each of the seven SBUs across Vestas global organisation report professionally to Morten.
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Annual Report 2009
results proved that we are tracking towards realising our commercial objectives, despite the global financial crisis.
• Customer excellence dashboard and analytics to monitor and manage Vestas’ performance towards key customers
+75 64
• Global customer intelligence function and global CRM backbone to complement market and competitor analyses
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2007
52 48
• Establishment of a Commercial Product Management Function charged with translating customer and market requirements into new competitive product developments and product launches • Design and launch of a world class Key Account Management programme providing exclusive status and commercial privileges to the world’s largest buyers of wind • Launch of a Global Market Positioning Programme entailing new brand development, clarified value proposition and establishment of a global consumerled wind movement. Fourteen months down the line, results are starting to emerge Vestas is now starting to harvest the fruits of the change process with an infrastructure, an analytical platform and a performance management structure in place to accelerate the execution of the defined commercial agenda globally.
2009
• New globally managed, locally executed Marketing Planning Process aimed at addressing the vital few customer and stakeholder groups in the global wind community
2008
• New global customer- and market-centric business forecasting and planning process (bottom-up as opposed to top-down)
2012 (Target)
• Definition of customer excellence KPIs to be regularly tracked and publically announced alongside Vestas’ financial statements to the stock market
2006
20
loyalty index
Several brick walls are still to be broken down Transitioning a diverse, technology-oriented, multigeographical, multi-divisional, multi-business unit enterprise as Vestas into a truly customer-centric firm is not a project – it is a year-long transformation. Our transformation requires determination in order to deliver superior customer experiences while upholding our ability to offer and develop world class products and technology. It is a tricky balance of being responsive to customer requirements while stimulating market demands that must be mastered for Vestas to emerge as the preferred wind partner for the biggest and fastest buyers of wind – and become an unrivalled driver of the global renewable energy agenda. But we are relentlessly committed to doing exactly that – and only by breaking down brick walls and replacing “old” habits with forward-thinking concepts and cultural changes will Vestas change the perception and performance of our 2,500 managers and +20,000 employees and emerge once again as a true market creator.
The loyalty scores that were announced during the FY2009 statement alongside the record high financial
Selected deliverables of the global commercial transformation project in Vestas (non-exhaustive list, 14 months period): Customer Analytics Intelligence • CRM • Customer Dashboard • Global Reporting Pulse Loyalty, Reputation, etc. Internal customer excellence initiatives • Customer Experience Management (Touch Point Guidelines) • Customer Excellence Roadmaps (Production Business Units & Group Functions) Commercial Planning • Customer Forecasting • Marketing Planning • Product Management and Marketing • Strategic Pricing
Key Account Management • Organisation • Governance, Performance Management, Incentives, Reporting • Selecting the Key Account Portfolio • Team Nomination and Capability Building Branding and Market Positioning • New Brand Platform • 1:1 Stakeholder Dialogue Framework
Copenhagen Consulting Company
Climbing to ”The Balcony” at 8,400 metres MOUNT EVEREST
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Annual Report 2009
Copenhagen Consulting Company
case: statnett
Statnett is Norway’s national main grid owner and operator Climate policy, EU targets and the work to develop new renewable power generation represent important driving forces behind many of the current and planned enhancements to the Norwegian central grid. This is why Stattnet is now preparing for the next generation energy markets in Europe.
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Annual Report 2009
By Gun Bente Johansen, Executive Vice President, Statnett SF
STATNETT – PREPARING FOR THE NEXT GENERATION ENERGY MARKETS IN EUROPE
Statnett is an important enabler in reaching Europe’s future climate goals. However, this role cannot be fulfilled without substantial changes in both the strategic and operational focus of the company. Statnett owns the larger part of the national high voltage electricity transmission grid in Norway, consisting of approximately 10,000 km of high voltage transmission lines as well as numerous transformer and connector stations. The company is also appointed the role as Norway’s Transmission System Operator (TSO) with an overall responsibility for coordinating the operation of the country’s electric power system, continuously maintaining the correct balance between supply and demand. The EU has set a target of 20% of energy consumption to come from renewable sources in 2020. This means that new renewable power is highly important for Norway’s contribution to European emission reductions. To achieve such high reductions, the European countries have to cooperate in order to develop cross-border transmission capacity as well as an effective single European power market. Norwegian flexible hydro power and other renewable energy sources can contribute to the EU’s climate goals and give added value for Norway – with Statnett as a key enabler. –––––––– With an industry characterised by long lead times and a traditional view on the role of national transmission power grids, we saw the need for major changes if Statnett should be able to play a proactive role in ensuring renewable energy to Europe in addition to securing the Norwegian supply. As a consequence, we conducted a thorough strategy process in 2009, which resulted in a redesigned strategic agenda setting the long-term strategic direction for the company towards 2050, with specific strategic initiatives to be implemented during the period 2009-2015. Most of our organisational units are and will be involved in the strategy implementation, closely followed by the corporate management team. Even though we are in the early stage of the implementation, we have already experienced that the new strategic agenda has changed the everyday work for many of our 700 employees.
Key strategic ambitions Statnett’s new strategy for 2009-2015 encompasses the following pillars: • Develop and upgrade current grid infrastructure (“next generation high voltage grid”) • Increase focus and investments in the northern parts of Norway • Enhance transmission capacity to the rest of Europe • Support development of new sources of renewable energy • Ensure European positions to secure effective market based solutions – providing renewable energy and stable system services from Norway to European markets. The agenda has a strong cross-Nordic focus taking into account that an integrated Nordic grid is a prerequisite for ensuring a stable and secure energy supply to both Norwegian and European energy markets. From strategy to everyday actions For Statnett’s employees and stakeholders, the strategic agenda represents a major shift in how the organisation works. First of all, a successful implementation of the new strategy requires enhanced competencies and increased capacity in the ability to manage several complex projects in parallel to avoiding any damage to the environment. Furthermore, units in charge of Statnett’s network operations are faced with new requirements in terms of offering integrated and professional services to key customers – shifting from a traditional public sector to a customer- and market-oriented management perspective. Also, the proactive role requires Statnett to work actively with key stakeholders – ensuring that decisions related to the development of the renewable energy sector are made based on an in-depth knowledge of reaching markets through modern and efficient transmission power networks.
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A number of organisational change initiatives have been initiated to ensure the successful implementation of the strategy: 1. Development of revised targets and new processes of work related to customer management and handling – including organisational structure, KAM, support systems and staff training 2. Design and implementation of organisational changes on corporate and divisional levels – including work processes, competencies, staffing, and structure 3. Redesign of current key IT-systems and procedures to ensure the same quality of data in operations, maintenance and development 4. Development of solutions for strengthening a joint Nordic energy market – including a well-functioning end user market across national borders 5. Redesign of how our employees interact with each other – including the design of new HQ offices.
GUN BENTE JOHANSEN Executive Vice President Gun Bente Johansen is heading the Corporate Staff in Statnett. The Corporate Staff includes functions such as Strategy and Organisational Development, HR, Communication and Legal which all play key roles in the ongoing strategy implementation and organisational change process. Gun Bente has a long experience from leading complex organisational change processes through her former position as head of Corporate Staff in Telenor and various other positions.
These initiatives represent only the first steps on our new path of contributing to Europe’s future energy markets while ensuring the values of Norwegian renewable energy sources. However, we feel certain that Statnett in 2015 will be considered a valuable and important enabler – seeking solutions that support an effective power market while contributing to increased accessibility to renewable energy providing both Norwegian, Nordic and European markets.
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Copenhagen Consulting Company
case: CARLSBERG
Carlsberg is the no. 1 brewer in Northern and Eastern Europe and the fourth largest brewer in the world More than 45,000 employees produce, market and sell more than 500 different beer brands around the world every day. The ambition is even greater. Carlsberg want to become the fastest growing beer company in the world. In order to do so, they are stepping up the game.
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Annual Report 2009
By Lars Krejberg Petersen, Vice President, carlsberg
Carlsberg – Stepping up the game Improving earnings in Northern and Western Europe is one of four strategic priorities for the Carlsberg Group. As a result, the Business Standardisation Programme (BSP) was launched in 2005 as a key lever for realising an average EBIT margin of 15% across the diverse European countries, where proud breweries in the Carlsberg family like Kronenbourg, Ringnes, Pripps and Feldschlössen fiercely defend local market positions. Today, BSP is one of the largest transformation programmes ever launched in Carlsberg. –––––––– A faster, smarter and leaner Carlsberg Carlsberg has an ambition to be the fastest growing global beer company in the world. Our main business priority is based on two central drivers: Increasing earnings by reducing costs and winning local market shares. BSP will enable both. By standardising our business processes we will make what we do everyday faster, smarter and leaner. We call this “the Carlsberg way”. Faster because we will optimise our processes. Smarter because we can share best practice across countries, and leaner because we can focus on value adding activities and reduce costs through economies of scale. Ultimately, the goal is to change the way we work together in the Carlsberg Group. We will go from silo-based optimisation to looking at our business from an end-to-end perspective. Carlsberg’s organisational structure is going to change with the establishment of shared service centres and centres of excellence as well as the increasing degree of compliance towards common processes and IT as we go from local processes to global core processes.
The change plan is built on four key promises. Our aim is to release energy locally. This means capturing value from the benefits of standardisation, while at the same time enabling our local businesses to respond to local markets as well as spend more time and resources on innovation and business development. Our focus is on the main ingredients. This means reducing complexity to make life and business easier and reduce non value-adding activities. Our solution is built on one tap with many flavours. With BSP we are trying to find the Standardisation Sweetspot – ie. standardise and harmonise where it makes sense and make local adjustments where needed. High degree of local involvement and ownership Lastly, our approach is straight from the bottle. We have chosen to communicate openly about the benefits as well as the downsides of the project and to be responsive to local needs and worries. The implementation of BSP has to be driven locally to succeed. Therefore, an essential element in the change strategy is local involvement and ownership. An important part of my role as programme director is to frequently visit the country management teams to inform about BSP and engage in a truly two-way dialogue. The role of the management team is to reflect on the effects of BSP to their business and give input to the criteria for success locally – how do our brands succeed across countries with strong traditions, different cultures and identities; some of them with hundreds of years old identities such as Kronenbourg and Pripps? The answer
Releasing energy locally BSP is a natural extension of the functional excellence programmes which Carlsberg has run for the past 7 years. Standardisation across functions and geographies is a logical and necessary next step. We need to consolidate and uniformise our business. And we must do so as quickly as possible – many of our key competitors started their business standardisation journey a long time ago. However, a large-scale transformation like BSP cannot be done “quick and dirty”. Recognising that the mental journey of a transformation usually takes a long time and requires more iterations than the “physical” journey of streamlining processes, organisation and IT landscape, we have put a lot of effort into establishing a solid change plan from the beginning.
BSP A Leaner, Faster and Smarter Carlsberg INTERFUNCTIONAL DRIVEN EXCELLENCE FUNCTIONAL DRIVEN EXCELLENCE
INTERNATIONALISATION VIA ACQUISITIONS the foundation of Carlsberg
1847
1990
2000
2010
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is respecting the local cultures. BSP is not a question of expanding Carlsberg all over Europe. It is a question of creating a more cost efficient organisation embracing the local cultures, maintaining the strong and individual brands and capturing the benefits from standardisation. From acceptance to real commitment We are now at a stage in the programme where BSP is no longer just a centrally driven ambition with the local countries asking why are we doing this? Through our change efforts and creative ways of engaging the organisation, we have now obtained a broad awareness and mental acceptance. The challenge ahead is to transform this acceptance into real commitment. Once the countries begin the roll-out, our key challenge will be to sustain, develop and defend our new common ways of working.
Lars Krejberg In 2008, Vice President Lars Krejberg Petersen, former CIO in the Carlsberg Group, was charged with being head of the largest transformation programme in the history of Carlsberg – the Business Standardisation Programme (BSP). BSP involves no less than eight countries, 11 functional areas, 232 processes and more than 500 managers and 10,000 employees. With his long experience in leading large-scale projects, pragmatic approach, excellent communication skills and broad Carlsberg network, Lars has succeeded in mobilising the organisation and getting Carlsberg ready for the journey ahead.
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case: dsb
DSB’s success rests upon the sum of each customer’s experience and each employee’s commitment In the last decade DSB has undergone a tremendous change from a government department to a state-owned company. It has been a period of great rationalisation and refocusing. Now it is time to go from transportation provider to service provider.
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By Søren Skovdal, ex-programme director and Malene Kingo Christensen, Head of Change & Communication, sporskifte2010, DSB
DSB – FROM TRANSPORTATION COMPANY TO SERVICE PROVIDER Imagine transforming a 100-year-old railway giant – publically owned and previously monopolistic - into a modern, competitive, customer-focused service provider. And imagine the cultural transformation this entails for the 9,000+ employees. Like in most countries, the Danish railway service (DSB) is publically owned and used to be a purebred monopoly service provider. But this situation is changing rapidly – across Europe more and more railway providers are being privatised, and competition is increasing with public tenders on more and more railroad lines. The new market conditions have forced DSB to raise the question: Are we able to compete on an open market? A benchmark report from the end of 2007 showed significant challenges: Not only were the costs higher than among competitors, but the customers were less than impressed with the services provided. The situation called for a change. –––––––– Changing tracks – The birth of Sporskifte2010 At the beginning of 2008, our CEO, Søren Eriksen, and our Board of Directors set a new vision for the future: DSB had to transform from a “traditional” transportation company into a modern, commercial service provider with about one third of its business abroad and a significantly improved reputation among customers and employees. This was not a small ambition and Søren Eriksen knew that getting our diversified organisation onboard from the very beginning was a prerequisite for success. In order to achieve this ambitious goal, a large-scale strategic transformation programme was designed, focusing on both hardcore business goals and on the fundamental cultural change needed in DSB to reach the goals. The strategy was called “Sporskifte2010” (changing tracks) and focused on four high-level goals set out by the Board of Directors. Ownership and Involvement: From Top to Bottom With only 3 years to reach the goals, we realised that we had to run fast - and we could not do it without the backing of the entire management team. The journey was planned based on the following key principles: • Creating a strong and visible leadership with the CEO taking clear ownership of the programme and process and having board members sponsor the key tracks of the strategy
• Involving 40+ key managers in the scoping of the strategic transformation programme through an intense 6 weeks idea generation process • Giving managers and employees insight into the background and focus of the programme – even before the first key decisions were made • Involving 300+ managers in driving the change in their local departments by repeatedly giving them deep insight into the programme and its results • Identifying “quick wins” and implementing them rapidly – and communicating the effects throughout the organisation, continuously and through multiple channels • Give all employees, at all levels of the organisation, the opportunity to contribute with ideas and thoughts through an “Idea mailbox” • Establishing a central programme office to orchestrate the journey • Communicating, communicating, communicating – through the entire process via a diverse and wide range of media channels A decisive factor in the successful implementation of the strategy was the intense and continuous involvement of the organisation. Engaging our managers and employees at an early stage was key to minimise resistance and increase buy-in. Among other things this meant that Søren Eriksen travelled around Denmark to engage in dialogue with the employees, making sure it was widely known throughout the organisation that Sporskifte2010 had his full backing and support. Information and communication have been intense throughout the entire process. We have used a wide range of channels ranging from traditional mass communication, More Marketoriented
More Efficient
More International
Improved Image
3% annual growth in customers
Reduce costs by DKK 400 mio.
40 mio. passengers
60 Reptrak Indeks
Status 2009: 1,0% customer growth
Status 2009: 325 DKK mio.
Status 2009: 55 mio. passengers by the end of 2010
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to dialogue meetings, a web portal, conferences for our 350+ managers etc. ensuring that the employees at all times knew the results, the actions and the wins of Sporskifte2010. Establishing a central programme office was critical to anchor the knowledge of the project, measure progress and benefits, continuously communicate about the process and to keep momentum. This has been paramount to a successful implementation. Reaching the destination No doubt that the transformation has been very challenging. Transforming such a big organisation is never easy. But by focusing on the change side of the strategy programme from the beginning, engaging in dialogue with the organisation and checking up on progress and visibility of the transformation process through periodically conducted Barometers of Change, we were able to ensure both involvement and ownership of the programme at many levels in the organisation. This was not just another grand plan, sketched up in a boardroom and left for a few people in the programme office to carry out, but a genuine, unified journey that involved and affected everyone, everywhere in the organisation.
Søren Skovdal Søren Skovdal is former Programme Director of Sporskifte2010. Søren came from DSB’s finance department and has spent 2+ years being head of the programme office running Sporskifte2010. He was recently appointed head of “Kort&Godt” – DSB’s 95+ retail stores, a separate business unit in the organisation. Malene Kingo Christensen Malene Kingo Christensen is Head of Change & Communication in Sporskiftte2010. Malene has been the chief architect behind the highly engaging and involving journey that has characterised the strategy implementation of Sporskifte2010. Malene is still part of the programme office – making sure Sporskifte2010 reaches its final destination. In this, the final year of Sporskifte2010, the overall goals for the programme are close to being met, and in some instances exceeded. This has been a tremendous journey for DSB – proving how far we can go when everyone is onboard and giving us the courage to raise the bar of what we can achieve together in the future.
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case: grundfos
Grundfos is the world’s largest manufacturer of circulator pumps, covering about 50% of the world market Founded in 1945, the company represents proud traditions and a strong business foundation. However, changing market conditions, have forced Grundfos to increase productivity and change the game – adjusting to a new world.
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By Niels Møller Jensen, Managing Director, Grundfos A/S
GRUNDFOS – BUILDING THE BRIDGE AS WE CROSS IT Is it possible to build a bridge while you cross it? The answer is yes. We did it. We changed the game. The Danish production company Grundfos A/S represents the core entity of the Grundfos Group. With a yearly production of approximately 5 million pumps distributed and sold globally through 70 sales companies and 14 production companies within the group, Grundfos A/S is contributing with about 35% of the total group value creation. In the early spring of 2009, Grundfos A/S, as so many others, experienced serious challenges due to changing market conditions and the global financial crisis. Within six weeks, sales dropped 50% and the lack of new orders painted a gloomy picture of the future. This was in fact the first time since the foundation of Grundfos in 1945 that Grundfos experienced anything but steady growth.
“Ultimately, we need to change the game – adjusting to a new world” As a result, Grundfos A/S was forced to substantially reduce the workforce with more than 600 employees in order to cut costs. However, in the midst of the financial crisis, downsizing was not enough. The crisis forced the top management in Grundfos A/S to design a new organisational structure to meet the new market conditions. This called for a more dynamic and scalable organisation designed to meet the changing market demands of the future. –––––––– Changing the game The new organisation was to produce the same quantities with 20% fewer white collar people. Focusing on creating a simple, more transparent and efficient organisation working as one company rather than separate units was seen as the immediate response – in practise moving from seven isolated factories to three integrated production chains and one common supply organisation. The new setup, we believe, will provide us with a common framework and structure that will strengthen our overall business, create a stronger foundation for prioritising the resources
and thus create more profitable efforts throughout the organisation. The overall strategy remained the same, but the structure of the organisation was to undergo a severe transformation. We called it “changing the game”. New world, new game. Due to the immense financial pressure on Grundfos A/S, time was an important factor in the transformation process. This called for a quick implementation of the new organisation to regain foothold in the industry. As a result, we had to implement a new organisational structure even before every detail of the plan was ready. In other words, we had to build the bridge while crossing it. At the time we did not know all the answers to the critical challenges we faced, but we knew we could rely on the competencies and determination of our middle managers. Our approach was simple and straightforward – we made it clear that we needed to find answers together and within a much accelerated time frame. By engaging managers and being honest about the severity and uncertainty of the situation, a very focused and committed attitude emerged, making way for the needed transformation of the organisation. Transforming the organisation in six steps The transformation of Grundfos A/S’ organisational structure took place in the following six steps: 1. Developing an Organisational Blueprint by gathering the top 10 management to discuss and form the overall structure and framework of the new organisation 2. Preparing for the changes and building management commitment. Focus was on their role as change agents and how each of them was expected to contribute to a successful transformation 3. The kick-off and communication informing all employees in Grundfos A/S of the new organisation to ensure a common understanding of the change 4. Involving all managers in defining the new roles and ways of working in their own organisational unit 5. Establishing new goals and KPIs and creating clear roles, responsibilities and organisational interfaces 6. Finalising the implementation of the new organisation through rigorous follow-up and adjustment focused on individualised efforts. Now that Grundfos A/S has almost crossed the bridge, it is time to finally anchor the changes into the new organisation and ensure that it becomes as efficient and
Copenhagen Consulting Company
successful as possible in our effort to regain profitability. Focus has moved from the overall framework to individualised efforts of specific departments and managers. The results are already starting to emerge; the last quarter of 2009 showed an increase of turnover which the new organisation managed to handle without any significant problems. As a matter of principle, the process is scheduled to end after the first half of FY2010. Our extensive transformation process has required significant efforts and man hours, and our energy must now be redirected to generating growth and developing the business going forward within the context of our new organisation. Ultimately, we need to change the game – adjusting to a new world.
Niels Møller Jensen To lead Grundfos A/S out of the severe challenges caused by the financial crisis, the company was forced to transform into a simpler and more efficient organisation. As Managing Director of Grundfos A/S, Niels Møller Jensen was charged with the difficult task of implementing a new organisation at an almost impossible pace. With his more than 10 years experience within Grundfos, his deep knowledge of the core business, the organisation and the people, along with his sound and honest leadership, Niels has succeeded in leading the organisation back to growth and profitability.
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case: CPH
Copenhagen Airport is among the 10 biggest airports in Europe with more than 9.4 mio. passengers departing annually However, ambitious growth goals, a vision of becoming the world’s best airport combined with increasing competition among airports call for a new strategy – introducing a more customer-centric mindset in the organisation.
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By Brian Petersen, CEO, Copenhagen Airports
CPH – Introducing a new and more customer-centric mindset The aviation industry has taken its toll the last couple of years, struck by record high fuel prices and a world economy falling into a deep slump, forcing passengers to stay grounded. While the network carriers have suffered from falling passenger numbers, the crisis has in fact proven to be an opportunity for the Low Cost Carrier (LCC) segment which has experienced a passenger growth of more than 5% in 2009. In the following years, this gap is expected to grow even bigger – shifting the balance of world aviation. Copenhagen Airport (CPH) is among the 10 biggest airports in Europe with more than 9.4 million passengers departing from the airport every year and more than 21,000 employees working in different companies at the airport. In 2009, the profit dropped 25% compared to the year before reaching a level of DKK 861.7 million and placing an immense pressure on the airport to ensure new ways of increasing growth in 2010. In the light of the development in the LCC segment, a new low cost pier at CPH will form an important strategic initiative in 2010 focusing on attracting more low cost airlines. In the early summer of 2009, CPH gained a great deal of public attention initiated by challenges with baggage failures and security delays, followed by the severe financial crisis of our key partner SAS, who accounts for almost 50% of all traffic in CPH. Compared to 2008, CPH was looking at a drop in passengers of more than 10%. Combined with a low growth rate compared to other European airports (2004-08: 3,1% vs. 5%) and a growth in long-haul travellers at only 25% of average, it became apparent that the competitive position of CPH had been severely weakened. –––––––– Accordingly, it was evident to the top management that for too many years CPH had been focusing more on internal processes than on the needs and behaviours of our core customers – passengers as well as airline partners. CPH had been heavily relying on the key partner SAS, and had not kept up with the radical changes in the industry, most importantly the rapid growth of the LCCs – generally growing more than twice the speed of traditional airlines. Falling behind in a fast moving industry like aviation is critical, and to CPH it meant that we had no clear strategy on how to attract and serve the increasingly important LCCs. Understanding the customer In the autumn of 2009, CPH top management designed a new strategy aimed at transforming CPH into a more agile and customer-centric organisation. In reality this
meant creating the ability to put ourselves in the shoes of our passengers and take responsibility for optimising all elements of the value chain which are critical for the passengers’ experience of the airport. Our strategy includes not only the elements which we operate ourselves, but also the parts of the value chain which are operated by our partners, including airlines, handling agents, and shop owners. At CPH we have traditionally defined ourselves as an infrastructure provider – focusing on the technical uptime in baggage handling and financial risk with shop concessionaires. But passengers are concerned about whether there is a queue at the check-in, if they can find clean toilets, or if they can get a good meal at a fair price – they do not care about the individual steps in the airport process or the technical details of our work. Customers care about the total travel experience. And so must we. Unifying a diverse management team The process of designing the new strategy was tailored around an intensive three month period involving the entire management team in a series of workshops and debates on CPH’s strategic challenges and options for the future. At the end of the process, the management team fully agreed on key themes of our strategy and the required strategic initiatives to execute the strategy. Regaining growth One of the key initiatives in the strategy is the ambition to become a “dual airport” with equal focus on retaining the network carriers (including SAS) and growing the LCC segment. We must provide valuable propositions to both segments by catering to their very different needs and requirements stretching from premium services to efficient and low cost alternatives. CPH must adapt to a dynamic
TOTAL LCC passengers (millions)
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2,8
3,2
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2010
3,6
2011
4,3
2012
4,9
2013
5,6
2014
2015
Copenhagen Consulting Company
market environment with SAS potentially no longer acting as an independent carrier, and with new partners entering the market. It is pivotal for our business to prepare ourselves for this new strategic scenario. This is why two important measures have been taken as part of our new strategy: The investment in a new and separate LCC pier (SWIFT) which is due to open later this year, and the new strategic partnership with SAS focusing on creating a world-class transfer process. This will reduce our minimum transfer time from 40 to 30 minutes on key destinations, creating numerous new daily connections in order to reach potentially 200,000 new transfer passengers annually. Apart from increased passenger volumes to SAS and CPH, this will also mean additional business for our shopping centre. The introduction of SWIFT will be a key strategic focal point for the entire organisation. The new pier will provide
BRIAN PETERSEN Since he took over as the CEO of Copenhagen Airports (CPH) in 2007, Brian Petersen has focused on transforming CPH into a more agile and customer-centric organisation. As overall responsible for the strategic direction of CPH, Brian has been closely involved in the strategy process as the executive sponsor for the project. With a long track record in FMCG, Brian has brought a new and unconventional market and customer oriented mindset to CPH, which so far has proven to be a key requirement for successfully driving the transformation process.
us with a strong platform for providing the product and services our customers demand. In the coming years, our key focal point is to fully harness the advantages of the new platform by further developing our customer offerings and ensuring an uplifted future.
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case: PFA pension
PFA Pension is Denmark’s leading provider of corporate benefit plans In order to become the most preferred pension company by companies, organisations, employees and members, PFA has launched a plan to become even more efficient – turning strategy into reality.
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by Henrik Heideby, CEO, PFA Pension
PFA – turning strategy into reality PFA is the leading provider of corporate pension schemes in Denmark with more than DKK 230 billion assets under management. PFA is customer-owned and thereby holds a unique position compared to most of the other Danish commercial pension companies.
In early autumn 2009, the executive management team, which had just been expanded from one to four members, got together for two days inspired by the 49er story. The objective was to translate the strategy into a concrete and tangible game plan – a transformation map.
PFA’s vision is to be the pension company that most companies, organisations, employees and members point to as the best place to have their pension plan. However, in 2006 and 2007, IT and operational challenges resulted in an – for PFA - unacceptable low customer satisfaction.
The transformation map was designed around six corridors with associated bearing points that are key to realising the strategy. The map ensures a clear focus of all projects against one of the six bearing points and a strict prioritisation of each project against each other.
In 2008, PFA launched a new strategy aimed at redefining the boundaries and perception of the Danish life and pensions industry and thereby increasing relevance and reclaiming the number one position in the minds of customers by 2015 – an ambitious effort that would place severe demands on management and employees and their ability to execute the initiatives of the strategy. However, during the first year of the strategy it became clear that the ability to execute was far from satisfactory. A long list of ideas and projects had been defined, but the ability to turn these into concrete actions and results was lacking. –––––––– Faced with this unfortunate realisation and our ambition to realise the vision by 2015, we knew something had to be done. Consequently we decided to launch a strategy execution programme with a clear goal of improving our ability to execute and turn our strategy into reality. We named the strategy execution programme “Do something!” inspired by a story from the 2008 Olympics of how the Danish gold medallists in the 49er boat class had suffered a broken mast just before the start of the final race, but returned to complete the race and win gold medals.
“Do something!” Prior to the final race in the 49er boat class at the 2008 Olympics, Jonas Warrer and Martin Kirketerp were in the lead and only had to complete the race to win gold medals. But on their way to the starting line, their mast split and what seemed
“The objective was to translate the strategy into a concrete and tangible game plan – a transformation map.” Ensuring management buy-in In order to clarify responsibility and accountability, each corridor/bearing point has been assigned to a member of the executive management team. Every Friday we meet to discuss progress vis-à-vis the transformation map and thus make the strategy part of our operational agenda. As a result, we have become intimately familiar with the progress on the vital few projects across the company and the associated resource allocations. No project is launched outside of the transformation map and the execution ability is now the number one priority of the company.
to be inevitable all of a sudden looked impossible. The two sailors returned to the dock while their dreams shattered. Not accepting defeat, their coach Jesper Bank commanded the two sailors to “Do something!” – which was exactly what the two sailors did. They scoured the dock for another boat and found the Croatian boat, which they rigged in record time and
raced back to the starting line with only seconds to spare - but in due time to win the gold medal. Why did they succeed after all? Because they had a clear game plan and as circumstances changed they were able to improvise and still fulfil their objective.
Copenhagen Consulting Company
With this approach to the strategy, we have not only set a very clear and ambitious direction for PFA, we have worked closely with all management levels (100+ people) to ensure a joint translation of the strategy into clear and tangible initiatives. To complete the equation, “Do something!” is supported by a management development programme to ensure that the required competences are present throughout the organisation not only now, but also in the future.
Henrik Heideby In 2001, Henrik Heideby was appointed CEO of PFA Pension with a mission to retain market share cost effectively and develop PFA for future growth and enhanced customer value. However 40 days after his accession, he was faced with an even greater challenge: securing the existence of PFA following the market collapse from the 9/11 terror attack.
“Do something!” is off to a good start and the first results of the strategic projects are starting to materialise. With momentum beginning to build, we are now preparing for bigger and bolder plays with initiatives such as “Asset management”, “Health” and “Senior”, which we expect will change the industry from within and ensure that we are number one in the minds of customers in the future.
The rescue plan succeeded and PFA’s image has gradually been restored. Eight years later, it was time for a new and ambitious goal – to lead PFA on a new strategic path, redefining PFA and the Danish life and pensions industry. With his background in the finance industry, his extensive knowledge of the company and his steadfast leadership, Henrik stands at the helm of the strategy execution programme “Do Something!”, ensuring ownership in the executive management team and leading PFA towards a position as the number one preferred pension company in Denmark.
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Themes
At the beginning of 2010, The Economist brought an article about consultancy fatigue in the wake of parliamentary inquiries in the UK uncovering a waste of budgets in the public sector. It stated that “…consultancy fatigue is even more pronounced than New Labour fatigue. Successive parliamentary inquiries have revealed appalling examples of waste. From the NHS to the BBC, consultants are regarded as fork-tailed devils. This counterblast against consultants is largely to the good. They have frequently left devastation in their wake and have treated the public sector as dumping grounds for airy-fairy ideas such as “transformation” that have been rejected by the private sector. They have built overly elaborate management structures that make it harder for people to do their jobs. And they have demotivated people who like to feel that they are working for the public good.”
Each year CoCoCo defines one or more “agenda setting business themes” in which we invest significant time and effort – analysing, documenting and presenting findings to our clients and other stakeholders. The agenda setting business themes serve as food-for-thought and are based on experience collected during client engagements. The themes are what we at CoCoCo deem relevant for Board and Executive Management discussions to reflect on and they are aimed at moving businesses fast forward on issues that are likely to make or break commercial success in the long run. Last year – in 2009 – we managed to successfully launch two such themes. Both where accompanied by booklets and both received extensive press coverage. In 2010, we will continue with the same aspiration and launch an agendasetting theme focusing on “Globalisation Management”.
“Consultancy fatigue” and value destruction by more or less diabolic consultants are disturbing news for everyone at CoCoCo, since our company is founded on a belief that the management consulting profession is honorable, humble and based on truly helping our clients succeed. Our company is founded on generosity, not greed – on winning relationships, not transactions. Transactions are the result of relationships. Our values ensure that we see a human being in every client and not a client in every human being. We oppose outnumbering the client team and challenge the conventional leveraged consulting model.
May 2009
September 2009
summer 2010 (exp.)
Carbon Management
The Anatomy of Tomorrow’s Winners
Globalisation Management
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Carbon on the strategic agenda
Global warming is a complicated and sometimes controversial subject where objective facts are mixed with more subjective feelings and opinions. Consequently, many companies and organisations are uncertain about the right approach to the often contradicting demands and expectations from different stakeholders and opinion makers. With our book “Climate on the Strategic Agenda” we wanted to pass on useful, relevant and fact based experiences to companies that struggle with creating successful climate strategies. The book presents some of the climate strategy front runners in Denmark and Norway, such as Novo Nordisk, The LEGO Group, Danske Bank, COOP Danmark, Posten Norway and HÅG in order to share their experiences. In addition, we present a simple yet effective way for companies to develop and implement a successful climate strategy.
“A common mistake when working with climate strategies is to make them very complicated and separated from the dayto-day business – separating the climate work in a corporate function. In order for climate strategies to make sense it is important to closely relate the climate and business strategy.”
In Denmark, the book is now printed in the third edition and has been placed on the bestseller list from the publisher Børsen Books (today: L&R Business) for several months. In February 2010, an updated version with local cases was published in Norway – the book became “book of the month” at Hegner Media, a well-established publisher in Norway. Learning from the climate front runners A common mistake when working with climate strategies is to make them very complicated and separated from the day-to-day business – separating the climate work in a corporate function. In order for climate strategies to make sense, it is important to closely relate the climate and business strategy. It is our ambition to provide clear, workable and businessorientated answers to the challenges that are top of mind with our business partners. For that reason we arranged an
exclusive seminar in May 2009 for top executives placing climate on the strategic agenda. Close to 200 executives participated in the seminar and key speakers such as Lene Espersen, Deputy Prime Minister of Denmark, Jens Moberg, Head of Better Place EMEA, and Jørgen Vig Knudstorp, CEO of the LEGO Group, came to share practices, opinions and tools on the importance of handling the climate question – the whys and hows in practice. A series of seminars is also scheduled to take place in Norway during the spring of 2010. No more talk and no more excuses Sceptics are currently pointing towards the somewhat disappointing outcome of the COP15 summit in Copenhagen in December 2009 as a proof that global warming and climate strategies are nothing but overhyped fads. However, leading companies worked hard on the development and implementation of climate strategies before the summit in Copenhagen, not because of the meeting, but because it made business sense. And obviously, they have continued to do so – regardless of how disappointing the COP15 results might be. Based on the assignments we have solved, the books and articles we have published, and the numerous conferences we have participated in, the conclusion is clear: All companies must decide and evaluate how the climate will affect their businesses – be that in the form of risks, regulation, business opportunities or otherwise – in the short and long term. In other words, it is essential that every company develops a climate strategy that defines ambitions, initiatives and relationship, and connects clearly to the overall business strategy. An increasing part of stakeholders are not interested in excuses, but hearing what has been done, what is done and what will be done.
Copenhagen Consulting Company
Setting the public agenda Working with climate strategies has been a strategic priority for us in 2009 and will continue to be so in 2010. Sharing our experience and showing others how to work successfully with climate strategies as an integrated part of the business is essential to us. As part of this strategy, we published our book, conducted a seminar inviting high profile speakers to share their knowledge, and conducted a survey among Scandinavian consumers to identify their attitudes towards climate products – the CoCoCo carbon footprint report. Being experts on the field, the initiatives prompted a great deal of press coverage exposing our knowledge and expertise to the public. For example, the Danish business paper Børsen printed the story “Companies choke on climate strategies” on 27 March 2009 which presented our book and survey revealing that only one in ten Danish companies have a climate strategy because of an immense uncertainty of how to handle such an impalpable issue in practice.
Later in 2009, Børsen printed the results from our carbon footprint survey and an accompanying story “Consumers demand carbon labels on products” documenting a major untapped potential among manufacturers and retailers that do not offer the consumers what they want – climate friendly products. The survey showed that even though consumers in general are not willing to pay more for a climate friendly product, they are in fact willing to switch brands and products as soon as more climate friendly alternatives are offered. An article about the survey was also printed in the Norwegian business newspaper Dagens Næringsliv titled “Consumers don’t want to pay extra for the environment”. The survey was conducted by YouGov Zapera among more than 3,000 consumers in Denmark, Sweden and Norway.
CoCoCo has gone Carbon Neutral In addition to advising our clients on how to develop their own climate strategy and reduce their carbon footprint, we constantly look at ourselves to see how we can improve our impact on the planet. Last year, we measured our company’s carbon footprint. Not surprisingly, the analysis concluded that the vast majority of our carbon emissions came from air and car transportation. Working with customers across the globe makes it difficult to reduce this significantly. Therefore, CoCoCo has chosen to offset the greenhouse gas emissions from our business to stay true to our commitment to the climate. JP Morgan’s division, ClimateCare, became the supplier of choice. ClimateCare funds projects in energy efficiency and sustainable energy around the world to reduce global carbon emissions and is certified with Gold Standard, Gold Standard Voluntary, Voluntary Carbon Standard and VER+. We are proud to say that CoCoCo is carbon neutral. CoCoCo knows that offsetting is not the only answer when it comes to improving the climate. By constantly rethinking the ways we work, we attempt to come up with new
alternatives. We are determined to continuously identify small initiatives that collectively make a difference. As an example, CoCoCo leased three bicycles from Baisikeli (Swahili for bicycle), a social economic venture. After two years, the bikes are sent to Tanzania and used as ambulances and as means of transportation for people and goods. The bikes are an important means of transportation in Tanzania and can help improve their living standards considerably. At CoCoCo, we use the bikes as an alternative to the car when we visit our clients in the proximity of Ryesgade, Copenhagen.
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THE ANATOMY OF TOMORROW’S WINNERS 2009 has been marked by the financial crisis and the immense consequences it has brought to companies all over the world. The crisis has brought the focus of the corporate agenda back to survival instead of growth and prosperity. The gravity of the situation raises essential questions: “Who are the winners and why? What have they done differently from their less fortunate peers?” In cooperation with the Danish business newspaper Børsen, CoCoCo conducted a survey among 432 Danish companies across a variety of industries with the objective to identify the key factors that explain why some companies outperform their peers throughout and beyond the financial crisis. The survey found that 27% of companies performed significantly better than their industry peers. We refer to these as “tomorrow’s winners”. Tomorrow’s winners are the corporations that have consistently delivered extraordinary top line and EBITDA growth throughout the crisis both in absolute terms and relative to their industry peers. They were found across all industry segments and company sizes. In addition to the survey, we engaged in in-depth discussions of the survey results with eight top executives from leading Nordic companies. These discussions not only added flavour, they also added new insights to the underlying findings of how to manage successfully through the crisis. Several of the top executives have experienced the crisis at close hand, struggling with downsizing and cost cutting in time of crisis, and they all have clear takes on how to navigate the rocks and shoals.
Discussions with eight top executives • Jørgen Vig Knudstorp, CEO, The LEGO Group • Vagn Sørensen, Chairman of the Board, TDC • Christian Clausen, CEO, Nordea • Michael Christiansen, Chairman of the Board, DR • Fritz Schur, Chairman of the Board, SAS • Steffen Kragh, CEO, Egmont • Dr. Dr. H. C. Mult. Peter Lorange, President of the Lorange Institute of Business, Zurich • Christian Hvidt, Former General and Chief of Defence
The survey results and conclusions from the discussions were published in Børsen’s DK1000 business magazine in September 2009: “The winners and losers of the crisis”. DK1000 is an annual recurring analysis of the 1,000 biggest companies in Denmark, circulated to more than 70,000 readers. The survey was also published in the Børsen business paper – “Top executives haven’t learnt anything from previous crises”.
“It has to be the first and most important job to actively adjust the company. But this is also where the pitfalls are, because adjusting too hard makes it difficult to build a future. It can be dangerous if the employees experience that the company has no future and therefore flee”. Jørgen Vig Knudstorp, CEO, The LEGO Group
The survey and conclusions from the top executives gained a great deal of publicity in the autumn of 2009, which has undoubtedly supported the exposure of CoCoCo in the public debate and the strategic PR-goal of promoting our expertise and insight and sharing knowledge with our clients. The statements from the top executives confirmed the findings from the survey. What distinguishes tomorrow’s winners from their comparable industry peers is not superior technology, access to favourable channels of distribution or excellent financial control systems. It is the ability to anticipate market developments and to adapt the organisation to the new market conditions while keeping close to their most important asset – the customers.
Copenhagen Consulting Company
Adapting the organisation When looking at the ability to anticipate market developments, the CEOs state the importance of setting up early warning systems to continuously register changes in the business cycles in order to be prepared for and able to adapt to new market conditions. “I believe that the winners are the ones who see the signs early, because they have the right warning systems. They are also the ones who dare to and are capable of acting proactively. Proactively in the sense that they react when the first signs appear – before the real changes occur.”
with a pressure from short-term financial results, this is crucial to create a sound business in the long run – and as such this is what characterises tomorrow’s winners. “Cyclical changes and structural changes fluctuate in many industries. In the long run, you must be measured on the ability to handle both the cyclical and the fundamental structural changes. It is important not to get stuck in the belief that challenges are caused by the cyclical changes alone.” Steffen Kragh, CEO, Egmont
Vagn Sørensen, Chairman of the Board, TDC
However, the conclusions from the CEOs underlined that adapting to market conditions is a tricky balance between creating an agile organisation and cutting too deep into the heart of the organisation. “There are many examples of companies that have cut costs to a point where it has been devastating to the value creation. When you cut costs, you should only cut where possible.” Christian Clausen, CEO, Nordea
“In the short run, the winners may look like the ones who have cleaned up and cut costs, but in the long run they may very well be the real losers.” Michael Christiansen, Chairman of the Board, DR
The long-term perspective The important thing is never to forget the long-term perspective. Even though thinking cyclical while planning longterm is a major paradox for managers when confronted
A strong leadership Being able to actually build an agile organisation and manage the financial pressure while still planning longterm to build or sustain a profitable organisation, takes a very strong leader. This was a clear conclusion from our discussions with the CEOs who all underlined the necessity of strong leadership in order to be a winner today and in the future. “Use the power you have and use it wisely; when in charge, take control! This is one of the areas in which I think we have to improve in Denmark.” Christian Hvidt, Former General and Chief of Defence
“If you don’t believe that you are 90% responsible yourself, but you think that external factors decide for you, you have a problem.” Jørgen Vig Knudstorp, CEO, The LEGO Group
Creating opportunities A crisis is not only bad, and wallowing in wretchedness is not our thing. So when looking at tomorrow’s winners, it is paramount to remember what will get us there, the tools and the people, and which opportunities changing market conditions and even crises can create. Overcoming the crises, ascending the mountain - even when it seems completely impossible and sometimes unheard of – takes great strength, preparedness, but most of all a strong desire to overcome obstacles and visualising the goals, the summit, the “what-can-be-dones”.
Being attentive and willing to explore new ways, whether optimising or expanding the company’s foundation, outsourcing production, relocating activities, looking for ways to attract new talent or even implementing a climate strategy to reduce carbon emissions, is vital. In our humble view that is what constitutes tomorrow’s winners. “When others are in crisis, you have the chance of a lifetime.” Michael Christiansen, Chairman of the Board, DR
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Copenhagen Consulting Company
“Above all else, I should like to stress our unity as a party. This was undoubtedly the biggest single factor in the final result, for the ascent of Everest, perhaps more than most human ventures, demanded a very high degree of selfless co-operation� John Hunt Leader of the first successful Everest expedition
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Managing Globalisation
Globalisation is regaining importance on the Board and Management agenda. Volvo is now Chinese, Jaguar is Indian and headquarter functions are being offshored to gain access to talent and innovation at lower cost. But why the rush? A recent European survey concludes that 70% of offshoring is motivated by cost savings, 50% by quality improvement and 40% by improving route-to-market. Global competition is altered significantly as a consequence of the massive relocation of jobs to low cost areas and the emergence of new giants in the marketplace. These changing global industry structures set new standards for low cost production in labour intensive industries like automotive producers, shipyards, software engineering, semiconductors etc. In addition, it allows emerging economies like China, Russia, India and Brazil to reclaim their political influence and influence global trade patterns and competition.
“We have come to acknowledge that the Chinese are incredible skilled and their products are good… If you think you can compete against them on quality you may fool yourself” Head of global Business Excellence Nokia Siemens Networks, Jørgen Laustsen
In response to rapidly changing globalisation trends, Nordic companies have picked-up the globalisation agenda – this time not solely as a cost strategy, but a business strategy which we label “total global strategy”, because it is about finding the optimal structure, location and governance to adapt to the new global reality.
The growth in cross border investments (FDI) as a measure of globalisation has been 20-40% per year in the past 20 years, with a few exceptions. The threshold for competition has changed. Today, many Scandinavian companies relocate the activities that are needed to maintain competitiveness, and to exactly those locations which offer the best “value” based on the predefined set of requirements. National considerations and the preservation of jobs are rarely seen as dominating objectives, despite governmental stimuli packages. Most companies find themselves challenged by the need to change structures and governance as a result of changes in their choice of optimal location of activities. As the value chain is being dispersed globally, the organisational complexity grows and so do the inherited challenges of managing cultural diversity. The gravity of decision making shifts from the corporate origin towards global hubs.
Total Global Strategy During our assistance on several globalisation studies throughout 2009, we have come across three essential questions that most businesses looking to reap the benefits of globalisation should ask themselves in the wake of the new challenge: 1. How do you assess your globalisation potential and design an operational framework for globalisation? 2. How do you identify specific projects and activities that will improve your business through globalisation? 3. How do you build and manage a global company with no central location of corporate centre functions? For most companies, 90% of sales, 2/3 of total production, and more than half of the company’s R&D and development activities are handled outside the originating country. And that is when traditional governance starts to fail. In fact, many international companies are tied up in a matrix organisation across multiple time zones, doing strategic planning, budgeting, business development, coordination and drawing upon mutual support centres etc. – all this to facilitate development, design, production and distribution.
The result is teleconferences around the clock, endless business travels, numerous coordinating boards and committees providing more dialogue than decisions. On top of that, people are exposed to power struggles and ongoing reprioritisation. This is a huge drag on personal energy and the real downside is that it hampers the ability to take real advantage of the global presence; i.e. we fail to fully empower the local talent.
“It has taken us seven years, but now it is a machine” says Cisco CEO John Chambers commenting on the implementation of a matrix organisation in Cisco – Cisco has 66,000 employees globally that do 5,500 internal TelePresence meetings a week which helped to cut travel budgets by USD 290m” The Economist
DEALING WITH COMPLEXITY CoCoCo is currently exploring issues like these with our clients. Globalisation is often seen as an incremental journey which leaves old decision structures and decision making processes unaltered. But findings so far suggest that real progress is made only when historical governance structures within the company that limit the ability to perform locally are removed. The central task is to build a structural ability to execute complex decisions locally across the globe without losing the “company touch” in the overall direction of the company. And to do it at a pace outperforming the competition.
It is one of our key aspirations for 2010 to assist Scandinavian companies in their efforts to manage globalisation and to bring total global strategy on the agenda across the Nordic business arena. We look forward to discussing it with you along the way.
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ONWARDS
This was the 2009 annual report from CoCoCo. Thank you for reading – we hope you found it worth your while. When we finalised the 2008 report, we stated that our outlook for 2009 did not correspond to Picasso’s “Guernica”, but rather a vision of all the works of art in the Reina Sofia museum – some terrifying and deeply disturbing, and some filled with beauty and promise. And that particular outlook was right on the money. On that same note, our outlook for 2010 is not as optimistic and brightly coloured as most of the Miró pieces at the Reina Sofia. Some are brightly coloured, but we are also convinced that 2010 will reveal a few surprising, perhaps even disturbing, turns on the road as well. However, at the end of 2010, we aspire to present our stakeholders with a company that has an even stronger ability to serve Nordic companies locally and globally. Consolidating our position as one of the top three consulting brands in Denmark, building a position in Norway that equals the one we have in Denmark today, and establishing an undeniable foothold in Sweden.
Due to our work with a range of the biggest and most prominent Nordic companies on how to ensure optimal decisions about the geographical, structural and managerial aspects of a globally dispersed value chain, we also aspire to be able to report about a CoCoCo book and a few landmark conferences on the topic of “managing globalisation”. In any case, we hope that our mutual business relationship has led us to interact, engage and collaborate long before next years edition of this report goes into print. If not in relation to the discussion on how to manage globalisation, then some of the other business challenges on top of your agenda. Best regards, Team CoCoCo
Copenhagen Consulting Company
Reaching the top of the world at 8,848 metres MOUNT EVEREST
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Copenhagen Consulting Company Copenhagen office
Oslo office
Ryesgade 3A
Inkognitogata 35
DK-2200 Copenhagen N
NO-0256 Oslo
Denmark
Norway
Tel.:
Tel.:
+45 33 1 7 00 00
+47 22 59 36 00
Email: mail@cococo.dk
Email: mail@cococo.no
www.cococo.dk
www.cococo.no
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Annual Report 2009
Copenhagen Consulting Company Copenhagen office
Oslo office
Ryesgade 3A
Inkognitogata 35
DK-2200 Copenhagen N
NO-0256 Oslo
Denmark
Norway
Tel.:
+45 33 1 7 00 00
Tel.:
+47 22 59 36 00
Email: mail@cococo.dk
Email: mail@cococo.no
www.cococo.dk
www.cococo.no