88a59fafdbe44c70bf2453ffd62ddd1a by QVARTZ

RE PO RT

SUMMER 2014

OPPOS ISS U E 07

ANNUAL

SITION

O P P OS IT IO N.Q UARTZCO.CO M

This is issue 07 of the Quartz+Co annual report

Publisher: Quartz+Co Editors: Ditte Rosing-Schow ditte.rosing-schow@quartzco.com Thomas Holm Møller thomas.moller@quartzco.com Torsten Hvidt torsten.hvidt@quartzco.com

Published in Denmark, Sweden and Norway. Printed in Denmark.

Contact: DENMARK Ryesgade 3A DK-2200 Copenhagen N Tel +45 33 17 00 00 NORWAY Wergelandsveien 21 NO-0167 Oslo Tel +47 22 59 36 00 SWEDEN Birger Jarlsgatan 7 SE-111 45 Stockholm Tel + 46 (0)8 614 19 00 INDIA MEC Intelligence 112, Udyog Vihar, Phase 4, Gurgaon Haryana, India. 122015 Tel +91 (124) 4802 700 www.quartzco.com Quartz+Co’s Copenhagen office is WindmadeTM Certified

RUNNING THE GAMUT OF P R I VAT E E Q U I T Y BUSINESS AS UNUSUAL C HA P TER ONE

C H AP T E R T WO

C H AP T E R T H RE E

25 KNOWING THE ROPES OF PRIVATE EQUITY QUARTZ + CO P E RS P E C T I V E ON

08 STRIVING FOR NEXT PRACTICE Q UA RTZ+CO PERSPECTI VE

10 CLOSING THE VALUE GAP T HE VA LUE R E A L ISATI ON PHI LOSOPHY

12 WHEN FAILURE ISN’T AN OPTION M A E R SK LI NE

14 MAKING SENSE OF BUSINESS

PUBLIC SECTOR UNDER PRESSURE

P RI VAT E E QU I T Y

26 REDEFINING MEDICAL PROCUREMENT TO REAP MUTUAL BENEFITS ONE ME D

27 SOMETIMES “NO” BEATS “GO”

31 ONE PREPOSITION MAKES A WORLD OF DIFFERENCE QUARTZ + CO P E RS P E C T I V E O N T H E P U B L I C S E C TOR

32 ALL ABOARD FOR NEW SOLUTIONS NS B

NE TS H OL DI NG A/S

28 JOE IS MORE IMPORTANT THAN HIS JUICE JO E & T H E J U I C E / VAL E DO

Q UA RTZ+CO A N D RED ASSOCI ATES

34 SLABA BANKA B ANK ASS E T MANAGE ME NT COMPANY

16 CONNECTING OIL RESERVOIRS AND TALENT POOLS M A E R SK GROUP

19 B2B COMPANIES ON THE EDGE OF DIGITAL

36 PRIVATE CAPITAL, PUBLIC CONTROVERSY

T HE IN TE R N ATIO N A LI ST DI GI TAL AWARD

GOL DMAN SAC H S / DONG E NE R GY

20 FROM POVERTY TO PROSPERITY

38 EARNING OUR PLACE AT THE ROUND TABLE

VE STAS W IN D SYSTEMS

P U B L I C S E C TOR WORK

Contents

CONNECT TO THE WORLD

W H AT K E E P S ENERGY LE ADE RS AWAK E AT N I G H T ? C H AP T E R F I V E

MOVING FO RWAR D, LOOKING BACK

C HA P TE R FOUR C H AP T E R S I X

41 KEEP ON CONNECTING

51 TOUGH QUESTIONS FOR ENERGY ELITES QUA RTZ + CO E NE RGY S E C TOR P E RS P E C T I V E

Q UA RTZ+CO PERSPECTI VE

42 GREATER THAN THE SUM OF ITS PARTS

58 ICONIC MOMENTS

52 END TO THE GRIDLOCK THE NORWE GI AN E L E C T RI C I T Y MARKE T

PA RTN E R SHIP W ITH MEC I NTELLI GENCE

44 LIKE WILL TO LIKE

53 TREAT OFFSHORE AS OFF SHORE REDU C I NG T H E COST OF E NE RGY

N E W PA RTN E R S IN QUARTZ +CO

46 THE NEXT GENERATION OF DOG-BITERS

54 SHIFT IN GRAVITY WITHIN OFFSHORE WIND R E P ORT BY QUARTZ + CO

Q UA RTZ+CO R E C RUI TMENT CAMP

55 CLEAR STRATEGIES FOR A CLOUDY FUTURE B L ADT I NDU ST RI E S

60 ONWARDS E P I LOGU E

47 SCANDINAVIANS ARE OBSESSED WITH HIPSTER MOMENTS C ULTUR A L O B SE RVATI ONS FROM OUR IN TE R N ATIO N A L COLLEAGUES

48 THE US IS ONLY FOR THE TOUGHEST WARRIORS

56 FUELLING THE GROWTH ENGINES OI L GAS DE NMARK

Q UA RTZ+CO B A ROMETER 2013

Contents

E DI TORI AL

OPPOSITION Two-time Pulitzer winner Walter Lippmann once said: “Opposition is indispensable. A good statesman, like any other sensible human being, learns more from his opposition than from his fervent supporters”. And indeed, without opposition we wouldn’t have heard about good statesmen like Gandhi, Mandela, Havel and Suu Kyi, just to mention a few. The democracy and the freedom of billions of people have depended on figures of opposition like these. We wouldn’t be struck when seeing Picasso’s Guernica, inspired when reading Hemingway’s A Farewell to Arms or overwhelmed when listening to Pink Floyd’s The Wall, had these artists not been in ardent opposition. And when you think about it, would we be able to enjoy a game of football or chess, or a meal Even though we are firmly at NOMA, or use our rooted in the traditional, iPads if it wasn’t for the professional values of concept of opposition? tier-one management

consulting, we founded this company with the clear intention of changing the industry from within.

Opposition is indispensable. Also for management consultants, if they are to change the status quo in various situations. At Quartz+Co, it’s even more than that. Because even though we are firmly rooted in the traditional, professional values of tier-one management consulting, we founded this company with the clear intention of changing the industry from within. We want to combine the ability to tackle and solve complex problems with the ability to engage and mobilise client organisations. Rigorous analysis hand in hand with behavioural change. A quick glance at the term “to oppose” in the dictionaries provides the following definitions: “to fight”, “to compete against”, “to disagree with” or “to counterbalance something”. And, as this report will show, we are indeed fighting, competing, disagreeing and counterbalancing the establishment together with our clients. In the following pages, we have selected a few cases and stories about our work with clients and other external partners that prove this point. On the internal side, we saw a little opposition to business as usual as well: opposition to obscurity and anonymity. For example when our offices at different points in time were transformed into night clubs, with artists such as Oscar Lindros and Oh Land performing live for over a thousand guests. Or during our annual soccer tournaments in Denmark, Norway and Sweden, where we challenged prominent accounting, law and consulting firms for a day of fun. And when we invited clients such as Novo Nordisk, Grundfos and TDC to join our CSR initiative, helping African entrepreneurs succeed, or welcomed graduates to our two-day Recruitment Camps, a new hiring experience that gives us and our potential future colleagues a chance to get to know each other. This report is about a great year at Quartz+Co, but even more so, it’s about a number of courageous companies who chose opposition, either to competitors, obscurity or business as usual. We hope you will find it inspirational. —TEAM QUARTZ+CO

Editorial

CH APT E R O NE

BUSINESS AS UNUSUAL

A constellation of dissimilar circular forms created with one Ø 140 mm ferrite ring magnet, one Ø 60 mm ferrite ring magnet, one Ø 60 mm ferrite disc magnet, two Ø 20 mm ferrite disc magnets and 850 grams of iron filings.

Business as unusual

ENO RETPAHC

SA SSENISUB LAUSUNU

Business as unusual

I NNOVATI VE SO LU T I ONS TO ST RAT E GI C C H AL L E NGE S

STRIVING FOR N E X T PR AC TICE QUARTZ + CO P E RS P E C T I V E

Next Practice consulting must strive to be the change, not just a merchant of transition.

Established companies have traditionally experienced difficulties with innovation, partly due to their path-dependent nature of maintaining traditional practices even when better alternatives exist. In this chapter, you can read about companies that have succeeded in breaking the mould. Some have challenged the traditional approach to understanding the market and customers by applying the process of sensemaking. Others, such as Maersk Group, have invited people to compete on their knowledge of the oil industry in Quest for Oil, the first real-time strategy resource management game, to address recruiting challenges. And Vestas counterbalances the traditional philanthropic approach to CSR through Wind for Prosperity, a commercially viable business model that is attractive both to investors, local business partners and society, which will bring energy to more than one million people and developing countries worldwide. Next Practice consulting must strive to be the change, not just a merchant of transition. It relies on a continuous movement: one that never reaches an ultimate goal bringing the journey to its completion. It must constantly challenge the status quo in order to be relevant to clients. Innovation is difficult, but approaching it systematically with customised and connected solutions greatly increases the chance of success. Our clients have shown how “business as unusual” has served them well in creating new methods, products and services, and consequently carved out value pockets that would have been unInnovation is difficult, attainable if applying but approaching it more traditional pracsystematically with tices. customised and connected

solutions greatly increases the chance of success.

NEXT PRACTICE

Quartz+Co was founded on a prevailing attitude and not based on a temporary truth or a momentary pain in the market. We are the change, not just merchants of transition. We are not a company, we are a collective, a civilisation. A movement of many. Tomorrow is never here. We will never reach a goal that will bring our movement to its completion because our purpose in management consulting is to devise Next Practice.

WHAT WE OFFER TO OUR CLIENTS

First-tier consulting skills

– insight and experience delivered with integrity Flexible approach

– matching team and skill configuration to client needs People centrism

– mobilising client organisations’ energy and capacity

WHAT WE OFFER TO OUR PEOPLE

Leadership through followership

– creating leadership opportunities as early as possible Individualised career development

– providing accelerated learning and career ownership Opportunity to influence

– offering room to create, build and be entrepreneurs

Business as unusual

THE CFO APPROAC H TO C H ANGE MANAGE ME NT

CLOSING T H E VA L U E G A P THE VALU E RE AL I SAT I ON P H I LOS OP H Y

All too often, we hear stories of large strategy projects that have lost either direction, momentum, or both. They were all launched based on attractive business cases, with funding and endorsement from both top management and – initially – a present, eager and demanding steering committee. They covered all aspects of change management – burning platform, stakeholder management, communication, etc., and celebrated kick-offs, quick-wins and successful pilot launches in internal magazines. Some even managed to create a lasting impact. But few even came close to delivering the value that the initial business case promised. This “value gap” is an all too common outcome of strategy projects. According to a Harvard Business Review study, only 60% of promised value gains are realised on average. The fundamental problem lies in the assumption that projects deliver the value. Projects don’t deliver value, people do. The fact is that the larger the proThe fundamental problem jects, the less impact lies in the assumption that they are likely to have, projects deliver the value. as they often take on a Projects don’t deliver life of their own and the value, people do.

business perspective gets lost. In a recent project, we discovered that a high-priority strategic headquarter initiative was #94 on the receiving organisation’s priority list! The need for large, successful and often rapid transformation is a given for most large corporations. Nonchange isn’t an option, so something must be The need for large, done. What we call successful and often Value Realisation is a rapid transformation is proven method for closa given for most large ing this value gap. corporations. Non-

change isn’t an option, so something must be done. What we call Value Realisation is a proven method for closing this value gap.

Value Realisation is — A shared aspiration

Value Realisation is a shared aspiration between us and our clients. It’s a commitment to do more than “get things done” and to hold each other accountable for delivering positive impact and the value which was promised.

35 — 55%

Value Realisation is — A mindset

VA LUE DE LIVE R ED

VALUE GAP

Relentless focus on realising value creates a mindset of pragmatism and accountability. Don’t make promises (or business cases) you can’t keep. Think end-to-end – when and how will value gains be realised, and who is going to institutionalise the changes necessary to realise the value gains?

VALUE EXPECTE D

Value Realisation is — A proven approach The value gap between intended and actual benefits from projects Source: Harvard Business Review: “Turning Great Strategy into Great Performance” (37% average performance loss), McKinsey-Oxford study: “McKinsey Oxford Reference Class Forecasting for IT Projects Study” (56% benefit short-fall)

Value Realisation isn’t a product of modern science. It’s not even breaking new ground. It’s a simple but disciplined approach that applies well-known concepts, deep understanding of the business, unbeatable enthusiasm and the ability to support the receiving organisation in driving its own transformation.

Business as unusual

BENEFIT CASE MAINTAIN RELENTLESS FOCUS ON THE BENEFIT CASE

The key principles of Value Realisation may look simplistic, but most leaders will know that matching the ideal transformation process with the real world is by no means an easy job. In order to realise the full benefits of strategy programmes, leaders must keep a disciplined focus on all three principles of Value Realisation:

Establish a clear and specific benefit case, which describes what you want to achieve in terms of dealing with real business pains and problems. The benefit case must be the basis for all direction setting, decision making, tracking and follow-up through the entire process â&#x20AC;&#x201C; from start to finish.

THINK OUTSIDE-IN

LEADER-LED CHANGE

USE AN OUTSIDE-IN PERSPECTIVE

DELIVER VALUE THROUGH THE RECEIVING ORGANISATION

Understand the business situation of the receiving organisation and adapt to it. Be realistic about what the receiving organisation is actually capable of achieving and about the relative importance of the initiative in this context.

Engage and mobilise leaders in the receiving organisation to drive leader-led change in order to deliver to the business, by the business and for the business. Make the benefit case tangible and assign accountability to realise value in the receiving organisation.

Business as unusual

VALUE RE AL I SAT I ON I N P RAC T I C E

W H E N FA I L U R E ISNâ&#x20AC;&#x2122;T AN OPTION SWI TC H BY MAE RS K L I NE

Over the past decades, the shipping industry has made a huge impact on the global economy by continuously offering better transport solutions. Maersk Line has been a key contributor to this development, enabling customers to deliver on their promises. Unfortunately, this value creation has not translated into satisfactory bottom line gains for Maersk Line. In the shipping industry, price differentiation is limited, which makes competitive cost performance crucial for long-term survival. In the last five years, Maersk Line has raised performance from below to In the shipping industry, slightly above the inprice differentiation is dustry average, leaving limited, which makes room for improvement. competitive cost

performance crucial for long-term survival.

Through standardisation, simplification and automation, SWITCH improves timeliness, consistency and accuracy in a cost-effective way.

To address this issue, the SWITCH programme was launched in early 2013 with the purpose of streamlining management decision making by providing timely and accurate financial data through global standardised processes made possible by one central IT system. Through standardisation, simplification and automation, SWITCH improves timeliness, consistency and accuracy in a costeffective way. Due to the importance of SWITCH and the motivation behind it, failing to deliver the promised results was not an option. Therefore, the SWITCH programme decided to follow the Value Realisation approach (see page 10 for further details) â&#x20AC;&#x201C; which applies a steely-eyed focus on the intended benefits as well as the resources and capabilities of the receiving organisation.

Business as unusual

SWITCH IN BRIEF

The SWITCH programme is focused on standardising, simplifying and automating systems and processes on one global IT platform. The programme affects two core processes of the machinery driving Maersk Line’s engine. The first process, Procurementto-Pay, deals with how to procure and, “The SWITCH programme is already well ultimately, pay for goods. Shipping is on its way to delivering the planned a cost-intensive industry – this means benefits – all less than 18 months after that Maersk Line must weigh deciprogramme initiation. The early engagement sions heavily and have an established with all stakeholders on the benefit case decision-making process for the operaand on how to realise it has strengthened tion. The second process is Accountingthe understanding, determination and to-Reporting, which deals with how willingness to take ownership” accounts are managed and how informa—CAMILLA ALM, DIRECTOR, MAERSK LINE tion is disseminated throughout the organisation to facilitate sound decision making. Essentially, SWITCH enables the organisation to base decisions on timely and accurate management information by providing efficiencies, better data quality and faster book closure.

Business as unusual

THE FIVE PHASES OF SENSEMAKING Phase 1

Frame the problem as a phenomenon —

Phase 2

Collect the data —

Phase 3

Look for patterns —

Phase 4

Create the key insights —

Phase 5

Build the business impact Source: The Moment of Clarity by Christian Madsbjerg and Mikkel B. Rasmussen

In early 2014, Quartz+Co hosted From Sensemaking to Growth, a seminar with Lars Rasmussen from Coloplast and Mikkel B. Rasmussen from ReD Associates on using the human sciences to solve tough business problems.

Business as unusual

USI NG THE HUMAN S C I E NC E S TO S OLV E B U S I NE SS P ROB L E MS

MAKING SENSE OF BUSINESS QUARTZ + CO AND RE D ASS OC I AT E S

We are working closely Quartz+Co supports clients in improving their core commercial disciplines not only from a quantitative perspective, but increasingly also from a qualitative perspective. As a consequence, we are working closely with pioneers in the human sciences in order to dive deep and get under the surface of surveys and data. In our opinion, an interesting pioneer in this field is ReD Associates, the company behind the article An Anthropologist Walks into a Bar…, published by Harvard Business Review, and the book The Moment of Clarity, a hands-on guide to using the human sciences to solve businesses’ toughest problems. ReD uses techniques from anthropology, sociology and philosophy to shed light on the big unknowns – new social behaviours, changes in market logic, new patterns in the adoption and use of technologies, changing aesthetic ideals, etc. – issues likely to pose serious challenges to incumbent firms. By looking at how people live, what they do, what their habits are and how they see the world, we can understand the “soft” factors underlying the “hard” facts we can see and measure. The hard facts can tell us what we do, but rarely why we do it. Sometimes we act rationally and consciously; other times we come home with crackers and ice cream when what we really needed was bread and mayonnaise for tomorrow’s lunchbox. In other words, we don’t always know our own motives, and when asked to articulate them, we often post-rationalise in an attempt to justify our actions. Homo Economicus, the Homo Economicus, the infinitely rational, utilityinfinitely rational, utilitymaximising individual maximising individual

with pioneers in the human that we base our linear problem-solving modsciences in order to dive els on, is a rare breed. deep and get under the Therefore, it can be surface of surveys and data. beneficial to supplement quantitative data with qualitative insights to “get people right” and ensure sustainable growth. The transformative power of customer insights

An example of the complementarity of quantitative and qualitative approaches is a project we completed in collaboration with ReD Associates for a leading, global medtech company that needed to transform its product portfolio and become more customer-centric. ReD conducted a comprehensive field study with more than 500 hours of observations, interviews and videos of customers. The results of the study were translated into a number of innovation briefs that aligned future product development with the observed customer behaviour. Quartz+Co subsequently adapted the innovation briefs for a commercial context, assessing their potential and prioritising them accordingly. A new customer segmentation schedule and a go-to-market model were designed in accordance with customer preferences. The result of the co-operation was a product portfolio customtailored to the company’s customers and a better approach to the marketplace.

that we base our linear problem-solving models on, is a rare breed.

EXTRAS opposition.quartzco.com /others

Download the first chapter of The Moment of Clarity and watch the video from the seminar From Sensemaking to Growth featuring Lars Rasmussen from Coloplast, Mikkel B. Rasmussen from ReD Associates and Hans Henrik Beck from Quartz+Co.

Business as unusual

Quest for Oil is the first-ever real-time strategy game about the oil industry. The game was launched by Maersk Group and takes the player on a quest for one of todayâ&#x20AC;&#x2122;s most indispensable resources â&#x20AC;&#x201C; oil.

Business as unusual

GAMI N G T H E WAY TO AWARE NE SS

CON N EC TING OIL RE SE RVOIRS A N D TA L E N T P O O L S QUEST FOR OI L BY MAE RS K GROU P

“New times call for new measures, and we want to use the computer game to tell the story of an extremely innovative business, which the entire world depends on, in a new and engaging way”

In June 2013, Maersk opened the door to the virtual world of oil exploration through Quest for Oil, a freely distributed gaming experience. The game emerged as a result of Maersk’s own quest to —CLAUS V. HEMMINGSEN, spread awareness about CEO OF MAERSK DRILLING the oil industry and reach a younger, global talent pool. Drawing on their vast experience from the high-tech extractive industries, Maersk tests the strategic and practical skills of the player, taking him or her on a quest for one of today’s most indispensable resources – oil. Quest for Oil is the world’s first real-time strategy game about the industry and is truly innovative in its ability to combine informational and educational elements in a format that appeals to players’ competitive instincts. It’s also a success story on how alternative channels can be used to solve companies’ strategic communication needs. Quest for Oil was developed by Quartz+Co in cooperation with Serious Games Interactive, an awardwinning, research-based developer of games, simulations and virtual worlds.

Over 40 million people have been reached worldwide

EXPLORING THE POTENTIAL OF GAMIFICATION

Drillers from Maersk playing Quest for Oil. Watch the video online at quartzco.com

With Quest for Oil, Maersk has tapped into the gamification trend and the potential it holds for creating social engagement. Gamification merges usability and behavioural psychology to appeal to user needs, encouraging collaboration and motivation by associating actions with results. Gaming breaks down a process into manageable tasks, but links them clearly to big-picture evolution. Thus, the game can be used for educational purposes both internally in the organisation and externally.

Quest for Oil has been played in over 182 countries

The number of game plays totals more than 300,000

Business as unusual

Maersk’s revolutionary game also caught the attention of highly esteemed international news outlets such as Sky News, BBC, Fox News, CNN, Forbes, Reuters, in addition to the Danish Broadcasting Corporation and the Danish television station TV2. CNN, for example, reported how “The Danish energy firm Maersk Oil has taken a new approach to boosting interest in the industry by launching a computer game that sees players fighting it out to retrieve oil from the ocean floor. Maersk launched the game Quest for Oil to highlight the complexities of oil exploration and also to inspire new recruits”. Forbes also featured the game: “Focused on strategy, the game introduces players to a remote corner of the industrial world accompanied by English-accented narration. Choppers tick away overhead, drilling apparatuses rise above the waves, and oil lies locked beneath geothermal maps of the ocean floor, where only the most skilled can find it”. “Most people take for

granted that we have oil and natural gas and not many people understand what it takes to find and produce it. The world’s need for oil and gas is leading exploration into ever deeper waters and ventures, demanding precision and cutting edge technology. It’s a sophisticated, fascinating industry and Quest for Oil offers everybody a glimpse of what oil and gas exploration is all about today”

3 (1) CNN reports how Maersk Oil is using gaming to recruit workers. (2) Quest for Oil was also heavily featured in Danish news media. (3) Jakob Thomasen, CEO of Maersk Oil, states to CNBC that he hopes to explain the oil industry to the masses and perhaps bridge a skill shortage gap.

EXTRAS

—JAKOB THOMASEN, CEO OF MAERSK OIL

opposition.quartzco.com /qfo

Watch the trailer, learn about the game’s development and educational use. Download and play Quest for Oil.

Business as unusual

VESTAS WI ND SYSTEMS AND MA E RS K B RI NG H OME DI GI TAL P RI Z E S F ROM NE W YORK

B 2 B CO M PA N I E S O N T H E E D G E O F D I G I TA L THE I NTERNAT I ONAL I ST DI GI TAL AWARD 2 01 3

On November 14, two large Danish B2B companies were honoured for their breakthrough communications approach at the Internationalist Awards for Innovative Digital Solutions 2013 in New York. Vestas’ pro-wind campaign Act on Facts and Maersk Oil’s subsurface gaming experience Quest for Oil won gold and bronze, respectively. The winning projects highlight the emerging world, social causes and purposeful branding, and display superior insight, strategy and results in the way they market their products globally. Quartz+Co’s communications and marketing strategy practice supported in developing and rolling out both of the award-winning digital concepts. “Many B2B companies have realised that there is immense potential in using digital and social media technology to target audiences that are otherwise difficult to reach at a relatively low cost”, says David Heilmann, Engagement Partner and Digital Strategist at Quartz+Co. “Act on Facts and Quest for Oil are two examples of On November 14, two how business strategy can large Danish B2B companies were honoured be converted into effective activation concepts, thus for their breakthrough communications approach creating awareness and engaging stakeholders in at the Internationalist new ways”. Awards for Innovative

Vestas’ Act on Facts campaign aims to counter anti-wind power movements by providing fact-based information about the misconceptions related to wind energy, disseminating information on pro-wind activities and delivering vox pop video content. It debunks myths about the wildlife impact, health risks and efficiency of wind turbines, among others.

Digital Solutions 2013 in New York.

Business as unusual

CONTINUE ONLINE Links Join the Act on Facts movement actonfacts.org —

Play Quest for Oil questforoil.com

COMME RC I AL I NNOVAT I ON

FROM POVE RT Y TO PROSPERITY WI ND FOR PROS P E RI T Y BY V E STAS WI ND SYST E MS

North Horr, Kenya, may not always have access to food and clean water, but this remote community on the edge of the desert has one resource in abundance – wind.

An abundance of wind is the key to Vestas’ latest commercial innovation programme, Wind for Prosperity, which, by cross-mapping global wind currents and health data, is in the process of bringing energy to more than one million people in developing countries over the next three years. Wind for Prosperity is neither philanthropy nor development aid. It’s a commercially viable business model that seeks to attract private investors. Perhaps this is why the programme has received backing from a range of influential persons, from UN General Secretary Ban Ki Moon and business magnate and founder of the Virgin Group, Richard Branson, to Jeffery Sachs, renowned economist and leader in sustainable development, alongside others.

Wind for Prosperity combines two data sets: global wind currents and child mortality rates. Locate the areas where winds are strongest and mortality rates are highest, and the result is a map of poor, rural communities without access to reliable electricity, but with an Wind for Prosperity abundance of wind recombines two data sets: sources. It’s the lives of global wind currents and these 100 million peochild mortality rates. ple that Vestas seeks to improve in the long run. The programme will create social and economic benefits, which are currently scarce or lacking in the affected communities, such as access to clean water, healthcare, irrigation, education and a communication infrastructure. Additional opportunities are being explored in countries such as Zimbabwe, Lesotho, Jordan, Indonesia, Pakistan, Vietnam and Nicaragua.

1.3 billion people around the globe live without access to affordable and reliable electricity

+100 million people live in areas with poverty and abundant wind resources

7,000 wind turbines will be deployed in rural communities through Wind for Prosperity

Business as unusual

Wind for Prosperity managed to attract attention from international as well as Scandinavian news media. The New York Times describes how Wind for Prosperity “aims to start supplying electricity next year to more than 200,000 people spread across roughly 13 communities in Kenya. The company plans to replicate the project elsewhere in Africa and in Asia and Latin America, using refurbished wind turbines in tandem with diesel generators to cut power costs by at least 30 percent”, while the Guardian emphasises as especially interesting “that Vestas aims to show that the do-gooder projects can also be profitable. It Wind for Prosperity was hopes to attract a varilaunched in New York ety of private investors, in November 2013. The including corporate ininitiative managed to vestors, to help finance attract attention from the program”. international as well as

Join the conversation on Twitter #wind4prosperity

Scandinavian news media and has received backing from a range of influential persons.

Business as unusual

HYBRID TECHNOLOGY TURNS WIND INTO VOLTAGE

“Well, I’m convinced that all businesses that will succeed in the long term will be those who manage to balance their pursuit of profit with a consideration for this beautiful planet and the needs of its people. These aren’t mutually exclusive goals, and there are many examples that show how it can be done. One such example is the Wind for Prosperity initiative launched by Vestas Wind Systems and their partner Masdar. Wind for Prosperity looks to address the momentous challenge of energy access. Well over a billion people worldwide continue to live without any access to clean power to light their homes and power their stoves. This affects their health, their livelihoods, their chances at prosperity. It disempowers women and puts children at risk. It’s an unacceptable situation, and we’re inspired by Vestas and Masdar’s vision to change it. Both have joined forces to develop a model that will bring clean and affordable electricity to communities that have never experienced it. Wind for Prosperity has enormous potential to change millions of lives forever while sustaining our planet and turning a profit”

The Wind for Prosperity project couples robust, factoryrefurbished wind turbines and advanced diesel power generators to create a hybrid system well-suited for operation on mini-grids in remote locations with limited infrastructure. Wind for Prosperity – a partnership between Vestas and, among others, Masdar, the Abu Dhabi renewable energy company – aims to supply clean energy to hundreds of thousands of people across multiple communities in rural areas within the coming months and years. The project will supply electricity at a cost which is at least 30% below the current price of diesel-generated power, the only viable alternative for populations currently living without or with very limited access to electricity. Developing the technology, however, wasn’t the most complicated part of the Wind for Prosperity initiative. “We decided we wanted to develop a technology solution that’s also a commercial solution, and it will enable us to bring wind energy to millions of people. Finding the technology solution hasn’t been the most difficult thing. The most difficult part is designing a business model that makes it attractive to investors, local business partners and the society”, says Morten Albæk, Group SVP and CMO of Vestas and the pioneer behind the programme.

—SIR RICHARD BRANSON

EXTRAS opposition.quartzco.com /wfp

Learn more about the business model and vision behind Wind for Prosperity and watch the interview with Sir Richard Branson about business as a force of good.

Business as unusual

CH APT E R T WO

RUNNING THE GAMUT OF P R I VAT E E Q U I T Y

800 grams of iron filings pulled towards two poles generated by a 70x30 mm ferrite block magnet and a Ă&#x2DC; 50 mm ferrite disc magnet.

Running the gamut of private equity

OW T R E T P A H C

EHT GNINNUR FO TUMAG Y T I U Q E E TAV I R P

Running the gamut of private equity

DUE DI LI GENCE FOR B I G AND S MAL L B U S I NE SS E S AL I KE

KNOWING THE ROPES OF P R I VAT E E Q U I T Y QUARTZ +CO P E RS P E C T I V E ON P RI VAT E E QU I T Y

From our perspective, 2013 was not a remarkable year because of the number of transactions, but because of the large variety of transaction types and sizes. We established new relationships with Swedish funds and were part of several iconic projects for large Anglo-American funds including Goldman Sachs, KKR and CVC. In Denmark, we were involved in the majority of large and medium-sized deals last year, in transactions ranging from less than DKK 100 million to more than DKK 10 billion. We served clients from industries such as IT, shipping and retail, to name a few. Our support covered all stages of the private equity ownership cycle, from industry screening, due diligence and post-acquisition support to pre-exit business plans. The latter is an area where we have seen increased activity due to a growing amount of preparation and required documentation needed for exits. Private equity firms are disciplined in their fact-based decision making when it comes to evaluating an investment. The role of the advisor in this process is to bring independence, analytical rigour and creativity as well as vast industry and functional knowledge to the due diligence process. Each project’s scope must be uniquely designed together with the private equity firm and reflect the determining issues for the deal’s success. Often, this includes a combination of field research (interviews with customers, suppliers and competitors) and internal analysis based on interviews with the target’s management as well as an assessment of the customer base and operations. In Denmark, we were It’s also useful to focus involved in the majority on exit opportunities if of large and medium-

sized deals last year, in transactions ranging from less than DKK 100 million to more than DKK 10 billion.

these are unclear and to lay out the post-acquisition agenda based on the findings in the due diligence process. In this way invesPrivate equity firms are tors will make better investment decisions by disciplined in their factperforming due dilibased decision making gence, assessing perwhen it comes to formance improvement evaluating an investment. opportunities and setThe role of the advisor in ting the post-acquisithis process is to bring tion agenda. independence, analytical

rigour and creativity as well as vast industry and functional knowledge to the due diligence process.

A SOLID DUE DILIGENCE IS BASED ON RIGOROUS, FACT-BASED KNOWLEDGE ABOUT BOTH THE COMPANY AND THE INDUSTRY AND TYPICALLY COVERS THE FOLLOWING AREAS: What is the company’s business platform? — How attractive is the industry, and how is the company positioned in the market? — What is the stand-alone growth potential (sales and earnings)? — Where are the synergies/optimisation opportunities, and what is their potential? — What are the “doomsday scenarios” and risks? — What are the exit opportunities?

Running the gamut of private equity

Strong presence in 10 countries in Northern and Eastern Europe

Net sales of about SEK 3 billion

In December 2010, OneMed was acquired by 3i – an international investor in private equity, infrastructure and debt management, investing in Europe, Asia and North America

POSI TI ONI NG FOR T H E F U T U RE I N H E ALT H C ARE

REDEFINING MEDICAL PROCUREMENT TO RE AP M UTUAL BENEFITS ONE ME D

The healthcare systems of Western, industrialised nations will face significant challenges in the years to come. Ageing populations and declining numbers of healthcare workers increase the costs and threaten the quality of care. In response to this changing customer landscape, OneMed has developed a new proposition to the healthcare systems, introducing performance and cost improvements OneMed has developed as an integrated part of a new proposition to the offering. the healthcare systems,

introducing performance and cost improvements as an integrated part of the offering.

The idea is simple. As a supplier of medical equipment to the healthcare industry, OneMed has full overview of what is prescribed to the individual patient and can follow patient flows. This allows OneMed to forecast or correct prescription mistakes or inefficiencies swiftly. By proactively correcting these situations, OneMed can prevent unnecessary processes and costs to the healthcare system. And the potential is huge: up to 20% of the combined spend pool. The solution, however, is complex. To proactively forecast and correct actions, systems must be well integrated with the healthcare providers’ systems. Further, it requires expertise and co-operation between the healthcare system and OneMed to capture the savings. This is nevertheless the journey OneMed is about OneMed can prevent to embark on – to help unnecessary processes the healthcare system and costs to the succeed while creating a healthcare system. And significant competitive the potential is huge: up advantage. to 20% of the combined

spend pool.

Running the gamut of private equity

ACQU I RI NG AT T H E RI GH T P RI C E

SOMETIMES “NO” B E AT S “ G O ” NE TS H OL DI NG A/S

The sale of Nets Holding A/S to foreign investment funds at a price well over the initial expectations grabbed headlines this year. Quartz+Co was involved in the case as advisor to an international private equity fund. Nets is the leading provider of payment, card and information services in Scandinavia, including BetalingsService in Denmark and AvtaleGiro in Norway as well as Dankort and BankAxept. Nets’ business model and value is radically dependent on a number of key areas: technological changes in payment systems, new business models/initiatives from banks and retailers, regulatory influences, the company’s ability to control costs, etc. These were issues with significant impact that needed to be clarified within a short period of time in order to understand the potential of the business and the right price. Nets is without a doubt uniquely positioned in the Nordic payment system. However, unique companies can also be expensive – and sometimes the best outcome is a “no” rather than a “go”. In light of the commercial assessment and the bullish, competitive bid situation for Nets, our client decided not to pursue the acquisiIn light of the commercial tion. assessment and the

In March 2014, the Nordic card payment provider was acquired by the consortium of Advent International and Bain Capital and the Danish pension fund ATP for a price of DKK 17 billion, making it the largest leveraged buyout in Europe this year. Advent and Bain may see other opportunities as they are already active in the electronic payment processing industry through their acquisition of Royal Bank of Scotland’s WorldPay Ltd, Europe’s largest payment processor in 2010.

bullish, competitive bid situation for Nets, our client decided not to pursue the acquisition.

Running the gamut of private equity

DU E DI L I GE NC E

J O E I S M O R E I M P O R TA N T THAN HIS JUICE JO E & T H E J U I C E / VAL E DO

Since its founding in 2002, Joe & The Juice has experienced exponential organic growth, currently boasting a turnover of DKK 200 million.

Since its founding in 2002, Joe & The Juice has experienced exponential organic growth, currently boasting a turnover of DKK 200 million. The Danish juice bar chain has expanded its operations and is now serving freshly squeezed juice with a wink and a smile at over 50 locations throughout Northern Europe, including Scandinavia, Germany and the UK. However, the rapid expansion came as no surprise to founder and CEO Kaspar Basse. He and his team had ambitious plans for international growth, and in 2013, they set out to establish a strategic partnership that would help the company realise its goals. They found such a partner in Swedish private equity firm Valedo, which became the majority shareholder in December of last year.

CUSTOMER PERCEPTIONS OF THE JOE & THE JUICE CONCEPT

+50% emphasised the “cool vibe”

(loud music, cool and flirty guys, modern design, youthful atmosphere) —

~40% emphasised “the good stuff”

(tasty food, fresh ingredients, high quality and refreshing juices) —

<10% mentioned “healthy”

(nutritious, low fat, vitamins as key elements of the concept)

WHO IS JOE AND WHAT’S IN HIS JUICE?

To fully assess the strength of Joe & The Juice’s value proposition, a deeper understanding of the customers and their perception of the juice bar was needed. Joe & The Juice’s value proposition is health, quality products and a cool vibe that caters to a younger customer base. But who exactly made up this customer base, what were their preferences and how did they interpret the Joe & The Juice concept? A comprehensive customer analysis was completed with several hundred respondents across the store network who had just visited a Joe & The Juice bar. Contrary to what might be expected, the cool vibe was clearly the most important part of the juice bar’s concept, while only a few of the respondents mentioned the health aspect of its products. Although the juice bar attracts a demographically diverse customer group, there was a clear trend towards a younger female audience. In fact, a majority of the female customers were below the age of 30 and frequent users, visiting more than once a week or several times a month. In other words, Joe & The Juice’s value proposition is to a great extent dependent on the atmosphere of its juice bars – Joe is more important than his juice. This highlights the strengths and uniqueness of the concept, but is also a potential risk factor for the sustainability of the concept over time; where continuous rejuvenation is key to maintaining its “coolness” and appeal to a younger audience. Currently, however, the sky seems to be the limit for Joe and his juice.

Running the gamut of private equity

CH APT E R T H RE E

PUBLIC SECTOR UNDER PRESSURE

600 grams of iron filings rise under the magnetic force of a Ă&#x2DC; 60 mm ferrite disc magnet, forming a crowd of iron spikes.

Public sector under pressure

EERHT RETPAHC

ROTCES CILBUP REDNU ERUSSERP

Public sector under pressure

WORKI N G WI T H T H E P U B L I C S E C TOR

ONE PREPOSITION MAKES A WORLD OF DIFFERENCE QUARTZ +CO PERS P E C T I V E ON T H E P U B L I C S E C TOR

For the Quartz+Co public sector team, 2013 was a breakthrough year. It brought several key learnings that make us optimistic about the future. We established that involving senior teams and insisting on working with our clients, not just for them, is extremely important in complex stakeholder settings with many, often conflicting, interests and expectations. In order to create lasting change, our work in many cases is to enable public sector leaders to put solutions into practice, by working actively with them, for example in how to communicate change or overcome barriers to implementation. We discovered that although the public sectors in Sweden, Norway and Denmark face different challenges, there are many valuable lessons that travel well across borders. Within the past two years, Quartz+Co has worked with ten government ministries as well as numerous government agencies and local municipalities on Although the public some of the most presssectors in Sweden, ing political and adNorway and Denmark face ministrative issues. different challenges, there

are many valuable lessons that travel well across borders.

However, there are three themes which keep surfacing in our work throughout the public sector: First and most obvious, the need to balance cost and quality, especially in terms of cost transparency and efficiency. This refers to determining precisely how funds in an organisation or state-owned enterprise are spent and what the potential is for improving outcomes through the reduction or reprioritisation of overall cost levels. Second, the constantly changing political landscape puts pressure on the public sectorâ&#x20AC;&#x2122;s ability to work with strategic planning and transformation. How can a ministry effectively set and operationalise a direction across its department and agencies, which not only defines the right priorities, but also strengthens its leadership team and ability to execute? Finally, internal processes must reflect the purpose and nature of government organisations. Governance and management of public sector institutions and state-owned enterprises must ensure the best possible link between administrative and political goals on the one hand and the actual output on the other. Though the context is often quite different, these issues are not that different from those facing many of our private sector clients. We are convinced that both sectors can learn from each other â&#x20AC;&#x201C; and that both of them benefit when consultants not only work for them, but How can a ministry with them. Prepositions effectively set and matter. operationalise a direction

across its department and agencies, which not only defines the right priorities, but also strengthens its leadership team and ability to execute?

Public sector under pressure

GETTI NG THE NORWE GI AN RAI LWAY B AC K ON T RAC K

ALL ABOAR D FOR NEW SOLUTIONS NS B

The elections to the Norwegian parliament in 2013 resulted in majority support for significant changes to the railway industry, including improved competition and a thorough restructuring of the sector.

For a long time, the Norwegian railway sector has struggled with a bad reputation, especially with regard to punctuality and the perceived quality of service. To complicate matters further, Statistics Norway expects the Norwegian population to have grown by one million by 2040. In other words, the Norwegian railway sector will face major challenges in the coming years. The election of the new parliament in 2013 meant majority support for significant changes to the railway industry, including improved competition and a thorough restructuring of the sector. This, together with the EU’s highly ambitious, game-changing railway agenda, has created the perfect breeding ground for new initiatives to get the Norwegian railway sector back on track.

In 2013, NSB presented their best financial results ever

Growth in the number of travels was at 7.3%, or about 4.1 million additional travels

Increase in the number of travels has saved the environment about 5,500 tonnes of CO2

NSB acknowledged that major changes lay ahead and decided to make a bold move. In November 2013, Geir Isaksen, CEO of NSB, held a press conference where he stated that new solutions were necessary to solve the problems of the Norwegian railway, and presented NSB’s view on how the railway sector should be redesigned, including both NSB’s and Jernbaneverket’s Instead of waiting for responsibilities. A new politicians to act, NSB took sector organisation was the initiative and came proposed, forming two with a groundbreaking new companies. The suggestion that has never first company is a pubbefore been seen in the lic administration comrailway industry. pany responsible for the customer offerings and all infrastructure, i.e. rail tracks, stations, rolling stock, etc., as well as long-term route planning. The other company will perform the operative tasks, i.e. train operations, in competition with other companies. The new structure will clarify the roles and responsibilities in the sector, separating the public administration part from the part exposed to competition (train operations). It will also enable long-term development of the train sector in Norway to meet tomorrow’s demand for reliable train services. Instead of waiting for politicians to act, NSB took the initiative and came with a groundbreaking suggestion that has never before been seen in the railway industry. “This structure will reallocate responsibility and authority, providing a needed “clean-up” of the railway sector. In 15 years, we want to be able to say that the Norwegian railway is among the best in Europe”, says Geir Isaksen.

“We think that it creates an opportunity for the railway to become better. We believe it’s important to go to further lengths to ensure that customers receive a better offering in the future. Large investments in the sector have been made. The future solution should ensure that we get the most out of these investments” —GEIR ISAKSEN, CEO AT NSB

Public sector under pressure

EXTRAS opposition.quartzco.com /nsb

Learn more about the future challenges of railways and the new sector organisation.

Public sector under pressure

“Reducing the share of nonperforming assets in banks and ensuring capital adequacy are key measures to strengthen the stability of banks and, consequently, improve financing conditions. With the aim of implementing these measures, the Bank Assets Management Company has been established” —SLOVENIAN PRIME MINISTER ALENKA BRATUŠEK

Public sector under pressure

SAVI NG S LOV E NI A’ S B ANKI NG SYST E M

SLABA BANKA BANK ASS E T MANAGE ME NT COMPANY

The Slovenian economy was hit hard by the financial crisis with a drop in real GDP of 11% between the pre-crisis peak and 2013 – the largest output loss in the euro zone after Greece. Trust in the economy was low; government bonds were trading only 200 basis points higher than in Spain and Italy. As trust waned and the economy contracted, banks reeled under the weight of non-performing loans, which reached a staggering amount of +20% of the total loans. “Slaba banka” – meaning “bad banks” – became a recurring theme in Slovenian news coverage. At the end of 2012, three systemic banks were in serious risk of collapse, so in order to save the country from financial catastrophe, the government established the Bank Asset Management Company (BAMC). BAMC’s mandate was twofold: carving out non-performing loans from government-owned systemic banks and restoring the highest possible amount of taxpayer money by actively managing the non-performing loans. A comprehensive task was at hand: to oversee the transfer and manage the restructuring of the loans as well as to design and set up the necessary processes and infrastructure for BAMC to become a highly effecAs trust waned and the tive organisation. economy contracted, the

Slovenian banks reeled under the weight of nonperforming loans, which reached a staggering amount of +20% of the total loans.

SETBACKS AND SUCCESSES: THE TRANSFER BEGINS

The transfer of EUR 3.3 billion in non-performing loans took place on December 20, 2013, and included two of the three systemic banks – Nova Ljubljanska Banka and Nova Kreditna Banka Maribor – but not without a few initial setbacks. Early in the process, conflicting interests between the European Commission, the Slovenian government and the banks caused a number of issues in terms of prices and the selection of assets from the banks’ books. Once the prices and the list of assets were locked in, the transfer was scheduled in multiple tranches so BAMC would receive loans in manageable portions. However, less than a month before the first credit transfer, the Bank of Slovenia and the Ministry of Finance unexpectedly announced that the transfer was to be completed in one large asset turnover. Both BAMC and the failing banks, however, would be unable to handle this abrupt transfer. Something had to happen, and it had to happen fast. Extremely intense months followed, during which new contracts had to be drafted and negotiated with the banks. In the end, the assets were transferred at the scheduled time, and Slovenia’s two largest banks were successfully rehabilitated. The third systemic bank will transfer its assets in Q3 2014. In parallel to the transfer, the necessary organisational processes and infrastructure have been put in place. To date, approximately 60 top-tier employees have been hired, and intense financial restructuring and operational improvement activities for some of the largest companies in Slovenia are now taking place.

Public sector under pressure

WHEN A CAPI TAL I NJ E C T I ON C AU S E S H E AT E D P U B L I C DE B AT E

P R I VAT E C A P I TA L , PU B LIC CONTROVE RSY GOLD MAN SAC H S / DONG E NE RGY

DONG Energy, the largest energy company in Denmark, needed capital. The utility incumbent made an operating loss of DKK 6 billion in 2012, after having invested billions to consolidate its position as a renewable energy leader. Help came in the form of a DKK 11 Goldman Sachs became billion capital raise the target of popular from equity investments protest in Denmark made by Goldman Sachs after it was made public and Denmark ’s two in December that the largest pension funds, investment bank was

to receive some veto rights in the shareholder agreements.

ATP and PFA. The deal reduced the Danish State’s ownership from 81% to 60% and was agreed upon after a “very detailed due diligence process where every stone [was] turned here at the company”, said Henrik Poulsen, CEO of DONG Energy. Goldman Sachs’ investment equals an ownership share of 19%, with ATP and PFA owning 4.9% and 1.8%, respectively. The remaining share is held by minority shareholders from a range of regional utility companies in Denmark. The capital raise was part of the energy giant’s financial action plan announced in the beginning of 2013.

The public protests in relation to the deal caught the attention of international business media. The Financial Times, Bloomberg, the Economist, the New York Times and many more all reported how the deal almost brought down the government.

Public sector under pressure

In an interview with Bloomberg, Henrik Poulsen said that “DONG Energy has exciting and profitable growth opportunities. With the equity injection, we’ve almost accomplished our financial action plan and have thereby created the necessary foundation to follow our strategic ambitions in the coming years”. Goldman Sachs became the target of public protest in Denmark after it was revealed in December 2013 that the terms of the shareholder agreements gave the Wall Street bank veto rights over several major decisions. This led to a long, politically-laden debate about the appropriateness of the centre-left government’s decision to sell such a large share to an investment bank that for many represents rightwing ideology.

AN OUTSIDE VIEW OF THE “AFFAIR”

Why sell in the first place?

Like many European utilities, DONG Energy has suffered from the financial crisis. With an operating loss of DKK 6 billion, a financial hole needed to be filled. The Danish government decided to seek new capital, thus reducing its stake in the company. Was Goldman Sachs the highest bidder?

During the week when parliamentary hearings were to be held, the Danish television station TV2 reported that PensionDanmark gave a higher bid than Goldman Sachs, spurring even more controversy around the deal. However, the conditions accompanying the bid were different, making it more akin to a loan, according to government officials. How big a risk is Goldman Sachs taking?

Another point of controversy was that some claimed that Goldman Sachs didn’t take a risk equalling their advantages. If DONG Energy isn’t listed on the stock market as planned by 2018, Goldman Sachs can sell 60% of the shares back to the Danish government at the purchase price plus an annual interest rate. Goldman Sachs’ veto rights

Goldman Sachs has negotiated certain veto rights that none of the other investors get. The Danish government replies that this isn’t unusual when investors take a big stake in an unlisted company. Role of tax havens

Given the high tax rates in the Nordic countries, it has become a sensitive issue that the investment will be managed by New Energy Investment, a Luxembourg-based affiliate owned by shareholders in the Cayman Islands and Delaware. Goldman Sachs replies that it would be uncommon for an investor to set up an investment vehicle in Denmark because of one minority investment.

Public sector under pressure

TAKI NG PART I N T H E L ARGE R CONV E RSAT I ON

E A R N I N G O U R P L A C E AT T H E R O U N D TA B L E P U B L I C S E C TOR WORK

Our public sector work is part of a bigger picture and must hold up under scrutiny from the paublic eye.

One of the most coveted honours in public sector consulting in Denmark is to be accepted into the Danish Ministry of Finance’s frame agreement. Many of the most complex and interesting assignments in this area are tendered under this framework, and with Quartz+Co’s fairly new public sector focus, becoming qualified to bid on these pivotal projects has been an objective for years. In 2013, this dream became reality – a truly iconic moment for our public sector team.

Our place in the frame agreement has been the starting point of many interesting dialogues and intriguing projects. One of the most publicly discussed assignments was an analysis of a potential expansion of Udbetaling Danmark’s responsibilities. Like the DSB analysis two years before, this project was made publicly available in its entirety and thus exposed to public debate. One of the most coveted This reinforced our honours in public sector belief that our public consulting in Denmark is sector work is part of a to be accepted into the bigger picture and must Danish Ministry of Finance’s hold up under scrutiny frame agreement. from the public eye. In the past few months, more exciting and highly prolific engagements have been added to Quartz+Co’s roster of public sector projects, including analyses of pivotal parts of the Danish unemployment system; a review of the Danish experiences with public-private collaboration and several others. Each of them has confirmed that we, with our brand of consulting, have a role to play at the round table.

2.2 million Danes received government benefits in 2013. In 1970, that number was 800,000

Danish productivity has risen on average 0.8% a year since 1996, while the number for Sweden is 2%

Public sector under pressure

CH APT E R FO U R

CONNECT TO THE WORLD

A globe of concentric circles formed by 800 grams of iron filings and a Ă&#x2DC; 140 mm ferrite ring magnet.

Connect to the world

RUOF RETPAHC

TCENNOC DLROW EHT OT

Connect to the world

WHERE DO WE GO F ROM H E RE ?

KEEP ON CONNECTING QUARTZ + CO P E RS P E C T I V E

“All I know is that it will have been one hell of a ride”. Such was the response of a young consultant when asked the question “where will you be in the year 2020?” during an internal discussion on the topic of internationalisation. This response is fairly representative of the sentiment that rests with most members of the Quartz+Co civilisation – changes will happen, new territories will be conquered, but exactly which, when and how remains unknown. Quartz+Co was founded in 2002, with a relentless desire to attune to the constantly changing industry dynamics that characterise the globalised world of business, praising “originality” and the ability to act independently without conforming to regular patterns or estab“All I know is that it lished rules. This year has will have been one hell

of a ride”

produced several developments that adhere to our founding principles of tapping into global growth centres and staying relevant to our increasingly global core clients in untraditional ways. Just to name a few: We acquired a majority stake in MEC Intelligence, a research company located in New Delhi, India, which currently employs more than 15 analysts and consultants. We took the temperature of a group of Nordic business executives operating in the US when conducting our yearly Barometer in collaboration with the Danish business daily Børsen, this time in New York City. We also launched a partnership with Port Jackson Partners in Sydney, one of Australia’s most well-respected strategy consulting firms. And through the “Sleeves Up” programme, a team of our consultants – together with students from Norway and Sweden and managerial talents from Novo Nordisk, Grundfos, TDC and Bech-Bruun – jetted off to South Africa to help entrepreneurs in Cape Town grow their businesses. It’s often claimed that a true civilisation should constantly be modelled and shaped by the people in it and the world around it. It should connect to the world. We heartily agree.

At the 2013 company day, the Quartz+Co civilisation gathered to discuss the direction of the company and our vision for growth. Everyone was asked to illustrate their idea of where we would be in 2020. The results were both funny and inspiring and took the form of comic strips, poems, videos, letters and everything in between.

Connect to the world

EXPLOI TI NG SYNERGIE S I N MARI T I ME , E NE RGY AND C L E ANT E C H

G R E AT E R T H A N T H E S U M O F I T S PA R T S PARTNER S H I P WI T H ME C I NT E L L I GE NC E

In 2013, Quartz+Co became the majority owner of MEC Intelligence, a market research company supporting growth by providing high-quality actionable insights within the maritime, energy and cleantech sectors, as well as regional insights across various industries, from its offices in India, China and Denmark. Sidharth Jain, the Managing Director and co-founder of MEC Intelligence, laid the cornerstone in 2011 with the vision of a global, best-in-class company serving C-suit members and recognised both for its expertise and its people. Quartz+Co and MEC Intelligence have worked closely together to exploit the natural synergies between the two companies in terms of combining top-tier problem solving and highly specialised industry knowledge. It has also been a grand opportunity to learn from one another; MEC Intelligence has helped Quartz+Co in understanding how to tap into the huge growth potential of the emerging markets and expanding the knowledge base in energy and maritime areas. Quartz+Co, in turn, has been instrumental in helping MEC Intelligence develop its Nordic client base and building a highly differentiated and entrepreneurial culture The fast-paced with progressive traindevelopment within the ing processes and career maritime, energy and development opportucleantech industries puts nities. significant pressure on

business leaders to stay informed about markets and technology.

According to Sidharth, MEC Intelligence’s people-centric culture is what makes it stand out from other India-based companies. “Our biggest differentiator lies in our mindset towards people”, he says. “Despite its young age, MEC Intelligence already attracts excelDespite its young age, lent people from leadMEC Intelligence already ing global consulting attracts excellent people firms because we offer from leading global intriguing and complex consulting firms. assignments and provide innovative policies and employee development programmes”. However, professional development isn’t limited to those working at MEC Intelligence: “we routinely hear from job candidates that it was the best professional interview they had ever attended, even if they were not offered a contract”, Sidharth reports. The Managing Director of MEC Intelligence is very optimistic about the future. The fast-paced development within the maritime, energy and cleantech industries puts significant pressure on business leaders to stay informed about markets and technology. “Our focus areas and partnership with Quartz+Co have provided an opportunity to create a market-leading knowledge hub. So far, the partnership has succeeded beyond our expectations both in terms of billings and the rapid expansion of the firm”, Sidharth concludes.

SIDHARTH JAIN

Managing Director, MEC Intelligence Sidharth has worked with strategy, business development, investment and innovation cases for both corporates and PE firms. He has extensive experience from evaluating opportunities in the maritime, energy and cleantech sectors across markets globally. Prior to founding MEC Intelligence, Sidharth was a manager at Evalueserve where he was responsible for executing the first strategy consultancy desk and leading the development of many successful strategic desks. He also built up the maritime practice and drove cleantech research.

Connect to the world

EXTRAS mecintelligence.com

MEC Intelligence looks at growing markets, emerging concepts and evolving trends to identify, define and detail growth opportunities in the maritime, energy and cleantech industries. Discover and evaluate the findings in MEC Intelligence’s latest publications.

2 1

LNG AS PROPULSION FUEL A DISRUPTION TO THE MARITIME INDUSTRY?

According to a forecast by MEC Intelligence, nearly 10,000 vessels are expected to adopt liquefied natural gas (LNG) propulsion systems by 2020, triggering huge growth in the market. Companies from all parts of the maritime value chain – oil majors, terminals, ports, bunker suppliers, service companies, component producers, vessel owners and charterers – need to rethink their offerings. MEC Intelligence’s report on LNG propulsion cuts through the scepticism and complexity surrounding the adoption of LNG as the preferred fuel in the shipping industry.

OFFSHORE WIND FOUNDATIONS REPORT

Huge demand, scalable technology and high innovation activity along with supply constraints make offshore wind foundations a highly attractive market. MEC Intelligence forecasts that the total global installed capacity of offshore wind will grow from approximately 3 GW in 2010 to 125 GW in 2020. This rapid development is driven by increasing momentum in the European market and a surge in installed capacity in Asia. The need for turbine installation in deep sea areas will create a demand for turbine foundations, and it’s expected that the value of the offshore wind foundation market will reach USD 20 billion by 2020, up from USD 700 million in 2010. 3

OFFSHORE WIND CABLES INSIGHTS

Offshore cables are a significant challenge for the wind industry. High costs, supply shortages and an underdeveloped supply chain hinder the progress of offshore wind. MEC Intelligence has published a report on the status of the key industry developments and innovations that will shape the future of the offshore wind industry. The report is available by request to reports@mecintelligence.com.

Connect to the world

SEARCHI NG FOR NE XT P RAC T I C E CONS U LT I NG

LIKE WILL TO LIKE NEW PART NE RS I N QUARTZ + CO

We have welcomed six new senior partners into our civilisation over the past year. Their expertise ranges from strategy to procurement, from the financial sector to transport, from private equity to private ownership. But they have one thing in common: they have been looking for a new platform from which to serve their clients, one that resonates with their personal beliefs and views on consulting as well as with the needs of today’s capable organisations. Learn what these experienced consultants view as Next Practice within management consulting. In the case of Per Segerberg, involvement is the Alpha and Omega of management consulting. “In operations,

the era of generalised management consulting is over. You need to be a trusted advisor and guide the client through the entire process. This means transferring know-how and functional expertise to the client’s organisation and mobilising the organisation’s problem-solving capacity”. Jerker Rosander continues, “Above all else, the understanding of the client’s culture and context is a fundamental prerequisite to help them succeed: an engagement model that allows for long-lasting projects and deep involvement is necessary for making a lasting impact”. One of his primary credos is to foster people centrism and a collaborative approach. For an organisation to change, people need to change.

JERKER ROSANDER

Transport, energy 15 years of consulting experience from McKinsey & Co.

“We have a genuine interest in the success of our clients and the individuals we work with – we look for the person in the client, not the client in the person” —JERKER ROSANDER

JOHAN LEMCHEN

Financial services, insurance, organisational design, outsourcing +20 years of consulting experience from Occam Associates, A. T. Kearney and Andersen Consulting

JESPER KJERSIDE

Financial services, private equity, transport 11 years of consulting experience from McKinsey & Co. and BCG; started as a lawyer at Kromann Reumert and also had a short stint in investment banking 44

Connect to the world

“Honesty requires that you speak the truth, even when it isn’t in your own best interest. Building mutual trust that allows you to speak your mind is the essence of a good relationship and of being a trusted advisor” —JOHAN LEMCHEN

JOHAN REIERSEN

Financial services, procurement, multi-channel management and steering systems +15 years of consulting experience from McKinsey & Co.

“It doesn’t help much to correct the problem if you don’t correct it in a way that fits the client’s organisation” —JOHAN REIERSEN

“Clients don’t want just advice any more – they don’t want you to tell them how to save 100 million. They want you to tell them how to save 100 million, help them realise the savings and build an organisation that has the capability to sustain those savings. They want the whole ‘transformation journey’” — PER SEGERBERG

PER SEGERBERG

Supply chain strategy, operations management, sourcing and procurement +25 years of consulting experience from Segerberg & Company, Accenture, SIAR-Bossard and Cresentia

TORBJÖRN MÅNSSON

Private equity, financial services, consumer and industrial goods, performance improvement +20 years of consulting experience from Bain & Co., SIAR-Bossard and McKinsey & Co.

According to Torbjörn Månsson, another important aspect of Next Practice management consulting is to stay on the offensive: “In my view, good management consultants should strive to adopt a challenger mindset and aspire to over-deliver on every assignment. We must bring fresh perspectives and respectfully challenge the status quo. Clients don’t bring on consultants to maintain the status quo”, Torbjörn remarks. “It’s crucial to be capable of cultivating a multitude of problem-solving approaches and use the complementarity of personalities and skills as an instrument of leverage”. One thing that really counts for Johan Lemchen is an aspiration to build a top-tier consulting company based on Nordic values, which for Johan include respect, humbleness and flexibility. “Clients don’t look for buzzwords and standardised solutions. The values, which I have the audacity to label Nordic, resonate well with my deep-held beliefs about how you should approach clients and problem solving”, he says. “We live in an increasingly global and transparent world, which makes the ability to execute a strategy as important as the strategy

itself. I believe that not only defining strategy but also supporting companies in the roll-out will play an increasingly important role. Too many strategies don’t create the intended value”. For Jesper Kjerside, flexibility is key when engaging with clients. “A Next Practice engagement model must constantly reconfigure to match the client situation. The traditional, one-size-fits-all consulting model isn’t for me. I believe the “shelf of products” model is obsolete and that consultants must know how to constantly adapt to their clients and the context. Consultants should perfect their listening skills and not expect clients to adapt to their ways of working”, Jesper explains. From Johan Reiersen’s perspective, spending more time with his clients is important: “The heavy involvement of senior partners in client work is an element in Next Practice. Implementation should be on the agenda from day one. Next Practice consultants, whether partners or not, should have a personal desire to be part of both the problem solving and the project roll-out – in order to deliver success and not only deliver successfully”.

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NEW RE C RU I T ME NT CONC E P T

T H E N E X T G E N E R AT I O N OF DOG-BITERS We have ditched the traditional recruitment model for graduates and designed a new hiring experience to better reflect Quartz+Co’s value proposition and create iconic moments from day one.

QUARTZ + CO RE C RU I T ME NT C AMP

At Quartz+Co, we don’t believe in standard industry solutions or methodologies. We believe in innovative processes, in (wo)men biting dogs, and we believe that being different starts with our own civilisation. That is why we have ditched the traditional recruitment model for graduates and designed a new hiring experience to better reflect Quartz+Co’s value proposition and create iconic moments from day one. Eschewing the three-round, threeweek industry norm, selected candidates are now invited to a two-day recruitment camp, where it’s just as important for the applicants to get to know us, as for us to get to know them. “The traditional recruitment model is a one-to-one dialogue – I would even claim it’s a one-way dialogue. What we try to accomplish with the recruitment camp is to make the hiring process a two-way street”, explains Hans Henrik Beck, Founding Partner at Quartz+Co. Six tired master’s students wash down anxious chatter with cold ale while they await feedback on their performance and – hopefully – a job offer. They have just completed an intensive interview programme that not only includes traditional elements such as quantitative tests and case interviews, but also new activities such as a group case and an MBTI assessment, among others. “Consulting isn’t only about being bright and clever – it’s also about having the right personality, and that is what we are assessing during the recruitment camp”, says Dorte Brehmer, Head of Staff at Quartz+Co. This focus on relationships is key in Quartz+Co. “We believe in relationships – our small civilisation is a dynamic concept shaped by the people in it, not a mould people must conform to”, explains Hans Henrik Beck.

TIPS FROM A FRESH RECRUIT

According to Filip Andersson, who attended our camp in Stockholm, you can safely assume that your CV is good enough if you are invited to the camp. What is left is to show your personality, and to demonstrate your ability to work in a group, as well as your analytical and problemsolving skills. 1. Think about how you want to interact with the rest of the group – both in group interviews and under less formal circumstances (especially if you are not used to this assessment format). I would say that the recruitment camp is more about this than about sweating outside an interview room trying to remember all the frameworks in Case in Point. 2. Practise problem solving in a structured way (preferably without clinging too much to specific learnt-by-heart frameworks). Make sure you are familiar with the most common types of cases. 3. Practise some quick calculations without a calculator (it’s usually fine to use pen and paper though).

EXTRAS opposition.quartzco.com /recruitment

Watch a video about what it’s like working as a consultant and get advice on how to prepare for Quartz+Co’s recruitment camp.

Quartz+Co has held eight recruitment camps in Denmark and Sweden, and Norway will join the ranks with their first camp in the autumn of 2014.

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WORKI NG I N T H E NORDI C S

S C A N D I N AV I A N S A R E OBSESSED WITH HIPSTER MOMENTS CULTURAL OBSERVATI O NS F ROM OU R I NT E RNAT I ONAL COL L E AGU E S

“I really enjoy that nobody At Quartz+Co we pride ourselves on being a Nordic original – that is, a management consulting company based on Nordic values, capable of combining Nordic presence with global reach. This includes supporting our clients wherever in the world they operate and attracting the best international talent. But how does our management philosophy hold up outside of Scandinavia? We decided to ask some of our non-Scandinavian colleagues about their experiences with working in a Nordic context. According to Yuran Chen, one of the best things about working in a Nordic country is the team spirit. “In a Chinese company, you’re always in competition with your colleagues, which can make work life seem tough. Oftentimes you keep a relationship because you have to, not because you really like the person – it can be a bit superficial”, she says. The thing Yuran finds most difficult about working in Scandinavia is the names. “The pronunciation is really difficult for me. Sometimes in conversation, someone will mention a colleague, and I think, ‘I don’t know this person’, but it turns out that I just didn’t recognise the name from the way it was pronounced”, she laughs. When Rahul Vasantlal Shah came to Scandinavia, he immediately noticed differences in the Nordic way of doing business. “There is a big focus on sustainable growth, and Quartz+Co is a good example of this. We’re “In a Chinese company, hiring a lot of people you’re always in

cares about your position right now, but there is a lot of discussion on in the company. They how to manage it. It’s have a genuine interest not just ‘let’s increase in you and in having a the numbers’ – it’s also conversation. It’s really ‘how do we balance it quite unique” and how do we sustain —MICHAELA BUBLITZ it’”. What surprised Michaela Bublitz from Germany most about Scandinavian work culture was the flat hierarchies. “I really enjoy that nobody cares about your position in the company. They have a genuine interest in you and in having a conversation. It’s really quite unique”, she says. “The mindset is that everyone has something to contribute”. When asked about what it’s like working with Scandinavians, Michaela has made some funny observations: “Scandinavians are obsessed with creating a ‘hipster moment’ – they always seem to be ‘constructing coolness’. But it works. Scandinavians are just a little cooler than everyone else, and you wish you could be as cool”. We are grateful to Michaela for attaching that adjective to things other than our weather.

competition with your colleagues, which can make work life seem tough”

—YURAN CHEN

Yuran Chen, China

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Rahul Vasantlal Shah, India

Michaela Bublitz, Germany

NORD I C B U S I NE SS E S I N T H E U S

T H E U S I S O N LY F O R T H E TO U G H E S T WA R R I O R S QUARTZ + CO B AROME T E R 2 01 3

Too many Danish companies go half-heartedly into the US, resulting in less than spectacular performances despite the huge market potential. So, why aren’t more Danish companies getting the US market right? Quartz+Co and the Danish business daily Børsen invited 10 top executives from ArjoHuntleigh, Arla, Bjarke Ingels Group, COWI, Fritz Hansen, Leman, Oticon, ReD Associates, Vertic and the Danish General Consulate in New York to participate in a panel debate on what it takes to achieve success in the world’s largest market. It did not take long for participants in the Quartz+Co Barometer to reach consensus on the formula for achieving success in the US market: a big commitment and willingness to invest, focus on excellent customer service and retaining the right local talent. The panel was also in agreement on why this formula isn’t being seen in practice: lack of courage and backing from home is the main challenge for Danish companies seeking to carve out their piece of the American pie. “In the US, the expected level of customer service is so high that it requires both dediIt’s not enough to set up cated resources from an office in the US; you the home office and must go all in with the talented, local employunwavering belief that you ees”, says Susie Hjort, can become a heavy hitter.

Director for Arla’s ingredients business in North America. It’s not enough to set up an office in the US; you must go all in with the unwavering belief that you can become a heavy hitter. Hesitation is picked up on quickly, especially by ambitious, career-minded and talented employees. “Our mistake was that we for too long wanted to be Danes in the US, and we thought for too long that we could handle the US market on our own. That meant that we didn’t get the right talents in”, says Sebastian Jespersen, CEO of Vertic. However, convincing top management and the board to place all bets on the US can be a challenge. Danish organisational culture can be a barrier as leadership teams often prefer cautious entry strategies, instead of larger, more aggressive investments. This approach, however, will not work in “the country of opportunity”. Success in the US doesn’t come without sacrifice and few companies are daring enough to run the risk. Perhaps the best advice comes from the Americans themselves: go big or go home.

ADVICE FROM THE TOP EXECUTIVES

“Don’t fool yourself into thinking that the same strategy which brought you successfully into a European market will also bring you successfully into the American market” ALEX MYERS, CEO, HILDING ANDERS GROUP, FORMER CEO OF ARJOHUNTLEIGH

“Secure the home office’s respect through good execution and make sure to get the necessary degree of freedom”

RASMUS BØRSTING, EXECUTIVE DIRECTOR, OTICON

“Make an overview of how much liquidity is necessary to establish yourself in the US, multiply it by three and then you’ll have a realistic budget” SHEELA MAINI SØGAARD, CEO AND PARTNER, BJARKE INGELS GROUP

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CH APT E R FIVE

W H AT K E E P S ENERGY LE A D E RS AWA K E AT N I G H T ?

Interlocking abstract forms produced by 900 grams of iron filings, energised by a Ă&#x2DC; 50 mm ferrite disc magnet and a Ă&#x2DC; 30 mm ferrite rod magnet.

What keeps energy leaders awake at night?

EVIF RETPAHC

S P E E K TA H W YGRENE E K AWA SR E D A EL ? T H G I N TA

What keeps energy leaders awake at night?

I NSI GHTS F ROM OU R OWN B AC KYARD

TOUGH QUESTIONS FOR ENERGY ELITES QUARTZ +CO E NE RGY S E C TOR P E RS P E C T I V E

Throughout 2013, Quartz+Co was involved in a myriad of projects – both horizontally across energy sectors and vertically within energy supply chains. Our assignments ran the gamut, from assessing the future potential of oil and gas on the Danish North Sea shelf to evaluating regulatory regimes in the Nordic DSO sector and developing strategies for the offshore wind industry – not to mention analysing pan-European consumer prices and designing new entry strategies and concepts with regard to the cleantech sector. This selection of the past year’s engagements not only underlines our commitment to building a strong support platform to the energy sector, but also demonstrates the complexity of the energy landscape. Looking out over our own backyard, we see several important questions that need to be addressed in the coming years, which represent both opportunities and obstacles for economic and societal growth. It’s on these key issues that Quartz+Co strives to deliver successful solutions to our current and future clients and acts as a trustworthy liaison between government bodies, utilities The past year’s and supply chain players. engagements not only

underline our commitment to building a strong support platform to the energy sector, but also demonstrate the complexity of the energy landscape.

KEY QUESTIONS for the energy sector How will the cash-constrained Northern European utilities develop in the coming years – that is, what business models, cash-oriented partnerships and consolidations can be expected, securing the necessary and vital investments?

How can the energy sector deliver cost-effective security of supply, balancing the dominant role of intermittent renewable production and need for thermal retrofit investments in the near future?

How should the future DSO sector be structured to ensure grid investments (i.e. smart grids) with acceptable returns without introducing unfavourable consumer prices?

How can the oil and gas production in the North Sea be prolonged to both maintain a high degree of self-sufficiency and to ensure a sustainable transition to a fossil fuel free society?

What keeps energy leaders awake at night?

UNLOCKI NG TH E P OWE R OF T H E E L E C T RI C AL GRI D

END TO THE GRIDLOCK THE NORWE GI AN E L E C T RI C I T Y MARKE T

Even though 15 years have passed since the deregulation of the electricity market, the Norwegian power industry is still fragmented and dominated by municipality ownership. Significant economies of scale can be realised through consolidating electrical grids in adjacent geographic areas; however, due to disincentives such as insufficient financial gains from the regulatory income model and the complications arising from grid companies’ integration with regional utility companies, consolidation hasn’t been on the negotiating table for a decade. This picture is now changing, with several factors pointing towards a new era for the power industry in Norway. First, the Norwegian government has expressed a strong desire to consolidate, and is exploring possible strategies. A recently published report has recommended increased segregation of grid company tasks in utilities and

As consolidation takes off, national and international financial players will be eager to participate, making economies of scale possible and generating a stable, attractive, longterm return on capital.

a simplification of the grid structure. Second, the argument for utility ownership of grid companies is weakening due to the introduction of the suppliercentric model, which means that utilities no longer can use grid companies as brand builders. Third, grid companies have ceased to be cash cows for utility companies – in the coming years, significant cash flows will be needed to upgrade ageing grids. In addition, power prices are expected to remain low, putting pressure on the profits of the utility companies, and in turn reducing financial returns for municipalities. As consolidation takes off, national and international financial players will be eager to participate, making economies of scale possible and generating a stable, attractive, long-term return on capital.

FROM INTEGRATED VALUE CHAIN TO UNBUNDLED INDUSTRY

IN DUSTRY STRUCTURE OF TODAY

I NDU ST RY ST RU C T U RE I N 1 0 Y E ARS?

Company activity type split 2012, based on the revenues of the 70 largest Norwegian energy companies

Future company activity type split (estimated)

PRODUCTI ON

P RODU C T I ON

GRI D G R ID SA LE S

SAL E S

Today, the operations of most Norwegian energy companies are focused on electricity generation, distribution and sales. In the future, increased specialisation is expected, although a core of these integrated companies will continue to exist. 52

What keeps energy leaders awake at night?

BRI GHT FUTU RE FOR OF F S H ORE WI ND E NE RGY

T R E AT O F F S H O R E AS OFF SHORE REDUCI NG T H E COST OF E NE RGY

LEVELISED COST OF ENERGY UK PROJECTS STARTING IN 2012/EUR PER MWH

2 50 208 200 145-165 150

1 44-1 50

150

1 1 4-1 2 8 100

10 0

0 SO LAR

OFFSHORE WI ND

COAL

B I OMASS DE DI C AT E D

For wind energy to really claim its position in the global energy mix, the Cost of Energy (CoE) must drop to a level at which wind can compete with other cheaper energy sources such as nuclear power. Onshore wind has managed to lower CoE to a somewhat attractive level – yet, this isn’t enough. The main challenge, however, comes in the form of offshore wind, where CoE has been on an upward trajectory. This is understandable given the immaturity of the industry, but offshore wind must lower costs by almost 50% to compete with nuclear energy. This isn’t accomplished through minor changes, but by fundamentally re-thinking the industry’s approach to offshore wind. We believe that the wind industry has a bright future ahead of it, but CoE must be lowered substantially in order to win the support of policymakers and the public, which will fuel demand and increase investments. It’s the responsibility of the major stakeholders in both Offshore wind must the US and Europe to lower costs by almost take the lead in organ50% to compete with ising the wind industry nuclear energy. This isn’t to make wind the most accomplished through clean and cost-competiminor changes, but by tive energy source in the fundamentally re-thinking global energy mix. the industry’s approach to

ONS H ORE WI ND

NU C L E AR

G AS (CCGT )

Source: DECC; Electricity Generation Cost (October 2012)

30 0

HOW TO LEVERAGE OFFSHORE WIND TO LOWER COE

Industrial standardisation of installation components and processes will significantly lower the industry’s marginal costs. Producing larger batches will create a learning curve effect and enable cost-efficient installation processes and O&M activities. It’s important to embrace the complexity of offshore wind and treat offshore as off shore, instead of trying to transfer experiences from onshore wind parks to the sea. Creating wind parks that are specifically designed for the oceanic environment is crucial to maximising the potential of the vast wind resources at sea. Encouraging industry-wide co-operation through the wind co-operation end-to-end (E2E) model is crucial. This model involves changing the way the industry shares information and is based on the concepts of an E2E and open-book mindset. Knowledge sharing and investing in skilled human capital is necessary for utilities and manufacturers to realise cost savings and add to the shared profit pool.

offshore wind.

What keeps energy leaders awake at night?

OFF S H ORE WI ND I N C H I NA

S H I F T I N G R AV I T Y WITHIN OFFSHORE WIND R E P ORT BY QUARTZ + CO

China’s rapid expansion within offshore wind represents an opening for the offshore wind sector to move from being a North European niche to becoming a global industry, apt for growth. European companies should be ready to take advantage of the experience and the capabilities acquired from building up the industry. Expectations for growth in the offshore wind industry, historically concentrated in Northern Europe and around the North Sea, far exceed anything ever experienced before in the cleantech sector. But the industry must anticipate a major shift in its centre of gravity. According to Quartz+Co’s report Wind in China, the emerging Chinese market is essential in ensuring continued, international growth within offshore wind – a development that should be welcomed by all players in the industry. It is, however, a race against time as the enormous investments and governmental subsidies to fuel growth are pressured by the repercussions of the financial crisis and competing sources of energy as well as significant supply risks. Offshore wind in China is only in the beginning of the life cycle. China will be dedicated to meeting their ambitious targets and offering paths to future growth for do-

The development towards de-risking and lowering CoE in the Chinese offshore wind sector can be accelerated by introducing European technologies and capabilities.

mestic players. But the development towards de-risking and lowering CoE in the Chinese offshore wind sector can be accelerated by introducing European technologies and capabilities. So whether you’re a utility player, a supply chain player or an investor in the European offshore wind sector, we’re convinced that you will be challenged by this question; how can you exploit business opportunities in the Chinese offshore wind sector?

EXTRAS opposition.quartzco.com /others

Read the full report that offers a snapshot of the Chinese offshore wind industry as well as a high-level assessment of the maturity level of the different categories in the value chain.

What keeps energy leaders awake at night?

STRATEGY I N A T U RB U L E NT AND I MMAT U RE I NDU ST RY

C L E A R S T R AT E G I E S FO R A C LO U DY F U T U R E B L ADT I NDU ST RI E S

How do you plan for a future with major uncertainties in the factors affecting your demand – in this case, potential technological shifts, political willingness to subsidise the offshore wind sector and the tendency towards larger and more complex projects? For Bladt Industries, the solution was a strategic base case analysing the development path that Bladt Industries would follow if technology, political support and projects developed as expected, combined with an outline of different market scenarios and the “trigger points” that would initiate these scenarios. For each scenario, Bladt Industries developed a preferred response regarding investments in production capacity and strategic focus. This mapping exercise facilitated management discussions of The scenario-driven the implications of each strategy process has scenario, which alternaincreased strategic tive that would genertransparency between the ate the most value for management team, the the company and what board of directors and the Bladt Industries could owner, and it has enabled do to drive the market Bladt Industries not only in the desired direction. to stay a step ahead of

the competition, but also to be prepared to act fast if external circumstances change.

The scenario-driven strategy process has increased strategic transparency between the management team, the board of directors and the owner, and it has enabled Bladt Industries not only to stay a step ahead of the competition, but also to be prepared to act fast if external circumstances change. The identified trigger points are being monitored closely and their respective scenarios have been mapped out to an extent where the management team, the board of directors and the owner are aligned on what actions to initiate and why, as well as what outcome to expect. The most significant outcome of the process was Bladt Industries’ decision to set up a new production site at Lindø Industripark in order to begin serial production of jacket foundations for offshore wind, as this is the technology that appears most likely to replace the current monopile foundations as offshore wind projects move into deeper waters. By being the first in the industry to adopt serial production of jacket structures, Bladt Industries has mitigated both the risk of technology disruption and the risk of competitors acquiring the attractive production site at Lindø. Today, Bladt Industries is a key player – some would say the market leader – in offshore wind foundations and substations. The strategy process helped Bladt Industries secure a strong and robust platform for pursuing opportunities outside Europe – and as a proof of this, the first major project in the US has been confirmed.

What keeps energy leaders awake at night?

THE POT E NT I AL OF T H E NORT H S E A

FUELLING THE GROW TH ENGINES OI L GAS DE NMARK

The trade association Oil Gas Denmark commissioned Quartz+Co to conduct a sector analysis based on the current situation of the oil and gas industry and its potential for future development and social impact. The resulting report, The potential of the North Sea â&#x20AC;&#x201C; realisation through three growth engines, released in October 2013, made an important discovery: despite the maturity of the shelf, there are still 1,400 million barrels of oil under the Danish sector of the North Sea, which represents more than 40% of the total production of oil and gas in Denmark since 1972. However, the report also uncovered significant obstacles to exploiting the remaining subsea oil reserves. Exploration is at its lowest since the 1960s, the development of marginal fields has stagnated, and the recovery rate is Despite the maturity of increasing by just over the shelf, there are still half of what it did in 1,400 million barrels of oil previous years. under the Danish sector

Unlocking the potential of the North Sea will require collaborative efforts within the industry and between the public and the private sector. New investments are needed, and time is of the essence as production is on the verge of being phased out. Cost reduction through operator collaboration, adjustment of the current regulatory framework and the establishment of a revised tax regime for new projects taking into account the maturity of the Danish shelf are main areas where growth can be created.

EXTRAS opposition.quartzco.com /others

Read the full Quartz+Co report â&#x20AC;&#x201D; The potential of the North Sea: realisation through three growth engines.

of the North Sea, which represents more than 40% of the total production of oil and gas in Denmark since 1972.

THE DANISH SHELF HOLDS A RESOURCE POTENTIAL EQUIVALENT TO 1,398 MMBOE

200

150

Technological resources Exploration resources Contingent resources Gas production Oil production

2013

100

0 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42

What keeps energy leaders awake at night?

CH APT E R S IX

MOVING FO RWAR D, LOOKING BACK

750 grams of iron filings exploding into a firework of organic shapes under the force of a Ă&#x2DC; 50 mm ferrite disc magnet and a 70x30 mm ferrite block magnet.

Moving forward, looking back

We continuously celebrate iconic moments; the everlasting images which people within and outside of Quartz+Co mention when asked to describe the company. Here, we present you with a few snapshots that have made an impression lately.

Moving forward, looking back

ICONIC MOMENTS 1

QUARTZ+CO WOMEN LEADERSHIP NETWORK

Quartz+Co’s ambition is to change the management consulting industry from within, also when it comes to the share of female consultants. Therefore, we have started the Quartz+Co Women Leadership initiative, an internal network which aims to strengthen female leadership in consulting. The group is a platform for promoting a culture of inclusiveness and flexibility, and provides a forum for debate in addition to sponsoring leadership training and inspirational events. For example, the former CEO of Tryg Group, Stine Bosse, held a presentation at our Copenhagen office, where she let us in on her secret to reaching the top: balance, perseverance and having the courage to seize opportunities when they present themselves. Former Danish Minister of Foreign Affairs and Minister for Justice, Lene Espersen, and her husband Danny Feltmann, CEO at Karmameju, also joined us for an evening to share their 10 principles on how to juggle family life and top positions. 2

SOCCER CHALLENGE 2013

They say once is a fluke, twice is a trend, but three times is a tradition. This year, we held our third annual Soccer Challenge in Copenhagen where the usual contenders from top professional service firms were invited to a one-day soccer tournament. Also, in 2013 the Quartz+Co Soccer Challenge went international as Stockholm held its first tournament in August. The members of the Quartz+Co team in Stockholm were very impolite hosts and won the Swedish tournament. The results from the Danish tournament have mysteriously gone missing. 3

CASE CRACKING

In November 2013, Quartz+Co held its first-ever case challenge, in which nine teams of three students laboured intensely over the course of 24 hours to solve a real-life business case. Their challenge was to develop an omni-channel retail strategy for SPORTMASTER, Denmark’s largest sporting goods retailer. The students represented six top universities, eight countries and a wide range of academic backgrounds, including law, finance, strategy, mathematics, physics and even nanotechnology. The winners made off with top-line sports and ski gear in addition to the bragging rights. 5

CLIMBING THE CHARTS

Quartz+Co continues the journey towards our audacious goal of creating the strongest employer brand in management consulting. On the Nordic ldeal Employer ranking we have taken yet another major leap forward to a position as number 33, and local rankings are improving as well. In Denmark, we have claimed our top-three position among management consulting companies for the second year in a row. AREAS OF ASSOCIATIONS WHERE QUARTZ+CO SCORES HIGHER THAN OUR COMPETITIORS ACROSS SCANDINAVIA C RE AT I V E AND DY NAMI C WORK E NV I RONME NT

BUSINESS-FREE ZONES

At Quartz+Co, relationships mean more than just business. We see a human being in every client, rather than a client in every human being, and that’s why we put together events throughout the year where business isn’t on the agenda. In Stockholm, for example, Club Q+ rocked to the rhythms of Swedish pop comet Oskar Linnros. In Oslo, friends joined us in our garden oasis in the city for the buzz of good conversation and the fizz of champagne bubbles. And in Denmark, a group of our clients, colleagues and their families gathered at Tivoli for the second year in a row for the gardens’ annual Christmas musical and shopping at the famous Tivoli Christmas market.

RE S P E C T FOR I TS P E OP L E

AT T RAC T IV E P RODU C TS

L E ADE RS WH O WI L L S U P P ORT MY DE V E LOP ME NT

FAST GROWI N G / E NT RE P RE N U R IA L

Moving forward, looking back

C L I E NT I NT E RAC T I ON

Quartz+Co Competitors 59

E P I LOGU E

O N WA R D S We believe that the biggest questions are best answered by insisting on keeping ambition and compassion in the same (mental and reflective) room.

The photographs of magnetic particles on the cover and chapter pages of this report represent our commitment to opposition. The theory of magnetism centres on the concept of the dipole, an object that has two equal but opposite magnetic poles. If a magnet is cut in two, two magnets or dipoles are created out of one. Rather intriguing. And we find plenty of dipoles in the values and aspirations of Quartz+Co. Tackle & Solve on one side, and Engage & Mobilise on the other. Results on one side, Relationships

on the other. Capitalism on one side, Humanism on the other. Indeed, the Q on one side of the + and the C on the other. However, we donâ&#x20AC;&#x2122;t see these opposite pairs as irreconcilable; on the contrary, we consider them prerequisites for each other. Much in the same way as we believe that the biggest questions in this world are best answered by insisting on keeping ambition and compassion in the same (mental and reflective) room. It will for us remain as meaningless not to make profit, as it is only to make profit. These abstracts conclude the 2013 annual report from Quartz+Co. Thank you for reading. We hope you enjoyed the stories of companies who opposed the status quo and prevailed. For us, it was a fantastic year, which makes us very optimistic about the future. We remain committed to assisting companies and organisations who oppose, compete against, disagree with and counterbalance the status quo. We hope to have the privilege of standFor us, it was a fantastic ing by your side in the year, which makes months and years to us very optimistic come. about the future. We

remain committed to assisting companies and organisations who oppose, compete against, disagree with and counterbalance the status quo.

Moving forward, looking back

N W

E S

O P P OS IT IO N.Q UARTZCO.CO M

OPPO