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EUROPEANCEO

EUROPEANCEO SUMMER 2018

Work hard, play hard

Businesses are attempting to improve productivity with game mechanics

Masters of none

Eastern fortunes

As French education falters, the German An entrepreneurial spirit has spurred apprenticeship model is thriving wealth creation in Eastern Europe

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SUMMER 2018 www.europeanceo.com

Dealing with data

European organisations increasingly leverage information to better serve their customers. As data proliferates and gains value, Interxion CEO David Ruberg believes interconnection and cloud hubs present the key to prolonged business success AUSTRIA €12.30 UNITED KINGDOM £4.25 GERMANY €5.10

NETHERLANDS €6.95 SWEDEN SEK 39 BELGIUM €6.75

FINLAND €5.10 FRANCE €5.10 GREECE €9.00

IRELAND €5.10 LUXEMBOURG €6.75 SPAIN €6.75

ITALY €5.10 PORTUGAL €7.50 SWITZERLAND CHF 9

POLAND PLN 18.75 CZECH REPUBLIC CZK 140 SOUTH AFRICA ZAR 129.90

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editor’snote

A Step Back

Perspective is everything. Take success, for example: to some, it is calculated by numbers on a screen, with each additional zero providing security, comfort and status. For others, professional standing and personal fulfilment are the greatest indicators of a life well-lived. Unfortunately, for the vast majority, these measures are often in conflict with one another, necessitating sacrifice and moderation.

The average European works 40.3 hours a week. With professional success increasingly synonymous with long working hours, however, it can be easy to lose sight of the clock – not to mention personal wellbeing. Even in Japan, where the term karoshi (‘death by overwork’) has gained notoriety, the government is introducing a number of measures to curb the nation’s staylate culture (p.84). Closer to home, people are finding their own solutions, escaping the confines of the modern office block in favour of working with their hands and perfecting a craft (p.164).

But taking back control doesn’t have to mean renouncing the corporate world altogether. Karoli Hindriks, CEO of Estonian start-up Jobbatical, has tapped into young professionals’ desire to combine work and travel, matching skilled workers with opportunities in underserved countries (p.150). Not too long ago, Estonia itself would have been perceived as a struggling Soviet state, rather than the technologically advanced and business-friendly nation it is today. Step back a little further, and it’s easy to see that this budding entrepreneurial spirit is indicative of the wider region; Eastern Europe is now one of the largest producers of ultrahigh-net-worth individuals in the world (p.74).

Businesses, too, are coming to redefine what it means to be successful. As conscientious consumers demand brands take a stance on hot-topic issues (p.82), companies are putting their best foot forward on environmental, social and governance initiatives, striking a healthier balance between making a profit and saving the planet. Whether sourcing organic ingredients (p.66), redesigning workspaces to improve mental health (p.86) or helping investors identify opportunities that promote sustainability (p.118), businesses are increasingly viewing the world through green-tinted spectacles.

Effecting change is never easy, and we all have different definitions of success.

As the leading lights of Eastern Europe have shown, adversity is best addressed with a positive attitude, an entrepreneurial spirit and an unwavering commitment to one’s personal values. We may not all become the ultra-rich of Estonia, Poland or the Czech Republic, but one thing is for certain: stepping back and taking an objective view of the world every once in a while is a stride in the right direction.

Max Tomlin Features Editor

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Tower Business Media Ltd 40 Compton Street, London, EC1V 0BD, United Kingdom T: +44 (0) 207 253 5100 www.europeanceo.com The information contained in this publication has been obtained from sources the proprietors believe to be correct. However, no legal liability can be accepted for any errors. No part of this publication may be reproduced without the prior consent of the Publisher. © 2018 Tower Business Media Ltd. ISSN 1755-2206 Editorial on p22-27 © Project Syndicate 2018

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CONTENTS

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COVER STORY

FEATURES

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74

104

134

ON CLOUD NINE

MOUNTAINS OF MONEY

ALL FUN AND GAMES

UNIVERSITY VS APPRENTICESHIPS

Following the introduction of the General Data Protection Regulation in May, European organisations are required to store information more securely and responsibly than ever before. As data has gained value, interconnection and cloud hubs have become an integral part of any forward-thinking company’s business strategy

The US has long been considered the billionaire capital of the world, boasting seven of the planet’s 10 richest people. However, with a budding entrepreneurial spirit and a commitment to developing new technologies, Eastern Europe is now one of the largest producers of ultra-high-net-worth individuals in the world

Businesses have always looked for ways to improve employee engagement and boost productivity. In recent years, firms have even turned to game mechanics to incentivise performance.

Although the benefits of ‘gamification’ are still largely unproven, an increasing number of companies are starting to enter the game

For many aspiring youngsters across Europe, applying to university has become the default option. But as degrees have proliferated, graduate positions have failed to keep pace. Now, as the French Government seeks to reform its education system, the German apprenticeship scheme could offer a sound alternative to many

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MACROECONOMIC SOUNDNESS IN LAST 20 YEARS INVESTMENT OPPORTUNITIES IN ENERGY, TRANSPORT AND SANITATION FAIR AND PREDICTABLE LEGAL FRAMEWORK

SEIZE THE OPPORTUNITY NOW INVEST IN A RELIABLE COUNTRY,

INVEST IN

PERU

www.proinversion.gob.pe

S UMMER 2 0 1 8

CONTENTS REGULARS

PROFILES

17

DIGEST

All the industry, financial and management insight you need for the coming months on topical issues from across Europe 22

COMMENT

Hard-hitting analysis from our expert columnists, with a focus on staff training, boardroom dynamics and cryptocurrencies

60

90

120

150

VINCENT STECKLER

HENRIK POULSEN

KAROLI HINDRIKS

FOLLOW US ON: facebook.com/europeanceo twitter.com/europeanceo linkedin.com/showcase/european-ceo

When Vincent Steckler first joined Avast in 2009, the company was operating without a CEO. Under his leadership, Avast has grown rapidly to boast the largest market share of any antimalware application

IDA TIN

INDUSTRY OUTLOOK

MANAGEMENT

FINANCE

WORLD VIEW

LIFESTYLE

In spite of recent social progress, discussing reproductive health remains a taboo. With Clue, Ida Tin is changing this fact, revolutionising the ‘femtech’ space and heralding a healthier future for women

Following unprecedented success at a number of Denmark’s largest multinational corporations, Henrik Poulsen is now the driving force behind Ørsted’s transformation into a green energy leader

With the skills gap widening in many industries, businesses are looking further afield to find the right candidates. As the CEO of Estonian start-up Jobbatical, Karoli Hindriks is ensuring companies have access to a global talent pool

34

64

94

124

156

TECHNOLOGY

OPERATIONS

TRADING

US DESTINATIONS

FASHION

Malicious actors are targeting businesses with increasingly sophisticated approaches, forcing organisations to adopt more agile defence systems

Businesses need to be digitally proficient to achieve their goals.

Sound project management is key to a successful digital transformation

Recent ESMA regulations have deeply impacted Europe, and Cyprus in particular. But new opportunities are present in a burgeoning marketplace

Port Arthur, Texas, was one of the cities hit hardest by Hurricane Harvey. Efforts to rejuvenate its affected businesses are still ongoing

The use of fur in fashion is a controversial topic. As many designers ditch the material, fur alternatives are raising their own moral questions

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72

102

140

162

ENERGY

LOGISTICS

FINANCIAL INCLUSION

PROPERTY

LUXURY DESTINATIONS

Many have called for the discontinuation of diesel engines, but new technologies are significantly reducing the emissions they produce

Transport infrastructure defines how we move around the world. One company breathing new life into the sector is Ansaldo STS

There are around two billion people in the world without access to a bank account.

Improving inclusion would benefit the global economy

With world-class facilities and wellness-inspired architecture, Quinta do Lago is one of the most sought-after residential communities in Europe

By combining horses and hospitality, Selman Marrakech provides guests with a unique experience that truly reflects the owners’ personalities

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114

144

164

HEALTHCARE

SOCIAL MEDIA

BUDGETING

TRAVEL

CULTURE

The prevalence of counterfeit drugs is growing at a troubling rate, putting patients at risk.

The healthcare industry must react to protect its customers

Younger generations increasingly expect brands to speak out on hot-topic issues.

Empty words, however, can do more harm than good

With its ability to free up resources for mergers and acquisitions, zero-based budgeting has made a huge comeback in recent years

The significance of face-toface interaction cannot be overstated. A comprehensive business travel package, therefore, is a must

In a fast-paced, hi-tech world, more people are leaving the traditional workplace to pursue their passions in the craft economy

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Does your organization have strategic agility?

A great strategy is worthless if it fails in implementation. More than ever, strategic agility is essential for any organization to successfully overcome internal and external barriers and thrive in today's dynamic environment.

The Brightline™ Initiative is a coalition led by the Project Management Institute together with leading global organizations dedicated to helping executives bridge the expensive and unproductive gap between strategy design and delivery.

Learn more at www.brightline.org/strategic-agility BRIGHTLINE COALITION PROJECT MANAGEMENT INSTITUTE � THE BOSTON CONSULTING GROUP � BRISTOL-MYERS SQUIBB SAUDI TELECOM COMPANY � LEE HECHT HARRISON � AGILE ALLIANCE ACADEMIC AND RESEARCH COLLABORATION

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MIT CONSORTIUM FOR ENGINEERING PROGRAM EXCELLENCE � TECHNICAL UNIVERSITY OF DENMARK UNIVERSITY OF TOKYO GLOBAL TEAMWORK LAB � BLOCKCHAIN RESEARCH INSTITUTE

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EUROPEANCEO

SUMMER2018 NEWS & COMMENT GOING UP, GOING DOWN | THE GRID | BIG IDEA | TOP TEN | LEGAL CORNER | MOVERS & SHAKERS BUSINESS BRIEFING | FINANCIAL DIARY | CASE STUDY | WHAT THEY’VE BEEN SAYING | THE PLAYBOOK

▲

GOING UP

THE GRID

1m

Electric vehicles Italy’s populist government wants to transform the nation into an electric vehicle leader by 2022, with plans to put one million battery-powered cars on Italian roads. The initiative is likely to cost the state ¤8.6bn in incentives.

GIVE PEACE A CHANCE Although the 2018 Global Peace Index (GPI) showed Europe to be the world’s most peaceful region, the continent did suffer an overall decline in peacefulness for the third year running

1st

0.5%

Bitcoin’s energy consumption According to economist Alex de Vries, cryptocurrencies are on track to account for 0.5 percent of the world’s electricity use by the end of 2018, as bitcoin-mining energy usage soars to record highs.

152nd 12th

GOING DOWN

▲

0

John Lewis’ profits British high-street stalwart John Lewis expects first-half profits to fall to “close to zero” this year, as Brexit continues to shake consumer confidence. The firm is making big tech investments as Amazon eats into its business.

97

French confidence According to official statistics from Insee, French consumer confidence fell to 97 points in June – the lowest level in almost two years – as households became more pessimistic about their future standard of living.

79th Iceland

Iceland continues to rank as the world’s most peaceful country – a position it has held since 2011. The Nordic country, which has averaged just two murders a year since the start of the 21st century, topped the GPI for societal safety and security.

Switzerland

Switzerland dropped three places against its 2017 ranking, falling outside the top 10. Although the famously neutral country scored well in terms of its relations with surrounding states, it has been one of the world's 10 most prolific weapons exporters per capita for the last five years.

Greece

Greece has fallen more than 20 places in the GPI since 2008, with peaceful protests against austerity often turning violent. The country’s strained relationships with its neighbours, Turkey and Macedonia, have also ensured that international tension is ever-present in the region.

Ukraine

Ukraine has been rocked by political and civil unrest since late 2013.

The country scored badly for both ongoing internal conflicts and violent demonstrations, in no small part due to the instability coming from neighbouring Russia (which ranked 154th on the index).

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DIGESTSUMMER2018

BIG IDEA

¤1.03trn

Value of the counterfeit goods market (2017)

TOP TEN Job satisfaction Proportion of population currently satisfied with their employment

PROVING ITS WORTH

The IBM Crypto Anchor Verifier uses advanced optical-imaging technology and artificial intelligence to help authenticate objects IBM’s Crypto Anchor Verifier offers businesses new hope in the fight against fraudsters. By adding a portable optical analyser to an everyday smartphone camera – and leveraging IBM’s artificial intelligence software – the verifier can analyse detailed optical characteristics to assure users of an object’s authenticity. With the counterfeit goods market valued at €1.03trn last year, it’s unsurprising the verifier is already being tested in the diamond industry. And, with the addition of blockchain technology, it could soon be applied to many more areas, from pharmaceuticals to fashion.

1

2

3

4

5

69.9%

68.3%

64.8%

63.7%

63%

6

7

8

9

10

59.5%

58.4%

57.2%

56.6%

56.6%

Netherlands

Belgium

Luxembourg

Spain

France

Malta

Romania

Italy

Latvia

Sweden

Source: Eurostat

LEGAL CORNER

Man vs France Jean-Noel Frydman is suing the French state for seizing his domain name, France.com. The Frenchborn American, who bought the domain from Web.com in 1994, set up a website about France to serve as a “digital kiosk” for tourists and Francophiles. He even went as far as to collaborate with official French agencies, such as the Ministry of Foreign Affairs.

However, in 2015, the very same ministry launched a law-

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suit against Frydman, claiming he was in violation of French trademark law and was using the domain name in bad faith. In September 2017, the Paris Court of Appeal acknowledged the dispute and ruled in favour of the Ministry of Foreign Affairs. Web.com subsequently transferred Compensation the host name to the paid to Jean-Noel ministry on March Frydman by 12, without giving Web.com

¤0

Frydman any formal warning or compensation.

On April 19, Frydman retaliated, filing his own lawsuit in the US against Verisign, Atout France (a government tourism agency), the French Republic, the Ministry of Foreign Affairs and the Minister of Foreign Affairs, Jean-Yves Le Drian.

The lawsuit accuses the Ministry of Foreign Affairs of “reverse domainname hijacking”. All defendants are yet to appear in court.

MOVERS & SHAKERS START-UPS | NEW APPOINTMENTS | ENTREPRENEURS

EUROPE NEW APPOINTMENT

EUROPE ENTREPRENEUR

EUROPE START-UP

Herbert Diess | CEO

Tom Blomfield | CEO

MONZO

CASTOR EDC

Before being appointed to head the Volkswagen Group in April, Herbert Diess was CEO of the group’s namesake brand.

He stepped into the top role during a time of great turmoil for the conglomerate, which was dealing with diesel emissions scandals across multiple brands. Diess’ mission in the coming years will be overseeing Volkswagen Group’s corporate restructuring, as well as its push towards electrification.

Banking is one of the most deeply entrenched industries in the world, but that didn’t stop 32-year-old Oxford graduate Tom Blomfield from trying to disrupt it. His fast-growing mobile bank, Monzo, entered the market with a bang, raising £1m (€1.13m) in 96 seconds to complete the fastest crowdfunding campaign in history. Expecting to hit one million users by October, Blomfield’s Monzo has set its sights high.

With a mission to create the most extensive medical dataset in the world, Amsterdam-based Castor EDC wants to accelerate the process of curing diseases.

By creating a cutting-edge electronic data-capture platform, Castor EDC allows medical professionals from around the world to share data with colleagues, streamlining medical research.

With a €1.1m grant from the European Commission, the company’s prospects are bright.

GLOBAL NEW APPOINTMENT

GLOBAL ENTREPRENEUR

GLOBAL START-UP

VOLKSWAGEN GROUP

Hans Vestberg | CEO

Andrew Paradise | CEO

SKILLZ

PYMETRICS

Appointed to succeed Lowell McAdam as Verizon CEO in August, Vestberg takes the reins at a pivotal time, with AT&T having recently stolen a march on the company with the purchase of DirecTV. Previously acting as CEO of Ericsson, Vestberg’s experience in the global telecommunications industry is extensive.

He can also boast having been the president of the Swedish Olympic Committee and chairman of the Swedish Handball Association.

With interest in eSports exploding all over the world, Andrew Paradise has been able to monetise video games for regular people. His company, Skillz, lets anyone compete for real cash through mobile games, ‘democratising’ the burgeoning realm of eSports competition. Hosting one million tournaments every day and doubling its revenue in the past year, Skillz has brought mobile eSports out of the periphery and into the mainstream.

Pymetrics wants to help companies hire the best people through a non-discriminatory process.

Founded by two neuroscientists, the company believes it can achieve its goals through fun brain games and artificial intelligence (AI). Pymetrics works by asking a company’s best employees and job candidates to play neuroscience games, matching underlying traits and analysing the results with AI to remove human bias from the recruitment process.

VERIZON

BUSINESS BRIEFING Engineering firm Rolls-Royce will axe 4,600 jobs over the next two years as part of a major restructuring. The company is working to reduce costs and complexities as it refocuses the business on civil aerospace, defence and power systems.

H&M will begin using data to customise the offerings of its 4,000-plus shops, as the Swedish firm struggles to reverse slumping sales.

H&M is the world’s largest clothing brand by revenue, but has suffered a decline in sales for 10 straight quarters.

Estonia’s Taxify is rapidly challenging Uber’s hold on Europe, after building up a portfolio of 500,000 drivers and 10 million customers across 40 cities in Europe and Africa. The firm was recently valued at $1bn (¤858.9m) after Germany’s Daimler bought a stake.

Pharmaceuticals and chemicals giant Bayer completed its $63bn (¤54.1bn) acquisition of rival Monsanto in June. The German firm will retire the Monsanto name, which became a target for environmental activists who were opposed to genetically modified seeds.

Enel, Italy’s largest utility provider, has beaten Spanish rival Iberdrola in the race to acquire Brazilian grid operator Electropaulo. The deal, which valued Electropaulo at just over $2bn (¤1.7bn), will more than double Enel’s presence in Brazil’s power distribution market.

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DIGESTSUMMER2018 CASE STUDY

FINANCIAL DIARY THIS QUARTER’S SELECTION OF THE BEST BUSINESS AND FINANCIAL EVENTS SUMMER 2018

HELSINKI

Helsinki Finance Summit on Investor Behaviour

20.08.18

Investor trading behaviour, household consumption and social influence in finance are but a few of the topics covered in this annual conference. This small-scale event, organised by Aalto University, provides a rare chance for in-depth discussions with renowned academics.

FRANKFURT

World Banknote Summit

24.09.18

With payment methods rapidly changing, the banknote landscape is at a pivotal time in its history. The World Banknote Summit is the only event that provides industry players with a chance to meet and discuss new perspectives regarding the role of banknotes in modern society.

DUBLIN

International This year’s International Conference On Accounting and Finance (ICAF) will take Conference On Accounting & Finance place in Dublin. ICAF gives delegates an

1.10.18

invaluable opportunity to share ideas, forge new collaborations with key global players and get to grips with cutting-edge applications.

“Based on our experience and knowledge of markets, it will not be possible... for private financial institutions on their own to mitigate fully the risks of disruption to financial services.”

Bank of England Governor Mark Carney criticises the European Union for its lack of progress on Brexit negotiations.

“This new [renewables] ambition will help us meet our Paris Agreement goals and will translate into more jobs, lower energy bills for consumers and less energy imports.”

Miguel Arias Cañete, the EU climate commissioner, commends the bloc’s decision to increase its renewable energy targets.

HEART IN THE RIGHT PLACE 3D printing has been around for some time – everything from toys to houses is being printed using plastic, metal and even cement.

However, three-year-old German start-up Cellbricks has made significant progress in an area yet to be conquered by the technology: the printing of living human tissue. Using a process called ‘bioprinting’, the company creates mini organs and vital tissues for drug development and regenerative therapies.

While still in its infancy, the potential implications of this technology are revolutionary.

Transplant waiting lists could be reduced, while printing multiple copies of a patient’s organ would allow healthcare professionals to test the type and dosage of medicine prior to administration, improving the precision of care.

Cellbricks has its own ambitions for the technology, envisioning the creation of new organs that secrete insulin or other specific medicines for patients with chronic conditions. With drug developments costing into the billions, printable tissue could change the way new drugs are designed.

WHAT THEY’VE BEEN SAYING

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“We must have more regulation regarding every type of migration, so that people have the impression that law and order are being enforced.”

German Chancellor Angela Merkel defends her government’s migration policy in front of a crowded Bundestag.

“This enhanced forward guidance clearly signals that we will remain patient in determining the timing of the first rate rise, and will take a gradual approach to adjusting policy thereafter.”

Mario Draghi, President of the European Central Bank, on the slow pace of proposed interest rate hikes.

“We [Europe] are not an island, and we must face up to this challenge while remaining loyal to our values, and protecting our people and national cohesion.”

French President Emmanuel Macron at the EU Summit in Brussels, speaking after a new migrant deal was reached.

THE PLAYBOOK

Tackling Twitter trolls

the visibility of offensive users’ posts. Such posts will be shown less in search results, as well as in replies to tweets.

“We want to take the burden of the work off the people receiving the abuse or the harassment,” said Twitter CEO Jack Dorsey. In trials, the new feature resulted in a four percent decrease in abuse brought up by search results, as

Twitter has recently changed the way it fights abusive trolls on the site. The social network already prohibits abuse and allows users to block or mute anyone whom they feel threatened by, but an additional feature will make the website all the more protected.

As part of the new strategy, Twitter will look for behavioural signals of harassment and limit

NEED TO HAVE

✚ A PPS ✚ DE V ICE S ✚ T OOL S ✚ G A DGE T S

1

TrackR

The penny-sized TrackR is one of the lightest Bluetooth trackers on the market. With LED lights and a loud ringer, you’ll never misplace important items ever again.

2

3

Pocket

Handpresso

Pocket is an app that allows users to quickly and easily save images, documents and articles all in one place – even when they don’t have an internet connection.

Perfect for those who are always on the go, the Handpresso is a portable espresso machine that serves up the perfect cup of coffee or espresso no matter where you are.

SOCIAL MEDIA FIRMS FACE INCREASING PRESSURE TO DEAL WITH ONLINE TROLLING, WHICH TENDS TO TARGET WOMEN AND MINORITIES

NEED TO KNOW

well as an eight percent decrease in abuse across conversations.

The move comes as social media firms face increasing pressure to deal with online trolling, which tends to target women and minorities. It makes commercial sense to reduce this abuse, too: if more people feel safe to go on social media sites, more businesses will be willing to advertise on them.

ASKING FOR A PROMOTION 1 Do your research. Fully understand what your new role would entail and be prepared to explain how you are best equipped to excel in it.

2 Build a case. Demonstrate how valuable you are to the company over time; use your initiative to resolve problems and improve processes.

3 Pick your moment carefully. Your request should follow a personal success, such as a completed project, and coincide with an upturn in company fortunes.

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COMMENT

Edoardo Campanella FUTURE OF THE WORLD FELLOW, IE UNIVERSITY

The limits of lifelong learning Technological progress continues to reshape the labour market. With an increasing demand for new skills, businesses and policymakers must start rethinking their training programmes As new technologies continue to upend industries and take over tasks once performed by humans, workers worldwide fear for their futures. But what will really prevent humans from competing effectively in the labour market is not the robots themselves, but rather our own minds, with all their psychological biases and cognitive limitations.

In today’s fast-changing labour market, the most in-demand occupations – such as data scientists, app developers or cloud computing specialists – did not even exist five or 10 years ago. It is estimated that 65 percent of children entering primary school today will end up in jobs that do not yet exist.

Succeeding in such a labour market requires workers to be agile lifelong learners, comfortable with continuous adaptation and willing to move across industries. If one

22 | EUROPEANCEO

profession becomes obsolete – a change that can happen virtually overnight – workers need to be able to shift nimbly into another.

Barriers to education Lifelong learning is supposed to provide the intellectual flexibility and professional adaptability needed to seize opportunities in new and dynamic sectors as they emerge, as well as the resilience to handle shocks in declining industries. Training centres, the logic goes, simply need to identify the competencies that companies will look for in the future and design courses accordingly.

Yet, in the eurozone, only about 10 percent of the labour force undertook some type of formal or informal training in 2017, and the share declined sharply with age. If lifelong learning is the key to competing in the

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labour market, why are people so reluctant to pursue it?

The truth is that reversing the process of skills obsolescence requires overcoming psychological and intellectual barriers that are too often ignored. According to behavioural economics, human beings are biased towards the status quo; we overestimate the potential losses of a deviation from our baseline and underestimate the potential benefits.

Lifelong learning is viewed as extremely costly in terms of time, money and effort, and the returns are regarded as highly uncertain, especially amid technological disruption. Such views may be reinforced by the feelings of depression and hopelessness that often arise when workers lose their jobs or face career crossroads. If the need to ‘start over’ after years in a certain job or field is demoralising, after decades it can seem like an insurmountable challenge. And, in fact, embarking on such a change late in life runs against our natural patterns of development.

Crash course Human beings experience a decline in cognitive performance relatively early in life, with fluid intellectual abilities – associated with working memory, abstract reasoning and the processing of novel knowledge – beginning to decline around age 20. After middle age, these abilities deteriorate substantially, making the acquisition of new skills increasingly challenging. Only our crystallised cognitive abilities, related to communication and management skills, improve later in life.

This reflects centuries of evolution. In almost any society, age is associated with wisdom, experience and growing social status.

Youth was the time for learning

the fundamentals of the profession that one would practise throughout adulthood. Once in that job, a worker would refine their skills as they gained experience, but they would probably not have to learn new competencies from scratch.

Today’s training programmes are ineffective partly because they usually target fluid intellectual abilities. For companies, the conclusion seems to be that retraining a workforce is too challenging, so when new skills are needed, it is better to pursue alternatives like automation, offshoring and crowdsourcing. In its 2015

TRADE UNIONS AND BUSINESS ASSOCIATIONS SHOULD ESTABLISH FORMAL MENTORING PROGRAMMES TO ADVISE WORKERS ON HOW TO PROGRESS IN THEIR CAREERS Economic Report of the President, the US Council of Economic Advisors found that the share of US workers receiving either paid-for or on-the-job training fell steadily from 1996 to 2008.

The assumption that workers, regardless of their age and educational background, will independently do what it takes to keep up with technological change is a fallacy that risks creating an army of unemployed. Such an approach can be expected only of the most highly educated and qualified workers – those whose jobs are usually not even at risk from automation.

New tricks This may change in the future, because younger generations are growing up with the expectation of lifelong learning. But, in the meantime, policymakers should take steps to mitigate the complicated mental processes at the root of many people’s professional inertia.

For starters, counsellors could help to guide workers through the tumultuous process of skills acquisition and job hunting. For individuals, securing the help of a counsellor would require overcoming feelings of despondency or shame about needing help at all.

Moreover, workers may get caught up in what psychologists call the ‘illusion of control’ – our tendency to overestimate our ability to shape events without external support.

If, however, counselling services become the norm, workers are far more likely to take advantage of them. To this end, trade unions and business associations should establish formal mentoring programmes to advise workers on how to progress in their careers or in a transition to a new sector. Employers, for their part, should establish formal feedback processes, not just to evaluate the performance of their employees, but also to assess what skills need to be updated or can realistically be acquired.

In addition, companies should be granted generous tax incentives to boost investment in training programmes. Reflecting the reality of adults’ cognitive abilities, such programmes should aim to transfer new knowledge gradually, while leveraging crystallised intellectual skills. More experienced workers might be less prone to learning altogether new skills than their younger colleagues, but they may excel in other valuable areas, such as problem-solving, self-management and self-motivation.

As we develop robots with increasingly human-like capabilities, we should take a closer look at our own. Only by learning to overcome – or at least evade – our cognitive limitations can we have long and fruitful careers in the new global economy. n

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EUROPEANCEO

COMMENT

Lucy P Marcus CEO, MARCUS VENTURE CONSULTING

Time for a boardroom reckoning Shareholders are becoming increasingly vocal on a range of hot-topic issues.

If boardrooms fail to address their concerns, business will inevitably suffer Gone are the days when annual general meeting season – the time of year when executives and directors of publicly traded companies gather to report on their activities, accounts and plans to shareholders – went by unnoticed. Ever since the 2012 ‘shareholder spring’, shareholders have stopped acting as passive recipients of companies’ reports or obedient rubber-stampers of their plans and pay packages, and have started actively and publicly questioning board decisions, airing grievances and submitting proposals for change. This shift is long overdue, and it will transform how business operates, whether companies like it or not.

Over the years, the number of issues that attendees have taken up during annual general meetings has grown exponentially. In fact, as several large-scale investors have told me, there are so many issues in need of attention that it can be difficult to prioritise them. Still, some issues have taken on particular prominence.

24 | EUROPEANCEO

Paying the price This year, the issue that was raised most frequently was executive pay. What stands out is that discussion of the issue was based not just on a sense of unfairness arising from extreme pay disparities and an apparent lack of regard for performance, but also on hard evidence, including a clearer understanding of how pay packages and bonuses work. This raises the likelihood that current grievances will result in real change.

For example, shareholders at British satellite telecommunications company Inmarsat voted against its remuneration report, underscoring the divide between executive compensation and company performance.

Likewise, remuneration policies were rejected by nearly 36 percent of shareholders at Unilever and 34 percent at AIG. Large investors at the Anglo-Australian miner Rio Tinto also balked at its remuneration report.

Of course, this trend is far from universal. Shareholders at Tesla approved what corporate governance experts have called the “staggering” pay package of the company’s billionaire founder, Elon Musk, whose “Trump-like ability to get people to believe in him and his preposterous promises” – as one commentator put it – has propelled the company’s share price to sky-high levels at the same moment that its bonds are trading at junk bond levels. Nonetheless, the shareholder pushback represents a major step forward, and the fact that the compensation issue is now being discussed not only in business media, but also in general outlets, magnifies the activists’ potential impact.

Shareholder concerns While executive pay got the most attention this year, investors and the public are deeply concerned about several other issues as well.

Some are better known than others, but all will require urgent

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The ride-hailing companies Uber and Lyft – following Microsoft’s lead – have taken a step forward, scrapping mandatory arbitration to settle harassment claims and giving victims more options, including public lawsuits. But demands for more comprehensive changes are likely to grow louder.

attention in the coming months if boards are to avoid major upheaval at next year’s annual general meetings.

For starters, resistance to allowing CEOs to also serve as board chairs – long a topic of conversation, particularly in the US – is intensifying. At Tesla, investors are being urged to keep Musk only in his role as CEO, while bringing in an independent board chair. Mark Zuckerberg’s dual role at Facebook also seems to be subject to increasing opposition.

Second, companies are facing intensifying pressure to improve their handling of sexual harassment accusations, from their response to initial complaints to their reporting of such responses.

In the #MeToo era, when victims feel increasingly empowered to report the harassment and assault that they experience, the extent of the problem – and the inadequacy of existing mechanisms for responding to it – is becoming starkly apparent.

AFRINIC, the body responsible for allocating internet network addresses across Africa, is in virtual free fall after allegations against its chairman resulted in the board’s disintegration. The Hollywood producer Harvey Weinstein has now been arrested on charges of sexual assault, and the company he founded, the Weinstein Company, has collapsed. Organisations like Save the Children are facing a reckoning as well.

SHAREHOLDERS HAVE STARTED ACTIVELY AND PUBLICLY QUESTIONING BOARD DECISIONS, AIRING GRIEVANCES AND SUBMITTING PROPOSALS FOR CHANGE

Cause and effect Another issue that is taking on a new sense of urgency is the relationship between business and politics, with companies facing criticism for their political entanglements. In particular, the pharmaceutical giant Novartis has found itself under the microscope in two countries.

In Greece, Novartis is accused of bribing 10 politicians. In the US, the company not only spent $8.8m (€7.6m) lobbying US lawmakers in 2017, it also paid $1.2m (€1.03m) to President Donald Trump’s personal lawyer, Michael Cohen, for guidance on how the Trump administration would approach healthcare policy issues. The telecommunications company AT&T paid Cohen as much as $600,000 (€515,490) as part of a similar consulting contract.

Even if these actions are not explicitly illegal, they raise serious ethical – and, in turn, reputational – questions, for which companies are increasingly being called to account. The same is true of decisions taken in numerous other areas, from environmental policies to working conditions, which are also becoming subject to growing scrutiny.

All of these are real and wellfounded concerns that will not go away any time soon. Boards and executive teams cannot sweep them under the rug, treating them like passing fads. The best bet for business is to get ahead of these issues, taking real, timely action to address them as soon as possible. Otherwise, future annual general meetings will only become tenser. n

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EUROPEANCEO

COMMENT

Robert J Shiller PROFESSOR OF ECONOMICS, YALE UNIVERSITY

New money is old news When the price of bitcoin soared in 2017, many started to believe in a cryptocurrency revolution. But the concept of ‘new’ money has a long and unfruitful history The cryptocurrency revolution, which started with bitcoin in 2009, claims to be inventing new kinds of money. There are now nearly 2,000 cryptocurrencies, and millions of people worldwide are excited by them. What accounts for this enthusiasm, which so far remains undampened by warnings that the revolution is a sham?

One must bear in mind that attempts to reinvent money have a long history. As the sociologist Viviana Zelizer points out in her book The Social Meaning of Money: “Despite the common sense idea that ‘a dollar is a dollar is a dollar’, everywhere we look people are constantly creating different kinds of money.” Many of these innovations generate real excitement – at least for a while.

As the medium of exchange throughout the world, money, in its various embodiments, is rich

26 | EUROPEANCEO

in mystique. We tend to measure people’s value by it. It sums things up like nothing else. And yet it may consist of nothing more than pieces of paper that just go round and round in circles of spending.

So its value depends on belief and trust in those pieces of paper. One might call it faith.

Take note Establishing a new kind of money may be seen as a community’s avowal of faith in an idea, and an effort to inspire its realisation. In his book Euro Tragedy: A Drama in Nine Acts, the economist Ashoka Mody argues the true public justification for creating the European currency in 1992 was a kind of “groupthink”, a faith “embedded in people’s psyches” that “the mere existence of a single currency… would create the impetus for countries to come together in closer political embrace”.

New ideas for money seem to go with the territory of revolution, accompanied by a compelling, easily understood narrative. In 1827, Josiah Warner opened the Cincinnati Time Store, which sold merchandise in units of hours of work, relying on ‘labour notes’ that resembled paper money.

The new money was seen as a testament to the importance of working people, until he closed the store in 1830.

Two years later, Robert Owen, sometimes described as the father of socialism, attempted to establish the National Equitable Labour Exchange in London, relying on labour notes, or ‘time money’, as currency. Here, too, using time instead of gold or silver as a standard of value enforced the notion of the primacy of labour. But, like Warner’s time store, Owen’s experiment failed.

C18AS_027_G09_89614.pdf

Bad penny Likewise, Karl Marx and Friedrich Engels proposed that the central communist premise – the “abolition of private property” – would be accompanied by a “communistic abolition of buying and selling”.

Eliminating money, however, was impossible to do, and no communist state ever did so. Instead, as the British Museum’s recent exhibit, The Currency of Communism, showed, they issued paper money with vivid symbols of the working class on it. They had to do something different with money.

During the Great Depression of the 1930s, a radical movement called ‘technocracy’, associated with Columbia University, proposed to replace the gold-backed

CRYPTOCURRENCIES ARE A STATEMENT OF FAITH IN A NEW COMMUNITY OF ENTREPRENEURIAL COSMOPOLITANS WHO HOLD THEMSELVES ABOVE NATIONAL GOVERNMENTS dollar with a measure of energy, the ‘erg’. In their book The ABC of Technocracy, published under the pseudonym Frank Arkwright, they advanced the idea that putting the economy “on an energy basis” would overcome the unemployment problem. The technocracy fad proved to be short-lived, though, after top scientists debunked the idea’s technical pretensions.

But the effort to dress up a half-baked idea in advanced science didn’t stop there. Parallel with technocracy, in 1932 the economist John Pease Norton, addressing the Econometric Society, proposed a dollar backed not by gold, but by electricity. While Norton’s electric dollar received substantial attention, he had no good reason for choosing electricity over other commodities to back the dollar.

At a time when most households in advanced countries had only recently been electrified, and electric devices from radios to refrigerators had entered homes, electricity evoked images of the most glamorous high science. But, like technocracy, the attempt to co-opt science backfired. In 1933, syndicated columnist Harry I Phillips saw in the electric dollar only fodder for comedy. “But it would be good fun getting an income tax blank and sending the government 300 volts,” he noted.

Other side of the coin Now we have something new again: bitcoin and other cryptocurrencies, which have spawned the initial coin offering (ICO). Issuers claim that ICOs are exempt from securities regulation because they do not involve conventional money or confer ownership of profits. Investing in an ICO is thought of as an entirely new inspiration.

Each of these monetary innovations has been coupled with a unique technological story. But, more fundamentally, all are connected with a deep yearning for some kind of revolution in society. The cryptocurrencies are a statement of faith in a new community of entrepreneurial cosmopolitans who hold themselves above national governments, which are viewed as the drivers of a long train of inequality and war.

And, as in the past, the public’s fascination with cryptocurrencies is tied to a sort of mystery, like the mystery of the value of money itself, consisting in the new money’s connection to advanced science. Practically no one, outside of computer science departments, can explain how cryptocurrencies work. That mystery creates an aura of exclusivity, gives the new money glamour and fills devotees with revolutionary zeal. None of this is new and, as with past monetary innovations, a compelling story may not be enough. n

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SPECIAL REPORT

Xxx

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HEAD IN THE

CLOUD, FEET ON THE

GROUND AS THE WORLD BECOMES INCREASINGLY DATA-DRIVEN, INTERCONNECTION AND CLOUD HUBS ARE MORE CRUCIAL THAN EVER. INTERXION, ONE OF EUROPE’S LEADING PROVIDERS, IS AT THE FOREFRONT OF THIS REVOLUTION, ACCORDING TO THE COMPANY’S CEO, DAVID RUBERG »

CLOUD COVER

ata centres are the physical building blocks of the digital economy. For the past 30 years, this special class of building has exploded in number to keep pace with the growing business requirement to house data and computing capacity. In 2017, there were an estimated eight million data centres around the world – most enterprises use at least one data centre, which they either own directly or rent from a third-party provider.

Among myriad data centres, there is a very small category that plays a critical role in enabling the global exchange of data traffic, which essentially underpins the digital economy. Carrier-neutral data centres – also known as ‘interconnection hubs’ – emerged more than 20 years ago, with the advent of the internet. Interconnection hubs became the neutral locations where telecommunications providers could interchange IP traffic to reach end users. Initially relatively small, these purpose-built data centres were historically located in major metropolitan areas in order to serve communities with a high concentration of people and a strong GDP. The need to exchange traffic with as many parties as possible within the same location has given rise to the construction of one or two interconnection hubs in every major city in the world. Further, successive waves of innovation, such as e-commerce and digital media, have led to exponential growth in the amount of traffic exchanged, which, in turn, has greatly enhanced the strategic importance of these facilities.

Today, all the biggest companies delivering digital services have a presence in the main interconnection hubs around the world, as it allows them to connect to one another and route their internet traffic to end users in the most effective and efficient way possible. And now that cloud and mobility have become the pillars of any modern enterprise IT architecture, establishing a presence in one of the major interconnection hubs has become a must for businesses aspiring to thrive in the digital economy.

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Interconnection hubs With the advent of cloud and mobility, two things have fundamentally changed in enterprise IT architecture. The first is that any organisation serving its customers through online applications must now employ a much larger pool of communications providers to deliver a superior end-user experience. The second change, meanwhile, has required businesses to adopt one or more public clouds in order to reduce their capital and operational expenditure. This, in turn, has forced them to find a secure and reliable mechanism that can access such services without breaking the bank on connection costs or exposing corporate assets to the risks of public internet. As Interxion CEO David Ruberg told European CEO: “Interconnection hubs are the only data centres where these critical requirements can be addressed in an effective and efficient way.”

Interxion is one of the few companies that operates these neutral interconnection hubs in Europe. Since its inception in 1998, Interxion has focused on building data centres in locations with the greatest demand for interconnection. The company has since expanded its presence to 13 major Western European cities across 11 countries, and now operates 50 data centres that serve more than 2,000 customers.

Ruberg has been at the helm of the company for more than 15 years and has served as CEO for the past 10. He joined the industry when it was still in its early days, having foreseen the critical role that interconnection hubs would play in enabling the global expansion of the internet. Throughout his tenure, Ruberg has overseen a steady growth in revenue, profit and customer base – but, more importantly, he has also built a customer-centric culture obsessed with delivering superior quality of service and the best possible value.

“Interxion’s core vision is to be at the heart of the global digital economy, enabling customers to enhance their value proposition by effectively interconnecting their businesses within their communities of interest,” Ruberg told European CEO. Participating in communities of interest is the principal value proposition for

companies that choose to work with Interxion.

These organisations are characterised by being highly interconnected with their customers, business partners and suppliers. Consequently, they benefit greatly from being present within interconnection hubs – into which all internet traffic flows. All the leading providers of public cloud services have deployed private cloud access nodes to enable enterprises to access their services in a secure and reliable way. For this reason, a subset of neutral interconnection hubs has evolved to become neutral cloud hubs.

Up in the clouds As the leading operator of cloud hubs in Europe, Interxion offers companies access to all of its major platforms across the 13 cities in which it operates. “The emergence of neutral hubs represents a terrific opportunity for enterprises that have embarked on their journey to digitalisation in order to increase business

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CLOUD COVER

Secure Perimeter

Fig 1

HQ Office Branch Office

Users

Enterprise Data Centre Customers

Branch Office

Internet

Branch Office

BEING CO-LOCATED DRAMATICALLY REDUCES THE COST AND COMPLEXITY OF A COMPANY’S DIGITAL SERVICE DELIVERY AND SUPPLY CHAINS

Fig 2

Users

Users

Users

IoT SAAS Platforms

WAN

Enterprise Data Centre

Interconnection Hub

Customers

Mobile Internet IAAS Platforms

Employees

agility, enable new business models, improve customer experience and reduce costs,” Ruberg said. “Accessing communication and cloud services through a private connection at Interxion – either through a direct deployment or through an IT service provider – is a critical step to delivering the best quality of service to as many end users as possible. It is also key to achieving secure and reliable connections to the cloud, by bypassing the public internet.”

Today, more and more enterprises are adopting IT models based on a hybrid cloud architecture. In such cases, some workloads are kept in traditional on-premise data centres, while others are moved to the public cloud. In a hybrid model, the benefits of having a presence in Interxion’s data centres extends beyond secure access to the public cloud.

“In a hybrid IT environment, people, processes and applications are connected to each other, yet sourced from multiple locations and

from a variety of providers,” Ruberg explained.

“This creates at least two new – and related – challenges for IT organisations that are migrating to the cloud: first, how to seamlessly and securely interconnect the different public and private IT environments; and second, how to create an agile IT sourcing model that allows workloads to be placed in the optimal location from a security and performance standpoint.”

In a scenario where applications are dispersed across different physical locations, connecting different workloads and datasets with the associated security, performance and service-level requirements creates a new networking challenge for enterprise IT teams.

Out with the old Traditional enterprise network architecture relied on a corporate wide area network (WAN), which was typically designed to connect a company’s data centres and offices. In this model,

the enterprise data centre is the hub within the corporate WAN and hosts most, if not all, private applications and data.

The traditional network topology (see Fig 1) is still the norm across many enterprises. It was, however, constructed for an on-premise workload placement strategy. With the emergence of cloud services – and with both customers and employees accessing mission-critical applications through mobile devices – this architecture is rapidly becoming obsolete. As such, enterprises that are embracing digital transformation are now rethinking their networking strategies.

Essentially, they are expanding their network architecture to include interconnection hubs at the edge of the corporate WAN, where they can gain private access to cloud services, while also establishing private connections to customers, business partners and suppliers (see Fig 2).

“This new approach to networking has profound implications on workload placement » EUROPEANCEO

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CLOUD COVER

strategy,” Ruberg said. “Once an enterprise network has been expanded via interconnection hubs, it makes sense for these facilities to house certain categories of applications that have stringent response-time requirements.” Since more companies are expanding their presence within Interxion data centres, enterprises are not only reducing the cost of their network infrastructure, but are also dramatically improving the performance of their applications by having direct access to other entities that are located in the same facility.

For instance, organisations that serve their customers via online applications benefit from being co-located next to mobile operators and internet service providers. Meanwhile, enterprises that burst their hybrid cloud applications into one or more public clouds benefit from being co-located within their cloud platforms of choice.

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dramatically reduces the cost and complexity of their digital service delivery and supply chains.

Co-location in a multi-tenant data centre has always been a good option for enterprises, but it was only really considered when their IT footprint did not justify building their own data centres (or occupying a dedicated thirdparty, single-tenant data centre). For digitally dependent enterprises, gaining access to the right co-location provider is key to achieving a successful digital transformation. This is largely due to the fact that they become just a short connection away from other organisations’ workloads and IT infrastructure providers.

Historically, only certain categories of enterprise workloads have benefitted from being in close proximity to one another. One example within financial services is high-frequency trading, which requires deployments close to the central trading platforms. Today, entire sectors, such as banking, insurance,

healthcare, retail, transportation and manufacturing, are embarking on digital transformations in order to remain competitive in their respective fields. As companies embrace the benefits of integrating into the fabric of the digital economy, it is likely that co-location will be embedded in any future IT architecture that manages massive volumes of data flowing from customer devices to back-office systems.

As Ruberg explained: “Cloud migration is the first step in the journey. This is because selected workloads are more effectively deployed in the public cloud while legacy applications remain tethered to their existing environment, giving rise to the current incarnation of hybrid environments.

“The move to hybrid cloud environments will evolve and accelerate as legacy applications are re-engineered and new opportunities, such as big data analytics, the Internet of Things and artificial intelligence, become the norm.”

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CLOUD COVER

FOR DIGITALLY DEPENDENT ENTERPRISES, GAINING ACCESS TO THE RIGHT CO-LOCATION PROVIDER IS KEY TO ACHIEVING A SUCCESSFUL DIGITAL TRANSFORMATION

INTERXION IN NUMBERS:

1998 2,000+ 50 100% FOUNDED

CLIENTS

DATA CENTRES

POWERED BY GREEN ENERGY

With these tools, enterprise IT is set to modernise its architecture to make optimal decisions that are based upon workload placement, cost, performance and customer experience.

Strategic partner A key criterion when choosing a co-location provider is the access it provides to communities of interest. The larger the number of customers, suppliers, business partners and service providers that an enterprise can connect to in a third-party data centre, the more valuable it will be for them to deploy infrastructure in that location. For this reason, neutral interconnection hubs – like those operated by Interxion – are emerging as the most successful co-location providers for the digital transformation.

Another key customer requirement is operational excellence, as the companies that participate in the digital economy rely on data for mission-critical and real-time applications.

Interxion’s facilities take the form of stateof-the-art data centres, designed with the highest standards of efficiency, security, availability and resiliency in mind. The power, efficiency and ‘eight-nines’ statistical availability of the company’s standardised data centre design, together with the efficient use of capital for construction, have been leading the industry for many years.

As Ruberg was quick to add, these factors have also contributed to Interxion’s above-industryaverage customer satisfaction rating.

Interxion is also an industry leader in sustainability – an area that has become a widespread societal concern and customer requirement – operating 100 percent of its data centres on green energy. “In today’s world, where data centres consume a significant and increasing proportion of energy, it is of paramount importance to strongly embrace sustainability as a key principle of doing business,” Ruberg said.

“At Interxion, we see green energy as an asset and not as a cost, and we always strive to combine efficiency with sustainability.

Since the early days, we understood the longterm implications of running data centres mainly on fossil fuels. Given the fast-paced growth of our industry, we accepted our social responsibility to do things differently, even at times when green energy was more expensive than the alternative.”

Operational excellence does not only derive from Interxion’s facilities, however: with more complex IT architectures depending on interconnection hubs, customers can rely on Interxion to provide flawless operational support 24/7. This, in turn, allows companies to optimise the experience offered to their own customers. In this context, it is vital that service delivery is continuously improved and aligned to the latest regulatory requirements.

“In our company, we take immense pride in how we deliver service to our customers,” Ruberg said. “We constantly strive to improve our operations and keep our service delivery

model in line with the latest customer requirements and the development of the industry.”

At present, Interxion is in the process of evolving its service delivery framework in line with the IT Infrastructure Library, a set of best-practice principles used by numerous IT organisations around the world. The end result will be a service delivery framework that meets customers’ service-level agreement expectations, while still optimising efficiency.

By leveraging standards and the latest toolsets available in the market, Interxion connects even more intimately with the way its customers think about service delivery. This helps to further integrate Interxion’s services into customers’ digital value chains, and also accommodates the company’s continued growth.

Fabric of success Interxion is enjoying great success at the moment: through its pan-European footprint, Interxion serves the largest proportion of GDP of any co-location data centre provider in Western Europe. But despite its leadership in the field, the company will not be resting on its laurels any time soon. Interxion continues to invest in new data centres, modernising the existing ones and strategically acquiring assets in highly connected locations, just as it has done in Marseille and Amsterdam in recent years.

Ruberg foresees a great opportunity ahead, not only for Interxion, but for all the European enterprises embarking on a digital transformation journey: “In 20 years’ time, we will not be talking about data centres anymore. The entire digital economy will seamlessly operate on a globally interconnected data fabric.

“At its core, there will be digital service hubs that represent the evolution of today’s interconnection hubs. The enterprises that will thrive in the future are those that will make smart architectural decisions over the next five years in terms of which IT infrastructure they select to enable and optimise their digital footprint.” ■ EUROPEANCEO

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INDUSTRY OUTLOOK

Technology

Attack vs defence

Malicious actors are using increasingly sophisticated approaches to target businesses, leading some organisations to adopt more agile defence systems, according to Richard Menear, CEO of Burning Tree A growing threat landscape is driving an uptick in fraud, theft and other damaging exploits, as nefarious actors become more adept at using freely available tools to hack and compromise corporate systems. But while artificial intelligence (AI), machine learning and predictive analytics technologies are now all firmly part of the cyberattacker’s arsenal, the number one threat to an organisation remains its people.

Ensuring the right people have the right access to the right resources at the right time is the key to ensuring effective control. As such, companies are increasingly concerned with assessing, analysing and identifying security threats in order to prevent or react quickly to incidents. Making security improvements in the midst of tightening budgets, however, is no easy task, especially when trying to boost productivity and profitability in a competitive industry.

UK-based information security firm Burning Tree is helping clients find innovative solutions in order to affordably identify and deal with threats to their organisations.

European CEO spoke to Richard Menear, the company’s CEO, about the changing threat landscape and how businesses can stay one step ahead of cyberattackers.

What is Burning Tree’s story?

Why was it created and how has it progressed to where it is today?

Burning Tree started as a security company focused on business processing and services.

This was a different approach to most security companies at the time, which were concentrating on network technologies. By applying security to the business process, Burning Tree soon became a leading provider of security consulting services across many industries, 34 | EUROPEANCEO

solving practical real-world problems within identity and access management programmes.

Today, Burning Tree addresses information security across all domains, including consulting services and business development, by working with some of the most innovative next-generation vendors and solutions.

How does Burning Tree help companies improve deficient security systems?

Burning Tree has been working extensively with its customers to help them understand and identify gaps in their security systems through the use of maturity capability assessments that utilise our proven reference architecture framework. By using maturity capability assessments as a benchmark, organisations are able to target, improve and measure progress more easily. We believe a holistic approach needs to be taken in order to identify vulnerabilities, while a commitment to continuous improvement is required to tackle deficiencies.

Using innovative technologies and delivering control in a DevOps-style deployment will help to stem the flow of negative events. This means a more strategic programme of work is often required. The main areas of focus for many of Burning Tree’s customers centre on two facets of security protocol: security event management, and identity and access management.

What challenges and opportunities occur when a company moves from a traditional security infrastructure to a new system?

Traditional systems are built as monolithic applications that often take months or even years to scope, develop and deploy. More

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INDUSTRY OUTLOOK

Technology

A future where we control our own identity on a mobile device is very likely

modern approaches, on the other hand, are being developed using agile methodologies and microservices, where code can be scoped, developed and deployed within days or even hours.

The ability for organisations to change the way they think about security controls within the development lifecycle is extremely beneficial.

Code scanning, vulnerability checking and the use of new technologies, like secure containers, are the principal elements driving security control in these newer systems.

This more dynamic methodology – typically deployed using cloud and mobile technologies – has significantly increased the attack surface of organisations. As a result, the use of next-generation security technologies, such as AI, machine learning, virtualisation and containerisation, is critical to securing the new landscape.

the authorised user. This is typically achieved by using authentication credentials in combination with geolocation, device characteristics, certificates, credentials, biometrics, user behaviour and other identifiers.

Blockchain also offers a new approach for individuals wanting to create, store and manage their own digital identity. This can then be used across a wide range of applications, from authentication at various trust levels to applications for services and products. A future where we control our own identity on a mobile device is very likely. We could prove our age, store our driving licence and passport information, and access offices, homes and our cars with our personal mobile device.

Are these new methods, like adaptive authentication, blockchain technology and AI, popular with customers? Do they pose any complications?

Conversationally, these themes are very popular with Burning Tree’s customers and the wider market more generally. Adaptive authentication is widely used in the financial services industry and among fintech firms.

Similarly, blockchain currently has a few practical identity applications, such as with student identity, age verification and the Know Your Customer initiative – and it could be used for many additional scenarios in the near future. The idea behind blockchain also promises to allow individuals to manage all of How has the threat landscape their own personal data. A number of Burnchanged since Burning Tree ing Tree’s partners have developed innovative was founded in 2003?

The cloud, the processing power of comput- technologies and use cases in this area that ing hardware and the proliferation of mobile are already being implemented commercially. technologies have all developed significantly over the past 15 years to make technology How does the European market for ubiquitous. Today, white goods, motor vehicles security solutions compare to others? and nearly everything else we touch are all How do you help firms grow their accessible via the internet – commonly referred market share in Europe more quickly? to as the Internet of Things.

Europe is a leader in security consulting serHowever, tools are also readily available vices, with innovative solutions seen across and easily accessible to anyone who wishes to organisations, whether they are based in finanuse them to compromise systems for criminal cial services, manufacturing or retail. After activities, ‘hacktivism’ or to simply prove they North America, malicious actors target Europe can. Attacks by nation states using advanced more than any other geographical region, drivpersistent threats have also been on the rise ing the need for better security controls. for political, as well as commercial, reasons.

Many of our partners in this space are innovative emerging technology companies based outside of Europe that want to use What new, innovative security Burning Tree’s extensive network and wide methods are being developed within identity and access management? How range of experience to grow their market do they compare to previous methods? share across Europe. As such, we often preAdaptive authentication technologies are the sent regular briefings and talks at industry leading tools being deployed by organisations events alongside our partners in order to to ensure the person authenticating is actually increase their exposure. n EUROPEANCEO

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INDUSTRY OUTLOOK

Technology

Steadying the ship

Ship recycling has long been considered one of the most dangerous and environmentally harmful jobs in the world. With new international regulations set to come into force, however, GSR Services aims to make safer, sustainable processes commonplace, according to the company’s CEO, Henning Gramann The maritime industry is much bigger than most people think. Not only does it account for the transport of more than 90 percent of all traded goods, but the vessels that traverse international waters also have the potential to cause significant damage in the form of oil spills, pollution and the transport of invasive species. While new sustainability regulations have addressed many operational aspects of shipping, the building and decommissioning of vessels still has a serious impact on both the health of workers and the environment.

The image of major ship recycling destinations – such as Bangladesh, India and Pakistan – is still generally quite negative. Ship recycling has been considered the most dangerous job in the world, but it can be done safely and in an environmentally friendly manner, even with a low-tech approach. With this in mind, Henning Gramann established GSR Services in 2011 to improve recycling practices in the dismantling of disused ships. European CEO spoke with Gramann to learn more about the role shipping has to play in global sustainability.

How has ship recycling changed over the years?

Ship recycling has existed since mankind first began using ships. But in the years since the Second World War, the industry has largely moved from Europe to Taiwan and, subsequently, the Indian subcontinent. This is a clear sign that once a country is developed, ship recycling becomes unfashionable. Labour and environmental regulations usually become stricter in parallel to a country’s economic 36 | EUROPEANCEO

growth, making ship recycling less profitable; there will always be countries with poorer working conditions willing to offer better prices.

In the last few years, however, we’ve seen a change as the International Maritime Organisation (IMO) developed a new agreement called the Hong Kong Convention, which sets internationally applicable standards. Even though the convention hasn’t come into force yet, major players in the industry have already started to live up to the requirements, and we have seen a major change on the recyclers’ side.

Not all recycling yards have looked at this developing market, though, which means good and bad performers are often direct neighbours. As such, it’s no longer appropriate to judge the standard of ship recycling by country; instead, standards must be distinguished between individual yards.

How does Europe compare to other regions in terms of ship recycling?

Europe has no significant ship recycling capacity and the few we do have are mostly only capable of handling ships of up to 200 metres. The majority of recycling candidates are much bigger, and of the few EU yards that could accommodate bigger ships and hold a valid permit, most are not active. Therefore, Europe has neither a good market share nor the capability to change this unless new, bigger yards open up.

Further, any ship recycling facility can apply to be on the European list of approved ship recycling facilities. And while European yards are on this list due to their location, their

foreign counterparts have to undergo a stringent approval process, one that even some EU yards might struggle to comply with.

The EU is introducing a new regulation for member states. What impact do you think this will have?

Under the relatively new EU Ship Recycling Regulation, ships flying the flag of an EU member state must use ‘safe and sound’ recycling facilities that appear on the European list of ship recycling facilities. Circumventing the EU legislation is very easy, but it does not necessarily mean the owner is going for substandard recycling: the owner can still enter into a contract with a good yard that complies with the Hong Kong Convention but has not applied for the EU list or is still awaiting EU approval.

In short, the positive impact the EU regulation will have is that ships under the EU umbrella or that visit an EU port must have an inventory of hazardous materials (IHM) by the end of 2020. That is the most important document in planning the recycling process of a ship.

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INDUSTRY OUTLOOK

Technology

It’s no longer appropriate to judge the standard of ship recycling by country; instead, standards must be distinguished between individual yards

90%

Despite this development, challenges and shortcomings persist. What are the most prominent? of all traded goods are The biggest shortcoming is a lack of demand for transported by sea sustainable ship recycling from shipowners, as many don’t care or simply don’t know about it.

As the Hong Kong Convention hasn’t come into force yet, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal is still applicable.

As this is truly a land-based and not shipspecific legislation, it is very difficult to comply with. Nearly all ships going for recycling are in breach of the Basel Convention for practical reasons and, therefore, act illegally. Unfortunately, grabbing the low-hanging fruit sometimes appears more attractive to shipowners than acting in favour of a proper, ethical solution.

How can these issues be resolved? And how does GSR work to resolve them?

First of all, the political debate on whether the so-called beaching method, which handles nearly 80 percent of recycling tonnage,

is appropriate or not must come to an end.

These requirements are fixed in the Hong Kong Convention, which should be used for distinguishing between good and bad ship recycling.

This will make decisions easier for those who have the power to decide where their ships are recycled. It will also establish fair competition based on quality, independent of the recycling method used. All of the different methods have specific advantages and challenges.

Once a common understanding is reached, it becomes clear where to sell ships for responsible recycling. Until this is achieved, only individual efforts and decisions can be taken, but there are guides available that offer sound and independent advice.

As for GSR, we are a knowledgeable and trustworthy business partner. We have all the abilities to prepare ships for sustainable ship recycling, from IHMs via last voyage planning and contracting with recyclers to the supervision of ongoing recycling activities at reasonable costs. We’re not compromising on what we believe is right, as our aim is to change the industry for the long term, not just provide a quick fix.

What developments in ship recycling can we expect in the coming years?

The EU legislation will mean we see more IHMs. That is a good foundation, as long as the IHM quality is right for setting the basis of safe ship recycling. We have actively supported the development of green and safe ship recycling in India for many years and have now reached a capacity of around 100 ships per year.

The experience gathered during these projects enables us to achieve the same standards in even less-developed infrastructures.

Green capacity will also increase further to become the norm, rather than the niche market it is today. Additionally, the processes will become more industrialised, requiring higher investments but also achieving higher productivity and revenue at year’s end. For me, it’s important not to reduce the number of workers, but to enhance the working and environmental conditions in order to achieve a truly sustainable future. n EUROPEANCEO

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INDUSTRY OUTLOOK

Technology

From Tallinn to Tokyo

With a growing demand in emerging markets, CITIC Telecom CPC is expanding its footprint and service offering through a carefully crafted strategy based on cutting-edge technology, according to Managing Director (Europe) James Halberstadt While most global telecommunications providers carve the world into the traditional Americas, Europe and Asia, they tend to define their strength in just one of these regions.

CITIC Telecom CPC (CITIC CPC), on the other hand, has created a unique set of capabilities that start in Eastern Europe and stretch all the way to Japan.

As operations in Eastern Europe, Russia, the Commonwealth of Independent States (CIS) and China are more challenging to global providers – due, in large part, to their complex regulatory environments – these regions are often less well served. This state of affairs, however, is starting to shift, thanks to the growing demand for global network services within emerging markets. These regions are beginning to request cloud-based services that are local to them, but that isn’t to say they don’t also seek providers with a global reach and product offering.

CITIC CPC’s focus on direct wholesale and enterprise connectivity between Eastern Europe and Asia is feeding this new demand. This, in turn, is seeing a considerable increase in the number of new services offered

by CITIC CPC, as well as an expansion in the group’s capacity.

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In light of the company’s recent acquisition of LINX Telecom, European CEO spoke to James Halberstadt, Managing Director of CITIC CPC Europe, to learn how the company is navigating this important period in its history.

What are some of the regulatory challenges to creating network solutions across international borders, and how do you overcome them?

It’s fair to say the international telecoms industry as a whole became deregulated during the late 1990s and early 2000s. This led to a glut of commoditised bandwidth across the US, Europe and Asia, with many different available operators. Now, local loop, facilities-based access infrastructure is the only hurdle preventing alternative providers from competing effectively.

There are a number of markets, however, that remain more difficult to operate in – such as China, Russia and the CIS – as they continue to receive strong oversight from their respective governments. This, in turn, necessitates licence ownership and a local presence – in the form of local offices, business entities and people – in order for a telecoms provider to operate successfully.

CITIC CPC is no stranger to operating in difficult markets: China, our largest market, is regulated by the Ministry of Industry and Information Technology, which reports directly to the Chinese Government. Operating in China for more than 16 years has put us in good stead to learn how to operate in markets with similar compliance regulations.

How does China’s One Belt, One Road initiative tie in with recent developments at CITIC CPC? CITIC CPC falls under the CITIC Group, which is a state-owned, Fortune 500 organisation in China. The One Belt, One Road (OBOR) initiative is at the forefront of the Chinese Government’s strategy to promote and facilitate business both in and out of China.

The acquisition of LINX Telecom, which was rebranded as CITIC Telecom CPC Europe on completion, provides points of presence (POPs) along the Silk Road. With POPs in Russia, Eastern Europe, Central Asia and Kazakhstan, CITIC CPC is now in a position to serve the needs of Asian clients that win contracts that have forced them to expand westward. Likewise, we are also seeing European companies invest in the East and successfully win contracts from the OBOR.

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INDUSTRY OUTLOOK

Technology

All service providers need to be at the forefront of technology in order to remain relevant to their customers

Why is it important that CITIC CPC works with world-class technology partners when delivering its services?

Technology evolves at an ever-increasing pace, and all service providers need to be at the forefront of technology in order to remain relevant to their customers. Security services are a good example, as five years ago a port-based, stateful firewall was considered a satisfactory enterprise security solution. Today, an application-aware firewall with built-in threat management is only the beginning.

Enterprises must have a multilayered approach in order to protect against viruses, malware, cross-scripted websites, botnets, phishing attacks and more. Security information and event management services that collect data from multiple sources and use big data analytics to detect anomalies, as well as warn of possible attacks, will soon become obligatory for every chief information security officer.

In light of such advancements, CITIC CPC’s TrustCSI security service continues to evolve and make use of new vendors that arrive in the market. Moreover, we have a research facility in Chengdu that tests and develops solutions from technology partners, including blockchain, big data analytics and other emerging technologies.

Can you provide some examples of the ways your customers are using cloud solutions to add value?

Our customers are increasingly moving their services to the cloud. This is not only to save money, but also to allow technology – and the efficiencies new technologies bring – to transform the way they operate. For example, a leather bag manufacturer has recently leveraged CITIC CPC’s SmartCLOUD solution to analyse cloth shape and size to ensure patterns are cut in a way that minimises the amount of cloth wasted.

An IT team that remains busy ‘keeping the lights on’ has no time to think creatively and strategically to help the business work in more interesting and competitive ways. CITIC CPC’s cloud solutions, however, ensure our customers’ IT leaders are free to spend more time in the boardroom and less time in the data centre.

How do SD-WAN technologies help businesses deliver optimal application performance?

Traffic patterns in corporate networks are reversing as companies move away from client server environments, which store applications solely in their own data centre, and move

towards cloud-based, software-as-a-service applications that are more typically located somewhere on the internet.

While previously 80 percent of traffic was destined for the data centre and 20 percent for the internet, this trend is rapidly moving the other way. The network environment is increasingly complex as enterprises operate in a hybrid configuration. This means business applications can be stored in multiple locations, both within and outside the private network environment.

SD-WAN solutions can be deployed over any underlying network transport as an overlay to the network. These solutions are deployed via ‘zero touch’, with policies downloaded from a graphical-user-interface-based orchestration system. Orchestrator policies allow network managers to identify applications (even if they are all HTTPS-based) and create path selection rules to route the traffic in the most efficient way possible – whether it’s based on bandwidth, latency or quality.

Finally, the SD-WAN service measures and makes decisions in real time, ensuring there is no disruption if the network environment is changed. End users’ application usage is, therefore, automatically optimised and protected from adverse network events.

With the digital threat landscape evolving all the time, how does CITIC CPC ensure its clients are always protected?

CITIC CPC’s motto is ‘innovation never stops’, and our engineering lab in Chengdu continues to be at the forefront of technology innovation. As testament to this ethos, CITIC CPC holds technology and vendor workshops with its customers in order to share the exciting innovations happening within CITIC CPC and the marketplace as a whole. We always strive to bring new technologies to market in order to allow our end customers to progress within their own competitive fields.

As a result, our Chinese and Asian sales teams have many customers in Europe with requirements that can now be fulfilled, and the same goes for our European customers, who can now enjoy unified network and cloud-based services across Asia. Looking to the future, growth in the European enterprise market is of paramount importance as we seek to help businesses with networking and cloud requirements that stretch all the way from Tallinn to Tokyo. n EUROPEANCEO

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INDUSTRY OUTLOOK

Technology

Rub of the green

On the brink of liquidation just a few years ago, EcoRub is now on track for a bright future thanks to a mixture of innovation and environmentalism, writes the company’s CEO, Åke Paulsson Having been an environmental activist for more than five decades, I’ve witnessed a lot of progress and many setbacks. My first foray into activism came shortly after I graduated as a chemical engineer, when I became uneasy about the gigantic outflow of heavy metals, sulphuric acid and other pollutants from the Boliden smelter at the Rönnskärsverken plant in Sweden. Alongside a number of other concerned citizens, I formed a group to tackle the issue.

The pollution was unbelievable. The arsenic levels in the Baltic Sea were nine times higher than in normal conditions. What’s more, the wildlife in the plant’s surrounding basin, which contained a mixture of saltwater and freshwater organisms, was barely managing to survive. Boliden, in partnership with the local trade unions, argued that the emissions had to be accepted otherwise thousands of workers would be made redundant. It also suggested the production of copper, lead, zinc, silver, gold and other materials was in the national interest.

The activist group that I was a part of, on the other hand, argued the emissions simply could not be tolerated, as they represented a threat to both the ecology and the people living around the Baltic Sea. It was our view that if emissions could not be significantly reduced, then production should be shut down.

40 | EUROPEANCEO

Stronger together Our group had a broad make-up, comprising fishermen, workers at the plant, technicians and other citizens who had a very good knowledge of the processes involved at the smelter.

We maintained there was technology available that could eliminate these emissions, but at that time there was a major issue for the Swedish trade unions, as they were being asked to balance environmental questions against work opportunities. Finally, the central trade union organisation, LO, decided environmental issues should take priority.

Subsequently, Boliden made efforts to ensure the smelter at the Rönnskärsverken plant was one of the cleanest in the world.

The company even started a subsidiary firm to develop green technology and sell it to the market.

Today, the wastewater from the plant is cleaner than the water pumped into the plant.

The gigantic chimney that was a landmark for ships has been demolished because there is no longer any use for it. Although fish caught in the Baltic Sea should still only be eaten in small quantities due to high levels of heavy metals and other pollutants, the environmental situation surrounding the plant is much improved. We may never know what impact our activist group had on Boliden’s decision to

INDUSTRY OUTLOOK

Technology

The demand for profit is pushing mankind to the edge of starvation

adopt a greener approach, but we can certainly be proud of our efforts.

Over the years, I have also worked as a trade union official specifically tasked with answering workers’ environmental questions. One particular project focused on the sustainable production of clothes and improved working conditions for textile workers. The project was savagely attacked by the textile workers’ trade union, which launched an attempt – in true McCarthyist style – to condemn the three project leaders as communist troika aiming to destroy the Swedish trade unions. As the other project leaders and I were known to be trustworthy supporters of trade unions, LO chose not to back the individuals trying to derail the project.

However, our efforts to develop sustainable textile production in Sweden did not succeed either. The huge negative environmental impact of cotton production, coupled with the textile industry’s immense waste stemming from our ‘fast fashion’ culture, was not strong enough to flip public opinion. Perhaps when we have to start eating insects fed on waste, mankind will understand that using land and water for food production, instead of for textile fibres, is a better use of resources.

Unfortunately, the demand for profit is pushing mankind to the edge of starvation.

New beginnings At the beginning of the 1990s, I decided to leave trade unions behind and, after a few years, ended up searching for ways to recycle rubber. My mentor was Sture Persson, a world-renowned scholar in the rubber industry and Head of Research and Development at Skega. After soaking up much knowledge, I eventually partnered with an American inventor to develop a patent in the US, while also forming EcoRub in Europe.

Our technique uses alpha-olefin copolymers to create a strong bond between thermoplastics, such as polyethylene or polypropylene, and particles of rubber. This creates a thermoplastic hybrid material that has production times that are just 10 to 20 percent of those experienced with vulcanised rubber.

The technical properties are in the range displayed by ‘normal’ vulcanised rubbers and of thermoelastic materials. The weatherability is excellent and the material can be reinforced with organic fibres to make a very resilient substance suitable for outdoor furniture and automobile parts, among other uses.

At EcoRub, the business started by importing rubber sheets from companies in the US that my partner had sold licences to. Today, there are four companies in the US that have

licences and about half of their production goes to the US automotive industry. In Sweden, however, the business grew more slowly, due to a lack of financial resources.

Then, in 2010, EcoRub became the first Swedish company to be granted funding from the EU’s Eco-innovation programme. Later in the same year, the company was taken over by venture capitalists and it was decided it would be better served by a more narrow focus.

EcoRub began to target the geomembrane market only, and my broader vision for the company was abandoned. As a result, I decided to take my pension in 2014.

Back to basics The venture capitalists decided to invest heavily in their vision for the company, spending €2m in less than two years. However, their efforts to establish a geomembrane business were not successful and, in spring 2016, all the equipment was sold to pay off debts. As the company prepared for liquidation, some dissatisfied shareholders and I took over the business, raising €200,000 in the hope of restoring EcoRub to its original purpose. Unfortunately, hidden debts quickly consumed the money we had raised.

But I still had faith in the company, and an offer of funding from the Bracknor Investment Group gave us the opportunity to pursue our original aims. Bracknor was willing to fund the company with €3m in tranches of €250,000.

The first tranche was paid in November 2017 and was used to expand our sales division, as well as purchase additional laboratory and production equipment.

In April, EcoRub bought a 6,000sq m industrial property (a former bakery) for €450,000 with money borrowed from EcoRub Chairman Svante Larsson. Then, in May, we created the solid foundations for the revival of EcoRub by starting projects in the automotive industry in China and Italy, alongside a geomembrane project in Romania.

What’s more, we will have a functioning laboratory by the summer and the production of rubber pellets should begin by autumn of this year. Once that is underway, we are going to invest in equipment to make rubber sheets, injection-moulded items and extruded products, as well as further expand our sales team.

The market for recycled rubber is very large, and it is possible to use discarded materials to create high-quality products that meet the strict technical standards set out by a wide range of industries. Despite some setbacks along the way, EcoRub’s vision of a world where both the environment and its workers are taken care of is getting closer every day. ■ EUROPEANCEO

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INDUSTRY OUTLOOK

Energy

Geared towards sustainability

Diesel engines have come under fire for polluting the atmosphere, with some parties even calling for their discontinuation. However, there are technologies being developed that can significantly reduce the emissions diesel engines produce, writes Jim Payne, CEO of dynaCERT The world is finally waking up to the damage being inflicted upon the environment. Every 13 seconds someone dies as a result of air pollution, with fossil fuels often pinpointed as the main culprit. Despite the technological advances made within the field of renewable energy, fossil fuels remain vitally important to big industry, as well as our everyday lives.

Although diesel engines are more efficient than petroleum ones, they have borne much of the brunt of the recent fossil fuel backlash, as the emissions they produce are more harmful to public health. However, innovative solutions that produce a cleaner burn without negating the efficiency benefits that diesel drivers have come to expect are being created.

At dynaCERT, this technology has been under development for a number of years and is now beginning to achieve market traction. Our proprietary, patent-pending technology creates hydrogen and oxygen on demand through electrolysis and supplies these gases through the air intake of diesel engines to enhance combustion. The result is a reduction in the carbon emissions emitted by diesel engines, as well as 42 | EUROPEANCEO

greater fuel efficiency. Small and compact, our HydraGEN technology units work on most diesel engines across numerous industries, producing remarkable benefits worldwide.

Changing perceptions Our journey at dynaCERT began in 2004, under our original name Dynamic Fuels Systems. At that time, we were solely focused on research and development (R&D) that centred on hydrogen technology for the diesel engine market. But success was limited, as early adopters of our products had units that were 10 times heavier than those produced for the market today.

We still maintain an R&D laboratory to improve these products and processes. For instance, we made our technology more robust to work under extreme conditions and surroundings, such as those found in mining, oil and gas, construction, hot climates, freezing environments and the ocean. Despite efforts to phase out diesel engines, the demand for a product like our HydraGEN unit is as pressing as ever.

Today, manufacturers produce 100 million new diesel engines per year and there

are currently more than one billion in use.

Certainly, market opportunities for a development such as ours have been present for a number of years and the growing awareness of environmental issues has provided further impetus for our team.

Wheels in motion Diesel engines are used all around the world in many different applications. As such, we want to help the entire world reduce its carbon footprint – one engine at a time. But didactically pushing green technologies is unlikely to prove effective and could even result in a backlash. At dynaCERT, we believe we can reduce pollution while saving businesses and consumers money on fuel, providing them with a financial – as well as moral – incentive to save the planet.

Our HydraGEN units reduce the amount of diesel a vehicle operator needs, save on diesel exhaust fluid (an emissions control liquid required in modern engines) and increase the time between diesel particulate filter exchanges. What’s more, the units can increase an engine’s available power. This all leads to a

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INDUSTRY OUTLOOK

Energy

Didactically pushing green technologies is unlikely to help reduce the world’s carbon footprint

HYDRAGEN UNITS:

12 months

Return on investment

6-28%

Reduction in fuel consumption

50%

Reduction in carbon emissions

65%

Reduction in particulate matter

46.1%

Reduction in nitrogen oxides return on investment (ROI) or payback period of less than 12 months in the majority of cases.

As our HydraGEN units have a design life of 10 years, the financial benefits to the vehicle owner or operator are a minimum of nine years’ worth of annual fuel savings.

As mentioned previously, dynaCERT has been a number of years in the making. So too has the hydrogen injection technology that resides at the heart of our offering. Diesel engine users may well be aware of the value of hydrogen injection, as it is an idea that dates back more than 40 years. However, most of the early injection systems were very rudimentary and did not produce the results they promised.

To gain market acceptance, we use certified third-party verification firms to provide an independent review that customers can trust.

Convincing individuals or businesses to adopt new technologies is never easy, especially when the incentives concern environmental benefits, which are long-term, and the financial motivations are slow burning. The results of our HydraGEN technology, however, speak for themselves: fuel consumption is reduced

by between six and 28 percent, particulate matter falls by at least 65 percent, and nitrogen oxides are reduced by as much as 46.1 percent.

Supported by the scientific community and a breadth of research, we believe that our technology provides the perfect way to cut emissions, while also guaranteeing a significant ROI.

Taking control As public awareness of environmental issues grows, the competition facing technology firms like dynaCERT increases – whether it comes from electric vehicles, hybrid cars or other green tech solutions. However, we believe the future for diesel remains bright, as there are still many applications that cannot be powered by electricity.

In fact, the deployment of new diesel applications is expected to continue for many decades. We are fortunate that our technology has arrived at this tipping point for different technologies. Indeed, the apparent benefits of hybrid or all-electric drive systems seem to be good for the environment, but have high capital costs and only offer very long-term solu-

tions. Conversely, our inexpensive HydraGEN units are available today, can immediately make diesel-powered equipment more energy efficient, and can lower carbon emissions by up to 50 percent.

Our smart electronic control unit (Smart ECU) is the brains behind the system and ensures we can deliver the benefits promised by our HydraGEN units. The Smart ECU monitors and optimises performance by regulating the flow of hydrogen into the internal combustion engine. Our HydraGEN technology has taken over $35m (€29.6m) and eight years to develop, and the challenges inherent in creating a reliable, accurate Smart ECU have been a significant factor in this.

In order to experience the advantages of hydrogen injection, the amount of hydrogen that is introduced into the engine must be measured to a precise level. Over many years, our team of experts and engineers has enabled dynaCERT to achieve this, while developing our Smart ECU in other ways too. The Smart ECU is not only a tool for optimisation, monitoring and reporting, but also for integrating with fleet management tools and international cloud-based, real-time communications.

At dynaCERT, we believe the ambitious aims we hold for our technology must be backed up by real-world results. Across many different vehicle types and in markets ranging from India to Mexico, diesel engine operators are witnessing the benefits of our HydraGEN technology on a daily basis. As a company, we have also been rewarded for our efforts, winning the 2018 Edison Gold Award in the vehicle advancements category. However, more work needs to be done.

The environment remains under threat from carbon emissions and other harmful pollutants, and we understand that ongoing improvements to our technology can make a significant difference in this space. That’s why we are committed to the continued deployment of our HydraGEN technology in the electrical generator, trucking, marine and rail industries, as well as further advancing our R&D in order to reach new heights. n EUROPEANCEO

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INDUSTRY OUTLOOK

Energy

Cooking on gas

There has been a surge in innovation relating to the transportation of liquefied natural gas in recent years, with increasing demand and cutting-edge solutions driving the industry to new heights, according to Philippe Berterottière, CEO of GTT The liquefied natural gas (LNG) market continues to grow, with global trade levels breaking records in each of the past three years. Industry analysts expect this trend to continue throughout 2018, with some even predicting trade will reach 300 million tonnes by the end of the year. If such expectations are to be met, the organisations that facilitate the transportation and storage of LNG will have to cope with increased volumes. In real terms, this means construction times will need to be reduced and more flexible solutions, such as floating storage and regasification units, will need to be explored further.

As a leader in innovation, GTT is keen to seek out the new technologies that will enable it to react to rising demand and further consolidate its position as a major industry player.

European CEO spoke with the company’s CEO, Philippe Berterottière, to find out how GTT is stepping out of its comfort zone to explore new markets and establish itself in previously unexplored verticals.

What challenges has GTT had to overcome in order to become an innovation leader?

Success can easily lead to intellectual laziness, and so GTT’s greatest challenge is being able to continue proposing innovative solutions. Further, we must develop our ability to adapt technologies to new regula44 | EUROPEANCEO

rival containment systems, optimising storage capacities and costs. They also enjoy an unparalleled level of feedback from actual use at sea.

Although speed and innovation often go hand in hand, how important is it to take the necessary time to conduct safety testing?

Safety is a key concern along the development path of all our technologies. This goes hand in hand with reliability, and I think our company enjoys a strong reputation due to the emphasis we place on both.

But I don’t think this approach is necessarily in conflict with speed; when you develop something quickly, you need to be very professional.

This professionalism is the very essence of GTT.

tory constraints and propose solutions that combine environmentally friendly features and increased efficiency with lower building and operating costs.

To achieve this, we continually invest in highly skilled engineers to accompany our projects and offer the most effective solutions to clients and partners. GTT also anticipates the future requirements of shipping industry players to ensure it is always in a position to innovate.

Can you explain some of the highvalue-added services that you provide for shipyards and shipowners?

How have environmental concerns and industry competitors spurred Our services include engineering studies, operainnovation at GTT? tional support and maintenance. The company LNG is the energy behind a global transi- assists its clients and partners – as well as the tion. The maritime shipping industry has LNG industry more generally – throughout the a considerable impact on the environment, life cycle of a project. Through our constantly hence we propose technologies and services improving service proposal, we offer added that facilitate the use of LNG as fuel, while value to the maritime industry.

GTT engineering studies also give operareducing pollutants and greenhouse gas emissions. We choose to focus on the development tors the ability to optimise their ships accordof solutions that are both cost effective and ing to specific requirements. Further, we have developed inspection methods that reduce environmentally efficient.

Competition has also encouraged us to the maintenance and repair time spent in develop LNG membrane technologies that dry dock. More recently, GTT has begun to use thinner and lighter materials than those of provide bespoke training solutions and fuel efficiency software for ships.

Looking to the future, our plans are twofold. First, we aim to improve the performances of our systems, while keeping costs as low as posExpected volume of LNG to be traded sible. And second, we hope to apply our expertise globally by the end of 2018 (tonnes) to new adjacent fields within the LNG industry. ■

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INDUSTRY OUTLOOK

Energy

Shedding light on eco-friendly infrastructure

The need for sustainability brings challenges to nearly every sector. Road infrastructure is one area where new technology and innovative design have spurred the creation of a holistic range of environmentally friendly products, according to Christine Nash, CEO at Metrosmart International In recent years, the business world has adapted to deal with one big issue: sustainability. The urban planning sector is no exception, and UAE-based Metrosmart International (MSI) is just one company working to make a difference to the environment and the economy through thoughtfully designed road infrastructure.

Unlike some firms that aim to invent new products, MSI is focused on working with like-minded companies and bringing numerous sustainable materials together in a single product. The firm uses the latest technology to bring smart structural designs to its green product offerings. MSI CEO Christine Nash spoke to European CEO about how the humble street light pole can help save the environment, as well as lives.

Why should sustainability be a key focus for urban planning?

The Industrial Revolution wreaked havoc with the environment, marking the start of mass manufacture and mass emissions production.

In today’s post-Industrial-Revolution era, the manufacturing industry has played a major role in the deterioration of human health, as well as the destruction of the natural envi46 | EUROPEANCEO

to the same level as high-income countries, a process that would be stalled by the introduction of new environmental regulations. But, the question is, what will be best for our planet?

Whatever the cost, the world needs to be better educated about why care should be taken when choosing which products are used and how they are manufactured. While small groups are making a big effort to save marine life and clear up air and water pollution, governments often state that such action is too expensive and fear losing the support of those with the greatest wealth. The only hope is that a better-educated society with a fairer share of resources will put pressure on those authorities that are less willing to make a change. It is, after all, cheaper Do you think urban areas are and easier to prevent destruction than to repair on the right track?

This answer varies depending on which country damage on such an enormous scale. we look at. For example, Scandinavian countries appear to be at the forefront of sustain- What are some of your most able urban planning. However, there are many innovative products? countries, such as China, that have only recently MSI has designed a holistic range of products stepped up to the mark. Then we have the US, and ensures that they work in harmony to which has been taking steps backwards since contribute to a sustainable future. For exam2016. Generally speaking, much more must ple, we are one of the few companies in the be done in most countries, but at what cost? world that offers sustainable street lighting.

Emerging economies are focused on developing We provide street light poles made entirely

ronment. Large-scale production has also contributed to global warming, causing ice caps to melt and sea levels to rise. Habitats are being flooded and destroyed; in fact, whole islands are disappearing.

Legislation that curbs the use of fossil fuels and CO2 emissions must be enforced and the manufacture of carbon-free machinery powered by renewable energies encouraged. Government subsidies need to incentivise green urban growth and support initiatives such as growing plants on building exteriors, a step MSI is already taking with shopping malls and hotels in the Middle East.

INDUSTRY OUTLOOK

Energy

Whatever the cost, the world needs to be better educated about why care should be taken in which products are used and how they are manufactured

ered one of the most environmentally friendly metals on the planet.

What are the environmental benefits of LED lights?

LED light bulbs use 70 percent less power than older lighting systems and last five times as long.

Their impressive lifespan means they do not have built-in obsolescence as so many products do, further reducing the waste they produce.

Above MSI has packaged a number of sustainable elements into the humble street light pole to create a product that is worth far more than the sum of its parts

from aluminium with no steel core wherever possible. The aluminium is anodised and not painted so there is no need to carry out maintenance. LED lights are used instead of sodium or metal halide, which use an inordinate amount of electricity, burn out quickly and need to be replaced often. LED lights use minimal electricity and last years without burning out. To enhance these benefits, we provide solar wrapping for the street lights so no electricity is required to power them, and we use long-lasting lithium-ion batteries.

MSI may not have invented these individual elements, but it has packaged them together in one product that is worth far more than the sum of its parts. We believe in collaboration rather than competition and working alongside like-minded companies to achieve the best results for the environment.

80%

The proportion of all aluminium produced that has been recycled

LED LIGHTS

70%

Reduction in power usage compared with older lighting systems

MSI uses a great deal of aluminium. Why is it one of the most ecological metals?

Aluminium is the most common element on Earth and also the most recycled. About 80 Increase in lifespan percent of all aluminium ever produced has compared to older been recycled and is still in use, making it lighting systems quite apparent why the material is consid-

500%

How do MSI street light poles save lives and assist the economy?

We design both frangible and passive safe poles, meaning they break if a vehicle strikes them. Furthermore, our use of aluminium – an energy-absorbing metal that will collapse upon impact – means the vehicle involved in a collision is only slightly damaged and the driver and passengers avoid serious injury or death. Not only does such design protect those involved in a collision, it also saves money in emergency services and healthcare. Aluminium is more expensive than steel, but ultimately it provides huge benefits to the community, both economically and environmentally.

Why should other authorities use this technology?

All government authorities involved with road infrastructure should encourage the use of aluminium passive safe poles, but they should also promote the use of smart poles. As well as bringing light to urban areas, smart poles house features such as street signs, traffic lights and security cameras. Due to their multifunctionality, they are not only much more practical than ordinary street lights but require fewer poles to be produced. They are essentially much more environmentally friendly; they can even be used as charging stations for electric cars, making the move away from petrol cars easier. n EUROPEANCEO

| 47

INDUSTRY OUTLOOK

Healthcare

Shaun Chilton CEO, Clinigen

Counterfeit crackdown

The prevalence of counterfeit medicines is growing at a troubling rate, putting patients at serious risk. The healthcare industry must act if it is to protect its customers Patients are increasingly being put at risk by counterfeit or falsified medicines infiltrating the global pharmaceutical supply chain. The growing prevalence of this illicit trade has forced pharmaceutical and biotech companies, regulators and safety organisations to take action in order to protect patients.

Clinigen is a global pharmaceutical and services company with a unique combination of businesses focused on providing ethical access to medicines across the pharmaceutical product life cycle. Its mission is to deliver the right medicine to the right patient at the right time.

Clinigen is dedicated to providing an ethical, compliant way for healthcare professionals to source medicines. It manages its supply chain closely and guards against the risk of counterfeit products reaching the patient. With more counterfeit medicines making their way into the supply chain, it is essential for other businesses to follow Clinigen’s lead and take steps to address this growing concern.

A global problem According to the World Health Organisation (WHO), falsified medicines are medical products that deliberately misrepresent their identity, composition or source. This term can apply to both branded and generic products.

They are often disguised as authentic medi48 | EUROPEANCEO

cines but may contain the wrong ingredients or dosage. These products have not been properly checked for quality, safety and efficacy, and many don’t require a prescription to supply. They can, therefore, pose serious health risks if self-prescribed.

Falsified medicines are becoming more sophisticated, and so the chance of them reaching patients has increased. The counterfeit industry can be very profitable for forgers, who operate outside the law and have no regard for patient safety. These criminals operate in many countries where the risk of getting caught and punished is relatively low compared with the illegal drugs trade. They use unlicensed online pharmacies to sell counterfeit medicines, concealing them among legitimate products.

Products such as Viagra and diet pills were the initial target for counterfeiters, but they are now turning to heavy-duty medicines such as treatments for cancer, HIV and AIDS. The illicit trade of such products is occurring on a global scale, with industry experts estimating worldwide sales of counterfeit medicines to be worth as much as €200bn annually. The infiltration of counterfeit medicines varies by region and is often dependent on the regulation in those territories. The WHO estimates that in some developing countries, over 30 percent of medicines in circu-

lation are counterfeit. In many post-Soviet states the amount could be over 20 percent, while in developed countries with effective regulatory systems less than one percent are thought to be counterfeit.

The impact of counterfeit medicines on human lives makes for difficult reading: it is estimated that fake drugs take 100,000 lives a year in Africa alone. It’s not just emerging markets that are feeling the impact of counterfeits either; according to a report published by the Drug Enforcement Administration, more than 700 deaths in the US between late 2013 and 2014 were related to the opioid fentanyl.

Cross-border collaboration The threat of counterfeit medicines is a global one, and so cross-border collaboration is needed to protect patients. The European Commission believes counterfeit medicines represent a serious threat to global health and has called for a comprehensive strategy both at the European and international level. The EU set up a legal framework in 2011 called the Falsified Medicines Directive. In the US, the FDA takes all reports of counterfeit medicines seriously and is working with other agencies and the private sector to protect the US drug supply from the threat of counterfeits.

INDUSTRY OUTLOOK

Healthcare

€200bn Estimated value of counterfeit medicine sales each year

30%

Proportion of medicines in developing countries that are counterfeit

1%

Proportion of medicines in developed countries that are counterfeit

Many of the top pharmaceutical companies are also working to tackle the issue, and have been doing so for some time. For example, German pharmaceutical giant Bayer provides background information on counterfeit medicines on its website, highlighting the issue with the aim to protect its patients.

There are many regional organisations that have been set up to protect patients. Clinigen is a member of both the European Alliance for Access to Safe Medicines (EAASM) and the Alliance for Safe Online Pharmacies in the EU (ASOP EU), two key European associations promoting patient safety and fighting to protect patients from the threat of counterfeit medicines. The general public is typically unaware of the dangers counterfeits present; these alliances, therefore, focus on educating patients and healthcare professionals of the perils of internet pharmacies.

The EAASM and ASOP EU believe there are up to 50,000 active online medicinal product sellers globally, and that as many as 96 percent of them are operating illegally. To address the illegitimate supply of counterfeit medicine, the WHO has developed an initiative to inform regulators how to detect and report pharma forgeries. Since 2013, 600 regulatory personnel in 141 countries have been trained on preventing, detecting and responding to counterfeit medicines.

In addition, Interpol regularly runs global initiatives targeting the online counterfeit market.

Its latest undertaking, named Operation Pangea, ran in September 2017 and involved 197 authorities in 123 countries. It resulted in the seizure of 25 million fake and illicit medicines worth over $51m (€43m). More than 3,500 websites were taken offline and 400 suspects investigated.

Counterfeiters use unlicensed online pharmacies to sell counterfeit medicines, concealing them among legitimate products

Making a change It is hoped that the mandatory global serialisation of licensed pharmaceutical products will go some way to eliminate the trade of counterfeit medicines. From November 2017 in the US and February 2019 in the EU, licensed products will be verifiable by a unique serial number linked to the product’s origin, batch number and expiry date.

Serialisation will affect many parts of the supply chain, from manufacturing to dispensation to the patient. Implementation is, therefore, likely to be a significant hurdle for the industry; label design, data management and budgeting will all be affected by the change. The aim of serialisation is to increase transparency and visibility, which will help reduce counterfeiting.

Through its commercial medicines department, Clinigen has its own speciality pharma portfolio, plus it runs clinical trial services that supply licensed comparator products. With such a varied role in the pharmaceutical sector, the company is committed to ensuring all aspects of its business are fully compliant with serialisation regulations both in the US and the EU. Clinigen is dedicated to fighting fake medicines; it works with regulatory authorities and the appropriate associations to raise awareness of counterfeits. The company also manages, supplies and distributes both licensed and unlicensed medicines. Furthermore, it interacts with pharmaceutical companies and healthcare professionals alike. Clinigen’s extensive reach in the market means it is well placed to understand the many challenges present in the pharmaceutical industry, the most pressing of which is the threat counterfeit medicines pose to patients. ■ EUROPEANCEO

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C18AS_050_A06_58543.pdf

INDUSTRY OUTLOOK

Healthcare

Dr Claudia M Elsig Founder and Medical Director, Calda Clinic

Rethinking mental health

Conventional psychiatry has to embrace more holistic, interdisciplinary solutions if it is to tackle the deep-rooted traumas affecting many patients It’s worth noting our body has self-healing tendencies, too. Together with a loving social network, it is often possible to overcome life crises without professional help. But if the load becomes too much, it is important to get the right support.

Unfortunately, the fields of psychiatry and psychotherapy are still stigma- Proportion tised. Virtually all of borderline diagnoses, except personality or eating perhaps specific pho- disorders related to bias and burnout syn- past trauma drome, are associated with shame and guilt.

Thus, the individual concerned requires a great deal of determination just to open up and find the right treatment. This is where Calda Clinic comes in: we help clients remove the mask through a professional and personalised rehabilitation process. In other words, we allow Seeking help Trauma is never far away in my profession. We them to open up by providing a trustworthy find it in practically all phenomena relating ear, a private atmosphere and the highest to the field of mental health. When exploring levels of discretion. the root causes of our patients’ conditions, we always find some kind of chronic stress. Keeping priorities in mind Importantly, the way we respond to stress is Some 10 years ago, I codeveloped a holistic prenatally moulded and shaped by our genetic approach to mental health that combines psypredisposition, our environment and experi- chiatry, psychotherapy and orthomolecular ences. We react with addiction, with fear, with medicine. This approach also tries to find altermelancholy or depression, with self-harm or native, complementary medicines and, where with external aggression on corresponding possible, avoids psychotropic drugs. Despite the stressors and painful life experiences. potential benefits, however, the concept is not Working as a young assistant doctor, I quickly realised that treating superficial symptoms is never enough. In 90 percent of cases involving borderline personality or eating disorders, there is a past trauma that must also be explored. In fact, early childhood traumas are present in 60 to 70 percent of cases, and emotional neglect is also extremely common. Unfortunately, these traumas are often connected to sexual abuse in childhood or chronic mental violence.

The #MeToo campaign shone light on what many already knew: successful, narcissistic, power-hungry people exploit others’ vulnerabilities and dependencies for their own personal gain. What many don’t know, however, is these abusers cause lasting damage that often cannot be seen on the surface. Modern-day health services must do more to tackle the pain associated with these traumatic experiences if they are to improve the mental health of their patients.

50 | EUROPEANCEO

90%

currently supported by national health systems – this is due, in large part, to the programme’s cost. If healthcare providers looked to the long term, though, they would find we’re actually much cheaper than the alternatives, but this can be difficult to explain when short-term financial pressures arise.

The cost of treating mental health is increasing around the world every year. Industrialised countries are often characterised by chronic stress and a lack of compassion for various forms of psychological and physical violence. And with the quality of nationalised healthcare in steady decline, it seems the individual doesn’t count anymore; instead, the human being has become an interchangeable number. The respectful treatment of people in a safe, therapeutic setting is essential to mental recovery, but nobody has the time anymore – this has to change.

It should be noted that the idea of taking individual responsibility for our health is still in its infancy and, as such, is not often given the importance it deserves. Many of us spend more money on our car, on our vacation or on our home than on our health. It may take 10 or 20 years to see the benefits, but a change of thinking must take place. The first steps on this journey begin with creating a more humane, holistic and interdisciplinary future for the medical profession. ■ F OR F UR T HE R INF OR M AT ION

www.caldaclinic.com

C18ND_001_X05_69628.pdf

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C18AS_052_D02_53241.pdf

INDUSTRY OUTLOOK

Healthcare

Dr Michael Hennig CEO, LeadXpro

Taking the lead

Start-ups are known for their ability to act with speed and flexibility. Such agility is particularly important in the highly competitive pharmaceutical industry With access to the latest technology and a variety of expert knowledge, it’s unsurprising that multinational pharmaceutical companies offer excellent conditions for research.

However, within such large and complex organisational structures, it can be far more challenging for new ideas to gain recognition and subsequently be developed. Consequently, new biotech start-ups are cropping up at an increasing rate to fill this void in innovation and value creation.

Having spent 20 years at Swiss pharmaceutical giant Roche before co-founding his own biotech start-up in 2015, LeadXpro CEO Dr Michael Hennig knows the benefits of an agile business more than anyone. In fact, Dr Hennig believes that spending too much time making a decision or searching for a focus is costly and detrimental to an organisation.

European CEO spoke to Dr Hennig to find out more about LeadXpro and how the company is creating new, innovative options for the treatment of diseases.

What is LeadXpro’s core business?

As an emerging Swiss biotech company, we focus the majority of our work on LeadXproowned, lead-molecule generation projects in disease areas like oncology and antibiotics. But moving forward, we intend to expand our value generation by partnering with pharmaceutical companies that are experienced in clinical research.

This leads me to the second pillar of our business: collaboration projects. As part of our collaboration initiative, we share our structure-based discovery platform with other biotech and pharmaceu52 | EUROPEANCEO

tical companies in order to facilitate their research projects. Importantly, we only work on one target with each of our partners to ensure confidentiality.

more specifically, in the area of GPCRs with peptide binding sites, isoform selective ion channels or protein-protein interactions that need to be addressed with transporters.

Can you explain more about membrane proteins as drug targets?

All cells in the human body are surrounded by membranes that contain very important signalling proteins. The modulation of these signalling proteins with medicines has been extremely successful in recent years, creating some of the most profitable blockbuster drugs.

Unfortunately, some of the proteins – ion channels, transporters and G protein-coupled receptors (GPCRs) – are challenging to tackle in drug discovery. By applying a rational, structure and biophysical methods-based approach, LeadXpro provides an efficient way to address such challenging membrane proteins.

LeadXpro has been working very closely with academic institutions – what benefits have you seen from these partnerships?

LeadXpro’s relationships with academic research facilities have sped the progress of structure determination, allowing us to investigate the binding properties of potential drug molecule candidates with human drug targets.

We have established a series of collaborations to advance technologies and provide greater access to scientific knowledge. As a result, we have made advances in new experimental methods and are able to gather new structural information quicker and more efficiently.

Will these new drug molecules be more effective and have fewer side effects?

Given that we know the structure of the target molecule precisely and can carefully analyse the interaction of the drug molecule by experimental and computational methods, we are able to design specific and active medicines that only work on disease-critical mechanisms.

This is instrumental to revitalising the efforts of the discovery of small-molecule drugs.

In addition, applying structure-based drug discoveries to membrane protein drug targets will extend the options for signalling mechanisms to be used for medicines. I am convinced, therefore, that the LeadXpro approach will extend the biological target space for small-molecule drug discovery –

What are the advantages of being located in Switzerland?

One of the main benefits of Switzerland is its extremely good infrastructure, which provides companies with the legal and financial security they need to flourish. Switzerland is also home to some of the world’s best scientific institutions, meaning we can recruit the finest individuals to facilitate our projects.

Companies in Switzerland are very international; I am always impressed when I see that Switzerland is ranked as the best place in which to live and work. As a result, we can attract the best talents from around the world.

This is the same whether you’re a multinational like Roche or a start-up like LeadXpro. ■

C18ND_001_Y06_14996.pdf

INDUSTRY OUTLOOK

Healthcare

HD Dental’s clients can combine their treatment with a holiday in Hungary

receive and the cost HD DENTAL’S DEMOGRAPHICS of treatment. Due to

28%

low operating costs in Hungary, HD Dental can provide its serAustria vices at half or even a third of the cost of overseas treatments Germany without compromising on quality. Unlike other health service UK providers, there is no queue or waiting list at HD Dental. BookUS and Canada ing an appointment or requesting information is as easy as Scandinavia picking up the phone.

HD Dental is qualified with the World Health Organisation’s international standards organisation for dentistry and is certified by Temos. Staff members speak English, German, Korean, Polish, Spanish, Chinese and Hungarian, and international patients are always welcome.

25% 21%

12% 8%

Sink your teeth into this

With more customers willing to travel abroad for dental treatments, Hungarian clinics like HD Dental are leading the charge in dental tourism, according to Dr Frank Kannmann, General Dentist at HD Dental In many parts of the world, the price of dental procedures can be extortionate, as they are often considered non-essential cosmetic treatments. As prices head skywards, dental tourism has flourished across Eastern Europe and South-East Asia, drawing in thousands of tourists seeking low-cost, high-quality dental work.

In Hungary, one of the leaders of this growing trend, dental tourists from Western Europe and North America can cut the cost of treatments by hundreds or even thousands of euros. Dr Frank Kannmann, a dentist at Hungary-based HD Dental, spoke to European CEO about the phenomenon.

Can you tell us about the trend of dental tourism?

Dental tourism, as an industry, started in 2005 and has grown rapidly since, with more patients searching for dental clinics on the internet. Globally, $33bn (€28bn) is spent on dental tourism

Choosing the right dentist is of the utmost importance, both in terms of the service you receive and the cost of treatment 54 | EUROPEANCEO

each year. Its popularity is mainly due to the low price of treatments. Hungary is renowned for being an excellent destination for dental tourists due to the outstanding education dentists receive and the high quality of treatments.

What sets Hungary apart from other European markets?

Affordability is the main advantage of dental treatment in Hungary. Hungary has one of the highest concentrations of dentists per capita in the world, meaning high-quality treatment comes at a low cost. Further, our patients usually visit Hungary as part of a full package holiday.

They are able to travel around the country and its neighbours as part of their trip; dental treatment is just another part of their holiday plan.

Can you tell us more about HD Dental?

HD Dental has offered a wide range of dental services since 2009, and has built up a great deal of experience with dental tourism in this time.

We boast a team of competent staff who work with the most up-to-date equipment, meaning each patient has a smooth and successful experience at the clinic. Individual treatment planning, combined with the latest techniques, allows for efficiency and flexibility.

Choosing the right dentist is of the utmost importance, both in terms of the service you

What treatments do you offer?

HD Dental offers a variety of treatments, including dental restorations for heavily damaged or missing teeth, dental implants and fillings. The clinic offers dental surgeries ranging from a simple tooth extraction to a more complex osteotomy. HD Dental also provides treatment for periodontitis, a serious gum infection that can lead to tooth loss.

What are the demographics of your overseas clients?

The majority of clients visiting from abroad come from Austria (28 percent), Germany (25 percent) and the UK (21 percent). Dental tourists travelling from the US or Canada make up 12 percent of our clientele, and eight percent come from Scandinavia.

Have you introduced any new systems, processes or treatments to meet the growing dental tourism trend?

We are following the digital trend in dentistry.

For example, scanning impression machines and CEREC milling machines allow dentists to finish crowns or inlays in one visit. Along with a photo room, we use Smile Vision technology to allow patients to design their smile before treatment. Furthermore, HD Dental offers painless drilling and provides narcosis for the dental-phobic patient. For the sake of sharing patient dental history, HD Dental runs its Life Time service, which allows patients to access their X-rays and treatment history. n

C18JA_001_Y06_07791.pdf W12ND_187_X01_05502.pdf

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C18AS_056_B04_08025.pdf

INDUSTRY OUTLOOK

Healthcare

Many companies underestimate the importance of organisational factors in translating a growth strategy into reality

Tailor-made treatment After years of making tough decisions in an everchanging market, German biopharmaceutical firm CO.DON has found its niche with a highly personalised therapy, according to Ralf Jakobs, the sole member of the company’s executive board When Ralf Jakobs joined German biopharmaceutical firm CO.DON in the spring of 2016, he found an organisation comprising enthusiastic employees, a good portfolio of treatments and a strong focus on research and development. But there was one thing missing: trust.

CO.DON develops, produces and markets autologous cell therapies – or, in layman’s terms, therapies that use only a patient’s own cells – to repair cartilage defects in the knee through a minimally invasive method. To date, the treatment has been used in over 200 clinics to treat more than 12,000 patients. Despite this fact, however, Jakobs believed there was a distinct lack of trust in the potential of the product when he first arrived, as well as a lack of belief in the team’s own capabilities. European CEO spoke with Jakobs, the sole member of CO.DON’s executive board, to find out more about the new culture of trust at the company, and learn how this has impacted CO.DON’s strategy.

What is CO.DON’s story? And what are its medium and long-term goals?

In July 2017, we received EU marketing authorisation for our cell therapy product Spherox. We launched the product in Germany in September 2017 and entered the UK market shortly after, with preparation underway in a number of other European countries, too.

To ensure we continue to supply the highest quality cell therapy products to our customers, CO.DON is entering a new dimension: in 2017, we started planning a new production site in Leipzig, Germany. Once the work is finished in 2019, the production site will be one of the world’s largest and most 56 | EUROPEANCEO

cutting-edge facilities for the industrial-scale production of human cells.

In the long term, I think CO.DON has the potential to become a global leader in the treatment of arthritis prophylaxis, a market that has a multibillion-dollar potential. With our clear strategy – which includes research and development – and the expansion of our product portfolio, we have the will and ambition to go down this path successfully.

How have these goals been affected by changes in the biopharmaceutical market?

The life science market, and especially the biopharmaceutical market, has significantly changed in recent years. As an executive board of a small or mid-cap company, you have to assess these volatile and uncertain markets very carefully. While the speed of change has not been surprising, you have to understand and decide how to separate the noise of the normal processes from the fundamental shifts that are taking place. Then you must determine what is the result of a broader economic CO.DON’S shift and what is speAUTOLOGOUS CELL THERAPY: cific to the company.

At CO.DON, we’ve had to make a number of tough portfolio Clinics have used decisions in the past the treatment six years and this has led us to focus on just one specific treatment Patients have area: cartilage repair benefitted w it h aut ologou s

200+

12,000+

human cells. This change was a strategic decision to transform CO.DON from a typical biotechnology company into a biopharmaceutical enterprise. As a result, our product represents the highest level of personalised medicine – an area that even big pharmaceutical companies have failed to succeed in so far.

How does CO.DON’s management structure factor into its strategy?

It’s become clear hierarchical organisation frameworks based on the ‘strategy, structure, systems’ doctrine of management no longer deliver competitive results. I still believe that structure follows strategy, and this is particularly important when you organise a company. However, I also believe the most important question is: “How do I prepare the company for growth?”

Many companies underestimate the importance of organisational factors in translating a growth strategy into reality. At CO.DON, we have worked intensively for the last two years on a strategic business case that can redefine our mid to long-term strategy.

Consequently, we have changed many business processes that didn’t fit with the company’s goals – and eliminated those that didn’t add value – in order to reach our strategic targets.

As a small company, we can react to changes in the market faster than our larger competitors. That’s why we maintain a very flat management structure; instead of a defined hierarchy, we simply add experienced people to manage growth. This structure allows us to stay nimble and flexible, which, in turn, gives us more control, improving our communication and decision-making practices in the process. n

C18JA_001_Z03_85115.pdf

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C18AS_058_C03_50233.pdf

INDUSTRY OUTLOOK

Healthcare

Augusto Mitidieri Corporate CEO, Sintetica

Creating a healthy corporate culture For almost 100 years, Sintetica has leveraged innovation and hard work to expand into new markets, but employee autonomy has played an equally important role in the company’s success Established in 1921, Sintetica is a Swiss pharmaceutical company that delivers injectable anaesthetics and analgesics to patients around the world using innovative approaches to drug development, production and marketing. We currently employ 300 people across offices in Switzerland, Germany, Austria, Italy and the UK. Our headquarters are located in Mendrisio, Switzerland, where our innovation department employs 15 percent of our total workforce.

Sintetica is fully committed to innovative therapies in local anaesthesia, pain management and neuromodulation. As such, we move forward with passion and competence in full respect of people and the environment. All our efforts and resources are focused on becoming the leader in our chosen fields by developing novel medicines and better treatment options for physicians and patients around the globe. But in order to achieve such levels of leadership and growth, we believe it is important to focus on strategic partnering and business development.

Taking responsibility As corporate CEO, I believe it is my responsibility to define the vision of the entire organisation, from strategy design through to execution.

Within this, I believe innovation is vitally important, not only in terms of our products but also with regard to management style and 58 | EUROPEANCEO

organisation. Getting this right is a key element of our long-lasting success.

That is why I am implementing an innovative organisation model based on responsibility and meritocracy, which I call ‘humancentred organisation’, instead of relying on a hierarchy of rigid internal structures. The human-centred organisation model is based on deep cultural change and requires an innovative managerial philosophy that places responsibility and merit at its core.

At Sintetica, we endeavour to create a working environment based on dynamic and highly innovative ideas, projects and products, not one obsessed with strict definitions and controls. We’ve found that our company culture is greatly improved by increasing our employees’ sense of responsibility. They may be given clear objectives to aim for, but our employees are also given a great deal of autonomy with regard to the management of their duties.

Managers, therefore, are moving from a role of commander and controller to that Proportion of of coach, enhancing Sintetica’s total talent through delegaworkforce employed tion and accountabilin its innovation ity. They are transidepartment tioning their mindsets

15%

away from controlling activities and towards an approach based on the control of results and accountability, so as to create peripheral decision-making autonomy based on conscious risk assumption.

Mutual trust I believe in a company culture that promotes creativity and informed risk-taking. In this respect, it must also promote a good feeling for all members of staff, who should always feel safe while they are at work. Making Sintetica a great place to work is my key objective and something that is very much a part of the company’s DNA. I consider our people to be the company’s core resource. That is why I trust my staff to be open to change and drive innovation in the long term.

We recently obtained marketing authorisation in the US for a new drug called Clorotekal (spinal chloroprocaine), which is mainly utilised for fast-track spinal anaesthesia to enhance recovery after surgery. This is an outstanding achievement. In fact, we are one of very few small-to-medium-sized companies in the world to have managed to register an original pharmaceutical product in the US. We have built up our international network and can now proudly boast that our products are registered in more than 100 different countries. Over the next five years, we should see these efforts bear fruit with our products launching in many of these markets. With a network of partners who share our ‘quality first’ approach, we are confident of maintaining and expanding our current innovation-driven value proposition significantly in the coming years. ■

C18JA_001_Y05_05227.pdf

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CEOPROFILE Vincent Steckler C E O | AVA S T

A safe pair of hands

Since being appointed CEO of Avast in 2009, Vincent Steckler has cemented the firm’s position as an industry leader. Today, the business that started life in communist Czechoslovakia has the largest market share of any anti-malware application Vincent Steckler’s journey from programmer to CEO of a multibillion-dollar business makes for a fantastic story – but it’s no fairy tale. Steckler had to work hard to earn two bachelor’s degrees at the University of California, Irvine – one in mathematics and the other in information and computer science. His parents, who never had the opportunity to go to college themselves, instilled a strong work ethic in Steckler and his four siblings from an early age.

Although he describes himself as a “geek”, Steckler only spent a further two years coding before realising management was a better fit for his particular set of skills. Steckler always sets out to challenge his staff, but aims to inspire them too, understanding that passion ultimately leads to higher levels of performance and better products.

In 1999, Steckler was faced with his own challenge, becoming the subject of an investigation into fraudulent conduct by the US Securities and Exchange Commission (SEC)

while working at Logicon. According to the complaint, Steckler aided and abetted fraudulent activity carried out by sales executives at Legato, a software development firm. The end result was a $35,000 (€30,070) civil monetary penalty and the issuance of two cease-anddesist orders against him.

For what it’s worth, Steckler neither admitted nor denied the SEC findings. Still, he certainly hasn’t allowed the incident to cloud the rest of his corporate journey. In 2009, Steckler became the CEO of Avast, a hugely successful global technology firm based in Prague. During his near-decade in charge, Steckler has used his extensive knowledge of the technology world to expand the company’s reach into new markets.

A vast business If Steckler’s story is one of hard graft, setbacks and steady progress, then it’s easy to see why he was initially drawn to Avast. Founded as Alwil by Czech entrepreneurs Eduard Kučera

CV BORN: 1958, US

AVAST |

EDUCATION: MATHEMATICS AND INFORMATION AND COMPUTER SCIENCE, UNIVERSITY OF CALIFORNIA, IRVINE

1979

2000

2005

2009

After graduating, Vincent Steckler joined IT firm Logicon, starting as a programmer before working his way up to vice president over two decades

Steckler joined anti-virus firm Symantec as the VP of its public sector business, playing a key role in the company’s projects with the US Government

After five successful years, Steckler was promoted to Senior Vice President of Worldwide Consumer Sales at Symantec, overseeing $2bn (€1.7bn) in multichannel sales

Impressed with his 30 years of experience in the technology industry, Avast appointed Steckler as CEO to sustain the company’s growth

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and Pavel Baudiš in 1988, Avast had to navigate significant economic challenges as Czechoslovakia moved away from communism and towards a market economy.

Despite facing financial difficulties throughout the 1990s, the raft of awards and positive reviews Avast received from security experts enabled the company to continue growing its user base. By the time Steckler came on board in 2009, Avast was achieving $18m (€15.5m) in annual revenue and had more than 20 million users. Although its growth had been impressive, Steckler knew the business remained a long way from reaching its potential, describing it as a “diamond in the rough”.

One of the principal reasons for Steckler’s assertion was the fact the business lacked a discernible management structure.

Of 40 employees, Avast had 38 software engineers, one individual handling finance and another working across marketing and sales.

There was no CEO in sight. »

IN NUMBERS

1988

444m

1,000

2bn

FOUNDED

EMPLOYEES BASED IN THE CZECH REPUBLIC

USERS

CYBERATTACKS PREVENTED EACH MONTH

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CEOPROFILE

From his time at rival anti-virus firm Symantec, Steckler had gained a wealth of experience concerning the industry’s different markets and how to permeate them. Under his vice presidency, for example, Steckler transformed Symantec’s worst-performing market – the Asia-Pacific region – into its best in less than three years. Similarly, Steckler wasted no time in putting his experience to good use. By concentrating on online marketing and targeting markets individually, the LA-born CEO was able to substantially grow the number of Avast users around the world.

The result of Steckler’s approach was extraordinary: the company’s user base grew to such an extent that, by 2015, it had approximately 700 members of staff based in Prague, Asia and the US. Perhaps the most significant growth driver to take place under Steckler’s stewardship, however, was the $1.3bn (€1.12bn) purchase of competitor AVG Technologies in July 2016. Speaking at the time, Steckler explained the reasons behind the purchase: “We are in a rapidly changing industry, and this acquisition gives us the breadth and technological depth to be the security provider of choice for our current and future customers.

“Combining the strengths of two great tech companies – both founded in the Czech Republic and with a common culture and mission – will put us in a great position to take advantage of the new opportunities ahead.”

With the AVG brand coming under the Avast umbrella, the business scaled up significantly; Avast is now the largest global provider of household IT security, with 261 million computer users, and the second-largest mobile provider, shoring up the defences of an additional 183 million users. What’s more, by combining the companies’ technological resources, Avast’s software engineers could draw on additional expertise when tackling cyberthreats. This bore fruit last year when a module developed as part of an AVG product helped Avast safeguard its users against the WannaCry ransomware attack.

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$17.4bn

Estimated value of the endpoint security market by 2020

The Threat Lab at Avast’s Prague headquarters

Avast’s open office space in the company’s Prague headquarters

As Avast has grown, Steckler’s customer acquisition strategy has remained centred on creating the best product possible and, in that sense, the CEO is simply maintaining the company’s pre-existing ethos. However, his ability to add structure to Avast’s many software development processes has certainly helped the business to mature rapidly under his leadership.

System reboot Avast has always embraced innovation and a willingness to try new things. The company was one of the earliest adopters of the ‘freemium’ business model, which is now ubiquitous in the tech world. But while this approach allowed Avast to create a loyal user base early on, the firm struggled to convert free users into paying ones.

With Steckler’s background in the industry, identifying some of the key stumbling blocks that were preventing Avast from monetising its product was relatively straightforward. Before his arrival, users of Avast’s antivirus software would not be asked whether

they wanted to upgrade to the premium version for at least 15 months.

Steckler realised there was a delicate balancing act to be managed if Avast was to ensure it gained more paying customers without alienating some of its existing users.

Sending too many emails prodding users in the direction of the premium version would likely result in uninstallations; sending too few would limit revenues. In the end, the decision was made to switch to a 30-day registration period, after which there would be the opportunity to upgrade. Although it may sound like a simple solution, it resulted in a significant growth in business.

The freemium model that Avast has long championed – and that Steckler further developed at the firm – has proven successful because it enables user numbers to increase rapidly, leverages network effects to boost market share, and encourages users to be the co-creators of value. Both independent app developers and tech giants, such as Spotify and Skype, have since adopted it.

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A communal area in Avast’s London office

Going toe to toe Despite the company’s success, Avast has remained true to its roots. Still headquartered in Prague, Avast has managed to become the most popular anti-malware application in the world without relocating to one of the more fashionable technology hot spots. In fact, although the firm has invested in several international branches, approximately 1,000 of its 1,600-plus employees are based in the Czech Republic.

Of course, this doesn’t mean Avast has closed itself off from external inspiration. On the contrary, Avast has a number of partnerships with technology companies based in the US, while its headquarters boast a SiliconValley-inspired office space. Steckler has been the major driving force behind the transformation of Avast’s workplace, which now includes all the major hallmarks of a West Coast tech start-up: hammocks, a gym, a recording room and a cafeteria led by celebrity chefs.

In an interview with European CEO, Amar Singh, CEO and founder of the Cyber Management Alliance, identified “the employment and retention of highly skilled cybersecurity researchers” as one of the key challenges facing anti-virus firms at the moment. The workplace environment created by Steckler, therefore, directly impacts the quality of Avast’s anti-virus products.

Steckler is also well aware of the important ethical role played by today’s major businesses. The Avast Foundation was launched just a year after he joined the business and concentrates on “supporting quality of human life, self-sufficiency and the right of the individual to freely make decisions about their life”. As a charitable organisation that receives a percentage of Avast’s business profits, it has

Avast has managed to become the most popular antimalware application in the world without relocating to one of the more fashionable technology hot spots been able to make a difference to the lives of disadvantaged people the world over.

Developing a creative working environment and launching community initiatives will certainly help maintain Avast’s good image, but the company is still operating in an extremely competitive industry. The endpoint security market, which includes anti-virus software, firewalls and related technologies, is forecast to be worth $17.4bn (€15bn) by 2020. Avast has to compete with other well-established firms like Symantec, Kaspersky and McAfee, as well as a number of independent anti-malware vendors.

In order to stay on top, Avast took the decision to go public in May. The listing on the London Stock Exchange raised £147.4m (€167.4m) in new capital after its first day of trading and was one of the UK’s biggest ever technology listings. The extra funds raised by the listing will help the company repay existing debts and, according to the company’s CEO, “support further growth”.

Always on the lookout Although Avast’s upward trajectory has brought Steckler plenty of praise, his time as CEO has not been without its setbacks. Last year, Avast was connected to a huge malware attack that

targeted CCleaner, a system clean-up application. The attack happened prior to Avast’s purchase of Piriform – the application’s developer – but the fact 2.3 million devices were infected reflected poorly on the anti-virus firm.

The CCleaner malware attack demonstrates the challenges anti-virus firms face when attempting to grow and acquire new businesses. It also shows just how difficult it is to keep on top of the constantly changing malware landscape. Fortunately, Avast acted swiftly to protect CCleaner’s users: working in partnership with the FBI, Avast was able to shut down the cyberattackers’ commandand-control server within just three days, preventing further breaches. To demonstrate the importance of the situation, Steckler personally updated users of the ongoing investigation via the company’s blog.

It is testament to Avast’s high security standards that Steckler has not had to publicly address security issues often, particularly with the threat landscape developing at a rapid pace.

Currently, Avast prevents two billion attacks every month and this figure is only likely to grow as new attack vectors are developed.

“It is extremely important for an anti-virus vendor to invest in both research and people to prove that it is able to detect advanced threats,” Singh explained. “Particularly as the industry churning out malware is motivated by the large amounts of money to be found in this criminal business.”

Well aware of the need to update its cyberdefence tools on a regular basis, Avast has begun to incorporate behavioural analytics into its suite of anti-virus tools. Behaviour Shield is now included within all versions of Avast 2017 and monitors all PC programs for uncharacteristic behaviour. In doing so, it protects against spyware and other malicious programs, proving to be particularly adept at tackling ransomware.

As a student at the University of California, Steckler’s favourite classes were those focusing on artificial intelligence (AI). Back then, he was fascinated by the LISP programming language that became favoured within the AI research community. The field has come a long way since then, with advanced machine learning tools now forming the bedrock of the cybersecurity industry. Steckler’s own background, therefore, ensures Avast will avoid complacency while it resides at the top of the industry. Steckler is well aware the technology sector moves quickly, and companies that let their guard down are those most vulnerable to attack. n EUROPEANCEO

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Mark A Langley President and CEO, Project Management Institute

Project management in the digital age

For businesses to achieve their strategic goals, they must become digitally proficient. The key to a successful digital transformation is sound project management Around the world, businesses of all kinds are facing disruptions as a result of greater competition, changing market demands and accelerated technological advances. In response to this threat, they are increasingly recognising the need to have a robust, customer-centric digital strategy. For many, the successful execution of such a strategy hinges on digital transformation – the integration of digital technology to enhance the customer experience, improve organisational performance and uncover new opportunities.

“Our customers are the driving force behind our digital strategy,” said Alicia Aitken, who leads the transformation and change capability at ANZ, one of Australia’s leading banks and a Project Management Institute (PMI) partner. “Putting the customer at the heart of everything we do begins with understanding what our customers truly need and want, not just today, but tomorrow.”

Getting started A digital transformation can encompass everything from redesigning the external user experience to updating IT systems, internal processes and technologies. In an interview for PMI’s podcast, Projectified with PMI, McKinsey & Company Senior Partner Anand Swaminathan stated this is an important journey for organisations, noting how it can “fundamen64 | EUROPEANCEO

tally change the way they will operate in the future to better serve their customers and better manage their employees and to really drive their organisation into a more effective and successful organisation in the future”.

Unsurprisingly, a recent survey by Forbes Insights and Hitachi confirmed that digital transformation is the top strategic priority for half of all top management. According to Accenture’s Digital Transformation in the Age of the Customer report, improving the overall customer experience is a top priority for companies and a main driver behind their digital transformation ambitions. This shows a growing awareness that customer experience is critical to an organisation achieving its ongoing strategy.

“We’re finding MONEY the forefront of digital WASTED IN transformation is the PROJECTS voice of the customer – the end customer,” said Jim Boland, wasted by global leader of IBM’s Project organisations for Management Global every €1bn invested Centre of Excellence.

“One challenge is how do we get our client wasted by European to put themselves in organisations for the shoes of their end every €1bn invested customer?” Organisa-

€99M

€127M

tions must continue to deliver the value and experiences customers demand and expect, while making ongoing real-time changes in customer-facing environments and activities.

Understanding challenges Organisations undergoing digital transformations know this process presents several unique challenges. Adding to the difficulty of digital transformation is that large, global organisations, such as banks and other financial services companies, often have legacy technology and ingrained ways of doing business. They also tend to have third-party partners that add to their complexity and thus make them vulnerable to disruption by smaller, nimbler, digitally orientated start-ups. Such start-ups are able to execute a digital strategy without the need to focus on a digital transformation.

While successful strategy implementation has always been of critical importance, it takes on greater urgency when it comes to digital transformation. These complex, wideranging initiatives are essential to a company’s ability to compete. Even businesses that don’t think of themselves as hi-tech or digitally orientated can’t ignore customers’ demands for digital engagement.

Organisational strategies are successfully implemented through effective portfolio, programme and project management processes.

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Improving the overall customer experience is a top priority for companies and a main driver behind their digital transformation ambitions

Organisations that make use of project management can hope for greater success in their digital transformation strategies. That said, many companies are still wasting money on projects. The most recent research from PMI’s 2018 Pulse of the Profession survey shows that, on average, global organisations waste €99m for every €1bn invested in projects – a slight uptick from last year’s figure of €97m. In Europe, the wastage figure is even greater: of the regions surveyed in PMI’s Pulse of the Profession, European organisations reported the second-highest average waste on project spending, at €127m for every €1bn spent.

Project management approaches Project management – the application of knowledge, skills, tools and techniques to activities to meet project requirements – brings rigour, discipline, standardised methodology and a common language to complex initiatives. It is recommended that organisations implement several of the following project management approaches to ensure they are taking the necessary steps to achieve their goals.

First, it is important to invest in executive support for the project. This is essential, as the top driver of projects can help ensure original business goals are met. Engaged executive sponsors help organisations bridge the communications gap between influenc-

ers and implementers to increase collaboration and support, boosting project success rates and reducing risk.

Organisations around the world report that an average of 38 percent of projects don’t have active executive sponsorship, which points to the need and opportunity for executive leaders to be more engaged in the delivery of strategy.

In Europe, 46 percent of projects were reported as not having an active executive sponsor.

The complexities surrounding digital transformation demand that an organisation focuses its efforts on benefits realisation management.

This collective process identifies benefits at a project’s outset and ensures they are realised and sustained once the project ends. It’s a process that occurs in three stages: identification, execution and sustainment.

In organisations with high benefits realisation maturity, 33 percent more projects met their original goals, compared with organisations with low benefits realisation maturity.

And yet, globally, only 32 percent of organisations have high benefits realisation maturity.

Similarly, only 31 percent of European organisations report having high maturity in this area.

Agile approaches have been identified as a key reason for organisations improving results with strategy implementation, according to PMI research. Agile is a mindset based on a set of key values and principles

designed to better enable collaborative work and deliver continuous value through peoplefirst orientation. Agile organisations are able to embrace change by moving quickly, decisively and effectively to anticipate, initiate and take advantage of change, yet remain robust enough to absorb any setbacks.

As organisations prioritise digital transformation, it is essential that they remain agile throughout the process. As Tony Meggs, CEO of the Infrastructure and Projects Authority, recently said to a PMI audience: “The increasing digitalisation of everything is leading to changes in project management techniques – in particular, the use of agile methods of delivery.” He credits increased use of agile, with its iterative, customer-centric approach, as having been “very successful in moving us away from a previous era of mega IT disasters”. Indeed, 28 percent of global organisations have high organisational agility, while only 23 percent of organisations in Europe report the same.

Businesses are embracing continuous change based on the capacity to sense and respond quickly to changing customer and employee behaviours, needs and wants. Though organisations are beginning to evolve to meet the digital challenges faced by all industries and regions, it is essential that they rely on sound project management practices as they drive their organisations forward. ■ EUROPEANCEO

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Kevin Cleary CEO, Clif Bar

Raising the bar

As today’s consumers ask more of their food, Clif Bar answers with long-held values In the coming years, Millennials appear set to overtake Baby Boomers as the largest living generation on Earth. What’s more, they are a generation that has already redefined the expectations of food and, with it, the standards by which food companies judge themselves. Gone are the days of three square meals; snacking has become the new norm. It seems Millennials want healthy food. They want authentic food. And they want it right now.

What’s most interesting about these changing expectations is that Millennials don’t just care about what’s in it for them: they want to know how their food affects other people, communities and the planet. As the CEO of Clif Bar, I’m proud to lead a company that’s long been ahead of this curve and continues to promote sustainable values.

Food made with purpose Nearly 20 years ago, Clif Bar introduced its ‘five aspirations’ business model, which focuses on sustaining our business, brands, people, planet and communities. These aspirations guide our company; we establish key objectives for each aspiration, set five-year stretch goals and then set to work. As such, our sustainability goals are built in, not bolted on. In other words, they are the measure of our success, not an addition to it. As a result, 66 | EUROPEANCEO

Millennials want to know how their food affects other people, communities and the planet

I believe the Clif Bar team is better connected to both its work and to one another.

For us, sustaining the planet begins with organic ingredients. We’ve been on the organic journey for 15 years now and have seen it positively impact people, the planet and farming communities. Since 2003, Clif CLIF BAR’S Bar has sourced 888 ORGANIC million pounds of GROWTH: organic ingredients, and 77 percent of all ingredients we use Pounds of organic are either organic or ingredients sourced certified sustainable. since 2003 In our day-today work, we’re also thinking about how Proportion of we can use less packingredients that aging, reduce landfill are either organic waste and work with or sustainable supply chain partners

888m 77%

to help them transition to at least 50 percent renewable energy by 2020.

Scaling our impact At Clif Bar, we believe that it’s more important to set up our business for years of strength than to push for near-term wins, and building a presence in Europe is a major part of that. In 2017, we established a base in the Netherlands, creating a new company in the process: Clif Bar Europe. Today, you can find Clif Energy Bars in 15 European countries.

As we have grown internationally, we have been presented with tremendous new opportunities to use our size and scale to shift markets and advocate sustainable agriculture. We are excited to bring our Clif Nut Butter Filled Bar to Europe. This new bar is a great example of sustainability meeting innovation, as it mixes organic ingredients with creamy nut butters.

Connecting shared values We’re not a company that thinks in terms of how to market to you. Instead, we’re people who love food, who need to get outdoors and who prioritise wellness. Clif Bar’s partnership with Prudential RideLondon – one of Europe’s leading cycling events – is an expression of those shared values.

Being a family and employee-owned business means we take care of our teams and understand that healthy, inspired people create food that is both delicious and nutritious.

Ultimately, we see food as a force for good in the world. When made with values in mind, food has the power to create positive change in our lives, our communities and our planet. ■

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CONTAINERS COLLECTED YEARLY

LEADING THE RESOURCE REVOLUTION For TOMRA leading the resource revolution is about creating partnerships for transforming how we obtain, use and reuse resources for sustainable economic growth and improved quality of life for all.

www.tomra.com

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Operations

Transforming strategies into great results

Even the best ideas count for little if organisations are unable to implement them effectively. Transforming strategies into results, therefore, requires not only a strong foundation, but also the closing of the gap between design and delivery, write Ricardo Viana Vargas, Executive Director, and Edivandro Conforto, Head of Strategy Research, at Brightline Initiative Organisations rise or fall on their ability to successfully implement great ideas through strategic initiatives. At a time when leaders are expected to do nothing less than transform their organisations so they can survive and prosper in a hyper-connected, fast-changing world, they urgently need to know how to turn ideas into reality. The Brightline Initiative has developed a set of guiding principles to help leaders – and their organisations – build on their implementation capabilities.

Brightline is a not-for-profit coalition, led by the Project Management Institute together with leading global organisations, that is dedicated to helping executives bridge the costly and unproductive gap between strategy design and delivery. Through our holistic knowledge and networking platform, we deliver solutions and insights that enable organisations to effectively deliver on their strategic initiatives.

Brightline provides organisations with three key benefits that will improve their ability to deliver on strategic intent: thought and practice leadership, networking, and capability building. By providing cutting-edge research, promoting strategic change and facilitating global collaboration, we are giving business leaders the tools to transform ideas into results.

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Even great strategies will fail Having a good idea is not enough to get results.

There is a long and complex journey between having a good idea, or designing a strategic plan, and actually delivering it. Most strategic initiatives fail because of flawed implementation – not bad ideas – resulting in a waste of both time and money. The dynamic interplay between strategy design and delivery starts at the moment an organisation defines its strategic goals and investments.

Most leaders appear to understand the importance of implementation and acknowledge the need to upgrade their delivery capabilities; at least 59 percent of respondents to Brightline’s global survey, conducted by the Economist Intelligence Unit (EIU), acknowledged a gap between their strategy design and implementation, and recognised its negative impact on organisational effectiveness. That’s barely an improvement on the 2013 EIU survey, of business leaders which saw 61 perhave acknowledged cent of respondents a gap between their admit to performancestrategy design and sapping shortfalls in implementation implementation.

59%

There is, however, no single true path to implementation excellence. As there are several frameworks for strategy design and implementation, every organisation needs to craft its own recipe for strategic success. We believe this recipe will be more effective when it adheres to Brightline’s Guiding Principles.

Dedicate and mobilise the right resources To turn great strategies into stellar results, every organisation needs to have the right resources and talent in place. Brightline’s third Guiding Principle is about having the right talent to lead and deliver the strategic initiatives.

But having the right talent is not enough anymore: leaders also need to make sure they are engaged and focused. “The reason strategy execution is often glossed over by even the most astute strategy consultants is because it’s not a strategy challenge – it’s a human behaviour one,” said Peter Bregman in a recent Harvard Business Review article, titled Execution is a People Problem, Not a Strategy Problem. “To deliver stellar results, people need to be hyper-aligned and laser-focused on the highest-impact actions that will drive the organisation’s most important outcomes.

But even in well-run, stable organisations,

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Operations

Most strategic initiatives fail because of flawed implementation, resulting in a waste of both time and money people are misaligned, too broadly focused and working at cross-purposes.”

Getting things done is hard and difficult work. It requires constant communication, focus, transparency, honesty, feedback and much more. But fundamentally, it is about people – bringing the best possible people to the task and maintaining their motivation and enthusiasm. This is something many organisations struggle with.

Promoting team engagement Our research report showed that, within the group of leading organisations, those involved in strategy development were actively involved and collaborating with those responsible for implementation. The C-level and senior executives are the ones responsible for engaging line and functional managers, ensuring they clearly understand the strategy, its goals and the challenges the organisation needs to overcome to successfully deliver results.

Securing a clear understanding of the strategy and buy-in is much easier when both ‘developers’ and ‘implementers’ work collaboratively. When there is no buy-in or alignment with line and functional managers, however, companies end up with a ‘frozen middle’. In

Brightline’s sixth Guiding Principle, we state that leaders should “gain genuine buy-in from middle and line managers by engaging and activating them as strategy champions rather than just as managers and supervisors”.

The EIU survey provides at least two key practices organisations can adopt to avoid the frozen middle. First, you must consider strategy delivery and design as an interconnected continuum of activities, not distinct areas of disparate importance. It does not work if one team creates a plan and another implements it. Second, it is important to have cross, multilevel communication and information flows across different levels of the organisation, as well as among the same levels (both crossfunctional and cross-business).

Gleaning customer insights It is essential businesses do not forget to look externally for assistance: they must continue to monitor customer needs, collect competitor insight and monitor the market landscape for major risks, unknowns and dependencies. An app created by a group of students over a weekend can disrupt your business model in a matter of months and pave the way for a new set of products and services.

Organisations need, therefore, to be able to identify trends, threats and opportunities, adapt their strategies quickly, and deliver results in the next quarter.

“Although most survey respondents track trends happening around them, leaders differentiate themselves in using that information to modify strategy delivery,” read the EIU survey.

“In particular, leaders engage those outside the formal boundaries of the company – especially customers and business partners – to help them reach their strategic goals.”

Most companies used to have five-year strategic plans. Now, plans are revised, updated or even discarded in some conditions at least twice a year. Data from the EIU survey showed that organisations with effective “feedback loops” presented advantages in resource allocation, strategic outcomes and overall performance. These leading organisations often show three key agile characteristics: they are faster to reallocate funding among implementation initiatives, quicker to reallocate personnel, and rapidly adjust strategies when new risks or opportunities emerge.

Advantages in the market flow to those who excel at gaining new insights from an ever-changing business environment and who quickly respond with the right decisions and adjustments to both strategy design and delivery. There is no one-size-fits-all approach to delivering a strategic initiative effectively. Businesses must select the relevant approach for each and every project or programme they are working on.

Finally, Brightline’s 10th Guiding Principle is about recognition. Inspiring people is part of the job of any leader. As a leader, you have to drive accountability and focus on delivery, but also need to motivate those who do the work.

Leaders must actively shape a winning culture by engaging and exciting the people responsible for delivering strategic change programmes. In other words, they must celebrate successes and quick wins, generously and publicly acknowledging those who demonstrate the leadership behaviours and programmedelivery capabilities that help the organisation transform strategies into great results. ■ EUROPEANCEO

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Operations

Harald Friedl CEO, Circle Economy

Squaring the circle A circular economy is one that works for everyone.

The world, however, is currently just nine percent circular, meaning the vast majority of raw materials are going to waste

The linear economy – or the ‘take, make, waste’ tradition in which the world currently operates – is not fit for purpose. While it has delivered tremendous living standards and wealth for some, fuelling economic growth in the process, the positive aspects of the linear economy have come at a high cost to the planet and many of the people on it. Between 1900 and 2015, the extraction of natural resources increased 12-fold.

Circle Economy’s 2018 Circularity Gap Report revealed the world is only 9.1 percent circular. This means more than 90 percent of the raw materials used globally are not cycled back into the economy, leaving a huge circularity gap and putting a strain on the planet’s natural resources and climate.

European CEO spoke to Harald Friedl, CEO of Circle Economy, to learn more about the circularity gap and how we as a society can bridge it.

call that stimulates action – we can no longer pretend business as usual is possible. At the same time, the circular economy is a business opportunity: in Europe alone, it could create up to three million jobs and net economic benefits of €1.8trn by 2030.

At Circle Economy, we strive to make this a reality and turn circular strategies into projects on the ground in dozens of cities and within hundreds of businesses. This in turn will help create jobs, reduce carbon emissions and promote economic and social benefits. The circular economy is a real solution that can help us achieve the United Nations’ (UN) Sustainable Development Goals and emission-reduction targets.

How can companies bridge the circularity gap? And what do they stand to benefit?

Companies decide to work with us when they want to close the circularity gap as part of their business strategies. They are often motivated by the fact the linear economy increasingly poses ‘linear risks’, in the form of excessive resource prize volatilities, for example. Businesses are part of this change, as are the cities from which a lot of the drive is coming. In our new ‘city-as-a-service’ model, we explore how circular business models in four areas of societal needs – housing, nutrition, mobility and clothing – can create business opportunities and the circular city of the future.

What does your Circularity Gap Proportion of raw We have identiReport set out to achieve? materials not fied four steps that As well as measuring and monitoring global cycled back into w i l l help br idge progress in bridging the gap year on year, the economy the circularity gap our Circularity Gap Report acts as a wake-up 70 | EUROPEANCEO

90%

through leadership and action. We are now building a global coalition for action, after which we will develop targets and translate them into local pathways for each country, region, city, sector and supply chain. Finally, we must improve our understanding of how different drivers affect the circular transition.

The dynamics of international trade, employment, education, training and future skills must also be understood.

Closing the circularity gap will reduce income inequality and improve access to basic needs and opportunities, as well as reduce the strain on the planet’s resources. Major trend corrections are needed and inconvenient truths must be faced if we want to increase the circularity of our economy and planet.

How does circularity link with other debates like climate change and sustainability?

The circular economy is a powerful tool in the fight against climate change, and it is an economy that is designed to meet the needs of the society it serves, not just manage the natural resources it uses.

We are champions of the circular economy. It is a positive, dynamic and interconnected model that embraces and endorses the best humankind has to offer: the power of entrepreneurship, innovation and collaboration. A multitude of stakeholders from the business community, the UN and other international organisations, non-profits, cities and governments have broadly supported the evidence we have presented. If this support and energy is channelled into an action agenda and concrete deliverables, we believe it will change the world. ■

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WHEN PEACE OF MIND MATTERS

MAKING THE RIGHT DECISION DEPENDS ON GOOD ADVICE.

Learn more on www.gtt.fr

GTT provides a full range of services to support the operations of LNGC, FLNG, FSRU and other LNG-related structures in order to shorten dry-dock time, assist crews in operations and optimise vessel economics. From simple maintenance to significant improvements such as converting the ship’s propulsion system or extending the vessel life, GTT is the key partner of decision makers. Customised services can be developed on request.

Excellent partnerships make successful projects.

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MANAGEMENT

Logistics

Andrew Barr CEO, Ansaldo STS

On the right track

Transport infrastructure is much more than just a maze of railways and signals – it defines how people move around the world. Italian automation and signalling expert Ansaldo STS is working to develop solutions that breathe new life into the sector With more than 160 years of history, Ansaldo STS is a company at the forefront of signalling technologies, safety systems and freight solutions. We move people and goods around the world, and we do it safely, quickly and with respect for the environment. However, our company is much more than that. Our DNA is written by a long sequence of committed professionals who deliver a wide range of innovative solutions to our ultimate client: the people.

This is our natural attitude, this is how we perceive our duty, and this is the goal that guides every employee when performing any task.

Ansaldo STS is widely considered to be a global leader across a variety of fields within the rail transport industry. We specialise in all aspects of construction, railroad engineering and management, and characterise ourselves as being turnkey railway constructors, as well as automation and signalling experts. More recently, we have also become active in the operation and maintenance field.

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Revolutionising the commute Giovanni Ansaldo founded Ansaldo STS in 1853 in Genoa. The core business at the time was to build locomotives and trains; today, our company is a multinational player in the transport industry and a part of the Hitachi family, providing solutions around the world from our base in Italy. And it was here, in the bel paese, that we first applied our expertise in signalling technologies. In Italy, we designed, developed and installed the highest-speed line signalling system in the country. It was a great success for the company, but an even greater success for commuters: everyday, around 170,000 people use these lines to reach their homes, offices and destinations.

The impact of our work is extraordinary, helping tens of thousands of people in their daily lives. But if we also take into consideration what we do for local transportation, the numbers reach even greater heights. It has been estimated that, in Italy, around 2.67 million passengers

travel on metro lines every day. Ansaldo STS is proudly present in five of the seven Italian cities where such metro systems operate: Rome, Milan, Genoa, Naples and Brescia. Working in this environment gives us a tremendous responsibility to all of the commuters, passengers and businesspeople that rely on our services and pass through the full spectrum of ‘iron mobility’.

Global connections As proud as we are of our achievements in Italy, it has been thrilling to be able to expand globally, taking on a variety of complex projects in many different countries. In 2017, Ansaldo STS completed the implementation of 14 driverless metro projects across the US, Peru, Denmark and Saudi Arabia, among others. We also built a freight line with new satellite capabilities on an iron ore mine in Australia. The Roy Hill freight line will transport 55 million tonnes of iron ore, from mine to port, along a 350km railway every year. All of this has been achieved while

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MANAGEMENT

Logistics

Left Ansaldo STS created the first driverless, 24/7 metro system in transport history in Copenhagen Right Ansaldo STS’ Roy Hill freight line stretches 350km to connect an iron ore mine to its closest port in Australia

ANSALDO STS:

€1.4bn Annual turnover

40

Regional offices

14

Driverless metros

4,200 Employees

building a high-speed line between Milan and Genoa in our home nation.

As a matter of fact, our horizon and business perspectives have widened continually, mainly thanks to the endless opportunities presented by the transportation industry. Like any successful company, Ansaldo STS focuses on delivering what people need. Throughout our history, we have undergone several major structural changes in response to a number of large-scale mergers and acquisitions. However, this has only driven us to consolidate our resources and embark on international expansion efforts to help as many people as possible.

Unlike many industry competitors, Ansaldo STS has 40 regional offices in 26 countries, with domestic footprints in Europe, North America, the Middle East and the Asia-Pacific region. We are witnessing significant growth in Africa and South America, too.

Thanks to the work of our dedicated and enthusiastic workforce, comprising 4,200 employees, we have been very successful in transferring our technology to the rest of the

Like any successful company, Ansaldo STS focuses on delivering what people need

world from our base in Genoa, implementing hundreds of projects to date. The development of the transportation industry means new ideas and suggestions are constantly being injected into the market, so it’s important to keep pace.

Fortunately, Ansaldo STS’ transition into the Hitachi Group in 2015 has put us in a strong position to compete: being part of the Hitachi family means being part of a game-changing organisation with widening horizons and endless business opportunities.

Next stop: sustainability With the help of the Hitachi Group, Ansaldo STS is broadening its horizons, moving towards multimodal solutions and a full-service operations approach. In order to succeed, we have defined a new, ambitious strategy that sets out our vision and goals for the coming years.

That said, signalling technologies will remain at the core of what Ansaldo STS delivers, and we will continue to ensure our capabilities and technologies are the most up to date and relevant on a market-by-market basis.

The numbers suggest Ansaldo STS is the highest-performing firm in the railway business, with an annual turnover of approximately €1.4bn. We are able to remain at the forefront of our industry because we build solid partnerships and, most of all, develop bespoke transit solutions. Nearly 20 years ago, Ansaldo STS landed in Copenhagen, creating the first driverless, 24/7 metro system in transport history. We are still there today, building new lines and operating local transport services via Metro Service A/S, a company

that Ansaldo STS owns a 49 percent stake in.

This transport system serves approximately 60 million passengers each year.

Following our success in Denmark, we applied our driverless technology expertise in Riyadh, Rome, Milan, Brescia, Taipei and Honolulu. But this was only the beginning: we have now established ourselves as a global leader in the development of automation technology. Working in partnership with the EU has enabled us to develop and implement a system that can effectively control pick-up and delivery train routes using innovative satellite technology, known as ERSAT. Having leveraged our experience in Australia and conducted tests in Sardinia to develop ERSAT, we are confident this technology will prove successful.

Our ability to design and develop new solutions for transport is of great importance, as is our approach to the environment. At Ansaldo STS, we believe it is our duty to play a direct role in protecting the Earth by finding the right balance between profit, people and the planet.

In order to do so, Ansaldo STS complies with all local laws and regulations, as well as voluntary sustainability guidelines. Further, we are dedicated to maintaining transparency throughout all our operations and adhering to corporate social responsibility on a voluntary basis.

In this regard, we publish a comprehensive sustainability report each year, detailing the various elements of Ansaldo STS’ commitment to sustainable governance. Such initiatives, coupled with our market-leading expertise in transport solutions, ensure Ansaldo STS keeps everyone on the right track. n EUROPEANCEO

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EASTERN EUROPE IS NOW ONE OF THE WORLD’S LARGEST PRODUCERS OF ULTRA-HIGH-NET-WORTH INDIVIDUALS. COURTNEY GOLDSMITH INVESTIGATES WHETHER THE REGION’S BUDDING ENTREPRENEURIAL SPIRIT CAN SEE THIS TREND CONTINUE IN THE DECADES TO COME »

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Eastern Europe's ultra-rich

he world is getting richer. Despite a temporary €2trn setback during the global financial crisis, the wealth of the richest people in the world – the ultra-high-networth individuals (UHNWIs) – has risen steadily over the years.

No other segment of the wealth pyramid has been transformed as much in the years since 2000, according to Credit Suisse’s 2017 Global Wealth Report.

In that time, the number of UHNWIs – or those with a net worth of $50m (€42.9m) or more – has risen five-fold.

The speed of this growth is accelerating, too. In 2017, a report by property consultancy Knight Frank and wealth research firm Wealth-X described a 10 percent rise in the global number of UHNWIs as a “notably more rapid rate of growth than [recorded] in the previous five years”.

The US is famous for pumping out billionaires, and for good reason: seven of the top 10 billionaires on Bloomberg’s Billionaires Index call the US home. But the picture is changing, and one area in particular continues to fly under the radar: Eastern Europe. Wealth is growing in this region, while a burgeoning culture of entrepreneurialism is fostering the potential for a boom in its ultra-rich population.

Climbing the ranks According to a 2016 report by Deloitte, Central and Eastern Europe (CEE) is on track to become a significant contributor to Europe’s UHNWI wealth. Deloitte described UHNWIs as those with over $10m (€8.6m) in assets, while its definition of Eastern Europe included Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia and Russia.

From 2016 to 2021, Deloitte said the ultrawealthy segment of CEE would grow at a rate of 7.6 percent, adding €400bn to European wealth over the five-year period. This figure would match the combined contribution expected from Germany, Austria and Switzerland.

Boston Consulting Group (BCG), meanwhile, had a wider definition of Eastern Europe. In its Global Wealth 2018 report, which included the contributions of Croatia, Estonia and Latvia, BCG found wealth in Eastern Europe rose by 18 percent to €3.3trn last year, boosted by the strengthening of local cur76 | EuropeanCEO

Eastern Europe’s capital:

rencies against the dollar. Across the region, BCG expects a compound annual growth rate of 11 percent over the next five years.

Eastern Europe and Central Asia showed the greatest concentration of wealth at the top; Total wealth in 2017, billionaires alone held almost a quarter of investable assets in the regions. According to Bloomberg’s Billionaires Index, 28 Eastern Europeans had a combined net worth of $294bn Rise in wealth (2016-17) (€252bn) in June, a figure that had risen by $3.4bn (€2.9bn) over the first half of the year.

Entrepreneurial spirit There is no question that the number of ultrarich Eastern Europeans is on the rise, but the driving force behind this trend is less obvious.

In his new book The Wealth Elite, German academic, author and investor Dr Rainer Zitelmann interviewed 45 German citizens whose wealth ranged from €10m to as much as several billion euros to determine how the ultra-rich created their wealth.

Zitelmann also sought to identify the personality traits and behaviour patterns behind the individuals’ financial success. One statistic in his research was particularly striking; Zitelmann found 60 percent of the interviewees’ parents were self-employed, a figure that is 10 times higher than in the German population at large. The parents of UHNWIs were frequently entrepreneurs, small-business owners or farmers. Although they were not necessarily rich, they taught their children it was not necessary to answer to an employer to make a living.

Zitelmann said: “It was something of a foregone conclusion for these interviewees when they were children and young people that they would later go into business for themselves.”

Many of them did, eschewing the typical jobs associated with one’s formative years – such as working behind a bar or through a temp agency – in favour of following their own ambitions. Examples of such entrepreneurial spirit included setting up a bicycle repair shop, selling handbags door to door and founding a film club. One interviewee even traded stocks from a bedroom in his parents’ house, earning €40,000 in just six months.

“A look at their varied ideas and initiatives reveals a tremendous amount of creativity,” Zitelmann said. “There can be no doubt that these experiences shaped the young people who would later become entrepreneurs. They

¤3.3trn 18% 11%

Predicted compound annual growth rate over the next five years

¤252bn

Combined net worth of the region’s 28 richest individuals

Entrepreneurial activity:

20% 8.1% Estonia

EU average

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EASTERN EUROPE'S ULTRA-RICH

THE SUPERRICH OF EASTERN EUROPE

Petr Kellner

Pavel Durov

CZECH REPUBLIC

RUSSIA

Net worth: ¤12bn

Net worth: ¤1.46bn

With a controlling stake in the PPF Group, an Eastern European investment fund with ¤35bn in assets (as of June 2017), Petr Kellner is the Czech Republic’s richest man. Kellner’s other assets include a stake in O2 Czech Republic and PPF Bank, as well as numerous commercial real estate holdings.

Often referred to as Russia’s answer to Mark Zuckerberg, Pavel Durov founded popular messaging app Telegram, which now has more than 200 million users. He is also responsible for creating Russia’s biggest social network, VKontakte.

Durov recently left Russia for Dubai, after refusing to hand Telegram users’ personal data to the state.

learned to organise, to sell [and] to think like entrepreneurs. They learned – often unconsciously – and acquired the implicit knowledge that is of such great importance for any entrepreneur or investor.”

Zitelmann believes there is a clear correlation between someone’s personality and how likely it is they will become rich: “It’s very unlikely to become super-rich as an employee.

Sure, there are some CEOs who earn a lot, but I would guess more than 90 percent of the superrich became super-rich as entrepreneurs.”

If a spirit of entrepreneurialism is the most important factor in becoming an UHNWI, it’s no surprise Eastern Europe is home to a growing number of them. The latest Global Entrepreneurship Monitor (GEM) revealed that Estonia’s economy registered some of the highest ratings across the report’s entrepreneurial framework conditions. In Estonia, 18 percent of adults planned to start a business within the next three years. Moreover, nearly

one in five adults were involved in early-stage entrepreneurial activity, compared with the European average of 8.1 percent.

According to the World Economic Forum’s (WEF) latest report on entrepreneurship in Europe, Estonia’s entrepreneurial success is no accident: the Estonian Government purposefully initiated a set of reforms that turned an existing system of state-owned companies, guaranteed product markets and fixed prices upside down in the 1990s.

“Estonia’s government has continued to innovate, most visibly with the A BURGEONING digitalisation of govCULTURE OF ENTREPRENEURIALISM ernment services, an area where Estonia IS FOSTERING THE has a global lead,” POTENTIAL FOR A the WEF report read.

BOOM IN EASTERN EUROPE’S ULTRA-RICH “Estonia now offers e-residency to anyone POPULATION

in the world who would like to do business online from a virtual base.”

What’s more, the World Bank has rated Estonia as the 14th-best place to start a business, and the country was ranked 12th in the organisation’s survey on the ease of doing business. A number of well-known tech ventures started in Estonia, including two unicorns: video-chatting platform Skype and low-cost money exchange app Transferwise. Starship Technologies, a popular self-driving robot delivery start-up, was also founded in Estonia.

Meanwhile, Poland ranked fourth on GEM’s Entrepreneurial Spirit Index, which measured awareness, opportunity perception and self-efficacy – the belief someone has in their innate ability to achieve their goals. In Poland, more than half of adults believe they have the required skills and knowledge to start a business, while almost 70 percent said they saw good opportunities in the area where » EUROPEANCEO

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EASTERN EUROPE'S ULTRA-RICH

THE SUPERRICH OF EASTERN EUROPE

Andrey Andreev

Sandor Csanyi

RUSSIA

HUNGARY

Net worth: ¤1.32bn

Net worth: ¤971m

Andrey Andreev is the king of dating apps. The Russian-born entrepreneur, who now lives in London, has helped build three successful apps, including Badoo, the world’s largest online dating site. Andreev also bankrolled Bumble, reaching out to Tinder co-founder Whitney Wolfe shortly after she left the company to encourage her to re-enter the dating space.

Hungary’s first billionaire (in USD), Sandor Csanyi, is the chairman and CEO of OTP Bank, the country’s largest retail lender. Under Csanyi’s stewardship, OTP has transformed into one of the biggest financial services firms in Central and Eastern Europe. He also owns agriculture and food conglomerate Bonafarm Group.

they live. Further, nearly 10 percent plan to start a business within the next three years.

Poland also took third place in HackerRank’s list of countries with the best developers, finishing well above the US in 28th. Also featured in the top 10 were Hungary, where unicorn software start-ups Prezi and LogMeIn were created, and the Czech Republic, which is home to CEE’s oldest unicorn, Avast.

Listen to your gut Nicos Nicolaou, a professor at Warwick Business School who has studied the ‘entrepreneurial trait’ for a number of years, estimates the characteristics an individual is born with account for approximately 30 to 35 percent of their capabilities as an entrepreneur. The remaining percentage is dependent on the environment an individual is in and whether they make the most of any available entrepreneurial opportunities.

While Zitelmann stressed the significance of seeing a parent achieve success as an entre78 | EUROPEANCEO

preneur, he also believes the importance of role models outside the home should not be underestimated: “The rich parents of friends, wealthy relatives, classmates at boarding school and affluent neighbours impressed a number of these future UHNWIs with their lifestyles.”

Tea Danilov, Head of the Foresight Centre, a think tank set up by Estonia’s parliament, echoed this sentiment, saying a personal example – such as personally knowing an entrepreneur – was a “crucial motivation” to starting a business. According to Danilov, Estonian attitudes towards ESTONIAN entrepreneurship ATTITUDES TOWARDS have changed over ENTREPRENEURSHIP HAVE CHANGED OVER THE the past five years, and potential busiPAST FIVE YEARS, AND ness-owners are POTENTIAL BUSINESSOWNERS ARE BEGINNING beginning to fear failure less. Danilov TO FEAR FAILURE LESS

explained that this change was characterised by indicators such as “seeing entrepreneurship as a successful career choice, the high status of entrepreneurs in society, and the high media attention to entrepreneurship”.

Personality traits also play a role in determining whether an individual is capable of attaining ultra-wealthy status. In his research, Zitelmann confirmed the hypothesis that entrepreneurs are extremely optimistic, though the UHNWIs’ definition of optimism was more in line with self-efficacy. He said: “For them, optimism is self-confidence in one’s own actions, as well as one’s own organisational capabilities and problem-solving competence.”

This high level of optimism, or self-efficacy, leads to a higher level of risk propensity, meaning the person is more willing to swim against the current and break the rules – two important qualities for creating and maintaining wealth. Other prominent personality traits included conscientiousness – or

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Eastern Europe's ultra-rich

Personality traits play a role in determining whether an individual is capable of attaining ultra-wealthy status

being careful and vigilant – extroversion and openness. UHNWIs were also good at dealing with setbacks, tending to move on from negative experiences quickly by taking personal responsibility and then forgiving themselves.

Zitelmann also confirmed most UHNWIs do, indeed, listen to their gut feelings when making important decisions. He believes gut feelings are not a “mystical property”, but rather “the expression of implicit knowledge – the outward representation of implicit learning”.

Only one of Zitelmann’s interviewees said gut feeling had no bearing whatsoever on his decision-making behaviour.

Russian recession The future growth of Eastern European wealth could be put at risk by Russia and the Commonwealth of Independent States (CIS), which includes nine former Soviet Republics, such as Azerbaijan, Belarus and Kazakhstan. These countries are not always included in measures

of Eastern European wealth but, when they are, they offer a considerable boost. At 2,870, the number of ultra-wealthy individuals living in Russia and the CIS accounts for around two percent of the global total.

In Russia, however, much of the wealth of ultra-rich individuals relies on the oil and gas industry. Speaking to European CEO, Liam Bailey, Partner and Global Head of Research at Knight Frank, said UHNWI wealth has declined in recent years due to the weakening price of oil and sanctions by the US and the EU. Despite this, the region bounced back in 2017, with the number of UHNWIs in Russia growing by 25 percent – a trend that coincided with the country’s exit from recession at the start of the year. However, the number of UHNWIs in Russia was still 37 percent lower than at the start of 2012, according to Knight Frank.

“I think the fact that there’s been an improvement there comes down to a rebound in terms of the economy,” Bailey said. “It hasn’t been growing that strongly, but certainly compared to recent years it’s been pretty healthy.”

Zitelmann expects fewer UHNWIs to come out of Russia in the future, as the region demonstrates a lack of entrepreneurial spirit: “It’s totally different from the wealthy people in the US. Where are the inventions from Russia?

There are none. The people who became rich in Russia became rich in a very different way.”

Bailey was more optimistic: “Ultimately, it all comes down to the performance of the economy – the ability of the Russian economy to generate economic growth and wealth creation. But I think there’s a certain expectation it will continue.”

An uncertain future According to a recent report by UBS and PwC, the current up-cycle of wealth creation will likely come to an end in the next decade or two. Over the past 10 years, the ultra-rich have done particularly well because the prices of financial assets have swelled. Anthony Shorrocks, a director at Global Economic Perspectives and co-author of Credit Suisse’s wealth report, told European CEO: “In the last year or so, [growth is] not quite as apparent.

Maybe they won’t do quite as well in the future.

As interest rates go up, asset prices are not going to go up. They may even go down, and that’s going to have an impact.”

Vincent White, Managing Director at the Wealth-X Institute, appeared to disagree, stating in a report that although the ultra-rich segment will face geopolitical headwinds, including monetary tightening, the population is expected to continue to grow in the medium term: “Even when conditions are negative, we have traditionally seen more resilience among ultra-wealthy populations.”

Despite this, White also cautioned that societal changes could shift the picture over the longer term: “The reaction to wealth inequality is a pressure that shouldn’t be ignored.

There may well be a point where the growth in ultra-wealthy populations doesn’t automatically continue on its current trajectory.”

Zitelmann was sceptical about theories calling time on the growth of wealth creation. “Big fortunes are the result of new inventions,” he told European CEO. “The theory that the up-cycle will end would mean the time of inventions is over.” Zitelmann expects many more billionaires to come out of China, so long as the country continues on its current pathway towards capitalism, but he expects a decline in areas where entrepreneurial spirit and innovation lag, such as Russia and some other parts of Europe.

Looking at Eastern Europe, Bailey expects future economic growth to continue to outpace the EU average: “There are lots of challenges to that, but I think the expectation is that the pattern will continue for the next few years. There is ample opportunity for wealth creation within those economies.”

Research into the wealth of Eastern Europeans is still in its infancy, however. Zitelmann said he has “a lot of doubts” about the collection of global wealth research that is currently available: “You use them, I use them, because there’s nothing else, but this is the only reason.

I wouldn’t call them scientific studies.”

Shorrocks, who has worked on wealth research for 50 years, warned that, while researchers make their best efforts and estimations, there are still “lots of little question marks in the analysis”. A growing number of countries are starting to produce better data, meaning more precise insights could be on the horizon.

As for now, Zitelmann hopes his research will pave the way for further scholarly studies into the mysteries shrouding the world’s wealthiest people: “After all, this book is only a first step towards understanding the wealth elite.” n EuropeanCEO

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MANAGEMENT

Human Resources

Dennis van Proosdij CEO, Boxx Global Expat Solutions

Moving in the right direction

Expats and employers looking for cross-border assignments can face a number of unique stress factors. By addressing these challenges, Boxx Global Expat Solutions is facilitating greater global mobility While it can’t be denied that today’s world is increasingly mobile, there are still a number of barriers preventing businesses from accessing the talent they need – especially when the company is based in a foreign country. Some of these problems stem from international regulations, but many others are caused by internal inefficiencies, with disconnects between HR teams and external vendors often creating an unrealistically high workload. The rise of self-service mobility has only exacerbated this problem.

As the largest independent office for global mobility in the Benelux region, Boxx Global Expat Solutions works hard to ensure the personal expectations of employees match companies’ process obligations. European CEO spoke to Dennis van Proosdij, the company’s CEO, to learn how Boxx helps its clients overcome the challenges presented by higher levels of global mobility, as well as the best ways to ensure both employers and employees are well looked after.

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How does Boxx help to improve global mobility?

We are currently focusing on three main problem areas that affect global mobility. First, we are working to attract more former in-house specialists from the HR departments of multinational companies. In doing so, we have people in our firm who have seen the mobility challenges from within: they know the playing field and the specific issues that occur between company departments and individual countries.

We also choose to do interim, in-house projects at multinational companies to ensure we have an up-to-date knowledge of HR practices.

The second focus area involves building a one-stop programme in which we control every step of the assignment process. This proposition gives us a broad overview and allows us to smooth out the process in the best way possible.

Finally, we have designed the Expat Customer Journey tool. This unique application can build a process in which the expectations of the

employees lead to maximum satisfaction and, through this, ensure a maximum return on investment for the employer.

Can you tell us about the expat journey?

How does the customer journey model fit into the global mobility market?

Since it is our belief expats (and their spouses/ children) are customers like any other; the steps they have to take in an assignment process are not too dissimilar to those in traditional customer journeys. Of course, an assignment is complex and consists of a number of different journeys, but collectively these pathways can be regarded as one big customer experience. In essence, it’s much like a customer journey in retail.

Every customer has different motivations, needs, expectations, sentiments and prior experiences. The team at a retail company knows that studying the way different customers experience their journeys can give them a grip on the expectations of said customers and, therefore,

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MANAGEMENT

Human Resources

Multinationals without a sense of employee wellbeing will not be able to attract and retain talented young professionals

When a member of staff feels employee wellbeing is high on an employer’s agenda, it leads to a stronger sense of loyalty. This loyalty often translates into motivation, inspiring employees to complete assignments to the highest possible standard which, in turn, boosts profitability.

Perhaps of even more importance to employers is the fact that wellbeing will become one of the major topics in the ‘war for talent’.

Multinationals without a sense of wellbeing will not be able to attract and retain talented young professionals in the years ahead.

their likely satisfaction scores. Translating this to the global mobility sector, an upfront knowledge of expats’ expectations – whether regarding the role of the employer, the role of the external advisor or the expat’s own role – is key in order to gain maximum satisfaction.

How does Boxx help improve the wellbeing of expats, and why is this so important for global mobility?

As well as focusing on the expat customer journey, we help expats by taking care of any financial, legal or practical worries they may have. This, of course, depends on the level of support the employer wants to give its expats, but if we’re asked to take over the whole process, we can. Boxx also assists employers by assessing the stress factors that may be affecting workers and keeping them abreast of the latest wellbeing developments in the market.

For example, we recently drew attention to the benefits of jet lag prevention glasses.

What role do IT tools play in the global mobility market?

IT tools are a bit like the navigation devices in modern cars. When buying a new car, you expect it to have a navigation system – and preferably a fast and user-friendly one. You don’t care about the how and why behind the screen, you just want it to give you the information you need to get from A to B. Still, if people ask you about your new car and how it drives, I think the answer will often be about speed, steering, acceleration, braking and comfort – in other words, the experience.

I think this tells the IT story, too. Without a good system, your business will experience pain. However, simply having a good IT system cannot create a feeling of real gain.

What is the difference between the expectations of assignees and their employer?

In general, employers expect expats to fit within their existing policy structure. Employees within the same positions and the same type of assignment will be treated on an equal basis as much as possible, as this makes sense from a business and domestic HR perspective.

Employees, on the other hand, see themselves as unique and, by definition, an exception to the standard procedure.

In normal domestic situations, the employer’s idea of equality makes sense, but in assignment processes the situation becomes more complex. The private lives of expats enter into the equation and equality is no longer evident, as private lives invariably differ.

It makes a lot of sense for employers to actively address this difference in expectations, yet it is also difficult because the employer has to maintain a certain degree of ‘business distance’ from its employees. Still, I think there is a lot of opportunity for companies to improve in this area of expat support.

Does a global service provider need to have its own offices and staff around the globe?

We strongly believe in a global formula, as shown by our unique global partner platform.

Uber and Airbnb have shown that the future is not about legal ownership, but rather about customer service, creativity, quality and flexibility. As such, we build our proposition around our clients and not the other way around. This, I believe, is the modern way of doing business.

In your opinion, what does the future look like for global mobility?

I think the future looks bright, but there are pressing challenges. As long as we are identifying cost savings, digital systems and self-help for expats as focus areas, I think we are missing the point.

I believe in the developments Tim O’Reilly forecasts in his book WTF? What’s the Future and Why It’s Up to Us. The human approach will eventually be decisive for modern multinationals with respect to their chances of survival in these disruptive times. The most important thing to focus on, therefore, is people. We hope, one day, the chief HR officer will be joined by a new kind of CEO: the chief expat officer. ■ EUROPEANCEO

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MANAGEMENT

Social Media

Speak out, profit up

The old maxim warning companies against speaking out on hot-button issues is increasingly under question, especially considering the values of younger generations, writes Fernando Moncada Rivera For public relations departments, the view that controversial issues should be avoided has long been near axiomatic. Increasingly, however, consumers expect the companies they do business with to take a stand on relevant issues and assert their values publicly.

The carefully crafted, sanitised and neutralsounding statements that once defined corporate communications are giving way to more forceful, ostensibly principled stances today.

Millennials and Generation Z are the age groups most driven by moral considerations in their purchases. As they enter the labour market in greater numbers, their values become more important for companies to consider.

Technology has made communications easier and faster both for companies and consumers, leading to higher demand for fast reactions from companies. Further, in times of political division, people can see corporations as proxies for the value-based leadership they believe governments to be lacking. This is a growing trend all over the world, and companies are beginning to see it as a new tool in their communications arsenal.

Taking action According to a study carried out by Sprout Social, titled Championing Change in the Age of Social Media, in which 1,000 consumers were surveyed, 41 percent of respondents believe it is somewhat important for brands to take a stand on social or political issues, and a further 24 percent say it is very important for them to do 82 | EUROPEANCEO

so. By contrast, only a quarter of respondents said that it is not very or not at all important.

“We are seeing a rising tide in this kind of behaviour from brands, which I think is not just in the US,” Andrew Caravella, Vice President of Strategy and Brand Engagement at Sprout Social, told European CEO. “There are some discrepancies based on what matters in certain regions, but behaviourally we are seeing it happen more and more.”

Despite the risk of alienating part of the market, there are greater benefits to speaking up than there are to keeping mum. According to Sprout Social’s survey, consumers are more likely to have brand loyalty if they agree with the message than they are to boycott a brand if they disapprove of its ideology.

Successive studies by the Global Strategy Group show that this trend has been growing for quite some time. As far back as 2013, 44 percent of people believed corporations should take a stand for their political beliefs, regardless of how controversial they may be. In its latest survey in 2018, that figure rose to 76 percent.

“There’s a pool of people who, as employees and as consumers, place a great deal of emphasis on corporate values, and want to work with and do business with companies that share those values,” Julie Hootkin, Partner at the Global Strategy Group, told European CEO. Edelman’s 2017 Earned Brand study, which surveyed 14,000 people from 14 countries, found that the number of people who were buying or boycotting brands based on their

ideological stance increased by 30 percent over three years. Further, the survey showed that 23 percent of belief-driven buyers will pay up to a quarter more for brands that share their beliefs, while 48 percent will defend the brand and criticise its competitors.

As well as brands, employees are realising the importance of making their beliefs public.

As companies compete to attract young talent, it is worth keeping in mind that among the most important factors young professionals take into account when choosing where to work is a company’s values.

“My sense is that from the consumer perspective and from the employee perspective, people are looking for purpose,” said Hootkin.

“On the employee side, we are seeing a huge priority placed on a company’s values, and employees who want to ensure the companies that they work for share their values.”

Deafening silence Edelman’s survey suggests that silence could be more damaging to a brand than speaking out. Of the respondents, 65 percent said they would not buy from a brand if it stayed silent on an issue it had an obligation to address, while 67 percent said they bought from a brand for the first time based on a position it took on a controversial issue.

In 2017, when President Trump’s ad hoc travel ban was causing havoc at airports around the US, cab drivers at New York’s JFK Airport went on an hour-long strike in protest. Ride-

MANAGEMENT

Social Media

CHAMPIONING CHANGE IN THE AGE OF SOCIAL MEDIA SURVEY RESULTS How important is it for brands to take a stand on social or political issues?

41%

Somewhat important

24%

Very important Should corporations take a stand for their political beliefs?

44%

believed they should in 2013

76%

believed they should in 2018

Above The US saw a number of protests taking place in 2017 and 2018 Right Cab drivers at JFK airport strike in protest of the US travel ban Far right President Trump signs an executive order to shrink national parks

company is right to speak out on any issue.

There has to be some form of relevant link to the brand itself, and the messaging must in some way fit the brand’s purpose and mission.

Without this connection between the issue and the brand, consumers can find it difficult to see the credibility in the message. Even with a well-established link, it is important that a company is able to communicate its reasoning.

One successful example occurred in 2017, when outdoor apparel company Patagonia mounted a strong protest against Trump’s decision to substantially reduce the size of two national parks.

The company prominently featured a message on its website that read “the president stole your land”, and filed a lawsuit to block the cuts. This stance went to the core of Patagonia’s purpose as a company: it defended the right of its customers to access vast areas of nature.

On the other hand, campaigns such as Hit and miss There may be more to gain than to lose by Pepsi’s protest advert featuring model Kendtaking a stand, but that does not mean any all Jenner failed famously. Capitalising on the sharing app Uber, however, did not stop operating in the area, which was seen by many as undermining the strike. The backlash against the company was swift and strong, sparking an online campaign for people to delete the app.

Uber’s main competitor, Lyft, capitalised on its rival’s mistake and drew a line between the two companies in the form of a $1m (€860,000) donation to the American Civil Liberties Union.

“Historically, you sort of got credit for doing something good, but there wasn’t a huge penalty for not doing anything,” said Hootkin. “Now… because expectations have intensified, because there is so much activity, because more and more companies are in fact stepping out, those who choose to do nothing or say nothing stand out more, and are potentially more at risk when it comes to reputation.”

growing number of protests taking place around the US, it showed a crowd protesting in front of police, only to be soothed once Jenner produced a can of Pepsi and handed it to an officer. There was no connection between Pepsi and the vague protest shown in the campaign, making it seem empty and opportunistic to viewers.

“One of the most important things to do is to be able to articulate your motivation for taking a position; you need to be able to explain why you took the position that you took,” Hootkin said. “People may not always agree with you, but to the extent to which you’re able to clearly articulate your rationale, they may understand.”

However, there is a limit to how much a brand should speak out. According to Sprout Social, consumers do not want brands to devote more than 10 percent of their social media activity to hot-button issues, as it can distract from the other customer communications.

It is also important for companies to practise what they preach. This does not mean always taking symbolic action to follow vocal statements, but it does mean it is necessary for brands to not appear hypocritical. A company that takes a stand on labour rights and then is revealed to have substandard working conditions will see its reputation suffer.

Brands should look at controversial topics not as the third rail of communications, but as a marketing opportunity. Not every issue is for every brand to speak on, and there should always be a plan in place to deal with the backlash that will surely come from disapproving audiences. There is no doubt, however, that it is more lucrative than ever for companies to make their values known to the public. Taking a stand is no longer just a principled position, but a sound business choice. n EUROPEANCEO

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Cause of death: karoshi Working to death is so common in Japan, it has its own name. But why is this phenomenon specific to the world’s third-largest economy? Elizabeth Matsangou investigates ‘You’ll work yourself to death’ – a familiar phrase to many an ambitious individual. Many of us do it: we work long hours, often well over what we’re contracted for. We do it because we care about our work and because we want to succeed; we work tirelessly to secure our future and to provide. But climbing the corporate ladder takes commitment and time. Missing social events with loved ones and working during precious weekends and holidays are often part and parcel of getting ahead.

And while this is the norm for many across numerous countries and industries, what is not the norm is literally working yourself to death.

Sadly, such is the case in Japan, where death by overworking happens so frequently, it even has its own name. Karoshi, as the phenomenon is called, was first coined in the 1970s, during a period of rapid growth in Japan’s post-war era.

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And though Japanese society has changed in many ways since then, one aspect that remains largely intact is its work culture. Leaving the office before your boss, for example, is still considered bad form. The onus on a man to be his family’s sole breadwinner continues.

And a strict hierarchical corporate structure endures, with those in the upper echelons often staying in their posts for decades, affording little opportunity for youngsters to advance.

“The Japanese labour market is a pressure cooker because, first of all, it is very hard to get into a top firm – have you seen how many young people at top universities in Japan have stress-related eczema?” asked Frances McCall Rosenbluth, a professor of political science at Yale University. “Once in a top firm, people compete to climb the ladder, and of course every organisation is a pyramid, so some are

pushed to the sides, which means taking lesser jobs in far-off branch offices – even if it means leaving [their] wife and kids in Tokyo – so the next generation has the best possible shot of getting into the best schools, [which equals the] best jobs. Extremely stressful.”

Premature departures Each year, hundreds of deaths in Japan are linked to karoshi, and while they range from suicides to strokes and heart attacks, the root cause is the same. Of late, a growing number of sad tales are grabbing media attention – not just in Japan, but also further afield. Among the most high profile is the story of Matsuri Takahashi, whose monthly 100 hours of overtime for advertising giant Dentsu pushed her to commit suicide at the age of 24. Another fatality that sparked outrage was that of 31-year-old Miwa Sado, who experienced heart failure following a month in which she logged a shocking 159 hours of overtime with public broadcaster NHK. In light of such revelations, in October 2016 the Japanese Government published its first white paper on the subject. According to

MANAGEMENT

Company Culture

80 hours

The amount of monthly overtime after which there is a danger of karoshi

1 in 5

The number of Japanese workers thought to be at risk of karoshi

22.7%

Proportion of companies with employees working more than 80 hours of overtime a month

10pm

The time Dentsu now turns off the lights at its Japan offices the study, 22.7 percent of companies surveyed had employees that worked more than 80 hours of overtime each month – the official threshold after which there is a chance of karoshi. Indeed, as many as one in five workers in Japan are currently at risk.

What makes this situation all the more unnerving is the paradox that exists in the Japanese labour market – namely, the tendency to overwork despite job shortages as a result of the country’s shrinking population. “You might expect workers to be able to demand better working conditions, including shorter hours, from their employers,” said Janet Hunter, Saji Professor of Economic History at the London School of Economics, who specialises in Japan.

But this isn’t necessarily the case: “There is still competition for the available secure jobs, particularly those in large companies, which have traditionally employed ‘sarariiman’ [salarymen] and offered lifetime employment.”

Rosenbluth added: “The labour market is punishing: lifetime employment contracts for the lucky few who then enter a cauldron of stress and have to start seniority over again if

they leave the firm and join another one. This set-up creates and reinforces a culture of vertical accountability and less reliance on merit, creativity and freedom.”

Efficiency is also sacrificed as a result. It is no coincidence that, despite having some of the longest working hours in the world, Japan also has an exceptionally low level of productivity – in fact, the lowest among G7 countries, according to the latest data from the OECD.

Hunter agreed: “Given the slow speed at which cultural attitudes and institutions change, there is perhaps a limit to what can be done through regulation. Pressure has been put on companies, and rules [have been] introduced to limit the number of working hours or overtime that an employee can be asked to undertake within a given period.

But these limits are still relatively high by international standards, and they cannot take account of the more informal pressures on workers – for example, to continue working Reversing the trend In 2014, a new law was introduced in Japan, outside the office, which has become technomaking it the state’s responsibility to take logically much easier.” steps to reduce the incidence of karoshi. But according to The Japan Times, this legisla- Efficient thinking tion does not actually include penalties to Change must come from within. Every firm companies that allow overworking past the – no matter its size – needs to take heed of 80-hour threshold. As such, the largely sym- the dangers their employees face and enforce bolic gesture has had little impact. strict rules that forbid them from excessive With stories proliferating, greater action overtime. This also entails creating new has become imperative. Soon after Takahashi’s opportunities for young people, paying pardeath, the government introduced Premium ticular attention to women. Greater job secuFriday, an initiative that gives employees the rity will further reduce the risk of karoshi. chance to leave at 3pm on the last Friday of Workers, in the meantime, can take a stand, every month. But with monthly finances and outlining from the start that they will not sales targets wrapping up for month-end, those put up with unspoken requirements to work taking advantage must simply work more hours obscenely long hours. to make up for that lost afternoon.

But this is invariably difficult. As Hunter Some companies are taking matters into explained, while small start-ups are actively their own hands. There are those, such as creating a less pressured work environment, Dentsu, that now turn the lights off at 10pm. and some workers are “voting with their feet”, The advertising firm also offers breakfast to the same cannot be said for bigger firms. those that come in early, in another bid to deter “At present, those who join large companies individuals from staying too late. appear prepared to take the downside with The government, meanwhile, continues to the perceived advantages, despite the appallplaster posters and hold events to raise aware- ing cases that appear in the press,” Hunter ness, but many see these actions as insufficient, added. “And unlike in some countries, labour arguing that more stringent rules must be unions (which in large Japanese companies enforced. Others, such as Rosenbluth, believe operate as company unions) are not in a that government regulations will only go so strong position to fight for workers’ rights far; karoshi won’t just disappear overnight. across companies or sectors.”

“Reversing this [trend] requires a big shakePerhaps a nod to productivity will better up in the labour market, which is based on prompt responsible parties to take the steps squeezing more out of white-collar labour necessary to abolish karoshi once and for all. than is healthy for anyone.”

A working culture in which young employees are expected to stay until their superiors have left – in which few are given the opportunity to progress, and job security is not guaranteed – results in undue pressure and While small start-ups are ultimately poor productivity.

Working excessively does not do anyone actively creating a less pressured any favours – not the firm, and certainly not work environment, and some the individual. But recognising the benefits workers are now voting with of promoting efficiency over hours spent in their feet, the same cannot be the office could have a mammoth impact on a company’s success, as well as on the Japanese said for bigger firms economy as a whole, while, most importantly, saving countless lives in the process. n EUROPEANCEO

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Room for improvement For many years, designers have largely been driven by aesthetic goals. CEO of Space, Juan Carlos Baumgartner, however, believes it’s time architects started thinking about how physical spaces can influence the way people think and act way people think and act. This is an ethos that has deep roots for the company’s CEO. “In my personal background, I studied ambient physiology as part of my undergraduate degree, and it always intrigued me how little traditional architects and architectural firms knew about behavioural psychology,” Baumgartner explained. “Since our firm was founded in 1998, we decided to challenge the status quo and find a common ground between disciplines like psychology, human behaviour and neuroscience, among others.”

However, as with many innovative approaches, the real challenges emerge when the time comes to translate theories into action.

Over the past 20 years, Space has developed an approach called ‘hybrid methodologies’ in order to test its design solutions. By working with a neuroscience lab in Canada, the company is able to investigate the correlation between a physical space and an individual’s state of mind.

Changing minds In fact, Space has found that design can The architects at Space believe the power of design can change the world for the better by be used to impact more than just a person’s using physical environments to influence the thoughts. By forcing people to use their bodies Winston Churchill once said that “we shape our buildings; thereafter they shape us”, and today there is a great deal of scientific evidence to support his claim. Recent advances in cognitive research show that our environment has a significant effect on our brains, our health and our social behaviour.

If physical spaces can influence our behaviour, then it’s not too much of a stretch to suggest they can also be used to shape a company’s culture or improve productivity. Despite this fact, there are very few design firms currently incorporating this idea into their work. Fortunately, Space, a Mexico-based architecture firm, is working to change this fact.

European CEO spoke to Juan Carlos Baumgartner, CEO of Space, about the company’s ambition to create architectural designs that are not only beautiful, but serve a social purpose too.

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in different ways, for example, it’s possible to influence internal chemical reactions, such as increasing testosterone or decreasing cortisol, by encouraging changes in posture.

“Another idea that is gaining more traction among architects is epigenetics,” Baumgartner said. “This is a theory that your genetic expression can be altered by your experiences, without altering the genetic code itself. Most humans spend 90 percent of their time indoors, in environments designed by humans. If we can design experiences in a particular way, then we can change not only our body chemistry, but also our genetic expression.”

For a long time, designers worked in isolation from other fields, creating physical spaces based on their aesthetic beauty alone. Today, the most creative companies in the industry are realising that there is so much knowledge to be gained from broadening their horizons.

Beyond beauty Far from being someone who simply ensures an office looks nice or fulfils the criteria of his client, Baumgartner is starting to incorporate social responsibility into his work. “We live in a historical moment as a society, where almost everything we know is going to be disrupted by innovative new technologies,” he noted.

“This represents a huge challenge, but also an enormous opportunity. I believe this is where designers have a huge social responsibility.”

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Company Culture

300m+

people suffer from depression globally

By exploring the ways space can act as a cognitive and biological intervention, good design can have a truly meaningful impact on society

90%

Amount of time the average person spends indoors

Physical environments have the power to shape culture, behaviour and wellbeing, so it is possible to explore deeper meanings through design. It is not enough for them to simply be beautiful. Baumgartner believes that by exploring the ways space can act as a cognitive and biological intervention, good design can have a truly meaningful impact on society.

“We need to start asking why so many kids suffer from attention deficit hyperactivity disorder (ADHD) or why there are so many depressed people or what we are doing that is causing thousands of elderly people to develop dementia,” Baumgartner said. “I’m sure that in many cases the answers to these questions will be found – in part, at least – in the environments that we have created for ourselves.”

This is not to say beauty is no longer a key concern for architects – it simply means that other considerations are increasingly important.

One of the ways Space is exploring these loftier goals is through its Design for Happiness theory.

“We have created a culture that has accomplished amazing things over the years,” Baumgartner said. “In general, we live longer, we eat better and we have more things, but we haven’t actually done much to improve overall levels of happiness. Today, depression is the most common illness involving the brain. The World Health Organisation estimates more than 300 million people in the world suffer from the condition and fewer than half of those receive treatment.”

Research indicates that happiness often stems from how we react to our experiences, both good and bad, and Space has been exploring how design can influence this. Currently, the company’s Design for Happiness theory is examining how architects can help individuals break out of the “loops they are stuck in”, according to Baumgartner. By understanding how design affects cognitive processes, it can be used to help individuals break free from their current limitations.

‘Neuroarchitecture’ may be a new area of study, but it is gaining traction fast. For example, it has been proven that people in hospital recover faster when they have access to natural light, and there is plenty of research suggesting schoolchildren perform better when they use their body as part of the learning process. The design of physical spaces is key to both of these examples and many others.

Healing spaces More recently, Space has been working with the latest brainwave measurement technology to better understand how the human mind is affected by physical space. By using equipment that measures five different types of brainwave, the company has been able to determine what each brainwave represents.

Ultimately, Space hopes to be able to establish whether certain states of mind are related to specific physical environments.

“My vision is that in the future we will be able to help cure depression or ADHD with the use of specific types of space – you will go to a doctor and they will prescribe specific environments,” Baumgartner said. “Then we will have an alternative to the solutions that we know today, which are mostly limited to the use of pharmaceuticals.”

If Space is to accomplish its ambitious target of using design for social good, then more research needs to be conducted. Fortunately, the company understands its goals will require a significant shift in the mindset of corporations and individuals alike. Baumgartner is currently working with a group of psychologists to create a change management process that will help alter the way people view their physical surroundings.

As the design world increasingly utilises the cutting-edge research being undertaken in the field of neuroscience, there is hope that physical spaces will serve more than just an aesthetic or practical purpose. By enabling people to be more productive, happier or even healthier, Baumgartner believes design could make a meaningful difference to people’s lives.

“In general, the aim of Space is to help society accomplish its most meaningful goals using architecture and design,” Baumgartner said. “More specifically, it is to leave a better and happier world for my kids and future generations.” n EUROPEANCEO

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Company Culture

Open wide

Open-plan offices are a source of annoyance for many white-collar employees. After decades of stagnation, office design has reached a crossroads, writes Callum Glennen The open-plan office is ubiquitous and instantly recognisable. Row upon row of desks separated by low partitions is the natural environment for the majority of the world’s office workers.

Being alone in an office almost always means someone has ascended to the pointiest end of the corporate pyramid, or is still working after everyone else has gone home.

But despite its popularity, there is a growing body of evidence suggesting the open-plan office might be doing more harm than good. Research indicates that, despite the best intentions of the design’s creators, open-plan offices can decrease employee productivity, health and happiness.

In response to mounting evidence and growing employee discontent, some businesses are beginning to adopt new ways of arranging workers. Heavily influenced by increasingly mobile jobs, even the idea of a personal desk The 1950s saw the development of the may soon become a relic of the past. For the modern open-plan office. Designed to disopen-plan office to survive, it needs to be reim- courage top-down management structures agined with thoughtfulness and focus. and represent more socialist values, German design group Quickborner developed Bürolandschaft. Meaning ‘office landscape’, Office landscaping The origin of the open-plan office can be traced the design philosophy saw desks being emanback to a desire for a mix of greater efficiency cipated from their rows and instead arranged and collaboration among workers. Between organically according to working groups. The the late 19th century and early 20th centu- idea was it would lead to ambient collaboration; ry, the Efficiency Movement took hold, with people would overhear their colleagues and many business thinkers looking for ways to might chip in with their own thoughts that streamline society to increase productivity. would otherwise have never been considered.

Mechanical engineer Frederick Taylor took this Business leaders Michael Bloomberg and Carlos movement to US workplaces; his solution was Brito both favour a desk out in the open over rows and rows of desks, with managers looking a cloistered private space for this reason: to on from corner offices to oversee work. While be more approachable and part of the team.

Of late, research has not been kind to the it meant a huge number of workers could be crammed into one room, the noise and ‘produc- open-plan office and its proclaimed benefits tion line’ layout hindered individual productiv- for employees. In fact, some open-plan offices have come to embody the opposite of what ity and fostered discontent.

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they were originally meant to. In terms of communication, open-plan offices can prompt too much of a good thing. Since everyone is always approachable, workers often have their attention called away by multiple small, additional tasks. These momentary distractions add up to a large decline in productivity over the course of a day. According to research conducted by Ipsos and Steelcase’s WorkSpace Futures team, office workers are losing a total of 86 minutes every day to distractions. While some distractions may only be for seconds, the study also stated it can take up to 23 minutes to return to a fully focused state of mind.

All of this has a domino effect in regard to employee health. A 2009 study from Queensland University of Technology’s Institute of Health and Biomedical Innovation found employees in open-plan offices suffered greater instances of conflict, higher blood pressure and a larger number of sick days. The layout also

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MANAGEMENT

Company Culture

Left WeWork popularised the flexible office with its co-working spaces Below Airbnb’s Dublin offices feature meeting spaces and casual cushionfilled seating areas

86 minutes

The average amount of time office workers lose to distractions every day

23 minutes

The amount of time it can take to return to a focused state of mind

70%

of meetings last less than an hour

84%

of meetings are for four people

leads to low productivity due to the ambient noise present in office environments.

Naturally, considering these factors, many businesses have allowed their staff to work from home. Laptops have allowed employees to be mobile while still working, and many see the living room as a more productive environment than the office. As such, it’s easy to see a future where the majority of workers operate from home. However, the latest trends in office design are creating a new kind of space to work in.

areas that can be used for socialising, town hall meetings, informal catch-ups and event space.”

Additions like these are part of the way designers and companies are working to make offices more appealing places to visit every day.

Spaces are also being designed to mitigate noise by using smarter acoustics and considering how employees and teams interact. When combined with designs that consider the way offices are used, this can help them become places that people enjoy, rather than tolerate.

Smart design Not all open-plan offices are created equal, and many of the complaints that emerge from them can be addressed by good design. Speaking to European CEO, Gary Chandler, CEO of workplace design and fit-out company Area, said though open-plan offices can be a source of frustration, better design can mitigate these problems: “To overcome this, office environments should foster great relationships and grow a sense of community that employees want to be part of, and this starts with culture and designing an office that provides an enjoyable ‘experience’.”

Chandler said the concept of the experiential workplace is the most important shift in office design thinking so far this century: “This is not only important as a way of attracting and retaining the best staff, but also helping them to be happy, productive and innovative.

Recent projects we have completed for our clients, including Austin Fraser, Reward Gateway and Camelot, have included an indoor basketball court, a tranquil garden room to support employee wellbeing, and versatile breakout

Hybrid benefits While more intelligent and thoughtfully designed open-plan offices can solve problems, many businesses have instead turned to more radical solutions to appease employees. Hybrid and flexible offices are designed to include different spaces for different tasks, allowing employees to, for example, work in a soundproof room for tasks that require concentration and on a couch in a common area for checking emails. In its most extreme form, popularised by co-working spaces like WeWork, employees do not even have their own permanent desks. The design also gives companies a lot of scope for expansion without completely redesigning their offices.

As well as allowing employees the flexibility to choose the environment that is best for the task at hand, Chandler said hybrid offices also allow for more effective use of space: “When we ask our clients to report how their space is being used, they often overestimate office capacity by 20 percent and meeting room usage by 30 percent. Businesses often include provisions for a number of meeting rooms, the smallest of which typically accommodate six to eight people and the largest up to 40 people. This is despite the fact that 70 percent of meetings last less than an hour and 84 percent of meetings are for four people.”

Flexible offices also prompt employees to move around and encourage the community spirit people crave. According to Chandler: “Users should feel empowered to use each platform and be mobile around the office. This helps provoke unplanned conversations with co-workers you would not usually interact with. These moments can spark creativity, innovation or idea generation.”

Though the modern office employee often finds they would be able to do their job from home, and may be tempted to do so, the traditional idea of an office has some life in it yet.

With more modern and thoughtfully designed spaces that are capable of more than just work, businesses can build offices that are ready for the future. n EUROPEANCEO

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CEOPROFILE Ida Tin C E O | C L UE

Getting a clue

Through the wildly popular app Clue, Ida Tin is revolutionising the femtech space, heralding a healthier future for women everywhere Reproductive health is still taboo – period.

For a civilisation advanced in so many ways, it’s almost incomprehensible that such a gap exists in both the market and in terms of general understanding.

Early signs of ovarian cancer often go undetected, many women don’t fully comprehend how their chosen contraceptive works, while one’s menstrual cycle is usually shrouded in an unspoken fog of mystery. Considered too niche, and even distasteful by some, such areas of research have often gone overlooked, while technology that can help fill the void lags behind countless other areas.

Fortunately, people are starting to stand up, speak out and change the tide. One such individual is Ida Tin, CEO and co-founder of Clue, a female health app that helps users track their periods and fertility.

The app also allows individuals to record how they feel both physically and emotionally, thus enabling them to identify patterns

in their own cycle. Essentially, Clue helps women understand their bodies better. It’s simple, scientific and incredibly useful – and yet, until its arrival onto a now-burgeoning ‘femtech’ scene, there was nothing else like it on the market.

“Reproductive health is an incredibly foundational and central part of our lives, but there’s a real lack of clarity for women over this generally,” Tin told European CEO. “That starts the moment a woman has her first period and begins to manage that part of her life, and continues as she chooses whether or not she wants to use birth control and, if so, which method to use.

“When I was about 30 I realised that my form of birth control wasn’t working for me, but was unsure of my alternative options. I thought it was insane that we were able to put a man on the moon, but we didn’t have a tool that would help us understand our body’s own patterns.”

CV BORN: 1979, DENMARK

CLUE |

EDUCATION: BUSINESS MANAGEMENT, KAOSPILOT BUSINESS SCHOOL

IN NUMBERS

2009

2013

2015

2016

Tin ran a motorcycle tour company with her father for five years. When she left the company, she wrote Danish best-seller Direktøs about this time

Tin’s dissatisfaction with the side effects of her own birth control prompted her to begin tracking her menstrual cycle.

She founded Clue to allow others to do the same thing

By mid-2015, the app had some one million users. In the same year, Tin was named Female Web Entrepreneur of the Year at the Slush Conference

Clue raised $20m (€17.3m) in a funding round led by Nokia Growth Partners, bringing total investment since the company was founded to $30m (€26m)

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Knowledge is power Recognising this knowledge gap, Tin – who had previously run a motorcycle travel company and wrote a best-selling book on the subject – became impassioned to rectify it. Getting her idea off the ground, however, was an uphill struggle. When making the rounds to venture capitalists in the usual spots – Silicon Valley, New York, London and Berlin – Tin was often the only woman in the room. Simply put, her audience wasn’t too keen on hearing about the need to track menstrual bleeding and breast tenderness.

“The biggest initial obstacle was demonstrating the value and opportunity of a women’s health app in what is a vastly male-dominated tech scene,” Tin explained. “But, at Clue, we believe that cycle health affects 100 percent of the population. Even if you don’t experience a menstrual cycle yourself, you are almost certainly close to someone who does. Women may be underrepresented in tech, but there is no denying that women are starting to make a »

2013

50

30%

5M

FOUNDED

OF CLUE’S USERS ARE FROM EUROPE

EMPLOYEES

CLUE’S ACTIVE USERS IN 2016

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CEOPROFILE

When making the rounds to venture capitalists, Tin was often the only woman in the room name for themselves within the industry – digital female health is one of the fastest-growing.”

Tin persevered and secured €50m in funding, launching Clue in 2013. It has since spread like wildfire; by 2016, the app had reached some five million users across 190 countries, making it a leader in the femtech space.

Clue is unique. It’s scientific, uncomplicated and in no way patronising, steering away from gender stereotypes, unlike other female health apps. It’s a tool for users of all ages and at any stage of their lives, whether they have just started puberty and are getting to grips with the changes they are experiencing, trying to conceive, or entering menopause.

It takes diligent chronicling to understand our bodies. But doing so puts us in greater control – knowledge is power, after all. This helps us to detect telltale signs when something is amiss.

And having a tool on hand at all times – one that’s quick to use and intuitive too – makes the responsibility of record-keeping less chore-like.

Listening to users Such empowerment drives Tin and her team; it’s why Clue’s user base plays such a significant role in the app’s ongoing evolution. “Our users are key to helping Clue develop and innovate,” Tin explained. “For example, we introduced cycle-sharing in 2016 and pilltracking in 2017, because those were the functions our users wanted to see. Most recently, our user feedback motivated us to completely 92 | EUROPEANCEO

rethink our website.” Evaluating the most frequent queries Clue received reconfirmed Tin’s perception of just how little information is available online: “There is still so much we don’t know about the menstrual cycle; the resources available resulted in a gap, with the information about female health usually going one of two ways: well researched but clinical and unfeeling, or empathetic and caring but lacking evidence-based research.

“Because of this, we made the decision to change our site [Helloclue.com] into a go-to source of menstrual health information, providing people with empathetic but scientifically accurate content, answering all the questions about cycle health that people might have.

“We develop in response to what our users need, and this in turn helps grow our user base.

We offer the features and educational insights that Clue users are asking for and that people are searching for online.”

Harnessing data For Tin, Clue isn’t just about helping women track their cycle. “We want to address all aspects of female health,” she said. “We also want to keep growing our company, making sure that Clue is readily available for women across the globe, no matter where in the world they are or at which chapter of their reproductive health. By achieving this, we hope to break down any stigmas surrounding menstruation, female health and sexuality.”

Clue thus provides a rare opportunity for the scientific community: capturing detailed, constant data about menstruation and fertility cycles from a pool of millions around the globe.

“When women track their period through Clue, they contribute [to] an unprecedented data set that is essential for continuing our understanding of female health,” Tin said. Partnerships with scientific organisations form the crucial bridge between this accumulation of data and its analysis. To this end, Clue is now working with world-leading research institutions, among them Stanford University, Columbia University, the University of Oxford and the Kinsey Institute.

“Our scientific collaborations are exploring questions like: what pain patterns are considered ‘normal’ in which populations?”

Tin told European CEO. “What mood patterns do we see around ovulation? How might our menstrual and symptoms patterns help us spot disease and illness earlier? It is also worth noting that the data we share with these institutions is always stripped of identifying factors, and only aims to answer research questions of a non-commercial nature.”

Tin believes that participating in the advancement of knowledge in the field is an added incentive for Clue users: “By contributing data to these initiatives, women are directly involved in the research that is being conducted, the breaking down of stigmas and better understanding of female health, which in itself is hugely empowering.”

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Left In 2017, following user feedback, a pill-tracking feature was introduced to the Clue app Right Social movements like #MeToo signify a change in how women’s issues, including reproductive health, are approached

$50bn

The potential value of the femtech market by 2025 For generations, talking openly about periods – and everything that comes along with them – was pretty much verboten. But neglecting this conversation has left women in the dark for too long. Fortunately, it seems that we’ve finally arrived at a new phase: stories of inequality, sexual harassment and social movements like #MeToo have come to the forefront. Together they signify to the masses that women’s issues matter. In turn, people are becoming more open to conversations about female health. Natural processes are finally being perceived as just that: natural. Words like ‘menstruation’ are becoming less awkward; with open dialogue come the next steps.

“I think women are becoming more empowered across all industries and not just femtech,” Tin noted. “This empowerment is

Clue is unique. It’s scientific, uncomplicated and in no way patronising, steering away from gender stereotypes, unlike other female health apps

growing continuously, as women fight for their voices to be heard and their ideas and concepts to be taken seriously by everyone around them.

It is essential that this process continues, as having women [engaged in] all industries can help countries and economies flourish.”

Leading femtech As female empowerment continues, femtech is set to develop further. With stewards like Tin, the space holds untold potential. “The analyst firm Frost & Sullivan released a report in March 2018, which stated that femtech could become a $50bn [€43bn] market by 2025, showing just how much the market has grown,” Tin said. “When it comes to the future, investing in and building female-led, female-focused tech isn’t just a step towards gender equality – it makes business sense.”

Naturally, the involvement of women in the industry is key. But such change takes time; women in the tech space are notoriously rare. But having leaders like Tin – whose work is easily accessible and increasingly prevalent – in the public eye can only encourage more women to take the bold steps needed to enter male-dominated industries and pursue entrepreneurship. “I firmly believe that it is essential for women to encourage and help each other take up space in the industry and continue breaking gender stereotypes in order to pave the way for others... This is what we are now seeing,” Tin added.

When asked what advice she has for aspiring female entrepreneurs, the theme of communication came up again. “I would advise women aspiring to start their own companies to never hesitate in seeking advice,” Tin said.

“Entrepreneurship, even though it is hugely rewarding when you succeed, can be tough, so advice and a sympathetic ear can go a long way in helping. I would especially recommend all budding CEOs to reach out to existing femtech leaders for support, advice and mentorship.

By supporting one another in our pursuits, women will continue to develop and grow in whichever industry they choose.”

Tin’s persistence and determination has seen her break ground in a practically untapped field. In terms of business growth, there seems to be no slowing down for this space, or this platform. But Clue is about so much more than a fast-growing app: it’s about making reproductive health part of everyday dialogues and helping women truly understand their bodies in ways that have simply not been commonplace before.

And that’s not all Clue promises, particularly given its collaboration with top-ranking institutions. The input of instantaneous data from individuals of all demographics on a global scale will provide a new level of insight into female health. Think of the lives that could be improved – the lives that could be saved. Clue isn’t just a platform for period tracking; it’s a window into a more equal, healthy and happy society. n EUROPEANCEO

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Trading places

New ESMA regulations have had a deep impact across Europe, and especially in Cyprus, where trading is particularly popular. But those that are well prepared for changes are already positioned to capture new opportunities, according to Marios Chailis, Vice President of Marketing at 24option In March, the European Securities and Markets Authority (ESMA) rolled out a series of significant regulatory changes, including a ban on the sale of binary options to retail investors and greater restrictions on contracts for differences (CFDs). Consequently, the industry in Cyprus – a major player in the European trading scene – has felt the impact.

Small trading outfits are now seeking opportunities to either consolidate or sell part of their operations. Meanwhile, according to Marios Chailis, Vice President of Marketing at 24option, there has been a great deal of uncertainty, as some firms simply cannot afford to shift their operations to full compliance while maintaining a sustainable business.

Well-established and larger businesses, on the other hand, are seeing this transition as the key to unlocking new opportunities in the long term. These firms are better positioned to support themselves and provide services to their clients in a way that is fully compliant and sustainable.

Among these more established operators is 24option, a subsidiary of the Rodeler Group, which was established in 2012.

Although 24option started out in the binary market, the company quickly realised that regulators were targeting the field, and so it refocused its efforts on forex and CFDs instead. European CEO spoke to Chailis to find out how 24option is dealing with 94 | EUROPEANCEO

the new regulations while maintaining client satisfaction.

Why is it so important for trading platforms to be proactive when adapting to regulatory shifts?

Regulators do not announce things out of the blue. The moment we realised they had negative views of certain products – or of the way they were marketed – we wanted to ensure that we did not find ourselves burdened with a product that was no longer relevant in a new regulatory environment.

So we decided to be proactive and react early. We gave up the binary business – despite being one of the pioneers in that industry – as we knew it did not sit well with regulators.

Has 24option’s decision to expand globally created any challenges?

To be honest, our expansion efforts haven’t really created many challenges. We have a very confident compliance team – as well as a lot of in-house experts, both in legal and financial matters – structuring everything.

Also, compliance is not the only thing that has changed recently. There have been changes to almost everything – from the storage of data to online advertising platforms – and most of it transpired at the same time. We have been working extensively with our product, compliance and legal teams to make sure that we satisfy every one of these requirements.

What have been 24option’s biggest achievements so far?

I would say having the ability to identify shifts, react in time and pivot our business. We welcome the introduction of regulations that set uniform requirements across the market in order to protect clients and, at the same time, increase trader confidence. Fortunately, our shareholders recognised that change needed to happen and they embraced it.

Even though we pivoted our entire product offering from binary options to forex and CFD less than a year ago, we have grown extensively over the past few months. We’ve been very successful in attracting new clients, even though we’ve only been a major player in these respective industries for a short time.

How do you ensure your trading platform is accessible to both new traders and experienced professionals?

Ensuring that traders are increasingly informed and confident is something that we take very seriously. As such, I think there is a lot more we can do in terms of education, which is why I’m currently negotiating with content providers to

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Trading

Cyprus has become the place to be if you want to succeed in the trading industry

supply more material to our clients. Further, I want our website to be interactive and to offer people more opportunities to learn by granting them greater access to trading seminars, webinars and online videos – anything that can help with trading activities.

It’s true that experienced traders usually ask for things that are more technical, while less experienced traders are after fundamental aspects, like the concept of trading platforms and how markets work. As such, we work with various partners to create content that caters specifically to each group.

Trading opportunities can arise rapidly.

How does 24option connect traders with the right options as quickly as possible?

There are different tools out there that notify people of market movements, so we try to provide our investors with as many as possible. We offer news and economic calendars, and we try to give traders as much information as they require. As a regulated broker, we don’t actually offer advice or tell people what to trade, but we still want to ensure that once people decide to trade with us, they can

ing traders to trust us. There are a lot of other companies out there, but we try to emphasise our long history and regulatory standards to ensure people make the right choice when selecting a broker.

Why is Cyprus such an attractive destination for forex brokers?

I think initially Cyprus was attractive because it was a part of the EU and the entry point to establish a firm was a lot lower than the alternatives – like London, for example. So in terms of pure cost, a lot of brokers chose Cyprus.

As the number of brokers has increased, however, Cyprus has created an environment in which the industry can thrive. Support companies have moved here – in fact, an entire industry has been developed – creating a positive feedback loop. Once it became clear that this was a growing market, more and more companies began to relocate here, so now a number of industry events are held in Cyprus.

It has become the place to be if you want to succeed in the trading industry.

Aside from the old-school established financial centres that are mainly associated with the banking system – such as London, New York and Hong Kong – Cyprus is very attractive, particularly for the newer, techfriendly and online trading firms. People now migrate from all over the world to work in this industry and share knowledge.

access their accounts and our trading platform wherever they are.

We’ve put a lot of emphasis on our mobile app, which allows investors to open and close trades from anywhere with an internet connection. We ensure that our web-based trading platform is truly user friendly and provides all the information and charts that traders are usually looking for.

There are a lot of expert advisors out there too, so we don’t limit our traders; investors can access any third-party system that will help them. We are very supportive of our traders, What are Rodeler Group’s offering them all the tools they need 24/7. plans for the future?

Our plan is to continue growing and penetrating new markets. We are in the process of As a trading platform that has pivoted reviewing a number of jurisdictions where fairly recently, how does 24option convince users of its reliability? we are planning to establish licensed entities.

We believe regulation to be a very strong Although we have pivoted recently, the company has a long history in the industry and we are still part of the industry’s future, so we want regulated to the same high standards as before. to make sure that we are compliant in as The fact that we have been around for a long time, many different markets as possible. Addiand that we are prominent in our market, makes tionally, we are always looking to improve and expand our product offering, while people feel confident when working with us.

We’ve been active in the industry for quite customer satisfaction and loyalty remain a while, so we’ve never had an issue convinc- as essential as ever. ■ EUROPEANCEO

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Trading

Knowledge is power

From a trading academy to a brand new mobile app, foreign exchange specialist OctaFX is developing new resources to help forex traders get the most out of a technologically advanced market, writes Product Owner Joanna Archer Technology is one of the most significant drivers of the foreign exchange – or forex – trading industry. As technology advances at hypervelocity, trading tools are becoming quicker, more precise and increasingly user friendly every day.

At the same time, the speed of data processing is picking up, creating new opportunities for market analysis, which has ultimately made forex trading more efficient. And, as internet penetration increases, trading is becoming more flexible, with traders able to access the market across various platforms.

This makes it possible for more users around the world to engage in trading and benefit from the highest level of financial awareness.

At OctaFX, we strongly believe our success is bound to our clients’ prosperity, and strive to take every possible step to boost their chances of success. Each time we launch a new feature, we ask ourselves two questions: will this allow traders to be more successful? And will this be easy to interact with?

Creating resources With a view to driving prosperity, we have several new features and activities to offer clients.

For instance, we have released a new handy app for those who need to manage business on the go. Our OctaFX cTrader app supports all of the major functionalities of the desktop version.

And, for novice traders, we’ve even provided introductory information on the core functionality of our site and supported platforms.

96 | EUROPEANCEO

Further, we are in the process of developing a full-scale trading academy, which will be open to the public. We believe the academy will become a huge web resource for anyone who wishes to develop their financial awareness.

We are also ready to launch a copy-trading feature, which will allow traders to automatically copy the positions of our master investors. The core idea of this offering is to make the whole business easier to learn and to create a social platform for our traders by fuelling a shared experience. What’s more, copy trading will help minimise risk: imagine an aeroplane that is about to take off. A long time ago, people used to applaud pilots for achieving their primary goal: transporting passengers to their destination. Today, however, technologies are so developed and pilots are so well trained that getting to the destination is routine and does not bear a significant risk. In our case, the destination is benefitting from forex trading with copy trading, and the pilot is our master trader.

With Trade and Win, traders can collect prize lots across all of their trading accounts, whether they generate a profit or not

After learning from our master traders, clients can then begin flying on their own, making even more profit. Additionally, demanding traders can track the performance of every master trader and choose whose positions to copy, depending on their performance and preferred trading techniques.

New approaches At OctaFX, we have developed a new loyalty programme that allows traders to collect special prize lots, which can then be exchanged for items such as T-shirts and smartphones in our special store. The loyalty programme, called Trade and Win, is available to all traders who use real accounts on any trading platform we support.

Every time traders accumulate an integer value of prize lots via routine trading, the value is added to their balance. For instance, if a trader closes a deal at 0.4 lots, they will only be required to close trades worth a total value of 0.6 lots to receive a prize lot. This way, traders can collect prize lots across all of their trading accounts, whether they generate a profit or not.

Additionally, we are thinking of creating new types of user accounts and special wallets.

These accounts will widen our offering to traders, allowing them to pick the conditions that suit them best. All of these developments are designed with the trader in mind; at OctaFX, our goal is to empower traders by giving them the information to make the most out of forex. ■

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Sales Enablement: A Master Framework to Enage, Equip and Empower a World-Class Sales Force www.millerheimangroup.com/sales-enablement

Understand sales enablement and what it can do for your company

Implement enablement using techniques that ensure performance impact

Adopt proven best practices through step-by-step advice from experts

Examine case studies showing the impact of sales enablement on your sales results

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FINANCE

Trading

As with any business, what’s important is to meet your customers on their terms, not yours

On the customer’s terms

A mobile-first approach to financial trading is handing control back to the client, writes Nauman Anees, Co-Founder and CEO of ThinkMarkets The financial services sector has always been at the forefront of technological innovation.

Electronic trading arrived in financial markets some 30 years ago, creating the familiar image of a broker at their desk, surrounded by multiple monitors displaying a quantity of data overwhelming to the uninitiated.

This image, however, only covers one side of the trade: the brokers’. If the fintech revolution means anything, it’s the creation and development of new channels to reach clients, as well as the growing obsolescence of a model that was established three decades ago.

At ThinkMarkets, a brokerage firm with a footprint in seven countries, we have found that modern technology has created new ways for us to reach our clients and, crucially, our potential clients. This in turn has impacted their expectations in terms of communication: as with any business, what’s important is to meet your customers on their terms, not yours.

Going mobile The digital revolution has largely eliminated many of the traditional friction points between businesses and the public. Think of Netflix streaming films directly to the home, delivery apps consolidating local food options onto a single platform, or virtual assistants like Amazon’s Alexa becoming more and more central to their 98 | EUROPEANCEO

consumers, have grown familiar with conducting their personal banking on their mobile phones. We believe it’s only logical to suggest those trading in financial markets are comfortable conducting their business via their phones as well. Adding fuel to this belief users’ domestic lives. Financial services may is the fact Trade Interceptor experienced a seem to be in a completely different category year-on-year growth of 20,000 users in 2017, to these everyday applications, but there is a rate that shows no signs of slowing down. a common thread: breaking down barriers between the user and the service.

One-stop shop With these new consumer expectations Of course, developing a mobile-first strategy in mind, ThinkMarkets has pivoted decisively has not just been about implementing a new to mobile. Since our founding in 2010 – in the channel for onboarding clients and then simply midst of the global financial crisis – we have using it to direct them towards the same old seen exponential growth in both revenue and broker model. The big brokers we compete with user base, highlighting our commitment to offer crude, one-size-fits-all models that are the development and sustainability of online increasingly outdated. We want to change that. financial trading. That said, there’s no room We pride ourselves on offering an agile, for complacency, as a constantly evolving suite customisable model that gives our clients of technologies is creating new opportuni- a voice. We have pioneered a holistic soluties to reach individuals who may not have tion that consolidates as much of the proconsidered trading previously. cess as possible into a single user interface In order to develop our mobile-first strat- – be it for our electronic compliance with egy and stay ahead of the competition, we Know Your Customer and anti-money launacquired the most searched-for trading app dering regulations, ensuring the client has on the App Store last year: Trade Intercep- the maximum provision of data and indicator. This new member of the ThinkMarkets tors available, or for catering for automated group has been at the core of our mobile and algorithmic trading. strategy, and all of This stands in stark contrast to the forour research has sug- mer web-based model that treated an online gested this is a strong presence merely as a conduit to a standard avenue for growth broker. At its core, our mobile-first stratTrade Interceptor’s within financial ser- egy is about empowering our clients with year-on-year user vices. Consumers, all the information and flexibility they growth in 2017 and especially young need to find success. n

20,000

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Urban Jurgensen 2340 WG The European Advert 280x210.indd 2

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FINANCE

Pensions

Improving member outcomes in retirement funding

Through the implementation of mobile technology and educational programmes, the Natal Joint Municipal Pension/Provident Funds are helping more South Africans plan for their retirement than ever before, writes company CEO and Principal Officer Sam Camilleri Over the past decade, a pivotal shift in the retirement industry has taken place. The move from defined benefit funds to defined contribution (DC) funds means the latter depends heavily on good investment returns.

It also means that DC funds, by their very nature, place more risk in the hands of end users. The need to have better operational systems, added value in the form of reduced costs, improved communication, better financial-literacy education, superior investment practices, modern operational platforms, solid IT solutions, and sound support structures has become absolutely vital.

DC funds must continue to move forward with consistency and be proactive in establishing innovative methods that can improve the retirement outcomes of their members.

Advancing better outcomes for stakeholders is achieved through finding new ways of improving efficiency. Recent projects undertaken by the Natal Joint Municipal Pension/Provident Funds (NJMPF) – provincial municipal retirement funds serving 22,000 active members and 8,800 pensioners across 54 municipal areas – do just that.

ment, the objective is similar, as the focus is based on improving benefits for members and developing communities at large. At NJMPF, improving members’ retirement outcomes is related to building a retirement funding service that changes the mindset of members while also achieving cost effectiveness.

We welcome the future through innovation and technology, as these elements help us to strategically position members’ total value proposition. They can also help place good governance and community development at the centre of all decision-making processes.

Over the years, the NJMPF has evolved and developed, keeping with the times by leveraging the latest technologies available in the financial sphere. Due to its continued efforts, as well as its steadfast commitment to providing superior retirement services, the NJMPF is now a leader in the industry – as evidenced by the numerous accolades and recognitions it has achieved over the years. These awards, in turn, support a working governance strategy, growing member knowledge and the assurance that our stakeholders are always at the centre of our decisions.

Our strategy to become a global leader involves having direction, intent and a focused outcome. Through this approach, we have found Leading provider The objective of any financial organisation is success in improving stakeholder results. This to increase shareholder value and profit. In has given greater value to our members through the context of a retirement funding arrange- the provision of a superior retirement service, 100 | EUROPEANCEO

which essentially comes down to collecting contributions, as well as investing in and paying out benefits to beneficiaries and pensioners.

Financial literacy For the past year, the NJMPF has collaborated with the National Credit Regulator (NCR) to implement a new module within the NJMPF Financial Literacy Programme.

As well as being practical, this new module addresses specific challenges to NJMPF membership, while also encouraging a change in members’ attitudes and behaviour when it comes to financial matters.

The NCR is responsible for regulating South Africa’s credit industry. One of its key tasks is to educate and deal with the needs of historically disadvantaged and low-income individuals. Partnering with this national regulatory body enables us to leverage the expertise of NCR in the field of debt-management education at no extra cost to NJMPF members. As CEO of NJMPF, I believe that knowledge should be transferred to members through methods that are both cost-effective and innovative. What’s more, this partnership works both ways, as it also addresses the NCR’s mandate to visit areas outside of South Africa’s main urban centres.

Low financial literacy levels are a global challenge, but they’re more prevalent in

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Pensions

developing nations like South Africa. To make matters worse, the nation faces surging debt levels, low disposable income and a negative household savings ratio. Teaming up with the NCR was a bold move in our aim to improve financial literacy across South Africa. It is also a continuation of various NJMPF programmes with other South African regulatory bodies that have taken place over the past few years.

For example, we have partnered with both the Financial Sector Conduct Authority (in 2014 and 2015) and the Office of the Pension Fund Adjudicator (in 2016) to promote financial literacy with regard to budgeting and members’ rights. This year, we joined forces with the South African Revenue Service (SARS) to educate our members on tax-free investments and help them understand the role of both tax and SARS in the economy.

Through our Financial Literacy Programme, we aim to develop the capacity of communities and citizens by engaging them through education and training that we believe will help them improve their lives. As such, the NJMPF runs financial literacy campaigns at no cost to the funds. These campaigns focus on educating members and pensioners in the province of KwaZulu-Natal about financial planning, control and products. Members and pensioners who are educated in financial systems are then able to transfer their knowledge to their immediate families and communities. This leads to citizens making more sound financial decisions, which in turn helps improve standards of living, as well as stimulate the economy at large.

Further, studies have shown that children can play a significant role in financial literacy, both for themselves and their parents. Educational programmes that are engaging for the whole family help to get the message across quicker and more effectively. In a bid to eradicate South Africa’s low financial literacy rate, we have incorporated these findings into NJMPF’s ongoing Financial Literacy Programme.

Low financial literacy levels are a global challenge, but they’re more prevalent in developing nations like South Africa

NJMPF:

22,000 Active members

8,800 Pensioners

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Epic innovation In 2017, the NJMPF launched a mobile app that allows members to interact with the DC fund instantly. The NJMPF app sends notifications and news, while also enabling stakeholders to become more financially literate. The app was revamped earlier this year and now includes access to videos, ‘call me’ notices and a log of queries. Today, the NJMPF app motivates members, pensioners and beneficiaries to improve their financial situation by encouraging them to think about retirement planning daily.

But our use of technology doesn’t end there: the NJMPF is also in the process of introducing an electronic barcoding ballot system, which will assign all members a unique barcode that has been designed specifically for them.

Our electronic voting system, meanwhile, has been enhanced to include voting on the NJMPF website and mobile app. Members will be able to log into the web portal and click the voting tab to cast their ballot for their preferred trustee. The data will then be filtered back to NJMPF, using the unique barcode to assist in automating the scanning and counting process, while verifying each ballot and preventing vote duplication.

The system will also generate reports and flag any potential inconsistencies. Our new online contribution submission system, known as Epic, automates this area of our operations, improving accuracy and efficiency in the process. The Epic system will serve in a client portal capacity, allowing the employer to submit contributions and member information online.

The NJMPF is committed to the continual training of our trustees, exposing them to the latest industry thinking and keeping them informed of upcoming legislation.

Combined, the excellence of the administrative functions performed in house by highly skilled specialists and the use of the latest technologies have helped elevate NJMPF to a world-class retirement fund. ■ EUROPEANCEO

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Financial Inclusion

Creating a more inclusive economy

There are approximately two billion people in the world who do not have access to a bank account. Improving financial inclusion among these individuals would provide huge benefits for the global economy, writes E Jay Saunders, Founder of Domus Semo Sancus Increasing financial inclusion around the world is essential to reducing poverty and boosting prosperity. Bringing people into the formal financial system helps them make day-today transactions, like sending and receiving money, and allows them to safeguard their savings, which helps households manage cash flow spikes and build working capital.

Financial inclusion also helps fund small businesses, enabling owners to invest in assets, mitigate shocks, plan and pay for recurring expenses, navigate unexpected outgoings and improve their overall welfare.

As a result, the benefits of financial inclusion are not only significant for individuals, but for societies as well. And, as the world rapidly transitions towards a cashless economy, issues relating to financial inclusion are likely to increase. Domus Semo Sancus (DSS) is committed to closing the divide between the banked and unbanked by helping individuals gain access to the financial services they need.

Easy identification In order to boost financial inclusion, DSS has created two powerful tools to assist individuals and businesses alike: SafetyNet and Wowlet.

More specifically, these applications help financial institutions streamline the approval process by verifying the identities of both customers and clients.

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and Microsoft – along with DSS’ own proprietary code – to perform enhanced due diligence checks at a quality, depth and speed far exceeding that of a human expert.

Wowlet and SafetyNet are designed to help the two billion unbanked people around the world who do not currently possess a proof of identity that meets the Financial Action Task Force’s Know Your Customer (KYC) standards. By leveraging alternative forms of information, such as public profiles, the applications allow these individuals to be reliably assessed for risk.

DSS’ SafetyNet uses a customised taxonomy to search tens of thousands of global data sources in real time across the surface, deep and dark webs. It studies structured and unstructured information – including global court cases, criminal registries, government records and curated news sources stored in multiple languages – for signs of risks relating to subjects of interest, at speeds exceeding 100 million pages per second. Any relevant information is then pulled together in an easyto-read live web (or PDF) report.

Reducing risk One of the ways banks typically seek to safeguard their asset portfolios and brands is through a process known as ‘de-risking’, but this approach has a number of drawbacks.

De-risking occurs when international banks attempt to reduce their risk exposure in response to tighter regulatory standards.

The practice has become a serious threat

As the world rapidly transitions towards a cashless economy, issues relating to financial inclusion are only likely to increase

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Financial Inclusion

to economic and political stability in Latin America and the Caribbean, as it often involves the termination of correspondent banking relationships with local banks, strategic market repositioning, complete withdrawal from the region and the closing of accounts for selected clients.

If not addressed, de-risking could jeopardise the $75bn (€63.4bn) of remittances coming into the region every year from citizens living abroad. These remittances are a lifeblood for the recipients, as they are primarily used to purchase basic goods and cover expenses relating to education and healthcare.

By utilising SafetyNet, local banks can, if necessary, monitor their entire client list on a continuous basis. Banks are then immediately alerted to any high-risk clients, allowing them to quickly take the necessary actions to eliminate or mitigate the risk. Further, SafetyNet enables local banks to take a proactive approach to KYC and anti-money laundering rules, which should give international banks a measure of comfort when moving away from blanket de-risking measures.

SafetyNet also offers banks other ways of reducing risk without unfairly penalising their customers. Building on its extensive datasets and its ability to conduct real-time vertical and horizontal searches, SafetyNet is able to utilise its link analysis engine, known as Visualise Connections, to graphically display the relationships and associations of a subject of interest. Visualise Connections is a first-of-its-kind cognitive link analysis tool that can create nodes cognitively, manually or through batch uploads. It allows an end user to quickly see the relationships between nodes and, through its tight integration with Google Maps, gives the end user an unprecedented view of potential risk that is not available through similar applications.

Among all the data consumed by SafetyNet on a daily basis are a large number of facial images. Building on the latest advancements in machine learning and machine vision, DSS has built a reverse image search tool called Facial Search. This enables the program to receive images – either manually or in real time from a video source, such as a CCTV network – and search within its own datasets for matching images. If a matching image is found, SafetyNet can automatiNumber of unbanked cally extract the identifying information and individuals around conduct an enhanced the world due diligence search.

2BN

With SafetyNet, Visualise Connections and Facial Search, law enforcement organisations can take a proactive approach to the detection, investigation and solving of crimes, particularly serious crimes. Similarly, governments can provide safe neighbourhoods for their citizens, secure their borders and protect their strategic assets without having to scale up their manpower.

Safety first DSS is careful to ensure that all of its programs adhere to the highest privacy and security standards. All of SafetyNet’s databases, as well as the application itself, are kept at Tier 1 cloud providers possessing a range of certifications for compliance, including ISO 27001, 27017 and 27018.

Only the sanction lists, directories of people already in the public eye and image databases are stored as searchable records. SafetyNet doesn’t create or retain records on entities. Although its datasets have information about individuals within them, they are stored as unstructured data, and no records are created or stored about any individual entities.

SafetyNet searches are conducted on the fly and, once a search is completed, only the profile report is retained. No metadata is kept on customer searches and each search is completely independent from any other. All profile reports and log files are kept in an encrypted state with built-in data governance tools that ensure files are not prematurely destroyed or kept for longer than needed.

The success of DSS is tied to how well it knows its customers, which is directly connected to the quality of its datasets and the credibility of the information SafetyNet analyses during each search. It also stems from the fact that DSS customers trust the company with their data. We spend a significant amount of our budget on ensuring that our data sources are of a high quality and our results are accurate, relevant and timely. As regulatory compliance is vitally important to us – not to mention to our customers – we have made it an integral part of our product development. We see innovation as building products that meet regulatory standards while delivering great user experiences – and that’s what we promote throughout the organisation. As DSS continues to pursue its goals, it hopes to put a significant dent in the number of people who are unbanked and make their lives better in the process. ■ EUROPEANCEO

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AHEAD OF THE

game GAMIFICATION IN BUSINESS HAS EXISTED FOR A NUMBER OF YEARS WITHOUT GAINING WIDESPREAD ADOPTION. BARCLAY BALLARD INVESTIGATES WHAT COMPANIES CAN DO TO ENSURE THE CONCEPT DELIVERS GENUINE RESULTS FOR THEIR BOTTOM LINE »

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GAME ON

Video games are more ubiquitous than ever.

The value of the global market is forecast to reach $137.9bn (€118.4bn) by the end of 2018, representing a growth rate of 13.3 percent year on year. The rise of smartphones has meant players can now tackle puzzles and score points whenever they have a spare moment.

Games are also entering the world of work. While you are still likely to receive a telling off from HR if you’re found trying to beat your Fruit Ninja high score in the office, game mechanics are being explored in business software as a way of improving engagement and boosting productivity. The approach has been dubbed ‘gamification’ and uses leaderboards, points and other rewards to incentivise performance.

It’s true that, to some extent, gamification sounds like yet another buzzword destined for the corporate trash heap – and for businesses that jump on this particular bandwagon without giving it much thought, this is likely to be true. However, gamification has shown itself to be more than just a flash in the pan. The term first entered the corporate vernacular in 2010 and continues to be championed by multinational giants and smaller start-ups alike. Its staying power indicates it is a concept providing tangible benefits for some – even if not all – businesses.

The use of game-like features primarily aims to solve the problem of workplace motivation. Although the need to put food on the table is usually enough to encourage people to turn up to work, it doesn’t necessarily mean their performance levels will be at their highest.

If the introduction of game mechanics can successfully boost employee motivation, it could be worth millions to the global economy.

The challenge for businesses is how to implement such tactics without being dismissed as just another gimmick.

All work and no play The benefit of applying game mechanics to real-world situations has a great deal of psychological support. By rewarding players – either by scoring points, earning badges or simply providing a sense of achievement – gaming is a hugely engaging activity. According to Caroleigh Deneen, UX Designer, Information Architect and Gamification Consultant 106 | EUROPEANCEO

at SAP, this is something that hasn’t gone unnoticed in the corporate world.

“The idea is to take something that isn’t a game and make it more fun and engaging by integrating motivators like those used in games,” Deneen told European CEO. “Established practices like frequent-flyer miles, loyalty cards and even unlocking a new colour for reaching the next reading level at school leverage the same principles. Gamification combines game design and behavioural design principles to persuade and motivate desirable actions, which lead to business outcomes like increased revenues, decreased costs and greater efficiency.”

WHILE GAMING AT WORK MAY SEEM LIKE SOMETHING OF A CONTRADICTION, HUMANS GENERALLY PERFORM BETTER WHEN THEY ARE ENJOYING THEMSELVES

Businesses have long searched for ways to boost engagement in the workplace, with varying degrees of success. According to Gallup’s 2017 State of the Global Workplace report, 85 percent of employees are either ‘not engaged’ or ‘actively disengaged’ at work. When this is coupled with the fact 70 percent of business transformation programmes fail due to insufficient employee engagement, it adds up to a huge number of companies operating below their full potential.

While gaming at work may seem like something of a contradiction, humans generally per-

70% PROPORTION OF BUSINESS TRANSFORMATION PROGRAMMES THAT FAIL DUE TO INSUFFICIENT EMPLOYEE ENGAGEMENT

$22.9BN PREDICTED VALUE OF THE GAMIFICATION MARKET BY 2022

form better when they are enjoying themselves.

The fact that playing video games can stimulate the release of dopamine – the neurotransmitter that controls pleasure and motivation – has long been known. So, if gamification can make employees have fun while carrying out menial tasks, then it could result in increased productivity and a subsequent revenue boost.

Of course, gamification is not about shoehorning a video game into your employees’ daily grind. As Deneen admits: “Customers and employees are too smart for gimmicks.”

Still, when implemented properly, game mechanics can promote creativity within previously mundane tasks, provide employers with performance feedback and even help members of staff acquire new skills.

Top of the leaderboard In the competitive corporate world, gamification has become another tool for businesses to outpace their rivals. It’s for this reason industries as diverse as pharmaceuticals and retail have begun to implement the concept. In fact, by 2022, the global gamification market is predicted to be worth $22.9bn (€19.5bn).

While there’s a wide range of business areas that stand to benefit from gamification, sales and marketing teams often prove the most compelling examples. In 2015, hospitality chain Marriott International decided to introduce gaming elements to help encourage front-office staff to enrol more guests onto the Marriott Rewards loyalty scheme. The programme utilised a private digital platform, which allowed staff to create teams and compete against other hotels within their region. Bespoke challenges were created, and a continually updated feed encouraged employees to give praise to high performers. The best teams were then rewarded with a range of prizes in recognition of their good work. Although it can often be difficult to quantify the benefits of gamification, in this case, the results were convincing: more than 400 hotels, spread across four regions, exceeded their enrolment goals by 10 percent.

The recruitment and HR space is another area benefitting from the use of game mechanics. Cognisess, a predictive analytics company that has worked with clients including Volkswagen, AB InBev and Havas Media, uses gamification to help improve employee onboarding, »

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SPECIAL REPORT

Xxx

Top Industry industry Players players BADGEVILLE

California-based Badgeville aims to fundamentally change the way people work.

By layering gamification and analytics over a company’s core applications, it has driven improvements in collaboration, training, sales and more. A number of different clients – including the likes of Deloitte, CA Technologies and EMC – have used the platform to make their existing enterprise software more engaging.

SAP COMMUNITY NETWORK

The SAP Community Network demonstrates that gamification can be used for more than just sales. Using missions, badges and ‘karma credits’, the network encourages members to collaborate and support their colleagues. By having a number of answers approved during Q&A sessions, for example, employees could receive permanent recognition at the SAP Community Network Annual Expertise Showcase.

retention and talent management. While traditional recruitment methods, such as sifting through hundreds of CVs, can be costly and inefficient, using game mechanics to assess candidate suitability provides added accountability. It means HR managers don’t have to go off a hunch – they have data to support their decisions.

“We use game elements within the assessment stage of people analytics to understand people more objectively,” explained Chris Butt, CEO and founder of Cognisess. “Over the years, you would have probably done plenty of job surveys and psychometric tests – tick this box, tick that box – and they tend to be very dull and quite subjective. However, using gamification allows us to create an interactive data collection platform that is engaging and, more importantly, objective.”

When gamification is combined with machine learning and artificial intelligence, it provides businesses with a powerful tool for assessing employee performance. Long-term trends can be identified that show why some teams are functioning more effectively than others and why good members of staff choose to leave.

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QUIZGAME

Developed by Pixofun, QuizGame is an application that takes an innovative approach to corporate training. Using several different game modes, it aims to strengthen previously learned knowledge in a fun manner. Considering 80 percent of the knowledge gained from employee training programmes is lost after just a week, QuizGame could make a huge difference to employee performance.

Multiplayer mode Not too long ago, video games were considered a solitary pursuit; the image of a loner sitting glued to their screen for hours on end was a common one. But times have changed: with the rise of online gaming, voice chat and cooperative titles, the stereotypical depiction of the ‘gamer’ has been eroded. Today, many video games encourage both competition and collaboration, and this is being reflected in corporate gamification efforts.

The introduction of game-like features that incentivise teamwork, flexibility, collective effort and the alignment of individual abilities and personalities has become increas-

WHEN GAMIFICATION IS COMBINED WITH MACHINE LEARNING AND ARTIFICIAL INTELLIGENCE, IT PROVIDES BUSINESSES WITH A POWERFUL TOOL FOR ASSESSING EMPLOYEE PERFORMANCE

BUNCHBALL

Bunchball is an engagement and performance platform aimed at boosting employee motivation. Nitro for Salesforce is one of the most common uses of the platform, enabling organisations to assign challenges, create public leaderboards and improve management insight. As part of the data-rich Sales Cloud, Bunchball is a tangible way for companies to prove that their gamification solutions are delivering a return on investment.

ingly commonplace. At SAP, for example, a community reputation programme uses game mechanics to foster regular participation, deliver ongoing feedback and encourage discussion. Participants are set missions, receive badges and accumulate ‘karma credits’ for their quality contributions.

“The SAP Community [Network] is a technical knowledge exchange community, where our prospects, customers and partners share authentic experiences about SAP products and services,” Deneen said. “We use a gamification and reputation programme to motivate quality community contributions. SAP benefits from the expert contributions of our members; our members benefit by having their expertise publicly recognised.”

The competitive element of playing games is another way businesses are motivating their employees. Of course, this starts with self-competition, where members of staff are encouraged to continually improve their own performance. However, a bit of friendly competition between colleagues can also provide an effective way of engaging a company’s workforce. Even something as simple as an employee leaderboard can boost performance.

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GAME ON

In the wrong environment, however, it can also prove problematic. In 2013, US pharmacy firm Omnicare introduced a staff leaderboard in an effort to reduce customer service wait times. Instead of creating a friendly, competitive environment, employees felt as though they were being monitored too strictly, causing response times to increase and even leading to a number of staff departures.

The challenge for businesses, therefore, is twofold: companies must first determine whether gamification is right for the kind of work they carry out, and then figure out how best to introduce it. As Scott Nicholson, Professor of Game Design at Wilfrid Laurier University in Canada, explained, gamification may not only be ineffective, it can actually be “harmful to motivation if used incorrectly”.

Winners and losers One of the reasons that gamification has not achieved wider adoption is because businesses remain sceptical of its merits – a view that is reinforced by a number of poorly implemented gamified corporate apps. In fact, there is a growing body of research that suggests using rewards to motivate people – one of the key features of many gamified programmes – can actually lead to inferior results.

The extrinsic motivation created by the offer of rewards, whether it’s a bigger wage packet or a shiny trophy, is not always effective, particularly in the long term. While this approach has been found to incentivise staff to complete routine tasks quicker, it has proved stifling when creativity is required. Instead of having an open mind to think of the most innovative solutions, the thought of winning becomes all-encompassing.

What’s more, rewards can damage intrinsic motivation. The end result is that when rewards are removed, motivation drops to a lower level than before the gamification layer was added. Perhaps even more worryingly, rewards lose their potency over time and need to constantly grow in order to keep employees engaged. This isn’t what most companies had in mind when they started exploring game mechanics in the workplace.

“There’s a reason why you haven’t seen studies on the long-term benefits of things like Fitbit and other gamified fitness tools,” Nicholson said. “How many of them actually made a difference in the long term? How many summer reading programmes turned kids into readers by rewarding them for reading quantities of books? How many grading systems inspired lifelong learning, as opposed to a disdain for doing anything that ‘wasn’t on the test’?

“Gamification is glitz and chrome, but if there isn’t something underneath it that is meaningful, it will have, at best, a short-term benefit and it could even have a negative longterm impact on intrinsic motivation.”

Companies may also be concerned that even if gamification is delivering the desired results, proving it is not always easy.

As Deneen noted: “Return on investment can be hard to evaluate because some of the behaviours influenced are only indirectly tied to revenue or costs.” Saying with certainty that gamification is the cause behind higher levels of engagement and therefore revenue, for example, is a challenge.

Although measuring the impact of a gamification programme is relatively straightforward if it relates to sales, for other business areas, the effect may be indirect and the associated revenues or cost savings may take place on an entirely different platform or in a different context. When this is added to the fact some corporate leaders remain sceptical about placing work alongside play, it is understandable if not every organisation is convinced by gamification.

INTRINSIC MOTIVATION IS DRIVEN BY A PERSON’S INNATE DESIRE TO EXPLORE, LEARN AND REALISE THEIR FULL POTENTIAL – NOT POINTS ON A LEAGUE TABLE

Levelling up If gamification is to prove its doubters wrong, then businesses must take greater care before introducing the concept. First of all, organisations need to commit resources to analysing the business areas that could stand to benefit from game mechanics. Introducing gamification on a whim, simply because other companies are doing so, is a waste of time and money.

Businesses should also ensure they have the right company culture in place before they explore game-like applications in the workplace.

Organisations that are open-minded towards new ideas are likely to benefit, but businesses already existing within a high-pressure environment should be wary of bringing another competitive element into their employees’ lives.

And while it may sound obvious, it is important that newly introduced game elements are actually fun. In order to achieve this, businesses need to think creatively about

the ways they use gamification. Surreal Studios, for example, employs augmented-reality games to give networking events a more relaxed atmosphere, leading to improved discussion and idea sharing. Conversely, simply promising your administrative employees a certificate for the fastest worker won’t actually make their duties any more engaging.

Most importantly of all, gamification efforts must focus on developing intrinsic motivation within employees rather than just concentrating on extrinsic rewards. In practice, this is difficult because intrinsic motivations are often deep-rooted and psychological. They are driven by a person’s innate desire to explore, learn and realise their full potential – not points on a league table. One way for businesses to tap into these intrinsic motivations is by ensuring that corporate objectives do not become the main focus of their gamification proposals.

“Having a focus on employee goals is absolutely vital,” Deneen said. “Superficially mixing points, badges and leaderboards into your business strategy won’t suffice. Gamification is about understanding where your employees’ goals overlap with your business goals. Once you’ve done that analysis, you can use gamification to motivate the types of behaviours that align with those common goals.”

Corporate gamification could also look to the consumer video game industry for further inspiration. When the industry was in its infancy in the 1980s, the majority of titles were limited by rudimentary controls and meagre (by modern standards) processing power. They were fun, but they were also simple. Today, high-profile games have often moved away from points scoring and instead focus on creating compelling narratives that keep players hooked. This approach has received little focus in the field of gamification despite having the potential to boost employee engagement on a deeper level.

The promise of improved workplace motivation may convince some businesses to adopt gamification, but others will require more concrete assurances. Fortunately, gamified applications are increasingly using data and analytics to provide evidence of a return on investment. Conversion tracking, customer relationship management software and sentiment analysis tools are being deployed to measure direct and indirect returns.

As this trend develops further, it is likely that more and more businesses will adopt gamification as a way of improving their bottom line. In the offices of the future, employees shouldn’t be surprised if they are asked to not only work hard, but play hard, too. n EUROPEANCEO

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FINANCE

Tax

The future of tax functions

Sweeping changes are transforming the global tax environment. In order to prosper, company executives must seek to understand what the future holds for tax functions, writes Jennifer Kurtz, Chief Technology Officer at Vertex Throughout the world, longstanding tax rules are undergoing major transformations. As CEOs huddle with their tax executives to analyse the far-reaching implications of tax overhauls in Europe and the US, they should also take a closer look at some major changes – and challenges – transpiring within tax functions.

At the same time as various rules and regulations are being revamped, technology is bringing sweeping changes to the tax sector, and new roles are now required to embrace this transformation. How well tax leaders address these pivotal short and long-term challenges will largely determine how effectively their companies respond to historic changes in tax rules and ever-increasing regulatory scrutiny.

Therefore, it’s up to CEOs to support their companies’ tax leaders in their efforts to reposition for the digital era by anticipating what successful tax functions are likely to look like a decade from now, and acting accordingly.

External disruptions The pace of change surrounding tax-related policies and legislation has become dizzying. In late 2017, the European Commission (EC) unveiled a package of VAT proposals described as “the biggest reform of EU tax rules in a quarter of a century”. One of the most noteworthy aspects of the proposals called for a shift from an origin-based VAT system to a destination-based system. Not to be outdone, the US enacted the Tax Cuts and Jobs Act of 2017 (TCJA), which qualifies as the most sweeping US tax legislation in more than three decades. Most US taxpayers, including multinational corporations (MNCs), are now scrambling to adjust to the TCJA. Earlier this year, the EC and the Organisation for Economic Cooperation and Devel110 | EUROPEANCEO

opment (OECD) published updates on their separate – but related – efforts to address the tax challenges posed by the increasingly digital nature of commerce. In its report, the EC asserted that the amount of profit currently going untaxed within the EU is unacceptable. Meanwhile, the UK’s Making Tax Digital initiative continues to progress, mandating companies to begin fulfilling digital record-keeping and submission requirements as early as next year.

Add to this mix a steady stream of new rules and regulations concerning real-time tax reporting in a growing number of individual countries, and it becomes clear the global tax postures of MNCs have never been subjected to such intense scrutiny. Nor have global tax functions ever contended with so much change or such cumbersome workloads. (i.e. restructuring) to limit tax liability in the future. Finally, tax functions are expected to assist employees with scenario planning Internal impacts Although tax policy overhauls and rule efforts, forecasting activities and other work changes differ in nature, they pose a consist- related to optimising the company’s response ent set of short and long-term challenges to to external tax policy changes. As new tax legtax functions within global enterprises. From islation is implemented around the world, tax an immediate compliance perspective, most functions will be required to conduct these and tax policy and regulatory changes typically other related activities with growing frequenrequire tax functions to: access and collect cy in order to ease new talent management more data, often at a granular level for regula- and technology pressures.

New tax compliance requirements oblige tory reporting; leverage data across numerous new, and often interconnected, calculations; tax professionals to monitor the changes to use new data and perform new calculations; the rules, analyse their potential impact on and assess current data management practices the company and then share their analyand tax technologies to determine what needs ses with senior-level colleagues. Major tax policy changes also require tax functions to to be changed, upgraded and/or replaced.

Further, there is a need to help senior re-evaluate tax management processes, data executives – including IT leaders – understand management practices and supporting techthe impact of new policies and rules on the nologies to identify which processes should company’s current operating model, as well be eliminated, tweaked, updated or replaced. as on options for adjusting operating models These efforts are frequently complicated by

FINANCE

Tax

organisational digital transformation initiatives, process improvement activities, acquisitions and divestitures, as well as IT-driven technology changes, including ongoing moves to cloud-based technology environments.

Many tax functions are discovering they have a growing need for tax experts with data management and data science skills – and they’re not alone. Other parts of the organisation and other companies are hungry for data science talent, which intensifies competition.

And, as is the case in other parts of the organisation, tax departments face demographic

A rapidly changing global tax policy environment has instilled tax planning with a growing strategic importance

challenges in replacing the high number of retirement-age professionals currently on their roster. Finally, tax functions have a growing need for supporting technology that can manage the data used across all tax management processes on a global basis.

Future functionality In addition to the short-term challenges these demands present, the rapidly changing global tax compliance environment, coupled with tax authorities’ strident calls for greater tax transparency, is reshaping how tax functions operate.

These changes will take time to develop, but a picture of how tax functions will take shape in the near future has begun to emerge.

It is likely that leading tax functions of the future will take a seat at the strategic planning table. A rapidly changing global tax policy environment has instilled tax planning with a growing strategic importance. While tax departments will always need to fulfil

tax compliance and reporting requirements, leading functions will also assume a more prominent role in organisational strategic planning activities. In other words, expect more tax leaders to join their C-suite peers in conducting complex scenario-planning activities. During these exercises, tax leaders will be called on as strategic business advisors to assess how tax liability and related reputational risks associated with different planning options can be managed. This work also requires the development of complex models to guide future tax planning activities.

Future tax functions will also cultivate a deeper partnership with IT. New tax compliance rules require tax functions to collect, analyse, safeguard and report new types of detailed data. This growing data management challenge is driving tax leaders to forge more collaborative relationships with chief information officers, chief information security officers and IT functions. Healthy tax-IT relationships help ensure tax technologies can be quickly procured, implemented, updated and/or replaced to sustain tax compliance in the most effective and efficient manner.

This relationship is especially important as more companies and tax functions embrace cloud-based applications. IT expertise is crucial in selecting and managing cloud technology vendors in an effective and highly secure manner. These collaborations also help ensure that sufficient governance and controls support tax data and tax data management processes.

As more organisations become increasingly data driven, and more global tax authorities move to adopt real-time tax reporting, tax functions will need to expand their supply of technology and data science expertise. To satisfy this need for talent, tax leaders will seek to recruit and develop ‘tax technologists’ – tax professionals who supplement their formal tax education with technology exposure and experience. In some cases, this technology training will consist of university degrees in computer science or management information systems. In other cases, tax experts will become tax technologists by learning XML, SQL, scripting languages, data preparation tools and other related skills.

Sweeping and complex changes have been non-stop in the worldwide tax environment, so it should be no surprise that the talent, technology and process changes occurring inside global tax functions are similarly transformational. By understanding how tax functions are currently evolving, CEOs and tax executives can pave the way for their future tax functions to thrive. ■ EUROPEANCEO

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Tax

Vive la France Although Emmanuel Macron’s time as French president has been rocked by protests and falling approval ratings, the country’s investment climate is hitting new heights, writes Barclay Ballard The 2017 French presidential election offered voters two starkly different choices: while both Emmanuel Macron and Marine Le Pen represented a break from the country’s political past, the candidates campaigned on two very different platforms. The former built his support by championing closer integration with EU states and reforming the domestic economy, while the latter promised to stop France from becoming “submerged by a flood of immigrants”.

If not everyone is happy with the choice made by the French electorate, investors certainly are. Since Macron took power, red tape has been cut, the country’s labour laws have been modified, and the small and mediumsized enterprise (SME) landscape has been reshaped. With the president’s La République en Marche party boasting a sizeable parliamentary majority, passing further reforms should not be overly challenging.

That isn’t to say Macron’s policies have been without controversy. As a former banker, he will always arouse suspicion from some in a post2008 world. But for others, his commitment to reform is exactly what’s needed to revitalise a business climate that has lagged behind that of Germany and the UK for some time.

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A French revolution Despite only winning the election a little over a year ago and having never previously held elected office, Macron’s presidency is already being lauded by members of the French business community. Some have even declared now is the best time in living memory to invest in France.

Such lofty claims reflect the fact that Macron has already made significant progress across a number of areas during his tenure. A labour reform passed in September 2017 has liberalised the job market by enabling businesses to negotiate deals with their workers, instead of having to comply with industrywide agreements. Individual tax cuts have followed, and a decrease to corporate tax rates – from today’s 33.3 percent to just 25 percent – will come into force by 2022. Collectively, these measures have targeted some long-held problem areas in the French economy.

“Macron’s policies have touched upon several issues that were previously viewed as ‘unreformable’, such as the organisation of labour-management relations and reforming specific sectors, such as the railways,” Thomas Michalski, Associate Professor of Economics at HEC Paris, told European CEO. “Tax overhauls

and a reasonable – but by no means revolutionary – path to improve the health of public finances have also played a role. This was one of the reasons business sentiment improved: there is a clear long-term path of reforms, and so far the government has been able to deliver.”

SMEs have also received a boost under the Macron presidency. Despite the fact there are almost 3.5 million SMEs in France, representing 43.3 percent of the country’s GDP, they struggle to compete with their international rivals. While 310,000 German SMEs export their products abroad, this figure falls to 125,000 in France. John Jackson, a partner at Jackson Walker and a founding member of the international legal network Globalaw, explained to European CEO how the president is revitalising this section of the economy.

“Macron has implemented several measures to support SMEs, including tax and social measures, which make the law more legible and reduce the burden on companies and company managers,” Jackson explained. “Such measures aim to encourage domestic and foreign private investment. In addition, the state is setting up a new €10bn public endowment fund for industry and innovation.”

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Tax

FRANCE’S FOREIGN INVESTMENT:

697

New projects funded in 2017

50%

Rise compared with 2016

$30m

Amount pledged by Microsoft to build four data centres

$20m

Anticipated value of Uber’s research and development centre in Paris

In response to Macron’s reforms, French investment markets are maintaining an upward trajectory. Across the president’s first year in office, the performance of France’s CAC 60 large-cap index surpassed that of Germany’s DAX and the continent-wide Euro Stoxx 50. Even as many other European stock exchanges were rocked by global trade tensions and political turmoil in Italy, the French equities market stood firm.

Businesses in France have also experienced a significant rise in investment under the Macron presidency, receiving €31bn from public markets in 2017 – a 47 percent rise when compared with the previous 12 months.

With plans afoot to make equities investing more attractive for long-term savers, the country’s improving business reputation could be set for further gains.

A certain je ne sais quoi Although Macron’s policies have certainly made an impact, so have his words. Perception is important to the markets, so Macron’s focus on the economy and entrepreneurialism was always likely to result in a boost to French stocks. His pro-business rhetoric also comes

as a breath of fresh air following François Hollande’s presidency, which was characterised by high unemployment and rising taxes.

Macron’s self-proclaimed “Jupiterian” style may be pompous to some, but the market is evidently behind the former investment banker.

In particular, Macron has made wooing foreign investors a major trait of his government.

Foreign investment funded 697 new projects in France throughout 2017, representing a rise of almost 50 percent compared with 2016. IBM has promised to create an additional 1,800 jobs and Microsoft has pledged to open four data centres in the country as part of a $30m (€25.8m) investment. Similarly, Uber has plans to fund a $20m (€17.2m) research and development centre in Paris in an attempt to turn its vision of all-electric flying cars into a reality.

What’s more, Macron’s presidential style promises stability. In Germany, Angela Merkel has faced difficulties keeping her coalition government together. In Italy, populists with a radical economic agenda have taken charge, while the UK continues to stagger through its protracted Brexit negotiations. By contrast, Macron is seen as a committed champion of the European project at a time when its detractors are seemingly getting louder. Earlier this year, the French president managed to bring the country’s deficit below the EU’s three percent threshold for the first time in a decade.

That being said, Macron has been dealt a good hand. The global economy is enjoying a solid recovery period – something the president cannot take credit for, but that certainly helps the investment climate – and the market is fully aware things could have ended up very differently. Investors and businesses were always going to look favourably on Macron’s policies by virtue of the fact that it could have been Marine Le Pen calling the economic shots instead.

“The reforms to date have been relatively modest,” Michalski said. “Two important factors are driving the cycle in France: the global

Some members of the French business community have declared now is the best time in living memory to invest in France

economic expansion and, after many years of morose business investment and waiting, the need to restock on depreciated capital goods.

But the cautious optimism that was established after Macron’s election should be credited too.”

This optimism is perhaps tinged with a little schadenfreude as well. With businesses based across the English Channel concerned about their post-Brexit future, Macron is positioning France – and Paris in particular – as the natural place for them to relocate. In EY’s 2018 survey, France overtook the UK as the second-most attractive investment destination in Europe for the first time since the survey began in 2000. Macron is helping to ensure the UK’s loss is France’s gain.

La Résistance Despite his successes, it has not all been plain sailing for the inexperienced president.

Macron’s attempts to liberalise the French economy have created conflict with the country’s trade unions, resulting in several protests, most notably in the rail sector. Macron has vowed not to be cowed by “slackers, cynics and extremists”. In response, protestors have thrown his words back at him, chanting: “Slackers of the world unite.”

While union-led protests have thwarted efforts to reform the French economy in the past – notably in 1995 – times are different now.

As in many other parts of the world, French labour unions do not wield the same power they once did, and Macron has significant public support. According to an Ifop survey taken earlier this year, only 44 percent of the French people felt the strikes in March were justified.

“In general, the public is ready for reforms and favourable to them,” Michalski said. “However, tough tests are in front of the government, such as the reform of special retirement plans for different categories of workers, the reform of unemployment benefits, or the goal to reduce employment in the public sector. Process will matter and so will political opinion. If the government continues to deftly move forward, trade unions will lose all the battles.”

As Macron continues to plough forward with his economic policies, there are many who will find cause to criticise them.

He is, after all, an ex-banker and a globalist, making him an easy target for individuals occupying both the left and right halves of the political spectrum. Just don’t expect investors to be too concerned. n EUROPEANCEO

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FINANCE

Budgeting

Zero hour (again)

Zero-based budgeting is making a huge comeback thanks to its ability to efficiently allocate resources, writes Fernando Moncada Rivera For companies with small margins, retaining a high growth rate can be difficult – especially when competing in mature sectors.

While traditional models of cost cutting may work temporarily, they’re unlikely to continue making gains in the long term. Various methods have been tried and tested to counteract this issue, but one in particular has been making waves in the past few years: zero-based budgeting (ZBB).

ZBB is a framework by which companies approach every budgeting period as if from scratch – completely unanchored from past results. Every year’s budget is determined not by what is currently being done, but rather by the needs and objectives of the company.

Unlike traditional budgeting methods, which use past allocations as a benchmark for adjustment, ZBB forces managers to scrutinise individual costs and identify the critical business functions within the company, reimagining their budgets from the ground up. It is a method that leaves no aspect of a business’ finances immune to microscopic scrutiny, with each expense – and department – forced to justify its worth at every budgeting period.

Day dot Originally developed in the 1970s by thenmanager of Texas Instruments Peter Pyhrr, ZBB started to take off when Pyhrr published a report on the principle in the Harvard Business Review and later wrote a book about its benefits. After some initial success, however, its popularity waned – this was due in large part to the mountains of data required to use the method effectively and the lack of adequate computing power at the time. But despite not seeing much use in the late 20th century, ZBB has witnessed an explosive resurgence since resurfacing in 2010.

Apart from its inherent business advantages, ZBB’s comeback can be attributed to the 114 | EUROPEANCEO

success of firms like 3G Capital and Berkshire Hathaway. Both firms have used ZBB across their portfolios to aggressively pursue acquisitions, hoovering up companies such as Burger King, Tim Hortons, Kraft and Heinz with the money freed up by the method. More recently, 3G and Berkshire went after Unilever without success – although perhaps unsurprisingly, Unilever is also a proponent of ZBB. According to Accenture Strategy’s Beyond the ZBB Buzz report, which surveyed 85 of the world’s largest companies, the number of businesses adopting ZBB has increased by an average of 57 percent annually since 2013.

“ZBB has been around for more than 40 years now, but just recently has gone mainstream… as a result of slowing growth, higher profitability targets across industries, and fading views that it is too niche, disruptive or aggressive,” said Kris Timmermans, Senior Managing Director for Supply Chain and Operations Strategy at Accenture Strategy, in an interview with European CEO. “The outcomes of ZBB are unprecedented.

Our research found that major global companies are unlocking as much as $1bn [€837.1m] in cost savings to fund growth strategies and pivot to digital business models.”

Starting from scratch Typically, the first step in the basic ZBB process is the identification of ‘decision units’. This refers to any organ of the business that operates independently with its own budget. For example, the human resources and marketing departments would be considered decision units, but telesales wouldn’t, as it falls under the marketing umbrella.

Each decision unit then breaks down its activities and projects into ‘decision packages’.

Decision packages are proposals that provide a detailed description of the specific activity in terms of its objective, funding needs, justifica-

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Budgeting

ZERO-BASED BUDGETING:

91%

Proportion of companies that met or exceeded targets

15%

Average cost reduction

$260m+ Average annual bottom-line savings SOURCE: BEYOND THE ZBB BUZZ

ZBB cannot just be a oneoff exercise; it requires a holistic change in the company culture

tion in the context of company goals, technical viability and alternative courses of action.

All decision packages within a decision unit are then ranked according to their importance.

This part can be very difficult, particularly if the differentiating criteria are qualitative in nature and don’t have a clear financial cost to compare. This step is vital, however, as the rankings help upper management determine which projects to allocate the most funding to. Top-ranking items will then be funded in full, while those lower down the list may only receive partial funding – or none at all.

Crucially, the process constantly evaluates and monitors the performance of each decision unit to give managers an idea of whether they have allocated resources in the most efficient way possible.

Gaining momentum “According to our research, 91 percent of [the] companies [surveyed] have met or exceeded their targets using ZBB and are funnelling that money into growth strategies and new digital models,” Timmermans said. “Companies that have implemented ZBB, on average, see cost reductions of 15 percent and average bottom-line savings of more than $260m [€217.6m] annually.”

Companies that have been vocal about their use of ZBB programmes include Mondelēz International, Campbell Soup Company, Kraft Heinz, Anheuser-Busch InBev and Tesco. In its 2017 first-half results, Unilever even reported that ZBB was improving its marketing productivity and streamlining its advertising spend, while also reducing overhead costs that weren’t bringing much value.

In the past, ZBB has been regarded as a model for fast-moving consumer goods companies with notoriously small margins. Timmermans rejects this view: “Every industry stands to benefit. There is some misperception that ZBB is only suited for global consumer goods companies with strong top-down cultures, but the potential of ZBB goes far beyond that.

“It’s an equal opportunity way of working that applies no matter a company’s size or industry, and there are unprecedented opportunities in store across industries. ZBB now has a strong footprint beyond consumer packaged goods, including financial services, life sciences, technology, retail, chemicals and natural resources, among others.”

According to Timmermans, examples of companies that have successfully implemented ZBB – whose names he was unable to provide – include a consumer goods company that was able to achieve 18 percent savings and a 20 percent increase in share price. Another case was that of a prominent commercial bank, which

unlocked a large sum of money and reinvested it in ‘going digital’, and a healthcare company that achieved savings of £1.2bn (€1.36bn) over the course of three years.

Zero-sum game While effective, ZBB has downsides and unique challenges that may stand in the way of success. The first of these is the additional workload it creates for a company: having a detailed projection of every cost, as well as an argument for why each expense is necessary, is an arduous process. A large amount of time and labour is needed to compile, analyse and package financial data.

There also exists the risk of allocating resources based on short-term returns in the next calendar year. If short-term thinking leads a company to make significant cuts to its R&D budget or its employee training, its competitiveness could suffer in the long term.

Further, ZBB can have an adverse effect on employee morale and may encounter internal resistance; people within the company can feel threatened by the prospect of their departmental budget being cut or, worse yet, the possibility of losing their jobs as a result.

The feeling of cooperation within a company can also be impacted, as one department’s gain is often another’s loss, leading departments to compete for resources rather than collaborate.

In order for ZBB to work, it cannot just be a one-off exercise; it requires a holistic change in the company culture. For such a change to happen, the support of upper management is crucial, and changes cannot be isolated to certain departments within the company. “The CEO and [their] team needs to be ‘all in’ for this to work because it requires a change in [the] behaviour of the organisation when it comes to spending expenses,” said Shin Shuda, Managing Director of Strategy, Consumer Goods and Services at Accenture Strategy. “When it comes to cost, you have to lead by example.

“I have seen programmes ultimately fail if all changes are simply cascaded down without engaging the organisation. Behaviour change takes ownership and it needs to happen at every level.”

In other words, implementing ZBB is a massive commitment and one that should not be taken lightly; if every step of the budgeting process is not monitored closely at all levels of the organisation, failure is all but assured.

When implemented properly, however, ZBB can lead to better cost visibility, greater growth opportunities and a more effectively run enterprise in the long term, allowing companies to free up funds to expand and improve previously untapped areas of their business. n EUROPEANCEO

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Asset Management

New kids on the block

Already responsible for disrupting a number of industries, blockchain heralds the next financial and technological revolution. In order to get in on the act, new investment funds are turning their attention to blockchain-orientated start-ups, writes Artyom Inyutin, Founding Partner at TMT Blockchain Fund At the tail end of 2017, TMT Investments unveiled the TMT Blockchain Fund, a new vehicle dedicated to investing in blockchainorientated start-ups before they hold initial coin offerings (ICOs). Worth some $60m (€51.9m), the investment fund offers cash in exchange for capital before any potential ICO. The fund was essentially inspired by a desire to embrace the new economy by incorporating the latest assets and mechanisms designed for growing wealth.

The support we offer at TMT Blockchain isn’t solely financial, however: during the time leading up to an ICO, we teach companies to build business models centred on sustainability. This approach speaks for itself: over the past three years, TMT Blockchain has successfully invested in a number of high-profile blockchain projects, building tech unicorns in Eastern Europe and launching a number of key blockchain ecosystem providers.

And despite being a relatively new company, TMT Blockchain’s proven experience, combined with a clear outlook that stems from an extremely professional team, promises to be an exciting development tool for blockchain and cryptocurrency-based start-ups around the world.

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Tech progress Start-ups that previously fought for investors’ attention now earn millions of dollars issuing and selling cryptocurrencies through ICOs. According to research firm Smith and Crown, blockchain-orientated start-ups attracted over $1bn (€864.6m) through ICOs in the first half of 2017 – 10 times the value achieved in 2016.

In my mind, the most famous cryptocurrency, bitcoin, boasts technology that is nothing short of revolutionary. Although bitcoin has sometimes been used for criminal purposes, this does not take away from the role it has played in technological progress. It is also worth noting that only one critical vulnerability has surfaced during almost nine years of operation – in 2010, someone hacked 92 billion bitcoins into existence. To fix the bug – a simple number overflow error – a ‘reset’ was instigated, cancelling all transactions that took place during the period. Despite the gravity of the hack, the fact there has only been one such incident to date is impressive.

Today, we are all used to sharing information through a decentralised interactive internet platform. But when it comes to transferring money, we still rely heavily on the services of

old, centralised financial institutions – namely, banks. While there are some alternative methods of payment available via the internet – the most obvious example being PayPal – they often require integration with a bank account or credit card to be used effectively.

Blockchain technology presents an attractive opportunity to get rid of this extra link in the chain, offering an alternative to the roles traditionally played by the financial services industry – namely transaction registration, identity verification and the creation of contracts. This is of great significance, as the financial services industry is currently the world’s largest by market capitalisation. Fortunately, the transfer of at least part of this system to blockchain technology will significantly improve the efficiency of financial services. In addition to issuing currencies such as bitcoin, blockchain technology can be used to store any kind of digital information, including computer code. Naturally, with such leaps and bounds, challenges will arise. For contracts, the main challenges will be presented by regulation.

Regulatory hurdles One of the growing concerns among regulators is the misuse of crypto-exchanges to defraud vulnerable investors. Due to the nature of cryptocurrencies, tracking and resolving any fraudulent transaction is a significant challenge. That is why, in January, authorities in South Korea announced banks would be required to verify the identity of their customers if their accounts were linked to crypto-exchanges. In other words, those wishing to buy cryptocurrencies in South Korea lost their right to anonymity. In China, meanwhile, the People’s Bank of China banned

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Asset Management

local exchanges – including BTCC, Huobi and OKCoin – and effectively put a stop to all activities related to digital currencies, in accordance with anti-money laundering legislation.

The US has also tightened requirements in order to make such transactions as transparent as possible. Last November, the Internal Revenue Service (IRS) won a lawsuit against popular currency exchange Coinbase, forcing it to provide information on users who had made deals in bitcoin worth over $20,000 (€17,300) between 2013 and 2015. As only around 800 tax declarations were reported annually during this period, it is clear the IRS is taking crypto tax evasion very seriously.

New way forward The action taken by the US, South Korea and China seems to be indicative of a new era of cryptocurrency exchange. Ultimately, now is the time to reach a good balance between the need for regulation and the desire for independence. On the one hand, this shift may impact the popularity of tokens; the enthusiasm of start-ups will inevitably be deflated by complex bureaucratic procedures. On the other hand, projects that were not initially aimed at attracting investments – those hoping to raise funds via fraudulent means – will leave the market, making it more secure for start-ups and investors alike.

In terms of ICOs, blockchain-orientated start-ups can register as many cryptocurrencies as they want, on their own terms. This has removed the need for time-consuming contractual agreements and the solicitation of help from venture capitalists – instead, investors are attracted through the internet, and tokens

The ICO model of fundraising has made the venture capital alternative obsolete

$60m

Total value of TMT Blockchain Fund

$1bn+

Money raised by blockchain start-ups through ICOs in 2017

can be transferred through the same medium.

The ICO model of fundraising has, in fact, made the venture capital alternative obsolete.

The capital lockups we see in traditional venture firms do not happen in the ICO world.

Investors can get huge returns on their investments just weeks – or even days – after being listed on an exchange. When ICOs become the industry standard, old-world fundraising, such as venture capitalism, could be shown the door.

Yet, this year we have already seen a number of mistakes being made by companies running ICOs: badly constructed smart contracts, CEO email hacks and Know-Your-Customer-related errors have forced several companies to fold and/or return all the funds they raised.

Fundraising is a full-time job, and one that is very hard to do on your own, which is why structures like venture capitalism exist.

Moreover, most ICO investors put money into an idea without any knowledge of the existing framework or business practices of the company in question. To succeed in contributing to a prosperous business, an investor needs to have considerable experience and expertise in the industry.

With a great deal of practical knowledge – especially when it comes to analysis – TMT Blockchain can ensure the consolidation of crypto-exchanges. Further, we can help startups make full use of their agility to implement the latest compliance mechanisms not yet available on larger exchanges. Such adaptability is key. Indeed, by the end of the year, we expect only a few major crypto-exchanges will have successfully adapted to all the necessary rule changes. For those who remain, we look forward to standing alongside you. ■ EUROPEANCEO

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Asset Management

Naïm Abou-Jaoudé CEO, Candriam Investors Group

A tipping point for sustainable investment

Responsible investments have gone from niche to norm, with more stakeholders than ever demanding that their portfolios have a positive social impact Sustainability is top of the world’s agenda.

Together, globalisation and technology have driven scientific progress and enhanced life expectancy, lifting millions out of extreme poverty in the process. That said, the benefits of globalisation and technology have not been shared equally, leading to an increase in social inequality.

Naturally, these inequalities have created tension, with factors like climate change only exacerbating the situation. Energy demand, for example, has grown by 20 percent over the past decade, and future increases to the global population will only accelerate this growth. The accompanying upsurge in fossil fuel consumption is simply not compatible with the need to keep the rise in global temperature below two degrees.

Earth Overshoot Day – the day on which humanity’s resource consumption for the year exceeds the planet’s capacity to regenerate said resources – fell on August 2 in 2017. In 2008, just a decade earlier, Earth Overshoot Day fell more than two months later, on October 26.

This is a simple but effective way of showing that resources are being used faster than ever before; we are living on credit, which is simply unsustainable in the long term.

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A world in motion Thankfully, a growing number of countries are waking up to these realities; individuals, companies and investors are now itching for change. Governments and other public bodies around the globe are leading the support for this revolution. Since COP21 in 2015 – and the resulting agreement to limit this century’s rise in global temperature to “well below two degrees Celsius above pre-industrial levels” – policymakers have been increasingly supporting economic growth.

The United Nations’ Sustainable Development Goals (SDGs), which were adopted by 193 nations in 2015, have further encouraged this shift in mindset. Recent examples include the EU Commission’s Action Plan for Sustainable Finance and Costa Rica’s promise to ban fossil fuels and become the world’s first decarbonised society. There’s also the fact that 66 percent of EU cities currently have plans in place to combat climate change.

Sustainable business is rapidly becoming a mantra for corporations too, with estimates by the International Labour Organisation suggesting the global green economy could create 24 million jobs by 2030. The business world is certainly moving in that direction: barely a week

25%+

Growth in responsible investing between 2014 and 2016

4x

more investment funds have integrated ESG factors in the past 10 years

64%

of investors increased their sustainable investment allocations in 2017

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Asset Management

The financial crisis acted as a wake-up call to many, showcasing the flaws and short-termism of the financial sector

passes without a major announcement from a big-brand company about its sustainability efforts. Adidas, for instance, sold one million pairs of trainers made from ocean waste in 2017. Volvo, meanwhile, revealed plans to cease production of all petrol and diesel cars by 2019.

The drivers of change Aside from global agreements and public action, the move towards a more sustainable world has been spurred by the financial crisis. While it’s true responsible investment (RI) existed before 2008, the financial crisis acted as a wake-up call to many, showcasing the flaws and shorttermism of the financial sector. Essentially, the crisis provided a stark reminder of the interdependence between societies, governments, economies and financial markets. At the heart of this realisation was the role of investors.

While previously concerned with simply making short-term profit, investors began to focus on good stewardship at investee companies.

Demographics are also playing a major role in this ongoing change, with Millennials viewing finance and investment as powerful tools for changing the world. They also view environment, social and governance (ESG) integration as an essential component of their own investments. Equally, the increase in female participation in the labour market has further driven sustainable pension choices.

Both of these groups – women and Millennials – tend to invest in order to make a clear and measurable positive impact on society, not just to generate profit. Consequently, sustainability awareness is having major knock-on effects for both investors and asset managers alike.

Adapting asset management Retail and institutional investors are considering the impact of their investment choices more and more each day: according to Schroders’ Global Investor Study 2017: Sustainable Investing on the Rise, 78 percent of investors consider sustainable investing to be more important to them than five years ago, while 64 percent increased

their sustainable investment allocations in 2017.

As stewards of capital for millions of savers, institutional investors are increasingly urging corporations to take responsibility for their carbon emissions and are no longer hesitating to divest in the case of non-compliance. Indeed, better-informed RI investors are now seeking accurate and detailed measurements of the social impacts of their portfolios.

Meanwhile, many asset managers have innovated their product ranges and integrated extra financial analysis into traditional fund ranges. In the past 10 years alone, the number of funds integrating ESG factors has quadrupled.

And between 2014 and 2016, the market for responsible investing grew by more than 25 percent, with this trend having accelerated further since. While led by Europe, this movement is global. Even in the US, where the adoption of sustainable principles has been slowed by political headwinds, investors are engaging with ESG issues. Other regions, such as Asia, are catching up too, with public entities in Japan and South Korea showing particular interest.

The next level With responsibility and sustainability at the very core of our investment offering and business conduct, Candriam has pioneered socially responsible investment (SRI) for more than 20 years now. Indeed, Candriam launched its first SRI strategies in 1996. Fortunately, however, we are no longer alone: sustainable investing now seems to be an irreversible trend, with the allocation of capital evolving from a strategy based on value to one reliant on sustainability and better-informed investment decisions.

We believe this is key, as asset managers can help generate further change and be pivotal in the industry’s transformation. As economic agents, asset managers are uniquely placed to help capital flow towards more sustainable investments. While the industry is now on the right course, time is running out. The transformation at stake needs enormous financing: it is estimated that achieving the SDGs will require between $5trn (€4.3trn) and $7trn (€6trn), with an investment gap in developing countries of around $2.5trn (€2.2trn).

Certainly, enhanced cooperation between public and private sectors is a prerequisite of success. A sustainable economic system needs to be organised differently, using legislation, tax systems, subsidies and regulations to align economic activity with sustainable development. The momentum for change exists, but investment firms – and their clients – still have a big role to play in making finance great again. ■ EUROPEANCEO

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CEOPROFILE Henrik Poulsen CEO | ØRSTED

Winds of change

Henrik Poulsen was propelled to the forefront of Denmark’s business elite following his success at multiple corporate giants. Today, he is the driving force behind energy firm Ørsted’s transformation into a green leader A corporate rebranding is a risky endeavour. If poorly calculated, even a simple name change or logo adjustment can result in public backlash, loss of consumer trust and unending bad press – not to mention the millions paid to marketing agencies for the privilege. Fortunately, when Danish Oil and Natural Gas – better known as Dong Energy – changed its name in November 2017 to reflect the company’s shift towards renewable energy, CEO Henrik Poulsen had already done most of the hard work.

Poulsen agreed to sell all of the company’s oil and gas assets to UK petrochemicals firm Ineos for $1.05bn (€903.7m) in May 2017, having pledged to phase out coal-fired power generation by 2023 earlier in the year. Dong Energy already held the title of the world’s largest offshore wind producer, operating more than a quarter of the wind farms dotted throughout the planet’s oceans. The name change, it seems, was merely a formality.

Dong is now known as Ørsted, an ode to the 19th-century Danish physicist Hans Christian Ørsted, who discovered electromagnetism and laid the foundations for modern electricity generation. And alongside the company’s new name and bright blue logo came a bold vision: a world that runs entirely on green energy.

Green gamble Poulsen recognised Ørsted’s potential to be a leader in the renewable energy space from the day he joined the company in 2012. When he announced he would step down as CEO of Danish telecoms giant TDC to lead Dong Energy, Poulsen said the firm held “a key position in Denmark’s transition to green energy”.

In the time since Poulsen’s declaration, Ørsted’s offshore wind capacity has grown from 1.7GW in 2012 to 3.9GW in 2017, with projects in Denmark, Sweden, the UK, Germany and elsewhere. More than DKK 80bn (€10.7bn) has been invested in the expansion

CV BORN: 1967, DENMARK

so far and, by 2025, Ørsted is targeting an offshore capacity of between 11GW and 12GW. But it would be misleading to suggest the company’s turn to renewables was all Poulsen’s doing. Ørsted, under one name or another, has long been invested in renewable energy. One of the company’s earliest iterations, Elkraft, was responsible for building the world’s first offshore wind farm in 1991 off the coast of Denmark. It’s under Poulsen, however, that the firm has made significant strides to hold its position as an industry leader.

“I think at the start of that process, [the shift away from oil and natural gas to offshore wind] could have been deemed as quite a bold move, and I think they’ve done that pretty well in that short time frame,” Gurpreet Gujral, an alternative energy and utilities analyst at Macquarie, told European CEO. “The offshore wind business, in my point of view, has been a huge success.”

According to industry body WindEurope, Ørsted was the largest owner of offshore wind »

ØRSTED |

EDUCATION: FINANCE AND ACCOUNTING, AARHUS SCHOOL OF BUSINESS

IN NUMBERS

1994

1999

2008

2012

Having graduated from Denmark’s Aarhus School of Business, Henrik Poulsen joined the country’s leading pharmaceutical firm, Novo Nordisk, as a finance controller

LEGO proved a pivotal next step for Poulsen, who climbed the ranks to become Executive Vice President of Markets and Products at the toymaker during a tumultuous period

Poulsen later joined TDC as CEO, helping the company overcome a challenging economic period by implementing a wide-ranging transformation programme

Upon leaving TDC, Poulsen FOUNDED revealed he was enticed by the “interesting challenge” presented by Dong Energy, which was struggling to finance OFFSHORE WIND CAPACITY its offshore wind business

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1972

¤1.8BN

12GW

90%

TARGET BY 2025

NET PROFIT (2017)

EARNINGS FROM WIND POWER (2017)

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CEOPROFILE

As prices for renewable energy drop, companies are increasingly feeling the pressure to act on climate change

power in Europe last year, with 17 percent of cumulative installations at the end of 2017 – a slight increase from 2016. Ørsted’s most impressive feat, however, has been its success in making renewable energy profitable: renewables now account for 83 percent of capital employed at Ørsted, up from 21 percent in 2006. At the same time, the company’s operating profit has more than doubled to DKK 22.5bn (€3bn). Furthermore, returns made on capital investments have more than quadrupled from six percent to 25 percent.

Jonathan Marshall, Head of Analysis at the UK-based Energy and Climate Intelligence Unit, told European CEO the main change in the sector since Poulsen took the reins was a drop in costs, which he attributed to investor confidence and technological advancements: “As the industry has matured and become less risky to invest in, [investors are] demanding lower returns on their loans, which, for a [capital expenditure] heavy investment and [capital expenditure] heavy infrastructure, makes a big difference to the overall costs.” Subsidies have underpinned the offshore wind sector since it started in the 1990s, but Marshall believes the industry has grown to the point where it often doesn’t need government support.

This stark drop in prices was clearly demonstrated last year, when Ørsted was awarded a contract to build Hornsea Project Two off the coast of the UK. With a capacity of 1.4GW, the wind farm will be the world’s largest when it is completed in 2022. However, the price Ørsted paid for the contract for difference was 50 percent lower than it paid in the previous round just two years earlier.

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As prices for renewable energy drop, companies are increasingly feeling the pressure to act on climate change. “If you go to an annual general meeting or watch a big presentation online, all of the questions from an audience to the CEO or the panel are about carbon emissions; about how these companies are going to deal with the problem,” Marshall said.

Meanwhile, just five or 10 years ago, questions from investors would more likely revolve around exploration licences and shareholder returns. Marshall continued: “There’s a sense that the industry has completely changed, and companies are having to respond to it.”

Hatchet man The transformation of Ørsted over the past six years has been no small undertaking, but Poulsen is famously fond of a challenge. He was thrilled to join a company that would thrust him onto a bigger stage. Upon leaving TDC in 2012, Poulsen called his new role as CEO of Dong Energy an “uncommonly interesting challenge” and said one major attraction was the “challenge that comes with the fact that Dong Energy is a company of which many people have high expectations”.

Poulsen was referencing the fact that Dong’s finances had taken a hit in 2012. Operating profits had fallen by more than a third and the company’s credit rating had been slashed as a result. The state-owned firm was running low on capital to invest in its emerging offshore wind business.

As part of a restructuring plan in 2014 – after the Danish Government had declined to inject new equity into the business – Dong sold

almost 19 percent of the company to Goldman Sachs for DKK 8bn (€1.1bn). The controversy of the sale was so profound it nearly caused the government to collapse. Denmark’s ruling coalition split, with six cabinet ministers and the Socialist People’s Party withdrawing from government. A poll at the time showed 68 percent of Danes were against the sale to Goldman, while nearly 200,000 people signed an online petition opposing the deal.

Despite this hurdle, Poulsen went on to lead the company through a period of immense change, overseeing an initial public offering of Danes opposed (IPO) in June 2016 Goldman Sachs’ that boosted its interpurchase of national profile conØrsted shares siderably. The successful float valued Ørsted at DKK 98.2bn (€13.2bn), one of the biggest stock market listings of that year and the biggest ever in Copenhagen. On the first day of trading, Ørsted’s shares soared by around 10 percent, proving there was a strong investor appetite for the fast-growing offshore wind industry.

“Ultimately, I would describe the IPO as a success,” Gujral said. “[Ørsted] performed very well as a listed business not only in terms of a stock price point of view, but an operational point of view. [It met its] guidance numbers, and more often than not [it has] actually had to raise [its] guidance numbers.” Ørsted has not been Poulsen’s only success story. He faced similar challenges at TDC and, before that, at Danish toymaker LEGO. In a 2014 address to the students of Aarhus

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University, his alma mater, Poulsen said he had “without a doubt changed jobs more often than most people”, but admitted he enjoys joining a business just as it is looking to chart a new course: “The consistent theme in my career is probably the fact that I tend to move on when things settle down again.”

Poulsen was an instrumental part of LEGO’s turnaround but, once the company got back on its feet, he left. “The obvious choice would have been to stay and enjoy the upswing, given that I’d been there for the tough part of the journey,” Poulsen said. “But I’d spent seven years at LEGO, and I simply couldn’t find the energy to continue.”

Poulsen had never sought out the role of “hatchet man” – someone who carries out

controversial or unpleasant tasks – but he has ended up in that position time and time again.

An unnamed adviser for Ørsted’s IPO told the Financial Times Poulsen had a “quiet self-confidence”, adding: “He’s very bright, very well prepared, and ultimately he just really delivers.”

Greener pastures Some imagined Ørsted’s IPO to be Poulsen’s final challenge at Denmark’s largest energy firm – his name has been mentioned in connection with the likes of Danish shipping giant Maersk and oil behemoth Royal Dutch Shell – but Poulsen has suggested he is not finished yet. At the time of the IPO, Poulsen told the Financial Times that his journey with Ørsted was “only getting started”.

Poulsen also told the students at Aarhus that he planned to stay with the energy firm for the long haul: “It might sound a bit ambiguous, but I’d like to make Dong Energy the company it has the potential to become, and this is more important to me than my desire to move on.”

And there is still plenty of work to be done at Ørsted. After the company beat its quarterly operating profit forecasts at the start of this year – thanks to a strong performance from its offshore wind business – Poulsen announced the firm would be expanding into other areas of renewable energy generation and storage, namely onshore wind and solar power. Poulsen said: “We have transformed the company into being an entirely green energy company and, therefore, we find it natural to now expand our portfolio of renewable technology.”

Although Ørsted was previously involved in onshore wind, it sold the business in 2013 due to financial challenges. “For an international business like Ørsted, I think there’s probably a lot of sense in looking to onshore [wind],” Marshall said.

However, Gujral was surprised by Poulsen’s decision to branch out into other forms of renewable energy. He speculated that Poulsen might have been looking to diversify the company’s assets: “I still don’t think that the onshore wind, solar and storage activity will be a similar size to the offshore business in any way. I think it will always be dominated by the offshore business.” Ørsted is also facing more competition now than ever. Gujral explained that offshore wind development in Europe – where Ørsted was a pioneer – is becoming crowded. For the company to keep growing, it will have to look at other markets, namely the US and Taiwan.

“The challenge for Ørsted and [Poulsen] is to be able to replicate the success that they’ve had in Europe into these new markets,” Gujral said. “No doubt I think they’ll do well. I think they have an incredible franchise in this space with a lot of smart people that are dedicated offshore wind specialists, which is to their advantage. But it is not going to be like their time in Europe; it will be a more competitive process this time.” n EUROPEANCEO

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WORLD VIEW

US Destinations

A port in the storm Situated in the Gulf of Mexico, Port Arthur was one of the cities hit hardest

by Hurricane Harvey in 2017. Today, efforts are ongoing to rejuvenate the individuals and businesses affected, writes RaNoda Lee, Marketing Manager at Port Arthur EDC

Residents recover items from their flooded home in Port Arthur, Texas

ral disaster of monumental proportions. As such, the response from the US Government was prompt, acting swiftly to declare Port Arthur a disaster area. We received visits from the Governor of Texas, the Senate and a representative from the White House.

Meanwhile, our neighbouring state, Louisiana, sent out its Cajun Army to help rescue families in dire need.

Exacerbating matters was the fact that only a small percentage of people in the Port Arthur area had flood insurance. The Federal Emergency Management Agency needed time to assess damaged properties, which forced some citizens to live in hotels. Ultimately, many homes were abandoned or sold.

Faith-based organisations stepped in to help individuals in any way they Proportion of could, but it will take homes in Port time for many resiArthur destroyed by dents to fully recover Hurricane Harvey from the disaster.

When the storm hit, the community was initially lost and solemn, but at the same time it was grateful for life and family. The community has worked together for the greater good, with every citizen stepping up to help make a difference. Although the outlook on life is somewhat different and more humbling now in the Port Arthur community, there remains hope for the future.

75%

In August 2017, Hurricane Harvey made landfall in the US, devastating communities along the country’s southern coastline. One of the hardest hit areas was Port Arthur, Texas, where recordbreaking levels of rainfall resulted in the destruction of 75 percent of homes. The subsequent closure of many major businesses inflated the cost of goods and services, which only added to the mental stress being felt by residents.

Despite the widespread damage, recovery efforts in Port Arthur were not implemented as quickly as in other parts of the US. Unfortunately, many efforts are still ongoing a year after the storm struck. This is why the Port Arthur Economic Development Corporation (Port Arthur EDC) remains committed to helping each and every individual that is still suffering from the devastating effects of Hurricane Harvey.

The recovery business The devastation from the hurricane itself and the subsequent flooding that put most When disaster strikes In the immediate aftermath of the hurri- of Port Arthur underwater knocked many cane, it became clear that this was a natu- businesses out of commission – and more 124 | EUROPEANCEO

The community has worked together for the greater good, with every citizen stepping up to help make a difference

than a few completely out of existence. At the Port Arthur EDC, we are offering a number of programmes to help small and medium-sized businesses get back on their feet.

Two weeks after the storm hit, Port Arthur EDC conducted a door-to-door survey to assess the condition of the area’s local businesses. As a result of this survey, our board of directors established a microloan programme to assist the recovery of small businesses that did not have flood insurance.

The board also applied to receive additional funds from the Texas General Land Office’s Economic Revitalisation Programme, which provides interim assistance to businesses through deferred forgivable loans and funding for job creation or retention schemes.

Despite the efforts of individuals and local businesses to rebuild Port Arthur’s damaged economy, more work still needs to be done. At Port Arthur EDC, our plans for the future include the revitalisation of the city’s downtown area, the creation of a citywide emergency operation centre and the strengthening of partnerships with the oil and gas industry, as well as the education sector. Collectively, we believe that we can help with more than just the area’s ongoing recovery: we can help it to be more resilient next time disaster strikes. n

C18ND_001_X02_17048.pdf

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WORLD VIEW

US Destinations

Virginia Beach’s transport network, coupled with the strength of its manufacturing sector, has helped it develop into a dynamic maritime and logistics hub

Sun, sea and business success

With a strategic location and a dynamic local economy, Virginia Beach is not just a great place to live – it’s also a fantastic place to do business, writes Warren D Harris, Director at Virginia Beach Economic Development Home to more than 450,000 people, Virginia Beach is the largest city in the Commonwealth of Virginia and the 39th-largest city in the US. The city finished the 2016/17 financial year with an unemployment rate of just 3.7 percent and attracted investment of over $170m (€145.6m) in the same period.

As a result, Resonance Consultancy named Virginia Beach on its 2018 World’s Best Cities list, and the city has been internationally recognised as one of the best places to live, work and conduct business. This is in no small part down to Virginia Beach’s educated workforce, low tax rates, diverse economy and strategic location; the city is within a day’s drive of two thirds of the US population.

The many advantages boasted by the area may have already created a vibrant business climate but, nevertheless, Virginia Beach Economic Development is committed to improving the local economy and helping international businesses make the most of their investments.

Strength through diversity Surrounding the world’s largest natural deepwater harbour, the Virginia Beach Metropolitan Statistical Area offers a strong intermodal infrastructure that includes two Class I railroads, 126 | EUROPEANCEO

one of the US’ largest ports, and major northsouth and east-west interstate highway connections. The city’s transport network, coupled with the strength of its manufacturing sector, has helped it develop into a dynamic maritime and logistics hub. Virginia Beach’s mid-Atlantic location also means it is ideally positioned for manufacturers engaged in international trade.

The local business community is composed of a highly diverse collection of companies, including nationally and internationally recognised corporations, technologically advanced manufacturers, billion-dollar defence contractors and small, locally owned businesses. What’s more, Virginia Beach VIRGINIA has eliminated tax BEACH: on equipment used within the manufacturing industry, Population meaning companies are no longer taxed on the purchase of goods Unemployment rate used directly as part of the production process. Numerous Total investment workforce develop(2016/17) ment programmes

450,000 3.7%

$170m+

are also in place to help manufacturers develop a highly skilled workforce.

As a result of this favourable business environment, the region is home to nearly 200 international companies – as well as 11 consulate offices – representing at least 30 countries. The Virginia Beach international business community includes global brands such as STIHL, Busch, IMS Gear, Kettler, Hermes USA and SANJO Corte Fino. While these organisations may be of varying sizes and industries, it seems there is one thing they can agree upon: Virginia Beach is the perfect location in which to conduct business.

Global access With the world’s fastest subsea data cables at its disposal, Virginia Beach is now a Tier 1 digital port city and an emerging global innovation hub. The cables, which were installed by Microsoft, Facebook and Telxius, connect the city to Europe and South America. Meanwhile, Globalinx’s carrier-neutral, co-location centre gives any carrier direct access to both cables, allowing them to reach customers in Europe, Africa, the Middle East and South America more efficiently than anywhere else in the world.

A third high-speed cable, provided by ACA International and South Atlantic Express, will connect the US directly to South Africa.

Joined by a partner system in Fortaleza, Brazil, the new cable will ensure Virginia Beach has a truly diverse transatlantic network. Once complete, the second phase of the operation will connect South Africa to Asia, too.

Virginia Beach Economic Development offers assistance to companies interested in taking advantage of the region’s substantial business benefits and growing international presence. The department is accredited by the International Economic Development Council and is one of only 50 economic development organisations in the world to have earned this recognition. Its global network, which includes business development offices in Germany and Spain, as well as a trade office in the Philippines, offers local and international businesses the perfect opportunity to expand into Virginia Beach’s dynamic economy. n

C18JA_001_Z05_70621.pdf

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C18AS_128_E04_70318.pdf

WORLD VIEW

Investment

Peru’s prime position

Infrastructure development is booming in Peru, presenting attractive opportunities to foreign investors far and wide, writes César Martín Peñaranda, Head of Investor Services at ProInversión For too long, infrastructure in Latin America’s sixth-largest economy has lagged behind that of its neighbours. Adverse weather conditions, such as last year’s floods, have exacerbated the situation and emphasised just how problematic Peru’s infrastructure gap is. Fortunately, such issues have also brought this gap to the forefront of political discussion. Consequently, in 2018, a monumental shift began taking place: between this year and next, numerous infrastructure projects to the tune of $11bn (€9.5bn) will be instigated.

Those set to make the biggest contribution to Peru’s economic development work in the hydrocarbon, transport, water and sanitation sectors. Among them is a new natural-gas grid system, stretching across the Apurímac, Ayacucho, Huancavelica, Junín, Cusco, Puno and Ucayali regions. Set to cost $350m (€301.5m), the project is due to be awarded in the last quarter of 2018.

During the first quarter of 2019, another two significant projects will be awarded: the Huancayo-Huancavelica railway, an exciting new development with an estimated investment value of $235m (€202.4m); and the Headworks and Conduction for the Drinking Water Supply in Lima, a $600m (€516.9m) water and sanitation project in the Peruvian capital.

Stable climate Thanks to a prolonged period of stability and a legal framework that is one of the most open and friendly in the region, Peru has achieved steady economic growth in recent years. In line with this progress, several large infra128 | EUROPEANCEO

structure projects have been launched in a variety of sectors, demonstrating the confidence that private investors have in the nation. This sentiment is also reflected in Peru’s investment rating among the world’s three most reputable agencies: Moody’s (A3), Standard & Poor’s (BBB+) and Fitch (BBB+).

Peru’s legal framework is particularly favourable. This is because it doesn’t discriminate against foreign investors, giving them the same treatment afforded to locals, including unrestricted access to most economic sectors, the free transfer of capital, free competition and free access to internal and external credit.

Foreign investors also receive guarantees on private property, while they have the freedom to purchase stocks from locals as well. Finally, foreign parties have access to an international disputes settlement mechanism and are given further reassurances by Peru’s potential OECD membership, which ensures the country implements the organisation’s Guidelines for Multinational Enterprises.

The PPP way Given its reputation for effective public resource management and accurate time frames, publicprivate partnership (PPP) is the method of choice for ProInversión, Peru’s private investment promotion agency. The best thing about PPP is its ability to capture the greatest advantages of the private sector for the good of public services. For example, public projects can harness the latest technology and innovations in the market, as well as improve operational efficiency, which is otherwise difficult to achieve.

$11bn

Total value of Peru’s commissioned infrastructure projects in 2018/19

WORLD VIEW

Investment

Peru presents a huge opportunity for investors, boasting a combination of advantages very few countries in the world possess

The private sector also has much greater success in delivering projects on time and within budget – another big bonus for the public sphere. In fact, studies have found that PPP can reduce the life-cycle cost by up to 20 percent when compared with the traditional approach. Moreover, according to a study by the UK’s National Audit Office, deploying a PPP model can reduce project overspend by up to 70 percent and schedule overruns by 65 percent.

As such, PPPs are a great way of developing local, private sector capabilities through joint ventures with large international firms. What’s more, the risks associated with such projects are transferred to the private sector.

Canada, Australia and the US have been using the PPP model for a number of years now – with great success. Indeed, the Canadian PPP model is considered one of the most effective in the world. For Canada, it takes an average of 16 months to complete a project – from the release of tender to financial closure – compared with an average of 34 months in the UK.

Prioritising sustainable investments ProInversión receives its mandates from government ministries and grantor entities in a variety of sectors. Once a mandate is received, our board of directors – comprising the Ministry of Finance, the Ministry of Energy, Mining and Hydrocarbons, and the Ministry of Transport and Communications – grants approval, prioritising projects that it feels will help reduce the national infrastructure gap most effectively.

Projects are also selected based on their compatibility with the PPP structure.

Sustainability is another key factor and plays an important role in all of ProInversión’s investment projects. For example, each project is subject to an environmental impact assessment to ensure it does not have a negative impact on the natural or ecological functions of the area. This line of thinking is something we are keen to pursue further, which is why ProInversión is taking greater consideration than ever to commission eco-friendly contracts and green construction projects.

With sustainability in mind, our PPP MODEL: business strategy has been divided into three basic pillars: identifiReduction in project cation, segmentation overspend and customer loyalty.

By identification, we refer to defining key Reduction in markets at a global schedule overruns level, as well as reach-

70% 65%

ing out to the top investors of those markets.

Segmentation, meanwhile, involves establishing the primary interests of potential investors – essentially, finding out which sectors and specific projects they are keen to invest in. This is key, as it involves giving potential investors a specific value offering, which also brings us to our third pillar: building customer loyalty. We feel this pillar is best achieved by using several commercial channels – namely hosting domestic events, attending international road shows and utilising digital strategies, among others. Such events are essential because, at present, the most commonly cited challenge to bringing investment projects to market in Peru is the information gap – or, in other words, keeping investors abreast of the latest project developments.

Peru presents a huge opportunity for investors, boasting a combination of advantages that very few countries in the world possess, including macroeconomic stability, a very open legislative framework and a wide range of sectors in which to invest. Despite such benefits, it is calculated that Peru will have an infrastructure gap of roughly $160bn (€137.8bn) until 2025. For this reason, our commercial strategy is of the utmost importance: through it, we can map and monitor the information that investors receive about their projects, as well as any significant movements in the economy and political arena.

Centre of excellence At ProInversión, we believe that having the best possible investment advisors in place is absolutely vital. The involvement of a highly skilled transaction advisor for each project can be directly linked to the quality of a project’s structuring, profitability and overall success.

We strive to bring projects of the highest quality to market. As formulation is key to achieving this, we are in the process of consolidating this phase of each and every project. In addition, we are currently carrying out international public auctions with high technical requirements – this way, we can ensure advisors have the experience needed for the sector in question.

All of our efforts are directed towards becoming a centre of excellence. At ProInversión, we promote private investment, which goes hand-in-hand with a strong commercial strategy. By doing so, we are able to bring key infrastructure players to each sector, as well as strengthen policies to eliminate barriers that investors may otherwise face. While we currently only have a mandate to carry out the structuring and transaction of a project, we are keen to begin supporting grantor entities during the formulation phase of their projects, too. ■ EUROPEANCEO

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WORLD VIEW

Investment

Failure to properly balance the various aspects of the public procurement system can lead to wasted efforts and poor development outcomes

Trusting procurement

Public procurement in Ghana is undergoing a complete overhaul, all in a bid to increase transparency and reduce the likelihood of corruption, writes Dr A B Adjei, CEO of the Public Procurement Authority The importance of public procurement, largely considered to be a business process within a political system, cannot be overemphasised.

In developing economies, a huge amount of the national budget is used to build roads, schools and hospitals, as well as other vital amenities.

This work is achieved through the process of public procurement. For instance, in Ghana, public procurement accounts for around 24 percent of total imports into the country. Furthermore, besides personnel emoluments, public procurement makes up between 50 and 70 percent of the national budget, contributing some 14 percent to Ghana’s GDP. Public procurement is not just the simple act of purchasing: it is a development tool that has the ability to transform public finances into development outcomes. It has become an essential part of governance and something political leaders must deploy with tact and skill to execute their promises and accomplish the desired benefits for their citizens.

Development tool Failure to properly balance the various aspects of the public procurement system can lead to wasted efforts and poor development outcomes.

As such, a strong regulatory body must be put in place to oversee compliance with public procurement law and best practices.

Ghana’s Public Procurement Act 663 established the Public Procurement Authority (PPA) in 2003 as a corporate body responsi130 | EUROPEANCEO

ble for the formulation of policies and guidelines in the field. The PPA is also in charge of developing procurement professionals and creating a strong public procurement system that promotes confidence within the business community.

Under my leadership, the PPA has undertaken a number of initiatives to both improve public procurement processes and minimise corrupt practices. One such initiative is the launch of the e-Government Procurement (e-GP) system, which is designed to reduce human interaction across the entire public procurement system. It’s expected to bring about a paperless process and will be used for electronic tender notices, electronic evaluations and electronic contract awards. Further, the PPA has introduced two new initiatives as part of an operational rebrand: the Due Diligence Unit and the Value for Money Unit.

These units have saved the Ghanaian Government approximately $200m (€172.3m) in the past year alone.

Rebuilding trust In addition to these initiatives, the PPA has successfully launched a comprehensive webbased aid named the Unit Cost of Infrastructure Budget Estimator Tool, which is designed to eliminate the risks associated with unrealistic budget estimates in procurement planning.

This tool helps our engineers and procurement officers generate realistic budget estimates

24%

for the procurement of infrastructure in the areas of roads, buildof total imports into Ghana are accounted ings and power systems, as well as water for by public and sewerage systems. procurement It makes the government’s budgeting and of the national budget expenditure processes more effective and is made up of public realistic, while also procurement cutting out the lapses that sometimes make room for corruption. of Ghana’s GDP Another significomes from public cant initiative that procurement I have overseen has been the recent launch of a procurement practitioners’ code of ethics, which will guide the activities of procurement practitioners. This new set of rules will help maintain integrity, prevent actions that can lead to the state’s financial losses and safeguard the public purse. Procurement practitioners that are found to have flaunted the code of ethics will be met with serious penalties. They could even face arrest and imprisonment.

Such developments are crucial in building transparency, trust and confidence in Ghana’s public procurement system. This will help the country’s continued economic development, most specifically with regards to infrastructure. It is for this reason that shortly after my reappointment as CEO, I embarked on a rigorous rebranding of the PPA, targeted at changing negative perceptions that the public once had about government spending. With less space for corruption, trust in the system can be rebuilt and will be stronger than ever before. ■

50 -70% 14%

C18JA_001_VVA_46644.pdf

WORLD VIEW

Investment

Stephen Amoah CEO, MASLOC

Little by little

Ghana’s SMEs could transform the country’s economy, but they are often excluded from the traditional banking environment. MASLOC is working to change that fact Small and medium-sized enterprises (SMEs) are the engine of growth in Ghana’s economy.

They employ approximately 85 percent of the Ghanaian workforce and contribute an estimated 70 percent to the country’s gross domestic product. Put simply, SMEs are widely recognised as being a key driver of the country’s economic success and, as such, need to be supported as much as possible.

The Microfinance and Small Loans Centre (MASLOC) is a microfinance apex body responsible for implementing the Ghanaian Government’s microfinance programmes, which are targeted at reducing poverty. The group’s mission is to help start-ups and SMEs expand their businesses through the provision of fast, easy and accessible microcredit.

MASLOC also aims to enhance job and wealth creation throughout Ghana.

European CEO spoke to Stephen Amoah, CEO of MASLOC, about the organisation’s commitment to developing SMEs and supporting Ghana’s entrepreneurs.

What key successes have been achieved at MASLOC under your leadership?

Upon my assumption of office in March 2017, a special task force was set up in all 10 regions of Ghana to assist in debt collection and hire purchase assets in arrears. As a result, cash and assets worth GHS 16m (€2.9m) were collected in March 2018, compared with GHS 6m (€1.1m) in 2016.

132 | EUROPEANCEO

Through tactful negotiations, MASLOC, together with key stakeholders, has established 216 district offices in a little over a year, with the aim of bringing microfinance to the doorstep of the less privileged. MASLOC has also undergone a restructuring process, including the establishment of a functioning internal audit department and an audit committee.

This has tremendously improved procurement processes, which normally present a major challenge in Ghana.

The process of deploying an integrated information and communication technology (ICT) system, including automated cards for our clients, is in an advanced stage. This has been made possible through a partnership with a software company that was funded by donors. Intensive education has also been undertaken to depoliticise MASLOC among political activists, who have presented the biggest challenge to the sustainability of the organisation’s operations in Ghana.

How does MASLOC ensure the loans it provides are suitable and the businesses it supports have long-term ambitions?

MASLOC loans are meant for people in the lower income group, particularly women and young people who are engaged in SMEs. There are 10 regions and 254 districts in Ghana. Our credit officers in these districts and regions perform extensive work to ensure that loan

applicants fall within our target group and their underlying businesses are sustainable before loans are granted.

The businesses that MASLOC supports have long-term ambitions, as most of the beneficiaries are young. Our market is also growing fast, supported by a wide range of raw materials and a quickly growing population.

What are MASLOC’s plans for the future?

MASLOC’s overarching plan is to grow continuously, to develop small businesses through the provision of sustainable microfinance, small loans and business services to Ghanaian entrepreneurs, and to take its rightful position as the premier provider of microfinance in Ghana.

In the short term, all the districts, regions and head offices will migrate onto an inteGHANA’S grated ICT platform, SMES: as MASLOC seeks to achieve competitive excellence in its Proportion of the operations and reach country’s workforce a wider clientele.

My vision is to Contribution to GDP achieve competitive excellence by using cutting-edge technologies to provide affordable and assessable microloans to SMEs and start-ups in the remotest parts of Ghana. This will ensure the financial inclusion of this target group, which has previously been excluded from the traditional banking environment. ■

85%

70%

C18JA_001_Y03_10491.pdf

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C18AS_134_G05_61409.pdf

Different

C18AS_135_G05_13800.pdf

strokes As the French baccalauréat shows, higher education isn’t for everyone. But, asks Elizabeth Matsangou, is Germany’s apprenticeship model the way forward? »

C18AS_136_G05_69608.pdf

University Degrees vs Apprenticeships

iberté, égalité, fraternité: the three words upon which the French Republic was founded. More than just a common philosophy, they are the ethos that built the French higher education system and the baccalauréat. Introduced in 1808 by Napoleon Bonaparte, the baccalauréat (known informally as le bac) is an entrance examination that entitles those who pass to take a place at the French university of their choice. They can study any subject they wish – even without any prior knowledge. Given the tremendous stress many youngsters face trying to win a place at a top university and prove they have sufficient potential in their desired field, this characteristic of the French system is somewhat unusual, to say the least.

It used to make sense. Back in 19th-century France, few citizens were literate – and even fewer still were able to attempt the exam. In 1950, the proportion of students attempting Napoleon’s qualification had reached around five percent. But as aspirations and means developed, so did the desire to attend university: in 2017, approxiHowever, France is finally on the cusp of changing mately 87.9 percent of students passed le bac. And yet, this outdated system. Though not the first president to the premise of Napoleon’s model has remained. attempt to reform French higher education, Emmanuel Macron may be the last.

Universités surmenées Unsurprisingly, this system – with its wholly good intentions – stopped working a long time ago. With the By default French Government covering the cost of university fees France may be an extreme example, but it is one worth almost entirely – students paid just €189 each in 2017 examining. The lesson to be learnt is that university – the state is coming under increasing pressure. Le bac education is not for everyone. But the trend of attendalone is a great expense, with many students coming ing university almost by default has become prevalent to regard it as their ‘given right’. This year, the cost of across Europe: nowadays, many attend university simply marking close to 719,000 papers cost a whopping €57m. because it is expected of them. Others go to put off the Universities are also struggling to cope. Each reality of working, enrolling for the fun and freedom it autumn, first-year students flood to their lecture halls in offers. But of course, there’s still a great number who droves; designed for hundreds, they somehow squeeze attend to progress their careers. in thousands. Deteriorating libraries are always overWith so many reasons to go, more and more people crowded, while professors are simply unable to sup- are studying at university level. The result, however, is port such a large student body, particularly given their fewer opportunities available upon graduation. Rewind remarkably different needs.

20 years and a good degree from a top university pretty Students who are markedly underprepared for much guaranteed a job upon completion. Unfortuthe subject they have chosen soon suffer the reality nately, these days, graduating is just half the struggle. of their choice. Many of them are simply unable to With so many candidates, there are simply not enough keep up, resulting in a high proportion of students graduate jobs to go around. dropping out after their first year. Others struggle Lizzie Crowley, Skills Advisor at CIPD, a profeson, retaking exams over and over again and wasting sional body for human resources and people develtheir own precious time and government resources opment, said: “I think the assumption by getting as they refuse to admit defeat. Such is the case that, more and more young people to go to university was according to The Economist, over 70 percent of uni- that this itself would create a natural demand for versity students in France fail to complete their degree those types of skills within business. But actually, within the usual three-year period. The end result is the economy hasn’t changed at the same pace as the disastrous for all parties involved. expansion of higher education.”

136 | EUROPEANCEO

FRENCH FOLLY: %

87.9

Proportion of students who passed the baccalauréat (2017)

57m

Cost of marking 719,000 baccalauréat papers

70%

Proportion of university students failing to complete their degree within three years

189

Amount paid towards university education per student, per year

C18AS_137_G05_77356.pdf

University Degrees vs Apprenticeships

loans at all, because they’re not earning enough. So essentially, this is underwritten by the taxpayer.”

The result is a mismatch of skills. Overqualified graduates are turning to non-graduate roles, while those who would ordinarily be employed in such jobs are being outdone by the competition. As such, more young people feel obligated to go to university – further perpetuating this vicious cycle.

With so many universityeducated candidates, there are simply not enough graduate Degrees of debt jobs to go around In the UK, a nation that boasts some of the best uni-

75%

Estimated proportion of UK students failing to repay student loans

versities in the world, student fees have risen to around £9,000 (€10,165) a year for domestic students. In Sweden, the cost ranges between SEK 80,000 (€7,675) and SEK 270,000 (€25,906), depending on the subject. A private university in Spain, meanwhile, will set back students between €5,500 and €18,000 per year. Naturally, accommodation and living expenses present further costs.

While other countries in Europe are cheaper, each year’s outlay still adds up to a considerable amount.

In addition to the direct costs of attending university, there is also the lost-opportunity cost of not working. This crucial three-year period (or quite likely longer, if you’re in France) could otherwise act as an instrumental step in one’s career progression, all the while allowing the individual to earn wages, rather than accumulate debt.

Aside from the obvious disadvantages of starting out with so much debt in tow, there is the question of what happens to these arrears when individuals aren’t able to repay – an unfortunate scenario for many graduates still searching for the type of job they studied for. Referring to the UK, Crowley told European CEO: “[Around] 75 percent of young people will never repay their student

The apprentice Though still disregarded by many at present, there is another way: apprenticeships. Learning while working boasts numerous advantages for young people, including the opportunity to gain real, hands-on experience, which is often the shortfall of graduates when searching for their first job. Crucially, it presents the chance to both earn money and avoid student debt.

“Apprenticeships increase the employability of young people,” said Hagen Krämer, Professor of Economics at Germany’s Karlsruhe University of Applied Sciences.

“Youngsters are confronted with [the] demands of the working world, i.e. they receive market-relevant training that improves their chances in the labour market.

“They get used to performing in the business environment, which is different to the school system in many ways. In addition, some young people who could not cope in a classroom [flourish] in a practical environment.”

Apprenticeships can also work exceedingly well for employers. “For companies, it is an ideal form of personnel recruitment,” Krämer explained. “They can gain two to three years of experience with the young people, [meaning] they know who they are dealing with and can avoid hiring the wrong people. Also, investment in first-class training is a key factor for success in an increasingly complex world. Digitalisation will further increase this need.”

As the benefits become more obvious, the range of available apprenticeships continues to broaden, creating a cycle of the more advantageous kind. Schemes are no longer restricted to manual trades and engineering; we are now seeing more apprenticeship opportunities in numerous other industries, such as publishing, IT, accountancy and journalism. With governments increasingly recognising the economic rewards – a more diversified workforce, less student debt and higher employment rates, to name but a few – they too are focusing on encouraging this shift.

The master Generally speaking, the apprenticeship model is still underdeveloped in many countries in Europe. Germany, however, is in a league of its own. One of the reasons it has such a highly developed apprenticeship model is because of the country’s competitive manufacturing sector, which goes hand in hand with its strong export culture. “The success of German export-orientated companies is based on high quality and technology, which requires a [medium-sized] and highly qualified workforce,” Krämer told European CEO. The German economic model, therefore, demands the skill sets developed by apprenticeships. » EUROPEANCEO

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University Degrees vs Apprenticeships

Youth unemployment: %

42.3 Greece

35% Spain

21.5% France

15.6% EU

11.5%

Learning while working boasts numerous advantages for young people, including the opportunity to gain real, handson experience

UK

6.1%

Germany

Source: Statista

Germany’s three-year programmes involve a 50-50 split between classroom instruction in trade schools and on-the-job training with the help of skilled mentors at participating companies. By the end of the apprenticeship, individuals know a trade and how to perform it in a real-world environment. The period of studying, and the level of education to which students reach, make Germany’s dual vocational education and training (VET) programmes equivalent – not inferior – to university qualifications. Seen in this way, it is unsurprising around 52 percent of young people in Germany complete a dual VET programme in their chosen field. Importantly, in the majority of cases, graduates of the programme are offered permanent employment at the company at which they were trained.

The success of this system speaks for itself. “Since the unemployment rate for 15-to-24-year-olds in Germany is below six percent – compared with over 15 percent across EU member states – an increasing number of countries are considering taking over the German dual-apprenticeship system,” said Krämer. “However, the question is whether the system can easily be transferred to countries with a different economic structure and a different system of industrial relations. I don’t think this can work anywhere.

“Transferring the dual-training system to another country is not easy, but generally not impossible. However, a transfer to another country will take time, as the system has a long tradition dating back to the Middle Ages.

Many apprenticeships go back to the old guild system.”

As explained by Krämer, another reason the German model is so successful is simply because it has been around for so long. Young people are more open to it. It is seen as an excellent option for career progression after high school, not as a route taken by those ‘not smart 138 | EuropeanCEO

enough’ to go to university – as is the common thinking in many countries. Parents are also more encouraging of this step, knowing full well the benefits it offers, with many of them having travelled down the same road. And because apprenticeships are so respected in Germany, some of the biggest and most successful companies offer them, encouraging the brightest pupils to enrol.

What also sets the German model apart from other European states is that standardised training is offered, meaning apprentices can easily go on to work elsewhere upon graduation. Their new employer is confident in knowing the standard to which they have been trained, as well as what particular skills and knowledge they possess. “Today, almost all companies in Germany require their applicants to standardise their vocational training, so that applicants trained for a particular profession have an advantage in the labour market,” Krämer told European CEO. “Most positions, from hairdresser to salesman, require standard training and certification.” Many apprenticeships in other nations offer training specific to the sponsoring company, making it more difficult for young people to gain employment elsewhere – a far less attractive option.

Transferring Germany’s system to another country will not be easy. It will require changing perceptions – a difficult feat in any area – as well as a great deal of support from a variety of stakeholders. “One challenge for a well-functioning dual-training system is that there must be close cooperation between government, business and the social partners,” Krämer said. Of course, as Krämer explained: “Other countries do not have to replicate every detail of the German system.” But what they can do is draw invaluable lessons and proof of the success an economy can have in supporting this pathway.

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University Degrees vs Apprenticeships

An apprentice learns the ropes at BMW Group's metal works plant in Leipzig, Germany

When improperly leveraged, degrees are a waste of time, money, government resources and academic support

Degree or not degree There is no denying the importance of university degrees: they open doors for individuals, revealing new possibilities and understanding. Degrees can enable students to really delve into a subject they are passionate about, all the while developing their analytical and writing skills in ways that will benefit them for the rest of their lives. Those who are unsure about their futures can also use this time to figure out what they want to pursue upon graduation. This flexibility is possible because completing a degree involves the acquisition of certain skills – skills that are transferrable. For many jobs, the actual knowledge learned at university isn’t crucial, but the proof of certain skills, ambition and dedication is an ideal foundation for a whole host of careers. They tell an employer enough about a person to give them a chance to prove themselves in person.

Social skills gained during university are another invaluable resource. During this time, many are given the chance to really develop as a person; to become and present to the world the person they want to be, free from teenage hang-ups and parental pressure. They choose friends, rather than simply turning to those seated next to them in class. They pursue hobbies and extracurricular activities that help them develop further and broaden their horizons. And finally, they network; meeting like-minded people who may become business partners or key contacts in the years to come.

But certainly, degrees are not for everyone. For those who are in it just for fun, to delay reality or who want a job for which a degree isn’t actually required, they are a lost opportunity. When improperly leveraged, degrees are a waste of time, money, government resources and academic support. As such, the assumption that university is the next logical step for all is simply illogical.

This belief is what has got many Europeans into the predicament they currently find themselves in – indebted, unemployed and, when they do find a job, often overqualified. This is a scenario that can lead to ample stress and dissatisfaction. Their respective governments also feel the burden; through subsidising unnecessary degrees, the state is lumbered with unpaid loans and high youth unemployment rates. Employers, too, have to deal with unhappy and unproductive staff, which further exacerbates the negative economic impact of the situation.

For many young people, a degree may not be the wisest option, but an apprenticeship could be. As Germany demonstrates, with enough support from the government and the corporate world, apprenticeships are a wonderful route to take. They ease stress on the state and enable employers to thoroughly train new starters, who are given decent wages and employable skills in return. Studies also show apprentices have greater loyalty to the companies they trained with, having learned so much from them.

Macron is right to reform le bac. Under a well-intentioned guise of equality, it has let down too many for too long. But France is not alone in such mistakes, and our leaders of the future continue to suffer as a result.

A change in mindset, however, can open up viable new options for young people, freeing them from the confines of university education. This, in turn, will allow individuals to choose the best possible path for them, in accordance with their unique skills, needs and dreams.

Ultimately, the well-executed provision of each route – degree qualifications and apprenticeships of an equivalent standard – is crucial for the future of our youth. If done correctly, it could foster an economy in which every person is best matched to their career of choice – rendering the debate of university education vs apprenticeships largely academic. n EUROPEANCEO

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Living well With world-class athletics facilities and a wellness philosophy embedded throughout, Quinta do Lago is among the most sought-after residential communities in Europe, writes the company’s CEO, Sean Moriarty According to the Global Wellness Institute, the wellness real estate industry was worth $134bn (€115.6bn) in 2017, and has been growing by 6.4 percent annually since 2015. It is estimated that by 2020, it will grow to $180bn (€155.3bn). As we become more attached to technology, we also come to realise how important it is to be connected to nature – and how crucial that connection is to our health and happiness.

At Quinta do Lago, the five-star real estate, lifestyle and sporting resort community in the Algarve, Portugal, everything from the land to the architecture and facilities are tailor-made to maximise wellbeing. Originally founded by Brazilian real estate entrepreneur Andre Jordan, Quinta do Lago has evolved from a place where wealthy people could retire in comfort and golf to their hearts’ content to an all-encompassing community focused on health and happiness.

Residents and visitors enjoy over 300 days of sun every year, allowing them to live an active, outdoor lifestyle all year round.

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A recent investment of €50m has further cemented Quinta do Lago’s position as one of the most coveted resorts and residential communities in Europe. Fundamental to Quinta do Lago’s focus is its family-orientated nature.

As such, a heavy emphasis is placed on creating activities for children and teenagers, who perhaps are not as interested in world-class golf courses. Also important is educating young people in health and wellbeing. Currently, young families represent a large proportion of Quinta do Lago’s audience.

Wellness architecture There is an inextricable relationship between the space that surrounds us and our mental and physical wellbeing. Wellness architecture takes into account the effect that architecture and design have on those experiencing them.

Recent developments in the field of human biology – namely a greater understanding of circadian rhythms – have highlighted the impact

and importance of natural physiological cycles on human health and wellbeing. A circadian rhythm refers to our brain’s inbuilt clock, which regulates the timing of biological processes and behaviour, such as sleep and physical performance. The strongest single external factor that influences circadian rhythms is light exposure.

Consequently, the most important component of wellness architecture is the way buildings and their interiors interact with light.

As such, Quinta do Lago incorporates biophilic design into every building it constructs.

Stemming from the Greek meaning ‘love of nature’, biophilia is a philosophy strongly felt throughout the resort. Research into the hospitality industry shows that proximity to, and views of, water and green space greatly enhance guests’ experience. In Quinta do Lago’s approach to design, natural materials are used as much as possible, as are natural colours and textures, blurring the transition between outdoor and indoor spaces. Above all, natural light is maximised.

According to Oliver Heath Design, the benefits of biophilic design have been well documented across a wide range of contexts. In office spaces, designs that allow in more light or provide a better connection to nature can increase productivity by eight percent. In education, there have been increased levels of concentration

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WELLNESS REAL ESTATE INDUSTRY:

$134BN

Total value (2017)

6.4%

Annual growth since 2015

$180BN Projected value by 2020

and rates of learning. Even in healthcare, biophilic design can reduce post-operative recovery times by 8.5 percent, as well as reduce the need for pain medication by over one fifth.

Facilities of the future Quinta do Lago’s state-of-the-art multi-sport and athletics facilities, collectively known as the Campus, are both comprehensive in their amenities and inclusive to people of all athletic abilities. While designed for high-level athletes, sports teams and Olympians, the Campus also welcomes amateurs and beginners of all ages.

The Campus stretches over an area of 45,000sq ft and boasts six tennis courts, a 25m swimming pool, a high-performance centre and a football pitch, among many other facilities. Further, it is fully staffed with resident specialists, such as trainers, physiotherapists, nutritionists and sports physicians. Quinta do Lago also features an Olympic-standard triathlon course that snakes in and around the resort.

For years, Quinta do Lago has been a popular destination for high-level athletes.

The perpetually great weather, close proximity to the airport and short drive to pristine beaches on the Atlantic Ocean have all made it a very attractive place to relax and recover.

We have done our research to ensure the facili-

ties and service provided meet professional athletes’ standards, while being done in a way that reflects Quinta do Lago’s ethos – in other words, it always feels nurturing, family-centric, collaborative and inspiring. The relative seclusion of the Campus removes the pressures that accompany widely recognised individuals in public environments, giving athletes the freedom to visit and train without disruption.

The Campus’ high standards are reflected in the fact it hosted the super-sprint triathlon trials for the Commonwealth Games held in Scotland in 2014. A number of high-profile athletes, including GB Paralympic triathletes and Burnley Football Club, have also used the Campus to train. At Quinta do Lago, we understand facilities for recovery are just as important as those for training, so our high-performance centre has both hot and cold plunge pools, a steam room, a sauna and a relaxation area.

There is an inextricable relationship between the space that surrounds us and our mental and physical wellbeing

Additionally, we have been working with well-known figures to be course leaders in our football programme, which began in April.

Professional players and coaches, including Rio Ferdinand and Bobby Zamora, help teach teenagers and younger children throughout the summer. Further, Irish Paralympic champion Mark Rohan manages the Bike Shed on the Campus, where bicycles can be hired for road cycling tours, as well as off-road tracking excursions and guided routes.

Hot property The concept of wellness architecture is best demonstrated in Quinta do Lago’s latest addition: the Lagula Villa. The villa’s open-plan design and modern features combine light and space to create an environment conducive to wellbeing. The white, bright architecture and versatile entertainment space invite a joyful life with family and friends. The Lagula Villa is up for sale for just under €6m and is one of three residential offerings at Quinta do Lago.

Another real estate opportunity is Reserva, a modern apartment complex overlooking Quinta do Lago’s lake. Set for completion in 2019, Reserva is composed of 26 garden and penthouse homes, each with extensive terracing and its own private swimming pool, as well as a 24-hour concierge and private gym. The third offering is at San Lorenzo North, a neighbourhood of 26 building plots surrounded by a lake and pine forests. Owners will have free rein over the design of their homes at these sites, and be able to employ architects of their choice.

Residents of Quinta do Lago also have access to three nearby championship golf courses, which have won numerous awards, including Best European Golf Venue (World Golf Awards) and Portugal’s Best Golf Course (Today’s Golfer Awards). Due to its reputation, Quinta do Lago has hosted eight Portuguese Opens, as well as a number of other European tournaments. What’s more, Quinta do Lago is just a short driving distance from one of the more attractive natural splendours in Portugal: the Ria Formosa Natural Park. The park features a lagoon and wetlands that have been protected for three decades. Wherever you are within Quinta do Lago, you are never more than a few kilometres away from Ria Formosa; residents can easily walk, run or cycle to the park, which is recognised as one of Portugal’s seven natural wonders.

As the wellness real estate market grows and demand increases, purchasing property tailored to maximise wellbeing is not just an investment into one’s health: it is a strong financial investment, too. n EUROPEANCEO

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Building bonds in Benidorm

Regarded by some as the European Las Vegas, Benidorm presents impressive opportunities to foreign investors exploring the market for shortterm rental properties, writes Maria Perez, CEO of BND Levante Group According to data recently released by the government, Spain’s economy has returned to its pre-crisis size. Naturally, this has had a positive impact on numerous industries in the country, not least of all its burgeoning property market.

Indeed, property sales recorded in Spain’s land registry soared in October 2017, up 28 percent from the previous year – the biggest increase since the housing market recovery began.

Benidorm, a seaside municipality in the province of Alicante in eastern Spain, is a key driver of this trend. In fact, it may surprise many to learn that Benidorm is the fifth most searchedfor location in the world for property investment.

With brilliant weather and blue skies all year round, many have come to compare Benidorm to Las Vegas. Like Nevada’s desert sanctuary, tourists from around the globe love to stroll down Benidorm’s palm-lined promenades, relish in its abundant choice of bars and restaurants, and soak up a skyline that features skyscrapers as far as the eye can see.

Another similarity between the two holiday destinations is the fact around 85 percent of rental properties are occupied all year round.

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This is a huge difference in comparison to other popular locations around the world – and especially those in Europe – which can only offer rental income during high season.

What’s more, Benidorm’s rentals predominantly comprise short-term visitors, who bring the highest return on investment (ROI) to any property owner.

Financing options In order to take advantage of Benidorm’s increasingly popular investment market, most of our clients seek to acquire corporate bonds.

This is simply because of the numerous benefits corporate bonds offer. More specifically, there is no mortgage involved, no maintenance fee and no great effort in finding tenants – all elements that usually cause investors a lot of hassle.

Corporate bonds, therefore, present a simple, easy and secure investment that generates a fixed return straight into your bank account.

They are safe and consistent for investors of all levels, with investments starting from as low as €5,000. Further, with corporate bonds there is no need to travel to a property yourself;

investors from around the world can benefit from Benidorm’s booming short-term rental market by purchasing corporate bonds via our website. You can even order the bonds online.

We offer investors two ways of entering Benidorm’s short-term rental market. The first option involves us identifying a property within a specified budget – with or without a mortgage, depending on your preference. Our second offering, which 95 percent of our clients opt for, involves buying properties in the best rental areas of Benidorm as one of a group of investors. As part of this package, we continue to manage the properties and find short-term tenants, generating a ROI of approximately eight to 11 percent every year. We are the first and only company in Benidorm to offer this option.

Safety in numbers Most clients who decide to go it alone simply do not make the same returns as those who take advantage of our group offering. The main reason for this stems from the fact that they are not from Benidorm and, most importantly, they are not available all year round to manage

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investment group and will instead choose to fully own and manage a property by themselves. As such, we offer services to help such investors yield the highest ROI. In fact, we’re recognised as the best partner in Benidorm for finding foreign parties an investment property suited to their exact needs – whether it’s a second home or a new property development in the Benidorm area. This reputation stems from the amount of time we’ve spent in the market and the extensive local knowledge we’ve collected as a result. We scan the market every day for new opportunities to ensure our bondholders don’t miss a trick.

BND Levante also helps clients to promote large developments. For example, we are currently promoting the most exclusive new beachfront development in Benidorm.

This state-of-the-art site uses an advanced energy efficiency system which, combined with its unique double-skin design, will enable it to obtain the LEED Gold sustainable build-

Corporate bonds present a simple, easy and secure investment that generates a fixed return straight into your bank account the property effectively. Further, it’s more difficult – and certainly more costly – to manage one property than it is to manage and promote 50, 100 or even more properties.

It’s also worth noting that we have close working relationships with all of the major banks operating in the Costa Blanca, such as BBVA, Sabadell Sol and Santander, to name but a few. As a result, we can offer our clients the pick of the market’s repossessed properties.

When combined, these factors make a drastic difference in terms of ROI for foreign investors.

In our experience, we have found that real estate investors tend to opt for corporate bonds or real estate funding structures, rather than choosing to finance the investment themselves.

This works out well for BND Levante Group, as the more bondholders we obtain, the more Average occupation properties we can buy, which in turn benefits rate in Benidorm’s our bondholders further. rental properties

85%

28%

A developing business Despite the obvious advantages offered by Rise in Spain’s corporate bonds, we understand that not eve- property sales (2017) ryone is interested in being part of a collective

ing certification. Buildings that receive this recognition are renowned for being respectful of their environment, using less energy and water, as well as benefitting from reduced operating and maintenance costs. This project, therefore, serves as an excellent example of forward-thinking design and innovation in Benidorm, while its prime location makes it one of the hottest developments around.

This year has been a successful one for both Benidorm and BND Levante – and it’s not over yet. We are also planning to introduce an alternative real estate bond at the end of this year, or early next year at the latest. With this bond, we plan to buy a first-line beach plot and develop our own 20-to-30-floor skyscraper, before selling it to the highest bidder.

Unlike our current corporate bond, this will not give investors a fixed monthly income until the project is completed. We will, however, offer our bondholders the chance to choose a combination of both bonds, allowing them to benefit from a large return at the end of the bond period, as well as receive a fixed monthly income in the intervening period. n EUROPEANCEO

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Travel

Trips of the trade In an increasingly digital world, faceto-face interactions are more important than ever. Providing a comprehensive business travel package, therefore, is vital to any company hoping to gain custom and retain staff, writes Fred Stratford, Group CEO of Reed & Mackay

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Not only is corporate travel one of the biggest controllable spend categories for a business – it is also one of the most emotive. Meeting the needs of your high flyers as they take to the skies while still accommodating the practicalities of cost savings and compliance can be a delicate balancing act for any board.

Despite advances in teleconferencing and the normalisation of FaceTime, the value of true human contact has never been greater.

The Centre for Economics and Business Research (CEBR) found that taking time out to connect with people is worth approximately £193bn (€219.1bn) to the UK economy every year. The business travel industry, meanwhile, is valued at $1.4trn (€1.1trn) and, according to the Global Business Travel Association, is set to grow more than six percent in 2018.

It’s no surprise, then, that a significant 82 percent of businesses believe travel plays an important role in driving their performance.

At the top of the return on investment charts are new business sales. For businesses that are reporting a growth in revenue as a result of

face-to-face meetings, 36 percent came from new business – showing just how critical face time can be in closing a deal.

Experience is personal While the returns generated by business travel may be clear, the best ways to keep people safe and happy – without breaking the bank – have become clouded by complexity. After all, not all travel policies are created equal. Perhaps this is why the voice of the traveller is increasingly heard reverberating around boardrooms, pushing for policies that feel more aligned to their leisure experiences.

Despite its huge business benefits, corporate travel is, at its heart, personal. Travellers are spending time away from their home, their friends and their family. For those who are regularly on the move, where they sit on the plane and whether or not they are going to get their air miles matters. What’s more, getting under the skin of what employees want when they’re on the move helps improve their work performance and can inspire loyalty

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With work-life balance now ranking among the top priorities for candidates, travel policies have taken on a new level of significance

tions we hear from travellers: don’t make me wait at the airport, give me the best flight times so that I can reduce my days away from home, and make sure I have decent Wi-Fi so that I can actually work. Also rapidly climbing the wish list is a suitable meeting space.

Business travellers are time-poor, which often means tight schedules, jam-packed with highvalue meetings.

As a result, indeBUSINESS pendent hotels are TRAVEL rising in popularity.

INDUSTRY: Not only do they offer something more personal, they also have Total value the agility to negotiate on price. Further, independent hotels Estimated growth tend to boast features in 2018 like destination bars, which can hold significant sway for someone who has a short space of time to accommodate numerous meetings.

Productivity rises and expenses fall if you can cut back on the time spent travelling in taxis to find suitable places to host your guests.

By understanding what works for your travellers, you can build a truly tailored policy, providing the experience they desire while mitigating other risk factors, such as escalating cost or traveller safety. Whether travellers are booking with an agent, an online tool or on their smartphone, a flexible policy engine is key to ensuring that the experience is personalised; if you want compliance, travellers need to feel listened to. This is a mantra that sits at the heart of Reed & Mackay’s relationship with its high-performing client base.

travel forms as little as 10 percent of a procurement or facilities director’s role.

Strong data visualisation tools can go a long way to highlighting strategic insights for time-poor executives. Our business intelligence platform, R&M/Insights, is designed to shine a light on the aspects of a travel programme that need board consideration. For instance, we’ve noticed that our clients are increasingly requesting greater visibility of where and why their employees are travelling. This is because the destination has a direct impact on the income tax due following the trip.

But the risk of underperforming policies isn’t just financial. Beyond health and safety legislation, looking out for your staff is simply the right thing to do. At Reed & Mackay, we work closely with our clients to bring together the different areas of their business that touch on traveller safety, from HR to risk management. This ensures all aspects are covered in the travel policy, protecting both the employer and employee.

More recently, we’ve seen new, travellerfocused technology come into play, which helps to manage personal safety right down to the geo-coded street level. Our travel risk platform, R&M/Protect, provides boards with instant visibility of their travellers’ whereabouts in case of an emergency. Additionally, it delivers tailored risk intelligence and briefing reports straight to the traveller’s smartphone via Reed & Mackay’s app.

A new feature on the app also lets businesses help their travelling employees play an active role in their own safety.

Business travel may be an emotive area, but keeping pace with changing traveller expectations via personal touch policies and consumer-grade technologies can attract, Safe travels Balancing cost control and compliance with the retain and protect talent, while also protecting ever-changing expectations of today’s business your company’s reputation and bottom line. n travellers isn’t easy. And not every business has the luxury of a travel manager, who can focus F OR F UR T HE R INF OR M AT ION exclusively on this area. For many businesses, www.reedmackay.com

$1.4trn 6% when competitors come knocking. Simple additions, such as lounge access, the ability to travel in business class and the flexibility to stay an extra day to take in the local culture, can make all the difference to the appeal of a benefits package.

Top talent has always been in high demand, and recent surveys suggest finding the right people is one of the greatest challenges faced by modern businesses. With work-life balance now ranking among the top priorities for candidates, travel policies have taken on a new level of significance. If the way in which a business manages its travel policy has a direct impact on its ability to attract and retain talent, then CEOs have an ongoing challenge when it comes to marrying rising expectations with continued pressures to cut costs.

Removing friction For many, a good work-life balance is simply about being able to get the job done to the best standard in the smallest amount of time. As such, there is a commonality to the frustra-

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Robin Hayes CEO, JetBlue

Sustainable aviation is taking off

Commercial aviation is one of the world’s more highprofile carbon-intensive industries, but companies like JetBlue are reacting to changing consumer sentiment to create a more efficient, low-carbon future Consumer priorities are shifting across a number of industries, and the aviation sector is no exception. In the past, businesses could get away with offering a simple, goodvalue service, but today’s customers expect airlines to take sustainability as seriously as they do profitability. One airline looking to integrate long-term environmental planning and corporate social responsibility into its core business strategy is JetBlue. The airline sets goals to meet both short and longterm financial needs, while also fulfilling its commitment to reducing emissions.

Now, as the market evolves beyond sustainability to incorporate more environmental, social and governance (ESG) issues, JetBlue is well positioned to lead the aviation sector into a new, more environmentally conscious future. European CEO spoke to Robin Hayes, CEO of JetBlue, to learn how the company is adapting to new environmental and social pressures, while continuing to meet the financial demands of its shareholders.

In terms of ESG, why is transparency so important?

At JetBlue, we believe in communicating transparently about our plans and achievements. Since 2006, we’ve shared our social and environmental efforts and impacts publicly. Companies report on these topics because customers demand this information – and rightfully so.

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ESG itself is focused on the risks that stem from factors relating to larger environmental and social pressures – in this respect, transparency is key. Investors want to see that we have a viable plan to stay profitable long into the future, even when faced with looming environmental and social challenges.

ESG relates to corporate financial reporting, investor relations, enterprise risk management and shareholder engagement. While sustainability is inherently inward-looking and operational, ESG focuses on external forces, planning for scenarios that are likely to arise in the near future.

with early-stage start-ups at the intersection of technology and travel.

One of its portfolio companies is Zunum Aero, a start-up that is developing hybrid-toelectric planes to service regional flights via local airports. Short-haul air travel currently generates 50 percent of all commercial aviation What kind of climate risk mitigation emissions, and these aircraft will help address strategies does JetBlue have in place?

JetBlue is part of an international agree- the industry’s global emissions by providing a ment led by the International Air Transport zero-emissions option for short-haul flights.

Association (IATA), which aims to reduce global CO2 emissions through the purchase Can you tell us about your long-term of carbon offsets. As such, we follow IATA’s environmental strategy? fuel efficiency and CO2 reduction targets. JetBlue continues to work closely with the US Since 2008, JetBlue has purchased more Federal Aviation Administration to implement than two billion pounds of CO 2 offsets the newest technological innovations, including and has invested $87m (€74m) in new in- the Next Generation Air Transportation Sysflight technology to improve fuel efficiency tem, into our growing fleet. This encompasses dozens of innovative new technologies designed and reduce emissions.

We are investing in technology today to to help customers arrive at their destination make travel better tomorrow. For example, more quickly, while consuming less jet fuel JetBlue has a venture capital subsidiary, JetBlue and producing fewer emissions.

In 2016, we signed the industry’s largest Technology Ventures, based in Silicon Valley.

Its mission is to incubate, invest in and partner biofuel contract, committing to the purchase

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Today’s customers expect airlines to take sustainability as seriously as they do profitability

gage tugs and belt loaders. It’s a move that JETBLUE’S SUSTAINABILITY not only reduces fuel consumption and noise pollution, but also makes the equipment safer INITIATIVES: and easier for crewmembers to use.

There’s also a convenience factor for crewInvested in improving members to be able to plug in a piece of equipment on their way to the break room and have it fuel efficiency and ready to use when it’s needed – no more having reducing emissions to drive to a fuelling station, wait in line and spend time filling up the tank. In fact, more Pounds of CO2 offsets than 80 percent of crewmembers said they purchased since 2008 preferred the new equipment to the old, with one even commenting: “It felt like the equipment was made with crewmembers in mind.”

The equipment was also made with the Charging stations environment in mind. We estimate that, over to be installed at the 13-year lifespan of one charging station, JFK Airport 25,000 fewer tons of carbon monoxide will be produced. Altogether, the JFK fleet conversion will reduce greenhouse gas emissions Ton reduction in carbon monoxide per to a degree equivalent to taking approximately 9,000 cars off the road or planting charging station 50,000 acres of trees.

$87m 2bn 38

25,000

of 33 million gallons of blended renewable jet fuel (RJF) annually for at least 10 years, starting in 2020. By signing a purchase agreement for RJF at competitive prices before mass-market adoption, JetBlue was able to secure a preferential price per gallon while simultaneously helping the emerging RJF industry gain traction.

We are one of the few US carrier airlines with offtake agreements for RJF. This biofuel significantly reduces emissions, allowing us to meet our goal for long-term fuel usage.

A nod to Puerto Rico’s 100x35 mile dimensions, we put our heads together and came up with at least 35 ways in which we could help the community, and committed to implementing our efforts within the first 100 days of the hurricane hitting and beyond. This included everything from providing seats for emergency personnel, relief workers and non-profits at no cost, to supporting the replenishment of vegetation.

Now that we are well beyond the 100-day mark, we are proud of our recovery efforts and are committed to carrying out our promise to our crewmembers and the broader island community to help Puerto Rico rebound and What is the 100x35JetBlue initiative?

As the number one airline in Puerto Rico rebuild stronger than before.

– JetBlue has more services to the island than any other airline and nearly 500 local How do electronic charging stations fit crewmembers that call the island home – we into your environmental strategy? take our commitment to the local commu- At New York’s JFK International Airport, we’re nity very seriously. Just days after Hurricane doing our part for the environment by swapMaria made landfall in 2017, we launched ping out our gas-powered ground service equipour 100x35JetBlue initiative – our commit- ment (GSE) and moving to electric-powered ment to supporting both short-term relief and versions, known as eGSE. We will be installing long-term recovery efforts.

38 charging stations that will power 116 bag-

Can you tell us about any other innovations that JetBlue is incorporating?

For our existing order of 85 Airbus A320neo family aircraft, which will begin to enter our fleet in 2019, we selected Pratt & Whitney geared turbofan engines. These engines ensure our growing fleet has the most technologically advanced engines that use less jet fuel, release fewer emissions and produce less noise.

Also, at our home terminal in JFK Airport, we built our T5 Farm to promote urban agriculture and provide more green space for our customers. The 24,000sq ft farm features 3,000 crates of blue potato plants, herbs and other produce.

Each farm season, we grow more than 1,000lb of potatoes and over 2,000 herbs, most of which are donated to local food banks. This has become a popular volunteer opportunity for JetBlue crewmembers, where they can help plant, maintain and harvest our crops. In this way, our ESG initiatives benefit our crewmembers, our customers and the wider world. n EUROPEANCEO

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A new kind of tourism Modern holidaymakers expect world-class resorts to provide natural beauty, entertainment and excellent customer service as standard. In order to truly stand out, brands must offer a unique and sustainable experience, writes Marcos Constandse, CFO of Experiencias Xcaret Experiencias Xcaret’s story began in the 1980s in the Riviera Maya, 70km from Cancun, when four visionaries decided to create a park to showcase the natural beauty and culture of Mexico.

Today, the organisation expects to welcome its 45 millionth visitor and, after being named a winner by the Travvy Awards for the third year running, is rightly recognised as one of the best entertainment park providers in the world.

This success is in no small part due to Xcaret’s commitment to sustainable tourism, which has seen the organisation provide holidaymakers with a host of unique experiences inspired by a respect for nature, culture and life. With seven parks and a number of tour options on offer, Xcaret attracts more than 3.7 million visitors to the most vibrant parts of Mexico each year.

Redefining an industry Undoubtedly, Xcaret’s success is also due to its unique business model, which promotes a healthy balance between profit and the prosperity of its people and the planet. The seed sown

by Miguel Quintana and his partners – my father Marcos and my two uncles, Oscar and 148 | EUROPEANCEO

Hotel Xcaret México

Carlos – has continued into the next generation and now carries the responsibility of driving the business to a new level under the premise of innovation and excellent service.

I have personally led the transition to cement corporate governance at the heart of the organisation, while also spearheading the development of Destino Xcaret – a project for which I am the CEO. Our commitment to the local environment and culture can be seen in the eco-integrated architecture at Hotel Xcaret México, which was designed by David Quintana.

The hotel has 900 rooms and serves as a tribute to the talent and creativity of Mexican artists.

Our decision to combine entertainment and environmentalism has been a great strategic success, enabling us to generate a new category in the international tourism industry: the All Fun Inclusive concept, with the best of Mexico included. Under this premise, tourists simply have to arrive in Cancun and they are ready for their vacation. When making a reservation with our hotel, holidaymakers also receive ground transfers, luxurious accommodation, entry to our entertainment parks – which include Xcaret, Xel-Há, Xplor, Xplor Fuego, Xoximilco and Xenses – a delectable selection of food and beverages, and access to the Xenotes and Xichén tours. What’s more, every part of this package is suppleEXPERIENCIAS mented by premiumquality service.

XCARET: We believe this approach will redeEntertainment parks fine the idea of an all-inclusive holiday and boasts a level of service unparalleled Visitors each year by some of the world’s best-known entertainment parks. As a result Travvy Awards of this forward-think-

7

3.7m+ 3

Experiencias Xcaret provides holidaymakers with a host of unique experiences inspired by a respect for nature, culture and life ing approach, we have been able to implement a new business model that generates the highest levels of satisfaction for our visitors, while also proving profitable.

A sustainable philosophy Despite being an independent hotel, Hotel Xcaret México has managed to grow its occupancy rate rapidly, witnessing a rise from one percent to 92 percent in just two months. From the first month of operation, the resort has achieved a positive EBITDA – something that is practically unheard of in the hospitality industry.

In strict adherence to its philosophy of sustainability, which follows the best practices outlined by the United Nations, Xcaret aims to maintain its growth in the coming years, with plans to construct 6,000 hotel rooms, a convention centre, a stadium and a mile-long commercial area that will integrate entertainment, shops and restaurants. The investment, which will total $2.75bn (€2.35bn), is expected to create more than 15,000 jobs directly and as many as 60,000 indirectly.

Despite our many successes, I am confident the best is yet to come. Our ongoing aim is to contribute significantly to the social, environmental and economic betterment of our community and country. In Mexico, a new concept is being created in the tourism industry, and its story is just beginning. n

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CENTURIES OF KNOWLEDGE FREEING THE WORLD FROM DISEASE!

EDEN

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CEOPROFILE Karoli Hindriks C E O | J O B B AT I C A L

Working off the beaten track

With the skills gap widening in many industries, businesses are looking further afield to find the right candidates. As CEO of Jobbatical, Karoli Hindriks is helping to ensure organisations have access to a truly global talent pool The idea of packing up and living in another part of the world is one that appeals to many.

Whether it’s fuelled by a desire to escape the monotony of a nine-to-five job, the chance to experience different cultures or a mix of the two, change sometimes proves simply too difficult to resist. Nevertheless, taking a career break is a risky, and often costly, decision. Not only will it deprive individuals of their main source of income, there is also a perception – rightly or wrongly – that it could damage long-term career prospects, too.

However, in today’s increasingly mobile world, focusing on the barriers to international travel seems futile. Instead, Karoli Hindriks, CEO of Estonian start-up Jobbatical, has come up with a unique solution: her company promises to find individuals the jobs they are passionate about in locations that inspire them. In doing so, Jobbatical enables people to experience a new culture while earning a living, and provides businesses with access to fresh talent.

“Jobbatical was inspired by my own travel experiences,” Hindriks told European CEO. “I thought: could I benefit from a different culture or experience, working somewhere in another country or continent? I realised that no one was leveraging that kind of talent pool.

No one was tapping into the curiosity of the talented individuals who have vital knowledge and experience within a specific job sector.”

Casting the net wide Although the global economy is on more solid ground than it has been for some time, there are still a number of challenges remaining. Unemployment figures may be falling – joblessness across the eurozone reached its lowest level for almost a decade in April – but businesses are still struggling to attract the right employees.

Across a whole host of job sectors, serious talent shortages are becoming apparent. This issue is even more pressing in industries that require technical skills: currently, there is a

CV BORN: 1983, ESTONIA

JOBBATICAL |

EDUCATION: BUSINESS ADMINISTRATION, ESTONIAN BUSINESS SCHOOL

IN NUMBERS

1999

2007

2012

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Aged just 16, Karoli Hindriks became Estonia’s youngest inventor to register a patent when she turned her idea of fashionable safety accessories into a successful business

After working in both marketing and PR at MTV Baltics, Hindriks was appointed CEO of MTV Estonia, tripling sales during her two-year tenure

While studying in Silicon Valley, Hindriks sought to identify why certain locations attracted world-changing companies and world-class employees while others didn’t

Hindriks launched Jobbatical, a start-up aimed at connecting globally minded companies with a community of ready-to-relocate tech, business and creative talent

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lack of investment in the training programmes required to ensure jobs in IT, engineering and other hi-tech sectors have a steady supply of qualified applicants. Germany alone could be facing a shortfall of up to three million skilled workers by 2030.

While it is true educational improvements will certainly help close the gap, this only provides a long-term solution to a problem many businesses need to address today. Boosting employee mobility, on the other hand, provides a more immediate fix, enabling industries based in one country to gain access to skilled workers that are underutilised in another.

This is where Jobbatical comes in.

Founded in 2014 in Tallinn, Estonia, Jobbatical helps businesses identify talented job candidates from around the world. The platform hosts job offers from across the employment spectrum, with a particular focus on tech, business and creative roles. Growing up far away from the major global employment »

2014

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FOUNDED

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centres of London and San Francisco, Hindriks appreciated there were many places – and many businesses – that could benefit from better access to international talent.

“I started to wonder why certain places were so successful in terms of creating worldchanging companies,” Hindriks said. “People seem to be drawn to particular locations. Coming from a small country like Estonia, I started to think about how you might draw people to locations that are not necessarily obvious. If you live in London, you might not think of moving to Tallinn, so I asked myself how we could help inspire individuals to discover these less prominent locations and incorporate them within the next step of their career journey.”

To boost the attractiveness of businesses and locations that might not immediately spring to mind, Jobbatical provides a fourstep solution. First, professional copywriters help to create an engaging job advertisement.

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social media channels and the most relevant Jobbatical users are invited to apply. The third stage grants businesses access to Jobbatical’s suite of application management tools, and the final phase concerns employee relocation.

In an increasingly globalised economy, Hindriks noticed there were still many challenges preventing businesses from reaching the right job candidates. By making cross-border hiring a simpler process and granting firms access to

By making cross-border hiring a simpler process and granting firms access to a previously inaccessible talent pool, Jobbatical reduces inefficiencies in the labour market

a previously inaccessible talent pool, Jobbatical reduces inefficiencies in the labour market.

“By the second half of 2015, Jobbatical had started to really grow and we had begun to figure out the answers to some of our early mistakes,” Hindriks explained. “Now, we have a platform where there are around 150,000 people looking for opportunities on a monthly basis, working with organisations across 49 countries. Today, we can help companies based in even the most remote corners of the world – like Penang Island in Malaysia, for example – to find the talented staff they need.”

New horizons Of course, by matching vacancies to the right applicants, Jobbatical doesn’t just provide a service to businesses: it benefits job candidates, too. “Employees get a culturally enriching experience while companies gain access to the skills they need,” Hindriks said. “When I was in high school, it was my dream to go and study in the US, and I eventually got to experience this

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Jobbatical ensures international borders don’t stop businesses or individuals from achieving their goals

3m

Estimated shortfall of skilled workers in Germany by 2030 during a year-long exchange programme. It really changed me as a human because, when you enter into a new country and culture, you learn to see things differently.”

Spending time in a different country is also great for long-term career prospects. For example, it could provide individuals with an opportunity to learn a new language in a way that is far more natural than simply studying from books and audio recordings. Studies have indicated learning a second language can even reduce bias in employees’ decision-making and provide a two percent boost to annual income.

What’s more, travel puts people in contact with new sources of inspiration and exposes them to colleagues with different ideas. Whether a Jobbatical user chooses to remain abroad or return to their home country, this experience is sure to enrich their outlook in terms of both their professional and personal lives.

Travelling can also be daunting, however, which is why Jobbatical offers a number of support services. The company already has

immigration partners in 42 countries and is working hard to launch additional services to ensure the process of resettling abroad is as straightforward as possible. In order for the best-qualified candidates to be matched with the most relevant job roles – regardless of location – individuals need to be empowered to move across borders. Jobbatical achieves this by giving jobseekers the boost they need to overcome legal, cultural and bureaucratic hurdles.

An independent streak With many entrepreneurs, it can be difficult to pinpoint where their drive and inspiration stems from. But with Karoli Hindriks, her upbringing in Estonia is a good place to start.

After all, it is, in her words, “a country that built itself up from nothing”.

After the country regained independence from the Soviet Union in 1991, each adult citizen received 150 Estonian kroon (roughly equivalent to €10) with which to rebuild their lives. Starting from such a position, the Estonian people had little choice other than to embrace openness, collaboration and an entrepreneurial spirit. It’s an attitude that is easy to see within Hindriks herself.

Aged just 16, Hindriks became Estonia’s youngest inventor to have a registered patent after transforming a school fashion project into a successful business. Then, after working in both marketing and PR for MTV Baltics, she was named CEO of MTV Estonia at the age of 23. Despite having little experience in the media business, Hindriks surrounded herself with a knowledgeable team and focused on learning as much as she could about her new industry.

Hindriks’ embrace of new experiences continues to this day through Jobbatical and, once again, owes something to the country of her birth. Estonia is rapidly gaining a reputation as one of the most technologically advanced and business-friendly countries in the world. As the nation that provided the world with Skype, Estonia has long been proud of its culture of digital innovation, something that can be seen today through its adoption of cryptocurrencies and e-residencies.

With a population of just 1.3 million people, Estonia has become a world leader in the tech scene by opening its borders to outside talent.

“When Estonians talk about immigration, they talk about how they can encourage more, not

about how to remove people or limit numbers,” Hindriks said. “So, in a way, it is already a country that is thinking of itself as more of a service.”

While some countries are putting up walls and focusing on ways to boost their deportation figures, Estonia is benefitting from one of the most flexible migration policies in the European Union. Jobbatical mirrors this approach by ensuring international borders don’t stop businesses or individuals from achieving their goals.

It’s a small world Despite Estonia’s enthusiasm for new ideas and, indeed, Hindriks’ previous successes, getting investors to support Jobbatical was not easy at first. In fact, finding backers in Hindriks’ home country proved such a struggle that the young entrepreneur began to doubt whether her idea would get off the ground.

“Eventually, I decided to go to Finland, where I applied to an angel association, and that’s where I got my first backers,” Hindriks explained. “After Finland, we received support from Russia, the UK, Latvia and then Estonia. This means we started quite differently from other start-ups, but in a way that was appropriate for Jobbatical. Although normally your investors come from your local market, ours came from five different countries – so we had a lot of international knowledge in our team from the beginning.”

Despite the initial difficulties, those early investors were perhaps encouraged by the way Jobbatical reflected a changing labour market. The recent growth in digital services has meant businesses are no longer rooted within a particular area or market. Similarly, employees, with the help of social media and other online communication tools, are now free to work and live abroad without feeling quite so disconnected from home.

In an increasingly global world, individuals appear more willing to work abroad than ever before. Millennials in particular are keen to explore international opportunities, with 40 percent of expats in this age group moving to pursue new challenges. As these trends develop, it is likely the demand for services like Jobbatical will only increase. If Hindriks gets her way, Jobbatical will soon become “the leader of cross-border hiring – an international careers one-stop shop”. Given her already-long list of achievements, few would bet against Hindriks realising her aim. n EUROPEANCEO

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156 Fashion 162 Luxury Destinations 164 Culture

“There are things that need to be said... and I think it’s my obligation to say them.”

Benjamin Clementine

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FASHION VICTIMS

The use of fur in the clothing industry is a controversial topic, inciting fervour on both sides of the argument. As more of Europe’s fashion houses decide to go furfree, Barclay Ballard explores whether the debate is finally drawing to a close In March of this year, Versace and Furla became the latest designer fashion labels to announce they would no longer be using real fur in their clothing collections. Speaking to the Economist Group’s 1843 magazine, Donatella Versace confirmed her family’s fashion label had made the decision for ethical reasons. “Fur? I am out of that,” Versace said. “I don’t want to kill animals to make fashion – it doesn’t feel right.”

Many others would agree with her, and the list of fashion companies to have ditched the material is already substantial: Gucci, Michael Kors, Armani, Calvin Klein and Vivienne Westwood represent just a few of the luxury brands to have already gone fur-free or plan to do so in the near future. But not everyone shares this point of view.

Fur has a long history within the fashion industry. It is a material that has inspired brands to produce innovative designs and is often passed down through generations of family members, creating a deep emotional connection. The ethics of using fur are also hotly debated: some believe animal welfare standards are stringent enough to allow for the ethical production of fur, while others will always be vehemently opposed to removing an animal’s skin for a scarf, coat or pair of boots.

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A grey area Attempting to topple a $30bn (€25.7bn) industry was never going to be easy, but anti-fur campaigners have been emboldened by a recent rise in ethical consumerism. A 2017 study conducted by Unilever found 33 percent of consumers around the world now choose to buy from brands they believe to be doing social or environmental good.

This has left the fur industry in a difficult situation. While many are quick to champion the high standards of animal welfare implemented across fur farms, there’s also a wealth of videos online appearing to show animals living – and subsequently being killed – in shocking conditions. Yvonne Taylor, Director of Corporate Projects at PETA UK, is unequivocal about what life is like for animals in the fur trade, whether they are reared on farms or caught in the wild.

“About 85 percent of the fur sold today comes from factory farms, where the most commonly bred animals are minks, followed by foxes,” Taylor explained.

“Other species farmed for their fur include rabbits, chinchillas, lynxes and even cats and dogs.

These animals are kept in tiny, filthy cages and denied everything that is natural and important to them. Every year, trappers also

kill millions of racoons, coyotes, wolves, beavers, possums, and other fur-bearing animals in the wild using steel-jaw traps, which can leave their victims in agonising pain for days.”

Although animals used for fur in emerging or underground markets may well exist in inhu-

“ANIMAL CRUELTY, WHETHER CONSUMERS ARE CONSCIOUS OF IT OR NOT, SHOULD NOT BE ALLOWED TO EXIST IN A CIVILISED SOCIETY”

mane conditions, strict standards concerning killing methods, international trade and animal welfare do exist in Europe. Mette Lykke Nielsen, CEO of Fur Europe, a Brussels-based organisation covering the fur value chain across the continent, told European CEO the use of fur in fashion was not only ethical, but actually vital to the sustainability of the industry: “If we want to improve and mitigate fashion’s impact on the environment, we should use more natural materials, such as fur, leather, silk, wool or feathers and down, not less.”

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“It is entirely based on research from the past 30 to 40 years conducted on fur animals and put together into assessment reports by scientists from seven different universities.

“What makes WelFur particularly special is not only that it is based on the European Commission’s Welfare Quality project, but also the fact that it looks into the animals directly. It provides information about animal standards based on the animals’ response, their behaviour, their interactions with people, whether they have any injuries and a lot more.”

Given everyone will have their own set of ethics determining whether they support the fur trade or not, education on the subject is key to ensuring individuals make an informed decision. Programmes like WelFur and Fur Europe’s Open Farm scheme, both of which grant first-hand insights into the industry’s animal welfare standards, are needed to provide clarity in an understandably emotional issue.

Only then can consumers make a decision whether or not to buy fur with a clear conscience.

While impartiality is difficult to find in this particular debate, WelFur, an animal welfare programme initiated by Fur Europe, is trying to use facts and statistics to help consumers make better-informed decisions. WelFur encompasses a certification programme that is based upon assessment visits conducted by an independent company called Baltic Control. This means the fur sector has no influence on the results of its assessments.

“WelFur is now being implemented across European fox and mink farms,” Nielsen explained.

So last season If PETA is to be proved correct in its belief that “the fur industry is headed for the history books”, consumers will need to have access to a suitable alternative. Faux fur has been available for a number of years now but, despite being embraced by high-end fashion houses, celebrity trendsetters and high-street shoppers alike, it too comes with ethical issues.

First, there have been numerous examples of brands mislabelling real fur as ‘faux’. Then, there’s the environmental cost of fake fur to consider; dependent on the material used, some forms of faux fur are not biodegradable and when thrown away will lie next to countless other plastic products in landfills for centuries. What’s

more, these faux fur items are likely to be thrown out more readily than a piece of clothing made from real fur, which is often used for decades before being handed down as a family heirloom. Fake fur items simply do not hold the same allure and are much more likely to contribute towards our ‘fast fashion’ culture.

“The main issue with artificial substitutes, such as fake fur, is their lifespan,” Nielsen said.

“People buy a piece of clothing made up of oil-based fibres, use it for up to five years and then throw it away. When that piece of clothing reaches a landfill, it can never biodegrade because it is, in essence, made of conventional plastic.”

However, it’s also true that fur farming is not without its own environmental issues. The World Bank ranks fur dressing – the use of chemicals to prevent putrefaction – as one of the five worst industries for toxic metal pollution, while a recent study found unsafe levels of potentially carcinogenic chemicals in the fur trim on several brands of children’s clothing.

Looking long term, perhaps science could provide the answer for consumers that desire truly sustainable fur. Start-ups like Vitro Labs are trying to create ‘bio fur’ using stem cells, while the Massachusetts Institute of Technology is currently conducting research into using computer software to 3D print fur substitutes. It will, however, be a long time before these sorts of products end up in stores or on catwalks. And even then, they may bring new ethical objections with them.

Gone fur good?

In the debate between pro and anti-fur campaigners, the likelihood of conciliation looks slim.

This is a passionate subject – and so it should be. Animal cruelty, whether consumers are conscious of it or not, should not be allowed to exist in a civilised society.

“FAKE FUR ITEMS SIMPLY DO NOT HOLD THE SAME ALLURE AS REAL FUR ALTERNATIVES AND ARE MUCH MORE LIKELY TO CONTRIBUTE TOWARDS OUR ‘FAST FASHION’ CULTURE” However, while the stand being taken by the likes of Versace, Furla and others is admirable, it would be premature to announce the end of real fur in the fashion industry. Although fur sales in the West have declined in recent years, demand in China is thriving, with retail sales reaching $16.9bn (€14.5bn) in 2015. Even in Asia, though, a slight slump over the past two years suggests consumers are turning to alternative materials.

Ultimately, companies will follow their bottom lines when deciding whether to work with fur or not. If consumers begin demanding faux fur in greater numbers, fashion brands will supply it and claim they did so in the name of animal and environmental wellbeing. In an industry subject to the whims of shoppers, however, fur could just as easily undergo a global resurgence.

“Fashion is all about trends, isn’t it?” Nielsen said. “Fur has made a big comeback in the last two decades despite pressure from those who oppose it. It has always been a controversial topic in fashion with two extremely polarising sides – people either love it or hate it.”

Given the use of fur is such a divisive issue – and there is so much misinformation surrounding the industry – it is vital consumers have access to facts that are disconnected from ideological posturing. Surely, that’s one thing both pro and anti-fur campaigners can agree upon. n EUROPEANCEO

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GREEN IS THE NEW BLACK

As one of the leading fashion retailers in the Middle East, Splash hopes to make sustainability the next big thing on the region’s runway, writes company CEO Raza Beig Fashion is one of the largest and most resource-intensive industries in the world. It is a complicated business involving large and varied supply chains that cross multiple markets, including agriculture, design, manufacturing, shipping, retail, marketing and recycling services.

As an industry, fashion is among the world’s worst polluters, having a sizeable and direct impact on the quality of our air and water, as well as producing a great deal of solid waste. It also has a profound socioeconomic influence on the hundreds of millions of people engaged in the industry globally.

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Ultimately, the fashion world has a vital role to play in delivering a sustainable future – simply because of all the areas and industries it touches. It contributes a huge amount to local economies, creates millions of jobs, influences the global supply chain and has considerable social effects, too. Evolving the role fashion plays becomes more pressing with each passing year, as our planet’s resources become increasingly scarce.

Fortunately, the industry’s size and influence means those within it have an excellent opportunity to positively affect the environment to the same extent they affect the economy. To make this a reality, the

future of fashion needs to use the innovation and adaptability with which it has become synonymous to create a more sustainable and fairer world for all.

Making a splash Splash is one of the biggest fashion retailers in terms of store presence and volume in the Middle East. As such, we believe it is our responsibility to bring about a positive change in the region.

But we didn’t adopt a sustainable approach simply to be on trend: we did it for moral reasons.

Splash has taken a lead in sustainable fashion, not just within its parent company, the Landmark

Group, but in the Middle East as a whole. Sustainable fashion is an ideology that was discussed in our boardroom for some time and is now part of our DNA, with everyone across our business practising it in their daily work lives. Sustainability has therefore become a core value for the brand, which is why we are determined to adopt and promote sustainable business practices across our extended value chain.

For years, the concept of sustainability in the Middle East was not as mature as it was in the West. More recently, however, there has been a significant shift in the approach towards sustainability: now, governments, businesses and

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“THOSE WITHIN THE FASHION INDUSTRY HAVE AN OPPORTUNITY TO POSITIVELY AFFECT THE ENVIRONMENT TO THE SAME EXTENT THEY AFFECT THE ECONOMY”

consumers are all moving in the same direction. Indeed, there is a constant push from leadership circles within the region to adopt sustainability as a key concept in the social, environmental and economic space. Sustainability is also one of the key themes for Expo 2020, which will take place in Dubai.

At the event, major players from around the globe will gather to share their creativity, showcase innovation and find new ways of collaborating.

As examples like Expo 2020 highlight, the fashion retail market in the Middle East has a great deal of influence on numerous international labels. Fortunately, this is a two-way street: the widespread presence of the world’s most renowned fashion brands in the region has raised awareness among consumers and home-grown retailers alike. To make the most of this exchange, Splash has again taken a position of leadership, and is now setting examples to numerous retailers in the region.

Common thread When Splash started its ethical journey, its key challenge was to drive sustainability as a philosophy within the organisation, aligning all internal teams to a common thought process. This involved awareness sessions, which were organised for all departments using internal resources, as well as bringing in external experts to ensure each and every person in the brand understood the concept of sustainability and lived by it too.

At Splash, we believe sustainability isn’t just a one-time activity or event – it’s a way of life.

As a next step, we started aligning key stakeholders – our sourcing partners – with this initiative. Fortunately, they were keen to get on board; in fact, a lot of know-how came from our partners working with other international brands and already having a grasp of sustainable business practices.

The next key step involved creating a long-term strategy, which was

drafted with clear, time-bound sustainability targets in mind.

We categorised our sustainability strategy into four pillars.

The first is centred on design, namely ensuring that our products are durable, of the highest quality, functional and, most importantly, eco-friendly. Next, we ensured that resources were managed efficiently and effectively, while also caring for the environment.

The third pillar of our sustainability strategy is the adoption and promotion of responsible practices throughout the supply chain.

Finally, there is marketing and engagement, by which we mean inspiring customers and business partners to join us on our journey towards sustainability.

To further support this strategy, Splash has affiliated itself with some leading agencies and organisations that promote sustainable business practices across the industry. As such, Splash is the first brand in the Middle East to become a member of the Better Cotton Initiative and the Sustainable Apparel Coalition.

Ethical fashion Sustainability at Splash is driven by the senior management and then cascaded down to each and every person in the hierarchy. Sales

are always fuelled by demand, and creating a higher demand for sustainable products is a continuous process – unlike in the West, customers across the Middle East are yet to fully embrace and understand sustainable products and initiatives.

That said, consumer awareness of sustainable products is rapidly increasing and so is demand, as evidenced by the great response we had following the launch of our first range of sustainable products in spring 2017.

The collection was thoughtfully crafted, using materials such as regenerated polyester, recycled organic cotton and sustainable fabrics like Tencel, which is regenerated from wood cellulose and coloured with eco-friendly dyes.

Naturally, anything new tends to be a little more expensive but, over a period of time, it generates a certain value and adjusts to a more realistic pricing structure. Despite this, we decided to approach sustainable fashion wholeheartedly, building at mass to ensure our products are no more expensive than they were before. Pricing the true value of sustainability into fashion products needs to become the norm, so consumers can see that sustainable goods don’t just reflect their moral values – they provide good financial value, too. n EUROPEANCEO

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FOR RENT Luxury goods have always been a status symbol, but as consumer trends shift from ownership to experience, people are increasingly happy to buy temporary access to such items, writes Fernando Moncada Rivera The sharing, or collaborative, economy has been around for a while; the idea that goods and services can be monetised through repeated use by multiple people is not new. However, because of the sharing economy’s nature – namely, that it looks to make things cheaper for the consumer – it is somewhat surprising that a fast-growing segment of it is devoted to luxury goods, which are typically a display of status and affluence. Increasingly, luxury items such as watches, clothing and handbags are being rented to consumers who don’t have the money to purchase them outright.

This follows the growing trend for consumers to purchase temporary access to goods, rather than to buy items outright. “In a lot of areas we find this philosophy of usage vs owning very strong,” Olivier Abtan, Partner and Managing Director at the Boston Consulting Group’s Paris office, told European CEO. “A few years back we believed it was not going to impact luxury, but actually it did. Really, economi160 | EUROPEANCEO

cally speaking, it makes sense. If you don’t attach value to owning stuff, it really makes economic sense to rent luxury.”

A budding market As a nascent market with a multitude of smaller players, the luxury rental industry has mostly flown under the radar. Consequently, it is unclear exactly how big the subsector is. “I am sure that everybody will be surprised when you add all the numbers to see how big this market is,” Abtan said. “Of course, it is not huge and it is not impacting the total market size and total market dynamics, but still I think it is really growing fast.”

Social media plays no small role in this quiet revolution. Luxury items are status symbols, and social networks like Instagram give the opportunity to show off new wares. Even among upperincome audiences, it is becoming more cost-effective to rent than own because of the aversion to being seen in the same piece of clothing more than once. Given

the self-imposed limits on an item’s lifespan, the relevant cost metric is not simply the price of the item but, more importantly, the cost per use.

Renting is not the only alternative to full ownership: firms that offer co-ownership services are also entering the fray. “The market for co-ownership of luxury goods is potentially enormous and, to date, is largely untapped... Precious collectibles have historically been unaffordable to all except the very wealthy,” Marco Abele, founder and CEO of Swiss luxury co-ownership start-up TEND, told European CEO. Referring to Millennials, he added: “This is not a generation that is hung up about ownership, or for whom a mortgage-free home and security in retirement are at the top of their wish list.

The Millennials are far more motivated by life experiences and personal enrichment.”

According to a report by PwC, 51 percent of total turnover in the sharing economy for retail and consumer goods are from people under

the age of 29. This percentage drops with age – only seven percent of turnover comes from consumers over the age of 60 – and points to a generational change in attitudes.

Additionally, people with monthly household incomes above €4,000 generate 41 percent of the sector’s total turnover but only account for 10 percent of usage frequency, suggesting a relatively small but very strong market for premium and luxury goods sharing.

The recruiting machine Far from being a threat to bigname brands, the rental model can be leveraged as a very effective customer recruitment channel.

According to Abtan, around 40 percent of a typical luxury brand’s sales come from a highly concentrated group of VIP clients that only make up five percent of its customer base. Additionally, 60 to 70 percent of a luxury brand’s customers are new every year, and of those, only 10 to 20 percent are still customers a year later. This means that it is extremely impor-

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CONTRIBUTION TO TURNOVER IN THE SHARING ECONOMY

51%

Aged under 29

7%

Aged over 60

41%

Monthly household income above €4,000 tant for luxury brands to devote significant resources to attracting new customers. “It’s a huge recruiting machine [that] luxury brands have to put in place,” said Abtan.

Traditionally, younger customers begin their relationship with a luxury brand through the purchase of small-ticket items like accessories, before eventually moving on to the more expensive products as their purchasing power increases.

With the rental model, however, they can access a much wider range of a brand’s stock from the beginning of this journey, making their initial experience with a brand that much stronger.

“These younger customers renting today... will represent the majority of the market tomorrow, and the question is whether they will change their consumption habits and move from renting to owning when they grow up,” said Abtan. He added that young people will buy more as they grow older and have more money, but will also continue to rent, meaning the

“EVEN AMONG UPPER-INCOME AUDIENCES, IT IS BECOMING MORE COST-EFFECTIVE TO RENT THAN OWN”

future luxury rental market will not be as isolated to younger age groups. As a result of this, brands will be able to target a larger market through rental channels.

Sustainable fashion The trend also has the advantage of tapping into a growing desire for sustainable products, as renting items means less material is being consumed. This is particularly true in the fashion industry, which faces constant criticism for its inefficient use of resources and the often subpar working conditions in factories.

Some gains in sustainability may be offset, however, by the logistical network needed to make a clothes rental business work. Rent-

ing means each person may technically consume less, but it also means that each article of clothing needs more input in terms of transportation, packaging and cleaning to make it available to customers.

Disruptor or partner Renting is unlikely to disrupt the luxury sector in the same way firms such as Airbnb and Uber have disrupted the hospitality and mobility markets. The cost of purchasing many luxury items is so prohibitive that, unlike Airbnb or Uber, the alternative to participating in the sharing economy would in most cases be not using that product at all, as opposed to going to a competitor.

As the rental market grows, however, brands would do well to cooperate with rental companies to expose potential customers to their wares. It is also in the best interest of luxury houses to supply rental networks with their best and latest products to ensure their brand is afforded the best representation to new customers.

“As a B2C company, you need to be where the customers are and you need to satisfy their needs wherever they are and in whatever way they want to enjoy your brand,” said Abtan. “I don’t believe [luxury brands] need to develop their own renting system – I don’t believe it makes sense. But I do believe luxury brands should collaborate with [rental] players and they should use this channel as a recruiting channel.”

In Europe, where a significant portion of luxury sales comes from tourists, partnerships with the nascent rental sector means developing the local market and funnelling customers towards a brand. Shifts in consumer behaviour may not pose a significant threat to established market players in the luxury sector, but as they grow, they present an opportunity that companies would be foolish to pass up on, lest more market-savvy competitors take advantage. n EUROPEANCEO

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THE FAMILY HOTEL THAT’S RIDING HIGH At Selman Marrakech, guests can expect to receive a luxurious welcome that uniquely reflects the distinctive personalities that helped create it, according to the hotel’s General Manager, Kamil Ennadifi As with many great hotels, the success of Selman Marrakech stems from a family history. The hotel’s owners, Saida and Abdeslam Bennani Smires, are fulfilling their grandfather’s dream of seeing the family create a successful business in his hometown. Educated at a hospitality management school in Lausanne and with a keen interest in Arabian thoroughbred horses, Abdeslam is a young man driven by his endless enthusiasm. In 2005, he launched a project to combine his two passions within an extraordinary hospitality concept that would set new benchmarks in the travel industry: Selman Marrakech.

Selman Marrakech is a truly unique project that would not have been possible without the support of Abdeslam’s parents and, most of all, his sister Saida, who brings a calmness and pragmatism to proceedings. With their 162 | EUROPEANCEO

complementary characters, Saida and Abdeslam have managed to create a hotel that echoes their differing personalities, as well as their family history.

European CEO spoke to Kamil Ennadifi, General Manager at Selman Marrakech, about what makes the hotel unique and why Marrakech is such an attractive business destination.

What makes Marrakech a good destination for a luxury hotel like Selman?

The local climate is a big selling point. Marrakech benefits from more than 340 days of sunshine per year, and while it is true winter can bring cold nights, it remains mild during the day. What’s more, this climate has helped sculpt Marrakech’s beautiful landscape, which has attracted the world’s best painters and photographers

for decades. Being within just a short three-hour flight of many key European capitals, the city is also perfect for short breaks.

Marrakech’s wealth of culture further adds to its attractiveness.

The city’s old town – or ‘medina’ – and its many souks are complemented by a new generation of modern-art museums, including the Yves Saint Laurent Museum.

It’s fair to say that Marrakech is truly a combination of tradition and modernity. It is also a dream destination for golfers, with 13 world-class golf courses available.

Finally, Marrakech is considered to be one of the safest places in Africa and the Middle East.

Why is it so important that Selman is a family-run hotel without affiliations to any hospitality chains?

The fact that Selman Marrakech is a family-run hotel is what makes it special, and we are keen for guests to feel as though they are at home.

As such, Selman Marrakech offers the perfect mixture of Morocco’s famous hospitality and top-class service – without being too formal.

With 50 rooms, five suites and five private villas set over six

hectares of landscaped gardens – which also include our impressive 80m-long pool – Selman Marrakech is a true oasis where each guest can live in total privacy.

Importantly, our staff are attentive without being overbearing.

As a result, we have been able to attract a lot of repeat custom, and guests always report that what makes our hotel stand out is the personalised service.

Although the famous designer Jacques Garcia took care of the hotel’s design, the owners’ views were also taken into consideration. The Bennani Smires have also incorporated their favourite pieces of art, adding further to the hotel’s distinctive atmosphere.

Where did the idea of housing Arabian thoroughbreds come from, and how was the breeding programme started?

Abdeslam has had the privilege of combining his two passions at Selman Marrakech: hospitality and horses. The hotel contains a live installation of the most beautiful breed of horse in the world, the Arabian thoroughbred, which is an integral part of Moroccan history and culture.

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“SELMAN MARRAKECH OFFERS PEOPLE THE CHANCE TO SHARE IN AN OTHERWISE CLOSED EQUESTRIAN WORLD” take place on Friday evenings in front of our Moroccan restaurant, Assyl, and every Sunday during brunch. The latter is an experience offered by no other hotel in Morocco.

Other guests enjoy the opportunity to ride the horses across the property. Our riding expert, Sadek El Bahjaoui, offers an amazing selection of experiences where people can ride easily, even if they are beginners.

Abdeslam has been able to visit the most beautiful hotels and stables in the world. It was an incredible experience for him, so he wanted to be able to offer other people the chance to share in this otherwise closed equestrian world, where access is normally only conferred through the invitation of horse owners. He wanted the guests to be able to enjoy the experience in all its glory and, in doing so, show them the principle of sharing that is so dear to the Moroccan people.

The breeding programme, which is called Selman Arabians, was initiated at the same time as the hotel project in 2005 and is inextricably connected to it. The

stud farm is located on our 30-hectare property in Rabat, where more than 30 Arabian thoroughbreds are housed. The aim is to command a starring role within the international equestrian scene – something that we are on track to achieve, with many of our horses having won international beauty awards.

How do customers respond to their experiences with the horses?

Our guests are delighted to spend time with the horses and are given several ways of doing so. While some just like to see the horses roaming in the paddocks, others prefer to enjoy our shows, which

What is the Chenot method, and how does it differentiate Selman’s spa from others?

Nestled in the heart of the hotel, our Espace Vitalité Chenot Spa is unique within Morocco. With an area of 1,200sq m, this wellness centre boasts an orientalinspired spa that resembles the hammams of ancient Istanbul.

Arranged around a heated central pool, Espace Vitalité Chenot has seven treatment cabins, four hydrotherapy cabins, a jet massage pool, two outdoor heated pools, two steam rooms, a fitness centre and a spa shop that sells products from the Chenot range.

We offer treatments inspired by the world-renowned Chenot

method, just as they are practised at the Henri Chenot Centre at Palace Merano. This concept of health focuses on the principle of ‘biontology’, which is based on understanding the evolution of the human body’s vital resources at different stages of life. The Chenot method benefits from 40 years of experience and aims to rebalance the body by helping to rid it of toxins. Through a personalised care programme, it restores the body’s wellbeing.

Beyond the relaxing treatments, Espace Vitalité Chenot offers detoxifying, energising and regenerating programmes, as well as a weight loss initiative that lasts between three and 10 days. Depending on the needs and requirements of the guest, the Espace Vitalité Chenot team can perform and establish specific therapeutic interventions to act on specific areas of the body, working against cellulite, localised fats or cellular ageing by stimulating natural collagen production. Our Chenot-trained therapists make it a point of honour to offer individualised treatments that, combined with the idyllic setting, promote relaxation and wellbeing. n EUROPEANCEO

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THE CRAFT REVOLUTION In a fast-paced, hi-tech world, more people are leaving the traditional workplace to pursue their passions in the craft economy, writes Courtney Goldsmith Hardly a day goes by where the world isn’t rattled by the shockwaves of a geopolitical or ethical crisis. Times are uncertain, and we are more connected to the chaos than ever. Millennials and Generation Z – groups that, combined, encompass those born roughly between 1980 and 2010 – are the generations of the smartphone and the internet. They are multitaskers and perfectionists, and they are no strangers to the constant pull of social media or the incessant pinging of push notifications.

All of these traits have not come without consequence: recent studies suggest Millennials and Generation Z face higher chances of being anxious or depressed.

Unsurprisingly, then, many are increasingly interested in logging off and trading their desk job for a workshop. Craft businesses are poised to play a pivotal role in the 164 | EUROPEANCEO

global economy – not to mention individual wellbeing – as workers gradually flip the script on the 21st-century workplace.

Crafty consumers Participation in the craft economy is snowballing, with US consumers spending $36.2bn (€31bn) on creative products last year, according to the Association for Creative Industries (AFCI). Over the same period, 62 percent of US households participated in at least one craft activity. This equates to around 70 million households contributing to the craft economy each year, AFCI President and CEO Mark Hill told European CEO. Meanwhile, research from the UK’s Crafts Council suggests the craft industry generates £3.4bn (€3.9bn) for the UK economy each year. In the EU, cultural and crea-

tive industries employ more than 12 million people, accounting for 7.5 percent of the entire workforce, according to the European Commission’s latest research.

A craft business can encompass many things: it could be hand dyeing New-Zealand-grown merino wool, conjuring up small batches of pickled vegetables or ‘upcycling’ home decor. It could also include joining the thriving craft beer market; in the US, small, independent brewers contributed $67.8bn (€58bn) to the economy in 2016, up nearly 22 percent from 2014.

Speaking to European CEO, Jonathan Burton, Festival Director of London Craft Week, said craft-focused events have also noticed a surge in interest. The week-long London festival aims to turn the spotlight on makers of all types and, according to Burton, has grown “incredibly quickly”.

In 2015, the festival held just 60 events; in 2018, that number had nearly quadrupled to 230. The rising interest in craft goods comes as consumers increasingly seek out artisanal products. Burton believes consumers desire products with

authenticity and provenance: “[Consumers] are increasingly discerning, socially responsible and want to engage with who, how and where something has been made.”

Hill, who has worked in the industry for more than 20 years, said consumers also crave personalisation. New independent retailers offering specialised goods, expert advice and a very strong one-to-one relationship with the consumer are replacing general one-stop shops. Hill said: “Despite what you hear, the younger generation does value an in-store, brickand-mortar location. However, it’s got to be different from what they could find online.”

Business is booming Profit-hungry entrepreneurs and corporations have also recognised the surge in crafting. Online marketplace Etsy is worth $5bn (€4.3bn) and has clocked up nearly two million individual sellers. Not only does the website give crafters a platform from which to sell their homemade wares, but its mission to “keep commerce human” is also proving to be a success. Shares in

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“ENGROSSING ONESELF IN AN ENGAGING ACTIVITY IS RELAXING, AND THE RESULTING PRODUCT CREATES A SENSE OF PRIDE AND OWNERSHIP” and Generation Z have the innate skills to make low-cost businesses prosper. Whether for good or bad, these generations are well versed in the side hustle. They are also digital natives, which Hill believes gives them a leg up: “They’re used to marketing and understand how to market online effectively, how to use Etsy, which made its stock market debut in 2015, rocketed to an alltime high in June after the company announced it expected sales in 2018 to grow by 32 to 34 percent compared with the previous year – 10 percentage points higher than earlier predicted.

Amazon is also lurking in the corners of the craft economy. The online retail behemoth launched its craft-focused arm, Amazon Handmade, in 2015. Although products are sold directly by artisans, consumers get the best of both worlds, as some qualify for Amazon Prime’s next-day shipping. In 2017, the firm boasted an offering of more than one million handcrafted items from thousands of artisans and small businesses.

Social media website Pinterest plays an influential role in the crafting world, too. The site, which acts as a digital bulletin board, allows crafters to browse for inspiration. Pinterest is reportedly planning an initial public offering in 2019, which would likely value the company at a whopping $12.3bn (€10.5bn). The website already has around 200 million monthly active

social media and [how] to use the portfolio of web services that are out there today to simplify a start-up.”

Many craft experts, however, suggest the time spent away from screens in today’s hi-tech world is a bigger draw. “In a frantic world, mindfulness has become something of a buzzword and feels like a happy by-product of many crafts,” Burton said. “Taking time to develop skills and explore personal creativity gives indiFrom hobby to career Today’s artisanal retailers skew viduals time to reflect, as well as younger than they have historical- express themselves through a wide ly, and it makes sense: Millennials range of materials.” users – a figure that has doubled since 2015 – and the firm’s user base is strong and engaged, making it a favourite for advertisers.

In addition to boosting the profile of the craft economy, these online marketplaces also encourage consumers to become involved. Now, more people are leaving traditional jobs to pursue a craft passion.

Hill, meanwhile, referred to it as “high-touch versus hitech”. At a time when people are increasingly spending their days in front of tablets, laptops and computer screens, high-touch activities present an opportunity to do something more physical.

Engrossing oneself in an engaging activity is relaxing, and the resulting product creates a sense of pride and ownership.

One of the main drivers of the craft economy is likely to be the desire to find meaningful work.

Careers website Escape the City was co-founded by Dominic Jackman after he left a London-based career in management consulting, having noticed both he and his friends were not happy in their jobs and were not working to their full potential. “I thought: this is such a waste,” Jackman told European CEO. “Why aren’t people working on work that matters?”

Escape the City now has close to 400,000 members and helps people change their career or turn their idea into a business. The firm’s start-up programme aims to assist entrepreneurs in breaking down and developing their ideas in a risk-free environment.

People often fear the financial repercussions of starting a craft business. But when Escape the City questioned members who had made the switch on their quality of life, work-life balance and finances, the vast majority felt they were not in a worse financial position, while every other category showed an improvement.

“Everyone’s looking for fulfilling work,” Jackman said. “People want to feel like they are actually contributing to a greater good.

I think once you’ve had a taste of it, you never go back.” n EUROPEANCEO

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WELCOME TO THE WORLD OF

CRYPTO MILLIONAIRES As the value of cryptocurrencies soared last year, a subculture previously confined to the dark corners of the internet entered the mainstream, writes Courtney Goldsmith Over the past year and a half, cryptocurrencies have stolen the spotlight in the mainstream media. Once relegated to discourse in online forums and Reddit pages, crypto chatter now makes headlines in national newspapers. This rise to fame was sparked by a meteoric surge in the price of bitcoin: in December 2017, the digital currency hit an all-time high of nearly $20,000 (€17,116), having climbed more than 1,900 percent in just under a year.

Although the price has now more than halved from its peak, the culture surrounding crypto assets has only grown more prominent in the public eye. The new crypto millionaires appear to be young, male and flashy. Rich tech entrepreneurs are gallivanting on yachts in Monte Carlo, celebrating their wealth by ordering bottles of vodka worth tens of thousands of euros.

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ken at numerous cryptocurrency conferences and attended the “crazy” after-parties. Speaking to European CEO, Aslam likened them to those thrown in The Wolf of Wall Street, a film based on the career – and social antics – of corrupt stockbroker Jordan Belfort.

The most intriguing thing of all, according to Aslam, was the fact many of these newly minted millionaires were just teenagers.

A man’s world Cryptocurrencies are often lauded for having the potential to transform the global financial structure into an accessible and democratic system. However, recent research by trading platform eToro revealed crypto investors were overwhelmingly likely to have one thing in common: a Y chromosome. Women make up just a sliver – 8.5 percent – of crypto investors. According to Forbes, bitcoin investors made $85bn (€72.7bn) in wealth last

year, with women sharing just $5bn (€4.3bn) of that total.

Online cryptocurrency forums and chats between investors on Twitter and Reddit often feel like a boys’ club, but the culture extends beyond the internet. For instance, in one now infamous example, the North American Bitcoin Conference featured 84 male speakers in 2018, versus just three women.

The official after-party – dubbed a “networking party” – was then held at a Miami strip club.

As cryptocurrencies move away from the dark corners of the internet and into the mainstream, women are starting to push back against the ‘bitcoin bro’ image that has come to characterise the industry. Iqbal Gandham, UK Managing Director of eToro, agreed the male-dominated culture behind cryptocurrencies is changing – you just need to look at some of the industry’s leading lights.

Gandham said: “In the past 12 months, at least, I’ve come across

more and more women, whether it’s on a development level, a business development level, a tech development level… [or in] the senior positions.”

Gandham named Elizabeth Stark, the CEO and co-founder of Lightning Labs, a firm working to make bitcoin payments faster, and Linda Wang, the co-founder of crypto infrastructure firm Lendingblock, as prime examples. “Could there be more?” Gandham asked. “Yes. Is there still a bias towards men? Yes.”

Hold on for dear life As the culture around crypto investing developed online, a language emerged that pulled the community closer together, creating – in Gandham’s words – a “tribal” effect. “I think with any new innovation, whether we look at when mobile phones first came into being, artificial intelligence [or] now cryptocurrencies, new industries do come up with a new language,” Gandham said.

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“CRYPTOCURRENCY FORUMS AND CHATS BETWEEN INVESTORS ON TWITTER AND REDDIT OFTEN FEEL LIKE A BOYS’ CLUB, BUT THE CULTURE EXTENDS BEYOND THE INTERNET”

The words and phrases also act as codes to investors in the know, signifying when an outsider has earned their stripes and can be accepted into the group. “If you meet somebody at an event and they understand the word ‘hodling’, they’re part of the team,” Gandham said. “They’ve done their research and they’ve understood more than the general individual on the street.”

‘Hodl’ is one of the words most commonly used by the crypto community. It originated in an online forum in 2013, when a bitcoin investor misspelled ‘hold’ while frantically typing out his explanation for not selling his coins. Now, the word has taken on new meaning – ‘hold on for dear life’ – and has become a state of mind for many crypto investors who believe the value of coins will always go up in the end.

Another popular term is ‘to the moon’, meaning cryptocurrency prices will appreciate to sky-high » EUROPEANCEO

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values. ‘Lambo’, meanwhile, is short for Lamborghini, and is used in a semi-joking manner to articulate how cryptocurrency investors dream of one day cashing in their investment. The phrases ‘when moon?’ or ‘when Lambo?’ are both ways of asking when a new coin will start to grow in valuation.

“It can be intimidating,” Gandham admitted. “If you’re in a crowd and suddenly people are talking about ‘mooning’ and you don’t quite know what that means – I guess it can be slightly intimidating. But I don’t think the words are offensive in any way, shape or form, and I think eventually they will become mainstream.”

Hitting the street As hordes of young, often nerdy men start looking to splash their newfound fortunes, many have funnelled into an industry that shares an interesting intersection with cryptocurrencies: luxury streetwear. Streetwear is rooted in youthful, effortless fashion from urban areas. It was popularised in the 1980s and 1990s, taking inspiration from surf and skate 168 | EUROPEANCEO

culture, as well as the increasing popularity of hip hop. Streetwear connoisseurs often flaunt casual T-shirts, sweatshirts, baseball caps and trainers but, in the luxury vein, these pieces can cost hundreds or even thousands of euros for a single item. In recent years, streetwear has been adopted as a mainstream style, with luxury brands such as Louis Vuitton, Jimmy Choo and Balenciaga swooping to collaborate. This is no surprise, considering the streetwear market gives brands access to two sought-after categories: Millennials and men.

According to a study by consultancy firm Bain & Company, high-end streetwear helped boost global sales of luxury personal goods by five percent last year to an estimated €263bn. Further, Millennials and Generation Z fuelled 85 percent of luxury growth in 2017. T-shirts, down jackets and trainers were among the year’s standout categories, with sales growing by 25 percent, 15 percent and 10 percent, respectively.

Balenciaga is one luxury brand that has fully embraced the edgy, carefree style of streetwear. At a

recent luxury goods conference, Balenciaga CEO Cédrec Charbit said the Millennial and male segments were growing faster than any of the company’s other categories. A survey by investment bank Piper Jaffray, meanwhile, revealed that teenagers favoured brands embracing the ‘street’ aesthetic.

Supreme, one of the sector’s most notable names, jumped three places to rank seventh in the survey.

Speaking to European CEO, Dr Dimitrios Tsivrikos, a consumer and business psychologist at University College London, said crypto millionaires are attracted to streetwear because it screams money and power while still being rooted in reality. Tsivrikos believes crypto investors are looking to understand and engage with fashion, but also “want to be part of a

“WOMEN ARE STARTING TO PUSH BACK AGAINST THE ‘BITCOIN BRO’ IMAGE THAT HAS COME TO CHARACTERISE THE INDUSTRY”

new wave of customers that have one leg in heritage and one leg in contemporary culture”.

As such, the luxury market has been flipped on its head by the streetwear trend, and Tsivrikos believes the industry will have to become more democratic as a result: “The old luxury of being exclusive for the sake of it will definitely shrink as a market.

It’s no surprise [when] you see who’s being hired at the moment in key fashion houses.”

Luxury brands are appointing significant people in the streetwear industry as creative directors.

And this, according to Tsivrikos, shows brands are “acknowledging the importance and continuation of streetwear as the new way, as the new type of luxury, which has a bigger, broader appeal”.

The relationship between streetwear purveyors and crypto millionaires is not entirely onesided, either. Earlier this year, California-based streetwear brand the Hundreds featured a blog post on its website singing the praises of blockchain – the technology behind cryptocur-

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CRYPTO SLANG: Alt-coin

Standing for ‘alternative coin’, this term is used to describe all crypto assets other than bitcoin

FUD

Fear, uncertainty and doubt. Investors use this acronym to dismiss negative stories about cryptocurrencies they believe to be baseless

Hodl

rencies such as bitcoin – calling it “era-defining technology”.

After describing some possible adaptations of the distributed ledger technology, the post continued: “This is without even addressing what blockchain could do for small businesses (like the Hundreds) – imagine the cool things you could do with inventory and for customer experience if you could assign each T-shirt or sneaker… a unique and secure global identity on the blockchain that nobody can fake or tamper with.”

Alongside this statement, the Hundreds announced the release of a crypto-inspired T-shirt, available for purchase in the US with bitcoin and other cryptocurrencies via a Coinbase account.

Streetwear brand HYPEBEAST, meanwhile, began accepting bitcoin as early as 2014, claiming the “newfound digital currency [seemed] to have found a lasting presence in the democratic digital landscape”. Other brands, such as Fancy, Jeffersons Apparel and Kicx Unlimited, have also encouraged customers to purchase their products with bitcoin.

Dating back to 2013 when a crypto investor misspelled ‘hold’ in a forum, the term has become a mantra among investors: hold on for dear life

Lambo

Shortened from Lamborghini, this word is used half-jokingly to describe what crypto investors plan to spend their riches on

Nocoiner

Someone who has never invested in bitcoin. Often used when discussing those who dismiss bitcoin or say it is a bubble or scam

To the moon

A phrase shouted jubilantly when one believes a coin’s value will appreciate to a skyhigh valuation

Weak hands

A term reserved for those who do not hodl when the price of a coin drops, nervously selling their coins instead

Whale

A name assigned to those elite few who hold the vast majority of the world’s crypto wealth

When Lambo?

Crypto millionaires are giving in to a more traditional splurge of the elite too: supercars. Ivan Soto-Wright left his traditional job as a risk management consultant in the financial services industry in 2015 to work in fintech. He made a speculative cryptocurrency investment way back in 2012, when a single bitcoin was worth between $4 (€3.42) and $15 (€12.84). As the price of bitcoin ticked higher, Soto-Wright became increasingly interested in the concept of cryptocurrencies.

He eventually founded MoonLambo (later MoonAssets), a company that planned to make it easier for people to buy luxury cars with cryptocurrencies.

Speaking to European CEO, Soto-Wright said: “I saw the most common terms among the trading chat were ‘going to the moon’ and ‘Lamborghini’, so I said why don’t we take those concepts and launch this website and see what happens? Let’s give these guys a marketplace where they can spend their cryptocurrency. And I was just shocked by the take-up.”

Now, Soto-Wright is Managing Partner of Hodl VC, a venture capital fund that is incubating and building MoonAssets. The website currently works as a lead generation platform for dealers that accept cryptocurrency as a means of payment. In the future, Soto-Wright plans to integrate directly with the dealerships, giving them the tools to accept cryptocurrency as a payment.

Soto-Wright said many early crypto investors have jumped to the high-net-worth category, but there are not very many places they can spend their cryptocurrency safely. “Although there’s a slight premium we charge for that service, people are really excited

by the prospect of not having to convert their cryptocurrency into cash and being able to spend that directly on the platform we’ve created,” he said. MoonAssets is also looking beyond supercars to more dynamic luxury sectors, with private listings for yachts and even islands already listed on its website.

But not everyone agrees that Lamborghinis and private islands are taking crypto investors by storm. Gandham, who has been involved in the tech industry for decades, said: “I’m yet to find – and I continue my search – anybody in the crypto industry who’s actually gone out and bought a Lamborghini. They haven’t. It’s more of a mythical creature, like a unicorn.”

Gandham said he suspects if one were to go out and buy a Lamborghini, they would be looked down upon in the crypto community. “They’re not your typical investors and traders from the city,” Gandham said. “Those that are serious about developing blockchain technology are very humble.

“The individuals in the industry very rarely talk about money. They very rarely talk about wealth, about how much cryptocurrency they actually own. They talk more about the innovation and the technical side of it – that’s what really sparks their interest.

They’re not going to wear Rolexes and Cartier... and go driving around in a Lamborghini.

“For the [individuals] who are [only] interested in money… [cryptocurrency] is just a route to making more money. It’s not about the technology and the innovation.

The individuals who are empowered by changing society – the way we work, the way we function – for them, it will always be the technology.” The true crypto believers, it seems, are still hodling. n EUROPEANCEO

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TROUBLE BREWING

FASHION THAT DELIVERS

A group of Belgian monks has pored through 35,000 books and files in the archives of a Flemish abbey in an attempt to find an old beer recipe. The tradition of monks concocting dark brew stopped in 1797, as a result of the chaos created by the French Revolution. No one has been able to recover the original instructions as of yet.

$200 A movement that sees mundane items repackaged as expensive clothing has taken off. The trend, dubbed ‘anti-fashion’, has been popularised by Zurich-based fashion house Vetements, which offers a $200 (€172) T-shirt inspired by courier company DHL. Other companies have produced similar products, with Spanish luxury brand Balenciaga even marketing an item akin to IKEA’s blue carrier bags. Unlike the Swedish furniture maker, however, Balenciaga charges $2,145 (€1,842) for its holdall.

200 The Palais de Tokyo has welcomed 200 people to its premises for a nudist evening.

Unclothed attendees at the contemporary art museum, which is located by the Eiffel Tower, were given a tour of the building and a private cocktail party on the rooftop. The Paris Naturists’ Association called the event “a day to remember”.

TO TURN EVERY 10 CENTS In the Dutch city of Helmond, drivers are being rewarded for staying within the 30km/h speed limit. A ‘speed-meter money box’ has been installed, rewarding motorists €0.10 each time they’re found to be abiding by the law. The maximum a vehicle can receive is €0.50 per day. In 2010, Sweden adopted a similar approach with the ‘speed camera lottery’, entering well-behaved drivers into a cash prize draw. Speeding reduced by 22 percent as a result of the initiative.

BEEN THERE, DUN THAT

6th Scotland’s fourth-largest city, Dundee, has found itself sixth on Lonely Planet’s Best Places to Visit in Europe in 2018 ranking.

Lonely Planet is keen to reduce overtourism through the promotion of lesser-known destinations in its annual guide. Dundee impressed the company with its urban redevelopment, historical monuments and “dynamic, creative spirit”. The overall winner of the publisher’s ranking was Emilia-Romagna in Italy, which is renowned as one of the country’s best destinations for food.

170 | EUROPEANCEO

MIND YOUR LANGUAGE

314 Protestors in France have campaigned against the use of gendered words. A total of 314 teachers have put out a public appeal to challenge the grammatical tradition that puts “the domination of one sex over the other”, and have said the current state of play makes women invisible. Linguistic purists are not happy about the campaign; the Académie Française has called the idea an “aberration”, and suggested the French language could be in “mortal danger”.

¤0.10 BLUBBER MOUTH

28

%

In spite of huge international opposition, Norway has announced a 28 percent increase in its annual whaling quota. In recent years, whaling has become less prominent, with industry workers attributing the decline to the lack of capacity at whalemeat processing plants. Animal rights organisations, meanwhile, blame the lack of consumer interest. Norway, Japan and Iceland are currently the only countries that authorise whaling.

C18JA_001_Y02_60885.pdf

WELCOME TO THE TECHNOLOGY INNOVATION DESTINATION. Virginia Beach’s future is fueled by innovative technology. The world’s fastest and highest-capacity subsea data cables installed by Microsoft, Facebook and Telxius now connect Virginia Beach to Europe and South America, with a third cable recently announced to South Africa. And, a carrier-neutral colocation center developed by Globalinx will connect carriers directly to the MAREA and BRUSA cables, which means businesses in Virginia Beach can reach customers around the globe more quickly and efficiently than from anywhere else in the world. Our world-class telecom system is primed for growth, boasting a data center park with available sites, certified power requirements, fiber access hubs, and reduced tax rates on data center equipment.

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4525 Main Street, Suite 700 · Virginia Beach, Virginia 23462 · 757.385.6464 · YesVirginiaBeach.com

MOF | Timeline Advert | European CEO | 280 x210 | CMYK | BB&P | +1 345 949 2933 | info@bbandp.com C18JA_001_Y09_40283.pdf

Significant Enhancements in Financial Services

Mutual Administrative Assistance Convention in Force

Implemented International Agreed Tax Standards Restructured Global Forum, Steering Group & PRG Membership IMF Report Grand Court Opens Financial Services Division

2008

2009

2010

Global Forum Supplementary Report UK Bribery Act Extended to Cayman

2011

OECD Anti-Bribery Convention

First Phase of Basel II completed Global Forum Phase 1 Report

Global Forum Rating: Largely Compliant

MMOU Signed with IOSCO

2012

36 Tax Information Exchange Agreements

MOUs with ESMA members

Multilateral Competent Authority Agreement Signed

FSB: Cayman Strongly Adheres to International Standards

Vice-Chair, Global Forum’s Peer Review Group

2013

AuditorOversight Authority

2014

1st OT to sign UK FATCA

1st OT to Announce Model 1 IGAs for US, UK FATCA

Continued cooperating with the EU on fair taxation

Bearer Shares Abolished

2016

2017

2018

1st Bilateral AEOI, US FATCA

Joined BEPS Inclusive Framework

CRS Regulations in Place

BEPS Country-by-Country Reporting by 2017

Cayman AEOI Portal Opens

Mutual Administrative Assistance Convention Extended to Cayman

BEPS Country-by-Country Reporting commences

2nd Bilateral AEOI, UK IGA

2015

1st OT to support UK’s G8 Agenda on tax and transparency

Anti-Corruption Law

Revamped Accountants Law

CRS Early Adopter

112 EOI Partners

Amended Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing

Global Forum Rating: Largely Compliant First CRS Exchanges EU commitment on fair taxation Enhanced Beneficial Ownership Legislation Commenced Revamped Anti-Money Laundering Regulations

31 Tax Agreements Global Forum Phase 2 Report

Non-Profit Organisations Law Commenced Money Laundering Regulations, including Beneficial Ownership Data Collection

Basel II implementation Began Freedom of Information Law FRU becomes Financial Reporting Authority

CFATF Third-round Evaluation Completed

2007

2005

IMF Review Tax Information Authority Law EUSD Implementated

2004

2003

Guidance Notes, Prevention & Detection of Money Laundering

2002

Financial Reporting Unit (FRU)

CIMA granted operational independence

Advance Commitment, International Transparency & EOI Standards

Audit Office (Independent of Executive & Legislature)

OECD Working Group: Produced Model TIEA

Member, Global forum EOI Working

Mutual Legal Assistance Treaty with the US

2001

First tax information agreement with the US

2000

1990s 1980s

Cayman Islands Monetary Authority (CIMA)

Terrorism Law

Cayman Islands Stock Exchange

Criminal Justice (international Cooperation) Law

Proceeds of Criminal Conduct Law

For more than 50 years, the Cayman Islands has taken definitive actions to build and maintain a globally compliant financial services regime.

This timeline demonstrates all the legislative and regulatory measures taken by the Cayman Islands in its continuous cooperative efforts to adhere to all agreed international standards.

These actions allow the Cayman Islands to be self-supporting, and to provide economic value to other jurisdictions worldwide.

Companies Law Banks & Trust Companies Regulations Law The Trusts Law

1970s 1960s

Insurance Law Banking Inspectorate

Tax Transparency & Cooperation Regulatory Compliance & Cooperation Anti-Corruption AML/CFT (Beneficial Ownership)

© 2018 Cayman Islands Ministry of Financial Services