Market view and Insights
Management consultant Roland Berger talks on loyalty, globalization and home.
Mr. Berger, as a management consultant active all over the globe, you have insight into all kinds of companies in all kinds of cultural contexts. How important is loyalty to them today – and what does it actually mean?
People used to say you should be loyal to your clients, your employees, and your country. That’s changed a little today, if you consider that a company such as Siemens is active in more than 190 countries. But what hasn’t changed is the fact that sustainable success is something you can’t achieve alone – even top managers know that today. You can only achieve great things in collaboration with other people – be they researchers, engineers, or your own employees in factories, sales, and services.
What does that mean in concrete terms?
It means that loyalty has remained an important virtue, even in our era of digitalization and globalization. People work for and with other people – whether they happen to be doctors, cobblers, or factory workers. They know that they are dependent on each other. That’s why loyalty really counts.
You say everyone works for someone else – does that even apply to investment bankers?
Of course! The investment banker is a peculiar species shaped by the Anglo-Saxon financial world, and he had to be reined in. The financial crisis and regulations have made these bankers less speculative, and they have become less and less able to make monopoly profits in so-called imperfect markets. But they still exist today. I remain convinced that if you want to achieve something in life that’s lasting – whether in business, science, or culture – then you have to involve the most diverse kinds of people possible. You can’t make it alone anymore in our networked, complex world today.
You mentioned Siemens. What bond – or loyalty – do these globally active companies have to their home country?
A company isn’t an entity set apart from history. It is influenced by the place where it was created and from which it was able to grow. That’s why Nestlé keeps its headquarters in Switzerland, for example, even though in logistical terms another site might make more sense. Roots are vital to a corporate culture, regardless of whether those roots are Swiss, German, or American.
A company loses face and character if it neglects its origins. The German carmakers produce their cars all over the world, but it would be a big mistake if they were to deny or forget their home country. There is still an interdependency between place and company. Because the place, too, profits from it: Companies create jobs, generate tax income, and invest in infrastructure. The cultural life of the city of Basel, for example, profits from the contributions made to art and music by companies such as Novartis and Roche. Tell me, were you ever in Ditzingen?
That’s where the Trumpf family company is based, which has a turnover of just under 4 million euros with its tool and laser-machine production. The company’s loyalty is naturally to the inhabitants of Ditzingen. They know the municipality, and they help out when there are money problems, whether it’s a matter of supporting the local Bach Orchestra, a school, or the football club. You can act on the global stage and get involved in culture and education at all your sites across the world, but it doesn’t mean you have to neglect your roots. That’s what successful globalization is about.
So what about you personally? You advise companies all over the world and you’re constantly traveling, even today at the age of over 80. How important to you is your home city of Munich?
I am a global citizen of European origin. I was born in Germany, and my home is in Bavaria. I very much like being in my home city, I love seeing my children and grandchildren, going to the opera here, attending a concert by one of our three world-class Munich orchestras, or cheering on FC Bayern in the football stadium. I also like eating “Weisswurst,” the local white sausage. What I’m trying to say is this: I know that in bars and in the media, people often describe the global elite as being “homeless.” We’re here today, somewhere else tomorrow. But I think that’s an exaggeration, because we all belong to a certain place. We all have roots and like to cultivate our old friendships, even if we’re traveling to China ten times a year.
This global elite has indeed been discredited recently. It’s not like in Thomas Mann’s day, for example, when the elite and the upper bourgeoisie were still highly regarded, and were seen everywhere as role models.
I don’t know about that. I didn’t live in Thomas Mann’s day, but I’ve lived 80 years on this Earth and I know that most people feel they need elites for their own good. After all, there isn’t just one elite. There’s the science elite, the business elite, the cultural elite, and many more elites – let’s call them the organizing and leadership elites. They work for the common good, they create jobs. Naturally, money was always one of the drivers of globalization. Textile companies began to expand into Asia because workers were cheaper there. Sure. But that’s just one side of the story.
So what's the other side?
A company opening a factory in another country assumes responsibility on the spot. It pays taxes there, and invests in training the locals. For me, globalization is one of the most important sources of knowledge transfer and educational transfer. I certainly wouldn’t like to live in China, but what’s been created there in economic terms in the past 40 years is extraordinary. The Chinese say to Western companies: You can produce or sell your goods here, but only in a joint venture with a Chinese company. That has provided a gigantic transfer of knowledge and technologies, and an incredible economic boom. In 1980, China had the same GDP per capita as India. Today, it’s five times as big. It doesn’t mean that poverty has been eradicated in China, nor that everything is wonderful there. But the Chinese don’t forget about those sections of their population who are still poor. The illiteracy rate in Germany lies at roughly eight percent; in China, it’s considerably lower.
Born in Berlin in 1937, he studied business management at Ludwig Maximilian University in Munich, and at the same time set up a laundry service. Before founding the consultancy that bears his name in 1967, he spent five years learning the trade of the management consultant in Milano and Boston.
Today, Roland Berger Holding GmbH employs 2500 people in 35 countries and is one of the leading players in global top-management consulting. Roland Berger has been Honorary Chairman of its Supervisory Board since 2010.
And yet people say that a process of disengagement is underway. The life of a top manager at Siemens has little in common with that of a factory worker, even though they both live in the same place. What’s your opinion of this development?
Roots are vital to a corporate culture. A company loses face and character if it neglects its origins.
You’ve got to differentiate here. It is indeed dangerous if parallel societies are formed that don’t speak to each other. 70 percent of all Europeans live no further than 20 miles from their home town. But most of them have trust in the globally active elites, at least that’s my impression. If they drive over a bridge, they expect it to remain standing. And if they get sick, they get treated by top physicians, and they are all constantly utilizing the fruits of technological innovation. I don’t see any general mistrust of our elites in this.
We live in an envious society, at least here in continental Europe, and especially in the German-speaking countries. And certain media like to promote conflict in the way they report on things, such as when they revealed how much Daniel Vasella earned at Novartis or Martin Winterkorn at Volkswagen.
Right now, globalization is being attacked quite vehemently from an unexpected quarter: US President Donald Trump is threatening to put up walls, impose higher tariffs, and place immigration restrictions on people belonging to “foreign” religions.
It’s understandable that globalization scares people. Trump is toying with this and wants to win elections. But it’s a mockery, of course, that it should be a US president who wants to increase tariffs and is so focused on his own nation, because it was primarily the American economy that was the initial driver of globalization and the global division of labor. And the USA also profits from it.
But it’s not just Trump who’s promoting national borders. There are right-wing populists all over Europe, not least in Germany, where you have the AfD, the so-called “Alternative for Germany.” And on the other side you have left-wing critics of globalization who protest that having our T-shirts produced in Bangladesh is exploitative. Is the era of unfettered globalization at an end? Or, to put it another way: Are people once again withdrawing behind their own borders because they want to stay loyal to their own citizens?
80 percent of the jobs that vanish will be lost to technological progress, but that progress will also create new jobs – even for those who lose out from globalization. Do we really want to reject progress if it’s going to create productive work and prosperity?
What is wrong about wanting to help those who’ve been left behind by globalization?
Nothing at all. But with politicians like Trump, I doubt whether they’re really bothered about these people. Such politicians simply have a different agenda for power. It’s also interesting that politicians still work primarily on a local basis, because that’s where their voters are.
Compare that with scientists – if they don’t publish in international journals and don’t speak at least two languages, they have no chance today. But we don’t always have to complain about Mr. Trump alone. We find the same tendencies in Europe. Politicians are focused on getting reelected, even though they ought to be more concerned about the greater good. Let’s assume that young people here want to get involved in politics. They start their political career in the local party, then they move up to the regional association, and then to the federal level. And everywhere they learn how to win over a majority. At the age of 35 to 45, they’ve become so set in their ways about wanting to satisfy the majority that they are too timid to embrace the truly innovative concepts and focus on the topics that are actually relevant to the future of their country.
We were talking about loyalty. People say that politicians are opportunists. Are politicians always loyal to the majority, and do they spend too much time telling voters what they want to hear?
We are living in what I call a clientele system. It’s problematic because it’s not democracy as we used to know it – the kind of democracy that guaranteed personal liberty and freedom of competition for entrepreneurs and employees alike, both enabling progress and promoting it.
Can you please explain that?
Every party has its own clientele. There are the retirees, for example. In Germany, they generally vote for either the Christian Democrats (CDU) or the Social Democrats (SPD), in other words for the two mass parties who promise the voters pension supplements in every new parliamentary session. Then there is the Green Party. They also have their own clientele, and they tend to attract the successful, urban middle classes and young people. Two-thirds of their voters are under 35, whereas only 20 to 25 percent of voters of the two mass parties are of that age. The way in which you can win a majority in Germany today is problematic. Politicians pay more attention to short-term voter surveys than to the long-term needs of society.
You have advised many politicians, such as the former Federal Chancellor Gerhard Schröder. But you paint a pretty pessimistic picture of politics in general.
There are politicians who achieve great things and who can recognize the signs of the times, like Gerhard Schröder did. History shows us that the best politicians always come to power after a big crisis: Konrad Adenauer, Charles de Gaulle, and Ludwig Erhard were all larger-than-life figures. They were the founding fathers of the European Union and were jointly responsible for 75 years of peace, democracy, and increasing prosperity in Europe. As a result, it’s highly likely that Western Europe will never experience war again – at least, I hope that’s the case.
Let’s return once more to those left behind by globalization. People who feel left out to dry. Do you understand their worries and their anger against those “at the top”?
Of course. They feel left behind by technological progress, and we have to take their worries seriously. We don’t even know yet how digitalization and future technological progress will impact on the working world of tomorrow. It’s natural for people to worry if they work in sectors that are being overrun by digitalization.
Established: 2008 by Prof. Roland Berger
Goal: Equality of opportunity. With its “German school scholarships,” the Foundation supports talented children and young people who have started their school education under difficult circumstances. Fundamental to the work of the program is providing each child with support from a voluntary mentor.
But it also offers incredible opportunities. A new banking system is emerging in Kenya, but not by opening new branches. People carry their account around with them on their smartphone. Farmers in remote corners can check at all times what the price of grain is in Mombasa. That means there is less chance of them being exploited by middlemen.
What can we do to assuage people’s concerns?
It’s important to keep them informed. You have to be prepared to engage in dialogue. Be objective and transparent. And don’t scaremonger. Because in global terms, things are better than people generally assume. In 1980, 44 percent of the world’s population was poor. According to the United Nations’ definition of poverty, that meant they were living on less than 1 dollar and 25 cents a day. Today, only ten percent of people live in poverty, even though the world’s population has grown rapidly. Education is the most fundamental weapon in the fight against poverty. And in poor countries, education comes about through globalization. On the other hand, some things are in a sorry state, even here in Germany. The child of a university graduate is still four times as likely to get a degree than the child of a worker. We still don’t have any real equality of opportunity here. This is where the Roland Berger Foundation can play a role, because we’re trying to rectify this. We have to ensure that children grow up with the best possible education and get the support that suits their abilities. That is the surest guarantee of success, not least in the struggle against the right-wing populists.
What do you mean by that?
There is a positive correlation between low educational standards and trust in populism. When you look at what people in Great Britain were promised with Brexit, it’s outrageous. It will be a disaster. And at the risk of repeating myself, I’m afraid we have to hold the media to account in this. If I look at the most important talk shows here in Germany, I see scandal and distorted reporting.
Worst of all, far too little explanations are given. It’s hardly surprising that almost no business leaders take part in talk shows in Germany. The people who take part in those panels are largely hostile to business. What’s more, the participants are always being cut off when they speak. There’s no discourse any more, just phrasemongering.
You’ve mentioned your Foundation – what exactly do you aim to achieve with it?
We are trying to create more equality of opportunity in education. That’s why we provide support for talented children from deprived families who are eager to learn, and we do that from their first year of school up to their high-school certificate. We’ve proven that our scholars get better grades than the average in Germany, even though they come from so-called uneducated homes. It shows that individual mentoring helps.
Every year, each child gets an individual curriculum and is assigned a voluntary mentor who helps him or her to participate in civil society. A second “pillar” in our system is our Human Dignity Award. We are supporting organizations in Africa that campaign against genital mutilation; we’ve given financial aid to women in India who’ve developed an app to let them call for help quickly and safely if they are accosted by men. We provide our award winners with support in their future plans and activities; we don’t give the award simply for what they have achieved in the past. That’s an important point, and it puts us in a unique position: we’re always concerned with effecting positive change, and with the future!
Photo in header: Keystone-SDA / IMAGEBROKER / Norbert Michalke.
This interview was published in Credo, LGT’s magazine about wealth culture. Published twice per year, it features interesting portraits, unexpected interviews and fascinating coverage of everything relating to wealth culture.
Learn more about Credo.