proximity and distance - pwc · daniel joggi, president of the paraplegics foundation. 14 “we are...

May 2011

The magazine for decision makers.

Dossier valuesWhat are values? How are they defined and lived? Executives from Cartier,Läderach, PSP, the Paraplegics Foundation and other Swiss organisationsreflect on what they perceive to be most valuable.

Value insights

CORP-1104-10290

HealthcareEntrepreneurial opportunities Page 29

Global employment marketHR strategy is a C-suite responsibility Page 39

Getting to grips with conflictGovernance makes family businesses more able to act Page 36

Max Manuel Vögele“It’s a matter of finding the right path.” Page 39

ServicePublications and contacts Page 41

ceo editorial 3

Dr Markus R. Neuhaus, CEO PwC Switzerland

“In times of change and turmoil it can help to revisit our core values and take guidancefrom them.”

We live in extraordinary times, and howevervaried the causes may be, they’re all highlysignificant in terms of our future and oureconomic development – in Switzerland aswell. In times of change and turmoil it can help torevisit our core values and take guidancefrom them. You might get the impression thatcurrent events in North Africa are shaped bythe fact that humanitarian values have beensuppressed there for too long. The individualfreedom and basic values embodied in ourWestern enlightenment world view are be-coming more important. With the shift in thepolitical and economic balance of power thequestion arises as to whether a fundamentalshift in values is also taking place – valueswhich are difficult for us, with our historicaland cultural background, to accept. Values, value, valuable: few words have somany different or weighty meanings andinterpretations. For this reason we thought itwould be worthwhile to look into the wholeconstellation of meanings and points of viewsurrounding the word “value”. The scope of this magazine is very broadindeed. But that tends to be how life is. Atleast that’s how we regularly experience it inour work as advisors and consultants. We’vedecided to concentrate on the things that areof value to our clients. And because we real-ised long ago that you’re usually way off themark if you project your own ideas and beliefsonto other people, we’ve tried very hard tounderstand what each of the people we talkto sees as valuable. Being a good listenerhelps, as does asking the right questions.You’ve just got to do it.

I hope you’ll find this issue a source of valu-able insights and thought-provoking ideas,and wish you interesting reading.

Markus R. Neuhaus

The Swiss economy is growing, Swiss com-panies are doing good business again, andpeople in the Swiss employment market areonce more feeling like they’re in demand. Butdespite all this, and for all the positive signalscoming out of Switzerland, there’s no realsign of enthusiasm. The things happeningaround us are simply too confusing, discon-certing and worrying. On one side, in the wake of the financial andeconomic crisis we have European countrieswhere it’s hard to tell how close they are toeconomic ruin, and what problems this mightyet cause for the European monetary union. On the other side we have Arab states withstructures teetering on the verge of collapse,and the bloodshed these changes entail. Andthen there’s nature, encroaching on the fatesof so many people in the form of earthquakesand floods, and giving us a stark reminder ofjust how vulnerable a highly developedeconomic power like Japan really is.In the wake of Fukushima things are nolonger the same – not only for those directlyaffected, but for the whole planet. The energysupply is crucial to our lives on earth, and ithas to be fundamentally rethought.

Publisher: PricewaterhouseCoopers AG ceo magazine, Birchstrasse 160, CH-8050 Zurich, Switzerland

© 2011 PricewaterhouseCoopers. All rights reserved.

ceo contents 54 ceo contents

“I am very honest in my relation-ships to others,” says Dr AnnaGamma, Zen teacher and director of the Lassalle Institute.8

“When you get too close to oneside, it reduces trust on theother,” says economist PeterSiegenthaler.6

“Luxury is the art of beingunique,” says Bernard Fornas, CEO and president of Cartier.42

“People don’t need culture; theyhave it,” says Martin Heller, self-employed cultural entrepreneur. 50

“We invest in increasing value,”says Dr Luciano Gabriel, CEO of PSP Swiss Property AG. 54

“The closer the target, thegreater the risk of losing shots,”says Martin E. Kessler, insurance broker and golfer.10

“You develop a different per-spective on things,” says DrDaniel Joggi, president of theParaplegics Foundation.14

“We are strongly attached to ourroots,” says Ralph Siegl, CEO of Ennenda-based confectionerLäderach AG.18

“Every relationship has a purpose,” says Martin Naville, CEO of the Swiss-American Chamber of Commerce.24

Dossier valuesEconomists have definedthe concept of value theoretically. But what do values mean in practical terms? How are they lived? In ourdossier, Swiss business executives reflect on what they perceive to be valuable in their personal lives and their organisations.12

Setting yourself goals

Forum proximity/distance

Thomas Brüderlin and JosefBachmann climb MountKilimanjaro and come away withdifferent experiences.58

Value insights

Medical care: The healthcare system of thefuture will be based on personalised medi-cine. Individuals will become managers oftheir own health profiles. Providers of med-ical services will have to get used to newtypes of relationships – with their clientsand with each other.29

Global job market: A lack of qualified work-ers can undermine the successful imple-mentation of a company’s growth strategy.Solving this problem in future will requirehuman resources management to find newways of collaborating across borders and todevise new organisational structures.32

Managing conflict: Family-run businessesmust consider the interests both of thecompany and of the family. For well-ledfamily businesses, the key to balancingthese interests is not just corporate governance but also family governance.36

Max Manuel Vögele: The chairman of the board of directors of Karl Vögele AG onsuccession planning and governance infamily businesses.39

Service: Events, publications and analyses.Subscriptions and contacts.41

ceo 1/11 contents

Cover: Markus Bertschi, Cartier

ceo forum 76 ceo forum


As a top-level civil servant, I was entrusted by four different FederalCouncils with finding solutions for a whole range of problems. For me,the two most impressive ones were the aviation and banking crises.The collapse of Swissair triggered a multitude of emotions. At thetime, many people were directly and personally affected, whichcreated a great deal of proximity in addition to the material problems. Proximity does not necessarily make the task of finding a solutioneasier. Back then, it was a permanent balancing act between theperspective of those affected and attempts to gain distance and definea common direction. At the time, I felt that being too close to oneparty made it difficult to be seen as a fair mediator. When you get tooclose to one side, it reduces trust on the other.Extreme pressure can generate strong identification with the task athand. Many people then give up. Proximity is created among thosewho stay, which makes it very difficult to say, OK, let’s stop this; let’sstart all over again. But sometimes it is precisely this hardness anddistance that is required to bring a development under control.I experienced the financial crisis from an entirely different perspec-tive. The Banking Commission, Financial Administration and NationalBank had already been in contact with one another since 2002 fortalks about a possible crisis among major banks. There were sandtable exercises on the possible impact, measures and legal bases. Thiswas an intellectual process, and at the same time the discussionsamong the parties involved created a good deal of trust, trust whichwas very important in the crisis. When the crisis actually happened,the risk was great but not as imminent as with the collapse of Swissair.Everything was handled in a very cool and objective manner, althoughsome of the people we were negotiating with – and this is a historicalfootnote – were the same ones as during the aviation crisis.This general tenor was continued in the “too big to fail” discussion,where all the affected parties sat round one table with the aim of plot-ting a course between the various concerns that was acceptable toeveryone. I tried to remain a fair mediator in this situation. To solveproblems, you need a certain proximity to the parties involved. But

Peter Siegenthaler: “When you get too close to one side, it reduces trust on the other.”

when that proximity becomes too intense, it prevents a solution frombeing found. It is not like in physics where a resultant can be reliablydetermined. During negotiations, the impact of various influencescannot be calculated. You listen, assess the conflicting interests andderive a possible solution. Of course, we feel ourselves closer to people who have views andbeliefs similar to our own. But in crises, you also get to better know thepeople from whom you previously kept your distance. Crises offergreat freedom for personal development. You quickly realise that reli-ability and trust are essential to finding a solution. It only becomesreally difficult when you discover that one of the parties involved istrying to feather his own nest using unfair methods.As the president of the Association of Swiss Cantonal Banks, too, oneof my tasks is to find common denominators. With 24 autonomousinstitutes, that is no walk in the park. Finding new ways of collaborat-ing is a long and rocky road. Here as well it is all about steering thevarious concerns into one common direction. Everyone has to foregosomething to enable us to win together.

Economist Peter Siegenthaler joined the Swiss FederalFinance Administration in 1982 and was its directorbetween 2000 and 2010. He managed numerous projects of national importance and on behalf of the Federal Council took on the operational management of the stateinterventions in the crises at Swissair and UBS, as well as the presidency of the Expert Commission on “Too Big to Fail”. Since 2010, Siegenthaler has held the office of president of the executive committee of the Associationof Swiss Cantonal Banks.

Photo: Helmut Wachter


Everything starts with us. We can only be as close to other people aswe are to ourselves. But how do we really get close to ourselves? Howdo we find out the real meaning of our lives, what makes us unique,what makes us happy deep down? Quite simply, by turning inwardsand experiencing what Meister Eckhart, a famous German mystic,formulated in the following question: “Why do you not draw on yourown powers? You carry all truth in you.”A simple and effective means to do so is Zen meditation. Seclusionstarts with silence. It is indeed a challenge to sit for a longish period oftime in a straight, upright position with your legs crossed on a medita-tion cushion, without moving and with your eyes open. The actual andvery easy exercise of Zen means directing awareness to observing yourbreathing.I came into contact with the practice and philosophy of Zen more than30 years ago. I have been fascinated by it ever since. Zen Buddhism,founded in the sixth century in China, opens a way to experience theunity of all life directly. A multitude of thoughts race through our minds every day, continu-ally going over what we do. Ignoring the fact that they often focusunproductively on the same topics, they narrow our perspective andcloud our vision. The first goal of Zen is thus to bring calm to this flow of thoughts. Ifthis exercise is continued, Zen can bring about a radical form of self-encounter. For many of us who are frequently exposed to externalconstraints and barely have any breaks for “me time”, this process canbe a painful one. At the same time, it is liberating and enables us torecognise what is really important.Those who seek seclusion in Bad Schönbrunn are looking for themeaning of life and for their true being. In the room of silence, courseparticipants can learn about their unique potential. This self-examin-ation gives rise to the strength to develop a code of ethics from holisticconsciousness. By ethics, we mean a culture of values, i.e. we learn toperceive life in all its forms and to make intelligent appraisals basedon this and act accordingly.

Anna Gamma: “I am very honest in my relationships toothers. I am open towards them and allowthem to be open towards me.”


We wish to enable people saddled with responsibility to dig downdeep within themselves and to ask questions such as: what is essentialfor me and how do I shape my life based on this? The problem of ourtimes is that many people have lost their intrinsic trust and content-ment.How do I maintain the balance between proximity and distance in mydealings with others? In my innermost self, I ensure that I am recep-tive to contact with other people. I seek both proximity and a harmo-nious distance. I am very honest in my relationships to others. I amopen towards them and allow them to be open towards me. The proximity that develops is a respectful form of psychological andspiritual contact. And this also includes a certain distance – a distancethat respects and appreciates the other person in his or her owndignity and uniqueness. You could say that proximity and distancebelong together like two halves of a whole. Here it is about “both …and” rather than “either … or”.

Dr Anna Gamma has been director of the Lassalle Institutein Bad Schönbrunn since the autumn of 2003. Together withthe institute’s founders, Niklaus Brantschen and Pia Gyger,the psychologist developed the course “SPIRIT & Leader-ship”. The Zen teacher (“sensei”) is the author of the book“Ruhig im Sturm, Zen-Weisheiten für Menschen, die Verant-wortung tragen” (“Calm in a storm: Zen wisdom formanagers”).

Photo: Andri Pol


Keeping a balance between proximity and distance is important inevery area of life. At work, it is often a tightrope walk. As professionalrisk and insurance consultants, we help our customers to appraiserisks and negotiate tailor-made insurance solutions for them. Ourcustomers are medium-sized and large companies from industry, services and retail as well as the public sector. As a fundamental principle, we generate trust through proximity to our clients. Toomuch proximity, however, can also be seen as currying favour. Certainclients have an ambivalent relationship with insurance. They keeptheir distance as it normally means something unpleasant for them,i.e. an expensive premium or costly claim. However, when majordamage or loss occurs, they want us to be there. There are many analogies between work and golf. Golf is a goodschool for every situation in life. It requires stamina, willpower,concentration, consistency and fitness. You learn that things cannotalways go your way. There is probably no other sport that demandssuch humility. Even with top golfers, outstanding rounds can befollowed by inexplicably poor performance. Whereas for a 100-metresprinter, “slower” or “faster” comes down to just a few hundredths of a second, on a bad day, a golfer might need to make 15 shots morethan on the previous day. Golfers know what losing means.Golf is frequently overestimated as a means of networking. Peoplewho spend more time on the golf course than in their office will not besuccessful. In today’s world, service quality and price are what count.Golfing, however, can promote customer loyalty and open doors.During the four hours a game typically lasts, you can get to know yourgolfing partner better as a person. How does he react when, forinstance, a putt is totally wide of the mark? You soon get closer to one another.With regard to proximity and distance, the most important insight ingolf is that long putts are primarily about direction and that precisedistance is only of secondary importance. With approach shots to thehole of between 75 and 10 metres, what matters is the correct length

Martin E. Kessler: “The closer the target, the greater the riskof wasting shots.”


of a shot. On the green, both the direction and the distance have to be right. The closer the target, the greater the risk of wasting shots. You need maximum concentration for the tee-off and close-up shots,although a feel for the ball around the green is just as important as atechnically clean shot. A shot is a good one if the ball flies in the rightdirection and is hit with the centre of the club.Although I have played golf since school, I have to train regularly tomaintain my handicap. Otherwise, I don’t enjoy it. It is the same in myjob. The competition is strong; I literally have to stay on the ball all the time.

Martin E. Kessler is managing partner of the insurancebroker Kessler & Co AG. The family-run company employs240 staff, and its clients include a good third of the 100largest Swiss companies. Kessler is a passionate golfer(handicap 4.1) and the honorary president of the Swiss Golf Association.

Photo: Cédric Widmer

“We are a community.”Ralph Siegl on the value of loyalty

“Unique possibil-ities to learn something aboutthe world.” Martin Heller on the value of culture

“A nice piece ofjewellery may cost amillion, or even ten.But one is buyingsomething of realvalue. That is a safeinvestment.”Bernard Fornas on the value ofhaute joaillerie

“Today the possibil-ities for integratingdisabled personsinto working life aremuch greater than in the past.”Dr Daniel Joggi on the value of modern technological aids

“Managers arefundamentallylonely. We providethem a settingamong peers.”Martin Naville on the value ofCEO Luncheons

Dossier values

According to the standard business dictionary definition,values are “important and enduring beliefs or ideals shared by the members of a culture about what is good or desirable and what is not. Values exert major influence on the behaviour of an individual and serve as broad guidelines in all situations.” But how do values play out in practice? How are they lived? In our dossier, Swiss business executives reflect on what they perceive to be valuable in their personal lives and their organisations.

Texts: Corinne Amacher, René Bortolani, Iris Kuhn-Spogat, Kaspar Meuli, Bernhard Raos, Franziska Zydek

Photos: Markus Bertschi

“Demand for real estate isincreasing.” Dr Luciano Gabriel on the value of property

12 ceo dossier ceo dossier 13

“You develop a different perspective on things”Anyone can make something of themselves, nomatter their physical disability or situation, saysDaniel Joggi, president of the Swiss ParaplegicsFoundation and himself a tetraplegic.

dossier valuesDaniel Joggi


The goal of the Swiss Paraplegics

Foundation is the holistic rehabilitation

of paraplegics and tetraplegics. The

foundation supports a comprehensive

network of services for paraplegics.

ceo dossier 17

A test that included a jump was planned for thelast day of the ski camp. Daniel Joggi, theorganiser, prepared the small jump with ashovel and was then the first person to ski downthe slope. He mastered the jump with ease, butthen lost control of his skis. Joggi had a cata-strophic fall, breaking several vertebrae in hisneck and suffering paralysis of his legs as wellas parts of his arms and hands. He lost allmovement in his fingers. The accident happenedon 30 December 1977.

Thirty-three years later, Joggi is sitting in awheelchair in his office at the Swiss ParaplegicsFoundation in Nottwil. He is a slender manwith snow-white hair and gentle eyes. His hand-shake is limp, and his hand seems to only brushagainst a visitor’s. He wears leather cuffsaround his wrists to aid his grip, and to enablehim to better manoeuvre the wheelchair.

Mr Joggi, how often do you find your-self recounting the story of your acci-dent?Not as frequently as I used to. Things weredifferent in the first few years. Shortly beforethe accident, I had completed my degree inagricultural science at the Swiss Federal Institute of Technology in Zurich and alreadywritten my dissertation. I then started myfirst job in Nyon. But I grew up in Neuchâtel.When I returned there every now and then and met someone I knew, of course they wanted to hear the whole story.

Does that bother you?No. I think I’ve come to terms with the wholething now, so I’m able to talk about it. Butwhen I do, it still stirs emotions.

How has the accident changed yourlife?In the first few weeks, you think your life hascome to an end. With time, however, afteryour stay in hospital and rehabilitation ther-apy, you realise what you can do with thefunction that remains. Still, many things areno longer possible. Back then, I played theguitar. Because I could no longer move myfingers, I was unable to continue. That hit mevery hard.

Does life seem more precious to you?Yes, definitely. It’s obvious. You develop adifferent perspective. You learn to appreciate

other things. I have also met many interestingpeople, nursing staff, occupational therapistsand physiotherapists. And I had a great dealof support.

In what way?Specifically, from my former work colleaguesat the Agroscope agricultural research insti-tute in Changins. They visited me, and organ-ised weekly plans for who came to visit mewhen or who collected me. Soon afterwards,the director also came to see me and told methat I would always have a place at the insti-tute. That motivated me very much and gaveme tremendous encouragement.

What do you believe is the value of life?The value of life is…

… that we are alive?Yes. But not just alive, that we are also able to contribute something. And not just be aburden. No matter how severe their disabilityor how difficult their situation, everyone can make something of themselves. Severelyparalysed people are often better able to do this than people with lesser degrees ofparalysis.

How independent are you?Although I am quite severely paralysed, I candrive a car. This gives me a certain degree ofindependence. I can live an independent lifefor one or two days. I can, for example, cometo Nottwil for two days and then return home.But then I need the help of my wife or otherassistance because I am no longer able to domany things for myself.

Many physically disabled peopleemphasise how normal their life is. Isthat how you see it too?Yes and no. You never lose the desire to standup on your own two feet again, even if it isjust for one day – to be able to jump aroundand run again.

Joggi had been a member of the board of directors of the Swiss Paraplegics Associationsince 1989 and its president from 2001 to2009. In 2000, he was elected a member of theboard of trustees of the Swiss Paraplegics Foundation (SPF), and has been its presidentsince December 2009. As president, he replacedthe Schwyz State Councillor Bruno Frick, whohad come under fire after two years in office.Frick had replaced Guido Zäch, the founder,chief physician and director of the Swiss

Dr Daniel Joggihas been president of the SwissParaplegics Foundation (SPF)since December 2009. The boardof trustees is responsible for thestrategy of the Swiss ParaplegicsGroup in Nottwil (which includesthe SPF).* The 61-year-old gradu-ate in agricultural science from the Swiss Federal Institute of Technology in Zurich has been atetraplegic since a skiing accidentin 1977.

* The SPF aims to bring about theholistic rehabilitation of paraplegicsand tetraplegics and supports an inte-gral service network for paraplegics,offering seamless linked services fromthe scene of the accident and medicalcare and rehabilitation, to life-longsupport and advice. With theirmembership in the Benefactors’ Asso-ciation of the SPF, 1.5 million peopleensure a sustainable financial basis forthe foundation’s activities.

90%are able

to reintegrateinto

working life.

16 ceo dossier

“You never lose the desire to stand upon your own two feet again, even if itis just for one day – to be able to jumparound and run again.”

Paraplegic Centre in Nottwil, as the president of the SPF. After a period of turbulence, peace has been restored to the group of paraplegicsorganisations under Joggi, who has broadsupport both internally and externally.

Mr Joggi, what are your responsibil-ities as the president of the board oftrustees?Somebody once said that I am the DJ of the paraplegics foundation – the person whomixes everything together and ensures that people in the various groups work asone. The board of trustees is responsible forthe general strategy: Where do we want to go? How can we achieve it? How do wecollect the funds for all the activities neededto strengthen our service network?

More than half of the members of the board of trustees are themselvesdisabled. Does that mean that disabledpeople tend to be better at understand-ing the problems of similarly affectedpeople? Or is that just a coincidence?No, it is no coincidence. Before I became president, 3 out of the 10 people on the boardof trustees were in a wheelchair; today, thatfigure is 6. There is a group of wheelchairusers who wanted to form their own advisorycouncil to better promote the concerns ofwheelchair users. But I prefer to integratethem directly in the board of trustees; I don’twant too many additional committees orgroups. We already have a complex organisa-tion as it is.

In Switzerland, around 10 per cent ofthe population, i.e. around 700,000people, have a mental or physicaldisability. Does the country do enoughfor these people?That is a very difficult question. The countrydoes a lot, but it could undoubtedly do more.I do not know whether society is sufficientlysensitised to the problems of disabled people.This in turn would shape people’s willingnessto make society a better place for everyone.But you always need two sides to bring aboutchange.

So disabled people have an obligationtoo?Yes. They have to approach others proactivelyand be open and do something. They cannotsimply assume that society will look afterthem. That message is not always wellreceived by disabled people. But they, too,must play their part in social integration andparticipation.

Are you in favour of a disabled quota incompanies?There are countries that have introducedsuch a quota. But it doesn’t really work thatwell. When is a disability relevant for thequota? In many companies, there are disabledpeople who are not designated or perceivedas such, for instance either because they only have a slight limp or are not covered bydisability insurance. To a certain extent,quotas also create ghettos. Within an administrative limit, people are disabled, and outside of that boundary they are not.

What do you campaign for?I believe that everyone has a talent for something. You just have to find out what

motivates someone and in what area he orshe can contribute and achieve something.That is of course not easy. I see no point inisolating people who are unable to keep up,leaving them to the social security institutionsto look after, and then complaining that theycost too much for doing nothing.

How difficult is it for a paraplegic tofind a job?It is, of course, always a bit more difficultthan for someone who is not disabled. But as paraplegics, we can be just as productive.And with modern technology such as thecomputer, the possibilities for integratingdisabled persons into working life are muchgreater than in the past. The requirement,however, is that disabled persons, too, ensurethat they have a first-class education andundergo further training. Disabled personsalso need to be proactive here.

What does the Swiss Paraplegic Centredo for the occupational reintegrationof its patients?We have developed a very good network witha whole variety of companies. This meansthat more than 90 per cent of the people whoare given care here are able to reintegrate intoworking life.

“We are strongly attached to our roots”Acquiring the Merkur chain of confectioners and developing a brand under its own name heralded anew era at the chocolatier Läderach. Now the questionis how to communicate the values and products of thefamily-run company to consumers and businesses.

dossier valuesConfiseur Läderach


Since 2006, former Nestlé manager

Ralph Siegl has served as managing

director. One of his tasks is to involve

the new generation in the running of

the company.

ceo dossier 21

The furniture seems too rustic for Ralph Siegl,who is in his mid-forties and hails from thelowlands around Zurich. Walls, desk and aconference table – the whole office is made of solid, darkened wood. “If I were to installdesigner furniture in here, it would probablyraise a few eyebrows in Ennenda straightaway,” laughs Siegl. For Ennenda is syn-onymous with Läderach. The chocolate factoryis not only the largest employer in Glarus; its emotional ties with the valley are also verystrong.

“We are strongly attached to our roots, and thatis one factor in our success,” says Siegl. He tookover the managing director’s office exactly ascompany founder Rudolf Läderach hadfurnished it, and he has no plans for redecorat-ing. Such changes would not sit well with theowners, the Läderach family, who until a fewyears ago worked and even lived in the building.In line with their Protestant work ethic, theLäderachs do not attach any importance toostentatious presentation.

Communicating worlds of enjoymentSiegl is the first managing director outside of the family in the almost 50 years of thecompany’s history. He is just a few yearsyounger than Jürg Läderach, a member of thesecond generation who owns and presidesover the firm. But as a graduate from theUniversity of St Gallen and former Nestlémanager, Siegl has skills that complementthose of the owner, who is a certified confec-tioner. The new addition to the management team atLäderach became necessary after the acquisi-tion of the Merkur chain of confectioners in2004 and the development of a retail brand asa second pillar of business. The company hasexpanded and made a name for itself in theindustry as a supplier to cake shops, confec-tioners, hotels and restaurants; it was not,however, well known among the generalpublic. Consequently, when the companyentered the retail market, suddenly end

consumers had to be addressed alongsidetraditional specialist retailers. For consumers,however, chocolate is not only a matter oftaste – it is also about emotions. One of Siegl’s tasks is to convey Läderach’sworld of quality and enjoyment to thediscerning urban target public. “The funda-mental values of the company must besupported by the family but not necessarilycommunicated by it,” says the managingdirector. Siegl’s appointment enabled Läder-ach to come up with its first brand message,incorporating the core values of the companysuch as freshness, craftsmanship, Switzerlandand individuality. “The challenge was toapply the craftsman’s mentality at Läderachto a modern lifestyle,” says Siegl.

Freshness as a value Parallel to these considerations, fresh chocolate was launched as a concept idea.“Up to then, many consumers had not beenaware that freshness is also a criterion forchocolate,” says Siegl. An industriallyproduced bar of chocolate does not appear on the sales shelf until three months after it is produced and will keep for over a year. In contrast, Läderach fresh chocolate arrivesin the sales outlet just a few days after it isproduced and will keep for six weeks. “Andhas more taste because of it!” says Siegl. “Astraditional and professional confectioners, we can offer consumers genuine added valuewhen it comes to freshness thanks to ourshort distribution channels and freshnessrecipes. Not to mention clearly differentiatingourselves on the market.”To enable consumers to experience this freshness, Läderach opened the first confec-tionery-making demonstrations at the begin-ning of 2008 in the main Merkur store on theBahnhofstrasse in Zurich and the Spitalgassein Berne, as a supplement to the shopwindows full of sweet delights – includingaround 24 different types of fresh chocolate,which has since boomed, and is exported byair to places as far away as Tokyo. Läderach is currently expanding the brandbusiness and B2B sales further in Japan,Taiwan, South Korea, the Middle East, theUSA and Germany. According to Siegl,

LäderachThe confectioner Läderach AGhas its registered office inEnnenda in the canton of Glarusand production facilities inSwitzerland, Germany andRomania. The companyemploys just under 800 peopleand generated a turnover ofCHF 120 million in 2010. Läderach products are hand-crafted solely in Switzerland.They are sold on the domesticmarket through 30 Merkurspeciality shops, which Läderach acquired in 2004, andworldwide through B2B salespartners and the company’sown stores. Company ownerJürg Läderach is the GroupCEO and president of the boardof directors. Since 2006, formerNestlé manager Ralph Siegl hasserved as managing director.Siegl studied political science atthe University of St Gallen andeconomics at the LondonSchool of Economics. He thenworked at the former SwissFederal Office of EconomicAffairs (now the Federal Depart-ment of Economic Affairs) andwas a member of the executivemanagement at Nestlé Australiaand Nestlé Switzerland.

Turnover of

120million

The 2,500 Läderach products are

manufactured largely by hand; only

the processes have been standard-

ised over time.

20 ceo dossier

Expansion is approached cautiously.Nothing should be forced; quarterlyplans are not part of the essentialtools of the family-run business.

the plan is also to create other stores as“centres of excellence for Swiss chocolateculture”, in which around three quarters ofthe range consist of Läderach products. It wasbeneficial in this new strategic orientationthat the Glarus-based company is not new to the countries it exports to; it has long-standing business partners and experiencethere as a supplier. Läderach took its first stepabroad as early as 1981.Nevertheless, expansion is approachedcautiously. Nothing should be forced; quar-terly plans are not part of the essential toolsof the family-run business. In Ennenda, timeis counted in years or decades rather thanmonths. Projects are also based on gut feelinginstead of on a calculated business plan. “It is good if an idea falls on fertile groundand develops into something; if it doesn’t,then there will be a new opportunity againelsewhere. Ensuring our financial and operational capability is important for us,”says Siegl, describing the company’s credo. In 1994, Läderach wanted to enter the retailbusiness with a shop in a top location in Paris.The project proved to be too ambitious andwas cancelled after three years. Ten yearslater, the attempt with Merkur was a resound-ing success: the consumer business is postingtwo-digit growth. The organic approach to business runsthrough the entire corporate structure. Eventoday, the 2,500 Läderach products aremanufactured largely by hand; only theprocesses have been standardised over time.At the factory in Ennenda, copper vats are notonly decorative; they are also used. Eggs arebeaten by hand, Easter bunnies painted, andhazelnuts roasted and caramelised in-house.Many workers have been with the companyfor decades; recently, one employee cele-brated 43 years of service. “We are a close-knit community,” says Siegl. “Our employeesare very committed to the company.” Whendemand slumped in the summer of 2009,Läderach did not reduce working hours. Inreturn, the company was able to count on the“full support” of the employees in 2010, when

multi-shift production was reintroduced. When Siegl joined the company five yearsago, there were 170 employees in Ennenda –today, there are more than 250. Increasingly,long-serving confectioners were coming intocontact with new staff from outside thecompany, a process that took some gettingused to. For the first time in the company’shistory, the agenda included executivemanagement courses to promote the integra-tion of old and new. “We had to find newways for a dialogue that in the past had beentaken for granted,” says Siegl. In seminars,formative and traditional fundamental valuessuch as cordiality, integrity and respect forcollaboration were jointly defined andprovided the basis for management guide-lines. They hang on the walls like recipes forchocolate delicacies and also apply in deal-ings with business partners.

Controlling the value creation chainIn Bilten, in the canton of Glarus, Läderach is currently building a factory for the produc-tion of couverture (special-quality chocolateused for dipping and molding). “It representsthe largest investment in the company’shistory,” says Siegl. The motivation is a desirefor greater independence from major sup-pliers. “From the cocoa bean to the counter”expresses a new solution to directly ensurequality along the entire length of the valuecreation chain and to support the brand in the long term. “By producing the couver-ture ourselves, we can include raw materialsuppliers in the production process andcommit them to social and ecological stand-ards.”A blueprint already exists: two Swiss émigrésto Brazil created an organic cocoa plantationin the middle of the rainforest in Bahia as asource of cocoa for the couverture for Läderach. The Glarus-based company turnsthe couverture into a special product line of wafer-thin carrés, truffles, pralines andfresh chocolate. That the delicacies carry nodeclaration of their sustainable nature is nooversight; it goes without saying: “We do notneed to certify our integrity in our dealingswith people and the environment,” says Siegl,seconding company owner Jürg Läderach. “It is simply part of who we are.”

Succession planningLäderach is a family-runcompany, and long-term plansare in place for a handover from the second to the thirdgeneration. The sole owner,Jürg Läderach, is one of fourchildren of Rudolf Läderach,who founded the company in1962. Jürg Läderach himselfhas six children, some of whomare already involved in the familybusiness. His oldest son isstudying at the University of St Gallen and has completedvarious internships at Läderach;another son is a confectioner in the development department;and one daughter apprenticedat the company. Ralph Siegl has been appointed managingdirector until the children areready to take over operationalresponsibilities. One of his tasksis to involve the new generationin the running of the company.

Founded in

1962

ceo dossier 2322 ceo dossier

Traditional fundamen-tal values such ascordiality, integrity andrespect were defined andprovided the basis formanagement guidelines.

“Every relationship has a purpose”The Swiss-American Chamber of Commerce (Amcham)is the highest-ranking commercial network in Switzerland. CEO Martin Naville reflects on his role as the Chamber’s point of contact, the art of cultivatingrelationships and the importance of virtual networks.

dossier valuesMartin Naville


ceo dossier 27

Mr Naville, 40 CEOs and Europeandirectors of major companies arerepresented on the Amcham board.What kind of relationship do you havewith the members?Relationships open doors and therefore serveas a means to an end. I can send members amessage and know that it will be read. Havingan open door is extremely important for me.It means that, if the topic is right, with mostmembers I can start a dialogue.

When is the topic right?When it contributes to the matter at hand, i.e.the promotion of Swiss-American economicties and conditions that encourage interna-tional companies to settle in Switzerland.

That sounds very rational. It is. Every relationship has a purpose andthat purpose must be respected. If yourdentist tries to sell you a car, he is misusinghis relationship with you. In the same way, I cannot suddenly start to collect money for Africa from the board members. As long as I make objective and efficient use of a relationship, it will remain open – if not, it will shut down. With friends, you can sometimes talk about anything; that’s notpossible in business relationships.

Are you not friends with members ofthe Chamber?There are grey areas. With some, the purposeof the relationship is defined very narrowly;with others, it is broader, and that can resultin a friendship. Based on my network ofcontacts, people have often suggested to methat I set up on my own and sell something.

That wouldn’t work, of course. My contactshave a relationship with the Chamber ofCommerce, not with me.

In other words, your relationshipsdepend on your position and not on youas an individual. Isn’t that ratherimpersonal? No. After all, I have family and friends whostay with me when I change jobs. I was once amanagement consultant, and I know what itmeans to have to get past the secretary to sellsomething that the boss perhaps doesn’t wantat all. What I sell in my present position issomething that is supported by everyone: thevision of a collaborative economic relation-ship between Switzerland and the USA, andSwitzerland as an ideal location for interna-tional companies. I am still the same person,but today I have direct access to the CEO.

The CEO Luncheons you organised havebecome one of the most popular plat-forms for current topics. Aside fromthe issue of the day, how important is asocial gathering for networking? The social part of events is valuable becausemanagers are fundamentally very lonely. Youspend the whole day with people who wantsomething from you: customers, employees,directors, analysts, unions, media representa-tives. We provide them a setting among peers.

Is there a place for small talk? If so,what is the art of small talk?If I knew the answer to that, I would be ahappy man. Talking about the weather isundoubtedly rather boring. A good startingpoint for a conversation is a professionalquestion, interest in the company, travel,sport. You try to exchange knowledge andfind a common denominator.

AmchamWith more than 2,500 members,the Swiss-American Chamber of Commerce (Amcham) is oneof the most important businessnetworks in the country. Itstrademark is the high status of its members. Corporationdirectors participate personallyin the organisation. The board,headed by Syngenta CEOMichael Mack, includes 40CEOs or European directors ofthe largest Swiss and Americancompanies. In addition to maintaining economic ties andproviding information and services for its members, theChamber of Commerce has also developed into a majorforum for current topics. TheZurich office, which employsseven staff, is managed byMartin Naville.

2,500members

26 ceo dossier

What value do such conversations holdfor you?Their value is in the nuggets of informationthat you get and which can be useful to yousomeday. Frequently, there is not enoughtime to discuss a topic in full, but you stilldiscover a few interesting details.

Do you have a systematic approach todeveloping relationships?Not particularly. I sort through my businesscards and scan the most interesting ones intomy PDA. The others, I throw away. I havearound 3,000 names in my collection. I amnot one of those people who constantlyupdate contacts with new information.

You frequently attend events that havenothing to do with the Amcham. Howdo you choose the events?If the event interests me and I have the time, Iwill attend it. Networks are like neuronalconnections that are constantly changing.Every year around 50 per cent break off andneed to be renewed. I primarily do that byattending events. That is how you see andhear a lot.

You have to be cut out for that. And of course you have to enjoy it! I do notconsider it a duty at all. I like swapping ideaswith people, picking up topics and examiningthem. Other people collect their ideas whilereading or walking; I attend events.

How important is gossip in all of this? It plays a role but it has to be relevant. It isabout who has a new job and not about whois currently going through a divorce. I am in abusiness environment and stay within thoseboundaries.

So you are unaware of what people doin their private lives? I often know how many children a person hasor where someone lives; you could say that ispart of the business card. But private mattersare none of my business, nor are they a topicat our meetings. If we talk about a private

topic, then it is on a non-emotional level. Wetalk about fine wines or skiing, but not aboutrelationship-related problems.

The Swiss are seen as reticent andtherefore not necessarily as modelnetworkers. Americans find it mucheasier to make contacts. What do theydo better?The circumstances are different. In the USA, people frequently change their place ofresidence as children and consequently knowwhat it is like to join a new class or group. The relationships are more changeable andpermeable than with us in Switzerland,where most people grow up in one place. Buteven if the initial contact among Americans ismore open and uncomplicated than with us,it does not mean in any way that a friendshipwill develop out of it. People in Switzerlandfrequently find that hard to understand.

What role do the new social networkslike Facebook and others play in yourweb of connections?Not a major one. I am a member of severalplatforms and use them primarily to look forpeople. E-mail or the telephone is the easiestmeans of direct communication.

As a result of virtual networks, thenumber of contacts escalates. But atthe same time they become more fleet-ing. What influence does this have oncultivating relationships?Virtual networks make it possible to cultivatean external group of relationships that itwould otherwise be impossible to maintain.You have a bit of contact with more people.But the real relationships are still played outlive. People predicted the end of personalrelationships when the telephone wasinvented, but nothing of the sort happened.People who are important to one another will still continue to meet up for dinner on aSaturday evening.

Martin Naville Lawyer Martin Naville took over the management of theSwiss-American Chamber of Commerce in the autumn of2004. Previously, he spent 16years at The Boston ConsultingGroup (BCG) in Munich, Zurichand New York, specialising in wealth management andtelecommunications. He is pres-ident of the board of directors of the Zurich Zoo and a memberof the board of directors ofSwiss-quote and Lombard. Heis also a member of the RotaryClub, Savoy Club, “Zunft zur Meisen” (the largest of theguilds in Zurich) and “Welt-offenes Zürich” (“CosmopolitanZurich”), among others. He ismarried with two sons.

“The real relationships are

still played outlive.”

“What I sell is the vision of a collaborativeeconomic relationship between Switzerland and the USA.”

ceo value 29

Healthcare Radical changes in healthcare are opening up entrepreneurial opportunities

The healthcare system is unwell.In all industrialised countries thecost of funding healthcare is highon the political agenda. Thefinancial crisis led to a hugeincrease in government debt,making the need for healthcarereform even more urgent thanbefore. In 2008, health spending inOECD nations averaged 9 percent of gross domestic product(GDP). In Switzerland the figurewas as high as 10.8 per cent, andis on the increase. The KOF SwissEconomic Institute at the SwissFederal Institute of Technology(ETH) Zurich forecasts 11.5 percent for 2009 and 2010.As well as these financialailments, the healthcare system is suffering from high blood pres-

sure brought on by the competingexpectations it has to manage.The public expects easy andimmediate access to high-qualitymedical care, personal attentionfrom doctors and hospitals, andup-to-the-minute information onhow treatments are progressing,all delivered at low cost. This is a situation that cannot besustained by the current businessmodel.

Dubious preventioncampaignsBut what exactly is the healthcaresystem, and who is involved inproviding healthcare? The healthsector is extremely broad anddiverse. Being dominated by thepublic sector, it is highly regu-lated and socially very sensitive.This is because it deals with avery special commodity: life. Themany participants in the industrymay have contrasting interestsand priorities, but they have this

in common: they want to assuregood medical care and preservelife.Simply speaking, the healthcareindustry can be divided into threegroups, the so-called three Ps:

• Payers who fund healthcare: governments, insurance companies and their policy-holders, taxpayers and patients

• Providers, such as hospitals, clinics, doctors and pharmacies

• Pharmaceuticals companies, including biotech and medtech companies

Other participants includeacademic institutions conductingmedical research, and, morerecently and to a growing extent,those operating at the pointwhere healthcare meets the foodand wellness industries. Theseniche players are gaining inimportance as awareness of theneed for healthier lifestylesgrows.Prevention of disease throughnutrition and exercise soundsgood in theory, but in practice it’sonly a small, privileged class of

The healthcare system of the future will begeared to the individual, with each personmanaging their own health profile. Healthcareproviders will have to get used to new relationships, with customers and with eachother.

00 ceo wertvolles wissen

Clive Bellingham, Life Sciences

ceo 1/2011 Value insights

Healthcare Entrepreneurial opportunities Page 29

Global employment marketHR strategy is a C-suite responsibility Page 32

Getting to grips with conflict Governance makes family businesses more able to act Page 36

Max Manuel Vögele “It’s a matter of finding the right path” Page 39

ServicePublications and contacts Page 41

28 ceo value

ceo value 3130 ceo value

prosperous and well-educatedpeople who are willing and able to manage their lifestyles in this way. Costly preventioncampaigns by governments,public broadcasters and healthinsurers have achieved littleimpact with the rest of the popu-lation. Even so, policy studiesindicate that individual patientswill be expected to bear a greaterpersonal responsibility for theirhealth in the healthcare system ofthe future.

The greying effect takes holdTwo developments in particularare making healthcare reformunavoidable: growing lifeexpectancy and rising levels ofchronic illness.Demographics are a key driver ofcosts. There are two reasons forthis. As with the pension system,the healthcare costs of olderpeople, often with lowerincomes, are increasingly fundedby a dwindling number of young,healthy people through theirhealthcare insurance premiumsand social security contributions.Four-fifths of people over age 75take at least one prescriptiondrug. This so-called grey factor isdriving up the cost of medicalcare. Possibly even more serious,however, is the growing preva-

lence of chronic and incurablediseases. Lifelong care for chron-ically ill patients is leading to anastronomical increase in health-care costs.

Cost pressure meets the pressure of expectationsGrowing demand could mean a prosperous future for the pharmaceuticals industry. Butthis shouldn’t be taken forgranted. It’s not just healthcare as a whole that is confronted withrising costs, but drug companiesas well. Most of these costs are incurrednot during the research phase,but in drug development later on.The approval journey for a drugis a long march involving count-less regulatory hurdles. As globalbusinesses, pharmaceuticalscompanies push the limits ofnational healthcare systems. Adrug approved by the FDA (USFood and Drug Administration)can be marketed in the UnitedStates, the biggest market in the

world, but not in other countries.In the EU most drugs are notcovered by the Cassis de Dijonprinciple, because public healthtakes precedent over reducingbarriers to trade.Nobody disputes the necessity ofapproval, but the need for everycountry to have its own separateprocedure consumes valuableresources. From the patient’spoint of view, it might make moresense if pharmaceuticals com-panies were to put the moneyswallowed up by multipleapprovals into basic research.This is one area where the pres-sure of costs and the pressure ofexpectations collide: patientswant effective, safe drugs, andthey want them today. Rules,regulations and procedures takethis interest into account, butthey all slow down the processand add additional costs. The problem is, there is no suchthing as a safe drug. Side effectscan be minimised, but not elim-inated. And clinical tests are not allowed to take into accountexternal factors such as theeffects of taking other medicationsimultaneously. It’s also the casethat many patients would beprepared to live with certain side

effects if the drug relieved theirmain problem.

The solution lies with thepatientThere are many reasons whymore money will have to beinvested in drug research. One isthat funding has to be madeavailable for research into rarediseases. Another lies in the needto do differentiated researchtaking account of differentpatient populations. Not allorganisms respond to a drug inthe same way. For this reasonscientists divide patients intopopulations with similar genetic,behavioural and socioeconomicprofiles. It’s also why diagnosticsand therapeutics are beingcombined. This approach is animportant step in terms of provid-ing “customer-” or patient-focused medical care.Many experts see this person-alised form of healthcare as theway forward. The key to achiev-ing this lies in the willingness of the payers, providers and pharmaceuticals companies toredefine their respective roles inthe process.

Patients will have to play agreater role in their ownhealthcare in future. Thisincludes managing their ownhealth through diet and lifestylechoices that aid prevention. Indi-vidual patients will be expectedto monitor their risk profile,adhere strictly to medicationschedules (something to whichfar too little attention is paid atpresent), and use tools such asthe Internet to stay in touch with

their care providers. Personal-ised funding, along the lines ofpension funds, is also conceiv-able: each person would build upan individual healthcare accountduring their working life to covertheir own healthcare costs lateron. However, a model of this sortwould break a big taboo, becauseit would spell the end of solidar-ity and mutuality in healthcare.Mixed forms of funding areanother possibility.

Governments have to do abalancing act between therequirements of society, therealities of the market, andthe need to control health-care costs. What is needed nowis partnership and cooperationbetween the public and privatesectors with the aim of ensuringan efficient and transparenthealthcare supply chain.Precisely because the healthcaresector is so multifaceted, it’s vitalto look at the system in itsentirety. It will have to be madeeasier to cross national andregional borders, and for effecti-ve cooperation to take place.While industrial and academicresearch is done on a worldwidebasis, healthcare is still a nationaldomain. Take hospitals. The hospital isstill a symbol of locally providedhealthcare. The trouble is thattoday’s hospitals are unsuited to dealing with the growingnumber of chronic diseases. Thetrend is therefore towardsspecialisation. For reasons ofcosts and resources, we can no longer expect every hospital tobe able to treat every illness.

The pharmaceuticalsindustry faces dwindlingmargins. In 2009 the pharma-ceuticals industry in the UnitedStates invested a record USD 65.3billion in research and develop-ment (PhRMA). For such a huge

Discrepancy between investment and return in one yearIn 2009 the pharmaceuticals industry in the United States invested arecord USD 65.3 billion in research and development. The FDAapproved just 25 new molecular entities and biologics that year.

investment, however, the numberof new drugs completing theprocess was very small. The FDAapproved just 25 new molecularentities and biologics that year.These figures make two thingsclear. First, the pharmaceuticalsindustry generates most of itsrevenues from products that havebeen on the market for sometime, but which will eventuallylose their patent protection.Second, the discrepancy betweenR&D spend and new approvalssuggests that the approvalprocess is getting tighter andtighter due to safety concerns.The figures also indicate thatpharmaceuticals companiescould be taking a more efficientapproach to research, with sharing base data an obvious area of joint opportunity.

Communications and informa-tion technology have a key role to play in the healthcare systemof the future. Patients are becom-ing well-informed consumers. As in any other industry, health-care will have to segment itscustomers, know their prefer-ences and offer them productsand services accordingly. Infor-mation technology provides theplatform for educating andinforming people about health.There are also growing possibil-ities in telemedicine, for examplemonitoring adherence to medica-tion schedules or a patient’sprogress at home. Creative entrepreneurs will be able to harness the winds ofchange in healthcare.

[email protected]

SummaryBetter communicationbetween doctors, hospitalsand the pharmaceuticalsindustry on diagnoses andtherapies will make iteasier to find customisedsolutions for individualpatient populations, andcould even accelerate thedevelopment of new drugs.And what applies to othersectors also applies tohealthcare in today’schanging world: spendingon virtual access points,networks and telemedicinecould turn out to be moreimportant than invest-ments in bricks and mortar.

USD

65.3billion

for research and development

25approvals


The War for Talent was declaredmore than a decade ago, but fewcompanies can claim victory. Thisis one of the findings of the latestAnnual Global CEO Surveypublished by PwC on the basis ofinterviews with around 1,200chief executives in 70 countries.Talent is right at the top of theexecutive agenda. Of the CEOspolled, 56% see the lack of talentas a significant business risk. The shortfall is particularly acutein growth markets. So it’s nosurprise that more than half ofthe CEOs plan to hire new peoplein 2011, with more than 80%(92% in Asia) intending to

realign the way they managetalent. But this is an area wherelong-term differentiation willrequire creative and innovativeapproaches.

Old patterns no longer hold Many organisations in industri-alised countries, and more andmore in emerging markets aswell, face a significant challenge:demographic developmentsmean that the number of youngpeople joining the company isn’t

sufficient to make up for theolder employees who are leaving.These older people are takingtheir knowledge with them –knowledge gathered over years ofpersonal experience that in mostcases hasn’t been fully docu-mented by the organisation. Inthe long run a development likethis can undermine the produc-tivity of entire economies. Socompanies should be doingeverything in their power toretain experienced employees aslong as possible. And they shouldalso be taking steps to ensureknowledge transfer within theorganisation. There are a numberof ways of doing this, includingnew technologies such as wikisand webcasts, and bringing backretired staff in a consultingcapacity. The 18- to 30-year-olds just start-ing out on their careers, what isknown as Generation Y, havedifferent values and expectationsthan previous generations. Formany, sustainability and socialengagement are now one of thekey factors in their choice of

Global employmentmarketHR strategy and talentmanagement is a C-suite responsibilityAny company seeking to implement a growth strategy will haveproblems if it doesn’t have enough qualified staff. New modes ofcollaboration are needed if this situation is to be avoided. Efficient organisational structures for human resources (HR)can help make this happen across the entire enterprise.

Charles Donkor and Stefan Linde,Human Resource Consulting

CEOs plan new HR strategies

PwC’s 14th Annual Global CEOSurvey:

For 14 years, PwC has been asking CEOsall over the world for their views on theeconomic situation. The latest AnnualGlobal CEO Survey shows what growthstrategies business leaders are adoptingin the wake of the financial and economiccrisis. More than 1,200 CEOs in 70 coun-tries were interviewed. The findings givegrounds for optimism: CEOs are almostas confident as during the pre-crisisboom years. They are making innovationand talent management the focus of theirgrowth strategies.

The most important findings in terms of humanresource management:

• The CEOs believe that their current HR strategies are nolonger adequate. 83% are planning to change their HR strategy.• The CEOs see a danger that they will not have the right stafffor a sustained upswing. They are concerned that the skills available in their organisation might not be sufficient. 66% areworried that a lack of talent could slow growth.• More than half of the CEOs polled plan to deploy more staff on international assignments. There they will play an importantrole in the development of local people. CEOs expect significantchanges in terms of staff mobility: many well-trained people inemerging economies are seeking career opportunities outsidetheir own country. Organisations want to exploit this potential.• The CEOs are embarking on plans to boost the engagement oftheir people and retain them for longer. 65% of those polled aredeveloping new, non-financial rewards to motivate staff.

The findings of the Annual Global CEO Survey are also revealing in terms of what companies are not planning:

71% of those polled do not plan to relocate operations to countries where a greater pool of talent is available. More thanhalf of the CEOs do not intend to incentivise young workersdifferently than others. And it’s a similar picture when it comesto changing policies to attract and retain more women and olderworkers.

Organisations should be managing their talent supplychain just as professionally asother areas of value creation. Thesurvey reveals that far-sightedCEOs are aware of this, and aredoing everything to use talentmanagement to achieve realcompetitive advantage.


• gives employees an incentive toidentify with the organisation and motivates them to deliver.

The key to business success is tohave enough people and networkpartners with the right qualifica-tions, values and attitudes avail-able at the right time. This meansthat HR strategy has to be firmlyembedded in overall businessstrategy. Organisations have tomake sure their talent strategyand planning are geared to thesame time frame as their overallstrategic planning – a horizon ofaround three to five years. An important part of HR manage-ment is being able to segment theworkforce along meaningfullines. Not all employees areequally crucial to the success ofthe business, not all have thesame needs, and not all respondthe same way to HR programmes(for example incentive schemes).For this reason, any successfultalent strategy must be built onstrategic HR planning combinedwith intelligent segmenting. HereHR management has a key role toplay.

Rethink and restructure HRCompanies that want their HRstrategy and talent managementto run as described need toorganise their HR functionaccordingly. HR should be able tooperate successfully acrossnational, divisional and depart-mental boundaries, and evenglobally if business demands.Here HR transformations have an

important role to play. An HRtransformation involves dividingroles within the organisation intostrategic (centres of expertise),administrative (shared services)and consultative (business part-ners) functions. A transformationlike this requires far-sighted plan-ning, and can entail comprehen-sive changes in the organisation,processes, information technol-ogy and, not least, in the waypeople work and collaborate. Itinvolves reallocating responsibil-ities and redesigning powerstructures. Far-reaching changesof this sort require a rethink fromboth HR and line management,and should be accompanied byintensive change managementsupport. The overarching object-ive of any change managementprocess is to assure the long-termsuccess of the project.

Transformation has to befully supportedAny innovation involves changesin the relationships between theorganisation and the individualemployees. Complex transforma-tions, either in HR or other areasof the business, can only succeedif staff are actively engaged in theprocess of change. This way anyuncertainties, fear and resistancecan be discussed early on andavoided in the long term. Apurely top-down approach tochange management is doomedto failure. So the role of manage-ment has to include making surepeople are informed early on,communicating any changestransparently, explaining thegoals of the project, and if neces-sary talking openly about anyaspects of the process that mightbe perceived in a negative light.

Summary“Our most important re-source is our people” is afavourite line in many com-panies’ annual report. Itmight sound like a cliché,but it’s true. But to have acredible impact, thespecifics of this claim haveto be elaborated and ex-plained, otherwise it caneasily come over negatively.In a knowledge-based econ-omy, the success of a busi-ness is primarily down topeople. The much-citedWar for Talent really isbeing fought, and given demographic developmentsand the individualisationof the workplace it will onlyget even more intense. Thismeans that HR manage-ment is increasingly a mat-ter for the boss.

Depending on the circumstancesit may also be advisable toappoint a sponsor who standsbehind the project and canstrengthen its credibility.Change management is import-ant, especially in the case ofcomplex projects that result inlong-term changes. Many toolsand processes are available toaddress the needs and concernsof the employees involved, ran-ging from clear communicationand coaching to comprehensivetraining. It’s often difficult toaccurately assess the changemanagement work involved in aproject. A rule of thumb is that 10 to 15% of the total investmentin a project fall to changemanagement and communica-tion. This has to be included inthe budget. Ensuring that changeis supported is the key to success-ful efforts to restructure HR,which in turn are key to growth.The CEO faces challenges at allthree levels.

[email protected]@ch.pwc.com

employer. Even young people arekeen to achieve a good work-lifebalance. Success and recognitionin their jobs are still certainlyimportant, but these days manyalso want to leave room for theirown personal projects, sports,travel and lifestyle. Researchshows that many people, espe-cially if they’re well qualified, arestarting out on their career withthe intention of changing theiremployer after only two or threeyears. To attract and retaintalent, organisations are beingforced to address the individualneeds and expectations of theseyoung people. The market isincreasingly evolving into anemployees’ market − a develop-ment that can already beobserved in a number of indus-tries (for example private bank-ing). To get more agile and innovative,in future companies will have tohave flatter hierarchies, come upwith new business models, andoperate on a worldwide basis viaecosystems and open innovation

networks. This will enable funda-mental changes in the wayemployees and managers collab-orate. Successful organisationswill increasingly be those thatmanage to foster a collaborativemanagement style, where theboss becomes a coach or even aplayer-manager. Collaborationplatforms and social networkswill be an integral component ofknowledge management andteam leadership. This raises newquestions. How, for example, doyou measure the performance ofstaff working in open networks?How do you create effective andmeaningful incentives? And howcan an organisation use newworking models to encourageinnovation?Another trend is the individual-isation of the workplace. Thesedays people are less and lesscontent with standard HRprogrammes in areas such ascareer planning. They want to belooked after individually andenjoy a wide range of choices atthe workplace. A new attitude istaking hold: rather than adaptingto HR programmes, peopleexpect these programmes to

adapt to their requirements. Butmany companies have invested agreat deal of time and money instandardising processes in thepast, and risk and complianceconsiderations mean they stillhave to limit people’s individualroom for manoeuvre. The key towalking the tightrope betweenindividualisation and standardi-sation is to be creative.

The optimum workforceWhat’s the ideal employee mixfor an organisation? Finding theanswer to this question is one ofthe core tasks of management,especially in a knowledge-drivenenvironment. An optimum work-force is one that:

• enables the organisation to operate flexibly and respond rapidly to changes in the market;

• combines different talents and skills that are important to the organisation;

Of further interest:• www.pwc.ch/hrs • 14th Annual Global CEO

Survey, 2011 www.pwc.ch/ceosurvey

• PwC study “ManagingPeople in a Changing World”, 2010

• PwC study “Managingtomorrow’s people. The futureof work to 2020”, 2007www.pwc.ch/publications

Attracting talentWhat skills do we need,and how do we attractthem?

Honing talentHow do we develop ourpeople to get the mostout of them?

ProgrammesHow do we optimise ourworking procedures?

Demographic developments are

leading to a four-generation

workforce.

New business models will

require new approachesto leadership

and teamwork.

The individualisation of the economy will require new working models.

Globalisation will mean that

strategies and projectswill have to be delivered

on a worldwide basis.

The following developments will shape the world of work in future:


that, it’s also important for familybusinesses to have principles,procedures and rules governinghow they’re managed andcontrolled. In other words, theyneed governance. When peoplecall for good governance, they’reusually referring to largeexchange-listed companies. Herethe desire to strengthen share-holder rights and avoid conflictbetween the people who own andmanage companies is very under-standable. Corporate governanceinvolves making sure that appro-priate checks and balances are in place, laying down responsibil-ities, and limiting powers.

Corporate governance andfamily governanceBut in the case of family busi-nesses it’s not the power ofmanagement that has to belimited. The challenge here is to

Getting to grips with conflict Governance makes family businesses more able to actIn family businesses there’s an overlap between the interests of the company and those of the family. To balance these interests,family businesses need not just corporate governance, but family governance as well.

Peter Schmid and Dr Marcel Widrig, Family businesses

ensure that the family’s influencedoesn’t restrict the company’sroom for manoeuvre. The mech-anisms by which family enter-prises function differ from thoseat management-led businesses.But they do have one thing incommon: there are claims topower that have to be balanced.At a family business, these checksand balances are twofold: they’rea matter not just of corporategovernance, but of family govern-ance as well.The situation at family-controlledbusinesses is complex, with busi-ness and personal interests over-laid, and rational and emotionalconsiderations often hard to tellapart. A family business is muchmore than an investment – it’sthe family silver. It’s bound upwith a tradition that has beennurtured over generations, andrelationships with the companyand its employees that often goback to childhood. In an environ-ment where people may well be

More than three quarters of Swissfamily businesses don’t have anyinstitutionalised mechanism forresolving conflict. This meansthey’re less well prepared fordispute than family-run enter-prises in other places − althoughmost other countries also havemajor shortcomings when itcomes to systematically dealingwith conflict. These are the findings of themost recent global survey offamily businesses conducted byPwC. More than 1,600 companiesin 35 countries were interviewed,including 108 in Germany, 21 inAustria and 52 in Switzerland.Institutionalised rules are import-ant in terms of resolving andavoiding dispute. But beyond

The figures are taken from PwC’s 2010/11 family business survey “Fels in der Brandung?”.www.pwc.ch/kmu

Is an institutionalisedframework in place for managing conflict between the family members who own the business?

40%no

38%no

24% no

27% no

Are there rules governing succession or transition if key decision makers die or fall ill?

Switzerland

77%no

Austria

67%no

Germany

57%no

Global

71%no

Max Manuel Vögele, whendid your family start plan-ning the succession?The handover took place step bystep. I took over the operationalmanagement of Karl Vögele yearsago. Now that my father is retir-ing, I’m also taking over the chairof the board of directors. You

have to realise I have foursiblings. That meant that as wellas planning the handover fromone generation to the next, wehad to find a satisfactory arrange-ment among the siblings.

How did you manage to dothis?The family’s interests are held ina holding company, of which KarlVögele AG is a substantial part.

SummaryFamily businesses are rightly seen as the backbone of theeconomy. In Germany, Austria and Switzerland theyaccount for more than half of total economic output, andprovide six out of ten jobs. Clear corporate and familygovernance rules can help strengthen what is a veryimportant area of the economy.

nesses don’t have to be valued ona regular basis, a valuation islikely to be necessary in the caseof extraordinary events such asmoves to increase the capital ofthe company, corporate transac-tions, or a change of ownership –regardless of whether a familymember or an outsider takesover. An objective valuation by anindependent party strengthensthe negotiating position, showsprofessionalism, avoids conflictwithin the family, and is espe-cially important given that mostbusiness owners considerablyoverestimate the value of “their”business. Here too, clear govern-ance rules can help removeemotion from the equation.The study raises an interestingquestion: how many companieshave sufficient liquid assets totemporarily assume the interestof a family member who leavesthe business at short notice?While around half the familybusinesses polled worldwide saythey are in a position to bridge agap of this sort temporarily, only29% of Swiss companies can.This low figure primarily has todo with the fact that Swiss familybusinesses often accumulatetheir profits and thus have a highself-financing ratio. This pushesup the valuation of the business.However, building up an addi-tional cushion of cash for emer-gencies such as the sudden with-drawal of a family shareholderdoesn’t make financial sense. Onthe other hand this situationmakes it difficult for any familymembers who do want to sell upto find a buyer for their (consid-erable) share of the business.Who wants to invest in an expen-sive family business when theyget practically no rights of co-determination for an interest of,say, 15% of the capital? By thesame token, if a troublesomefamily member acquires an inter-est and voting rights, for examplethrough inheritance, the firm

needs good governance rules tokeep their influence withinlimits.

Strategy as a source ofconflictDifferences of opinion at familyfirms are rarely about money. Inmost cases, compensation is not amatter of dispute. When conflictarises, it mostly has to do withmatters of strategy. Of the busi-nesses polled in Germany, Austriaand Switzerland, 31% see deci-sions on strategy as a source ofconflict. This conflict can runalong two lines: either betweenmembers of the family working inthe business who have conflictingideas on strategy, or betweenactive family members and thosewho depend on regular dividendsfor their living. Investing heavilyin new markets might be the rightthing for the business, but it canundermine the finances ofcertain members of the family.Clear powers, responsibilities anddecision-making structures canhelp prevent arguments overstrategy.

[email protected]@ch.pwc.com

emotionally attached and think-ing in terms of dynasties, youneed governance rules.A proper company charter, whichshould also include a family charter, brings a greater degreeof objectivity to the decision-making process. A charter likethis can help separate the inter-ests of the business – at least to acertain extent – from those of thefamily. This eases the day-to-day running of the business andensures that roles, for examplemanagement and oversight func-tions, are clearly demarcated. Butgovernance rules are particularlyimportant when it comes toimportant decisions on the futureof the business.

More objective decisionsOne of these situations is thequestion of succession planning.What role will the next gener-ation play? Experience showsthat parents tend to either over-or underrate the talents andachievements of their children.For its part, the younger gener-ation may see attractive careeropportunities outside the familyfirm. A governance code laysdown procedures for selectingpotential candidates to take overthe business on an objectiverather than a subjective basis, forexample by stipulating a profes-sional assessment process.Succession is a pressing issue formany family companies. Thesurvey found that around 40% ofthe businesses in Germany,Austria and Switzerland that facean imminent change of owner-ship in the next five years plan tohand over the reins to anothermember of the family.Rules are also needed for valuingthe business. While family busi-

“It’s a matter of finding the right path”Max Manuel Vögele, CEO and chairman of the board of directors of Karl Vögele AG, on succession planning and governance in family businesses.

Karl Vögele AG was established in 1960. Its roots goback to 1922, when master shoemaker Karl Vögeleopened a shoemaker’s shop in Uznach. Since then thecompany has been family owned. With 400 outlets andsales of CHF 380 million, Vögele is one of the biggestshoe companies in Switzerland and Austria. AlongsideVögele Shoes, the group also includes the Bingo Schuh-Discount chain and lifestyle brand MAX Shoes. Thisyear the company centralised its entire logistics inUznach, firmly opting for a location in Switzerlanddespite the fact that more and more shoes will in futurebe exported to the EU from the Canton St Gallen distri-bution centre. Max Manuel Vögele, grandson of thecompany’s founder, has been CEO and member of theboard of directors of Karl Vögele AG since 1987. Thisyear he succeeded his father Max Vögele as chairman ofthe board of directors.

Alongside this there are share-holdings and property interests.It was important to lay downrules governing powers andresponsibilities within the hold-ing company. But one point inparticular is crucial: at KarlVögele AG there is never morethan one family member involved


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Swiss energy industry:unaddressed customer needs

Swiss energy companies are too optimistic when it comes togauging the satisfaction of theircustomers. The greatest discrep-ancies arise on pricing, flexibilityand customer-specific services.The report “Offene Kunden-wünsche – Schweizer Energie-markt 2011” involved evaluatingstatements from 118 Swissenergy industry executives. Forthe first time it presented theviews of both utilities and largeenergy consumers.

You can download a PDF of the report in German atwww.pwc.ch/publications.

Economic growth:CEOs see potential

After two years of recession, CEO confidence in economicgrowth has almost returned topre-downturn levels. This is oneof the findings of PwC’s 14thAnnual Global CEO Survey. According to the survey, 88% of CEOs worldwide are positiveabout economic developments.Of those polled, 51% plan to hire new people. Two-thirds see slower economic growthresulting from the search forqualified staff, tax hikes, or cutsin public spending. CEOs believe China is the marketwith the greatest potential. Themarkets remain volatile andunpredictable, and according tothree-quarters of CEOs polledstill represent the greatest sourceof uncertainty.

You can download a PDF of the report in English atwww.pwc.ch/ceosurvey.

E7 overtaking G7: the futureof the world economy

The global financial crisis has ac-celerated the shift of economicpower in favour of the emergingnations, with the rapidly growingE7 economies set to overtake theG7 industrialised nations. Thisdevelopment is driven by Chinaand India. By 2050, both of thesecountries will have knocked theUnited States off its pedestal asthe world’s largest economicpower. These are some of thefindings of a PwC study entitled“The World in 2050”.

You can download a PDF of the report in English atwww.pwc.ch/publications.

ceo value 41

on the operational side. Myfather’s hard and fast rule hasalways been that there’s oneperson who takes responsibilityfor the business. He’s alwaysbeen aware that any otherarrangement can lead to conflict.

Why were you chosen ratherthan one of your siblings?The choice was made along verytraditional lines: I’m the first-born. I wasn’t chosen on the basisof my qualifications. It was morelike an inheritance. But I hadenough freedom to make my owndecision. We children wereencouraged to share responsibil-ity early on. This way the wholefamily has also been able to iden-tify with the business. My fatheralso transferred shares to us at anearly age, which meant we identi-fied even more strongly.

Has this helped avoidconflict on the strategicorientation of the business?We have a firm rule within thefamily that powers and responsi-bilities have to be clearly demar-cated. There are no interlockinginterests within our holdingcompany. My siblings don’t sit onthe board of directors of KarlVögele AG, and I’m not a directorof any other subsidiary of theholding company. With us thebusiness always has priority.That’s no cliché. In concreteterms it means that a) invest-ments always have to be financedby our own cash flow and b) wehave a clear target dividend. It’s never been about maximising

the personal benefit; it’s alwaysabout optimising the structure ofthe business.

Is it an advantage not to bereliant on the capitalmarkets? It’s the key advantage of a familybusiness. You’re under less pres-sure to generate returns. For usit’s important for the company todo well in the medium and longterm. As a family shareholder youalso have to be prepared to makesacrifices to make sure that valueremains in the business.

What governance principleshave your business andfamily adopted?So far we haven’t laid down any governance rules in writing. Our governance consists of anumber of different elements, forexample our guiding principlesand management guidelines. Formany years we’ve had a share-holders’ agreement governing the interrelations between theshareholders. But we will beintroducing family governancerules once my father has retiredand the ownership structure has changed. This is important,because however much we mightargue, there is a good under-standing between us. We must –we want to – keep it that way.

Will the structure of the busi-ness also change?Yes, the structures are going toget more professional. Until nowwe’ve had family meetingsseveral times a year. This was agood arrangement: people werekept openly informed about indi-vidual items of business, and theyknew more and had greaterunderstanding. But a familycouncil of this sort is a fairly old-fashioned arrangement. In future

Karl Vögele AG will have a profes-sional board of directors, prob-ably including two externalmembers who bring additionalknow-how from our industry or finance. What we’re seeking is a balance of power between the meeting of shareholders, the board of directors, and themanagement.

Who will make the strategicdecisions?Basically strategic decisionsconcerning the business aredown to me. But we do have acorporate and an ownershipstrategy. When it comes to important decisions such as withdrawing from a particularmarket, the ownership strategycomes into play. To be equippedfor the future we’ll be adaptingthe powers and responsibilities to the new circumstances in a shareholders’ agreement. Thiswill clearly lay down when the owners decide, and when the person who manages thecompany decides.

How will you decide oncompensation?The board of directors will decideon compensation, with the excep-tion of my salary, which will be decided by the shareholdersmeeting.

What, for you, is the attrac-tion of running a familybusiness?I grew up in the realisation that a company outlasts a singlegeneration, and is then handedon to the next generation. ButI’ve also seen how difficult it is toplan for the long term. The

market changes. Developmentswe predicted ten years ago haveturned out quite differently. Youcan’t stubbornly insist on keepingthe business in family hands atany price. You have to getemotional distance. The familycan’t just let the business run itsown course. It’s more a matter offinding the right path for it. Afterall, it’s not just about the family;it’s about more than 2,500 peoplewho work for the company.Maybe that’s what’s so specialabout a family firm: you givethese things a bit more thought.

Could you imagine sellingthe business?There’s a time and a place foreverything. If some day we wereto see a better option for the busi-ness, we’d keep an open mind.The important thing is that we’reable to take the business forward.If we were to find another owner-ship structure that could propelthe business forward much faster,we certainly wouldn’t say no onprinciple. For me running afamily business isn’t some kind ofreligion. On the other hand,family businesses certainly aren’ton their way out either.

“As a family shareholder you also have to be prepared to makesacrifices to make sure that value remains in the business.”

40 ceo value

“Luxury is the art of being unique” Cartier CEO Bernard Fornas weighs in on the difference between the transient andthe permanent. And about investments that outlast time and crises.

dossier valuesBernard Fornas


ceo dossier 45

Mr Fornas, there are many attractivebrands. Why do customers buy fromCartier?They choose our products because they knowthat Cartier is a reputable company, that wesupply quality and are admired the worldover for our creativity. Because they get some-thing of real value for their money! All theseelements combined ensure that people cometo us – and even more so in times of crisis.Over the past few years, we have once againseen that in a crisis people prefer companiesthat are credible and have an establishedplace in the market. Those who do not havethis credibility, who do not have any legacy orhistory, lose market share.

In other words, you gained newcustomers during the crisis?Many bought a beautiful item of jewelleryfrom us because they wanted to diversifytheir investment portfolio. Perhaps they hadlost money with shares and said to them-selves: “We prefer to buy a nice piece fromCartier. It might cost a million, or even ten,but we are buying something of real value.That is a safe investment.”

Is jewellery really an investment in thelong term? Isn’t it a matter of contem-porary taste?At the auctions held by Christie’s, Sotheby’sor Phillips, Cartier creations from bygonedays sell at top prices. For these are uniquepieces, of great quality and creativity – worksof art. And there is only this one piece – andno other like it.

You speak of haute joaillerie. What isthe base price for this segment?It is a question of definition. At our company,it is EUR 200,000. That is a lot of money. Butyou can also buy a wonderful necklace atCartier for EUR 20 million.

Is it possible to earn money with hautejoaillerie today, or is it more like withhaute couture, where ultimately it isthe sales of perfume that generate theprofits of the fashion houses?Our business has nothing to do with hautecouture! Fashion is transient, but watchesand jewellery are made for eternity. Your suitand mine, in two to three years, will bethrown away. But one day my watch will bepassed on to my son, my daughter, my girl-friend or whomever. You have to differentiatebetween the transient and the permanent.This difference is very important in the way inwhich something is designed, developed andproduced. When you make something to lastforever, you have to be uncompromising inyour approach. And that is precisely what weare. Ephemeral products such as fashion orperfume must never be confused with thingsthat are made to endure.

But Cartier also sells perfumes…We sell perfumes to ensure nobody else doesso under our name. We decided on this stepto protect our brand from forgers and copy-cats.

Do jewellery and watches account forthe biggest proportion of yourturnover?Yes, of course. We created perfumes orfoulards more out of necessity than passion.By making these products, which represent avery small part of our business, we protectedthe rights to our name for the entire cosmet-ics and textile sector.

Cartier has sold luxury products formore than 150 years. What values doesluxury symbolise today?Everybody has their own personal level ofluxury. But real, ultimate luxury is somethingthat only one person can call their own: aspecial item of jewellery that was designedand produced for him or her specifically, thatnobody else in the world will possess, nomatter how rich they are. True luxury is theart of being unique.

Bernard FornasFrenchman Bernard Fornas isCEO and president of the boardof directors of Cartier Interna-tional. He is also a member ofthe board of directors of theluxury goods group Richemont,the parent company of Cartier.After completing his MBA at theKellogg School of Managementin Chicago, Fornas started hiscareer at Procter & Gamble. Hethen worked at the InternationalGold Corporation and at theperfume manufacturer Guerlain.In 1994, he became interna-tional marketing director atCartier, where, after an interludeat the Geneva-based watch-making company Baume etMercier, he was promoted toCEO in 2002.

“The jeweller of kings

and king of jewellers”

44 ceo dossier

A temple of luxury and of lasting

values: Cartier, Rue de la Paix,

Paris. Individual pieces of jewellery

are finished in an atelier located

above the showroom, protected by

numerous security checkpoints.

We had the privilege of watching

the jewellers at work – see the

following pages.

“Many bought a beautiful item of jewellery from us because they wanted to diversify theirinvestment portfolio.”

Luxury can also be political. At any rate,Bernard Fornas, CEO of Cartier, was sure ofhis political impact when he declared in a TV interview in 2008 that his company wouldnot be buying any more of the legendaryBurmese rubies until the human rights situ-ation in the country changed. Two weekslater, other major jewellery manufacturersfollowed suit and joined the boycott. A fewyears previously, Cartier had initiated thefounding of the Responsible Jewellery Coun-cil, an international industry federation thatcampaigns for ethical values and, amongothers, combats child labour and the trade inblood diamonds. “As a global leader, you are arole model and you have to set a good exam-ple,” says Fornas, explaining his commitment.“Everyone is looking over our shoulder.”Indeed, what Cartier does – and does not do –matters. The company, which is headquar-tered in Geneva, is the largest buyer ofdiamonds in the world. Not only that. Cartieris the undisputed number one on thejewellery market and is also one of the lead-

Celebrating uniquenessOne name, one success story –Cartier is the undisputed worldleader in haute joaillerie. And notcoincidentally. For more than 164 years, the company has stoodfor style and quality.

Does luxury also have something to do with showing off? Do people buy aCartier watch to put it on show?Yes, definitely. In countries like China or theformer Soviet Union, people want to demon-strate their commercial success. A man might buy his wife some Cartier jewellery or a watch from Cartier as a symbol of thatsuccess. In other countries, people buyCartier products too, but less to show themoff. The interesting thing is that we cater tothe full range of tastes: the penchant for bling – “Look at me, I’ve made it!” – and themore reserved appetite – “I have money andadmire the craftsmanship.”

A balance between aspirations andexpectations…That is precisely the interesting thing about it. At Cartier, these facets complement one another and are not a contradiction inthemselves. That is a great and unusualcombination.

Can this combination be managed byvalues?We control it very deliberately. For that, we have to be very cautious in everything wedo. We have to put our savoir-faire and ourculture to the test on a continual basis. Whichis why, for instance, we maintain our one-of-a-kind collection of 1,700 haute joaillerieitems and exhibit them in museums all over the world. In the Palace Museum of the Forbidden City in Peking, half a millionpeople saw the Cartier collection. It helps to show the creative importance that Cartierhas, and always has had.

Isn’t the focus a little too much on thepast?The great tradition and the fantastic crafts-manship are just the one side of the coin! On the other, there is our commitment tocontemporary art. We set up the FondationCartier in Paris 27 years ago; since then, themost important young talents of our timehave held exhibitions there. Other companiesare just in the process of discovering contem-porary art – with its commercial aspect inmind. I can only laugh at that. With our foundation, we never wanted to do anythingapart from promoting young artists. And wewill continue to do so.

Precision, guided by an unerring eye: highly specialised professionals cut,

set and polish gemstones, sometimes using tools over 100 years old. Each

finished piece of jewellery is crafted by hand in an atmosphere of supreme

quiet and concentration.


purveyor by royal appointment “the jewellerof kings and king of jewellers”. This pricelessslogan is frequently and proudly cited.

A price segment with no upper limitThe jewellery company was founded in 1847by Louis-François Cartier, but it was mainlyhis grandsons Louis, Pierre and Jacques whoat the beginning of the 20th century madeCartier one of the most desirable brands inthe world. In search of inspiration, they trav-elled to India, Russia and the Persian Gulf,and opened stores in the epicentres of luxuryand style: Paris, Rue de la Paix; London, BondStreet; and New York, 5th Avenue.Today, Cartier still produces the basis for thebrand’s reputation: jewellery items of superbcraftsmanship in a price segment with noupper limit. Its second pillar of business iswatches. Cartier was one of the first clock-makers to make wristwatches at the end ofthe 19th century. Under Bernard Fornas, thissegment has grown substantially in import-ance – the timepieces are manufactured in a

ing manufacturers of other luxury goods,from watches, writing instruments andleather goods to cigarette lighters and spec-tacles. Cartier has been part of the RichemontGroup since 1997 and contributes around halfof its turnover, which is growing at an excel-lent pace. In the first nine months of 2010,total sales increased by 33 per cent to EUR 2.1billion.Cartier owes its success to a perfect blend ofinnovation and tradition. The company’s ownhistory is elaborately celebrated, for it is veryclosely associated with the personal history offilm divas and crowned heads of state. Forinstance, the engagement ring that PrinceRainier of Monaco presented to Grace Kellywas from Cartier – a platinum-set 10.47-caratdiamond with an emerald finish. However,Cartier made its biggest PR coup with KingEdward VII of England, who called his

brand-new factory in La Chaux-de-Fonds,Switzerland. The prize items, however, arejewellery watches produced in very smallseries, decorated with hundreds of diamondsfor the price of a luxury limousine – or uniqueitems, the price of which is not revealed.

Up to 10,000 hours of workAll unique Cartier items and special items toorder are made at the company’s atelier onthe Rue de la Paix. Sixty highly specialisedprofessionals, including 40 jewellers and awatchmaker, work behind numerous securitycheckpoints around an atrium in Zen-likequiet and concentration. Up to 10,000 hoursof work are invested here in complex items ofjewellery. “This is unparalleled anywhere inthe world,” says Xavier Gargat, director of theCartier atelier for the last twelve years. Everypiece – from diamond rings and complexcolliers to sophisticated jewellery watches – is

elaborately handcrafted. The three-dimen-sional, movable animal shapes, beset withhundreds of different-sized diamonds andgemstones typical of the Cartier style, areparticularly demanding. They are createdusing old techniques and traditions and withprecision tools, some of which are 100 yearsold. Each stone is set by hand, fitted andfixated with microscopically small metalelements. An artistically ambitious jewellerneeds 10 to 15 years of experience until he orshe has mastered this exacting work. From a style perspective, the precious itemssymbolise timeless elegance with a stronglink to art deco design. The company’s ownaspiration is that a piece from Cartier should“travel through the decades in eternal youth”.Above all, a Cartier product must always berecognisable as such. Its essence? Quitesimply, “très Cartier!”.CEO Fornas himself ensures that Cartiernever strays from this course of quality andstyle: “Among the thousands of new products

that are manufactured at our company everyyear, there is not a single one that I do notsign off on personally,” says Fornas. “First inthe design and then as a prototype or individ-ual finished piece.” Fornas reserves two hoursevery week for assessing the new designs andjewellery items. He thus ensures that every-thing that is launched on the market has the“Cartier touch” and carries on the “Cartierlegacy”. Pieces have been known to be sentback to the Paris atelier – irrespective of themany thousands of hours they took to make.Why is this ultimate quality check given top priority? Fornas answers immediately: “The CEO must have the last word. Withoutquestion. Here, it is the strategic alignment of the company that is at stake.”

A Cartier product must always berecognisable as such. Its essence?Quite simply, “très Cartier!”.

Xavier Gargat has worked for

many notable jewellery producers

in the Place Vendôme in Paris.

He has directed the Cartier atelier

for twelve years. “What we do here

is unparalleled anywhere in the

world,” he says.


In the watch-making atelier, there are photos of

unique jewellery watches hanging on the walls;

their price is not disclosed.

“People don’t need culture; they have it”Culture lets you discover something about yourself and the world, says Martin Heller. He runs his own company specialising in cultural projects and aims to strike a chord with people in Switzerland and abroad and inspire them.

dossier valuesMartin Heller


ceo dossier 53

Mr Heller, according to your company’smission statement, you develop a widerange of cultural projects. What isculture?At the 1982 World Conference on CulturalPolicies in Mexico City, UNESCO famouslydefined culture as virtually anything – i.e. ourliving conditions per se. And in addition to this definition there is also the acceptedinterpretation by those who work in thecultural sector that culture is everything associated with art in the broadest sense ofthe word. The term “culture” is vague, but we have to live with this vagueness.

Do people need culture?If culture in the broadest sense is our livingconditions, i.e. the way and manner in which we organise our coexistence with oneanother, then culture in its various forms is all around us. People don’t need culture; theyhave it.

What is the value of the culture thatyou offer with your projects?We do experiments with festivals, exhibitionsand also towns. For us, these projects are not just outpourings of beauty; they also offeran opportunity to discover something aboutourselves and the conditions in which we live, or about an era or what artists thoughtabout their time. In short, culture offersunique possibilities to learn about the world.

How important are these experiences?It varies considerably. I worked with the cityof Linz over a period of five years; the city hadset itself the goal of becoming the EuropeanCapital of Culture in 2009. This project waspivotal to the city; to a large extent it deter-mined politics and how the city was perceivedinternally and externally for many years. Itgenerated high expectations and enabledmany citizens to have defining experiences.Another example: we designed an exhibitionon urban development in Berlin last autumn.You can either visit an exhibition, or stay at

home. Thirty thousand people came. Formany of them, the visit to the exhibition wasan enduring experience.

The public sector invests a lot of moneyin culture, for instance in museums orin theatres. Is it one of the state’s tasksto support culture?Yes, of course. But the state needs to thinklong and hard about which cultural expend-itures are necessary and vital for the commongood. I am referring, for instance, to theprotection of ancient monuments, the preser-vation of traditions that explain to the nextgeneration where we come from or theupkeep of museums as a kind of artisticarchive. There are many rational reasons forstate support of culture. But there are alsoidealistic and political ones: a culturallyeducated citizen is more politically maturethan someone who has nothing to do withculture.

Should people in the cultural sector beresponsible for success or failure, likebusiness people are?I think they are anyway. Just as everybody isresponsible for what he or she does or doesnot do, and whether he or she does it well ornot. Nobody can shirk responsibility. Unlikepeople in the business sector, however, peoplein the cultural sector should not be measuredprimarily by economic goals. The really goodartists are at their best when they are giventhe opportunity to tackle and reflect on issuesfreely. In the cultural sector, not everythinghas to break even – on the contrary, in a country as wealthy as Switzerland, there alsoneeds to be space for the experimental, forroom to manoeuvre, and for the qualities thatonly art and culture can offer.

You work at the interfaces betweenpolitics, business and culture. How dopolitics and business affect your proj-ects?I am interested in these interfaces, not leastbecause of my experiences as artistic directorof Expo.02. When I took on that job in 1999, I became closely involved in politics and busi-ness. Our business plan at the time envisageda target of 10.5 million visitors; with regard torevenues, this was a must. We met our goal –and we also struck a chord with people and

Martin Helleris CEO of the company HellerEnterprises. He sees himself asa cultural entrepreneur, imple-ments cultural projects, givespresentations, holds seminarsand writes for magazines, cata-logues and books. The 59-year-old Basle native was thedirector of the Museum ofDesign in Zurich from 1990 until 1998. He came to nationalprominence as the artistic director of Expo.02.

“In thecultural sector,not everything

has to breakeven.”

52 ceo dossier

inspired them. That is a decisive factor.Having to live within a budget and to accountfor every penny is an inescapable reality ofthe work that I do, but it is not what mattersmost. And there is also another aspect. Whenpoliticians and businesspeople get involved incultural projects, it is my task and delight toexplain the adventure of invention to them. Itis about new things, but also about creatingnew things with what is available.

How well do you reconcile your ownideas with the clients’ interests?It works best when clients approach me in thebelief that I can implement what they have in mind in my own independent way. When we then discuss the mandate, I normally want a formulation that gives me the freedom tocreate the invention in the way that I want to.

Can you give an example?I mentioned the exhibition on urban develop-ment in Berlin. In the discussions with repre-sentatives of the client, the Federal Ministryfor Transport, Building and Urban Affairs, theissue was what a current exhibition on citiesin Germany should be like. “The goal is that it should inspire people to live and work in towns and cities” was the rather unusualformulation that we agreed on. I then madethe suggestion that the exhibition consist onlyof models. These were exhibited in a marvel-lous factory building in Berlin, a formerpower plant – which was fascinating for bothus and the public! We then sent photograph-ers through the world of the models on a kindof multi-city tour, thus creating an impressivebook in addition to the exhibition.

You had a staff contract as the directorof the Museum of Design in Zurich andat Expo.02. Now you have your owncompany. How do you like your role asthe CEO of Heller Enterprises?Having your own business brings additionalfreedom, as well as additional burdens.Managing your own small company is ofcourse a great challenge. Many difficulties areonly experienced over time. After the Expothere were no really convincing job offers. So I struck out on my own because that is theway I can best satisfy my requirements withregard to risk, variety and different forms ofworking.

You are working on another majorproject in Berlin.The Berlin City Palace is being restored. Sincethe 15th century, it had been used as a residence by electors, margraves, kings andemperors. In 1950, the government of theGerman Democratic Republic had the build-ing demolished; the Palace of the Republicwas erected in its place. In 2007, the GermanBundestag and the state of Berlin decided torebuild the palace. Construction work isscheduled to start in 2013. This new BerlinCity Palace is dominated entirely by non-European cultures, and I have been commis-sioned to develop a concept for the content ofthe large event area. The client is the stateminister for culture and media in Germany.

This is a highly political project inwhich many people want to have theirsay.Yes, very much so. There are political stances,commercial interests and the expectations of the public – all of which is a minefield tonegotiate. For me, working there meansdeveloping my own ideas about what mightbe good for such a cultural venue, based onmy experience, as well as finding out whatothers want. The result is important for me.We intend it to be meaningful and not just acollection of compromises.

How will you tackle this project?I have one overarching principle: I try to takethe time at the beginning to collect informa-tion from those involved directly or indirectly.Last autumn, I didn’t know anything aboutBerlin City Palace. But since then, I must have had 40 conversations with people whoare involved. In addition to the standardapproach of researching and developing myown ideas on the topic, being privy to allthese expectations, information, requests andaspirations is very important to me.

Are you going to move to Berlin?I will be spending a lot of time in Berlin, just as I did in Linz at various times. Since the Expo I have always lived in at least twoplaces – and now I live in three.

“The resultshould be mean-

ingful and notjust a collection

of compromises.”

“It is about new things, but also about creatingnew things with what is available.”

“We invest in increasing value”PSP Swiss Property AG is one of the largest real estatecompanies in Switzerland and is aiming for furtherprofitable growth. CEO Luciano Gabriel discusses realvalues, cycles in the real estate market, speculating onthe stock exchange and dynamic locations.

dossier valuesPSP Swiss Property


ceo dossier 57

Mr Gabriel, you said at the beginningof 2007 that people could sleep well atnight with real estate shares in theirportfolio.That statement still holds true today –although nobody knew from mid-2007onwards what would really happen in thefinancial markets. I remained confident. Afterall, the assets of a real estate company are itsproperties and they remain real even in acrisis, provided they are managed properly.Those who think long-term will always dowell with real estate in Switzerland.

Nevertheless, the share price of PSPwas halved in the crisis. Weren’t youconcerned?Yes, I was because we didn’t know when thedecline in the share price would stop andwhat it could trigger in a worst-case scenario.There were many financial market playerswho made the whole thing worse by speculat-ing that share prices would fall even further.The decline in the share price was entirelyunjustified.

How do you cope with the market valueof your company fluctuating by severalhundred million francs in the space ofjust a few weeks?It is best not to check the share price everyday. We have to live with fluctuations, as others do. And there are movements thatcannot be rationally explained. Shares in PSP were hugely undervalued; the internalvalue of the share was substantially higherthan the share price on the stock exchange.The company has an excellent strategic alignment, it is professionally managed andits revenue drivers are long-term – thosethings are important. In the medium and longterm, share prices do find their correct level,as current developments show.

You have to increase value for yourshareholders and profit per share. Isthat a curse or blessing?It is a good thing for us never to lose sight ofthis mandate. We consider very carefully howwe can generate added value. If we only

wanted to increase in size, we would havebeen more aggressive over the last few yearsin our acquisition policy. But that does notpay off in the long term. To answer your ques-tion, it is nothing but a blessing.

How did you become the head of a realestate company?PSP was created when Zurich Insurancecarved out its real estate division and floatedPSP on the stock exchange in March 2000. At the time, I was working at Zurich FinancialServices in the Corporate Finance divisionand was responsible for preparing the IPO(initial public offering). In 2002, I moved toPSP, initially as its CFO. Five years later, I wasappointed its CEO.

PSP is the second-largest real estatecompany in Switzerland…If real estate investment funds are also takeninto account, we are further down the list.Positioning according to size is not important.The profit and the internal value per shareare relevant for us. As a company listed on the stock exchange with real estate worth a good CHF 5 billion, PSP is big enough and hasthe required visibility. We only invest inincreasing value. We want to grow externally,but the price has to be right. Otherwise, wehold back and concentrate on optimising ourexisting portfolio.

Do you believe that excessive prices arebeing paid for commercial real estatetoday?I do not believe that there is already a bubble.In individual cases, you get the feeling thatthe price is very high. But nobody knowsexactly which price level is the “right” one –every buyer has to decide for himself how far he wants to go. They all want to buy thesame properties in the dynamic commercialcentres.

As a recent bank study revealed, therental prices for commercial proper-ties are also stagnating.A differentiation has to be made here. Forinstance, 250,000 or so additional squaremetres will be offered to the market over thenext few years in the Zurich region, and thesefirst have to be absorbed. What will suffer isnot real estate in or near the centre but poorlymaintained properties on the outskirts.

Dr Luciano Gabrielhas been the CEO and delegateof the board of directors of PSP Swiss Property AG since2007. Before that, he was thecompany’s CFO for four years.Gabriel studied businessmanagement and economics at the Universities of Berne and Rochester (NY, USA) andcompleted his doctorate at the University of Berne. His firststep on the career ladder was at the Schweizerische Bank-gesellschaft (Union Bank ofSwitzerland), as it was called at the time; he then moved to Zurich Financial Services.Gabriel is a member of theexecutive board of the Euro-pean Public Real Estate Associ-ation and of the board of direct-ors of Orascom DevelopmentHolding AG.

“I do not believe that

there is already a bubble.”

56 ceo dossier

Specifically, this means there would be major differences in the rental yieldwith an office in a good location inZurich and the same office in a lessdynamic region.In Zurich, the rent for good locations isbetween CHF 700 and 900 per square metre;in Geneva, prices are similar and can evenreach more than CHF 1,000 in particularlygood locations. In towns and cities with lessgrowth, the rental prices have often stag-nated at between CHF 200 and 300 for years.Although building prices have increasedthere, too, there is no movement because thedemand for office space is not strong enough.It is often difficult to find a new tenant. Thereis no proper market outside of the maincentres. Even if the rent falls, nobody wantsto move there because the infrastructure, forexample, is not ideal.

PSP has office and commercial build-ings, but no residential real estate.Don’t you want to diversify into thissegment?No. We see little upward potential there in thelong term. With commercial real estate, wecan participate directly in the economicupturn and generate correspondingly higherrental revenues with investments thatimprove the quality of our portfolio. The realestate business is of a long-term nature. Asalready stated, the value of a propertydepends on its location and its quality. We askourselves where new jobs will be created overthe next 20 or 30 years and where thedemand for office space will rise. Thisdynamism exists primarily in Zurich, Genevaand Basle. The NRLA rail link (through theAlps) could offer new perspectives. It willmean that Ticino, for instance, will movecloser to the main centres.

Your company focuses on the Swissmarket.That will definitely remain the case. Whyshould a shareholder invest in France throughour company? He would do better to investvia a French real estate company. We wouldnot have any comparative benefits withinvestments abroad. Real estate is a localbusiness. You have to be familiar with thelegal and fiscal systems and know the localmarket well.

A key ratio for real estate companies is the vacancy level. This is just under9% for PSP. You want to get it down to5%. By when?

That will take a few years at our company.Five per cent equate to the natural or struc-tural vacancy rate. A large part of our vacancyrate is in Zurich West, where we see greatpotential over the next few years. The entirearea is currently a building site, which is whymany prospective tenants are still rather reti-cent. Patience is needed, but we are in theright place. Office space is a scarce resourceof increasing value in densely populatedSwitzerland.

Analysts compare the differencebetween the net return on the proper-ties and the average interest rate ofexternal financing. This is currently1.8% for PSP. Are you satisfied withthat?This comparison is constantly being madeand does not say all that much. Let us assumethat the rental yield of a property doubles. Inthis case, the market value of the propertywould increase accordingly and the netreturn would stay the same. The comparisontherefore only makes sense when you buy aproperty. We have our financing situationunder control.

With more than 50% equity, PSP is indeed comfortably financed andcould afford acquisitions of some CHF 1.5 billion without having to increase its capital. Are there nosuitable properties available?Our financial leeway is an advantage. In theshort term, however, I do not see why weshould need this flexibility. What’s more, alow level of indebtedness helps a company toease through cycles that are inherent in thereal estate business.

At what stage do you see Switzerland atthe current time?I am not euphoric, but generally the situationis a good one. The Swiss economy has comethrough the global crisis well and is now in aposition of renewed strength. The demand forreal estate is increasing, not least due toimmigration in Switzerland. If we extrapolatethe current economic development, we havecause for confidence. A major economic crisisin Europe would undoubtedly also have anegative impact on Switzerland. But that isnot our scenario.

PSP Swiss Property AG is the second-largest Swiss realestate company and has beenlisted on the stock exchangesince 2000. The company hasoffice and commercial buildingsworth CHF 5.4 billion in themost important commercialcentres in Switzerland. Itemploys a total of some 80 staffat offices in Geneva, Olten, Zug and Zurich. Since the saleof its Property Management forThird Parties unit, PSP hasconcentrated on optimising andfurther developing its own realestate portfolio.

CHF

5.4billion

real estateportfolio

58 ceo engagement

Setting yourself goalsWhat it takes to reach the top.

Who hasn’t seen the pictures of Kilimanjaro,that impressive mountain with its snow-whitepeak, rising up from a never-ending plateau?At 5,895 metres, it is the highest mountain in Africa, the highest free-standing mountainin the world and one of the largest dormantvolcanoes on the planet. All that, and theword “Welcome” written on the wooden sign-post marking “Kili’s” summit at Uhuru Peak. The Swahili “uhuru” means “freedom” inEnglish. It is an apt description of Africa’shighest point, as Thomas Brüderlin, an audi-tor at PwC, discovered. For Brüderlin, sittingat the summit and watching the sun rise overthe equator was “an overwhelming feeling”;the pleasure in recalling that moment is writ-ten all over his face.

Powerful emotions were the last thing on hismind when he decided to climb Kilimanjaro.“I had just celebrated my 40th birthday andwanted the challenge,” says Brüderlin. Heprepared intensively for six months, wentclimbing three times on Switzerland’s MountTitlis and a countless number of times on the Sonnenberg (“our ‘local’ mountain”) inthe Frick Valley. He also went for long hikes.When he started his trip, he was in peakcondition – in the truest sense of the word –and eight kilograms lighter. Both were a blessing for the strenuous tour, whichrequires climbers to negotiate 1,000 metres of altitude every day. Brüderlin managed thetest of stamina without having to pushhimself through any pain barrier: “I really

was able to enjoy it,” he says, “even thesummit push, which is the toughest and worstsection of the route. I thought it was simplyamazing.” The climb was also unbelievable for JosefBachmann, the managing director of thepension fund at PwC, but in a different way.He treated himself to the tour on Kilimanjarolast autumn as a 60th birthday present. “Iwanted to feel what it was like to stretchmyself to the very limit,” says Bachmann, apassionate runner of half-marathons. Hisdoctor had confirmed that he was fit enoughto climb the “roof of Africa”. But things took adifferent turn: “At around 5,400 metres up,the guide advised me to turn back as I wasvery unsteady on my feet,” says Bachmann.“First I refused; I wanted to get to the top,come what may. But then I accepted that Ihad to give up. However, before I could tellhim my decision, I fell into a sort of altitudeintoxication.” He was astounded by whathappened next: “I felt a surge of energy andmade it to the top without any problems.”However, the descent, which most peoplemanage with ease, was sheer torture for him.He had to battle his way down, step by step.The highlight for Brüderlin on the five-daytour was reaching the top; for Bachmann, it was making it down again in one piece.Both draw similar conclusions from theirexpedition: “You cannot control how yourbody will react,” says Bachmann. “You can do some solid groundwork beforehand, butyou ultimately also need a bit of luck to besuccessful,” says Brüderlin. As to what theKilimanjaro tour has bequeathed them fortheir everyday working life at PwC, both say“equanimity”.

Photo: Vera Hartmann

PwC in person

PwC’s Thomas Brüderlin and Josef Bachmann on climbingMount Kilimanjaro: “You can do some solid groundwork before-hand, but you ultimately also need a bit of luck to be successful.”

For Brüderlin (left), the

highlight of the five-day

expedition was reaching

the top; for Bachmann, it

was making it down again

in one piece.

proximity and distance - pwc · daniel joggi, president of the paraplegics foundation. 14 “we are...

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