strategy+business is published by PwC Strategy& LLC.
or, sign in with:
strategy and business
 / Winter 2004 / Issue 37(originally published by Booz & Company)


Europe: Old World or New?

Booz Allen Hamilton's Torbjorn Kihlstedt
The Rhineland has a word for what we should be seeking -- subsidiarity. That means that countries, even regions, can organize their lives, their economies, under the frame of a very clear constitution that sets values and direction for Europe.

S+B: Several of you have said that Europe should be defined by a sense of clear values. Is it possible to articulate what those values might be?

Confalonieri: The two pillars of world history are égalité and liberté. Adenauer, Schumann, de Gaspari -- the founding fathers of modern Europe -- thought about both equality and freedom as the foundations of a peaceful Europe. We did stop the wars by finding a way that involved both.

S+B: But those could also be described as American values, or the values of other nations and continents. Is there a way to define European values that would make them distinct from others?

HABBEL: A big advantage of Europe is the way Europe deals with problems -- business problems and other problems. Europe has learned about consensus. It might take a little longer sometimes, but we have created a more negotiation-based than power-based way to solutions. That approach also creates social stability, which is advantageous for Europe. Of course, that also delays things, and creates, as Helmut said, more bureaucracy. It's often remarked that the Declaration of Independence has 100 lines, and the import regulations for bananas into the European Union has 1,500 lines. That kind of thing I guess we have to guard against.

Confalonieri: Governments can become paralyzed and trapped in the consensus paradox. For Europe to enhance its competitiveness, structural reforms have to be addressed outside the context of the local and national debates. We cannot let bureaucracy win the game. Our values, it seems to me, are drowning in a bureaucracy that is concerned about the length of bananas. We have to prevent bureaucracy overcoming the balance of liberty and freedom that was at the origins of contemporary Europe.

Pineau-Valencienne: At the same time, we need common rules in order to work together, and to cut the kind of expenses we had when we operated solely as individual countries. I will give you one example: When we at Schneider acquired Square D in the United States, which made electrical distribution and industrial control products. Square D served North American markets. They had three warehouses for the whole of North America: Mexico, United States, and Canada. In Europe at the time, to serve the Common Market, we had 114 warehouses! So we need common rules, to change the bad habits we have in some countries. Fortunately, thanks to the single European currency, that's happening. When I left Schneider five years ago, we had only 32 warehouses, and now the company is down to maybe four or five.

All these transformations happen because we have common rules. I've had long discussions with Mario Monti, the E.U. competition commissioner. To the annoyance of many, he is bringing a common rule to antitrust regulation. That's what we need. It doesn't have to be the bureaucracy of the bananas, but we need to play a similar game with broad rules.

Willy R. Kissling, board president of the Unaxis Corporation
After Maastricht

Habbel: I agree with you, Didier, that we need rules, but I think they should be few, and there should be enough leeway and freedom attached to them that entrepreneurialism can flourish.

Napolitano: I'm not sure the political class understands the distinction between common rules and bureaucracy. And I don't think they are managing expectations well. The politicians have been portraying an integrated Europe as the end -- you know, "Now we've got Europe, and everything will be beautiful." They're not explaining what the opportunities are, and what it will take to get there.

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store


Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.