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 / Fourth Quarter 2002 / Issue 29(originally published by Booz & Company)


Best Business Books 2002: New Europe

One Market, Many Cheeses

The launch of the euro marked for many the emergence of a new Europe. In fact, it was simply the most outward and visible sign of a long-term process of integration in the region. Since 1992, reforms undertaken by the European Union (E.U.) have been aimed at creating a single market — united by common regulation, taxation, tariffs, and the free movement of goods and people across national borders. Global businesses have (often) worked toward the same ends, rolling technologies and brands across borders and building pan-European organizations to manage them.

Capitalism, a major force of change in Europe, which brought about the rise of former U.K. prime minister Margaret Thatcher and the fall of the Berlin Wall, is a less tangible but probably more powerful and pervasive influence than single-market political and economic reforms. True, state-owned industries have been privatized and protected industries opened to competition. But the effect of unfettered market competition is even broader. As Richard Roberts and David Kynaston write in City State: How the Markets Came to Rule Our World (Profile Books, 2001), their history of the last 20 years of London’s financial markets, political debate has given way to “‘market populism,’ the axiomatic assumption that the will of the people and the will of the market are identical.”

On the surface, the new Europe that has resulted from all these changes looks more like the U.S. than it ever has before. Witness: a single market, a single currency; public regulation and private capital; individual initiative and personal responsibility. Shops, newsstands, and television programs are full of names familiar to Americans. Communication is quick and cheap. Credit cards are accepted, and cash is available from ATMs. The English language can be used for most transactions in most countries.

But appearances are deceiving. Europe is, in reality, anything but a single market. And it certainly isn’t the U.S. From a distance, one can forget that (with the notable exception of France) most European states are federations: Germany, Switzerland, Italy, Spain, Belgium, and the United Kingdom. Hugo Young writes in This Blessed Plot: Britain and Europe from Churchill to Blair (Overlook Press, 1999), his history of the E.U. seen through British eyes, “Nationalism remains a force, perhaps the strongest force among people who were given any encouragement to express it.”

The rise of the E.U. and the end of East–West tensions have diminished the role of traditional political boundaries, allowing this regionalism and nationalism to resurface. Even within more homogeneous countries, regional differences translate into distinct values and cultures, and Europe has neither the internal migration nor the national media that stir America’s melting pot. From biscuits to boardrooms, distinct local tastes influence every aspect of business.

Managing Complexity
The challenge of managing in the new Europe is to come to terms with its growing complexity — its increasing fragmentation at all levels: political, social, and cultural. An American executive, even the most ardent Europhile, cannot hope to understand all of Europe’s rich diversity. The key is to understand that it is diverse and then to create and lead the businesses and organizations to succeed in that diversity.

No one has written the definitive guidebook to managing in the new Europe. It’s probably impossible, as the dual forces of integration and populism are still reshaping the markets. It’s also unnecessary. A growing number of executives are trained to operate regionally or globally by the world’s leading business schools. And English has long been the lingua franca of the worlds of science and technology. Only accounting and human resources/labor relations remain arcane national arts requiring an expert native guide. To be sure, no book can prepare you for the subjective judgments of German reserve accounting or the mind-numbing complexity of dismissing Italian staff members. Still, any number of recent books collectively present a variety of guidance on developing strategy and managing in the new Europe. Some are quite literary, presenting vivid portraits of individual country cultures; others offer more practical advice about managing in them.

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