COO
INSIGHTS
THE MAGAZINE FOR
CHIEF OPERATING OFFICERS
ISSUE 03.2014
FRUGAL
INNOVATION
SIMPLE,
SIMPLER,
BEST
New products, new thinking:
Prof. Requardt, CEO of Siemens
Healthcare, on the difficulties
of being "good enough"
5
$ 6
0
0
0000
0
0 0
F IGU R E I T OU T
000
By 2030, the purchasing power of the global middle
class could rise to USD 56 trillion – that would be
an increase of 160% on 2009 levels. Consumer power
is growing, particularly in the emerging markets,
which Western companies have long neglected.
(See p. 12 for a more detailed look at the shift in global purchasing power.)
E DI TOR I A L
Dear Reader,
What do Renault-Nissan's Logan, Siemens's Multix Select
DR X-ray system and Unilever's Surf detergent have in
common? All three products represent a major conundrum:
how can companies switch from a "Big is beautiful" mindset to one of "Good enough" or "Best fit"? The answer is
" frugal innovation" – the art of making more out of less,
when the "less" is already on hand. In this issue we explore
three assumptions. First: emerging markets are no longer
markets that simply scoop up whatever they get from the
high-end Western producers. Second: scarce resources
are forcing companies to be more efficient in how they use
raw materials and more careful of costs (see the previous
issue of COO Insights). And third: What's good for the
emerging markets can also be good for the entire world. It
sounds simple – but deceptively so. Frugal innovation is
not a cure-all, but it is a sensible modification of our sometimes too-rigid innovation culture. After all, as Albert
Einstein put it: "One cannot solve a problem with the same
mindset that created it in the first place." We wish you an
enlightening read.
COO Insights | 03.2014
Thomas Rinn, Partner
Max Blanchet, Partner
[email protected]
[email protected]
3
C ON T E N T S
|
IS SU E 03.2014
TITLE
6
FRUGAL INNOVATION
Simple, simpler, best
12
GLOBAL
PERSPECTIVE
The growing
purchasing power
of the global
middle class –
Who's in the lead?
23
APPS
How the smartphone is replacing
the doctor's visit –
Clever or dangerous?
Simple and affordable products tailored to customer needs whet
the appetites of mature industries
16
INTERVIEW
"We can't afford to be foolish"
Prof. Hermann Requardt, CEO of Siemens Healthcare, on paradigm
shifts, cultural changes and local presence
14
VOICES
The art of simplicity
– Thoughts on
frugal innovation
24
AUTOMOTIVE STUDY
We can do everything – except cheap
The automotive industry is making budget cars and
"unrefining" the standard
30
DUAL BRAND
Types of diversity
29
PATENTS
Innovation –
Emerging markets
battle for the
lead in patents
Brand architecture, product offering, brand strategy – What companies
need to consider when expanding into new segments
WORKSHOP
33
WORTH KNOWING
Facts and figures
About emerging markets, modularization, mobile marketing
and the future of 3D printing
37
KIOSK
39
RB KIOSK
Mobile, practical,
good: Roland
Berger publications
on the go
Readers' corner
Structural concepts for flexible management
38
7 QUESTIONS FOR ...
2
FIGURE IT OUT
3
EDITORIAL
39
IMPRINT
Dr. Hans-Ludwig Schubert
The Senior Vice President of Product Management at Voith Paper
GmbH & Co. KG talks about the competition of ideas
4
COO Insights | 03.2014
TITLE
| MAIN TOPIC |
FRUGAL INNOVATION
/'fRu:g l/
>Adjective: simple, plain; using resources
in a careful way< FRUGAL products are
linked to six main characteristics, especially
in emerging markets: F – Functional
R – Robust U – User-friendly G – Growing
A – Affordable L – Local
TITLE
|
FRUGA L INNOVATION
SIMPLE,
SIMPLER,
BEST
Rising demand for frugal products is changing corporate
innovation processes from the ground up. Billions of
euros in sales are at stake in the war for the hearts and wallets
of millions of new middle-class consumers
6
COO Insights | 03.2014
7
TITLE
|
FRUGA L INNOVATION
I
It struck at 8:45 a.m. Measuring 7.7 on the Richter
scale, the earthquake that ravaged the state of Gujarat
in western India was the worst to hit the subcontinent
in 50 years. The epicenter was north of Bhachau, but
houses 250 kilometers away in Ahmedabad collapsed. Bridges
and dams gave way. Trains went off the rails, mines were
destroyed, whole villages razed to the ground. The final tallies: 20,000 people dead, 200,000 injured, 400,000 left standing before the rubble of their homes. It was January 26, 2001:
Republic Day, a national holiday in India.
Mansukhbhai Prajapati survived, but he lost everything.
The young potter from rural Gujarat faced utter ruin. His
workshop destroyed, he had no electricity, and food spoiled
in a matter of hours in the brutal heat. After months in this
situation, Prajapati developed the unconventional apparatus
that would make him famous: a refrigerator made out of clay.
He named this ungainly curiosity "Mitticool".
Mitticool functions on the principle of water evaporation.
Behind a pane of glass, a simple two-chamber system keeps
fruits and vegetables fresh for up to five days, milk for up to
two. And Mitticool doesn't need any electricity or chemicals.
People in rural areas – cut off from India's uphill struggle for
global player status, they view conventional refrigerators as
blessings from another world and electricity as the last word
in luxury – are eagerly snapping up the clay fridges.
"Frugal innovation turns this
lack of resources and capital
into a DRIVER OF INNOVATION"
The idea has caught global attention, with interest from electronics giant Bosch and Siemens. Prajapati is the star of a
generation of young entrepreneurs who make very much out
of very little. For them, the everyday lack of resources and
capital is not an obstacle to growth – it's a pure driver of innovation.
This phenomenon is called "jugaad" in Hindi; we might
call it "resourcefulness" or making do with what you have.
Managers of Western companies are adopting this idea and
translating it into a new business model. Jugaad is becoming
"frugal innovation" – the art of creating sometimes radically
new products and services with limited resources. The new
creations are much simpler and more affordable, but offer at
least the same value in terms of functionality. Made mostly
for and in emerging markets such as China, India or Brazil
8
and perfectly tailored to the specific demands of the lower
and middle market segments, these products target the growing purchasing power of the rising middle classes. From
there they come to more established markets as "reverse innovations". The suspicion is growing in these countries that
overengineered everyday gadgets do not truly reflect the reality of the average consumer – especially given resource
scarcity, lack of disposable income and pressure to cut costs.
"Good enough" instead of "high value for money", "spend
less and innovate" instead of "spend money and innovate" –
the change in direction also addresses a problem of mentality. Low-cost engineering is frequently mistaken for poor
knock-offs of expensive originals, which offend the quality
awareness and prevailing taste of discriminating customers.
And no wonder: the industry tries to paint each previous
product generation as a relic of the Stone Age compared to
the new one. But the average customer often fails to appreciate the refinements of the sophisticated inventor, and has
no clue how to use them. Frugal innovation, in contrast, offers
a more moderate ideal: the simplest solution offering the same
value that can be realized with existing means.
H
High tech is good – especially for those who can
afford it. But it has its critics. "We have forgotten
how to make products and services that actually
solve problems," says well-known innovation researcher and book author Navi Radjou ("Jugaad Innovation.
Think frugal"). Companies also tend to forget that the growing
middle class in the emerging markets has different desires.
Products for them have to be affordable, easy to operate,
economical and robust, while still offering the same level of
performance – in short, frugal! Design, unnecessary features
and prestige take a backseat. The products have to work
under normal everyday conditions and mustn't break down
the first time the power fluctuates or cuts out.
Manufacturers wishing to move in this direction have to
completely revamp their business models. For a long time,
one simple principle held sway: developing countries are sales
markets. And what no longer sells in the industrialized world
is still good enough for them. The poster child for this philosophy was the Mercedes truck. The legendary heavy-duty
truck with the short snout was developed in 1950s Germany
and removed from the Western Europe market 20 years later.
However, Mercedes's Indian partner Tata kept the truck afloat
until the turn of the millennium. But although it worked in
this case, companies must not come to the wrong conclusion
that they have a perennial recipe for success at hand. Times
change, as do markets. That's why frugal products are beCOO Insights | 03.2014
WESTERN COMPANIES AT A DISADVANTAGE
Western companies frequently have a weaker positioning
in rapidly growing segments of emerging markets
Market
segment
Developed markets
Emerging markets
Positioning
of Western
companies
High-end
Mid-end
Low-end
Low-low-end
Strong market position
Frugal
High growth
Medium growth
Low growth
Weak market position
Source: Roland Berger
coming ever more important for Western companies. Their
contribution to sales is growing a good deal faster than that
of high tech – globally by 7% each year, and even up to 10%
in China and India. Frugal products currently account for 12%
of sales at the companies surveyed by Roland Berger Strategy
Consultants for a study entitled "Emerging markets are changing the global innovation agenda". The share of sales is expected to nearly double (to 22%) over the next five years. At
the same time, these companies predict that by 2018, frugal
products will generate more than 18% of overall profits, up
from 10% today. These numbers are impressive, but the reasons behind them are not particularly surprising. Over two
decades ago, Unilever and Procter & Gamble starting selling
small volumes of shampoos and detergent in what were then
still exotic markets such as India. These products were customized for often modest living conditions and leaner budgets.
Sporting goods giant Nike designed the first full-body sportswear for Muslim women, and Samsung developed a washing
machine with a special cycle just for saris – keeping the long
and colorful clothing of Indian women from becoming entangled in other laundry items.
COO Insights | 03.2014
Frugal innovation goes a step further and plays a role in the
third wave of globalization. Instead of constantly upgrading
and reworking existing products for new markets (processes
carried out primarily in their home markets), Western companies are completely redesigning their innovation processes.
The technology company Philips calls this "decentralized
creation of business" – the fundamental transformation from
single to multi-R&D processes. In other words, decentralized
product research and development.
Frugal innovation systematically works its way toward
the local customer. The starting point is asking what consumers really want and need and – most importantly – what
they don't. What product features are truly necessary? Which
can be left out? And what will the customer actually pay for?
"Many companies don't pay enough attention to the local
customer needs in their sales markets, and their products
are too expensive for their potential customers," criticizes
Sebastian Durst, Principal at Roland Berger. Tailored, affordable solutions are needed. Keeping development and production close by is key, as is collaborating with local suppliers.
This gives rise to products and services that, once shorn of
9
TITLE
|
FRUGA L INNOVATION
FRUGAL INNOVATION
SIX SUCCESS FACTORS
1
Fitness check
Define target markets and
customer segments. First, ask
whether the current product
or service range is suitable for
new markets and what potential it has. Depending on the
results of this analysis, you
have three options: Keep the
current range, change/adapt
it or completely redevelop it.
2
Market analysis
Now look at the defined target markets and target customer segments in detail.
What do the new customers
really need? And especially,
what don't they need? How
much are they willing to
spend on which product features? These models include
an idea of the right price
range and possible profit.
4
Value chain
configuration
This involves deciding how
much to outsource and creating a tailored solution for
each stage of the value chain
– from development (where
will the product be made?)
to marketing and sales (is a
dual brand strategy best?)
5
Roadmap
The roadmap doesn't just
describe the situation; it also
includes the conclusions and
the preferred solution. It is a
straightforward business case
– with an honest risk assessment, implementation plan
and clearly allocated responsibilities.
6
Change management
3
Product design
Imagine you are designing the
product. What is its core?
What is indispensable? What
extra features do you need?
What fits the desired user
behavior and what doesn't?
All these questions can be
answered by a technological
concept including target
costs and a bill of materials.
10
Frugal innovation transforms
thinking at all levels. Executives and employees often
meet such changes with
incomprehension and skepticism, or they create obstacles. That wastes time and
money. Change management
processes accompany the
transformation: not just to
overcome reservations, but
also to create enthusiasm
for the new idea.
their dead weight, are often reduced to their core functions
but are still complete. They boast the same quality and performance, but offer exactly what is required given the different levels of purchasing power and user habits in each market. What's more, they often enjoy healthy demand among
customers in industrialized countries who can't or won't cope
with high tech.
Siemens Healthcare's Multix Select DR is one such product. Representing the first step toward digital radiography,
this X-ray machine covers nearly all clinical applications, is
simple to operate and costs about one-third less than its comparable predecessors. These features make it particularly attractive for emerging markets as well as established markets
that have to use analog radiography for cost reasons. The
Multix Select DR provides the doctor with an X-ray image in
just seconds. Special software ensures image contrast, which
was previously reserved for high-end products. The system
was developed by a German-Chinese-Spanish team.
"Simple", "Maintenance-friendly", "Affordable", "Reliable",
"Timely-to-market" – SMART is the acronym of the Siemens
strategy and growth program in emerging markets. When
the program was launched, it targeted Brazil, Russia, India
and China and the Middle East. It now includes Mexico,
Colombia, Chile, Poland, Turkey, South Africa, Vietnam,
Thailand and Indonesia. The core of the program is localizing
the entire value chain in each location.
T
This example shows how dramatically innovation
management is changing at multinational companies
in the West. The big question is: How can existing
models hold their own against inevitable competition with innovative development divisions at Indian or
Chinese companies?
The answer: they can't. At least not always. RenaultNissan CEO Carlos Ghosn promotes frugal innovation by
letting developers compete. In one instance, teams with
similar capabilities and resources from France, Japan and
India submitted a proposal for solving a certain technical
problem. All three groups independently arrived at similarly
satisfactory solutions. However, the Indian team offered their
solution for a fifth of what the French and Japanese teams
were asking.
"It's not about market share; it's about creating a market,"
says Vijay Govindarajan, former Chief Innovation Consultant
at global group General Electric (GE) and co-author of
the business bestseller "Reverse Innovation". He calls for a
cultural shift away from "exporting to emerging markets" to
"inventing for emerging markets."
This realization is not sinking in everywhere. The varying
levels of purchasing power in rapidly expanding economies,
the unexpected consumer behavior of unfamiliar populations,
fast growing, sometimes extremely volatile markets, the lack
COO Insights | 03.2014
of infrastructure as well as markedly different living conditions in predominantly rural regions can hardly be sorted
out merely by adjusting innovation management. What's
needed is a complete overhaul using "local growth teams",
who can act independently of the central office, according to
Govindarajan.
R
Roland Berger Strategy Consultants calls this the
"end of glocalization". The term refers to selling
locally developed Western products globally. The
time is ripe for a paradigm shift. In contrast to their
position in premium segments, Western companies are frequently weak in the lower and middle market segments of
emerging economies. Not even half of the companies surveyed by Roland Berger for the abovementioned study (45%)
COO Insights | 03.2014
describe the success of their frugal products as "high" or
"very high" (measured in terms of sales). Even fewer are
satisfied with product profitability: less than 30%. "Most
companies have recognized the enormous potential of these
simple products," says Michael Zollenkop, Principal at Roland
Berger, "but many still don't have a clear idea of the actual
success factors."
The prospects are tremendous: According to the United
Nations, 95% of the global population growth before 2030
will take place in emerging markets. These markets will also
generate 70% of the increase in global GNP, as well as 70%
of the profits of Western companies. Already by 2020, consumption in emerging markets will see double-digit growth
in areas such as food, fashion, health, leisure and education.
For a long time now, these markets have been more than
a place to generate billions in new sales – they're also an
arena for keeping the competition in check. The pressure on
11
TITLE
|
K NOW LEDGE
*Global middle
class = Households
with a daily income
of USD 10-100
The rising purchasing power of the global middle
class* is a major engine of growth
2030
2020
2009
GLOBAL
PERSPECTIVE
Source: OECD
EUROPE
10%
20%
17%
29%
59%
26%
38%
NORTH AMERICA
42%
1%
6%
AFRICA
7%
4%
IN % OF THE TOTAL (2009-2013)
>The
purchasing power of the
global middle class
North America: 4%
Europe: 39%
Central and South
America: 103%
Middle East and
North Africa: 147%
Africa: 223%
Asia: 558%
World: 162%
12
ASIA
MIDDLE
EAST/NORTH
AFRICA
4%
CENTRAL
AND SOUTH
AMERICA
1%
1%
4%
7%
23%
Global demand from the middle class may
rise from USD 21 trillion to USD 56 trillion
by 2030. Over 80% of this growth is from
Asia. In other words, the Asian consumers
will overtake Western consumers in terms
of their demand volume. But these figures
do not say which products the new global,
solvent clientele actually want. Western
companies started competing for this group
some time ago.
TITLE
|
FRUGA L INNOVATION
economies that are predicted to see the greatest growth by
2030. Even if China's economic miracle is waning somewhat, the world's second largest economy will have replaced
the US as the world's largest consumer goods market by 2018
at the latest. "Western businesses have to take action if they
wish to succeed in developing countries with innovative and
competitive solutions," summarizes Zollenkop. For instance,
Kenya's 40 million people comprise the world's second largest
market after Asia for mobile telephony, but not because multinational providers are showering the East African country
with powerful cell phones and flat rates. Instead, the winning
combination is phones that offer extremely good value for
money plus prepaid cards.
This doesn't always work. In 2008, India's Tata Motors
introduced the hotly anticipated Tata Nano city car amid
massive global fanfare. Even European carmakers eyed
the discount offer with growing concern for their own portfolios. Yet an export version of the Nano,
announced at the 2009 Geneva Motor Show to
be launched in 2010, disappeared into thin air.
The Nano – 600 kg, 35 hp, a top speed of 105
kph and costing the equivalent of EUR 1,440 – is
considered a massive flop even in India (see our
article p. 24). Nevertheless, Tata should not be
also been a big hit
underestimated. Where BMW and Ford failed,
worldwide.
the Indian company succeeded by investing
billions: rescuing and reestablishing the tradi> Crop Tiger
tional British automotive brands of Jaguar,
India boasts the
Range Rover and Land Rover.
world's biggest agriIn its home country, Tata became a synocultural economy –
nym
for frugal innovation. "The Tata Nano of
and it is the second
household
appliances" – that's the moniker given
home of agricultural
the
ChotuKool
refrigerator made by India's
machinery manufacGodrej
&
Boyce
Group.
A conventional refrigeturer Claas, which is
rator
has
200
parts,
whereas
ChotuKool (or "Litheadquartered in Hartle
Cool")
needs
just
20.
It
is
probably not only
sewinkel in Germany.
the
smallest,
but
also
the
cheapest
appliance of
Claas has been in
its kind in the world. ChotuKool has handles so
India for over 20 years
that migrant workers can carry the fridge with
and now dominates
them to keep their food cool. It runs on the same
the subcontinent's
technology used for cooling computer chips. An
market for combine
integrated battery and thick insulation ensure
harvesters. These are
that the refrigerator can continue to function
especially well suited
during power failures. It's not sold in stores, but
to sludgy soils and
door to door – delivered by post, each costs
small rice paddies.
about USD 69.
The Crop Tiger went
Thanks to ChotuKool, Godrej & Boyce has
into series production
been ranked one of the world's most innovative
in 1993 based on
companies by US magazines Bloomberg Busia collaboration with
Indian manufacturer
nessweek and Fast Company. And Forbes named
Escorts and is now a
earthquake survivor Mansukhbhai Prajapati one
leading export.
of the seven most powerful rural Indian entrepreneurs, who could change the lives of millions
of people across the country.
the R&D divisions of Western companies is growing as emerging markets unleash the power of their own research capabilities. As the CEO of General Electric, Jeff Immelt, puts it,
if Western companies don't create innovative products for
developing countries and sell them globally, then companies
from emerging markets will do it. "Traditional competitors
can't destroy us, but 'emerging giants' can."
"Today, companies in so-called low-cost countries are
investing more and more frequently in development projects
and thereby creating their own competitive products," explains Bernd Brunke, Partner and member of the Global
Executive Committee at Roland Berger Strategy Consultants.
The biggest drivers of innovation are China and India. These
two alone account for one-fifth of R&D investment worldwide.
Of the 20 most innovative companies in the world today, 5
are from China, India or Brazil. That should come as no
surprise, for these 3 nations are among the "Focus 20" –
4
Examples
of globally
successful frugal
products
> Nokia 1100
Developed as the "Penny", it was designed
for irregular electricity
supply and adverse environmental conditions
– with a non-slip grip,
dustproof case and a
flashlight. "Katorchi",
as it was nicknamed,
became the world's
most successful cell
phone, with 200 million sold.
COO Insights | 03.2014
> Sunnan
This lamp turns sunlight into electricity,
ideal for countries and
regions with frequent
power outages or no
power supply. Lightemitting diodes give
the lamp a long useful
life. Children in India
and Pakistan can use
it to read, write and do
their homework after
dark.
> Mac 400
This portable, batterypowered ECG by General Electric costs less
than half the price of
a conventional device.
Treating a patient costs
just one dollar rather
than the usual ten. It
has only four buttons,
and the printer is the
same model used on
buses to print tickets.
Developed for undersupplied rural areas in
India, the device has
13
TITLE
|
VOICES
WHAT THEY
SAY ABOUT
FRUGALITY AND
INNOVATION
From Henry Ford to Jeff Bezos, from Leonardo
da Vinci to the American professional boxer
Muhammad Ali, it seems like everyone has
something to say on the subject of frugality and
innovation. Their observations are smart
to thought-provoking and witty – and are at
times anything but politically correct
5/
DOUGLAS HORTON
AMERICAN
CLERGYMAN
2/
DHYANI YWAHOO
AMERICAN
AUTHOR
The art of
simplicity is a puzzle
of complexity.
You can tell how high
a society is by how
much of its garbage is
recycled.
3/
LIDO ANTHONY
AMERICAN
BUSINESSMAN
In the end, all business operations can be reduced to
three words: people, product,
and profits.
6/
JEAN COCTEAU
FRENCH POET
Always consider yourself
as more stupid than
the others – but don't be!
7/
LEONARDO
DA VINCI, ITALIAN
POLYMATH
Simplicity is the
ultimate sophistication.
1/
HENRY FORD
AUTOMOBILE PIONEER
A market is never saturated with
a good product, but it is very
quickly saturated with a bad one.
14
4/
BENJAMIN
FRANKLIN, AMERICAN
WRITER
AND STATESMAN
The way to wealth is as plain
as the way to market. It
depends chiefly on two words,
industry and frugality: that
is, waste neither time nor
money, but make the best use
of both. Without industry
and frugality nothing will do,
and with them everything.
8/
ALBERT
EINSTEIN, GERMAN
PHYSICIST
One cannot solve a
problem with the
same mindset that created
it in the first place.
COO Insights | 03.2014
16 /
JOHN RAY, ENGLISH
NATURALIST
Industry is fortune's
right hand,
and frugality its left.
13 /
EDGAR WATSON
HOWE
AMERICAN
JOURNALIST
9/
KONRAD ADENAUER, FORMER
CHANCELLOR OF GERMANY
The modest person is
usually admired,
if people ever hear
of them.
You have to look at things so deeply
that they become simple.
10 /
JEFF BEZOS, AMERICAN INTERNET
ENTREPRENEUR
I think frugality drives innovation, just like other
constraints do. One of the only ways to
get out of a tight box is to invent your way out.
12 /
AURELIO PECCEI
ITALIAN ECONOMIC
SPECIALIST,
FOUNDER OF "CLUB
OF ROME"
11 /
MUHAMMAD ALI
AMERICAN
PROFESSIONAL
BOXER
It's hard to be
humble, if you are as
great as I am.
COO Insights | 03.2014
14 /
AYN RAND
AMERICAN AUTHOR
Wealth is the
product of man's capacity
to think.
Innovation
can also consist
in renouncing
scientific findings.
15 /
GEORGE
BERNARD SHAW
IRISH AUTHOR
17 /
AJAY BANGA
INDIAN PRESIDENT
AND CEO OF
MASTERCARD
As the world's
economic center of
gravity continues to
shift – and as new
consumers continue to
emerge – it's clear
that the logic and business practices that
drove yesterday's
success won't drive
tomorrow's.
The reasonable man
adapts himself to
the world; the unreasonable one persists
in trying to adapt
the world to himself.
Therefore, all progress depends on the
unreasonable man.
15
Dr. Know-all
"Each day we ask ourselves how close we
need to be to patients
to do them good."
16
TITLE
"WE CAN'T
AFFORD
TO BE
FOOLISH"
Prof. Hermann Requardt, CEO of Siemens Healthcare and
member of the Managing Board of Siemens, talks about
the paradigm shift in medicine, the changing culture in R&D
and new threats from the Far East
|
INTERV IEW
The company
in figures
SIEMENS
52,000
EMPLOYEES
around the world work for
Siemens Healthcare.
13.6
BILLION EUROS
in sales and earnings of
EUR 2 billion in fiscal
year 2013 help Siemens
Healthcare realize the
next generation of groundbreaking innovations.
190
REGIONS
Professor Requardt, the
German weekly paper
"Die Zeit" once called you
"Doctor Know-all". How
did you end up with this
nickname?
The issue was how we can add
more intelligence to our
healthcare system and thereby
make it better and more efficient. We have a huge amount
of medical data. And we have
the technology to call up this
data and transfer it anywhere
in the world. Personalized medicine exists in the scientific
COO Insights | 03.2014
world, but is only starting to
be used in the medical world.
You want to consolidate
data because you can identify patterns and thereby
enable individual patient
treatment. However, many
people are afraid of the
Orwellian vision of a transparent patient.
I understand these concerns
and we have to take them
seriously. But we also have to
ask ourselves whether we can
still afford not to consolidate
this knowledge – which I
would like to explicitly point
out is anonymous – to find
new forms of therapy. Everybody knows that spiraling
healthcare costs are a threat to
the prosperity and welfare of
people around the world. That
means we have two options
for handling this: either we
scale back the level of medical
care or we make the most of
what we have.
The company, which was
founded 160 years ago,
supports customers with
innovative technologies
and extensive know-how.
Will machines be making
diagnoses in the future?
17
TITLE
|
INTERV IEW
This will certainly be true in
some cases, but is not bad for
either machine or mankind.
What can be automated should
be automated. This will free
up time which we can then
devote to things that can't be
automated.
Interview
Roland Berger Partner
and medtech expert
Michael Dohrmann
(right) in conversation
with Prof. Requardt
So what you're saying is
more machines?
More intelligence in any case.
It's imperative that the various
medical disciplines work
together more efficiently. The
most expensive medication
is that which has no effects but
side effects.
But you make your living
selling medical equipment...
... and we've been very
successful doing so ...
... but how do you accomplish this? Western healthcare systems with hightech equipment are
running out of money. One
in four German hospitals
is on the verge of bankruptcy. Existing equipment
is running at full capacity
and new investments are
being delayed or even cancelled altogether. And on
top of this, emerging markets are investing more
and more in healthcare,
but need only a fraction of
the equipment developed
countries have.
Each day we ask ourselves
how close we need to be to
patients to do them good. The
goal of medical technology
should be to take clinical problems and develop technical
solutions that can be made
available to the general public.
We need intelligent machines
that can exactly map out the
complex individual as accu18
"THE SEAL OF QUALITY IS
NO LONGER MADE IN
GERMANY, BUT INSTEAD
MADE BY SIEMENS."
Prof. Hermann Requardt
rately as possible. And it's just
a matter of time before this
becomes reality. On the other
hand, high-end technology
doesn't only mean bigger,
further and faster, but also intelligent tailoring to suit a specific need – and at an acceptable cost and appropriate price.
You always need to incorporate more and more intelligence into the system so that
equipment is easier to operate.
In this context, researchers often talk about "frugal
innovation". These are
products that are less complex and easy to operate,
but also aren't merely
cheap, no-frills copies for
markets that can't afford
the more expensive versions. This can be summarized as being "good
enough". Is this what the
future will look like?
We have our own name or abbreviation for this at Siemens:
SMART – Simple, Maintenance-friendly, Affordable,
Reliable and with appropriate
Time to market. However, the
idea is essentially the same:
providing outcome-oriented
technology.
You once explained this to
us as follows: "We invest
in clinical intelligence, i.e.
COO Insights | 03.2014
said that he worries less
about traditional competitors, but more about
emerging players in developing markets, who are
concentrating on frugal
products.
We're not going to make
things too easy for him. But he
does have a point. We're living
in a world where we build
highly specialized equipment
for our highly specialized clientele, whose business model
involves making very specific
diagnoses using this very
specific equipment. However,
this is not applicable to the
new markets. Not wishing to
belabor the term, I'd still like
to mention the paradigm shift
once again: More and more
technology does not automatically mean more and more
health.
what is clinically necessary
and not what is technologically possible."
And that's quite right and describes precisely the imminent
paradigm shift. On the one
hand, growth in developing
countries means medicine
is reaching regions where, at
best, technical support is
totally underdeveloped and
where completely different
demands are placed on our
equipment. Take China's rural
areas, for instance. Established
healthcare systems are increasingly being measured using
stricter cost-benefit ratios.
This means patients pay only
if they feel better and not for
images or blood analysis. Both
provide a different take on
technology.
COO Insights | 03.2014
That sounds like a renouncement of high tech.
But it's not! I'm simply pointing out that I want to deploy
technology that helps me make
clinical decisions or that
measurably improves my decision-making. And that's all! A
magnetic resonance imaging
scanner today with all the
bells and whistles will still be
here in 10 years. But we've got
to consider other equipment
concepts for regions where
there's nothing at the moment.
Here the alternative isn't
whether people have new or
old equipment, but whether
they have anything at all. We
can't let local manufacturers
take over these markets.
They've become strong and
self-confident enough to do so.
What do you have that's
still high tech? And what's
already smart or frugal?
It's not as easy as you think to
separate the two. Even high
technology, which is becoming
cheaper over time, could be
considered a frugal innovation.
Design-to-cost is a topic in the
same vein. But that's not what
I'm talking about. Instead,
I'm talking about the principle
of smart or frugal. All the
big manufacturers must adopt
a culture of using this as a
guidepost. Otherwise, they'll
learn it the hard way by others
coming in through the back
door.
Jeff Immelt, your counterpart at competitor General
Electric, once essentially
You couldn't survive on
high tech alone?
Let me put it this way: The
high-tech market has very
different growth rates than
the mass market. There is, of
course, the scientific market
or the science-based market.
That is where medical progress
takes place and where highperformance equipment is essential. However, our goal is
also to be among the top
players in the mass market.
That's where our good-enough
products come in and are
playing a bigger and bigger
role, as door openers too. The
person who buys an ultrasound device today, buys a CT
tomorrow and, if business is
good, a high-end unit the day
after tomorrow. In other
words, we are paving the way
for the future.
Expensive equipment for
high-end medicine and
19
TITLE
|
INTERV IEW
About
HERMANN
REQUARDT
> Prof. Hermann Requardt,
born in 1955, has been a
member of the Managing
Board of Siemens AG since
2006 and is CEO of the
Healthcare Sector.
> Requardt studied physics, then worked as a
research assistant at the
German Aerospace
Center's Institute for Aviation Medicine before joining Siemens AG in 1984.
> Requardt worked in various R&D functions in the
Siemens Medical Solutions
Group, ultimately as the
division's Board Member
from 2001 to 2006.
>Together with Erich
Reinhardt, longstanding
President and CEO of
Siemens Medical Solutions,
Requardt transformed
Siemens Medical Solutions
from a company in dire
straits to a market and innovation leader.
> He was instrumental in
setting up special, locally
developed and manufactured product lines for
Asia's growth markets.
20
good-enough technology
under one roof: Is that
even possible?
With the "SOMATOM Definition", Siemens was first to develop a dual-source computer
tomography system. It enables
high-end split-second scanning. This device produce
images of the highest quality,
even of rapid or irregular
heartbeats – and all this with
only half the dose of radiation.
This system is the epitome
of high end. And do you know
where we sell most of these?
In China! By contrast, in
China we developed a 16-line
computer tomography device
that is simple to operate and
cheaper to buy, but which
provides valuable information
in day-to-day clinical settings.
And where are most of these
sold? In the US.
Regardless of where your
products are developed
and manufactured, they
are always ready for the
global market. Why does a
product developed for the
Chinese market have to
be marketable in Germany
or the US too?
This is not a must, but it works
because there is a need. A
device that is sold in China at
half the price is suddenly interesting in the US or Europe
– if the quality is up to our
usual standards and it meets
the customer's exact needs. I
don't have a problem with
offering a specific product for
five years in China only. That's
what we do in India. But the
advantage in China is that the
approval processes there are
similar to those in the US. We
would be foolish not to make
the most of this. And we can't
afford to be foolish.
Haven't you ever thought
about creating a separate
brand for your smart
products?
We've thought about it ...
... but you didn't do it.
Why not?
Because there's no need to.
We can sell all our equipment,
including our smart products,
to Johns Hopkins Hospital,
the highest-ranked one in the
US. That doesn't damage our
brand. On the contrary, we
have a competitive edge as a
full-line provider.
When would a smart
product start to damage
Siemens Healthcare's
reputation?
That is obviously something
we want to avoid. We don't
want to offer low-end products
that are poor compromises
in terms of patient safety.
We maintain our standard
of quality, but with the right
ideas it's naturally possible
to achieve this standard at a
lower cost.
But the broader the portfolio, the higher the complexity costs.
It's not just about the product,
but also about having a product concept suitable for smart
applications. That's where
modules come in. The car
industry has shown us the
way and leverages enormous
economies of scale. I think
it would work well for us too.
This must be rather sobering for ambitious development engineers.
Good engineers like to push
the boundaries of their
Prof. Hermann Requardt
"SIEMENS HEALTHCARE IS
NOW PERCEIVED AS A
CHINESE MANUFACTURER IN
CHINA, JUST LIKE AN
AMERICAN IN AMERICA OR
GERMAN IN GERMANY"
COO Insights | 03.2014
machinery's capabilities. It's
kind of like saying, "it's only a
few euros more, so let's just
put it in." That's not true for us.
Often it is only afterwards that
we ask ourselves if that really
makes sense. Sure, top developers always want to be top
dog in their market segment.
That's fun and it's also good,
that is unless you lose sight of
where the money is going.
That's the case in the high-end
segment, but not exclusively
there!
How do you achieve a shift
in attitude among people
who are used to pushing
the limits of physics and
must now focus on what
look like very simple solutions?
People tend to look at smart
products and related innovations as the second-best solution, but this is simply not the
case. It's a huge challenge to
intelligently reinvent complicated machines so that people
who've never seen them before, let alone operated them,
can get the results they need.
And this in conditions that we
often really can't imagine and
at costs that are far below
those that are typical. It's crucial that engineers understand
the benefits of such equipment. And besides that, smart
products provide millions of
people with access to medical
care. That's something to be
proud of!
Is R&D the only issue when
talking about frugal innovation, or does it also involve setting up infrastructure, i.e. factories and
distribution networks?
We're pretty sure that in China
we're the biggest manufacturer of medical devices. We are
COO Insights | 03.2014
active in all parts of the value
chain with a clear goal: "Local
to global". Our understanding
of product design is combining
local value creation where it
makes sense with fair distribution of costs across the globe.
What was it like at the start
of the smart strategy?
Whew, it was tough going in
the beginning! We focused
heavily on the high end and
overlooked certain markets. At
first we thought that all we
needed was the right product
and things would develop
naturally from there. Then we
discovered that we needed
to develop the market: the factory, purchasing, logistics,
sales, on-site expertise. We
had to shift everything away
from high end. Smart is its
own product and sales world.
It was a costly lesson, but one
we've been able to learn from
and put to constructive use.
That means you pulled
products from the market?
We did.
The Fetal Heart Monitor
for example? A microphone
that monitors the heartbeat of unborn babies –
An affordable alternative
to ultrasound.
That was a field test. But there
are also other examples, such
as computer tomography consisting of seven components.
That was one of our first ideas.
Unfortunately, it wasn't good
enough.
In 15 years, will China's
situation be like that of
Germany's or the US's? If
you look at our per capita
expenditure on healthcare
and extrapolate that to
China, it doesn't look af-
Products from Siemens
EXAMPLES
890 m people
in emerging countries
have access to Siemens
imaging systems
MULTIX SELECT DR
> Multix Select DR is a digital X-ray system that provides
users with an affordable solution to digital radiography.
The digital system is suitable for virtually all clinical applications in radiography. It's also easy to use and is about onethird cheaper than similar competitor products.
SOMATOM PERSPECITIVE
> This high-tech CT is the first of its kind to feature eMode
functionality. It was created to determine and automatically
select the optimum system scan parameters so that the
CT operates with as low a load as possible while providing
excellent imagery, with the goal of minimizing wear and
increasing the scanner's lifecycle.
MAGNETOM ESSENZA
> Magnetom Essenza is an affordable resonance tomograph
with 1.5 MR imaging. New technologies mean much shorter
examination times plus 25% lower maintenance and electricity costs.
ACUSON X700
> The Acuson X700 system is a powerful ultrasound system
that offers exceptional image quality, robust technology
and intelligent workflow solutions at an excellent price.
Many advanced imaging technologies that were previously
available only on high-end, higher-cost systems are now
standard on this system. Intelligent workflow solutions keep
operating costs low.
21
TITLE
|
INTERV IEW
"INCORPORATE MORE INTELLIGENCE SO THAT EQUIPMENT IS EASIER TO OPERATE"
Prof. Hermann Requardt
fordable in any way. This
means you've got to prepare for completely different conditions.
That's why having a local presence is so vital. Siemens
Healthcare is now perceived as
a Chinese manufacturer in
China. And that's exactly what
we want to be, just like we
want to be American in America or German in Germany.
The seal of quality is no longer
"Made in Germany", but
instead "Made by Siemens". We
have the same quality controls
in China as we do in Germany.
The factories are practically
identical.
There's a saying among
carmakers: The bigger it is,
the more profit you make.
The smaller it is, the less
money you earn. Do smart
or frugal products mean
saying goodbye to big
profits?
On the contrary! I know a
Chinese manufacturer that
doesn't exactly have a big
name in the high-end sector,
but still enjoys healthy margins. And if that company can
do it, why can't we? To do so,
however, we've got to rethink
our entire value chain. You
don't need to tear everything
down, but there are certain
habits we can't afford in our
smart product business.
Smart or frugal products
22
are simpler. Are they also
simpler to copy?
We're not at a point where
we're just trying to find the
cheapest way to make products that have lost their shine
long ago. Some frugal ideas
represent quantum leaps in
terms of their technical feasibility. A head start of three
years is enough for us as long
as we're in this mode. More
than three years isn't possible
anyway.
How important has China
become for you now?
Very important, and all the
more so because the country is
a reliable partner. The planned
economy is open for all to see
how much is being invested,
and where it is being invested.
Planning security means that
if I can help achieve what's
politically desired, then I have
a real opportunity. This is not
the case in other Asian countries, where we just hope for
the best. It happens time and
again that money flows elsewhere than expected. We sell
to various market segments
in Brazil and there, too, the
business environment always
presents a few surprises.
Siemens Healthcare is
once again making a profit
for the Group, but sales
and orders are stagnating
nevertheless. Would the
situation be even worse
without China?
No question about it: The skyrocketing growth in China has
now taken on a more realistic
character, but the country
remains an engine of growth.
And we don't expect any drastic changes there. Growth will
also be generated by working
with a partner or two to tap
into business at hospitals that
don't even know Siemens yet.
And what's your next
smart product?
Next question please!
What is the next stage of
development? I'm referring
specifically to "disruptive"
technologies. 3D printing
is practically reinventing
mechanical engineering.
Crowdfunding is providing a real alternative to
bank financing. The logistics industry is facing the
challenges of same-day
delivery. What's coming
your way?
An ultrasound machine will
remain an ultrasound machine. But does it have to look
the same as it does today? Just
imagine a simple transducer
on a PC that fulfills the same
function. The PC still looks
like a PC, but is no longer a
PC. Such attempts were already made a while back. Today we've now made considerable progress. There are so
many things that can now be
done on a smartphone or iPad.
We have competitors in Asia
that we're watching closely.
There's certainly something in
the works.
Do you mean Samsung?
That's one of them.
Are frugal or smart products especially vulnerable?
Why don't we connect specific
sensors to ordinary consumer
electronics with the appropriate software, sensors that can
be used for blood tests or that
emit audible signals that provide information on the
patient's condition? We can't
attach an X-ray tube, because
that would be more expensive
than anything else, but even
that is remotely conceivable.
Using this line of thinking,
you can set up a universal machine, a type of minimal
equipment for a doctor's office
out in the middle of nowhere,
where previously nothing was
there at all. Then if you have
a robust data line, and there
are a lot of those around, you
can simply send images from
your mobile phone to someplace where they can be read
or where a high-performance
computer can interpret them.
Is this a threat to you?
Potentially yes. But these are
precisely the smart scenarios
that we must clearly come to
terms with.
Prof. Requardt,
thank you for
sharing your insights
with us!
COO Insights | 03.2014
TITLE
|
K NOW LEDGE
Healthcare of the future: The PEEK
program for smartphones is replacing the eye doctor
PEEK: PORTABLE EYE EXAMINATION KIT
Using the phone's camera, the app scans the
eye to test the lens for cataracts. The flash
makes it possible to examine the retina and
optic nerve too. The app can diagnose a range
of conditions: cataracts, glaucoma, macular
degeneration, retinal disease, even tumors. It
can also measure the various aspects of the
user's sight (color vision, field of vision, etc.).
APPS
IDEAL FOR THE DEVELOPING WORLD
The PEEK app has been designed to be easy
enough for anyone to use. Most importantly, it keeps diagnosis costs to a minimum:
A couple hundred euros for a smartphone is
but a fraction of the roughly EUR 120,000
needed for the building and equipment
of an eye clinic (not including employees).
This makes PEEK and similar apps especially interesting for developing countries.
IT'S THE POOR WHO SUFFER
285 million people around the
globe are visually impaired. 90%
of blind people live in developing
countries. Cataracts are by far
the most common cause of blindness. In many African and Asian
countries, over half of those afflicted with cataracts eventually
go blind.
THE ECONOMY
SUFFERS TOO
Lost production time or damages due to undiagnosed
vision problems among
employees costs the global
economy an estimated
EUR 204 billion every year.
KENYAN ROOTS
In 2011, British ophthalmologist Dr.
Andrew Bastawrous had the idea for a
smartphone app that would help provide better care for his patients in
Kenya. Few people there go to the
doctor due to poor infrastructure and
poverty. Using the app for diagnosis
brings medical care closer to the
people. The doctor receives the images
by e-mail and can therefore respond
quickly or share them with experts.
PRICE STILL TO BE
DETERMINED
PEEK is still in development,
and therefore the price has not
been set yet. It will certainly be
kept appropriately low for the
app's lower-income target groups.
Medical apps – Useful service or gimmick?
Diabetes manager
Cancer diagnosis
Eyewash
A look at blood pressure
The "iBGStar" is a blood glucose
meter with smartphone connection.
The app stores the readings so
that you can monitor the data and
e-mail it directly to your physician.
http://bit.ly/17b7Y0j
Apps such as "Skin Prevention"
analyze pictures taken of moles
using your smartphone to see
if there's a threat of skin cancer.
However, a US study warns that
there's a 30% chance of misdiagnosis. http://bit.ly/1i7Smdf
A medical eye examination requires hands-on precision. Therefore, apps such as "Vision", which
test individual eye functions, are
more or less gimmicks. In contrast,
the tips for working in a way that
puts less strain on the eyes are
very useful. http://bit.ly/17ZHYhW
This app appears to be medically
perfected: "Withings Health Mate"
can be connected to a specialized
blood pressure machine that stores
its readings on your mobile phone.
You can then send them directly to
your physician.
http://bit.ly/1d9QWkD
23
TITLE
|
BUDGET CA R S
WE CAN
DO EVERYTHING –
EXCEPT
CHEAP
The auto industry's answer to
frugal innovation is the budget car.
Emerging markets such as China
and India are redefining mobility –
even if the hand brake is still on
24
COO Insights | 03.2014
Hit the gas
VW is no. 1 on the
German market,
and with its Chinese
partners is also the
market leader in China
25
TITLE
|
BUDGET CA R S
MID-CLASS CAR FOR UNDER EUR 7,000? Volkswagen managed to achieve this miracle with Chinese
assistance. Group CEO Martin Winterkorn let the cat out of the bag back in 2012 at the Detroit Motor
Show: "We're weighing our options. The initial figures are giving us confidence. At the moment we're
working hard to ensure that Volkswagen can be active in this growth segment." It might take as little
as three years. The attraction is powerful: the global low-budget market is currently estimated at
around 7 million units, or about 13% of the overall volume. Market observers expect 8 million cars in
2015. Volkswagen has committed itself to at least 10 million cars by 2020. So far these 10 million don't
fit anywhere in the Group's systems, but they are rapidly raising hopes of a new growth spurt in the
booming automotive world of the emerging markets.
VW shifting into top gear in China
A
All eyes are on China: Volkswagen has been making
cars there for 30 years, and the country has become
the Group's largest sales market. In 2012, the top
dog from Germany delivered more than 2.81 million vehicles to customers in the People's Republic:
that's close to one third of all the cars it produced. In 2013, sales
saw another healthy double-digit increase. Audi alone broke records
in October 2013 by growing almost 62%. The Sino-German joint
venture FAW-Volkswagen operates two factories in China. They
plan to add four more over the next few years. By 2018, the number
of employees will have gone from 75,000 to 100,000, and production capacity will zoom from 2.6 million to over 4 million vehicles
per year.
The man with a plan for budget cars at Volkswagen is Opel's
former Managing Director, Hans Demant. A trained engineer,
Demant isn't focusing on Eastern China's affluent suburbs around
the mega-gridlock cities of Beijing and Shanghai, where long German luxury cars illustrate the country's rise to global economic
power. "There is also a need for mobility in Western China," explains
Demant, "where average wages are much lower" – and people often
don't have enough money to buy even a used car. In India, an excellent proving ground for small but effective vehicles, only half of
all vehicles currently meet the most basic requirements. Russia
also has to play catch-up: its market is good for about 900,000
budget autos annually. Then come the ASEAN countries, then
South America, and trailing a good distance behind – Europe.
Europe's smallest aren't going to get it done
Drivers along Europe's brightly lit boulevards are dazzled by a
cheerful mix of high-volume premium wheels: Smart, up!, Spark,
i10, Twizy and Cinquecento. But not everything that's chic, good,
clean and small by European standards is suitable for the automotive diaspora to (primarily Asian) emerging markets. "You have to
look at the topic from a regional perspective," cautions Demant. "If
you set global market standards, you risk exceeding the purchasing
26
power of the target group. Thinking regional means different cars
for different markets. One model is not enough. To be successful,
you need one model for each core market."
And even that is no guarantee. In India, the Tata Nano at first
appeared to be an answer to the prayers of the tuk-tuk generation.
The 35hp-weak budget car went for about EUR 1,400, but sales
ground practically to a halt. It was announced at the 2009 Geneva
Motor Show that an export version would be ready in 2010, but
that talk died down a long time ago. Problems in production and
a number of unexplained vehicle fires stopped the victory march
of India's Tin Lizzie before it even got started. At any rate, the car
was useless as a status symbol for India's growing middle class.
Now the model has been thoroughly jazzed up and should be
ready for relaunch: central door locks with remote control, audio
system with USB ports, Bluetooth function. For the first time,
Nanos will also run on natural gas.
The gray area between low-tech and no-tech
Currently, the successful protagonists in the budget-car story are
the Maruti Alto, Chevrolet Celta, Perodua Myvi, Proton Saga, Lada
Kalina, Ford Figo, Fiat Palio and Dacia Sandero. The Volkswagen
Jetta has also joined the fray of models jockeying for position. Yet
the parts kit, which is based on the Golf II, dates to 1984. In the
"Old World", Dacia rules the gray area between low-tech and notech. In Western Europe, Renault's Romanian arm sells the car that
offers the best value for the money – prices start well below EUR
10,000. Equipped with sound technology and eminently suitable
for everyday use, the brand is socially acceptable even in Germany's
jaded automotive wonderland: in the ads, the car is parked in front
of a golf course like some kind of alien.
In the US, the Koreans have long since hoisted the Big Three
out of Detroit with their own petard, managing to elegantly outdistance the complacent Japanese. Of the 81 different Chinese car
brands, so far not a single one has successfully penetrated another
country with its low-budget cars. If that's not a judgment of the
product, it at least says something about the brand. Perodua in
Southeast Asia has specialized in the secondary use of Daihatsu
components, Proton assembles discontinued Mitsubishi models in
COO Insights | 03.2014
Bus stop
Malaysia, and in India Maruti manufactures small hand-me-downs
from Suzuki. Take note: with Daihatsu, Toyota already plays a
supporting role in the budget-car drama, but thus far the world's
largest automotive manufacturer has not been able to create its own
basic model.
Transportation for the undemanding
Although Nissan is not doing too badly providing transportation
for undemanding customers, such as the Versa, it has also joined
forces with Renault to market its own budget brand. The "Datsun"
name has been around for a while, and now aims at offering "lots
of room at low cost" with its GO and GO+ models. Chevrolet is a
rising star in the US, setting its sights on the developing markets
from its location in Korea (formerly Daewoo). General Motors
worries that a budget car would damage its core brand, so it is
developing two new models under elegant-sounding code names:
"Jade" (from microcar to Opel Corsa format) and "Emerald" (Astra
and Astra plus). The compact variants are intended for the Indian
and South American markets, while the larger formats are aimed
at China and Russia.
Small-car specialist Suzuki was supposed to pave the way for
Volkswagen's entry into India's mass market, but bitter disagreeCOO Insights | 03.2014
In India, taking the
bus is incredibly
time-consuming and
often a mild adventure, even for locals
ments among the partners ruined those plans.
But now Volkswagen's own low-budget line
is lending the topic a new dimension: production in China could start as early as end of
2017/beginning of 2018. The company is currently testing four
sales regions for the new brand, with China taking top priority.
There the choice has already been made for a vehicle from the Golf
class. After that, Demant and his team want to grace India with a
microcar in the format of the Volkswagen up!. Number three on
the list will be either Brazil with an offer from the Polo class or
Russia with a vehicle between the Jetta and the Passat. The motto
is "bottom up": the platform will be designed so that each car can
be made from one in the class just below it. For example, creating
a Polo from elements of the up!. This cuts costs and keeps the
price low. In the ideal case, 85% of customers are first-time buyers
who can't afford any other new car.
Despite the positive outlook, Volkswagen
lets caution reign
Volkswagen is treading carefully. The engineering-driven company
purposely sets the bar for new developments very high. "We can do
everything except cheap" is an oft-quoted VW maxim. But it doesn't
27
TITLE
|
BUDGET CA R S
fit so well with a low-budget car that is designed primarily with an
eye to cutting costs. At the same time, they're afraid of their own
daring. Skeptics claim that cheap cars threaten the more important
business with used cars, which are flooding the local markets.
Profitability on budget cars is hardly worth talking about, so all it
takes is one flop to throw the figures of a complete model generation out of whack. For some, low-budget cars are more of a snapshot
than a long-term project anyway. The fear is that ultimately, every
cheap car represents a certain degree of "doing without". Nobody
wants to put up with that over the long run, neither customers nor
manufacturers. The latter would prefer to hide behind an artificial
brand rather than tarnish their image – for the time being.
What's more, under current law foreign companies can produce in China only if they have a Chinese partner. Volkswagen is
ready to contribute its know-how to this project, but no one wants
to invest a lot of money in it. The factory is supposed to be built on
a greenfield. The investor provides expertise, namely the basic
technology, the design, the strategy and part of the processes. In
return, the local partner opens up its network: providing access to
suppliers, coordinating processes and ideally participating in value
creation.
Specifically, Volkswagen expects its Chinese partner to build
and install engines – if necessary, according to the German model.
That would cover about half the investment. Decreasing the amount
of production they do themselves should cut costs further. To keep
overall costs in check, every manufacturing facility should see to
its own architecture. They are also supposed to simplify manufacturing (e.g. by using preassembled modules), cutting back the
supplier pool (system suppliers preferred) and realigning the sales
(to direct sales or even sales via Internet and social media).
Much remains unclear, but one thing is certain: the opportunities for a start aren't half bad. To date, the market for new cars
priced around EUR 6,500 has been dominated by local no-name
providers. They try to entice their customers with vehicles that are
markedly Western in design and sport previous-generation technology. Volkswagen, almost a local company in China, is redefining
the country's market and mobility. But it definitely remains to be
seen if the Chinese low-budget car is also suitable for other markets.
Decontenting: "Desophistication"
for the less well-off
What customers want varies from country to country. For example in China, people demand a certain minimum of space and
features even in the bottommost price category. In India, by contrast, customers want the most compact dimensions and the lowest
maintenance costs possible. For the largely untapped markets of
Central Asia, parts of Africa, western China and eastern Russia,
the industry is working on even more extreme mobility concepts.
The reason: people in these areas are forced into a nomadic lifestyle
28
"If you set GLOBAL MARKET
STANDARDS, you risk exceeding the
purchasing power of the target
group. Thinking regional means
different cars for different markets."
as they search for work, food, clean air and clean water. Coupled
with rapidly rising birth rates, this is boosting demand for increasingly pragmatic transportation. The tuk-tuk 2.0 is a three- or
four-wheeler that can carry several people. Its relatively spacious
lightweight frame is propelled by a modest one- or two-cylinder
engine. The name of the game is decontenting.
This process of "desophisticating" sets different priorities depending on the market. Lower-income Indian customers skip the
airbags and ABS, but not Bluetooth, smartphone interface or Internet connection. In China, by comparison, a simple link between
telephone and PDA is sufficient. Budget car buyers are barely interested in driving performance, so cars are stripped to the bare essentials. Even cars in the Passat format run on engines that barely
crank out three-digit horsepower. Some of what the manufacturers
save is invested elsewhere – for example, in robust chassis for bad
roads, very solid frames or powertrains that are immune to lowgrade gasoline.
Lean production for lean cars
Spending follows the same principle as the cars: trim. Opening a
factory doesn't require any more than 200,000 cars per year.
300,000 units kick off the first round of expansion, with 400,000
units marking the second and usually last expansion. Small factories
don't need as many skilled employees, which are notoriously hard
to find. In addition, the vehicles don't have to be transported
thousands of miles, but instead are sold relatively close by. The
ideal case is 100% localization – makes logistics easier, saves money,
and is fast and flexible.
GM's Jade development team has only 35 people, compared to
Volkswagen's 80 employees working on the budget car. They're not
based in China, but in the US and Germany. There, they are
pinching pennies, distracted by only one thing: the nightmare
scenario of a budget car that really takes off and is ultimately good
enough to threaten the premium core brand.
That would be winning the battle but losing the war, something
Martin Winterkorn is definitely keen to avoid.
COO Insights | 03.2014
TITLE
Number of
patents filed
per year
20,000
|
K NOW LEDGE
Where the world's knowledge is at home:
Emerging markets are fast catching up
Source: OECD
18,000
PATENTS
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0,00
2001
Brazil
> Is
2002
China
China about
to become
the world patent
champion?
2003
India
2004
Russia
2005
2006
2007
2008
2009
2010
Germany
In the knowledge-based society of the 21st century, patents are an increasingly important currency. Companies pay billions to acquire their competitors' intellectual property, while others wage
"patent wars" for years as they seek to protect
their own intellectual property and outdo their
rivals. Looking at where patents are filed reveals
the "home" of knowledge, which is where to
find the economic growth of tomorrow. A glance
at the world patent map reveals:
The industrial nations still have a very comfortable lead.
The emerging markets, particularly the BRIC
countries, are rapidly closing the gap.
Comparing the latest available figures (from
2010), the US leads in patent filings with 44,520,
or nearly a quarter of the global total. Japan is a
close second (37,055) and Germany an even more
distant third (17,909). China, the largest of the
BRIC players, accounts for "only" 13,810. However, when comparing growth, it becomes clear
how much the BRIC states are catching up. For
example, China's patent filings have increased
1,400% since 2001. In that same period, India's
filings have gone up about 330% and Brazil's
160%. Russia is trailing behind with just about
50%, but is still well ahead of Germany's 30%
increase. And what about world patent champion
US? Since 2001 its filings have gone up just 11%
– its champion days are numbered.
29
DUA L B R A N D S
|
BR A ND A RCHITECTUR E
Diversity?
Not quite. Look
closely and you'll
find a common
source. Just like with
these cactuses
TYPES OF DIVERSITY
If you want to address the growing middle class in emerging markets you need
the right brand architecture. But which? Single brands might lead
you astray. And so might dual brands. But they still have a lot going for them
UNLIKE IN MANY mature markets, emerging
regions are often characterized by "stacked
markets" where customers can be assigned
to clearly definable segments. With this
30
model, multinational corporations compete
in one league, local players in another. And
their paths hardly ever cross – at least, until now. China is now changing this pattern.
Its mid-market segments are developing at
a much faster pace than high-end product
and services segments. This challenges existing strategies – and affects both multinaCOO Insights | 03.2014
31
DUA L B R A N D S
|
BR A ND A RCHITECTUR E
tional groups traditionally focused on premium segments as well as local players who
have until now been almost exclusively
associated with the low end of the market.
The temptation is tremendous. A study by
Roland Berger Strategy Consultants about
trends in selected engineered products sectors found that the low-end and mid-market
segments for stationary discrete production
machinery will be 2.5 times the size of the
high-end segment in 2015.
How should producers respond to this?
Companies can either complement an
existing brand with new product lines and
continue their single brand strategy, or they
can build an additional brand and switch to
a dual brand strategy. Both alternatives
should be cautiously weighed against each
other. Which to choose depends on the right
brand architecture, the appropriate product
portfolio and the best supply chain. There
are four options:
1
With a pure single brand strategy, the
company uses its existing brand without
further differentiating it. Either because
there is really only one customer segment
or because the risk of cannibalizing the
high-end product lines is minimal.
2
The single brand strategy with several
product lines spreads out the brand. Different product lines under a single brand
are tailored to suit different market segments. In doing so, the company establishes clear links to the brand while adapting
each product line to the special requirements of its particular customer segment.
Bosch's T-edition for China's new midmarket has the same quality and useful life
as all Bosch power tools, but offers a reduced range of features and less output.
It is also marketed via different distribution channels than the ones used for products of the upper market segment. Bosch
had felt increasing pressure from small
32
competitors that were producing simple
power tools at low prices. The company
looked for answers to this situation, came
up with 168 ideas and ultimately went with
the T-edition concept.
3
When pursuing a strategy with two
brands in one brand family, an additional
brand (or sub-brand) is created specifically
to address the low and mid-market segments characterized by strong growth. The
company does not try to keep the origins
of the new brand a secret. One such example is forklift specialist Kion Baoli.
The company focuses exclusively on
the economy class in China, Eastern Europe and South and Central America. Its
vehicles lift up to 10 tons and are produced
at the Baoli headquarters in Jingjiang near
Shanghai. In terms of units sold, the company is among the top 10 local brands.
Strong demand from emerging markets is
driving Kion's business: more than one in
three Baoli forklift trucks leaves the assembly lines for destinations in China, Brazil
or Eastern Europe.
4
When adopting a dual brand strategy,
the company builds (or acquires) a new
brand. Nothing indicates a relationship
with the main brand, and customers normally don't know the origin of the new
one. SEM produces compact, small and
medium-sized earth-moving machinery for
the Chinese market and selected growth
markets in Asia, Africa, Latin America,
CIS, India and the Middle East. Target
customers are small companies who prefer
a lower purchase price to long-term low
operating costs. No SEM location gives
away the brand's origin: Caterpillar, the
global leader in construction machinery.
Four options. But which one is the right
one? What are the threats and what are the
opportunities? When deciding on a brand
strategy, multinationals should take several
factors into account. Four criteria that are
often highlighted are brand dilution or cannibalization; investments and expenses;
time until brand awareness is achieved; and
close fit with the segment's requirements.
Single brands, in particular those with
a long established tradition, suffer from the
fixed perception of their target groups.
There is hardly any room to recharge the
brand. Several product lines under one roof
also suffer from this problem, albeit to a
lesser extent.
The dual brand strategy is much more
flexible. The new brand is tailored specifically to address customers who have previously been neglected. Sometimes it is also
born out of sheer necessity. The Intellectual Property Appellate Board in Delhi revoked the patent for the hepatitis C drug
Pegasys held by Swiss pharmaceutical group
Roche on the grounds that the drug's price
was too high: up to USD 8,000 per year.
The expensive Pegasys drug is still being
sold to wealthy Indians, but a second brand
under another name is being launched to
cushion potential setbacks in the market
– while having the same effect.
This puts the focus on the objective of
new brands. Should they generate revenue
and profit independently from the main
brand – the more the better? Or is profitability of lesser priority and the brand's
main purpose is attracting new customers
for the main brand and thus work as an
entry-level brand? The market decides the
direction. It is the key factor when determining the strategic goal. If the mid-market
seems to be a transitory phenomenon, the
rule of thumb is to opt for an entry-level
brand. But if a company plans for the long
term, an independent brand is best.
The desired reach is also a key criterion.
Will the brand be used in a clearly defined
geographic region? Or should it work well
beyond borders? Krones, the German producer of bottling equipment, has the answer:
The company uses Kosme, its second brand
that addresses the low and mid-market, in
the wine/champagne/spirits, fruit juice,
water and beer sectors – and does so worldhttp://rbsc.eu/dualbrand
wide. COO Insights | 03.2013
WORKSHOP
70 %
| FACT |
>Western companies expect to grow
their profits by 70% in emerging
markets. For more information on this
topic plus further studies, see the
following pages ...<
WOR K S HOP
COO Insights
Issue 03.2014
WORTH KNOWING
New players revolutionize the auto industry
Apple
Microsoft
Technological innovations
Pandora
such as electromobility or connectivity make it easier for
new players like IT or power
companies to gain a foothold in
the auto industry. Established
companies have to respond
Google
Airbiquity
Paypal
Foursquare
Bing
HRS.de
Deutsche
Telekom
| Automotive study |
THE RULES OF
THE GAME
ARE CHANGING
34
RWE
The automotive market provides an excellent example of how new business models and technologies
are dramatically changing the rules of the game in many industries. Both manufacturers and suppliers
will certainly profit from the rising demand for vehicles, but they also face various risk factors. The
market focus is shifting (stagnation in Europe, growing dependence on BRIC countries).
In addition, innovations in powertrain technology and connections linking the car, telecommunications and the Internet mean that players from very different industries can suddenly become
competitors (see illustration above). Many established players therefore need to rethink their strategies, service focus and partnerships. http://rbsc.eu/thin_ice13
COO Insights | 03.2014
COO Insights
Issue 03.2014
70
%
| Hot markets |
| Strategy |
MODULARIZATION
PAYS OFF
According to a Roland Berger survey, modularization is the most important factor
for successful product strategies in emerging countries. Although the details depend on the industry and product, the
underlying concept of modularization is
EMERGING
MARKETS – THE NEW
SALES DRIVERS
always the same: finding suitable compromises between the usual standardization
and individual customization.
The objectives are to meet consumer
needs better, reduce costs and complexity
and take action more quickly. More and
more companies are attempting to transfer this concept to as many areas as possible, be it sales, service or marketing. http://rbsc.eu/Em_inno
8%
Simple products
8%
Offering affordable resources, technological
innovation and growing purchasing power, the
emerging markets are taking off. Western firms
therefore expect that these markets will account for on average 70% of their profit growth.
But new opportunities mean new challenges:
it's no longer enough to adapt sophisticated
products developed in the West into a simpler
form. To stay successful in emerging markets
in the future, companies have to develop new
independent and tailored business models.
Offering various
(levels of) extras at
corresponding prices
25%
Specialization (niche
strategy)
59%
Modularization
http://rbsc.eu/Hot_Markets
| 3D printing: Massive plunge in prices
provides market opportunities |
2013
4.2 € /cm3
-58%
2018
1.8 € /cm3
-35%
2023
1.2 € /cm3
Major potential
Forecast costs for
using 3D printing
in the metals industry
"Additive manufacturing, or 3D printing,
will soon become one of the biggest drivers
of change in manufacturing industries. At the
moment, the technology is on the brink
of transitioning from the prototype phase to
series production, with a realistic cost/benefit
factor. In the metals industry, for example,
3D printing could cut costs by up to 58%
over the next five years."
Dr. Bernhard Langefeld, Principal, Roland Berger
COO Insights | 03.2014
35
WOR K S HOP
WORTH KNOWING
COO Insights
*Share of mobile
channels in the overall
digital advertising budget
(forecast for 2016)
|
22%
6%
In our two-speed global economy
In developing
Globally
countries in Asia
of quickly growing developing countries and stagnating developed countries, a new group of players is continuously gaining importance:
multinational groups based in developing economies. Unlike companies based in developed markets
who have pushed globalization, they
are only just beginning to expand
2012
2007
internationally. With their good
financial backing and in-depth understanding of local markets, they seem ideally positioned to profit from developing markets' growth: Developing economies' combined GDP grew 4.3%
on average every year between 1980 and 2012, and is set to grow further. This
is especially true in Asia, where the growing middle class is spurring demand
http://rbsc.eu/GMESR
for luxury goods.
602
2.369
US companies*
1.621
3.166
11%
Annual sales growth (in USD bn) since
2007 at the top 10 companies...
| Companies in devel-
oping countries
with growing business
Issue 03.2014
51%
Indian companies*
| Mobile marketing |
DIRECTLY LINKED
By 2030, approximately 80% of the global middle
class will be living in today's developing countries.
Companies have to arrive at a better understanding
of the needs of these future clients if they want to
tap into the opportunities for growth this offers. It's
the only way they can develop the right products as
well as effective marketing and sales strategies.
One of the greatest challenges is how best to disseminate information: The majority of people in
developing economies are under 25 years old and
have grown up with mobile phones.
So mobile devices are the most important digital platform for them, whereas in developed countries, it's the personal computer. This is why media
planners in India, for example, will spend more than
50% of their digital advertising budget on mobile
channels in 2016. Western marketing experts should
keep these local preferences in mind.
http://rbsc.eu/reach_em
36
Administration
& overhead 41%
Product
portfolio 66%
Innovation &
development 49%
Production 60%
Purchasing 49%
Working
capital 58%
Marketing &
sales 52%
Accounting &
finance 60%
Logistics 54%
| Focus areas for 2014 |
OPERATIONS EFFICIENCY RADAR
This year's Operations Efficiency Radar focuses on a "slow growth" scenario.
Growth in the triad markets is slow, and is tapering off in the emerging markets.
We talked to 200 executives to identify the top levers for growing profitably
under these conditions.
The product portfolio tops the list, followed by production, accounting &
finance (first time in the top 3) and working capital management.
http://rbsc.eu/5thOPER
COO Insights | 03.2014
WOR K S HOP
|
K IOSK
Readers' corner: Recent publications
from Roland Berger Strategy Consultants
KIOSK
STRATEGIC SCENARIO PLANNING
How can entrepreneurs and managers
align their strategies in an environment
where everything is complex and incalculable? How do you handle uncertainty when you have to make decisions
for the long term? Traditional strategic
management can no longer keep abreast
of today's fast-paced changes, and it
has become too one-dimensional. Our
new solution is "scenario-based strategic
planning" – an up-to-date structural
concept for flexible management.
Globalization has built strong networks around the
world, and new technologies and free trade are
driving growth and prosperity. But these changes
are occurring at breakneck speed, thus making
management tasks ever more complex and slowing
down business operations. Industry and markets are
governed by uncertainty and ambiguity. Where
should managers look for guidance? Which models
should they choose to make sound decisions? The
scenario-based strategic planning approach provides
helpful guidance.
"Scenario planning makes good management
easier and is an important tool for decision-makers,"
says Prof. Dr. Burkhard Schwenker, CEO of Roland
Berger Strategy Consultants. In collaboration with
Prof. Dr. Torsten Wulf of the Center for Strategy
and Scenario Planning at the Leipzig Graduate
School of Management, he has published a new book
on strategy.
Earlier scenario planning methods were often
complicated and time-consuming. The new concept
is directly integrated into strategic planning and
helps make projects less complex and more efficient
Mass-affluent
consumers
at the same time. It can easily and quickly be adjusted to changes and allows for more flexibility. The
book describes the approach for scenario-based
planning developed by the Leipzig Graduate School
of Management and Roland Berger and the underlying concept. The authors present their methodology
and its benefits for the management process and
show how to integrate the approach into existing
planning processes. "Working with scenarios expands one's line of thinking, promotes interdisciplinary work and improves the quality of decisions.
It also improves companies' strategic flexibility,"
says Wulf.
The book's three key messages are:
1. Managers need to understand how uncertainty
affects planning and decision-making and what the
consequences are for strategic management.
2. Scenario-based planning offers a methodological
approach for calculating uncertainties, volatility and
management complexity.
3. Scenario planning can improve the quality of decisions in uncertain times and help develop flexible
strategies for dealing with volatility.
ASEAN countries will become global leaders
in economic growth in
the years to come. The
study provides important insights for companies who are planning
to penetrate the attractive market segment
of the Southeast Asian
middle class.
Shale gas
phenomenon
Shale gas has set off
a new boom for the
US economy, securing
a competitive advantage
for the US for decades
to come. The first companies are already
"re-sourcing" their production to partake in
this boom.
Six practical tools
Managers can structure their planning with a sixstep process and suitable tools. Using a case study
from the European aviation industry and a consulting project with one of the world's leading conglomerates as examples, the authors explain how the tools
are applied in practice.
Successful like
the champions
Scenario-based strategic planning
Developing strategies in an uncertain world.
By Burkhard Schwenker and Torsten Wulf,
Springer Gabler Verlag, Sep. 2013, EUR
39.99. Burkhard Schwenker is CEO of Roland
Berger Strategy Consultants.
What makes a machinery company successful and what can others
learn from this? The
good news: Any company can become successful. More on how
can be found in this
book.
37
WOR K S HOP
|
IN CON V ER SATION
Life with frugal innovation
7 QUESTIONS
FOR...
6 / Do you use a single- or multibrand strategy for traditional and frugal
products?
We use a single-brand strategy, but we are
in a position to equip the products with
varying levels of features for different
markets. For example, we can have more
automation in Western European facilities
or motors with frequency converters in
regions where energy costs are high. This
approach to standardized modularization
virtually eliminates any threat of cannibalization.
7 / What were the biggest obstacles
you had to overcome?
pressure to develop frugal products is coming particularly from the Asian markets.
3 / What are the key success factors
in developing frugal products?
DR. HANS-LUDWIG SCHUBERT
Senior Vice President of
Product Management, Voith
Paper GmbH & Co. KG
1 / What role do frugal products play
today? And in five years?
Frugal products are of critical importance
today. A company is valued as a partner
only if it has the accepted technological
solutions for its customers. Frugal products are a must for the growth markets
in particular. They account for anywhere
between 5 and 50% of our current portfolio. I believe that in five years at the
latest, the investment market in our industry will be globally dominated by frugal
products. Frugal is becoming the standard.
2 / What do you see as the most important markets?
The Asian markets, especially China, are
the most important for us, with South
America lagging somewhat behind. The
38
We have to understand the unique features of each market. For example, our
Chinese customers demand less customized technology and are more interested
in standardized solutions. First you have
to get the design teams on board. If your
engineering and product management
departments aren't excited about frugal
ideas, any effort to redesign products for
these new requirements is going to fail.
Finally, it's necessary to convince each
and every employee that this is the right
approach. They have to shift from focusing on the optimal technical solution toward balancing commercial and technical
considerations.
4 / Are your frugal products the same
around the globe or are they tailored to
each individual market?
The basic design of the products is standard, but the features vary depending on
the needs of the regional market. What's
important is that the products all use a
standardized basic model despite any regional differences.
5 / Do you also sell frugal products in
developed markets?
This simple question is the most difficult
to answer. Our employees are convinced
that they have developed optimal technical and technological solutions that offer
more value than our competitors' products. Now they have to learn that although customers appreciate the product's technical value, they are no longer
willing to pay more for it. Overcoming
this challenge was our biggest obstacle.
We were able to find "beacon projects"
for some product categories, where we
could realize significant savings without
sacrificing technical functionality. These
beacon projects inspired our employees
and launched a competition of ideas.
The result was lots of new solutions and
savings potential we didn't think were
possible.
About Dr. Schubert:
>Born in 1956, Dr. Hans-Ludwig Schubert studied forestry at the University of Hamburg and
then began his career in industry with Kraftanlagen Heidelberg. Until 1998, he worked on developing and implementing new processes for
pulp production and bleaching. In 1999, Dr.
Schubert joined Voith Paper and was appointed
to the management team in 2008. As head
of global product management of the business
line projects, he is responsible for the new product family of stock preparation machines as
well as the modularization of paper machines.
Yes. I believe that there is a market for
frugal products everywhere around the
world. This is the result of global cost
pressure on the capital goods industry.
COO Insights | 03.2014
I M PR I N T
|
OU T L O OK
COO INSIGHTS 03.2014
PUBLISHERS Thomas Rinn/Martin Erharter
Roland Berger Strategy Consultants GmbH
HighLight Towers
Mies-van-der-Rohe-Str. 6
D-80807 München
Tel.: +49 89 9230-0
COO_ [email protected]
RESPONSIBLE FOR CONTENT Dr. Michael Zollenkop
IN ACCORDANCE
WITH GERMAN PRESS LAW
PROJECT MANAGER Dr. Katherine Nölling/Victoria Wulf
EDITORIAL ADVISORY BOARD Christian Böhler, Bernd Brunke, Philippe Chassat, Michael Dohrmann, Dr. Sebastian Durst,
Dr. Martin Eisenhut, Martin Erharter, Oliver Knapp, Dr. Bernhard Langefeld, Dr. Ralph
Lässig, Dr. Christian Neuner, Dorit Posdorf, Thomas Rinn, Ingmar Schäfer, Prof. Dr. Burkhard
Schwenker, Jonathon Wright, Prof. Dr. Torsten Wulf, Dr. Michael Zollenkop
DESIGN Roland Berger Media Design
COPYRIGHT NOTICE The articles in this magazine are protected by copyright. All rights reserved.
DISCLAIMER The articles in this magazine do not necessarily reflect the opinion of the publisher.
Do you have any questions for the editorial team? Are you interested in studies
conducted by Roland Berger Strategy Consultants? Then please e-mail us at:
[email protected]
PICTURE CREDITS Cover: Slavica Ziener, p. 3: Roland Berger Strategy Consultants GmbH, p. 6-7: Patrik Svensson,
p. 11: Patrik Svensson, p. 14-15: Ralph Zimmermann, p. 16-19: Slavica Ziener, p. 21: Siemens,
p. 23: Corbis, SiencePhotoLibrary/Agentur Focus, p. 24-25: Mark Henley/Panos,
p. 27: Jacob Silberberg/Panos, p. 30-31: RB Media Design, p. 38: Ralph Zimmermann
Published in November 2013
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39

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