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The Executive Newsletter of TheOfficialBoard

Dawn Raids in Europe

By Peter Citron, Lovells

One of the key tools that the European Commission uses in its fight against cartels and other anticompetitive behaviour is a dawn raid, an unannounced on-the-spot investigation. There are some hard facts emerging from recent dawn raid practices which businesses should be aware of.

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Wider use of dawn raids

In 2008, the Commission opened a sector inquiry into competition in the pharmaceuticals sector and dawn raided a number of pharmaceutical companies. This is the first time that the Commission has launched a sector inquiry by means of a dawn raid. The case illustrates the Commission’s determination to use its dawn raid powers increasingly widely.

IT Searches

Inspectors have the right to examine and copy documents stored on a computer system. The inspectors bring IT experts who can use forensic search techniques and can retrieve deleted documents. The documents do not have to be on the computer system on the premises. The Commission takes the line that they are entitled to review and copy all documents which are accessible from the premises, and this can include documents which are stored on a server outside the EU.

Privilege

The recent Akzo judgment has confirmed that communications with in-house lawyers can be reviewed and copied by inspectors in an EC investigation. Only communications with independent, external, European Economic Area-qualified lawyers are protected by legal professional privilege. So, for example, advice from a US qualified lawyer, which may be privileged under US rules, can be inspected and copied by Commission officials for use in their investigation.

Sealing

If a dawn raid lasts more than one day, it is standard practice for the Commission inspectors to seal rooms and filing cabinets. It is absolutely essential for companies to ensure that these seals are not broken or tampered with. In 2008, the Commission imposed a fine of Euro 38 million on E.ON Energie AG for breaking a seal fixed by the Commission during a dawn raid.

Obstruction

The Commission has a clear policy of punishing companies severely for obstructing investigations. In its first application of its new 2006 fining guidelines, the Commission imposed an increase of 30% to Sony’s fine for obstruction of the dawn raid. This was on the grounds that a Sony employee had refused to answer oral questions asked by the Commission’s inspectors and another employee was found to have shredded documents during the inspection.

Waiting for the company legal advisors

The presence of a legal advisor is not a legal condition for the validity of the inspection, and the inspection must not be unduly delayed or impeded by awaiting the arrival of legal advisors. Inspectors may be willing to wait a maximum of 15 minutes for legal advisors to arrive.

Home searches

The Commission has the power to raid private homes in addition to business premises. In May 2007 inspectors raided the home of a director in the marine hose cartel investigation, and another inspection at private premises took place in 2008.

Further guidance?

We have developed an e-learning course on how to deal with dawn raids for you and your teams in Europe. This is an interactive screen-based course which employs a series of role plays to deliver training to a number of staff within any organisation.

Peter Citron is Head of Practice Development and Knowhow for the Competition and EU law practice area of Lovells. Lovells is one of the largest international business legal practices with offices in Europe, Asia and the United States.

From Deference to Reference

By Viky Cooke, Chime Communications

8-juin-viky-cookeTrust in the voice of authority is fading as consumers increasingly put their faith in each other. Messages from businesses, politicians and tabloid newspapers are being listened to with scepticism.

The economic crisis has caused a seismic shift in attitude. Consumers are now entering what the company calls the “age of emotional proximity”, where peer recommendations surpass all other marketing.

We have moved on from a place where we automatically respected our elders and betters to one where we trust friends and family first and foremost. The shift from deference (people accepting what they are told) to reference (asking advice from peers) has been developing since 2002 according to our quantitative surveys.

This has moved on again and accelerated as the Internet has grown. The unravelling of financial institutions has resulted in a wider loss of confidence, not just of the City but of other businesses too. The majority of the public (73%) and opinion leaders (85%) agree that “bad management in a variety of business areas has increased mistrust”.

Celebrity promotions

It appears we are not even buying into celebrity endorsements any more. While stars are still rated as more trustworthy sources of information than “leaders”, the glut of reality TV “stars” that have invaded viewers’ screens has lowered opinions of celebrities.

Some retailers such as Marks & Spencer in the UK have now moved away from big names fronting ad campaigns. The UK retailer is scaling back its use of celebrities in advertising campaigns in favour of a greater emphasis on promotional discounts.

People have become much more sophisticated in the way they think about celebrity endorsements, and brands need to think carefully before signing up a star name.

Brands should focus instead on the trend of peer-to-peer “proximity” to get their messages across. eBay, Amazon and TripAdvisor promote through recommendations to give you a sense that you are hearing from people like you.

Extended trust networks

Consumers are still putting most of their trust in the opinions of their friends and family, but they also put faith in friends of friends and family, whom they consider to be “people like us”. Even opinions on forums and social networks are seen as trusted sources of information.

This trend has been accelerated by the rapid growth of the Internet and increasing popularity of social networking. Consumers want to know that opinions are honest and not just marketing spin and a vested interest in the outcome.”

Familiar household names are ideally positioned to capitalise on trust by combining with reliability. If a product has been around for a long time, it becomes “like a friend” and has a reputation for meeting consumers’ needs even in a tough economic climate.

Familiar face

But this doesn’t mean that newer brands have to sit back and patiently wait for trust to build. Google is incredibly clever because it feels like it is your friend. It’s such an easy way of getting information. People’s perceptions are that it is accurate and transparent.

Now is the time to get out there and be a part of people’s lives and empathise with them.

Viki Cooke, is joint CEO at Opinion Leader and a Member of the Executive Team at Chime Communications, a leading global communication group located in London, UK.

World Sourcing Opportunities

By Reid Walker, Lenovo

8-juin-lenovobWith the global economy in upheaval, traditional distinctions between consumer and producer nations, and between developed and emerging markets has blurred, creating promise and peril for multinationals as the early “shoots” of economic recovery take root.

1. Brazil, Russia, India and China are evolving into vast market economies, and many smaller economies are making similar progress. China has emerged as today’s third largest economy and is poised to surpass the United States in GDP before mid-century, with countries like India and Brazil not far behind.

2. Demographics and education levels are changing. The population of the Western world is growing older relative to that of the East. Brazil, Russia, India, and China have a high and growing percentage of college educated adults; now approaching 20% - second only to the United States.

3. Widespread use of information and communication technology is changing the world. The PC, the internet, and inter-operable software have made real instantaneous communication on a global scale. This development has forever altered all facets of our economic, political and social lives.

The PC has been a key enabler of evolution to world sourcing. Lenovo, partly because of its origins, has pioneered its use in the PC industry. Its world sourcing approach to business has created a platform for success and leadership. A new kind of company that blends the best thinking of East and West is emerging to meet the needs of a changing world.

What did it take for us to be a world sourced company? World sourcing meant locating resources strategically to serve key markets globally. That meant having the most talented and innovative people, the strongest infrastructure, the deepest language proficiency, the finest technology capabilities, the most efficient operations and  facilities, wherever they are best available to sell wherever profitable markets exist. Easy to say…

Our World sourcing addresses 3 key challenges in getting closer to customers.  First, competition has no borders: you can’t hide from high-value, low-cost offerings.  Second, customer service is critical, but it is harder to deliver well because it demands increased knowledge of local markets, cultures and business practices including underserved consumers in developing market economies. Third, in a world with essentially one time zone, we have to source materials, innovation, talent, logistics, infrastructure, and production wherever they are best available.  And we sell wherever a profitable market exists, anywhere in the world.

In today’s economic climate, companies must world source or perish. It is that simple

Reid Walker, is Vice President Global Communication at Lenovo, one of the 3 leading global PC suppliers.

The Sustainable Customers

By Peter Lacy,  Accenture

08-juin-accentureeIn our research and work with clients around the world, we see the challenges that many companies are facing in this difficult economy.  Management must demonstrate their ability to run day-to-day operations better than before, maintaining flawless operations despite the need to tighten belts and deal with suppliers in crisis, customers lacking in confidence and ongoing merger-integration challenges.

In this downturn, consumers don’t have the same spending power, are more price sensitive and they’ve lost trust in companies and brands. They now have a higher propensity than ever to switch.

First, consumers may have lost some spending power, but that doesn’t mean they have lost their consciences. Yes, they are cutting  back, but their values and good intentions remain.  If they are able to support their values despite the economic pressures, they do.

One of the clearest headline findings from our latest survey of over 11,000 consumers worldwide is that consumers’ level of concern over climate change has remained unaffected by the challenging economic conditions. In fact, 3 out of 4 respondents said that they’ve changed their behavior to a “great extent” or “some extent” over the past 12 months to try and reduce their individual carbon footprints.

However, consumers aren’t prepared or in a position to pay a differentiated price. This is giving rise to the ‘frustrated consumer’.

Second, This is creating an opening for savvy companies.  As companies compete for limited consumer spending, the reinforcing ‘sustainability’ message is a differentiator and a positive response to the ‘frustrated consumer’ phenomenon.  Increasingly consumers want “embedded” sustainability.  Take the following examples:

  • P&G has designed its Ariel and Tide washing detergents to work at low temperatures. In 2006, Ariel started the “Turn to 30 degrees” campaign in the UK. The campaign was effective, with an increase in the number of loads washed at 30 °C moving from 2% to 17% following the campaign. This translates into about 60,000 tons of CO2 emissions saved. For consumers, this means about £50 a year saved.
  • In 2008, Clorox launched its Green Works line of natural cleaning products and already this new brand has captured 42% of the market.  According to Clorox, the consumer market for natural cleaning products has doubled since its launch in 2008.
  • General Electric recently announced a 21% increase in revenues from their Ecomagination offerings. With over 80 products and services in the range – they are addressing consumers’ sustainability needs in refrigerators, smart meters for the home, turbines and engines for industries.  The 80 products represent a 30% increase from the 2007 portfolio, which GE plans to bring to US$25 billion by 2010.

Conclusion: there is an opportunity to turn this position into real business value.  If you can give customers everything they traditionally want, with features like price, quality, availability and sustainability, this is the winning formula.

For an increasing number of consumers, sustainability is a benefit – and lack of it is a cost. Using sustainability as a focal point and differentiator in the economic downturn makes sense.

Peter Lacy is the Accenture Sustainability Practice lead for Europe, Latin America and Africa.

Starting your Company Blog

By Hervé Kabla

08-juin-logo-blog-angelWhat makes top executives like Georges Colony at Forrester, Bill Marriott at Marriott Hotels, Lucien Fa at Yoplait, or Françoise Gris at Manpower so similar? It’s not a question of language, nor sex, nor age, nor even industry. No, the common point between all those CEOs is much simpler: they all started a blog in the last 3 years.

When I say started a blog, I really mean a blog. A blog? Yes, those stupid little websites that kids worldwide have adopted in order to share, exchange and test new ideas.

But politicians like Mr Obama and Mr Sarkozy have long understood what benefits they can drive from these “kid’s” platforms. A corporate blog or a CEO blog is a valuable communication tool you can use whenever you need to emphasize specific topics, and can have a great impact on your business.

Why some C-Level managers at your company should start their blog right away:

1-Spend more time with customers. Managing your company requires strong agenda management, no matter your company size: meetings, phone calls, flights.  You rarely have the opportunity to develop a real discussion with customers. A blog will offer you an asynchronous way to reach them – and them to reach you. Don’t worry about the topics, they’ll naturally find their way to your mind: customers know what to ask – and when.

2. Enhance your online brand reputation. The web is the place where people look for information. People generally don’t know how to determine the most valuable voice out there. Why not add your own messages to the discussion? Your authenticity and your position will give your voice a tonality no other writer will ever reach, no matter what your level of writing skills may be.

3. Get high visibility for a small investment. Compared to traditional media, blogs are really, really cheap to start, maintain and develop. Yet, you’ll have to dedicate a small amount of time – one hour or two every week – in order to find the appropriate message to deliver to your customers, employees, analysts, competitors or partners. You can write these messages yourself, or rely on corporate blogging agencies to help. That’s it. All the rest (publishing, moderation, answering) can be delegated.

4. Own your communication channel. No one ever knows what the future will bring to your company or your business. The economic downturn, potential health risks, scandals, we don’t want our revenue to stumble on headlines. Depending on the crisis phase, you’ll easily find the appropriate tone: soft or passionate when you have to entice readers, strong or even tough when you need to defend your positions.

5. Learning by doing You can’t understand Social media (Twitter, Facebook, or blogging) by reading an article in a magazine or a report from your Chief Marketing Officer. Sure, they can tell you what they are, but you won’t be able to truly understand how they could change your business unless you actually use them.

Hervé Kabla is the CEO of BlogAngels, a leading corporate blogging agency located in Paris, France.

Making your Workplace Flexible

By Maryanne Perrin

08-juin-photo-maryanne-color4A cultural change we cannot ignore. Unless you’ve been completely unplugged, you’ve probably heard some rumblings about the benefits of workplace flexibility.  If not, here’s the scoop: study after study shows that it’s a top priority for employees and it’s good for employers, too.

Need further proof? US-based Best Buy and UK-based BT Group both have programs that allow employees’ maximum control over when and where they work  (called Results Only Work Environment and Freedom to Work respectively) and results of these programs have been impressive:  productivity improvements ranging from 15-35%; reductions in turnover and absenteeism; and significant savings in real estate costs.

While the concept of a truly flexible workplace - people working when and where they like as long as they get the job done - isn’t rocket science, it isn’t going to happen without proactive planning and leadership thanks to ingrained notions of work that have their roots in the Industrial Age.

Want to ensure you’re creating a flexibility culture that meets the realities of an Information Age workplace and workforce? 51% of Gen X workers say they’d leave their current employer for a chance to telecommute; 60% of working mothers view part-time as the ideal work arrangement; two-thirds of workers between age 45-74 desire flexible schedules.

Here are some tips:

1. Approach workplace flexibility as a broad business strategy that requires the support of the entire management team.  By relegating it to the ranks of an “HR program” instead of a strategic, company-wide initiative, you’ll guarantee that it doesn’t go far.

2. Examine your own ingrained notions of work and the messages you might be sending employees.  Do you make assumptions about someone’s work ethic and contributions based on when they arrive and depart the office?  What do you assume about the dedication of employees who work alternative schedules (e.g. part-time, job-share)?  Are employees rewarded for putting in long hours (“face time”) or for results?

3. Find out what your employees want. Workplace flexibility isn’t necessarily about working LESS; it’s about working differently so people can effectively manage the complex demands of work and life.  Take the time to understand your employees’ perspectives on flexibility so that you create a strategy that supports your business and your people.

4. Make the necessary operational changes to support a flexible workplace. Essential items include: strong performance management systems; technology that enables remote systems access; communications protocol; formal HR policies and management training (the “management” concept changes dramatically from managing bodies at desks to managing results!).

5. Lead by example. Many companies have written flexibility policies that go unused because the underlying corporate culture values face time over results.  What’s the best way to show your support of a flexible workplace?  Let your employees see you changing your work hours and location to meet the demands of business and life!

Maryanne Perrin is a founding Partner at Balancing Professionals, which provides new strategies for a new workforce.  They are located in North Carolina, USA.

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