Eating Disorder Addressing the World’S Growing Pains

THE POINT bridgepoint.eu

Intelligent investing in Europe from Bridgepoint Issue 31 | May 2017 Eating disorder Addressing the world’s growing pains

The genuine article Global ambition Not just for gamers Corporate authenticity Success on the Augmented reality in demand international stage comes of age Contents

INS & OUTS 2 Bridgepoint investments and exits across Europe

MANAGEMENT 5 The extra mile Motivating staff can be hard work and money alone is rarely the answer

VIEWPOINT 10 Shrink the world Rising obesity has prompted a surge GROWTH in health-related businesses. But will 22 Where next? they make people leaner? International expansion is a logical step for many businesses but it’s important to know MARKETS 16 Honest to goodness how to go about it Battered by false promises, THE INTERVIEW consumers yearn for authenticity. And 26 Striving for excellence there are considerable rewards for Thomas Babacan was once a tennis coach. companies that can deliver it Today he makes fridges for some of the world’s best-known supermarkets

TECHNOLOGY 32 Reality bytes Virtual reality has been the preserve of geeky gamers. But forecasters estimate the market could soon be worth around $80 billion

LAST WORD 36 Does self-help help? Is the self-help phenomenon finally running out of steam, 80 years after How to Win Friends and Influence People was published? FOREWORD

Growing pains

ith overeating now responsible for about 5 per cent of deaths worldwide, it Wcomes as no surprise that rising obesity is spawning a range of fast-growing businesses keen to tap into this phenomenon. What’s more surprising perhaps is that the rate of transformation applies not just to the food industry, as companies vie to offer more wholesome alternatives, but to a new mobile app industry. The Point (page 10) analyses whether food that is natural and organic is, by definition, healthier and explores why consumers are hungry for such products when technology may arguably have a bigger part to play in fighting obesity. The quest for the right answer is also the subject of “Honest to goodness” (page 16) – not about food but about authenticity and how customers, battered by false promises, yearn for true authenticity from the corporate world. Millennials – the generation of 20 to 30-somethings – are especially sensitive to brand honesty. For businesses that get it right, the rewards are huge, even in the B2B space, which has been slow to learn from its consumer brothers and sisters. As we have learned and encouraged in the businesses that Bridgepoint owns, in almost every industry companies are considering driving sales growth through internationalisation. The Point explains that, while the benefits are many, so too are the pitfalls (page 22). And on a similar theme (page 26), we discover how AHT Cooling Systems and its CEO, Thomas Babacan, have successfully responded to consumer demand to build up an international presence and become the undisputed market leader in their sector. It all sounds good in theory, doesn’t it? Motivation is rightly a key component for a business, especially in times of uncertainty, as a well-motivated workforce is enthusiastic, productive and good to be around. But nowadays, as we show in ‘The extra mile’ (page 5), traditional motivating factors such as remuneration are no longer sufficient – feeling under-rewarded demotivates but it doesn’t necessarily work the THE POINT other way round. In our regular ‘Ins & Outs’ (page 2), we outline news of acquisitions in the UK, Portugal and Sweden, as well as the successful sale of Nordic Cinema Group to New May 2017 York-listed AMC Theatres for US$929 million and the £835 million sale of Oasis Issue 31 Published by Dental Care to private health group Bupa. Bladonmore (Europe) Ltd And finally, our guest columnist Paul Croughton, of the luxury magazine Robb Editor Joanne Hart Report, writes, with his tongue firmly in his cheek, about the rise of self-help books, Design and examines the growing backlash against their Bagshawe Associates UK LLP Reproduction, copying or advice (“Last Word”, page 36). extracting by any means of the whole or part of this We always enjoy reading your feedback, so publication must not be undertaken without the please continue to let us know what you think written permission of of The Point via [email protected]. the publishers. The views expressed in Enjoy this edition n The Point are not necessarily those of Bridgepoint. William Jackson www.bridgepoint.eu is managing partner of Bridgepoint

1 INS &OUTS Moving into top gear

Zenith, the UK’s leading vehicles and delivering manufacturers and independent car leasing fully outsourced fleet financial services group, has been acquired by management services. businesses. The company Bridgepoint in a transaction “Zenith is already best-in-class specialises in flexible employee and benefits from an exceptional benefit schemes, too, including totalling £750 million. management team. With them, we salary sacrifice, where employees The UK fleet services market is believe that the business can lease cars for personal use. This valued at around £14 billion annually continue its impressive growth market has tripled in the last three and is growing fast, thanks to trajectory through a continued focus years and is expected to continue increased outsourcing and rising on customer service, technology expanding over the coming years. employment. and targeted acquisition activity,” Tim Buchan, chief executive Zenith is a leader in the field with a says Emma Watford, partner at officer of Zenith, says: “Bridgepoint proven business model and an Bridgepoint and head of its business share our ambitions to consolidate unbroken track record of growth services sector team. and grow our position as the number over many years. Focused on both Established in 1989 and one corporate fleet provider in the the corporate car and consumer headquartered in Leeds, Yorkshire, UK, transforming Zenith into a markets, the company provides a Zenith also provides “white label” broader-based business and range of services, such as funding back office fleet management extending the value proposition in

company cars or commercial systems and services to vehicle both the UK and Europe.” n Bridgepoint sells big-screen pioneer Bridgepoint has exited has a dominant position in investment, as Bridgepoint Stockholm region, Nordic Cinema Group, the its markets and delivered director Mika Herold introduced new cinema largest cinema operator in revenues of SEK 3.16 billion explains: “Working with experiences to customers the Nordic region and the in the 12 months to Bridgepoint, Nordic opened such as the first Nordic Baltics. The sale, to September 2016. a new flagship IMAX theatre, three Scape New York listed AMC Acquired by cinema in the premium large-format Theatres, is valued at Bridgepoint in 2015, screens and improved food US$929 million. Nordic has grown and beverage offerings Based in Stockholm, substantially over across its network. As the Nordic Cinema Group the past two undisputed cinema group operates across Scandi- years, leader in the Nordic region navia, as well as Finland, benefiting and the Baltics, the Estonia, Latvia and from business is well placed for

Lithuania. The company widespread further growth.” n

2 UK’s leading dental Vitamin operator extraction boost

Bridgepoint Development Capital (BDC) has acquired a majority shareholding in Stockholm- based Vitamin Well, a market-leading business in the functional drinks sector. Established in 2006, the company develops, markets and sells high-quality products for health-conscious and active consumers under brands including Vitamin Well, NOBE aloe vera and NOCCO. Over the past decade, Vitamin Well has

Bridgepoint has sold Oasis Dental platform and a commitment to Care to private health group Bupa in quality and innovation, it has a transaction valuing the business at become the leading branded dental £835 million. operator of scale in the UK. It will Acquired by Bridgepoint in 2013, continue to lead future consolidation Oasis is the UK’s leading private of the UK dentistry market as it dental services provider, with 380 extends its brand in the market,” practices and over 1,800 dentists. says Bridgepoint partner and head of Under Bridgepoint ownership, healthcare investment Jamie Wyatt. Oasis has been transformed through UK dentistry is a £7 billion market organic and acquisition-led growth. with strong long-term growth drivers, EBITDA tripled, as the group including favourable demographics, acquired 191 independent dental government policy trends and expanded significantly in its practices, opened in the growth in domestic market and moved into the Republic of cosmetic dentistry. 28 countries across Europe. Ireland and made “Our growth is BDC partner Johan Dahlfors considerable invest- accelerating and says: “Consumers increasingly ments in marketing and clinical enthusiasm is building among seek healthier alternatives to infrastructure. Oasis also extended dentists and customers. Bridgepoint carbonated soft drinks and opening hours, introduced has been very good at asking us Vitamin Well’s products cater to transparent pricing and ran the first what our world will look like and this growing demand. We look national dental chain TV campaign, how we can make sure we're winning forward to working with a strong prompting a 12 per cent rise in in five years’ time. It's been a management team to drive appointments very motivating way to run a innovation, accelerate growth in “Oasis’ performance has been business,” Justin Ash, Oasis chief the Nordic region and broaden impressive. With its robust clinical executive, explains n the European footprint.” n

3 Sapec sows seeds of BDC exits long-term growth TMF expert Bridgepoint Development Capital (BDC) has exited Phlexglobal, the specialist provider of document management solutions and related services to the global clinical research market. Renowned in its field, Phlexglobal has expanded significantly since partnering with BDC in 2014, extending its customer base, expanding its operations and developing The Agro Business interests of cutting-edge R&D and new platforms. Belgium-listed conglomerate expertise in the “As the outsourced pharma- Sapec Group have been acquired complex regulatory agro environ- ceutical industry has grown on by Bridgepoint in a transaction ment to drive further revenue the back of increased R&D valued at €456 million. growth, enter new territories and spend and more complex regula- Headquartered in Portugal, launch new customised products. tion, so Phlexglobal has Sapec Agro Business (SAB) is the We will also explore consolidation expanded with new technology number one crop-protection opportunities,” says Bridgepoint and services. By extending its specialist in Portugal and a global partner Héctor Pérez. reach to customers, the leader in crop nutrition, with Crop protection and crop company is now well placed to revenues of more than €225 million nutrition are growing markets, as accelerate development further,” and sales in over 70 countries. It farmers and growers seek to says BDC develops, manufactures and address challenges, such as partner supplies crop-protection products, population growth and dietary Alan Payne. such as herbicides, insecticides shifts. SAB also benefits from Headquartered in Amersham, and fungicides, and produces targeting high-value crops such as Buckinghamshire, Phlexglobal is speciality fertilisers, such as fruit, vegetables and vines. a world leader in the provision of micronutrients and biostimulants. Sapec Agro Business chief electronic Trial Master File “Sapec Agro Business is now executive Eric van Innis says: (eTMF) systems and services. ready to accelerate growth and “These are exciting times for Sapec These systems facilitate the gain scale as the market consoli- Agro Business and its customers in evaluation of pharmaceutical dates. We believe there is an what remains an attractive long- trials and the quality of the data

opportunity to use the group’s term growth market.”n produced n 1st Credit transfer Award-winning ethical Headquartered in suppliers and telecoms Investor in Customers debt purchaser 1st Credit Reigate, Kent, 1st Credit companies and enters into accreditation for three has been sold by Bridge- has over 100,000 long-term repayment years running for its high point to European customers and agreements with levels of customer service. credit manage- arrangements of consumers. In 2015 it increased collec- ment services more than £300 Authorised by the tions revenue by 18 per group Intrum Justitia, for million. The company Financial Conduct cent to £50.1 million, while an enterprise value of acquires debt portfolios Authority, 1st Credit has EBITDA rose 22 per cent

£130 million. from banks, utility achieved a three-star to £33.2 million n

4 MANAGEMENT

The extra mile A well-motivated workforce is enthusiastic, productive and good to be around. Above all, motivation is a key component of business success. But finding the right formula can be difficult, especially today.

5 ew would disagree that the order to get there. How do you past 12 months have been keep everyone pulling together F full of surprises. For some, and concentrating on the task in these have been welcome; for hand when you can barely see others, less so. Either way, events past the next bend in the road? of the past year have had a The rise of the gig economy and profound effect on business, with the surge in the number of many long-held assumptions about contractual or freelance workers the economic and political present further challenges. Their framework in which companies relationship with employers tends operate now shrouded in murk. to be short term so they may be Looking ahead, uncertainty is less motivated to maximise their expected to persist for several output. And for managers, it may years, creating a distinct, and be considerably harder to motivate often frustrating, loss of visibility a team whose very composition is for businesses of every shape and constantly changing. size. Not only does this unpredictability make investment The power of empowerment decisions difficult, it also presents As a leader, says Katia Beauchamp, a significant challenge to anyone co-founder and CEO of beauty box who has a company to business Birchbox, the place to build or a target to start is with yourself. “The best hit, and a team that way to motivate people is not with needs motivating in options and incentives – although everyone in this firm is an equity holder – it’s to make them feel like owners themselves. If you empower your team, it really makes all the difference: let them know that they are trusted to make decisions and to make mistakes, and that if they do make mistakes it doesn’t mean you will stop trusting them. Because to get real growth you have to make mistakes.” Most people have worked at In an age where one time or another for the kind of shop-floor workers, boss whose instinctive reaction senior managers when things get tricky is to look and almost for a patsy on whom to offload the ‘‘ everyone in blame. Don’t be that boss – instead take a leaf from Microsoft between are glued chief executive Satya Nadella’s to games such as book. He recently revealed the Candy Crush, it contents of an email he sent seems only logical to the team responsible for last year’s disastrous artifi- to use a bit of game- cial intelligence chatbot Tay, playing to spice up which had to be hastily unplugged work performance” after its tweets, initially harmless,

6 descended rapidly into racism and then execute. If it’s not panning and healthy and their productivity foul language. out then you choose another place had increased. The superchickens, The company was forced to to go,” says Beauchamp. however, had had a bad time of it make a public apology and endure – only three were left alive, and considerable humiliation. After Superchickens and eggs they were featherless and bleeding. such an embarrassing episode, There is also, of course, the vexed The rest had all been pecked to many outsiders might have question of productivity and the death by their flockmates. expected Nadella to heap ongoing debate over the link The take-home messages for opprobrium on hapless colleagues. between motivated employees and motivation, says Heffernan, are Not a bit of it: “Keep pushing and increased output. One popular that there is such a thing as keep learning,” went Nadella’s approach in recent years has been unhealthy rivalry, that outstanding uplifting message. “The key is to the ‘Superstars’ model, predicated individual performances often keep learning and keep improving.” on selecting the most motivated come at the expense of the whole Times of trouble or uncertainty and productive individuals from and that if you treat people like lab are opportunities to flex your across the business and putting rats (or chickens) then that’s how motivational leadership muscles, them together into hyper-effective they will behave. agrees Harvard Business School ‘dream teams’. “There’s lots of academic graduate Beauchamp. Birchbox It sounds like common sense research into team-building and has 1 million subscribers across but, as CEO turned business what matters is not so much the the US, UK, France, Spain, Belgium author and speaker Margaret intellectual stuff like IQ, but and Ireland and has been credited Heffernan has noted, there are social skills – how in tune they all with creating a brand-new problems with this approach, are with each other, whether they category, the so-called subscrip- illustrated by the unlikely- listen and whether someone is tion box model. But it has also sounding ‘superchickens’ experi- overly dominant in the group,” struggled with explosive competi- ment conducted by biologist she says. tion from deep-pocketed rivals, William Muir at Purdue University including the biggest beast in the back in the 1990s. Looking to e-commerce jungle, Amazon, maximise egg-laying in the poultry which started a rival service industry, Muir compared the within a year of Birchbox’s launch. fortunes of a flock of average To cope with that kind of egg producers with those of a challenge requires resilience and specially chosen group of agility, and the readiness to admit super-productive fowl over that you don’t know everything. the course of six generations. “As a leader you are not some At the end of the trial, the anointed person with all the right average egg layers were plump answers. There are always a million answers. What the leader does is choose a destination and

The ‘Superstars’ model is ‘‘predicated on selecting the most motivated and productive individuals from across the business and putting them together into hyper- effective ‘dream teams’”

7 Workforce motivation in uncertain times: a six-point plan

1. Don’t pretend to know what’s going to happen in the future. Instead, paint a picture of what it might be – a vision of the snow-capped mountain peaks helps people when they are struggling through the crocodile-infested swamp. 2. Understand organisational politics, but rise above them. Politics come to the fore when the way ahead is uncertain and it’s naive to say that you should ignore them. But neither should you be partisan – be aware but don’t take sides. 3. Stay focused on the task in hand – speed, service, execution – whatever your core competency is. This is really important. Don’t be distracted by big external events that you can do nothing about. 4. Talk about “we” not “you”. Like an army officer leading the troops, you have to foster a sense of being in it together. Identify with your foot soldiers, but not so much that you fail to tackle performance issues. 5. Have a Plan B. When things go wrong, it’s vital not to panic – having a back-up plan helps you to keep your cool when all about you are losing theirs. 6. Tell the truth and don’t pretend to be perfect. By definition, uncertain times mean that you won’t always know what to do – you will gain respect by admitting that, and lose it if you try to bluff or cover up.

Devised by Gareth Jones, a fellow of the Centre for Management Development at London Business School

8 Play the game director of south east Wellbeing has gone Gamification is another trendy London-based specialist lift from a nice-to-have topic in the motivation debate. In business Apex Lifts, prefers to a must-have. an age where shop-floor workers, to use more traditional senior managers and almost techniques with his small but Its impact can be everyone in between are glued to ‘‘ profound but you mixed workforce of 120, which games such as Candy Crush, it includes factory workers, service can’t just have a seems only logical to use a bit of engineers, salespeople and few bean bags and game-playing to spice up work administrative staff. “You have to pool tables and performance too. US IT giant listen to people, and really lead Cisco is one of many companies to rather than just shout. That’s some salads in have used game-style challenges something that I’ve found comes the canteen” to encourage the sharing of more naturally with age and knowledge and ideas between its experience,” he says. Alliance Manchester Business thousands of employees across the Money alone is not a good School. “Wellbeing has gone from globe. By setting goals and motivator – while feeling under- a nice-to-have to a must-have. Its awarding virtual prizes to users, rewarded will demotivate, it impact can be profound but you the company has boosted the doesn’t work the other way round. can’t just have a few bean bags take-up of its intranet – helping to Generous pay does not produce a and pool tables and some salads in break down inter-departmental proportional boost in productivity. the canteen; that won’t cut it.” silos by rewarding employees who Instead, a few cheaper but more Cooper’s top tips for making answer each other’s questions creative methods can yield results. sustainable improvements in with a higher ranking. “It’s important to look after motivation and engagement “The best aspect of gamification people’s wellbeing, because when involve no quick fixes. “It’s not tools is that they are social,” says someone is off ill, it can have a easy – it starts with culture, and Heffernan. “It’s a way to say thank really big impact in a smaller with managers who operate you that is easily visible to others. business like ours,” says Jenchner. through praise and reward rather And for low-risk activities So at Apex there’s a gym with a than criticism. So identify your they can provide small, immediate personal trainer and a proper most socially adept line managers, rewards.” kitchen and lounge area where and train them,” he says. But in the long run the novelty people are encouraged to sit Above all, as a leader you have of work-orientated games can together and chew over shared to grow and develop yourself, just wane, she warns. “It’s fun to get a issues while eating their meals. as you require others to. “I now star the first few times. But after a Uncertainty over prospects can have a much more philosophical few weeks the effect wears off.” breed anxiety and loss of focus, so definition of success,” says Warren Jenchner, managing an important part of maintaining Birchbox’s Beauchamp. “Your levels of motivation is to make job is not to get praise from your your people feel valued and looked team but to make sure that after, agrees Sir Cary Cooper, 50th they are coming to work happy anniversary professor of organisa- and motivated.” tional psychology and health at It’s grown-up, effective and much more sustainable, but she Money alone is not admits to the odd pang of a good motivator – nostalgia for the days when the wins were simpler and more while feeling under- clearly visible than they are today. rewarded will “Then it was all about ‘Wow! I just ‘‘ demotivate, it closed this brand.’ Now I pat other doesn’t work the people on the back, but it’s much other way round” rarer to get a pat on the back yourself,” she says n

9 VIEWPOINT

Shrinthek world

10 Rising obesity mong the more ghoulish about four times the European worldwide has spawned symbols of the obesity Union’s 500 million population. A epidemic, Goliath Casket Overeating is now responsible a range of fast-growing stands out – a firm that crafts for around 5 per cent of all global businesses in industries coffins for the heaviest corpses. deaths, imposing an economic ranging from food The US manufacturer has been cost of around $2 trillion a year, doing a roaring trade since the similar to the impact of smoking, manufacturing to app mid-1980s in super-sized burial armed violence or terrorism, development. Many receptacles, which can contain a according to an analysis by the benefit from mistaken body weighing up to 72 stone McKinsey Global Institute. Nor is perceptions about (more than 450kg.) this any longer just a rich-world While the US is seen as the problem. Clothing sizes are rising health and nutrition. heartland of the bulging waistline, along with household incomes in obesity is an increasingly global the likes of China and Mexico too. problem. More than 2.1 billion “This is a major challenge for people – approaching a third of the food industry. Big food firms the world’s population – are risk being vilified rather like overweight or obese, based on the tobacco companies were in past World Health Organization decades,” says Dr Alan Russell, figures. That is equivalent to director of the Disruptive Health Technology Institute at Carnegie Mellon University.

Consumer fightback Consumers are already ﬁghting back. Many display a growing preference for what they perceive as healthier foods, driving a

11 transformation in the food loss. One of the fastest-growing slump, with revenue declining in industry, as companies battle to food firms in the UK, for example, double digits annually. Jeff offer more wholesome alternatives is Heck Food, a sausage and Hamilton, president of Nestlé to traditional treats. And with burger maker that has achieved foods division, appears to have consumer tastes changing fast, sales growth of around 170 per helped reinvigorate the line by international giants face a rising cent over the past three years. shifting the focus away from low insurgency from smaller rivals, The gourmet range promotes its fat and low calorie, to stress many of which are growing at a use of natural ingredients but, products that are high-protein, rapid rate. while these are leaner than gluten-free and free from “There is a race to find the top traditional alternatives, the firm genetically modified organisms. emerging brands in healthy has not focused its marketing on A new comfort selection even natural foods,” says Erin Lash, a calorie restriction. Similarly, Bulk includes such staples as meatloaf food industry expert at US Powders, with sales growth of 78 and mashed potatoes. research firm Morningstar. “Aside per cent over the past three years, Meanwhile, General Mills faces from the possibility of strong sales produces the whey protein fast-declining sales of Yoplait growth, early investors in such powders beloved of weight lifters, Light, the low-fat yogurt once companies can expect heavy along with nut butters. Its all- beloved of dieters. bidding from large food companies natural peanut butter may be “The focus is no longer on that want to revive revenue healthy in moderation but, at weight loss,” says Lash. “Calorie growth, which in many cases has around 46 per cent fat, would not counting is out of vogue. There is been stagnant for years.” be recommended for those aiming a perception that calorie- The giants of the industry have to slim down. restricted diets don’t work.” even been setting up internal Instead, consumers are hungry for venture capital funds to sniff out Diet: a dirty word products that are natural, organic the next big brands. In June last And despite the growing and perceived to be healthy in a year, Kellogg joined this search prevalence of obesity, diet has broader sense. with a fund called eighteen94 become a dirty word in the food The svelte and muscular Tom capital. A similar vehicle by industry. Most diet or light General Mills, called 301 INC, has products have been having a focused heavily on increasing tough time. Lean Cuisine, owned exposure to healthy food-makers, by the Swiss titan Nestlé, the taking stakes in cottage cheese world’s largest food and maker Good Culture, plant-based drink company by food-maker Beyond Meat and kale revenue, has only chips brand Rhythm Superfoods. recently pulled out of But while the fastest-growing a multi-year sales upstarts have usually been focused on producing food with natural and healthy ingredients, they have rarely promoted weight

Despite the growing prevalence of obesity, diet has ‘‘ become a dirty word in the food industry”

12 Some evidence suggests that diet or under fire from the US Food and healthy foods delude people into thinking Drug Administration (FDA) for using the term healthy on its they are eating less and they make up for packaging, despite the high fat the deficit and then some. All food content of the nuts used in its ‘‘ companies want people to eat more of products. KIND has petitioned the their products, not less” FDA to update its guidelines, contending that the healthy fats used in almonds shouldn’t count Bilyeu, the young co-founder of and understand the ingredients on against it. (The FDA has said it is protein bar manufacturer Quest the labels, even if that means re-evaluating its standards.) Nutrition, grew up in a morbidly higher calories,” says Lash. US “KIND bars are not about obese family. Quest has achieved chocolate titan Hershey, for dieting; they are about incorpor- sales growth of 57,000 per cent in example, has been moving away ating whole foods, such as nuts just three years and Bilyeu says from the use of the intimidatingly and grains, with some sugar and that one of his missions was to polysyllabic emulsifier polyglycerol chocolate thrown in,” says Marion create a product that would help polyricinoleate, or PGPR, which Nestle, a professor of nutrition, people trim their waistlines. helps chocolate flow into moulds. food studies and public health at But while protein bars can help But the transition required extra New York University. “Are they gym rats put on muscle as part of a cocoa butter, which boosted the really healthy? Well, that depends balanced diet, no nutritionist calorie count of its bars. on everything else you eat.” would argue that they will Companies are thus responding promote weight loss for those Kindly rethink to consumer preferences. Natural whose health club memberships Snack bar maker KIND, which or organic ingredients won’t lead go unused. And many do, with the uses real ingredients, has come to weight loss, all other things US National Public radio reporting being equal. They will, however, that gyms typically lose around fatten corporate revenue growth. half their members every year, Within the cereal market, for while even among members, example, granola has come to be non-attendance rates are often seen as a healthy alternative for high. Adding extra protein to the breakfast, spawning numerous diets of such gym shirkers will lead fast-growing start-ups. In fact, to further bulking up in all the granola can be a nutritional wrong ways. false friend, with some containing Among consumers, however, more sugar than regular fizzy natural ingredients trump weight drinks and more fat than a serving loss, it seems. of fries. “People are gravitating towards The bottom line is that smart products where they recognise food companies may be able to

13 There are now more than 150,000 health-related applications in the Apple store, with forecasts ‘‘suggesting the mobile health industry will be worth $21.5 billion by 2018”

14 generate revenue growth by Tech to the rescue expected to soar by around 40 per chiming with the zeitgeist but Russell believes that consumer cent in the western Pacific, they are highly unlikely to offer a technology may have a bigger part including China. As a result, solution to the rising obesity to play in fighting the rising tide of companies that produce insulin epidemic. obesity. “Companies producing used to control diabetes are “Obesity is about calorie apps that promote healthy expected to deliver robust balance and particular foods don’t decisions don’t have a vested revenue gains over the coming help unless they encourage people interest in you eating more,” he decades. Firms involved in kidney to eat less in general,” says Nestle. observes. “Instead, they try to help dialysis also offer potential for “Some evidence suggests that diet people stay on track with their strong growth, along with or healthy foods delude people broader health goals.” companies that produce special into thinking they are eating less There are now more than equipment for overweight hospital and they make up for the deficit 150,000 health-related applications patients, such as beds and trolleys and then some. All food companies in the Apple store, want people to eat more of their many of which are Businesses involved in treatment products, not less.” focused on Whatever the impact on nutrition. And a rather than prevention are likely to waistlines, innovative food study by BCC remain among the biggest companies are blossoming, with Research forecasts beneficiaries from obesity” the ‘health-conscious’ market that the mobile ‘‘ expected to continue growing at health industry will be worth able to handle the morbidly obese. a rapid rate, as operators benefit $21.5 billion by 2018. Other common side-effects of from mistaken public assumptions Inevitably perhaps, businesses obesity include high cholesterol, about healthy food and involved in treatment rather than obstructive sleep apnoea, cancer weight loss. prevention are likely to remain and musculoskeletal disorders “Ultimately, the evidence among the biggest beneficiaries such as osteoarthritis. Such health suggests that while consumers say from obesity. Type 2 diabetes, for problems could prove magnets for they want healthier alternatives, example, is linked to weight gain enterprising businesses. they are unwilling to sacrifice and is on track to surge by 19 per Meanwhile, back in Indiana, taste,” says Lash. “The health-food cent in Europe between 2015 and Goliath Casket will almost market looks set to continue to 2040, according to the Inter- certainly continue to flourish as it grow fast even if it doesn’t always national Diabetes Federation. Over caters to the needs of the US’ help people to get slimmer.” the same period, the disease is larger citizens n

Overeating is now responsible for around 5 per cent of all global deaths, ‘‘ imposing an economic cost of around $2 trillion a year”

15 MARKETS

16 Honest to goodness In a world where marketing-speak is both uniform and pervasive, there is an increasing suspicion of the artificial, overly-crafted messages beloved of many large companies. Instead, customers are drawn towards businesses that appear to offer an authentic approach.

recent study, by communi- Growing consumer scepticism that hope to thrive are increas- cations agency Cohn & is pushing all types of businesses ingly being advised to conduct an A Wolfe, revealed that four to enter what some thought ‘authenticity audit’ – a large-scale out of ﬁve consumers across the leaders, such as Harvard Business evaluation of their messaging, world do not believe brands are School senior fellow Bill George, products and services, to ensure honest. Western Europeans were describe as an “age of authen- they are not hiding behind a well- found to be the most cynical of all ticity”. It’s a time in which crafted image, but are interacting surveyed consumers, with only 7 consumer savviness, combined with clients and customers from a per cent in the UK, France and with an immunity to boilerplate place of authenticity. Germany agreeing with the marketing-speak, drives a growing statement that most brands are demand for corporate Transparency first “open and honest”. Americans transparency. In this new environ- But what is authenticity anyway? were more trusting at 23 per cent, ment, authenticity – rather than The Oxford English Dictionary while 36 per cent of Chinese popularity, or utility – is the new deﬁnes it as “the quality of being respondents still expressed faith gold standard for attracting and genuine or true”. In the context of in brands. retaining customers. Businesses a brand-consumer relationship,

Authentic companies target their message and their products towards a smaller ‘‘ set of consumers who share their perspective and are likely to develop a long- lasting loyalty”

17 however, authenticity often comes (47 per cent) of those surveyed raw and immediate social media down to transparency. In 2017, said they were more likely to seek platforms, and they expect and feel consumers no longer believe that employment from an authentic entitled to an open dialogue with companies are perfect or infallible. company, while 23 per cent were the brands they use. Of all Brands that attempt to project a more likely to back it financially. consumers surveyed, millennials picture-perfect image can risk Millennials – the generation of were most likely to make strong coming across as false. Recently, 20 to young 30-somethings born associations between spending communications company Bonfire from 1982–92 – are especially and social responsibility, with Media invited 12,000 respondents sensitive to brand authenticity. nearly 50 per cent saying they across 12 industries around the They grew up witnessing the were more likely to use the world to offer their own defini- tions of corporate authenticity. The most common responses included: not sweeping problems under the rug, and being honest about the processes that go into producing products and services and the environmental impact of consumer products. Speaking on the survey results, Bonfire’s then leader of corporate affairs, Geoff Beattie, said he was “astonished” by how clearly customers seemed able to articu- late exactly what corporate authenticity is. Over and over again, respondents said they would be drawn towards “a brand that has values and morals and stands by them no matter what, while honestly divulging its practices – flaws and all”. While authenticity would be collapse of Enron and the 2008 products or services of a brand easy to write off as the latest crash. They also entered their that shares their values and point corporate buzzword, the study prime spending years amid global of view. also revealed that a company’s destabilising events and declining perceived authenticity is closely faith in the government and Point of view related to profits and return on media. This age group tends to be “Point of view” is one of the investments. A full 91 per cent of particularly sceptical of corpora- common qualities to emerge from customers – including those of tions that try to appeal to them discussions of corporate authen- B2B businesses – were more likely with slick advertising. They are ticity. In an article for Harvard to stay loyal to companies they accustomed to interacting with Business Review, Amy Jen Su and perceived as authentic. Nearly half brands (and celebrities) through Muriel Maignan Wilkins argue that companies that are happy to share a specific world view In 2012, its first year of selling “demonstrate both strength and products, The Honest Company hit flexibility”. These companies don’t $10 million in revenue. Just a few bother to cultivate a generic identity intended to appeal to years later, it is bringing in over $250 everyone. Instead, authentic ‘‘ million and valued at $1.7 billion” companies target their messages

18 B2B businesses communicate in a way in 2016. That year, the firm faced a that is direct and data-driven, giving class action lawsuit alleging that its baby formula contained unsafe clients a full and honest picture of what synthetic preservatives. Instead of their services can – and cannot – do” settling the suit behind closed ‘‘ doors, Honest’s executives and their products towards a the company itself invites an open decided to address the issue smaller set of consumers who share conversation with customers about directly. They released a statement their perspective and are likely to the processes behind its products denying the claims, and listing the develop a long-lasting loyalty. and the ingredients it uses. various levels of testing products In recent years, companies such The impact of selling honesty – undergo to meet safety standards. as The Honest Company – which both in the company’s name and They also discussed how Honest’s sells products targeted at environ- as a key component of the executives use the baby formula mentally conscious mothers – company’s products and business for their own infants, and admitted have benefited from turning a mode – has paid off hugely. In how unsettling these accusations specific point of view into a 2012, its first year of selling had been to them on a personal corporate ideal. Honest’s mission, products, the company hit $10 degree. This degree of to “reduce the ubiquitous million in revenue. Just a few years transparency helped the company presence of toxic chemicals in our later, it is bringing in over $250 bounce back and continue to grow natural environment, man-made million and is valued at $1.7 billion. with its brand intact, as customers environments, and our personal Authenticity can always come seemed reassured by the direct environments” is clearly stated on into play when a company deals and authentic response. all messaging and products, while with a setback, such as Honest did Khalil Grell, a branding

19 strategist with Siegel+Gale, who speaks regularly on authenticity, says companies’ fear of alienating customers by taking a point of view is often misplaced. “In fact, consumers become much more loyal when brands connect with their values,” he says. US company General Mills, for example, recently ran a major advertising campaign for Cheerios, including both interracial and same-sex families. The advertising campaign not only succeeded in starting a conversation, it showed a new side of Cheerios and suggested that the company itself is progressive and willing to take risks in order to share that viewpoint.

Taking a stand In 2016, Apple took a stand on a particularly divisive issue. After a terrorist attack in San Bernardino, California, the FBI requested that Apple write software to create a back door that would allow it to crack open the suspect’s locked iPhone. Apple refused to comply with the request. In an open letter to consumers, Apple CEO Tim Cook presented an authentic and impassioned reason for the company’s refusal, saying: “The United States government has demanded that Apple take an unprecedented step which threatens the security of our

Apple established itself as a company that puts ‘‘ customers first and holds their security and privacy as sacrosanct, even in difficult times”

20 customers. We oppose this order, Among the list of top global themselves. The result was that which has implications far beyond brands perceived as authentic, one consumers – whether or not they the legal case at hand. This towards the top of the list may enjoy eating at McDonald’s – moment calls for public discussion, come as a surprise: McDonald’s. began to view the company as and we want our customers and But McDonald’s is another more authentic, and essentially people around the country to company that, like Apple in 2016, honest in its mission and relation- understand what is at stake.” dealt with adversity by facing it ship with customers. Apple went even further than head-on, and choosing to be just making a statement. The next transparent with customers. The B2B perspective generation of its operating system, In 2010, a viral video alleged Cultivating authenticity isn’t just iOS 8, features new encryption that McDonald’s hamburgers were important to consumer-facing tools that would make it nearly not made of entirely real meat but, businesses. B2B businesses can impossible for anyone to hack into rather, ‘pink slime’ – beef also benefit from making it the a locked phone – including the trimmings treated with ammonia. cornerstone of every interaction government – thus integrating its The company surprised many by and service. Alan Cohen, chief philosophy and perspective into addressing the pink slime issue commercial officer of security the product itself. head-on. It launched a new start-up Illumio, is a firm advocate Cook and Apple’s stance was advertising campaign where it of authentic communication and controversial, with 50 per cent of invited an outside investigator to realistic expectation-setting, Americans in opposition to the come into its food preparation suggesting that B2B firms can company’s decision. However, in facilities and report for himself adopt these values to great its refusal, Apple established itself whether he found any pink slime. advantage. Empathy is as a company that puts customers The company spoke openly about fundamental to authenticity in the first and holds their security and the myths surrounding what goes B2B world, he says. “Empathy can privacy as sacrosanct, even in on in McDonald’s kitchens and take the form of not just difficult times. invited customers to see for performing a service – such as financial services or consulting – A full 91 per cent of customers were in a vacuum, but by clearly taking the time to find out each more likely to stay loyal to companies individual client’s needs and they perceived as authentic” adjusting your business accordingly,” he says. ‘‘ He notes that the best B2B businesses communicate in a way that is direct and data-driven, giving clients a full and honest picture of what their services can – and cannot – do. In many cases, clients don’t want to be told that you are a fix-all for every problem, but they do respond well to being presented with reasonable and reliable performance metrics. When interacting between businesses, as when interacting with consumers, an authentic business strives for candour, openness and transparency. In this new era of authenticity, it may be the greatest sustainable advantage n

21 GROWTH

Where next? International expansion can deliver turbocharged growth, when it works. But corporate history books are littered with examples of expensive failures. Ensuring success involves thought, preparation, cultural awareness and resources.

22 or many companies, the initial failure is a salutary lesson North America, Australia and New prospect of international for any company seeking to Zealand. Fexpansion is the holy grail of expand abroad, particularly at a Founded just over 20 years ago, business. It is a promised land of time when more businesses than the company’s technology is used increased sales and profits and a ever across the world are looking to improve the productivity of route to global brand recognition for growth in new markets. legal, healthcare and professional and market dominance. organisations and it was acquired But like any worthwhile quest, Eye on expansion by Bridgepoint Development it is not easy and the road is According to the Centre for Capital in 2012. At the time, the littered with more failures than Economics and Business Research US accounted for about 12 per success stories. Everything from (CEBR), nearly a fifth of Britain’s cent of BigHand’s revenues and inadequate market research small firms intend to expand chief executive Ian Churchill was to cultural insensitivity and overseas by 2025. This footloose keen to boost the company’s poor timing can derail a expansionist approach is expected international firepower. Now the company’s expansion beyond its to become even more pronounced US accounts for 25 per cent of domestic borders. after Brexit, when the UK group sales. No one knows this better than government and business will Transatlantic expansion has Cath Kidston, the British retailer, be heavily focused on fostering helped deliver stellar sales, healthy famed for its floral and vintage enhanced international trade deals margins and strong cash conver- designs. In 2003, 10 years after and relationships. sion rates and it has been fuelled the business was founded, A similar story can be heard by strategic acquisitions of several Kidston attempted to expand across the EU. Around 74 per cent US companies. into the US, only to withdraw of European businesses are “About 1,000 firms are using shortly afterwards. looking to expand abroad to BigHand’s services in the UK and “Fools rush in may be the best access new markets for their 1,600 overseas. Initially we way to describe it. When we went products and services, according expanded into Australia and then into the US we only had seven to the Economist Intelligence Unit New Zealand, each time putting stores in the UK within the and international expansion one of our UK staff members on confines of the the ground. We did the same when M25. We were You get to a certain point where you we went into the US. The trying to run need a national to run the business. professional services market in before we You can only get so far with expats the US is massive, so it has been could walk and as a hugely important in helping us small organisation parachuted in and you then need gain a larger customer footprint we were not ‘‘ someone with local understanding and we continue to evaluate equipped to deal of the market” accretive add-on acquisitions,” with that. Even just says Churchill. figuring out US customs regula- consultancy TMF Group. And Polish online payment service tions was very difficult and being nearly half of those businesses cite platform PayLane is another so far away made it hard to two principal reasons behind their business that has made a real oversee the business. We were ambition: increasing competition success from international just too young a brand,” says Cath at home and a bid to offer more expansion. Having started out in Kidston’s director of marketing value to customers. Gydnia, a small town on Poland’s Sue Chidler. Of course, there are many Baltic coast, PayLane is now used Cath Kidston has since benefits to expanding abroad, by merchants in 26 countries, regrouped and now has more than particularly into large, well- including the US. The payments 180 stores outside its UK home established markets such as industry is highly regulated so market. It has successfully the US. Leading digital dictation overseas expansion is complex but expanded into Europe and Asia company BigHand, for example, PayLane had global ambitions and is even considering growth in has experienced significant from the start. And its internation- Latin America. However, Kidston’s growth since expanding into alisation has been achieved, amid

23 stores next year in a larger debut Around 74 per cent of European than was originally planned. It has businesses are looking to expand secured stores in dozens of US abroad to access new markets for cities, established a headquarters their products and services” in Arlington, Virginia and is ‘‘ building warehouses in key locations. But Lidl will have some heavy competition from Worldpay ago in a Berlin flat and is now way to go to catch up with rival and US-backed Braintree, which Europe’s largest online-only Aldi, which already has more than has been targeting expansion in fashion retailer shipping fashion to 1,300 stores in the US. Market Europe. more than 19 million customers. experts believe both Aldi and Lidl’s There are many other examples Extraordinarily, Uber, the San expansion in the US is fuelled by of European and US companies Francisco-based car service app, the need to find new markets to looking to expand abroad. only launched in 2010. Its platform counteract slowing demand in Deliveroo, the food delivery is now used in more than 580 Europe, where both supermarket service, secured $275 million in cities worldwide. In fact, Uber’s groups dominate the discount equity backing last August to fund expansion and market disruption grocery sector. further domestic and international have been so rapid, it has led to There is almost no industry expansion. AO, Britain’s fast- riots and bans in some markets. where businesses are not consid- growing white goods online ering driving sales growth through retailer, has moved into Germany Heading stateside internationalisation, as Mark and the Netherlands, and Joules, a Even the conservative German Barnes, KPMG’s leader of Interna- rival to Cath Kidston, has been family-owned business Lidl, the tional Corridors, explains: “When making inroads into the US and discount grocery chain, is it comes to manufacturing, pretty German markets. targeting growth in the US. Lidl is much every manufacturer in the Zalando was founded nine years expected to open its first 150 US world is hoping to achieve global growth by entering into new markets.”

Do your research. Establish an Avoid the pitfalls 1Find markets with 2 experienced team While the benefits of expansion relevant demographics of internal and external are obvious – more customers, and think carefully advisers, including local where to expand first. staff, who can help navigate more markets, more sales and complex legal, political more profits – there are potential and regulatory hurdles pitfalls too. Expanding abroad can in different jurisdictions. go horribly wrong if it is not properly executed. No matter how Do your good a product or service is in a 3 research. domestic market, for example, Find markets 5 Be conscious expansion could be doomed if with relevant TOP TIPS 4 of cultural demographics FOR EXPANDING sensitivities but there is fierce competition or and think ABROAD maintain a weak consumer demand in the carefully where company’s core target market. to expand first. culture when expanding. Gap, the US household retailer, announced last year that it was closing all its Banana Republic Invest ahead of the stores in the UK after weak 5 growth, building capacity and readiness, in order to demand led to a string of capitalise quickly on a disappointing sales results. The successful overseas debut. ailing San Francisco-based chain found it was unable to cope with

24 better European rivals such as scale business. Bridgepoint- department store operators such Inditex’s Zara and H&M. And backed Pret A Manger, for as Nordstrom, Dillard’s and Von Tesco, once a byword for example, has succeeded in the US Maur in the US and Peek & supermarket success, failed because it spent more than five Cloppenburg in Germany. “We find abysmally with Fresh & Easy, its years testing market demand and the right partner and start small. ill-timed and poorly executed refining its offer through a single Then we build it up over time,” entry into the US. store in New York before says Porter. Many companies that have lost expanding further. out when expanding abroad have Joules spent a significant Local expertise neglected to follow some simple amount of time mapping the size BigHand’s Churchill believes one but essential rules, such as of various markets, as well as the of the most important elements of carrying out detailed ease of doing business, any expansion plan is to enlist research and market before deciding where to local staff support as soon as testing before expand. As chief possible. “We found that you get launching a executive Colin to a certain point where you need full- Porter a national to run the business. You can only get so far with expats parachuted in and you then need someone with local understanding of the market.” Most companies agree that local knowledge is paramount. UK hygiene and workwear provider Rentokil has acquired more than 100 companies since 2014 and now generates more than 70 per cent of its revenue from overseas. Throughout this expansion spree, a small and experienced central mergers and acquisition team worked closely with local country and regional divisions to identify target acquisitions that could help fuel the company’s overall growth and profitability. Sometimes, however, success explains: might simply hinge on cultural “From that awareness. When Cath Kidston exercise, we was expanding in Japan, the group No matter how decided we were soon realised that folding bank good a product or going to focus on the notes was considered bad luck in service is in a US and Germany as our the country. Its best-selling wallets domestic market, prime markets. We don’t were quickly adapted so they were need to be everywhere. Our large enough to accommodate yen ‘‘ expansion could be strategy was let’s try and go notes. doomed if there is fierce deeper into a couple of “You can’t push the same competition or weak markets rather than being product onto every market,” says consumer small in lots of markets.” Chidler. “You have to be open to demand in the Joules also calculated cultural differences which that the best way to expand sometimes might be staring you target was to partner with large right in the face.” n market”

25 THE INTERVIEW

Striving for excellence

26 Thomas Babacan is chief executive of Bridgepoint-backed AHT Cooling Systems, a global leader in the manufacture of fridges and freezers for food retailers. His overriding philosophy is simple: as long as better is possible, good is not good enough.

hen Thomas Babacan was “I was approached while I was 16 years old and still at still finishing my master’s at Wschool in Frankfurt, he Goethe University. I was at a was already earning money – as a tennis camp when my girlfriend tennis coach. A keen sportsman, called me to say the HR depart- he played tennis whenever he ment had rung, asking if I would could and competed in tourna- like to join the treasury division. I ments across Germany. “I was a said: ‘That sounds very interesting reasonably good tennis player so I but what’s treasury?’ They took earned money from coaching right me on anyway,” he says. through until my twenties,” he says. Babacan rose through the ranks Babacan’s interest in sport was at speed, becoming CEO of not just spurred by a desire to play Oerlikon Leybold Vacuum at the but also by a desire to win. “I hate age of 35. “I was the youngest ever to lose. I am fiercely competitive and I really want to win. Even when I was practising tennis, I loved competing against someone else, rather than just When you are dealing against myself. Some people – and with thousands of some companies – are afraid of ‘‘ comp-etition. I love it because it employees, you can’t stretches you and encourages you really be close to the to think of different solutions,” he people; you can’t get explains. your arms around the That spirit has carried Babacan through an 18-year career in company. But with a industry, starting in 1999, when, smaller business, you aged 30, he joined the treasury know the people, you department of Balzers & Leybold, know the customers an industrial vacuum business, and when you make which was part of the Swiss Exchange-listed conglomerate a decision, you see Oerlikon Group. the impact”

27 CEO of that business and the ﬁrst person to lead it who was neither a PhD nor an engineer,” says Babacan. Despite his relative youth and lack of specialist knowledge, Babacan did well, ultimately becoming COO of Oerlikon Group, a company with thousands of employees worldwide. He was also CEO of Oerlikon Textile, Oerlikon’s largest subsidiary at the time and the biggest textile manufacturing business in the world. “I ran Oerlikon Textile for nearly three years. It was a global business with 30 manufacturing sites worldwide and 120 locations,” he explains. Oerlikon Textile’s revenues almost doubled under Babacan’s leadership to nearly SFr2 billion but the parent company underwent many changes in the years following the ﬁnancial crisis, and in 2011 he left to take up new challenges.

Itchy feet The following year, he joined a family office, where he was tasked with building up its international presence. The idea appealed, not least because Babacan was brought up in many different places around the world, a background that left him with a passion for travel and an ease with different cultures. “My father was an engineer and we travelled extensively. When I was a schoolboy, we spent holidays in countries across the world, such as South Africa, Singapore, Saudi Arabia, Botswana and India. It was both a pleasure and a privilege, and when I was older I

28 AHT is a B2B business but we are interesting and it really is. Of heavily influenced by the consumer – course, AHT is a B2B business but we are heavily influenced by the their buying habits have a direct impact consumer – their buying habits on us. I really enjoy that aspect of the have a direct impact on us,” says ‘‘ business. It’s very dynamic” Babacan. “I really enjoy that aspect of the business. It’s very dynamic, it means you have to be flexible would sometimes work in plants “I talked to Bridgepoint and the and change becomes part of your overseas while visiting my father. team was very compelling. I also routine – which really means that To this day, I love working with did some external due diligence on there is no routine,” he adds. international businesses,” AHT and the references were very AHT traces its history back to he says. favourable. People said it was a 1442, when an ironworks was Babacan found his new life good company with a strong established in Rottenmann. But its interesting, but after around 18 brand. The growth story is impres- modern incarnation dates to the months he began to hanker for the sive too,” he says. beginning of this century, when industrial world once more. In 2014, Based in Rottenmann, a small AHT became increasingly well he became CEO of valve manufac- town in Austria, AHT is a leading known as an industrial fridge and turer VAG Group, part of US-listed manufacturer of chilled and frozen freezer specialist. Rexnord. “I had two job offers, cabinets for supermarkets and VAG and another one, which was a discount chains, making almost Environmental leader much bigger company. I could not 300,000 units a year. With annual In the vanguard of ecologically decide between them but I was turnover of around €400 million, sound technology, AHT pioneered talking to my wife, who is much the group supplies major the introduction of environment- smarter than I am, and it became household names across the food ally friendly cooler units, using clear that I much preferred retail sector, owns production propane as a refrigerant rather running a smaller business than a sites in China and Brazil and than harmful greenhouse gases. larger one. works with sales affiliates Some of its chilled cabinets “When you are dealing with worldwide. channel the energy created by the thousands of employees, you can’t Well known for its supermarket cooling process to produce heat really be close to the people; you freezers and chilling cabinets, for retail sites as well, further can’t get your arms around the refrigerated shelves and bottle reducing energy consumption. company. But with a smaller coolers, AHT is also the number “From the start, I was drawn to business, you know the people, one manufacturer of ice-cream AHT’s focus on green technology, you know the customers and chests, counting the world’s freshness and innovation. The when you make a decision, you largest producers among its amount of energy that the see the impact,” he says. customers. These food manufac- company’s environmentally sound turers install branded ice-cream solutions have saved over the Passion over ego chests in a multitude of past decade could power a “At that point, I realised my indeci- independent retailers, and AHT is medium-sized town for a year,” sion was all about ego. So I a key supplier. “I have been says Babacan. decided to ignore the ego and go involved in many different AHT is highly innovative in with what I really wanted to do,” industries during my career but I other spheres too, specialising in he adds. have never had Leading VAG – and joining dealings with Reynord’s executive board – was the retail Great people are the most important fulfilling but, following some industry and asset of any business so we need to strategic changes at the parent this was a big company, Babacan decided to attraction for make sure that we have the right move on. In June 2016, he became me. I thought it people on board in the right positions CEO of AHT Cooling Systems. would be ‘‘ and then empower them”

29 some are even second generation. That breeds both loyalty and expertise. Also, it may sound slightly sentimental but being here Profile in the middle of the mountains does, I believe, encourage our people to think about green Age Family Name 47 Married with no technology and ecological Thomas Babacan Born children but a very solutions,” he says. Frankfurt playful dog Combating complacency “However, given that my motto is ‘As long as better is possible, good is not good enough,’ I believe there is real room for improvement and Car Education First job expansion at AHT. I truly believe Goethe University Coaching An old black that great people are the most Mercedes tennis important asset of any business so we need to make sure that we have the right people on board in the right positions and then empower them. Some of these people are already here but it is Home Interests Frankfurt with a Biggest regret Travelling with also good to bring in external Life is too short for my wife base in regrets appointments to encourage Rottenmann business development,” he adds. To that end Babacan has made Greatest achievement several new appointments - a That my wife is still married group COO, a head of procure- to me, even though my work has meant we have ment, a head of product spent much less time management and a head of together than most customer service. New general couples managers have been appointed in Brazil and China, the US management team has been upgraded and an office has been been opened in Charleston, South Carolina. “The US is our number one priority There are huge opportunities so-called “plug-in” fridges and them in and get started and across the States, especially as freezers, which are easy to install, they can be moved around easily consumer tastes veer from highly flexible and particularly so they are much more flexible,” hypermarkets to smaller, local in keeping with current food says Babacan. supermarkets,” says Babacan. retailing trends. Having been at AHT for less Reassuringly, AHT’s initial “Traditionally, fridges and than a year, Babacan is impressed expansion into the US will take freezers were built-in, particularly with the business but ambitious place in partnership with one of its in hypermarkets. But today’s to deliver further growth. “This is largest customers, a European consumer increasingly prefers an excellent company with really discounter with strong trans- smaller, local shops and this is good people. It’s one of the biggest atlantic ambitions. “Our market where plug-in systems come into employers in the region and many share is reasonably high in Europe their own. Retailers can just plug people have been here for years – but it’s still very low in the US and

30 their physical and complacency. So far, we are I hate to lose. I am fiercely networks, while the number one provider of plug- competitive and I really some of the biggest in solutions but others are food retailers are following us so we have to stay want to win” migrating from ahead of the pack. That comes hypermarkets to from investment in innovation and our‘‘ ‘plug-in’ solutions are pretty smaller supermarkets and those in people. And that’s what we rare so we are already seeing are our sweet spot,” says Babacan. intend to do,” he says. interest from potential new It has been many years since Babacan is particularly customers over there,” Babacan Babacan last held a racket, but the motivated to deliver results at explains. attitude that helped him win AHT, as he has personally invested The company is not seeing any games as a youth remains an in the business. “I’ve always felt great impact from online retailing integral part of his personality and like an entrepreneur and tried to either. “Everyone talks about approach to business. act like one in the past, behaving online shopping, but at the end of “Our market is highly competi- as if the company’s money is my the day retailers need cooling tive but that’s a good thing. money. Now it is – and other systems and that’s what we make. Nothing is more damaging than colleagues are invested too – and Also, discounters are our biggest staying at the top of your game for that creates a diﬀerent spirit and customers and they’re expanding too long. That encourages laziness drive,” he adds n

31 TECHNOLOGY

Reality bytes

32 Virtual reality is most commonly associated with hard-core game enthusiasts but the technology is expected to transform industries from healthcare to engineering. And fast-acting businesses can benefit.

cancer patient sits in Sydney have found, or children and VR will completely change a hospital in Sydney, with autism in the UK, where the the way both consumers and A enduring yet another NHS is using an immersive VR businesses interact with gruelling, all-day chemotherapy room to help them overcome technology. session. their phobias. In its Tech Trends 2017 report, But she’s relaxed and smiling Deloitte notes that the potential broadly – thanks to the magic of Beyond gaming for businesses to harness this virtual reality (VR), she’s escaped While gaming remains by far the mixed reality technology is a real the chemo ward and is instead largest market for VR and cause for excitement, even fulfilling her lifelong ambition to augmented reality (AR), the though the consumer buzz walk the Great Wall of China. technology is increasingly being remains focused on games and In another ward, a frightened used in other areas, from health- entertainment. youngster soon to undergo care, training and education to “Though it may be several years surgery puts on a headset and retail, real estate, architecture, before mixed reality’s endgame is instantly soothed as he’s urban planning and engineering. materialises, the time to begin transported to the zoo to pet With its opaque headsets, VR exploring this dynamic new world the koalas. isolates users from the outside – and the digital assets it The traditional image of VR world, immersing them in an comprises – is now,” say Deloitte is that of goggle-wearing imaginary environment – or an analysts Nelson Kunkel and teenage gamers, tethered to exact digital replica of their real Steve Soechtig. their computers around the world. AR, by contrast, allows In their vision of the factory clock, enthusiastically mowing users to remain connected to the floor of the future, they see smart down the zombie hordes, outside world via clear goggles or goggles providing maintenance waging intergalactic war or their smartphones, on which workers with metrics, instructions battling fantastical beasts on digital images are overlaid, and remote support. Some mystical islands. typified by Nintendo’s hugely colleagues will have goggles with But there’s much more to VR popular Pokémon Go game cameras and motion sensors, on than playing games, as patients at launched last year. which assembly instructions will the pioneering Chris O’Brien According to consultancy be overlaid and training given; Lifehouse cancer hospital in Deloitte, recent advances in AR others will be guided through the warehouse by their smart goggles. This technology has the potential to All devices will be connected to transform how we interact with almost a sophisticated data management system and, as a result, the every industry today and we think it will effectiveness and engagement of be equally transformative from a workers will be dramatically ‘‘ consumer and enterprise perspective” enhanced, Deloitte says.

33 Transformative solutions their ear and talking to someone ever headset – dubbed The Sword Analysts at Goldman Sachs also that we could not see on the of Damocles – was created in the believe that business and public other end”. late 1960s but weighed so much it sector demand will play an Goldman estimates that the had to be suspended from the increasingly important role in the mixed reality market will grow to laboratory ceiling by a cable. VR world, as managing director around $80 billion by 2025. But, There was a surge of interest in Heather Bellini explains. despite the huge hype that has VR in the 1990s, when Nintendo “We think this technology has surrounded VR – and the many launched its 3D video game the potential to transform how we billions of dollars poured into its console, Virtual Boy. But the interact with almost every development – it has consistently technology failed to live up to the industry today and we think it will failed to fulfil expectations. hype and consumers, disappointed be equally transformative from a The headsets consumer and enterprise perspec- are expensive and Goldman estimates that the tive,” she says. often unwieldy, mixed reality market will grow to In a major report on the sector and prolonged use around $80 billion by 2025 and if last year – Virtual and Augmented can cause a form of seasick- Reality: Understanding the race ness, as the brain and body developers are able to for the next computing platform – struggle to keep up with‘‘ the overcome current technical Goldman Sachs suggests that VR 360-degree action of the challenges, that figure could and AR have the potential to virtual world in which the surge to more than $180 billion” become the next big computing wearer is immersed. But a platform after the smartphone, “as wave of technological with the poor graphics and transformative as when we used to advances could mean that VR is low-quality games, eventually see people walking around the finally about to make the major lost interest. streets… holding a big brick to breakthrough that has been Looking ahead, there is still a promised for so long. chance that VR will once again fail VR has been around in various to live up to its promise, remaining forms since the 1950s. The first- largely the preserve of gamers. But even in this delayed uptake scenario, Goldman Sachs believes the market will be worth around $23 billion by 2025. And if developers can overcome some of the current technical challenges that are preventing widespread adoption of the technology, such as poor battery life and limited mobility for users, that figure could surge to more than $180 billion.

Enter Facebook A deﬁning moment came in 2014, when social media giant Facebook bought the US start-up Oculus Rift for $2 billion. Oculus Rift – oculus is Latin for

34 Consider, for example, ‘walking’ through a virtual cruise-ship cabin ‘‘ or hotel suite before booking”

eye and rift refers to the gap developing the technology. “revolutionise” the industry. between the real and the virtual They include Swiss company “Consider, for example, ‘walking’ world – was one of the pioneers of MindMaze, whose mix of AR and through a virtual cruise-ship cabin VR although when Facebook VR technology is used to aid the or hotel suite before booking it or bought it, the company had only a recovery of stroke victims. The immersing yourself in a virtual single prototype headset. Lausanne-based company last jewellery store where you try on Unveiling his big bet on the year raised $100 million, the necklaces that catch your eye,” the technology, Facebook’s Mark largest amount in one round by firm says. Zuckerberg predicted: “One day… any European VR company. Retailers are already offering this kind of immersive, augmented Spain-based behavioural health shoppers VR fitting rooms while reality will become a part of daily technology company Psious is furniture giant IKEA has been life for billions of people. another European firm leading using AR technology for several “Virtual reality was once the development in VR. Its platform is years – customers download the dream of science fiction. But the used by health professionals to app on their smartphones, take internet was also once a dream treat anxiety disorders, fears and pictures of their rooms and then and so were computers and phobias and it is growing fast. select items from the catalogue to smartphones. The future More than half of the 300 see how they would look. is coming.” companies tracked by The The streaming of live sporting That future has yet to arrive, Venture Reality Fund are based in events or concerts is also a however, and even the mighty the UK, France, Germany and potentially huge market for VR. Facebook has found the going Sweden, with France taking the Users will feel as though they are tougher than it expected. In lead in Continental Europe. physically there and will even be March this year, it was forced to Pioneering names include CCP able to choose a particular player slash the price of the Rift headset Games of Iceland, nDreams of the or band member to follow, thus and Touch wireless controllers by UK, Resolution Games of Sweden seeing the proceedings from 25 per cent, to $600, after and VideoStitch and Giroptic their perspective. disappointing sales. of France. In real estate, high-end As industries outside the core companies such as Sotheby’s are Europe VR landscape gaming market increasingly adopt already offering their cash-rich, Historically, the US has led the the technology, so public time-poor clients virtual tours of way on technological development awareness of VR is growing. And luxury properties. but Europe now has a burgeoning on the commercial front, the real As they don their headsets and VR ecosystem, with a growing estate and healthcare markets are the real world fades away, the international impact. According to expected to lead the way, along billionaire property buyers may a survey by the Silicon Valley- with retail. feel a little uncomfortable. But the based venture firm, The Venture Many would say that the bricks they used to hold to their Reality Fund, which tracks the AR internet has already transformed ears in the 1980s weren’t that and VR markets, there are some the retail sector. Now according to comfortable either – and just look 300 start-ups in Europe Deloitte, VR is poised to how they turned out n

35 LAST WORD Does self-help help? Self-help books promise eager readers everything from everlasting love to the perfect body to riches beyond the dreams of avarice. But evidence suggests they simply don’t work and now the fight back has begun, as Paul Croughton, editor of the UK edition of luxury magazine, Robb Report, explains.

magine you’re on a plane. There you are, settling into new concepts seem to be verbosity and profanity. position, hoping the flight won’t drag and looking Combine the two and you’ve got yourself a six-figure I forward to arriving at your destination. Another advance quicker than you can say “Seriously?” traveller sinks into the seat next to yours. You offer a Three of the latest manuals seem genuinely to relish brief nod and watch idly as they proceed to get comfy, peppering their titles with swear words so explicit that removing phones and keys from their pockets and the front covers are littered with asterisks. Professing positioning their reading material nearby. You look at to help you focus on your needs and wants without the cover of the book: The 7 Habits of Highly Successful worrying about obligations, responsibilities or other People. What do you think? people’s opinions, these books seem to be encouraging a) Good for them – another of life’s seekers, contin- an almost teenage attitude to life, replete with unneces- uing on their journey to reach their highest potential. I sary expletives. They could easily be mistaken for must recommend Feel The Fear And Do It Anyway to parodies of the self-help genre. them before I watch Eat Pray Love. b) Please don’t talk to me. In self-help land, two of the most It was b, wasn’t it? exciting new concepts seem to be Where did the self-help explosion come verbosity and profanity. Combine from, and who’s buying these books? You ‘‘ the two and you’ve got yourself a might think, as I did, that they emerged from six-figure advance quicker than you the greed-addled carcase of the 1980s, can say ‘Seriously?’” providing a lifeline for those left shell-shocked by a decade of inflation, John Lennon’s assassination and But real help may be on the way. Now that we’ve just Freddie Kruger. But no: How to Win Friends and Influence about recovered from a winter littered with books People was published in 1936. And the genre takes its proclaiming how much we all needed a little more name from a book called Self-Help, which the unusually ‘hygge’ in our lives, there comes a new title from Scandi- named Samuel Smiles unleashed upon an unsuspecting navia, called Stand Firm, by Danish professor Svend world in 1859. Brinkmann. In it, he insists we need no more self-help. Since then, millions of people have bought millions of No more finding ourselves. We have done enough. We books that claim to be able to help them on almost any live in a “culture of social acceleration”, he says. “Where quest: drinking less, becoming richer, stopping smoking, God used to be at the centre of the universe, now it is losing weight, gaining confidence. And yet, look around. the Self.” With alcohol consumption still going strong, increasing Brinkmann suggests reading novels, not self-help numbers of people feeling strapped for cash and books, and goes so far as to take issue with the king of cigarette firms not exactly going out of business, it is self-help, Anthony Robbins, and his famous quote: hard to conclude that self-help books do the trick. “Success is doing what you want, when you want, where No matter. Self-help’s invidious reach now extends to you want, with whom you want, as much as you want.” everything from food to fitness. The rise of clean eating Potentially, argues Brinkmann, “this way of thinking is just self-help in fetishised form. We’re invited to drink resembles psychopathy or antisocial personality the kale Kool-Aid, and we go back for more – fitness star disorder.” Joe Wick’s Lean in 15 book was the third-best-selling As Robbins’ client list reads like a who’s who of the book last year, and the best-selling diet book of all time. great and the good in global politics and Hollywood, I But the industry may finally be running out of steam. couldn’t possibly comment further. I’ll just leave it with Right now in self-help land, two of the most exciting you… n

36 bridgepoint.eu