Accounting for naturePutting a value on the environment

Survival of the smartestWinning the media game

Ready for workThe rebirth ofapprenticeships in Europe

Virtual: realityWhen professional andprivate lives merge

bridgepoint.eu

THE POINT

Intelligent investing in Europefrom Bridgepoint

Issue23 |May 2013

9MARKET INSIGHT

Work-life mergeThe boundaries between personal andprofessional lives have become blurred.How are employers and employeesadapting?

19BUSINESS TRENDS

Made to measure How personalised medicine couldtransform Europe’s healthcare systems

24IN THE SPOTLIGHT

Affording our eldersEurope’s population is ageing and statebudgets are shrinking. How will we cope?

CONTENTS

2INS & OUTS

Investments and exitsacross Europe

3SECTOR ANALYSIS

Coming to a screen near youAs the way we consume media continuesto change, forward-thinking firms arereaping the benefits

28FACE TO FACE

Glad tidingsJean-Emmanuel Sauvée on life at sea,Polar cruising and Compagnie du Ponant

32MANAGEMENT FOCUS

Growing your ownWhy the apprenticeship model isback in vogue

36LAST WORD

You are what you eat How food has replaced money as ameans of defining our social status

15TALKING POINT

Accounting for natureEnvironmental economists arenow putting a monetary valueon nature. But aregovernments and companiestaking note?

1

FOREWORD

It may strike you as fanciful the notion that a commercial value can or even shouldbe placed on the environment. Yet that is what ecological economists are now tryingto achieve, arguing that the Earth provides a range of services that can and shouldbe given a monetary value. In ‘Accounting for nature’ (page 15), we weigh the prosand cons of imagining and implementing such a policy.

Evangelists argue that human-caused ecological damage is estimated to be nearly $6 trillion a year and that deterioration of the environment threatens to halve theprofits of publicly listed companies. Is this for real or does this novel approach createstatistical hocus-pocus? I leave you to decide.

Do you remember ‘having it all’ in the 1980s? Or ‘work-life balance’ in the 1990s?Now, a different phrase has been coined to capture the spirit of the day. In ‘Work-lifemerge’ (page 9), we explore changing attitudes towards work, family life and leisuretime as smartphones, tablets and other devices blur the boundaries between workand play.

It is said that by 2040, more than 40 per cent of government spending in seven majorEuropean countries is forecast to go to public benefits for the elderly. In ‘Affordingour elders’ (page 24), we ask how individuals, companies and states will cope withthe prospect of an ageing population and what needs to be done.

In a similar vein, we explore (‘Made to measure’, page 19) how advances in healthcareare moving towards personalised medicine, which could reduce the global health-care bill by €100 billion a year.

In the media world, it is common to hear the phrase, ‘content is king’. And today hasnever been a better time to consume that media content. For some mediacompanies, the increase in distribution threatens their survival. But for the nimble-footed there is a real business opportunity. Read why and how on page 3.

Ask many employers and they will bemoan the skills gap of many of their employees.Yet moves are afoot to change this using a training model without equal: the apprenticeship, which may also help to rebuild the bond of trust between employerand employee. ‘Growing your own’ (page 32) explores this trend.

Finally, we provide news on new Bridgepoint investments in our ‘Ins & Outs’ page as well as our regular Face to Face profile, this time the chief executive of polar

cruise line, Compagnie du Ponant, a recent Bridgepoint investment. As always, we try to make The Point as varied andinteresting as possible in the hope that it stimulates interest intopics that we believe are relevant to corporate Europe. I hopeyou enjoy it n

May 2013Issue 23

Published by Bladonmore (Europe) Ltd

EditorJoanne Hart

DesignBagshawe Associates UK LLP

Reproduction, copying or extracting by any means ofthe whole or part of this publication must not be undertaken without the written permission of the publishers.

The views expressed in The Point are not necessarilythose of Bridgepoint.

www.bridgepoint.eu

THE POINT

William Jacksonis managing partner of Bridgepoint

The economics of ecology

2

INS &OUTSBRIDGEPOINTnews across Europe

Bridgepoint has acquired Oasis, the UK’s largest provider ofprivate dental care services.

2012 Annual Review reveals double-digit growth

Bridgepoint snaps up UK dental chain

Private client wealth managementbusiness Quilter is merging with discre-tionary investment firm Cheviot AssetManagement. The combined business,known as Quilter Cheviot, will havemore than £12 billion under manage-ment, including £8.2 billion from Quilter.Quilter chief executive officer MartinBaines, who will run the combinedgroup, says: “We will now have the scaleand resources to be an even morepowerful contender in the private clientwealth management sector.” n

Oasis has more than 200 dentalpractices across England, Wales andNorthern Ireland and has grownsteadily since it was founded in 1996.The company, valued at £185

million, offers a full range of NationalHealth Service and private work,including general dentistry andspecialist services.The group employs 2,000 people

and is expected to grow rapidly whilemaintaining a focus on quality service. Justin Ash, Oasis chief executive,

says: “We have a successful trackrecord of acquisitions and newopenings, and, with Bridgepoint asour new funding partner, we will bestrongly positioned for furtherprofitable expansion.”

The UK dental market is wortharound £7 billion and has beenexpanding in recent years, particularly in the private pay sector,as a growing, affluent, ageing population perceives the need forregular dental care. Yet the market is highly

fragmented and ripe for consolida-tion. Corporate owners representjust 10 per cent of the industry, whileabout 34,000 dentists operate from10,500 practices owned by individualpractitioners. Jamie Wyatt, a partner at Bridge-

point, says: “Oasis’ financialperformance has been impressivethroughout the recent economiccycle. It is a robust platform with acommitment to quality and innova-tion from which to create the onlybranded dental operator of scale inthe UK.” n

Quilter and Cheviot merge to accelerate growth

Sir Stuart Rose takeshis retail expertise toFat Face

One of Europe’s most experi-enced retailers, Sir Stuart Rose,has become chairman ofBridgepoint-backed Fat Face,the active lifestyle clothing andaccessories group. Sir Stuart, a member of

Bridgepoint’s Advisory Boardsince 2010, has enjoyed a long and successful retailcareer, most recently aschairman and chief executive of Marks & Spencer. “There are undoubtedly

great opportunities ahead forFat Face and I look forward toworking with the company,” he says. His appointment comes amid

signs of increasing progress forthe retail chain, with double-digithigh street sales growth andsoaring e-commerce revenues n

Bridgepointcommitted

€838 million to six newinvestments last year, with atotal transaction value of €1.9 billion. Bridgepoint also returned €892 million to investors as it exited fourcompanies, Aenova, Alain Afflelou, Dorna andSymington’s. The data emerged in

Bridgepoint’s 2012 AnnualReview, which also revealedthat the firm’s portfoliocompanies delivered double-digit revenue and earningsgrowth last year. Thebusinesses completed 22add-on acquisitions in 2012at highly accretive multiples

and now employ more than77,300 people. Bridgepoint managing

partner William Jackson says:“While the outlook for Europeis unquestionably morefavourable than 12 monthsago, national economies willcontinue to experienceeconomic headwinds. “As in 2012, though, we

believe that Bridgepoint’sinnate strengths – itscompetitive position, broadnetwork and long experience– will allow it to acquire goodcompanies at compellingprices in the most attractivemarkets, and, importantly, toreturn capital profitably to itsinvestors.” n

3

Sectoranalysis

There have never been moreways to consume media content– from tablets to smartphones toold-fashioned televisions. Forsome outlets, the increase indistribution channels threatenstheir very survival. For thenimble-footed however, it is agenuine opportunity.

Coming to a screen nearyou

4

hen Austrian spacejumper FelixBaumgartner leapt out

of a small capsule and fell 128,000feet from the edge of space backto Earth in October 2012, it’sunlikely he was thinking abouthow his maverick stunt waschanging the face of media. Hehad more pressing things on hismind. Like breaking the worldfreefall record – and staying alive.

Yet 23 miles below, back onEarth, Baumgartner’s Red Bull-sponsored space stunt wasmaking history, and not justbecause it was the farthest a manhas ever fallen from space. Thejump was being watched live by arecord eight million peopleworldwide – not via a traditionaltelevision broadcast but online on YouTube.

The spectacle registered thelargest number of concurrent livestreams in the video site’s history– dwarfing the Olympics viewingfigures and marking a significantshift in the way the worldconsumes live events.

Technological innovationThe extraordinary viewing statis-tics produced by Baumgartner’sleap of faith are testament to howfar technological innovation haschanged the media distributionlandscape. The explosion in thenumbers of powerful connecteddevices, combined with improvedinternet speeds and the rollout of4G mobile infrastructure, meansthere are now more ways than

W

The frontier between media andtechnology is blurring. You needthe content – content is still king– but now you also need thedistribution” – Xavier Robert,partner and head of media andtechnology, Bridgepoint

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5

ever for people toconsume media,whether at home, atwork or on the go.That was all in evidence duringBaumgartner’s descent.

“The feat itself was a hugeachievement but what was trulyremarkable was that we were ableto watch the whole thing unfold,streamed live from the edge ofspace, direct to a WiFi-connectedtablet or a 3G phone anywhere onthe planet,” says Luke Peters,editor of consumer technologymagazine T3.

“The any time, any place,anywhere media dream is nowvery much a reality andconsumers increasingly expectthis total accessibility and choicewhen it comes to how and wherethey consume media,” he adds.

To feed this appetite forcontent on demand, videocreation and consumption aregrowing at dramatic rates.YouTube claims that 72 hours ofcontent are uploaded to itsplatform every minute, whileCisco’s Visual Networking Indexpredicts that the total usage of allforms of video (tv, video ondemand, internet and peer topeer) will account for more than

85 per cent of globalconsumer traffic by 2016.

Consumerresearch companyNielsen’s latestglobal survey onmulti-screen mediaconsumptionsuggests too thatwhere people wantto watch video ischanging. Three-quarters (74 per

cent) of global respondents nowreport watching video via theinternet (on any device) and morethan half of global onlineconsumers (56 per cent) say theywatch video on a mobile phone atleast once a month, with 28 percent doing so at least once a day.

However, the Baumgartnerepisode reveals a more compli-cated media picture. Online videohabits are increasing but so ismedia fragmentation.

Besides YouTube, thespace jump was alsobroadcast by morethan 40 televisionstations and 130digital outletsacross the globe.Meanwhile, RedBull’s first post-jump photo ofBaumgartner gainedalmost 216,000 ‘likes’,10,000 comments and morethan 29,000 shares on Facebookwithin 40 minutes.

Throw in the fact that half ofthe worldwide trending topics onTwitter at the time were Red BullStratos-related and the disruptionof the way global audiencesconsume and interact with majormedia events is evident for all to see.

New competitorsWorryingly for big TV bosses, this

masterclass in how to harnessnew distribution opportunitieswas orchestrated, not by any ofthe established broadcast giants,but by an energy drinks company.“Broadcast” history was made by anon-broadcast company.

The Red Bull Stratos project isclearly a standout case, butindustry experts highlight thiskind of activity as an example of akey trend in the media space: newcompetitors are emerging asbrands become wise to thepotential of becoming mediaowners in their own right.

“Brands are now adopting thepersonalities of televisionchannels – broadcasting contentand finding audiences to match,”says James Holler, co-founder ofuk-based creative agency Holler.

“Smart brands no longer wantto rely on the whim of the 30-second television spot to propelthem to some brief fame against a

relatively ill-targeted groupof people who are

probably notwatching theadverts anyway.Instead, theyare realisingthat there is anincreasing

opportunity tobe owner,

provider, distrib-utor and ultimately

in charge. “The more astute and powerful

brands can create outstandingcontent which they not only own,but for which they also own thedestination and deliver it too.They know what they want to say and are in full control of the manner in which it finds an audience.”

The man behind hit advertisingcampaigns such as the Cadbury“Gorilla”, Skoda “Cake” and SonyBravia shares this viewpoint.

Media organisationscan’t afford to lockcontent into onespecific platform; theyneed to be proactivein ensuring that theircontent is discover-able, personal andsocial” – PhilFearnley, generalmanager, BBC Newsand Knowledge

‘‘

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

“For all their billion-dollarbudgets and the boon of theOlympics, surely no global brandwill receive a more palpable andefficient shot in the arm than RedBull in 2012?” wrote LaurenceGreen, founding partner ofmarketing agency 101. “Why buymedia if you can instead make itflock to your door?”

However, as new technologycontinues to disrupt the mediasector, and media distributionfragments, creating this “flocking”effect becomes more and morechallenging. As the airwaves, appstores and virtual newsstandsbecome increasingly busy, if youcan’t send a man to space, how doyou stand out?

It is exactly this question thatinvestors should be excited aboutaccording to Xavier Robert,Bridgepoint partner and head ofits media and technology team.“The media space is veryinteresting right now. It’s a perfectstorm with things moving veryfast. It creates problems for somegroups, but it also creates manyopportunities for investors if youcan spot the right trends,” arguesRobert.

“You can get some very highgrowth, even in the Europeaneconomy where things aredifficult right now. You can find businesses growing doubledigits in the media space becauseof all this disruption and newtechnology.”

New consumersWhat makes this sector evenmore attractive is the opportunityfor companies to build global scalevery fast and very cost-effectively.

“All these new digital channelsto market open up opportunitiesfor media to reach new consumersin all parts of the world,” says

Mark Wood, CEO of FuturePublishing, which became thebiggest publisher on Apple’sNewsstand after the launch of theservice in 2011.

“A few years ago we reached afew million print magazinereaders, mainly in the uk and theuS. Today we reach over 50million people worldwide everymonth online, on tablet, onsmartphone and in print. Now wehave their attention, we candevelop new ways to engage thataudience and assist them, in the process developing newbusiness models.”

For Robert, success in thissector is all about delivering first-class content via top-rateplatforms but he warns against asingle-platform approach.

“Every kind of media that isdeveloped right now has to becompatible with all devices, TV,tablet and mobile. You have to beeverywhere but that’s the beautyof these business models.

“Through the internet there’sscalability, so that youcan have a globalbusiness model. You canbe based in France,Spain or the uk but youcan reach everybody onthe planet. You don’twant to be just a mobileapplication or tabletapplication, you want toprovide content or aservice to everybody throughevery kind of interface.”

So as the importance of thedelivery grows, media companiesare increasingly becomingtechnology companies as well.

“The frontier between mediaand technology is blurring,”continues Robert. “It’s not onlyabout delivering content. Youneed the content – content is still

king – but now you also need thedistribution. The way youinterface with customers is veryimportant – the user friendlinessof your application for example.So it’s about content but it’s alsoabout how you deliver it.

“Fragmentation means peopleare no longer attached to thetraditional way of media, whichforces advertising on you. Youreally go and consume what youwant, when you want. Sky isfantastic for this. It is the mostadvanced company in terms of allthe technology it puts behind itsservices and the interface withthe consumer.”

Distributing contentFor decades, the BBC was hailedworldwide for the quality of itscontent but it too has had toevolve. Successes such as the on-demand video tool, BBC iPlayer,stand out but with the 2012Olympics the challenge to keepup with new distribution trendswas broader.

“Quality content will always beking,” argues Phil Fearnley, generalmanager of News and knowledgeat the BBC. “But it’s not enoughjust to create it and hope thataudiences will find it. Mediaorganisations can’t afford to lockcontent into one specific platform,they need to be proactive inensuring that their content isdiscoverable, personal and social.

Over half of global onlineconsumers say they watchvideo on a mobile phone atleast once a month, with 28per cent doing so at leastonce a day”

‘‘

“Audiences are telling us,through the way they use a widevariety of digital services, thatthey want more personalised andsocial experiences. The industryneeds to listen to them and lookat how to extend media acrossnew platforms, in new ways, tomake them feel part of it.

“The general consumption ofmedia via apps on handhelddevices has also been a hugebehavioural change, and peoplenow expect the samekind of experienceirrespective of thedevice they’re using.One of the BBC’s bigsuccesses deliveringthe digital Olympicsacross four screens –PCs, mobile phones,tablets and connectedTVs – was how ourfamiliar design andfunctionality across all

devices allowed audiences todevelop new viewing habits very quickly.”

A quick glance at Sky’s strategyalso highlights the need to becontent owner and master of yourdistribution network.

“By 2014, we expect to invest£600 million a year in Britishproductions across our portfolioof channels. This is within thecontext of a total on-screen spendof £2.3 billion a year, which makes

Sky the biggest single investor inTV content in the uk,” a Skyspokesperson says.

Not everyone has Sky’s deeppockets but the good news forstart-ups is that they do not needmulti-million-euro budgets to succeed.

“For independents, the on-rampto being a producer has never hadlower overheads,” says JamesBeechinor-Collins, founder ofRepublic Publishing. “Audiencesare easier to build and distribu-tion platforms are easier to accessand maintain. However, moreoutlets mean more people chasingthe same pot of money. At the endof the day, media outlets still needto be functioning businesses andthe very opportunity offered toindependents (ease of access) isalso the very thing which makes itchallenging to succeed.Consequently, only the strongestwill survive.” n

Smart brands no longerwant to rely on the whim ofthe 30-second televisionspot to propel them to somebrief fame against arelatively ill-targeted groupof people who are probablynot watching the advertsanyway. Instead, they arerealising that there is anincreasing opportunity to beowner, provider, distributor and ultimately incharge” – James Holler, co-founder, Holler

‘‘

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9

Market insight

Technological andsocial changes arerevolutionisingpeople’s attitudes towork. Employers whoare aware of theseshifts and willing toadapt to them mayreap substantialbenefits both now andin the future.

Work–life merge

ou’re on the 6.30pm trainhome, smartphone in hand,responding to some late

emails from colleagues. A textmessage pops up – can you pickup a bottle of wine on the way? Afriend sends a Facebook link to thelatest viral video, which keeps youamused for a few minutes. Youspend the rest of the journeylistening to music.

Are you working? Interactingwith family and friends? Or havinga bit of “me time”? You’re doing allthree, of course. Welcome to the“work-life merge”, where theboundaries between work andpersonal life are increasinglyblurred; where you can connectwith work in an instant and keepin touch with friends and familyfrom the office.

In the 1980s, it was about“having it all”. In the 1990s and 2000s we were, perhaps, more realistic and the focus

switched to achieving the “work-life balance”. Technology is rapidlyconsigning that concept to history,however, replacing it with the“work-life merge”.

The phrase was coined by EmilyWhite, a Facebook executive, in2012: “Forget the balance, this isthe merge,” she proclaimed. Butthe work-life merge is just as hardto achieve as the work-lifebalance, and White should know –she reportedly came up with theterm after finally managing toschedule an evening alone withher husband, during which theyboth spent their time transfixedby their iPhones…

Changing prioritiesWe may be able to tap into ouroffice email before we go to bed atnight and as soon as we wake inthe morning, but how do we reallyfeel about work? And how is thechanging shape of the modern

family influencing ourlifestyle choices?

Research fromTrajectory Partnership,a forecasting consul-tancy, reveals that wevalue work far lesshighly than we everhave and, despite a

general perception that the familyunit is disintegrating, familyremains by far the most importantfactor in our lives.

Trajectory’s report, The ModernFamily and the Changing World,shows a dramatic shift over thepast two decades in the way wevalue work. In advancedeconomies, the percentage ofthose surveyed who said work is“very important” to themplummeted from 52 per cent in1989 to just 29 per cent in 2012.The importance of family, on the

other hand, has remained fairlystable, at a commanding 87 percent, while leisure edged downfrom 40 per cent to 38 per cent.

In emerging economies, themost significant changes alsoconcern the sharp fall in theimportance of work but with acorrespondingly dramatic rise inthe importance of leisure. Between1989 and 1993, 76 per cent ofconsumers in emerging marketsrated work as “very important” butthis has since declined to 61 percent. As work recedes inimportance, leisure has rocketedfrom 15 per cent to 36 per cent.

The low regard with which weincreasingly appear to hold work isechoed in research undertaken bythe Centre for Economic Perform-ance. In their February 2013discussion paper, Are You HappyWhile You Work?, economists AlexBryson and George Mackerronfound that work is ranked lowerthan any of 38 activities, rangingfrom sport to eating, cooking,browsing the internet, chatting,smoking and shopping. There wasonly one thing rated worse thanwork – being sick in bed.

Topping the list of activitiesthat make us happiest – perhapsnot surprisingly – was sex. Thisapparently raises happiness levelsby 14 per cent, followed by leisureactivities such as going to thetheatre or to museums and playingsport. Working reduces happinesslevels by 5.43 per cent, accordingto the research, with the relatedactivity of commuting having a1.47 per cent negative effect.

Y

Work is ranked lower than anyof 38 activities, ranging fromsport to eating, cooking,browsing the internet, chatting,smoking and shopping”

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10

11

Family valuedSo if work ranks alongside beingsick in bed in its detrimental effecton our happiness, what are theimplications for employers,employees and governmentsaround the world, which arestriving to increase nationalwellbeing? And how can theworkplace be adapted to ourchanging needs?

One clue may lie in people’sattitudes towards their family.

Social commentators constantlyopine that family life is in declinebut there is little evidence tosupport this. In fact, the Trajectoryresearch underlines how central itremains to consumers’ lives.However, what constitutes afamily has changed significantly inrecent decades, moving towards“vertical” or “beanpole” familiesand away from the traditionalhorizontal family.

There are several demographicfactors fuelling the rise of thevertical family – increasedlongevity, the decline of fertility,the tendency to have childrenlater in life and the risingprevalence of single-child families,whether those families be made

up of lone parents or couples.Children have fewer siblings,

cousins, aunts and uncles. But,thanks to our lengthening lifespan,they are likely to enjoy longer andpotentially closer and morerewarding relationships with theirgrandparents, who will often play akey role in caring for them.

The family remains a crucialunit, agrees James Murphy,editorial director at the FutureFoundation, a trendspottingconsultancy. Despite the significant rise of the singleton,the resilience of the multi-generational, or vertical family isstriking, he says.

In its Global Family report, theFuture Foundation identifies the

1989

2007

2012

40%

29%

52%

45%

36%38%

19892007 2012

60%

76%

62%

35% 36%

Importance of leisure

Importance of work

Importance of work

Source: Trajectory Partnership

Importance of leisure

Emerging economiesAdvanced economies

Our changing attitudes to work

In advanced economies, thepercentage of those who said work is“very important” to them plummetedfrom 52 per cent in 1989 to just 29 percent in 2012. The importance of family,on the other hand, has remained fairlystable, at a commanding 87 per cent”

15%

12

21st century family as “theultimate buying group”, highlight-ing the multigenerational aspect ofmodern families. The trend tomarry later and delay havingchildren means grown-up childrenare staying on longer in the familyhome, remaining happilydependent on their parents intotheir twenties and even thirties.

The trend is particularlypronounced in Italy, where theyeven have a word for it – bamboccioni (big babies). Morethan half of Italians aged 18 to 34still live at home, with a third ofthem in their thirties, a figure thathas tripled over the past 30 years.In Canada, it’s known as theTanguy syndrome,taken from a filmabout a 28-year-old man whorefused to leavehis parents’apartment, insteadspending his daystopping up his tan.

These changes are influencingrelationships between the genera-tions, believes the Future

Foundation – families becomemore organised, democratic andegalitarian as everyone getsinvolved in the decision-makingprocess and operates as a realteam. While this might be anidealised vision of the intergenera-tional family, it is a significantchange from the old horizontalfamily pattern and poses particularchallenges for employees.

What workers want“For employers, the key toattracting the best staff will be awillingness to fit in with whattheir workforce wants,” saysMurphy. That might includemaking the workplace a morecomfortable and creative place tobe, such as the famously quirkyGoogle headquarters in MountainView California, where staff enjoya gym, swimming pools, medita-tion rooms, massage therapy,dry-cleaning facilities, a hair stylistand on-site oil change and car-wash services.

Offering employees morecontrol over their working lives isbecoming increasingly importanttoo. The flexibility to, say, worklate on a Tuesday and takeWednesday morning off, is apowerful tool in retaining staff –

and keeping them happy.The Netherlands has been

leading the way in this, particu-larly for its male workforce, some

The multigenerational family

Dutchmen are increasingly squeezing theirworking hours into a shorter week, workingfour days and taking the fifth day off”

‘‘

The traditional horizontal family

The modern vertical family

Great grandparents

Grandparents

Parents /Aunts & Uncles

Siblings / Cousins

Children have fewersiblings, cousins, auntsand uncles. But, thanksto our lengtheninglifespan, they are likelyto enjoy longer andpotentially closer andmore rewarding relation-ships with theirgrandparents, who willoften play a key role incaring for them”

13

23 per cent of wh0m work reducedhours, more than double the 10 percent average across the rest of theEuropean union. The femaleworkforce, which has always had ahigher proportion of part-timeworkers, has three out of fourworking part-time in the Nether-lands, way above the 41 per centfigure for the Eu and 23 per centin the united States.

Dutchmen are increasinglysqueezing their working hoursinto a shorter week, working fourdays and taking the fifth day off ina trend that has been dubbed “thedaddy day”. According to theDutch national office of statistics,some 9 per cent of male workersenjoy daddy days. Flexible workingis not just for parents either; in theNetherlands a growing proportionof childless men and women orparents with grown-up childrenare taking advantage of shapingtheir working lives to their ownindividual needs.

While some are cutting back ontheir hours, however, for othersthere is no let-up in the pace ofwork. “People who have skillswhich are in demand are findingthemselves working harder andharder. Work has become a 24-hour phenomenon as technologyenables us to work across threedifferent time zones,” says Lynda Gratton, professor ofmanagement practice at LondonBusiness School.

“But people want to have morecontrol over their working lives,”she adds. This could mean moreemphasis on flexible working andworking from home, both of whichhave become particularlyimportant in the era of the vertical

family and technological advances. “Working from home is not the

problem it used to be; it doesn’tdamage your prospects ofpromotion like it used to. But itneeds to be balanced – if too manypeople work from home thensomething will be lost in theworkplace, the energy andcreativity will disappear and evenfewer people will want to gothere,” says Murphy.

Productivity vs presenteeismThe debate over remote workingwas blown open earlier this yearwhen the new boss of ailing techgiant Yahoo, Marissa Mayer,ordered the firm’s army ofhomeworkers to report back tothe office.

“To become the absolute bestplace to work, communication andcollaboration will be important, sowe need to be working side-by-

side,” she wrote ina memo to staff.“That is why it iscritical we arepresent in ouroffices.”

The diktat didnot go down wellwith the Yahoos,as the firms’semployees are

known. But the move raisedeyebrows beyond Yahoo as well:“As Japanese office productivityshows, just because people sit inthe office all the time, that doesn’tmean they are being productive,”says Gratton.

The key question, she says, ismore about motivation: “How canwork be redesigned so that it’sintrinsically interesting andmeaningful, and so that people areengaged and excited whereverthey happen to be?”

Find the answer to that and the“work-life merge” may be able tooffer the best of both worlds – jobsatisfaction and home lifehappiness. For now, employers andemployees are grappling with theissue. Over the coming yearshowever, there will be increasingpressure to find a way through themaze created by social andtechnological changes n

For employers, the key toattracting the best staff will be awillingness to fit in with what theirworkforce wants. That mightinclude making the workplacemore comfortable and creative oroffering employees more controlover their working lives”

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15

$6.6trnecological damage

8%of global GDP

$200bnfood chain

Accounting for

nature

Talking point

Saving the planet has been on the agenda for several yearsbut few have tried to put a monetary value on theenvironment – until now.

16

A growing band of environment-alists now argues that thisapproach puts a more urgent spinon conservation.

“Recognising the financial valueof what we are destroying is thebest way of conveying the harmwe are doing and slowing thisdown before it becomesirreversible,” says Pavan Sukhdev, aformer managing director atDeutsche Bank and a goodwillambassador for the unitedNations. Human-caused ecologicaldamage is running at close to $6.6trillion a year, according to areport by the united NationsEnvironment Programme (uNEP),about a tenth of global output.unless action is taken, the deterioration of the environmentthreatens to halve the profits ofthe world’s publicly listedcompanies – leading to highercommodity prices, naturaldisasters as well as soaringinsurance premiums.

Not surprisingly, such a novelapproach has its critics. Evensome environmentalists believethe figures are statistical hocus-

pocus. However,there is acompelling logicbehind many ofthese ecologicalsums. The basicidea is to takethe servicesprovided for freeby nature and

estimate the cost of replacingthem. A classic example is thecomplimentary service providedby pollinating insects, like bees, forthe world’s farmers. A falling beepopulation – the result of acombination of climate change,loss of habitat and rising pesticideuse – has highlighted their

protest to save the Indian vulture mightnot bring large crowds on to the streets.But the public and politicians might paymore attention if they knew that thesenear-extinct creatures had been savingthem around $30 billion a year – more than

the net worth of Google founder Larry Page or close to afull year’s economic output for the kingdom of Jordan.

This arresting sum is derived by assessing vultures’ rolein disposing of dead animals that litter the Indian country-side. With fewer vultures, India’s dog population hasexploded, causing a surge in dog bites and tens ofthousands of deaths from rabies.

Such calculations are at the heart of a new branch ofecological economics. According to Tony Juniper, author ofWhat Has Nature Ever Done for Us?, the Earth provides arange of services – ridding us of unwanted pests,supplying food and preventing flooding – that can andshould be given a monetary value.

If economists were to subtract the $6.6trillion of ecological degradation the UNbelieves was inflicted in 2008, worldGDP would have declined by about 8per cent that year instead of growing by3 per cent as the InternationalMonetary Fund calculated”

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A

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immense value in agriculture.About $200 billion worth of globalfood production is dependent onthese insects – including blue-berries, grapefruits, strawberries,cherries and apples. Dwindlingoutput of such crops nowthreatens to decimate farmincomes, boost global food pricesand so deplete the disposableincome of consumers everywhere.

Ecological damage can also spillover into economically disruptiveand costly criminality. Falling fishstocks, for example, appear to bepartly to blame for the rise inSomali piracy, as the nation’sseafarers find it harder to make alegitimate living from the sea.Chipping away at the $274 billioncontribution fishing makes to theglobal economy every year is likelyto cause problems elsewhere too.

Measure and manageFrom society’s point of view, suchcalculations make a great deal ofsense. “Measure something andyou immediately start to pay moreattention to it,” says Dan Ariely, abehavioural economist at Dukeuniversity. “Such figures grabpeople’s attention more thanvague appeals about biodiversity.”They also reveal an alarming truth,which is that mankind mightactually be getting poorer, ratherthan richer, as conventionaleconomic statistics suggest.

When assets are damaged,companies are forced to take awrite-down, which in turn reducestheir profits. Apply the same logicto global gdp and the world turnsout to be shrinking. If economistswere to subtract the $6.6 trillionof ecological degradation the uNbelieves was inflicted in 2008,world gdp would have declined byabout 8 per cent that year instead

of growing by 3 per cent as theInternational Monetary Fundcalculated. More worrying still, theannual tally for environmentaldeterioration is on track to rise to$28.6 trillion by 2050 or around 18per cent of that year’s forecastGDP, the uNEP believes.

“The current way we measureeconomic growth is deeplyflawed,” says Mathis Wackernagel,president of the Global FootprintNetwork. “We are confusing theliquidation of assets – in this casenatural ones – for income.”

Juniper describes this in termsof personal finance. “A prudentinvestor spends only dividendswhile saving the capital,” heexplains. “Instead, we haveembarked on a short-term spree,whereby the capital itself is beingblown away.”

In certain areas, there areencouraging instances where themere use of such brutal ecologicalhonesty appears to have worked.Costa Rica, a nation that wasthreatened by rampant deforesta-tion, attempted to put a monetaryvalue on natural services underthe guidance of energy and

environment minister CarlosManuel Rodriguez between 2002and 2006. Having been toldconservation was not a govern-ment priority by the financeminister, Rodriguez developedstatistics on the monetary value ofnature – starting with revenuesfrom eco-tourism and moving onto the value of forests in capturingthe water that powers hydro-electric turbines.

“When we had this workcompleted, I went back to thefinance minister, but this timewith some economists,” Rodriguezsaid. “When he saw these guyswith me, he began to talk to themand they were speaking the samelanguage.” In Costa Rica this savvypresentation appears to haveturned the tide. In the late 1980sthe nation had only 21 per centforest cover. That has since risento 52 per cent. The country alsogenerates 92 per cent of energyfrom renewable energy sources.

Corporate conscienceSome companies have taken thismessage to heart. Sportswearmaker Puma is far ahead of the

‘‘Close to 70 per cent of shoppers are willing topay more for a product or service produced inan eco-friendly fashion”

18

crowd, becoming the firstcompany to place a value on theenvironmental services it uses.Alongside standard accountingstatements, the company producesan environmental ledger – whichrecently admitted to $6.2 billion ofdamage from its direct operationsand $75 million from its supplychain. Sir Richard Branson’s VirginGroup has also been praised bymany environmentalists. His B Team initiative, set up lastautumn with former Pumachairman and PPR director JochenZeitz, aims to make businessesthink more broadly about theirimpact on the world. The ideabehind the scheme, which is stillin its infancy, is to encouragebusiness leaders “to shift focusfrom just financial gains, towardsenvironmental and social gains as well”.

While this may sound almostcheesy, for businesses that selldirectly to consumers, going greencan also be a savvy commercialmove. In today’s world of social

media, being seen as an environ-mental “bad guy” can swiftlydamage customer rapport.

Companies are wary ofhighlighting the monetary value ofgreen initiatives, sincethis might appear cynical. Still, arecent survey of more than 700 companies by the Society forHuman Resource Managementshowed that green initiatives atcompanies can improve moraleand boost a company’s publicimage. Half said that sustainabilityprogrammes helped them create abrand that attracted top talent.

Establishing a reputation as agood environmental citizen canalso boost sales. A survey byGreen is universal showed thatclose to 70 per cent of shopperswere willing to pay more for aproduct or service produced in aneco-friendly fashion by a brandthey trust. Such an edge can becrucial for highly brand-sensitivecompanies such as Puma.

Businesses that are dependenton agricultural commodities, such

as Nestlé and unilever, have aneven stronger reason to act.“These businesses have correctlyworked out that their futuredepends not only on goodproducts, willing consumers andstrong brands, but also on, amongother things, healthy soils, a stableclimate, fresh water andpollinating insects,” says Juniper.

But sceptics warn that efforts to place a monetary value onnature are statistically flawed. “It’snot easy to figure out how muchwe should pay the birds forsinging,” says Wackernagel. “Thevalue of most assets fluctuateswildly and is often impossible tocalculate.” His institute favours anapproach that calculates theextent to which a nation is using more resources than theenvironment can replenish. Heestimates, for example, that theuk is using four times more thannature can replace.

Doing nothingThe biggest worry for environ-mental economists is that theirapproach will not catch on amongbusinesses. Overall, the environ-mental harm inflicted by the top3,000 largest publicly listedcompanies was around $2.15trillion in 2008, the uNEPestimates. For companies to admitthis, however, would be to inviteregulation and extra taxation.

“For most chief executivesdriven by profit, the rationalresponse to the loss of ecologicalservices is to do nothing,” arguesTom Biracree, an energy expert atconsultancy IHS. “Their horizon ofconcern is usually two or threeyears at the most. Over that timeperiod, the loss of fresh water orfisheries, agricultural land orpollinating insects is unlikely toaffect them personally.” n

Alongside standard accounting statements, Pumaproduces an environmental ledger – which recentlyadmitted to $6.2 billion of damage from its directoperations and $75 million from its supply chain”

‘‘

Raw material costs

Human resources

Profit & loss

Depreciated assets

Infrastructure

Taxation

Envionmental cost

Businesstrends

Made tomeasureHealthcare has traditionallyfollowed a one-size-fits-allapproach with any given illnessreceiving one specific treatment.Now there is an increasingrealisation that a morepersonalised approach canimprove health and save money.

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20

magine going into a doctor’s surgery feelingunwell and being asked for a DNA sample to findout exactly what strain of a disease you aresuffering from. You are then given a course ofmedication precisely matched to the sub-typethat is ailing you. As a result, you respond better

and live longer than you would have done on standardmedication.

This may sound like science fiction but it is alreadya reality for certain diseases.

And over the next decade, rapid expansion isexpected, helping patients with conditions rangingfrom rheumatoid arthritis to meningitis.

In fact, advocates believe “personalised” or“targeted” medicine could prove transformational,turning advanced cancersinto chronic diseases andeven unlocking the secrets of Alzheimer’s.

Such claims beg manyquestions. How advanced ispersonalised medicine?Will governments pay for iteven if the science delivers? More basically, whatexactly is personalised medicine?

Analysing the benefitsMost understand the term to mean splitting patientswith one disease into different groups, depending on whether or not they will benefit from a particular therapy.

Angela Brand, professor of social medicine andpublic health genomics at Maastricht university, saysthere are, in fact, two steps: stratification and whatshe terms “genuine personalised medicine”.

“Stratification means that you define certaingroups of patients that could derive especially bigbenefits from a certain therapy. For instance, based oncertain genetic traits of a tumour, we can now predictvery precisely for many types of cancer whether ornot the given patient would benefit fromchemotherapy,” she explains.

One of the best examples today is the breastcancer drug Herceptin, which is routinely given tobreast cancer patients whose tumours have highlevels of a protein called HER2. Only a fifth of breastcancer patients have high HER2 levels, however, sothese are the women at whom Herceptin is targeted.

For the remaining 80 per cent, Herceptin would beworse than useless, subjecting them to all of the sideeffects and none of the benefits.

Increasingly therefore, pharmaceutical companiesare using their knowledge of genetics to improve theway they target existing medicines and find newtreatments with a narrower, more personal focus.Many drugs are being trialled and firms are starting toseek regulatory approval for treatments, on theproviso that they will only be used for patients withspecific genetic profiles.

These new drugs are not cheap, often costing tensof thousands of euros for a year’s supply. But targetingthem to those who will benefit most minimiseswastage and ensures they are better value for money.

In 2011, for example, an Euproject estimated person-alised medicines couldeventually reduce the globalhealthcare bill by €100billion a year.

This is particularlyrelevant as governments

search for ways to cut soaring healthcare bills. In theuk alone, pharmaceuticals cost more than £12 billionlast year (€13.7bn). Any medical advances that wouldtrim this figure would clearly prove helpful.

Dr Severin Schwan, chief executive officer ofSwitzerland-based pharmaceutical giant Roche, iscertain that personalised medicine will be of growingimportance to the industry.

“We know that patients respond very differently tomedications so there is no doubt that if we can betterstratify patient populations and better tailormedicines to them, we create a lot more medical valueand improve clinical outcomes,” he says.

“Crucially too, particularly in Europe, that alsoresults in major savings for healthcare systems. First, you waste fewer medicines but there are alsoindirect cost savings, which are even more signifi-cant,” he adds.

These include keeping people out of hospital, byensuring they respond better to medication, andcutting back on expensive wage bills, by reducingstaff numbers.

“The less time people spend in hospital, the fewerdoctors and nurses are needed to look after them. Thesavings could be immense,” he says.

An EU project estimated personalisedmedicines could eventually reducethe global healthcare bill by €100billion a year”

‘‘

Niche bustersOthers are even blunter about the need to shift awayfrom blockbuster drugs to what have been termedniche busters. “I think we need to recognise thatdrugs that have a low response rate are really a wasteof money,” says Professor Alan Ashworth, chiefexecutive of the Institute for Cancer Research in London.

“Not only that but it is fundamentally wrong to usedrugs with serious side effects in a scattergunmanner,” he suggests.

Ashworth believes that personalised medicinecould ultimately turn even advanced cancers intomanageable chronic conditions, much like hiv.

“dna tumour profiling will become absolutelyroutine practice with every cancer patient within fiveto 10 years. Besides helping those with advancedcancer live longer, it will increase the cure rate inthose with earlier stage disease,” he says.

Many innovations are needed to realise this visionbut researchers point out that the basic knowledge isalready there. And there are several spin-offs from it.

As the field grows and develops, for example, therewill be a growing demand for specialised computersystems capable of storing and processing the vast

quantities of genetic data generated. Academics atuniversity of California Berkeley, San Francisco andSanta Cruz recently estimated that to store a millioncancer genome sequences was “roughly the size of allthe videos in YouTube”.

However, personalised medicine is not just aboutfinding the right therapies. It is also about developingtests for genes and other biomarkers that identifyhow individuals will respond to different treatments.

Companion diagnosticsThis associated field, called companion diagnostics, isgrowing fast. German medical testing firm Qiagenbegan working in this area just four years ago andcompanion diagnostics already accounts for $100million of its $1.2 billion annual revenue.

“The division is growing at a solid double-digit rate,year-on-year,” says spokesman Dr Thomas Theuringer.

Companion diagnostics provokes differentreactions. Some medics perceive it as young anddynamic; others as unpredictable and risky. There isno doubt however, that the field is at the forefront ofmedical research.

universities are spinning out diagnostic companieswith specialist knowledge of particular biomarkers or

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Personalised medicineis not just about findingthe right therapies. It isalso about developingtests for genes thatidentify how individualswill respond to differenttreatments”

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genes, many of whom are forming partnerships withlarge drugs groups. Big Pharma has the financialmuscle and network of relationships needed to havetests validated, approved and marketed; smalldiagnostic firms have the specialist know-how.

Compared to the drugs themselves, the tests arecheap. Qiagen has developed a test to see if bowelcancer patients will benefit from the Merck Seronodrug Erbitux. The test costs about €200: a year’ssupply of the drug costs around €50,000. Yet MerckSerono recently estimated that fewer than half ukbowel cancer patients were being tested, suggestingtens of millions of pounds are being wasted by givingErbitux to patients who will not benefit from it.

For the moment, oncology (cancer medicine)dominates personalised medicine but it does not havea monopoly. uk firm Epistem, for example, hasdeveloped a portable device called Genedrive, capableof testing a patient’s DNA for a wide array of differentdiseases.

One application simultaneously diagnoses tubercu-losis and analyses the patient’s DNA to see whetherthey will respond to the main treatment for thebacterial infection, or if they should go straight on toan alternative drug.

Matthew Walls, Epistem’s chief executive, says: “Ifyou get the wrong course of treatment, not only doesit not cure you but you continue spreading it to otherpeople for six months.”

Walls has signed a deal with diagnostic multi-national Becton Dickinson to distribute Epistem’s test

across most of the globe.He foresees a time whenthe company’s iPad-sized device will be ableto diagnose a vast rangeof conditions either inthe doctor’s surgery oreven at home.

Roche’s Dr Schwansuggests targetedtherapy is “more andmore becoming the reality” in diseases such asasthma and rheumatoid arthritis.

“The train has already left the station. EvenAlzheimer’s, which affects millions across Europe,could be suitable for the personalised approach. A lotof scientists think Alzheimer’s is not Alzheimer’s; thatyou have different types of the disease,” he says.

But he urges patience when it comes to realisingthe promise of personalised medicine.

“There is no doubt that the area is growing rapidlybut it is from a small base. Expectations have to bemanaged and people have to realise that thesedevelopments take time,” he says.

Nonetheless hopes are high. Blockbuster drugswere the Holy Grail for pharmaceutical companies in the 20th century but most concede that times have changed. The niche buster could prove morehelpful for patients, more realistic for drug companiesand significantly more cost-effective for nationalhealth services n

The niche bustercould prove morehelpful for patients,more realistic fordrug companiesand significantlymore cost-effectivefor national healthservices”

‘‘

In the spotlight

Affording

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oureldersOld age used to conjure upimages of firesides andslippers. Now it is morelikely to involve sleeplessnights, part-time work andpenury. How can Europecope with its ageingpopulation?

e live in an era of manychallenges, from globalwarming to global

terrorism. But few are as certain asglobal aging and few are as likelyto have such a large and enduringimpact on the size and shape ofgovernment budgets, on the futuregrowth in living standards, and onthe stability of the globaleconomy.”

This draconian statement canbe found in the Global AgeingPreparedness Index, the firstcomprehensive assessment of theprogress that countries worldwideare making in preparation forglobal ageing. The index, compiledby the Center for Strategic andInternational Studies, forecaststhat by 2040, more than 40 percent of government spending inseven European countries – theuk, Germany, the Netherlands,France, Italy, Sweden and Spain –will go to public benefits for theelderly, assuming governmentspick up the whole cost.

Even if they do not, it is clearthat companies, consumers andpolicymakers are struggling tocope with the soaring costs of old age.

Insurance company Aviva hascalculated that the pensions gap –the difference between whatpeople need for a decent standardof living in retirement and whatthey will actually receive – standsat €1.9 trillion across the 27countries in the Eu, equal to 19 per cent of their 2010 GDP.

Company pension schemes arealso under pressure: actuary LaneClark & Peacock calculates thatthe pension deficits of companiesin the FTSE 100 Global Indextotalled €270 billion as at 30September 2012.

So it is no exaggeration toconclude, as the Global Ageingreport does, that: “Global ageingpromises to affect everything frombusiness psychology and workerproductivity to rates of savingsand investment, long-term returnsto capital, and the direction ofglobal capital flows. Perhaps mostfatefully, it could throw intoquestion the ability of societies toprovide a decent standard of livingfor the old without placing acrushing burden on the young.”

Aviva’s research suggests thereis no single solution to the issue.The insurer has calculated theimpact of a variety of possiblemeasures including increasing therate of return on pension invest-ments, pensioners surviving onjust half their pre-retirementincome or increasing pension age.It still concludes that there is agap of between €669 billion and€1.66 trillion.

Uncertain retirementFigures like these are makingpeople more aware that they facea penurious oldage. Researchconducted byfinancial servicescompany Baringsin 2012 found thattwo-fifths ofBritons do notknow when they will be able toretire, and 12 per cent have noplans to retire – a massiveincrease on the pre-crisis era in2008, when everyone expected toretire and just 1 per cent were notsure they would be able to.

Quilter, which provides invest-ment management services toindividuals, trusts and pensionfunds, confirms that attitudes to

retirement are changing. While adecade ago, most of us couldexpect to retire at around 60 witha pension to fund our old age,Quilter’s executive directorPamela Reid says that people areincreasingly planning to “winddown” from their working liferather than having a fixed retire-ment date. “At all levels, not justamong professionals, people aredoing some work in retirement tosupplement their pensions. Theymay start an alternative career,work part-time or offer consul-tancy services,” she says.

Older people are also becomingmore flexible about how they usetheir retirement savings, forexample through the use of SIPPs,which give greater flexibility inboth investment strategy and theway benefits are taken.

“If you have a final salary[company pension] scheme, youare very lucky. For the majoritywho do not have that, it is good tobe able to structure your invest-ments so that your retirement lifeand your retirement income go

hand in hand,” Reid explains.Final salary schemes, which pay

retired employees a percentage oftheir working wage, are certainlyon the wane. In the uk, theNational Association of PensionSchemes said that just 13 per centof such schemes were still takingon new members in 2012, a fall of athird since 2011. Across the Eu,according to the International

W

The difference between what people needfor a decent standard of living in retire-ment and what they will actually receivestands at €1.9 trillion across the EU”

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25

Longevity Centre, 60 per cent ofcitizens do not have access to aworkplace pension. Soaringpension deficits, caused by tighterfunding rules, growing lifeexpectancy and falling govern-ment bond yields in countriessuch as the uk and Germany, willalmost certainly reduce access tocompany schemes even further.

At the same time, enthusiasmfor saving through personalpensions has taken a severe knockfollowing the financial crisis. Asthe International Longevity Centrepoints out in its report, BoostingRetirement Savings Across Europe,annuity rates have been fallingsharply in recent years. Interestrates across Europe have fallen torecord lows and sharp fluctuationsin investment returns caused byvolatile stock markets have had asignificant impact on retirementschemes. As a result, peopleretiring a few years apart, withsimilar levels of savings, haveexperienced wide variations intheir pension income.

Savings pressuresThis is hardly inspiring news forEurope’s hard-hit consumers,already unwilling or unable to putmoney aside for old age. Yet theywill have to be encouraged to savemore. Aviva estimatesthat closing the uk’spension gap meansevery individual willhave to save an extra€12,300 a year, whilecitizens in countriessuch as Spain andFrance will need to putaway at least €7,000 a year.

Governments aretrying to boost privatesector savings. InBritain, a new regime iscoming into force,under which anyemployee not already ina company pension scheme mustenrol in the state-sponsored Nest scheme, to which bothemployers and employees mustcontribute. Auto-enrolment, asthis is known, is also under discussion in Germany.

“It is clear that Europeans needto be saving more. The mosturgent task for policymakers atboth national and supranationallevels is to ensure that appropriatesupport and incentive structuresare in place,” the InternationalLongevity Centre concludes.

The financial crisis has not justaffected pension scheme returns,it has exacerbated the problem ina number of other ways. First, andmost obviously, it has left manygovernments in the Westlabouring under huge debtburdens, making the rising costs ofretirement even harder to bear.The austerity packages needed toreduce these debts have caused asharp increase in unemployment –across Europe, one person in 10 is

out of work and in countries suchas Greece and Spain, it is morethan one in four. The Europeanunion, in a white paper onbuilding an adequate, sustainableand fair pensions system, points

out that, in 2010,there were four people ofworking age forevery one over theage of 65; by 2060there will be justtwo. If a quarter ofthose of workingage areunemployed, theburden on thosewho are in workwill be even greater.

The Eu’s greenpaper, TowardsAdequate, Sustain-

able and Safe European PensionSystems, says: “The financial andeconomic crisis has seriouslyaggravated the underlying ageingchallenge. By demonstrating theinterdependence of the variousschemes and revealingweaknesses in some schemedesigns, it has acted as a wake-upcall for all pensions, whether PAYG[pay as you go] or funded: higherunemployment, lower growth,higher national debt levels andfinancial market volatility havemade it harder for all systems todeliver on pension promises.”

Government responseGovernments across Europe arealready taking steps in response tothe financial crisis: virtually allausterity programmes includemeasures to cut the costs ofpensions. Retirement ages arerising and many countries aremoving towards increasing themin line with life expectancy. InGreece, the retirement age has

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Global ageingpromises to affecteverything frombusinesspsychology andworker produc-tivity to rates ofsavings and invest-ment, long-termreturns to capital,and the directionof global capitalflows”

‘‘

In 2010, therewere four peopleof working age forevery one over theage of 65; by 2060there will be justtwo. If a quarter ofthose of workingage areunemployed, theburden on thosewho are in workwill be evengreater”

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been equalised between men andwomen at 65 and, from 2020, willincrease in line with longevity. Itspreviously generous payment of 14annual instalments is beingreplaced with 12 annual paymentsand payments of more than €1,400a month will attract a “solidaritytax” of between 3 per cent and 10per cent. In Italy, measures haveincluded a two-year freeze onstate pensions, an increase in theretirement age to 67 by 2022 anda phasing out of the concessionallowing pensions to be taken fromthe age of 62. Even relativelywealthy Switzerland is introducingnew regulations on investment,governance and transparency ofpension schemes to address theissue of increasing longevity.

Much remains to be done,however. The Global AgeingPreparedness Index points out that,already, more than 15 per cent ofBritain’s elderly are living inpoverty while in Spain the figure is23 per cent. State benefit cuts anda lack of private savings mean it islikely to get worse. Nor can werely on our descendants to fundour old age: as a result of fallingbirth rates, we have gone from aposition in the mid 1960s when

almost every developed countryhad a birth rate of more than the2.1 children required to maintain astable population to well belowthe replacement rate. In Italy andSpain, the fertility rate is 1.4 and inGermany it is just 1.3.

Low birth rates and increased lifeexpectancy mean that, within 30years, almost 40 per cent of thepopulation in places such as Italyand Germany will be over 60. Wehave barely started to address theproblem of how to afford them n

Alleviating the crisis: suggested measures from theEuropean Commission

•Align the retirement age with increasesin life expectancy

•Support longer working lives byimproving access to lifelong learning,adapting workplaces to a more diverseworkforce, and developing employ-ment opportunities for older workers

•Restrict access to early retirementschemes and other early exit pathways

•Equalise the pensionable age betweenmen and women

•Support the development of comple-mentary retirement savings to enhanceretirement incomes

Face to face

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Jean-Emmanuel Sauvée is chief executive of Bridgepoint-backed luxury cruisegroup Compagnie du Ponant. He started his career with the French merchantnavy but shipping has been in his family for generations.

Glad tidings

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ean-Emmanuel Sauvée was just seven years oldwhen he spent 45 days at sea, travelling fromFrance to New Caledonia. His father was a senior

officer in the French merchant navy and the familyspent five years travelling back and forth from thatremote Pacific outpost.

“I was on board ships from a very young age. Shipsare my life,” says Sauvée.

The family association dates back even before hisfather. His grandfather was also a merchant seaman,who founded a specialist seafarers’ journal and spent50 years writing about ships while collecting articlesand books on the French merchant navy.

So it was only natural for the young Sauvée to jointhe marine marchande when he left school. At the ageof 18, he was enrolled as a cadet and embarked on acombination of practical training at sea and theoret-ical training at the navy’s dedicated academy.

“Initially, I wanted to become a captain but I soonrealised that I wanted to be a ship owner, rather thana sailor. I was much moreinterested in the economic,commercial and legal aspects ofshipping than the technical side,”he explains.

Sauvée left the merchant navyand in 1988, at the age of just 23,he started a company with ninelike-minded young officers.

“In the mid-1980s, it was very hard for Frenchpeople to go on nice cruises because the big Frenchcruise lines had more or less stopped operating. So wedecided to try and create a cruise line,” he says.

At the time, Sauvée was based in Nantes, Brittany,close to a working shipyard that was building ships –but not for the French market.

“They were working for foreign ship owners, mainlyAmericans. This seemed silly. French people wantedto go on cruises but there were few local possibilities.We wanted to offer them that opportunity. We hadthe know-how to build ships in France: why shouldn’twe operate them too?” he says.

From the start, however, Sauvée felt his newcompany needed to offer something a little bitdifferent.

“We wanted to go where other people didn’t go and

offer what other people didn’t offer so we decided tobuild a small ship, to go on unique expeditions andprovide top-level service – in other words, we wantedto focus on high-end luxury cruises. As it happens, 25 years later the strategy has not really changed,” he says.

The management mantleBack in 1988, the group of enthusiastic young officershad one, not inconsiderable, challenge to overcome:how to raise sufficient cash to realise their vision.None of them had much commercial experience andthe idea they had in mind was unique in France. Itbecame clear that some of the team would have toconcentrate on managing the new company, ratherthan dreaming of the sea.

“We shared the responsibilities. Some of us weresailors and engineers but we needed people to run thecompany too,” says Sauvée.

Abandoning his dreams of standing at the bridge,Sauvée took up the managementmantle and ended up bypassingthe banking market entirely toraise the cash he needed.

“In early 1989, we raised 150million French francs (€25 million)from 220 private investors, mainlysmall company chief executives.

They then became co-owners of our first ship, LePonant,” explains Sauvée.

A three-mast vessel, Le Ponant was just 88 metreslong with 32 cabins and 32 cabin crew – considerablysmaller and more service-oriented than almost anyother cruise liner.

“It was unique in size, design and service levels,”says Sauvée.

The ship was due to be completed in early 1991 andset sail for the Caribbean in February 1991. But thefirst Iraq war erupted in January of that year,economic confidence – already low – plummetedfurther and the shipyard Sauvée was using wentbankrupt.

“It was our first crisis. The ship was three monthslate so our first cruise set off in May, not the best timeto take people to the Caribbean,” says Sauvée.

Nonetheless, Compagnie du Ponant made progress.

J

Before being a captain, it is good to be a sailor. And before owning ships,it is good to have spenttime at sea”

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Economic conditions were tough and business startedslowly but it built up over the following months and inless than a year the company was profitable.

“It was really helpful to have spent time in themerchant navy. Before being a captain, it is good to bea sailor. And before owning ships, it is good to havespent time at sea,” says Sauvée.

Sauvée’s experience gave him an understanding ofmarine affairs but he also had considerable commercial acumen. His company soon bought outthe investors in Le Ponant and in 1997 commissioneda new ship, Le Levant, capable of sailing throughArctic waters.

“It sailed to the Caribbean, the Orinoco River andthe Amazon basin during the winter, but in thesummer it went to the Canadian Arctic. This was thefirst time we had sailed through ice and the cruisesproved very popular,” says Sauvée.

So much so that Compagnie du Ponant decided tofocus on the Polar market and, in 2004, it acquired athird ship, Le Diamant, capable of sailing througheven colder climes.

“We went to Greenland and the North in thesummer and to Antarctica in the winter,” explainsSauvée.

At the time, Compagnie du Ponant was owned byCMA CGM, one of the largest container shippingfirms in the world. In the aftermath of the financialcrisis, however, the shipping industry was hit hard,with certain consequences for Compagnie du Ponant.

“The financial crisis did not really affect us in termsof our actual business but it did have an impact interms of financing new ships,” says Sauvée.

Most of Compagnie du Ponant’s passengers arewell-heeled, experienced travellers in their late fiftiesand early sixties, a demographic less affected thanmany by the economic downturn. Sauvée was keentherefore, to press ahead with expanding Compagniedu Ponant and plans were afoot to build two new ships.

But in the dark days of 2009, capital was hard tocome by, not least because CMA CGM was facing itsown challenges. Sauvée, no stranger to problemsolving, worked with the shipbuilding company itselfto find a solution. In 2010 and 2011, two state-of-the-art cruise liners joined the Ponant portfolio. Le Boréaland L’Austral each has 132 cabins and they arecapable of even more adventurous expeditions. At thesame time, the older ships, Le Levant and Le Diamant,were sold off, leaving the company with its famousfirst lady, Le Ponant, and three Polar explorers.

“We are the number one in Polar cruises. Ourpassengers are people who want to experience

something completely different. They have been tolots of places but they want a new adventure. Ourraison d’être is to create special experiences forpeople. We sail at night and every morning peoplewake up in a different place. Then for us, as a Frenchcruise company, we make sure we offer top-levelservice, which means wonderful food and top-qualitydestinations. Passengers kiss the captain when theyleave our ships and thank him for offering them thetrip of a lifetime. That, for me, is the whole purpose ofthis company,” says Sauvée.

Long-term ambitionskeen to provide more pleasure for more people – andgrow his business – Sauvée began thinking aboutadding a new ship to Compagnie du Ponant’s portfolio.He had longer-term ambitions too.

“I wanted to have a fleet of five ships, Le Ponantand four Polar liners, and I wanted to go to moreplaces, like Papua New Guinea, the whole of the Asia-Pacific region and Alaska,” he says.

CMA CGM was not in an expansionist frame ofmind at the time so Sauvée began considering otheroptions. On a visit to Paris, he met a friend who hadworked at Bridgepoint many years ago. He wasintroduced to Bridgepoint partner Benoît Bassi in thespring of 2012 and, by August, Compagnie du Ponanthad a new owner.

“Working with Bridgepoint has been a really benefi-cial experience for us. They have already helped us tomake a number of improvements to the way we runour business. Our management structure has beensimplified and we have professionalised our approach.They have also helped us to think about our plans forexpansion – where we should focus our energies andwhich markets we should target,” says Sauvée.

“They also seem genuinely interested in ourbusiness and that is very important for me. Ours is avery human business. The figures matter, obviously,but you have to deliver an authentic experience tothe customer. You have to care about them. We doand they feel that when they come on board,” he adds.

Compagnie du Ponant takes delivery of its fourthship, Le Soléal, this summer and ambitious newcruises are scheduled.

“We will be the first French company to cross theNorthwest Passage from Greenland to Russia. It will be a three-week cruise and it will be amazing,”says Sauvée.

Sauvée works from modest headquarters inMarseille but Compagnie du Ponant also has offices inHamburg, Miami, Hong kong and Shanghai. Opened

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Name: Jean-Emmanuel Sauvée

Nationality:French

Age: 48

Education: French merchant navy schoolin Nantes

Married: Yes, with two daughters, aged13 and 17

Place of work:Marseille

Car:Grey convertible Audi A5

Ambition: To makeCompagnie du Ponant aglobal leader

Greatest achievement:Building up Compagnie duPonant from nothing tonumber five in the world

Greatest regret:Not being bilingual in [French and] English!

Passengers kiss thecaptain when theyleave our ships andthank him for offeringthem a trip of a lifetime.That, for me, is thewhole purpose of thiscompany”

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in the past couple of years, these new sites havehelped boost the company’s international passengernumbers. Once Ponant cruisers were largely French.Now only half its clientele comes from la belle France,with 30 per cent coming from the united States andthe rest from elsewhere in the world, including Chinaand Australia.

The company is 25 years old this year and Sauvée

remains as passionate as ever about his work. “When I am on board chatting to the sailors and

talking to the passengers, I am happy,” he says. Now he wants to make Compagnie du Ponant the

leading luxury cruise business in the world: “I startedfrom scratch and I want to become the number one inmy sector. With Bridgepoint, it is a reasonableambition. It could happen with them,” he says n

Apprenticeships havetraditionally been associatedwith manual work or dyingcrafts. But times arechanging and demand isgrowing for a new breed of apprentice.

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Management focus

Growing your own

here may not be much call in the modern, global economy for the talents of cordwainers,tallow chandlers, loriners* and the like, but when

it comes to the means by which these crafts weredeveloped and handed down from one generation ofworkers to the next, it’s a different matter.

For, despite having been around for close to athousand years, the apprenticeship model shows nosign of falling by the wayside, unlike those super-annuated skills which dominated the workinglandscape in times gone by. In fact, the practice ofoffering on-the-job training blended with classroomlearning – and a modest wage – is very much aliveand kicking.

In the uk, the number of people enrolled in someform of apprenticeship scheme has rocketed. In 2008,just under 240,000 people enrolled in a scheme. Bylast year, the number had doubled to 520,600,according to data from the Department for Business,Innovation and Skills.

The official figures are backed up by anecdotalevidence too – many employers are reporting adistinct increase in demand. “We’re seeing a hugeincrease in the number of apprenticeship applicationswe get,” says Claire Snell, leadership & talent develop-ment director at consumer goods multinationalunilever. She sees it as a win-win for those who wantto get on without having to commit the time orresources to a university education. “Apprenticeshipsoffer people the chance to develop skills while alsoearning a salary. In return, we develop a diverse andhighly skilled workforce in a very cost-effectivemanner,” she explains.

The firm traditionally offers apprenticeships in twomain areas, research and development and supplychain, where in-depth technical skills are paramount.But – in another indication of the rising popularity ofthe apprenticeship – it is also in the process of takingon its first apprentices in IT and business administra-tion roles, disciplines that in recent years have beenlargely the preserve of the university-educated.

“They will be more clerical, doing sales andmarketing support,” says Snell. “They may not berunning brand plans for Dove straightaway, but theywill be developing deep skills that are transferable.”

Tectonic shiftsLike so many other businesses large and small, Anglo-Dutch unilever (which was formed in 1930 and whoseconstituent companies date back to the 19th century)

now finds itself in a world where the balance ofeconomic power is shifting from old establishedmarkets in the West to younger, high-growth regionsin Asia and Latin America. Some 55 per cent of its €51 billion annual revenue now comes from emergingmarkets, and ideas and innovations that used to flowlargely from West to East are starting to move back inthe other direction.

Apprenticeships help the company keep on top ofsuch tectonic shifts, by providing a sustainable supplyof skilled people from a wide variety of social andcultural backgrounds. “We don’t just want to buypeople in, we want diversity of age and background.The more diverse the workforce, the better thedecisions we make,” says Snell.

John Horgan, international managing director atglobal infrastructure group uRS, agrees. The companyis involved in projects as wide ranging as Crossrail inthe uk, asbestosremediation in Germanyand motorways inGreece, as well assubstantial develop-ments across the uS,Asia and the MiddleEast. Now Horgan hasstarted an apprentice-ship programme forEurope and India. “As amajor player in Europeand India, we are able totrain people in amultinational context, giving them opportunities toacquire a broad range of skills they can bring toprojects across the region.

“We believe there is a skills gap in the engineering,construction and technical services industry inEurope and India that we are well positioned toaddress. Our apprentices will have the opportunity togain experience in multiple geographic locations andthey will work on projects that address many oftoday’s most pressing challenges, such as mitigatingflooding and designing resilient, sustainableinfrastructure that meets 21st century needs.”

Many large international firms, such as Rolls-Royce,Ford or Reckitt Benckiser, have offered apprentice-ships as a complement to graduate programmes formany years. They are the kinds of employers thathave become known as nurseries of talent for theirrespective industries.

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The swing back toapprenticeships mayalso help to rebuildsomething of thebond of trustbetween employerand employee”

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However, the benefits of practical training coupledwith supporting qualifications are also coming to beappreciated in sectors that have historically taken amuch more “free market” approach to talent.

Banking is a classic example. As part of its desire todraw a line under the Libor scandal, ppi mis-sellingand myriad other troubles, London-based financialgiant Barclays has committed to taking on 1,000apprentices of school-leaver age to work in thegroup’s high street branches. They will earn around£15,000 a year while they are on the scheme, andBarclays hopes to be able to offer permanent employ-ment to most of those who successfully complete theprogramme. The bank has even launched a Bridgesinto Work scheme intended to help SMEs employmore apprentices.

Solid benefitsClearly, there can be a corporate citizenship elementto offering apprenticeships, but there are also solidreasons forjobseekers tochoose an appren-ticeship overuniversity.

“In the lastcouple of decades,there has been ahuge shift towardsuniversityeducation,” saysAndre Spicer, professor of organisational behaviour atCass Business School in London. But he reckons thatthe realities of employment in today’s uncertaineconomic climate may set the pendulum swinging inthe other direction. “Now we’re heading back topeople just wanting a job again. They are not so easyto come by these days. An apprenticeship looks like apretty good deal if the alternative is an unpaid intern-ship somewhere.”

Then of course there is the vexed question of fees.A first in maths from Oxford or Cambridge is alwayslikely to prove a good investment, but a degree inpolitical studies from the university of Nowheresvillemay not seem like such a smart move if it costs you£9,000 a year to acquire and there’s little prospect ofa job at the end of it.

The swing back to apprenticeships may also help torebuild something of the bond of trust betweenemployer and employee, which used to prevail in the“job for life” days of the 1960s and 1970s. Few would

argue that a return to the hidebound labour market ofthat era is desirable but there were some advantagesto the mutual respect it could engender.

“A company has a long-term commitment to itsapprentices. In turn, those apprentices have to trustthe company to deliver on that,” says Spicer.

uRS expects to take on 300 apprentices next year,only half of whom will be graduates. “We are seekingto recruit apprentices at all levels, from school leaversto master’s-level graduates. As a global company, it isimportant we make a long-term investment in ourpeople and their development. It benefits us, ourclients, our industry and the wider economy,” he says.

But what exactly is an apprenticeship? Thepractice began in northern Europe back in the MiddleAges, when youngsters would be taken on by experi-enced tradesmen and tutored in the skills required tomake a living in return for their bed and board. By the1400s, the craftsmen’s guilds – forerunners of thetrades union movement – were well established in

Britain and othermajor tradingnations of thetime. Theyformalised themodel of a seven-year indenturedapprenticeship,with the potentialto become anofficial master

craftsman at the end of it. These days, the duration isusually two to four years but the apprentice is paid amodest salary and the programme involves a mix ofpractical and classroom-based learning. Now, as then,employment at the end is not always guaranteed.

Nevertheless, Spicer anticipates that the popularityof apprenticeships will continue to rise. It may evenprecipitate a change in the old “dirty fingernails” blue-collar prejudice. “To some people, apprenticeships areworking class, and we’re all supposed to be middleclass now. It’s ridiculous, of course. They don’t havethat attitude in other parts of the world,” he says.

Continental commitmentIndeed not. For while the apprenticeship may beundergoing a resurgence in the uk, in many othercountries it never went away. There are almost asmany apprentices in Austria as in Britain, for example,despite a population only one-seventh the size. InFrance – a country where possession of the right

We believe there is a skills gap in the engineering,construction and technical services industry inEurope and India that we are well positioned toaddress. Our apprentices will have the opportunity togain experience in multiple geographic locations andthey will work on projects that address many oftoday’s most pressing challenges” – John Horgan,regional managing director, URS

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piece of paper always helps the wheels turn smoothly– the range of on-the-job professional qualificationsmirrors those on offer in the regular educationsystem, from the humble brevet professionnel throughthe baccalauréat professionnel, right the way up tomaster’s degrees and more.

But perhaps the real spiritual home of the appren-

ticeship is to be found in Germany, where mastercraftsmen have been training youngsters to follow intheir footsteps since the Middle Ages. The uk beganat around the same time but fell behind in the mid-20th century and has yet to catch up. In Germany, thetradition is unbroken and is enshrined in a dualeducation system, which formalises apprenticeshipsin the same way it does university degrees.

More than 50 per cent of German workers agedunder 22 have completed apprenticeships, andapprenticeships are available in some 340 specialisa-tions, ranging from plumbers and opticians to doctors’assistants and bankers. It can be almost impossible toget a job in Germany without one, and is doubtless amajor contributory factor to the enviable productivityrecords of firms such as BMW, Siemens and Bosch.

“There are different nationaloutlooks and different forms ofnational capitalism,” says Spicer.“In Germany and Switzerland,capital is more patient than it is inthe uk. And they have a longerinvestment horizon.”

Consequently, employers canafford to take a more long-termview of the workforce. “Appren-ticeships allow you to train peoplewith very specific skills. Thoseskills may not be worth as much toanother employer as they are toyou, so those people are much lesslikely to leave.”

Nonetheless, there are uk firmswhere apprentices are valued andcan progress as far or even furtherthan their university-educated

peers. Martyn Bridges is director of marketing andtechnical support at central heating systems manufac-turer Worcester Bosch, part of the giant Bosch Group.He is a former apprentice heating engineer who hasrisen to the very top, and he is not alone – of his 12colleagues around the boardroom table, no fewer thanfour began their careers as apprentices with the firm.

Perhaps as a result of thecultural influence of its Germanparent, the firm’s management areavid believers in the power ofapprenticeships: alongside theusual crop of engineering trainees,Worcester Bosch has just taken onits first three apprentice

salespeople. “We decided that it would be very usefulto have some employees who gain a thoroughgrounding in the commercial side, and spend timetalking to the customers, before they move on toother functions like marketing or product manage-ment,” says Bridges. “Apprenticeships produce verygrounded employees with a broad base of skills acrossthe whole business. The balance between work andstudy is a great mix, and our ‘grow your own’employees are always the best ones.” n

*Cordwainer (a worker in fine leather); tallow chandler (a maker of oil and candles from animal fat);loriner (a maker of bridles, harnesses and spurs).

More than 50 per cent of German workers aged under 22 havecompleted apprenticeships, and apprenticeships are available insome 340 specialisations, ranging from plumbers and opticiansto doctors’ assistants and bankers”

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Lastword

You are what you eat Once people were defined by the way they spoke and the schoolsthey went to. Now the food we eat has become a key determinantof who we are and how the outside world perceives us. Harry Wallop explains why.

alt – the very stuff of life. So essential, Romansoldiers were given it as payment. Somethingthat is surely borderless and classless. But I

realised this was not so, when my father-in-law, fromsalt-of-the earth working-class Cumbrian stock, askedme if I had any “proper” salt to sprinkle on his chips.By this he meant, not the flakey Maldon Sea Salt thatI had presented in a little ceramic bird-shaped dish onmy wooden kitchen table. For him, this delicateseasoning, packaged in nice boxes, was proof of myirredeemably metropolitan, upper-class status. He wasright, up to a point. My entire fridge and storecupboard subtly, but defiantly, reveal the inner me.The mustards, chutneys, cereals, eggs, bacon, air-dried organic Culatello di Zibello – these havebecome the key definers of who I am.

A generation or two ago, class in Britain was abouta thousand little rules – whether you wore tweedafter six o’clock, phoned for the fish knives, how youpronounced Featherstonehaugh ukridge, which dayto wear an old school tie. Much of it came down toyour accent, vocabulary and job. It baffled those whowere not born in England, especially those effortlesslyelegant Italian bankers who spent most of their timewondering why people were staring at their brownshoes when they attended meetings in the City. Butthings have changed. Class was once about yourposition in life; now it appears to be increasinglyabout lifestyle. And specifically the brands with whichyou choose to decorate your lifestyle.

As a result, the elites of the world, be they French,German, American or British, have merged into onepolyglot but uniform type: all wearing Hermès ties,clutching iPads in Burberry leather covers, andlounging in Missoni by the infinity pools of the world.

Even those without platinum credit cards can fretabout brands – be it the scented candle on your halltable (Diptyque, please), or the manufacturer of yoursalt and pepper in your kitchen cupboard. When itcomes to salt, your options are: supermarket own-

brand table salt (for the unpretentious salariat), SaxaSo-Low (so low class), Maldon Sea Salt (a key staplefor any farmers’ market regular, knitted tie creative orProvence holidaymaker) or organically certified HalenMôn sea salt (reserved for those who have thereservation line for beyond-trendy Danish restaurantNoma on speed dial).

Coffee tops them all, however. Just over a year ago,BritainThinks, a market research company, found that71 per cent of people define themselves as middleclass in Britain. It is not a wildly dissimilar percentagefrom the 50 per cent to 60 per cent of Americans whodefine themselves this way. The company then askedsome to come to a focus group and bring an objectthat most accurately summed up their bourgeoisstatus. Along with a set of keys to their own homeand a gold credit card, several brought along acafetière. A cup of posh coffee, it appeared, was asimportant as owning your own property when it cameto deciding status.

But even within proper coffee, there are gradationsof snobbery: from standard plunger, via those difficult-to-wash-up Italian moka pots (adored by owners ofwood-burning stoves), all the way up to showy,heavily branded Nespresso machines (the Louboutinsof the coffee world). For many owners of thesemachines, the click, kerpush, whoosh of processing alittle pod of caffeine is the closest they get to manualwork. To fret about these things may be seen assymptomatic of a society corrupted by consumerism.But snobbism is the engine oil that can keep the cogsof social mobility turning. Especially in an age whenthere is less money about, the need to distinguishoneself from the millions of other “middle classes”around the world is a powerful one. And to be judgedfor how one spends one’s money, rather than how oneearns it, seems to me progress of some sort n

Consumed: How Shopping Fed the Class System, byHarry Wallop, is out now, published by Collins.

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