FEATURE1 July 2011

Preparing for what tomorrow may bring

Features News

GfK is setting out to “own the future”. But with another round of consolidation looming, will its new corporate strategy be enough to safeguard its position? We put these questions and more to CEO Klaus Wübbenhorst.

Research: What’s the thinking behind the name ‘Own the future’?

Wübbenhorst: If you have a strategy you always have to find a nice, catchy name. But with everything that we intend to do starting 1 January, we want to have initiatives that we really think embrace future trends for our clients and for our people as well. We want to own the future by helping our clients take the right decisions – helping them to own the future – and by doing this and growing the GfK business we help our people to own the future too.

But how does an internal restructure help clients?

It’s not only an internal reorganisation, it’s external as well. Under the roof of ‘consumer choices’ we have all the systems that create currency: TV measurement, radio measurement, sales data for consumer electronics, DIY, office equipment etc. We’ve seen that in audience measurement, through the convergence of media, those insights are coming together. What today is normal TV usage in the living room will in the future be watching TV on mobile phones, on computers. We really see those media converging so we have to find the right tools to get the right solutions to our clients. This still means that for many years we will do normal TV audience measurement, but in the future I can envisage a company like Procter & Gamble will not only want to know how many people are watching TV but what are they doing while watching TV, while reading newspapers, while on the internet, and what effect the additional money they have spent on those different channels has on making people buy something.

That’s the reason why we said, “OK, we don’t want to have a separate media business”. On the other hand, we said there is some media business which is customised research and this fits into the ‘customer experiences’ business, which deals with why people are doing something – what they like and what they don’t like. We can create a loop between what people think, what they feel and what they are buying. We want to use these synergies in these converging times.

What was the inspiration for all this?

After a very successful 2010 it was the task of the management not only to celebrate the results but to have a deep-dive look at the changing environment – the changes in digital media, the globalisation of clients. We are doing well – we are doing better than other companies – but still we wanted to look at whether there were trends and challenges that we could follow better.

We decided that we needed to focus our product offering a little more. We needed to see what clients we wanted to go for, to prioritise our investments in certain regions. We wanted to make sure we were doing the right things in the digital space and to look at how to set up GfK to encourage innovations. After a couple of months of deep research, helped by an external company – speaking to clients, looking at what competitors do, looking inside – we came up with this strategy.

You’re leaving the company next year and it is doing well. Were you not tempted just to take it easy for the next twelve months rather than oversee the implementation of a new corporate strategy?

That is not my attitude, and besides, we started this initiative looking at our positioning in summer/autumn last year and this was still two years for my contract to go. I wanted to help the management and supervisory board to get GfK into a position where it had a business model for growth that would be successful for the next couple of years. And again, all of the management board and the supervisory board were so convinced about the logic of the next steps we are going to take, it would have been a failure on our part to lean back and sit and wait until a new CEO arrived. We would have wasted two years and with times changing so fast we cannot afford to do this even with the good results we have.

Is this strategy going to be enough with a further round of consolidation on the horizon, with the possible merger of Ipsos and Synovate? Is GfK going to have to look to bulk up through acquisitions?

What we have said is we will always have a combination of organic growth and acquisitions – and maybe we want to be in a position to grow organically faster than we have done up to now – but if there is a target that fits GfK’s strategy we have the resources to really go for such a company. We have just placed a [€200m] bond and you might have read that we have a couple of hundred million euros we could make available if there is an acquisition. But based on our strategy and based on what Synovate could offer in line with our strategy, we said that for GfK we are not going for Synovate. We think Synovate is not the right target for GfK, especially given the amounts that are being discussed in the market [a rumoured price tag of £520m]. Our strategy is a strategy that does not need Synovate.

But a few years back you were open to making a transformative acquisition with TNS. If Ipsos and Synovate do come together, the opportunity for those sorts of acquisitions diminish. Is that a bad thing for GfK?

No, and to make clear, we do not acquire for the sake of acquiring. We had crystal-clear arguments that GfK plus TNS would have been a good combination – pulling together our household panels, taking their strengths in US and Latin America plus our strengths in central and eastern Europe. That would have made sense, but not at any price, which is why we stepped back when [WPP CEO] Martin Sorrell opened the purse and was prepared to pay more.

TNS would have been logically a very good fit for GfK. Synovate we don’t think is a fit. You will not see GfK making acquisitions just to get bigger, bigger, bigger. We want to get better, more profitable and have a good offering for our clients and with this strategy we are pretty sure we will get a good position in our industry. Whether that is number two, three, four or five in the rankings isn’t really what matters. It will be a good position for our clients.

1 Comment

9 years ago

Interesting discussion. Those, I imagine very few, clients who'd forged strong partnerships will now have to understand which of their servicing teams will move which way (in the event of a likely m&a). And starting all over again with a new team And if you didnt believe in partnerships, the future sees such a shortage of talent from the 'supplier' side, it is time they 'invested' such resources for a long term partnership otherwise they would face a heavy premium or a really poor or no choice of supplier...

Like Report