Economy to make money, “sad science” all built around the dynamics of “profit”, always and at all costs. And, on the other hand, economy as an engine for activity, for creativity, for development. Money. And a business, the place that creates wealth, obviously, but also work and, in many cases, social cohesion. In short, business economy as community, according to the all-Italian lesson of its best entrepreneurs, from Adriano and Camillo’s Olivetti to Pirelli. The economic discussion has focused on these different concepts for quite some time. Not contradictions, although they are often seen as such. But poles that are animated by different values and a different spirit.On which to rediscover and build original convergences.

The latest challenge comes from a recent speech by Pope Francis, who had economists debating heatedly, along with big names from culture and entrepreneurs. Economy, indeed. And ethics. Deeply-related dimensions of human activity.

In a speech in Genoa, in Cornigliano (27th May), before the halls of a steelworks – the most part of which is currently no longer active – Pope Bergoglio was very clear: “A sickness of the economy is the progressive transformation of entrepreneurs into speculators. The speculator is a similar figure to what Jesus calls a mercenary. Firing, closing down, moving the company are not a problem for him, because the speculator uses, exploits, eats up people and means to make a profit”. These are strong words. But they are not unexpected nor are they unusual.

In his “Evangelii gaudium” (the first apostolic exhortation of the papacy, in November 2013), the Pope had already pointed out four negative figures of economic globalisation: the negation of the human being through the affirmation of the idol of money; uncontrolled consumerism that reduces the individual and his or her social relationship with the figure of the manufacturer and consumer; the economy of exclusion that reduces the human figure to a function, which can be discarded when unnecessary; the ideology of the absolute autonomy of markets. “Repeating these topics and resuming work ethics for Pope Francis means attempting to find an answer to these evils”, commented Gianfranco Brunelli (Il Sole24Ore 28th May).

The Pope is a man with a sophisticated culture and solid social experience, which he has also lived in lands where there is a controversial economic trend. He knows how to tackle the economic and moral challenges of the difficult times we are all experiencing. Indeed, along with denouncing “the speculator” he also provides spot-on considerations about the entrepreneur’s responsibility, aware that “there is no good economy without good entrepreneurs”. He mentions Luigi Einaudi, a top-ranking liberal thinker, banker and politician: “Millions of individuals work, produce and save despite everything that is done to hinder them. They constitute a powerful motivating force for progress. There are entrepreneurs who invest huge amounts of capital, achieving more modest profit than they would achieve through speculation”. And he insists on the “dignity of a job well done”. He mentions article 1 of the Italian Constitution (the foundation of the Republic on work). And he reiterates the fact that “dignity of work comes before income” (a topical concept, against the hypothesis of the minimum guaranteed wage irrespective of the job). So these are social and moral issues. On which, indeed in times of crisis and radical changes in the economic and social make-up, are worth thinking about. Studying. Seeking political and cultural answers that are neither banal nor easy.

Reading helps. Literary classics. Along with the contemporary thoughts of good economists. A writer such as Émile Zola, for instance. “Money was the dung heap in which grew the humanity of tomorrow”. And also “the poisoner and destroyer, becomes the ferment of all social vegetation”. These are the last pages of Zola’s Money (L’Argent), just recently republished by Sellerio: a mighty novel from 125 years ago which holds an extraordinary force today. Because the lead character, Aristide Saccard, a financial speculator, is an able and cynical adventurer but also a visionary entrepreneur. And the tensions for the accumulation of wealth tie together, then as now, with a controversial yet powerful passion to build new worlds. Sinister souls. And eyes greedy for the future. That money is a chain. And an engine. Zola knows in fact how to showcase all its ambivalence, describing with the utmost realism the financial environments of Paris during the Second Empire, the second half of the 19th Century, under the rule of Napoleon III, also known as “Napoleon the small”.Deals, speculation, argent, in other words money. To accumulate and consume, with exaggerated vitality. Saccard’s idea is to create a Banque Universelle. And to launch into funding the railways linked to the Suez Canal that had just been completed. The smell of money draws unscrupulous partners. And it animates a world that revolves around the Brogniart building, the Parisian stock exchange, packed with bankers, corrupt members of parliament, journalists with few scruples, ambitious women in search of rich lovers, parlour revolutionaries. An entire circuit which can be found, with similar characteristics, in Wall Street one century later and in other cities where “making money using money” will corrupt markets and souls. Rapacious finance. Zola is a genuine master at telling the tale of a proper moral jungle. And like genuine writers, he proves to be absolutely contemporary.

Rereading Zola is therefore useful in times of growing critical reflection on the economic balance, on the relations between power and finance and politics, on ideologies and also on the rules and practices of the market economy. There is abundant literature on this topic. Mention must be made of “Ripensare il capitalismo” (Rethinking capitalism), an anthology of essays edited for Laterza by Mariana Mazzucato (who teaches at University College in London) and by Michael Jacobs, economist, consultant to the former English prime minister Gordon Brown. The basic idea is that “a more innovative, sustainable and inclusive economic system is possible, but it requires radical changes in our way of interpreting capitalism and of conceiving public policies”. The market and the competition cultures demand clear rules, transparent economic relations, more just social balances. A business ethics. Good laws. And better relations between “democracy and capitalism” (as described effectively by Joseph Stiglitz, Nobel prize-winning economist and Colin Crouch, the sophisticated critical analyst of the “post democracy”). A key role in this is played by innovation. Which requires significant public investments in research and training human capital, but also a long-term idea, that is more ambitious and generous than the “short-term” passions of financial speculation and less of a slave to the “dictatorship” of immediate profit.

Innovation, people, time. Business. Work. We are back to the starting block. Issues that are not “economistic”. But instead social. And moral.

A book that was recently translated in Italy by Nobel prize winner for economics Alvin E. Roth explores the mechanisms of wealth allocation in economic decisions

Companies move in an environment made up of scarce resources. And the company – which becomes an enterprise with its entrepreneur and which lives and acts with its managers  -, each day needs to deal with the shortage of wealth within it and outside it; indeed, it is through the combination of scarce wealth and goods, leading to other scarce wealth and goods, that the enterprise manages to grow, make a profit, generate well-being and wealth. Understanding from within the mechanism that moves this all means acquiring an in-depth knowledge of the economy. Beyond money.

This is what one learns by reading “Matchmaking. La scienza economica del dare a ciascuno il suo” (Italian translation of Who Gets What — and Why: The New Economics of Matchmaking and Market Design) written by Alvin E. Roth (Nobel prize winner for Economics in 2012), which has just been published in Italian.

It is important to read Roth’s work, but not only because of his pioneering research into market design , i.e. on the principles that govern those markets where money is not the only factor to determine who gets what. Reading Roth’s work is important because his clarity and simple statement of the facts accompanies the reader along a path that would otherwise be bitter and complex.

The main objective of the book (just under 300 pages long) consists, as mentioned above, in investigating the laws of the market economy that do not entail money changing hands. It is a much more widespread part of the economy than one might think. And it teaches two fundamental things for companies too: identifying the factors that make markets work well or badly and most of all teaching to make more secure and effective decisions to give “everyone what they deserve”, in other words allocate scarce resources effectively and efficiently.

To show us how widespread these markets are, Roth for example leads us to an aboriginal tribe that arranges marriages between unborn grandchildren, or he shows us the mechanism on which new companies such as Airbnb and Uber are based, whose success is for the most part determined by brilliant  market design.The register of the book is clear from the initial pages, as an example that is apparently far removed from economics: the allocation of scarce resources involved in organising organ transplants and the organisation behind them.

Roth explains in a particularly clear passage the importance of the theme: “The really interesting thing is that none of these elements, a kidney, an exclusive school, an enviable job, can be obtained by those who are willing to pay the most, or by those who are content with the minimum wage. In each case there has to be a match: a match between two counterparts”. It is indeed in the match of two counterparts that one of the “secrets” to a good business clearly lies.

 Matchmaking. La scienza economica del dare a ciascuno il suo (Italian translation of Who Gets What — and Why: The New Economics of Matchmaking and Market Design)

Alvin E. Roth

Einaudi, 2017

A work presented at Ca’ Foscari university reviews the concepts of innovation and strategy, also taking into account the need for consistency with corporate culture

Companies need to win on the market. And to do so, they need to produce good products, but they also need to implement strategies that keep up with the times, the context, the competition. It is no easy task, not even for big companies. It is a question of entrepreneurial flair, but also of strategic and innovative abilities.

It is around this group of topics that the work entitled “L’Innovazione Strategica. Per la (in)coerente rappresentazione del Modello di Business” (Strategic Innovation. For the (in)consistent representation of the Business Model) by Elena Trovò revolves; the entire reason for the investigation is explained in the first few lines. “A company must (…) be able to adopt the correct competitive strategy to face oncoming threats from the market. The term strategy has for hundreds of years been associated with a context of war, which notoriously involved a winner and a loser; similarly, doing business means fighting, fighting to win over others and stay afloat in a constantly evolving environment, marked by a high risk index. However, strategy alone is not always enough; strategic decisions must stay in line with a fundamental concept these days: namely innovation. (…) Pursuing strategic innovation not only means analysing the external context but also being clear about what one’s business model is”.

Thus an analysis of the world surrounding the company, but also a clear conscience about what one wants to do. With a continuous exchange of information between the inside and the outside. “This awareness – the author explains – translates into the primary objective of strategic innovation, in other words the untiring pursuit of the right fit between incoming signals from the outside and the impact they have on one’s identity and on the business model. To keep up with the changes occurring in the world, and all the more so if one wants to change the world somewhat, there needs to be a constant synergy between what is going on inside and outside the company. A synergy that should be pursued in a wider dimension of consistency (internal/external fit)”.Among other things, it is curious and interesting to note the use of the word fit  which can also be explained as “adapting” but also “wearing” and “suiting”.

Indeed, it is on the pursuit of the most suitable methods to achieve a “wider dimension of consistency” – as well as adapting internal and external requests of the company -, that Elena Trovò’s work focuses. Starting with an in-depth investigation into what innovation is, followed by an analysis of the concept and implications of strategic innovation, and ending with the entire upheaval of it all: an examination of the passages to innovate strategy with which companies can act.

The contents of “L’Innovazione Strategica” are a good compendium of arguments, information and conceptual schemes around a complex and evolving theme. It should therefore be approached with caution. Trovò ends the work with a significant leap in her thoughts. “There is (…) the possibility that to pursue a consistency in meaning, the company needs to become detached from the traditional canons of strategic consistency, but this break – and therefore apparent inconsistency – may not only prove necessary to maintain a good level of consistency of meaning, but it many actually represent its major strong point”. Which is the same as saying: the winner on the market is the one capable of shuffling the cards and beating the others with a splash of imagination.

L’Innovazione Strategica. Per la (in)coerente rappresentazione del Modello di Business (Strategic Innovation. For the (in)consistent representation of the Business Model)

Elena Trovò

Honorary Master’s Degree in Administration, Finance and Control. Università Ca’ Foscari, Venice

2016

A book that has recently been published suggests a few rules to manage business complexities without creating unnecessary complications and fostering greater efficiency

Every business has within it an organisational structure that allows it to function. This structure must be functional, in other words also with the correct level of complexity that will allow it to function problem-free. Although this appears to be simple, it is in  actual fact one of the most difficult conditions to achieve. When faced with the challenges of the market and of the competition, often companies make their life more difficult and become inefficient instead of perfecting their efficacy of activity.

Yet ways to simplify and make business activities more competitive doexist.This is what “Smart simplicity. Sei regole per gestire la complessità senza diventare complicati” (Smart simplicity. Six rules to manage complexity without becoming complicated) by Yves Morieux and Peter Tollman explains.The book begins with a statement. According to the Complexity index of The Boston Consulting Group, the complexity of the manufacturing system has grown six-fold over the last sixty years. Concurrently, the complicatedness of organisation (i.e. the number of facilities, processes, committees, systems) has gone up a generous thirty-five times: in an attempt to respond to increasingly complex objectives, organisational mazes have been created, making it more and more difficult to improve productivity and promote innovation, and they cause demotivation and poor involvement on the part of co-workers. And yet, this is what the two authors believe, facing complexity with simplicity is possible. Morieux and Tollman then identify six rules of simplicity to manage complexity without becoming complicated. Using multiple examples to demonstrate in a tangible way theirefficacy, they reveal why these rules work and how to apply them. And autonomy and cooperation are the key elements of what they suggest. These would be the two most important qualities to face what appears to be an endless complexity.

The book is a fascinating and an easy read with parts of the introduction that set the key-concepts better to understand. For instance, one needs to know how to distinguish between complexity and complicatedness: the former is understood as an indispensable part of life and business , and the latter is the human response to all the elements that derive from such a complexity. It is  also necessary to reach a certain “smart simplicity” that is not  a simplistic or even a utopian condition, but the basis on which to manage a business wisely.

What Morieux and Tollman  have written is useful to read, and perhaps even re-read while one tries to work in an organisation, as specified in their book.

Smart simplicity.Sei regole per gestire la complessità senza diventare complicati (Smart simplicity. Six rules to manage complexity without becoming complicated)

Yves Morieux, Peter Tollman.

Egea, 2017

A collection of research investigates the relations between new manufacturing technologies and work

Work is one of the pillars of a business. And the work should be carried out appropriately and defended, as well as being remunerated. Proper relations between the entrepreneur and the worker are, after all, at the very core of the development of any manufacturing organisation. Yet the nature of the work changes depending on the type of company to which it applies, as well as on the technologies that are used. Understanding the relations between the different types of income, the work and the nature of the business it refers to is important to all intents and purposes. It is therefore useful to read “Reddito garantito e innovazione tecnologica, tra algoritmi e robotica” (Guaranteed income and technological innovation, amid algorithms and robotics), a collection f research and analysis on the subject of work, robotics and the new ICT technologies, work hours and manufacturing.

The logical reasoning that joins this set of investigations is the pursuit of connections between income (basic, based on citizenship, based on work) with the new technologies.

The path followed by the reader is therefore varied and complex, and it starts with the consideration of the aspects tied to guaranteed income, to basic income and to the types of work, then addressing the implications of robotics and also of the evolution of work relations in reference to current legal regulations that nevertheless need to be observed.

The base of the reasoning followed by each individual investigation is however the consideration of the mixture of old legislative regulations, new methods of production, the differentiation of requirements and the types of income, market demands and therefore business demands.

Most of all, however, the collection of research proposed in this book introduces the reader to the unknown issues created by the new technologies (and hence also by robots) as regards proper work remuneration as well as the defence of its dignity.

“Reddito garantito e innovazione tecnologica, tra algoritmi e robotica” is obviously not the perfect set of investigations on a complex topic such as the relations between technological innovation and work, but it is an excellent tool to stop and think about one of the most poignant issues faced by current manufacturing organisations.

Reddito garantito e innovazione tecnologica, tra algoritmi e robotica (Guaranteed income and technological innovation, amid algorithms and robotics) et.al.

BIN – Quaderni per il reddito, 07 – March 2017

One of the favourite great passions of Italians is to speak ill of Italy. But also to take offence at those who criticise the country. Fan talk. Sports Bar-room chatter elevated to political values. An insistence on declaring, like Bartali, that “everything’s wrong, everything needs sorting out” (but without his rough and ready amiability). Or having a go at the “jinxers” and “people who row against the current”. “Provincialism”, is the sentence passed by Angelo Panebianco in the “Corriere della Sera” newspaper, where he rightly challenges “the complaints of an immobile Italy”.

However, it is better to examine the data and the facts without partisan passions. To construct well-founded criticisms. To appreciate the work of those Italians who act rather than speak of doom. And to apply in their everyday lives (and in their political, administrative and cultural pursuits) the lesson in civil duty from Italo Calvino, in the latter pages of “Invisible Cities”: “Hell for the living is not something which will happen in the future; if there is one, it is the hell which is already here, the one in which we live every day, which we are building as we live together. There are two ways not to suffer from it. The first is easy for many people: accept the hell and become part of it until you no longer notice it. The second is risky and demands continual attention and examination: look for and recognise who and what, in the midst of the hell, is not hell, and make them last, and give them room.”

Let us look more closely, then, within this hyper-critical Italy yet which is also so often hostile to changes and reforms (we have spoken about this several times in our blogs), at what “is not hell” and to what we should “give room”.

One item of data, above all: the return of investment by industrial companies in new machinery. A positive sign of activism, entrepreneurship, and willingness unshackled by decline.

After years of stagnation, orders for machine tools grew by 22% during the first quarter of 2017 (compared with the same period of the previous year) on the internal market and by almost 11% on the international markets (data from UCIMU, the joint industrial association for the sector). What does this increase mean? That Italian industry has finally realised that it is housing old machinery (the average age of plant and equipment is 13 years old) and has decided that now is the time to play the innovation card. This card is obligatory, if it is to take on international competition. It has been boosted by the tax incentives from the government’s “Industry 4.0 Plan”: the super-depreciation rate of 120% and hyper-depreciation rate of 140%.

There is in fact a virtuous combination between private initiatives and industrial policy (the choices made by the Renzi and subsequently the Gentiloni governments and commitment by the Minister Calenda have been positive). And the awareness is growing on the part of the most dynamic section of Italian manufacturing that they need to seize the opportunity of industry’s “digital” shift: hi-tech and quality manufacturing, services, the use of “big data”, the whole innovative universe of “4.0 Industry”, precisely. It is on this that Italian companies are basing a robust competitive capability. What portion of industry? A fifth, or at the most, a quarter, reply those who are familiar with the strength of companies, sectors and manufacturing networks, local centres, medium-sized companies specialising in mechatronics and rubber, pharmaceuticals and chemicals, new materials and the most highly sophisticated foodstuffs. And what about the rest of industry? Selective changes are under way. This is, nevertheless, a world which is moving ahead. 20% of the companies account for 80% of exports and added value. The rest are plodding along, albeit with varying degrees of speed. The challenge (for company culture and industrial policy) is to grow that 20%. Precisely by insisting on innovation and competitiveness.

There is another item of data relating to what “is not hell” about which it is worth reflecting. And it is the one relating to the confidence of companies, which has finally improved. The monthly confidence index compiled by ISTAT indicated in April a level of 107.4 points, compared to 100.8 in December 2016: this is the highest level since October 2007, the eve of the Great Crisis (during which Italian industry lost 25% of its manufacturing capacity, suffered in terms of activity and employment, and started to revive itself by investing, innovating and finding new outlets in the international markets: a dynamic worthy of appreciation and to be “given room”). Confidence, then. Which also stimulates those long-term investments in plant and machinery, of which we have already spoken.

The best companies, therefore, are in a state of flux. Their confidence data should be read alongside another item of data, the one which tells of the fall in the confidence of consumers. It is reversing. “Bipolar Italy. Companies and families, their paths are diverging”, comments Paolo Bricco in “IlSole24Ore” (28th April). ISTAT speaks of 7.2 million Italians who “live in dire economic conditions”. Consumption is not growing, or only marginally. The internal market is static. The companies which are active predominantly in this market are suffering (building activity is in decline for the tenth year running, and things are moving only in the major cities of the North, starting with Milan).

In such a climate, political, economic and social challenges meet head-on. The future for growth resides with the most dynamic companies, with the ability of those hi-tech and medium-tech manufacturers in the North, those which are the most “European”, to drive things forward. But there is no single sector or economic or geographical area which can play the role of locomotive, unless the entire system of the Country embraces the idea of a strong and decisive choice for long-term reforms. Specifically, the one which it has refused to make so far. This, then, is the “challenge of what is not hell”. Without speaking ill of ourselves. Without vain optimism. But by growing things which we know how “to do, and to do well”. We are worthy of better than chatter in the wind.

A book that has just been published in Italy proposes a journey across nine steps better to cope with the stresses of modern life

A winning entrepreneur is one who does not think like his colleagues. The most successful manager  is the one who manages to make his organisation take the highest leap. The ability to stand out from the “crowd”. Not just the desire to do more and better, but to do so differently from others. Understanding these kinds of mechanisms is important. Applying them is something personal. Reading “Al passo col futuro. Come sopravvivere all’imprevedibile accelerazione del mondo” (Keeping up with the future. How to survive the unforeseeable acceleration of the world) by Joi Ito and Jeff Howe is in any case useful to understand where we are and where the world is taking us.

The book, which has just been published in Italy, begins with the need to understand fully the fact that the world is more complex and volatile than at any other time in history. The tools of our modern life are progressively becoming faster, cheaper and smaller, and you just need one click, one tweet or one post for people to connect with the other billions of people across the globe. According to both authors, the encounter of these two revolutions has released an explosive force that is transforming every facet of society, from business to culture, from the public sphere to our most private moments.

The future is going faster than before, and everyone needs to be able to learn much more quickly and react much more quickly than in the past. In production organisation too.

If this is the logic, Joi Ito and Jeff Howe have distilled it into nine organisational principles to navigate and survive amid such a tumultuous situation. Starting with their experience, obviously. Howe is assistant professor at Northeastern University and coordinator, at the same university, of the Media Innovation course; Ito on the other hand is an entrepreneur and venture capitalist but he also defines himself as a defender of the emerging democracy, of privacy and freedom on the Internet as well as being director of the Media Lab at Boston MIT.

So to answer at speed to the speed of the world, according to both authors, for instance you need to welcome risk strategically with open arms rather than mitigate it and you need to be capable of drawing inspiration and innovative ideas from your network of relations. The book therefore spans nine main chapters, each characterised by a title that compares a “winner” with a “loser”. These titles indicate the same number of concepts and therefore the peculiar aspect of the entire volume: Skimming beats Authority, Pull beats Push, Compasses beats Maps, Risk beats Safety, Disobedience beats Conformity, Practice beats Theory, Diversity beats Capacity, Resilience beats Strength, System beats Object.

“Al passo con il futuro” is a good read whose contents you do not necessarily have to agree with, but which should be read with an open mind and the curiosity of understanding which leaps lead to novelty.

Al passo col futuro. Come sopravvivere all’imprevedibile accelerazione del mondo (Keeping up with the future. How to survive the unforeseeable acceleration of the world)

Joi Ito, Jeff Howe

Egea, 2017