To thrive and to grow, a business must innovate. Innovation is no longer anything new in business, and it now comes in many different forms, all of which, however, are faced with the same restrictions: the need for a skilled business leader; the context within which the business operates; and the outlook for the industry in question. In other words, innovating is no easy task for small and medium enterprise, especially in Italy, but it is nonetheless a necessity.

In order to better understand all that can happen, it may be interesting to read “Nuovi modelli imprenditoriali, tendenze e politiche di sostegno” (New business models, trends and support policies), an article written by Donato Iacobucci (an associate professor in the Department of Automation and Management Information Systems at Università Politecnica delle Marche) that takes a closer look at what has happened to the manufacturing industry in the Marche region of Italy in recent years.

In particular, the study (which appeared a few weeks ago in Prisma Economia Società Lavoro) analyses the situation that has arisen in the economy of the Marche region following the international crisis of 2009 and the consequent recession that has afflicted Italy over the last three years.

Manufacturing in this region has been hit harder than the national average. The author blames this on the region’s particular model of specialisation and consequent model of innovation, which shows a distinct lack of research. In other words, the underlying idea is that the businesses of the Marche region have, indeed, reacted to the crisis with innovation, but this innovation has not been based on research. In a certain sense, innovation has been handicapped and left excessively fragile and exposed to the blowing winds of the crisis.

From this, we find two obstacles that the author has transformed into recommendations. In Iacobucci’s view, it is important to promote the launch of new business that takes greater advantage of knowledge, businesses that would then be able to help bring diversity to the economy and drive greater innovation among existing businesses. This is crucial for the region’s future, but it can only be achieved by also changing the models of “entrepreneurial activation”. In other words, what is needed once again is a qualitative shift in the minds of enterprise and in corporate culture that is not always easy to achieve. The second obstacle/recommendation concerns the need to help young entrepreneurs to create new enterprises, this already rocky road is made more challenging by another obstacle to development that is all too typical in Italy, that of coming up with adequate funding.

This short, intense article by Iacobucci starts from a real-life situation, which is then analysed with a good dose of theory and is most certainly to be read with great care.

Nuovi modelli imprenditoriali, tendenze e politiche di sostegno

Donato Iacobucci

Prisma Economia Società Lavoro, 2014 Fascicolo 2

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In times of uncertainty, crisis and great change, there are those who go in search of new “models” in the hope that these will help them to keep their businesses afloat, and there are those who turn to management textbooks and other “how-to” books that describe the “keys to success” and tell stories of other successful business people to emulate (something that is all to common in the more Anglo Saxon incarnation of the culture of enterprise). But it is in these times of crisis, fraught with both danger and opportunity, that there are also those who focus on the idea that the very soul of the true entrepreneur is one of eccentricity and non-conformism, one might even say heretical (a highly stimulating attitude in the Italian culture of enterprise), such that, instead of seeking refuge in the “safe” harbour of models, one prefers to look more towards the “anti-model” to spur others into action. This is what Oscar Farinetti has done on the back of his success with Eataly, ready to challenge old habits and traditional business practice (see, for example, the 27 October edition of CorrierEconomia), and his is a story that deserves to be heard.

“It’s better to have doubts that certainties,” Farinetti says. What is needed, he says, is a blend of agility, speed and determination in achieving objectives, but only after taking the time to understand what it truly is that is changing and how. “Determination in achieving objectives is essential, but not enough on its own. It must be accompanied by the ability to listen to others and by a willingness to change one’s mind.” In other words, more doubt and less preconceived certainty. A predisposition to challenge the norm, to have an open mind, to know how to pay attention to and take advantage of the ideas of others, to be carefree, and to look at things with a critical eye (as we have discussed on other blogs about the culture of enterprise), as well as a commitment to building leadership based on merit, rather than on the formalities of authority, on the wisdom of decisions and accountability for such decisions.

And there is something else to ponder as well: that of taking advantage of know-how, naturally enough, and of knowing how to tell the story of quality production, focusing on the needs of consumers and on their personalities. “There is an enormous contrast between what we have and the total inability to take advantage of those strengths. We lack the propensity towards marketing.”

To do business, we must identify our priorities and know how to manage them, but we must also be able to “manage imperfection”, because it is out of imperfection that we get something that is truly new, not standardised, mass-market products (and in high-volume industry, Italy is trailing the rest, but in high-value, niche markets we often cannot be beat). As Farinetti explains, Italy is the nation with the highest degree of biodiversity, particularly in terms of food and agriculture, and this is a key to success in the international marketplace. “Biodiversity has given rise to a vast network of small and medium enterprises that, if they were to unite their efforts and their distribution, could find great success in the United States, where they are starved for genuine Italian cuisine. In other words, “think locally and act locally” and establish a narrative that is not so much about the product as it is about the nation as a whole because “the product is a blend of both technology and history”.

That may sound like quite a challenge, but it is possible and is much more appropriate in a nation as complex as Italy than all those Anglo Saxon models are. Farinetti would also warn us to never give up, but not in the form of stubborn determination: “Focus energy on what is difficult, but don’t waste time on the impossible.”

In order to generate welfare, businesses need philosophy, and business leaders need to have been fed a good dose of the humanities. This is more than nostalgia for the classical traditions, more than abstract theory; it is a real need, but one that is not often understood or put into practice.  In other words, sound culture of enterprise is more than just numbers, effective logistics and efficient technology. Indeed, there is more that needs to be taken into consideration. It takes a healthy balance of art and technique, of the humanities and engineering. This is no easy task, but it must be our ultimate objective, and it’s what enables the best entrepreneurs to shape industrial history, both in Italy and around the world. 

 

This is what makes Not For Profit: Why Democracy Needs the Humanities, by Martha C. Nussbaum, such an interesting read to this day. Written in 2010, this book (of just over 180 pages) looks at the need for the humanities in education in addition to economics and technology. As the author explains, good citizens and true democracies are born and thrive when individuals are taught to think on their own, and the same can be said for the growth and development of a business and all that this entails.

 

“The profit motive suggests to many concerned leaders that science and technology are of crucial importance for the future health of their nations. […] My concern is that other abilities, equally crucial, are at risk of getting lost in the competitive flurry,” Nussbaum writes. 

 

She then goes on to discuss the connection between the humanities and democracy, between the classical disciplines and the capacity for growth and looks at the complexities of modern times from a fairly “non-technological” point of view, including both recent history (on up to Barack Obama) and a healthy dose of classics in education and literature, such as Rabindranath Tagore and John Dewey. One passage is of particular relevance to enterprise: “Citizens cannot relate well to the complex world around them by factual knowledge and logic alone. The third ability of the citizen, closely related to the first two, is what we can call the narrative imagination. This means the ability to think what it might be like to be in the shoes of a person different from oneself, to be an intelligent reader of that person’s story, and to understand the emotions and wishes and desires that someone so placed might have.”

 

Indeed, these words apply to us all, including to business leaders and their enterprises. 

 

 

Not For Profit: Why Democracy Needs the Humanities

Martha C. Nussbaum

Princeton University Press, 2010

Competitiveness and speed. If we were to summarise the most important characteristics of the successful business today, these might be two of the words we would use. Underlying these concepts is a different form of culture of enterprise than that of the past, one that sees response time as one of the keys to growth, along side product quality, naturally, and the quality of interpersonal relationships, which, at the end of the day, must permeate all things in a business seeking to maximise its growth potential.

These concepts – competitiveness, speed and enterprise quality – are difficult to fully comprehend, even when faced with concrete examples. This makes the work by Anna Posenato (who recently completed a three-year programme in Enterprise Engineering at the University of Padua, Department of Industrial Systems Management & Technology) an interesting read. Entitled “Analisi delle tecniche di organizzazione e gestione dei sistemi produttivi nelle imprese manifatturiere: il profilo di 3 casi studio” (Analysis of techniques in the organisation and management of production systems in manufacturing: a look at 3 case studies), the paper opens with some theory before examining three business case studies with a particular emphasis on supply chain management, which is of strategic importance to many businesses today.

One aspect makes this study particularly interesting.  It is part of the international High-Performance Manufacturing (HPM) project, which began in the U.S. in 1989 and is currently being conducted by research groups in over 50 universities in Europe, Asia, North and South America. The HPM project is, in essence, a project of international benchmarking, the purpose of which is to assess the ability of manufacturers to achieve on-going improvement through production management practices and by applying techniques of production system organisation and management, which make it possible to reach a certain degree of global competitiveness.

As explained in the paper, it was possible to experience first hand the true consequences, within a business, of the implementation – to varying degrees of efficiency – of one organisation technique compared to another. Indeed, it is important, if fairly simple, to understand what happens when a specific element – a cog or an approach to operations – changes within a complex organisation, and a look at these three (anonymous) case studies points to similarities, differences, inefficiencies, and strengths that emerge when technology changes and the culture of enterprise transforms.

Analisi delle tecniche di organizzazione e gestione dei sistemi produttivi nelle imprese manifatturiere: il profilo di 3 casi studio

Anna Posenato (Three-year programme in Enterprise Engineering at the University of Padua, Department of Industrial Systems Management & Technology)

Undergraduate Thesis, 2013-2014 academic year

How is Italian capitalism changing? Greater emphasis on manufacturing and less on energy and services. A greater presence of large international groups (including those of Italian origin) and growth in medium to large-scale manufacturers with a capacity for expansion abroad. In short, those that are managing to combat the crisis are corporate groups exposed to competition, that great driver of competitiveness, while businesses in more “protected” industries suffer, unable to sell their services on the open marketplace. Once again, Mediobanca has painted us this complex picture in its annual analysis on the leading Italian enterprises, a report now in its 49th edition with nearly half a century of annual reports and other numbers on manufacturers, banks, insurance companies and mid-sized to large-scale service firms.

So let’s take a look at the rankings. Headlines in both Il Sole24Ore and Corriere della Sera report that Exor-FCA has surpassed Eni in the rankings of big industry. Indeed, during the first six months of 2014, revenues for Exor, led by the Agnelli family through the Fiat-Chrysler merger, exceeded 58 billion (and were 113.7 billion for the full year 2013) compared to 56.6 billion for Eni (which posted 114.7 billion in 2013). In 2013, Exor-FCA was already first in terms of number of employees, at 306,000, the same level of the early 1980s (but at that time, 80% of all Fiat employees worked in Italy, whereas now only 26% does, and sales in Italy account for barely 8% of the group’s total revenues). In short, thank you Chrysler and globalisation. And with the name change, all that we see of Fiat is the initial “F” in “FCA”, which stands for Fiat Chrysler Automobiles.

Eni has maintained its title as champion in profits at 13 billion for 2012-13, followed by Enel (3.5 billion) and Exor (2.4 billion).

But what else do we see in the rankings? Having been essentially unchanged for years, we now have a new entry in the top 20: General Electric Italia (formerly “Nuovo Pignone” from Florence), which now leads the American group’s oil and gas business (and is one of the best examples of the importance of international investment in helping Italian industry to grow) and which has jumped from 29th to 19th place thanks to investment in Avio.

Others moving up in the rankings include Edison, Luxottica, Poste Italiane and Esselunga (the supermarket chain owned by Bernardo Caprotti), as well as Salini (construction) with the acquisition of Impregilo, all working hard to grow and to be more competitive and more profitable.

Among the top 20, we have nine companies in the energy industry, six in manufacturing (in addition to Exor-FCA at number one and GE Italia, the new entry, there is also Finmeccanica, Luxottica, Prysmian, and Pirelli, all with strong sales abroad), and five in infrastructures and services. Seven groups are state owned, and five are controlled by international entities.

Mediobanca’s ranking only includes groups whose head offices are in Italy. As such, it does not include Techint, led by the Rocca family, which would place sixth behind Telecom with 19.1 billion in revenues; STMicroelectronics, which would place 20th with 6.1 billion in revenues; or Ferrero, which would come in at 12th place with 8.1 billion – all of whom would further strengthen the presence of manufacturing. In the same way, it does not include the Italian business of the French firm Lactalis, which is owned by Parmalat.

Finally, the rankings also show an improvement in mid-sized manufacturers, which, in many cases, posted increases in revenues on the order of 20-55%. This includes SimiGroup, Stevanato, Ballarini, Stefano Ricci, Uteco Converting, Casa Vinicola Botter, Ecuador, Fosber, Chimec, Euroitalia, and the MCZ Group, all dynamic, efficient, competitive “pocket-sized” multinationals and testament to the fact that good Italian capitalism and industry still has a few tricks up its sleeve.

Businesses become enterprises when an entrepreneur takes action, but an enterprise would be nothing without an organisation of individuals and the work they do to make it run. While this may sound obvious, it implies an obligation: if we truly want to understand an enterprise, we need to look beyond its leader and have a clear idea about its organisation, about the individuals who work there. 

A useful work in this regard is “Persone, lavoro, organizzazione. Una lettura psicologica della vita organizzativa” (People, labour, organisation. A psychological look at the life of an organisation), the latest effort of Pier Giorgio Gabassi (a professor of industrial and organisational psychology at the University of Trieste) and Maria Lisa Garzitto (a research fellow in industrial psychology and human resources).

In roughly 350 pages, this book looks at the evolution of the conceptual models used to describe and interpret every business organisation and provides a “tool of knowledge”, a sort of introductory textbook for anyone wanting to learn more about psychology as applied in organisational contexts. It is just what we need in these times in which we are faced with having to make a shift from technology to the individual, from machines to the psychology behind the human interaction that makes up an organisation. 

The work starts from an underlying idea: individuals, work and organisation intertwine in complex ways. The book then looks into the fact that an anthropocentric view of work puts the experience of the individual at the centre of the system of production. Cognitive and emotional aspects come to the fore after this extended period of “hard-core industrialism” that has profoundly marked the life experience of a great many workers.

Some of the issues faced include time and subjectivity, the division of labour, human interaction in the workplace and how it applies to management, organisation development, total quality management, corporate culture, the climate of the workplace, communication within the organisation, leadership and management, negotiations and conflict resolution, training and development, evaluations, salary, the psychological contract, ergonomics in the workplace, stress and suffering, bullying, and consumerism.

In short, individuals in the workplace and the business in all of its facets, and a book that is as easy to read as it is important. 

Persone, lavoro, organizzazione. Una lettura psicologica della vita organizzativa

Piergiorgio Gabassi, Maria Luisa Garzitto

Franco Angeli, 2014

Every nation has its own brand of enterprise, because its history and other social and cultural aspects leave their mark on how business is organised, how profits are viewed, and on the forms of enterprise that give rise to businesses and help them to thrive. All of this goes beyond the general principles of business organisation and of production, so understanding where an enterprise is from can help to better understand its nature and its evolution, even in these more economically advanced areas that are examples of manufacturing efficiency and social responsibility.

A useful read in this regard is a paper entitled “Comparing National and Business Culture in the Nordic Countries – A Finnish Perspective” (i.e. Denmark, Norway, Sweden, Finland and Iceland). Recently published in Arcada Working Papers (no. 2/2014) by the Arcada University of Applied Sciences in Finland, this brief, clear article helps to understand the approach to production and enterprise that is common to this area. Written by Jakobssoni, Daria Loktevaii, Angel Lawsoniii, Ville Strömbergiv, Carl-Johan Rosenbröijer (Arcada University of Applied Sciences, Finland, Department of Business Management and Analytics), the paper describes the methodology followed before outlining the key aspects of the culture of enterprise in each country. Each culture is analysed based on certain characteristics: the relationship with institutions; a comparison of individualism and socialisation in business; relationships between the sexes in the workplace; the approach to risk and uncertainty; the degree of pragmatism; and the degree of rigidity in following the rules. All of this is then summarised in a easy-to-read table comparing the various countries.

The conclusion reached is that, despite many similarities, culture of enterprise in Nordic countries features a number of important differences that may not be apparent when looking from the outside at the area as a whole. In short, this paper leads us to an understanding of details that would otherwise remain hidden from view.

Comparing National and Business Culture in the Nordic Countries – A Finnish Perspective

Charlotta Jakobssoni, Daria Loktevaii, Angel Lawsoniii, Ville Strömbergiv, Carl-Johan Rosenbröijer (Arcada University of Applied Sciences, Finland, Department of Business Management and Analytics)

Arcada Working Papers 2/2014, pp 8-20

The quote by Leonardo Sciascia of how most of us would know little about ourselves and the world if not taught by literature opened the meeting last Friday at the Istituto Tecnico Avogadro in Turin. A discussion on literature and industry, based on the anthology La fabbrica di carta – I libri che hanno raccontato l’Italia industriale [“The paper factory. Books which have narrated industrial Italy”], edited by Giorgio Bigatti and Giuseppe Lupo, published by Laterza and sponsored by Assolombarda, and the film Il libro e la fabbrica [“The Book and the Factory”], a first-rate short made by students at the Istituto (it can be found on YouTube and of course on the website of the Istituto, www.itisavogadro.it).

The quote by Sciascia is appropriate, an intelligent suggestion by the head of the Avogadro, Tommaso De Luca. Not because the writer was familiar with industry (the sulphur mines of his home village in Sicily were, still in the Fifties, a savage form of ancient capitalism, run by the mafia and ruthlessly exploiting child labour) but because literature in fact holds the key to understanding and interpreting science, economics and the more complex of industrial relations. Tales therefore that support corporate culture. Corporate culture as culture tout court, as a real “polytechnic culture” which overcomes false divisions between humanistic knowledge and science (an idea dear to the Fondazione Pirelli, which the students and teachers of the Avogadro greatly appreciated).

An interesting discussion therefore on the topical nature of industry for development in Italy, as well as on its history, on the memory of a Turin which for many years was “car capital” and today a metropolis undergoing a transition after the decline of the “company town” with the Fiat brand, on the many faces of innovation and on the relationship between education, critique, work, productivity and competitiveness. Crucial issues for young students (who in the great hall were the boys and few girls from the fifth form) who are close to entering the world of work or about to take the decision to enroll at university with strong professional opportunities.

The Avogadro is moreover an excellent college. Set up in 1805 (one of the initiatives from the Napoleonic age, as part of a radical rethink of education) to teach geometry, chemistry and architecture which later became the “Istituto professionale operaio” in the industrial Turin of the early 20th century (with a school of arts and crafts and an art college) and later Regia Scuola Industriale. In 1946 it took the name of the great physicist from Piedmont Amedeo Avogadro. 1700 students are enrolled (350 in evening classes for those who work) at the school of applied sciences and the technical college of technology, with three specialisations, mechanical engineering and mechatronics, electronics and electrical engineering and computer studies and telecommunications. Half of these students find a job immediately after gaining a diploma and half go to university, the Turin Politecnico, with particularly brilliant results (“more than half of those who obtain postgraduate degrees from the Politecnico come from technical colleges”, the head De Luca told us).

Persons of quality therefore. Well-trained human capital able to face the needs of the labour market both in the industry of the “great Turin” and overseas, following for example the expansion of the “pocket-size multinationals” in Piedmont. The technical colleges in fact (Confindustria, the industrialists association, has been saying this for years) are the keystones for the development of corporate Italy: high-level skills and young people ready to face successfully the hi-tech evolution of Italian business. The Avogadro, naturally, as from this year, is one of the seven colleges chosen for the “experimental program of high-education training” introduced by Law no. 128 of 2013 and agreed by the education and labour ministries, Enel, regional authorities and the education sector. Companies are opening their doors to the “student apprentices”. Classroom, workshop and on-the-job training, to use a managerial expression, for up to 35% of the annual class time. An innovative way (in the wake of positive experiments launched some time ago, for example in Germany) of improving the people needed by businesses in the era of the knowledge economy. Advanced technologies, research, innovation, hi-tech skills linked directly to the production cycle. The proper route, provided critical thought is not overlooked (Avogadro himself, in the Piedmont of the House of Savoy, was an excellent example of this) and (why not?) good literature, the key to understanding people and the changes in the world.

Business culture is made up of something which is intangible and inescapable, and also elements which can be defined clearly and often gauged, knowledge and information without which the figure of the entrepreneur still exists but in some way is undermined. Understanding both aspects is important yet complex. Oscar Bernardi, also an entrepreneur succeeded in this and wrote the interesting book Cultura d’impresa, leadership e management nella micro e piccola impresa, [“Business culture, leadership and management in micro and small firms”] on the basis of his several years’ experience as consultant in contact with micro and small firms. In these firms in fact, which are the keystone, as we are often reminded, of Italy’s economy, Bernardi found on many occasions a lack of academic and managerial training in the entrepreneurs heading the various organisations. With all the respect owing to those men and women who have set up businesses often in difficult conditions, the author carried out actual research in the field with the distribution of nine thousand questionnaires. The results of the survey show the average level of education of the entrepreneur, often lacking, the various styles of leadership adopted in the firm, with a focus on a particularly delicate time in the life of the firm, the generational change, and with an analysis of the tensions and problems inevitably involved in this event.

The picture of the entrepreneur painted by all this corresponds to the types of people who “do it themselves”, who follow their intuition rather than science, who never calculate but instead “feel”. Often scheduling and planning are not the bread and butter of these people who, the author notes, have difficulty in reconciling their working life with the rational methods of company management. 

Yet it has to be said that these are the firms in fact which are often assigned the role of standard bearer of Italian savoir faire. However, faced with the difficulties of the modern economy, it is also true that the room left for business people armed solely with intuition is increasingly limited. 

According to Bernardi something has to be done which first of all takes shape in a process of bringing education and corporations closer together “in such a way”, as we read in the book, “as to bring to entrepreneurs the information they are often lacking in order to familiarise with an international competitive situation, which risks leaving Italy’s small firms behind, forever”. However, more generally, Bernardi invites us to reflect on a new “business and business people project” which has to come from the best heritage from the past but also from a strong injection of know-how, culture and information which can succeed in creating in firms “cultural workshops” which enable them to produce innovative goods and services and to interact effectively with the surrounding environment.

 

 

Cultura d’impresa, leadership e management nella micro e piccola impresa

Oscar Bernardi 

CreateSpace Independent Publishing Platform, 2014

Understanding reality not just in order to predict its future but above all to understand the measures to be taken to make sure this future is the best possible. All this naturally also on the basis of past experience. This is an economic analysis approach which can in itself also make up corporate culture. However the right instruments are needed to understand what lies around us.

An example of what can be done comes from the University of Padua (statistics department, specialist degree course in statistics) which has supported the research contained in the dissertation by Stefania Sorato: “Evolution models of industrial districts. Comparison between literature and empirical proof for three districts in the Veneto region”.

The author writes: “understanding the changes underway in the districts, reading them and using them to define more targeted projects for maintaining competitiveness in the new global context are increasingly precious and required skills”. Hence the meaning of the work which takes into consideration, after a solid basis of theoretical analysis, the development of three manufacturing districts in the Veneto, outlining both their technical and management and cultural aspects. This is the analysis of the evolution of the areas of sports equipment of Montebelluna, eyewear in Belluno and gold working in Vicenza. “These districts”, the dissertation explains, “are specialised in different types of production yet which can be linked to the wider sector of fashion, one of the production sectors which has been most affected by the new features of the economic context and which is being changed the most by them”. The question which the work seeks to answer is simple: what has changed during these years?

The results obtained were the product of the application of various statistics techniques, starting from the descriptive and exploratory analysis of the data, via the calculation of a series of economic indicators, up to the techniques of the survival analysis of companies. A focus on five variables, number of firms, number of employees, presence of leader firms, dynamic companies and institutional stakeholders, allowing a description of the main “district dynamics” and therefore an understanding of not only the development but also the prospects of the single areas. As well as the specific results for each district, what counts in the research is however the method and the way of leading the reader along a path with some difficulties. Useful, for example, are the summary tables (the “evolution paths”) of the features of every district which go to mark a summary index of evolution which gives meaning to everything.

The work by Stefania Sorato is detailed yet easy read, supplying clear and useful information.

I modelli evolutivi dei distretti industriali. Confronto tra letteratura ed evidenze empiriche per tre distretti veneti  

Stefania Sorato (University of Padua, statistics department, specialist degree course in statistics)

Degree dissertation, A.A. 2013-2014