Communicating leads to growth, both in life and in business. In fact, communication both inside and outside of an organisation contributes to the growth of the culture that is created and gives form to the business itself, and this growth then opens doors and creates profits, jobs and wellbeing. Of course, this is nothing new, but it is true that much work needs to be done in order to fully understand the great potential of effective communication both inside and outside the organisation. Some help in this regard can certainly come from reading “Effective Communication: Strategy for Efficient Organizational Culture and Performance”, by Uti Charles Amechi, Choi Sang Long and A.I. Chikaji (of the Faculty of Management, Universiti Teknologi Malaysia), which was recently presented at the sixth annual American Business Research Conference held in New York on 9-10 June.

The study looks at effective communication as a key strategy in achieving an efficient organisational culture, and it opens with an observation. As the authors explain, “[E]very one in life is in communication with another person in a social context, [and] irrespective of what the context may be, people share and exchange views, opinions and information […].” Although an apparently mundane observation, this leads the three researchers to take a closer look at the way in which we communicate in an organisation. We communicate both to persuaded and to engage others, and each of us communicates in our own unique way. This is why the researchers then take a look at the various channels for exchanging information between managers and their staff, between the owners and management, and between management and the workers. There is a sort of organisational communication that gives rise to an organisational culture, which then creates the culture of enterprise and which is defined in a manner that may appear superficial, but which is actually quite profound: “the way we do things around here”.

One of the conclusions reached is that “within an organization, both formal and informal communication do occur daily, [and] it is evident that the effectiveness of such communication play (sic) a critical role in structuring and strengthening organizational culture, objectives, strategies and activities aimed at enhancing and ensuring organizational success”. This work by Uti Charles Amechi and his colleagues can help us to understand more and is certainly to be read with care.

Effective Communication: Strategy for Efficient Organizational Culture and Performance

Uti Charles Amechi, Choi Sang Long, A.I Chikaji (Faculty of Management, Universiti Teknologi Malaysia)

Proceedings of 6th Annual American Business Research Conference, New York (9 – 10 June 2014)

Even the government can be a good entrepreneur and a good innovator. This is not a promise; it’s an observation of many organisations throughout Italy, entities that come to blows with others that speak of government inefficiency, of corruption, of rigged tenders, of a lack of laws, and so on. And yet a great many organisations depend on the government as entrepreneur, or at least this is what Mariana Mazzuccato claims in her book Lo Stato innovatore (The State innovator), a recently published work of a few hundred pages that reads like a challenge.

This provocative, interesting book opens with a number of questions. Who is the boldest entrepreneur or the most prolific innovator? Who funds the research that leads to the most revolutionary technologies? What drives industries like the green economy, telecommunications, nanotechnology, or pharmaceuticals? 

For all of these questions, the answer is the same: the State. As Mazzuccato explains, it is the State, in the most advanced economies, that bears the initial investment risk that leads to new technologies. It is the State, through decentralised funds, that finances much of the development of new products up to the point of their commercialisation. And it is the State that creates the revolutionary technologies that, for example, make the iPhone so smart, e.g. the internet, touchscreens and GPS, and it is the State that plays the most important role in financing the green revolution of alternative energy. 

In short, the image that comes off of these pages is that of a State instilled with a culture of enterprise and of innovation. Far from how we might typically view government. 

But the author goes beyond just tearing down a stereotype – that of the State as the embodiment of inefficiency — to then get to the crux of another matter which leads to another question: If the State is the greatest innovator, why then do all of the profits deriving from a collective risk end up in the hands of the private sector? This leads to another observation, that it is not the State per se that creates inefficiency and corruption, but its components that contort the results of its efforts. 

Packed full of examples, Lo Stato innovatore is one of those books that stimulates debate and that sheds light on our everyday lives, pushing us to work harder to truly disseminate that form of State innovation that makes the government an agent of growth and of crucial progress for all. 

Lo Stato innovatore

Mariana Mazzucato

Laterza

The figures tell of an industrial decline: 120,000 factories lost between 2000 and 2013 and 1,160,000 jobs up in smoke. “A mass erosion in the production base,” said a study to come out of Confindustria. At the same time, the manufacturing gap between Italy and the rest of the world is widening, with an increase of 36% in volumes produced (from the start of 2000) as compared to a drop of 25.5% in industrial production in Italy for a trend moving clearly in the opposite direction and a gap which had already opened prior to 2007 and has now widened quite dramatically. Another symptom of Italy’s struggles is the fact that, over the last six years, the nation has gone from the world’s fifth leading producer down to eighth place, being passed by South Korea, India and Brazil and now tied with France (falling from 4.5% of global manufacturing in 2007 in current dollars to just 2.6% in 2013). In short, Italy is still the second leading manufacturing nation in Europe, behind Germany, but we continue to slip in terms of both productivity and competitiveness.

The alarm bells on the risk of decline that the Confindustria Research Centre sounded on 4 June are to be taken extremely seriously because it is precisely manufacturing that is needed to give a decisive boost to economic development and because other nations are reassessing the role of manufacturing and providing both support and stimulus in order to drive recovery after these years of the Great Crisis of bad finance. This includes the US, the UK, France and, naturally enough, the strong Germany and dynamic BRICS nations (i.e. Brazil, Russia, India, China and South Africa), but here in Italy?

Italy’s minister for economic development, Federica Guidi, pointed to the central importance of manufacturing when speaking to Confindustria on 29 May, as well as to a commitment in Europe to strengthening the “industrial compact” and to concrete measures both to create a more favourable climate for business (i.e. less bureaucracy, greater transparency and efficiency in order to combat alarming levels of corruption, fiscal and justice reforms, and so on) and to stimulate investment (with a much needed helping hand from Mario Draghi and the ECB, which again cut rates and gave banks great support in the form of liquidity so long as that liquidity goes to small and medium enterprise). How exactly? Such as by providing new  funding to the “Sabatini” law, which grants subsidised lending to renovate plant and machinery, in addition to the 2.5 billion already earmarked for 2014.

Actually, some good news has come from the numbers on this Sabatini law to offset this decline in industrial production: some 3,000 business owners have submitted requests to invest in new machinery to renovate their businesses through more advanced, safer and more productive equipment. “It’s the end of the moratorium on investment,” noted Dario Di Vico in Corriere della Sera (on 7 June).

“New investment is necessary,” said Gian Maria Gros-Pietro, a respected economist, “because demand is starting to grow again, both domestically and internationally, and we need to be ready to respond.”

The Italian association of manufacturers of machine tools and robotics, UCIMU, has confirmed the boom in orders seen in recent months, so, in addition to heeding the warnings regarding the economic and social cost of the ongoing crisis, it is also worth making note of the modest signs of recovery in manufacturing, particularly in the more industrialised areas of Italy, such and the northeast, northwest and the great manufacturing platform of the Emilia region, signs in which we can also hear the echo of the annual meetings of Confindustria’s regional branches, such as the general meeting of Assolombarda in Milan (held in the greatly symbolic Pirelli HangarBicocca, once a site of manufacturing, now a factory for contemporary art), where a great deal of emphasis was placed on the key role of “medium tech” and of “additive manufacturing” and on the virtuous relationship between entrepreneurship, innovation, training, lawfulness, competitiveness and internationalism, or the one in Varese, where the association’s members are convinced of the importance of the hi-tech industry and the need for radical change in the organisation of production in order to take full advantage of the opportunities in manufacturing being provided by 3D printing.

Important encouragement has also come from the Young Industrialists, who met for their traditional early-summer conference in Santa Margherita. “New industrial humanism,” said their chairman, Marco Gay, when speaking of the central importance of manufacturing, the knowledge economy, a culture based on merit, and leaving room for the younger generations (and of a commitment to combat corruption and the delocalisation of businesses in search of lower costs of labour). “Italy is a leader in product innovation in 100 industries,” he added, and there is a significant number of businesses that are now beginning to bring their production back to Italy in search of quality, an initial flow of reshoring that is to be promoted through a sort of “industrial shield” and fiscal incentives in order to strengthen the bond between legitimately earned profits and their territory of origin.

So we are reacting to the crisis. Italian industry is certainly struggling, but it remains highly vibrant, and we are seeing real signs of efforts to combat the decline.

There is a future for manufacturing, even for small-scale manufacturing, particularly when it’s young people leading the way, revelling in being entrepreneurs and in that special spirit that drives any enterprise worthy of its name.  To that end, some encouraging ideas have recently come out of a study by Censis and Confartigianato regarding the approach of young people towards small-scale manufacturing. Recently presented in Rome, “Giovani, artigianato, scuola” (Youth, craftsmanship, school) is an important work that helps better understand the potential future of a sector of fundamental importance for Italy’s economy as a whole and one in which entrepreneurs can find new outlets for their creativity.

But perhaps what is of greatest importance is the approach that young people are showing towards the entrepreneur as a positive force in the economy and, above all, as a person of talent (as defined by 53% of those surveyed) who knows how to take risks (over 45% of those surveyed). For 38% of young people interviewed, the entrepreneur is someone who has lots of financial resources, as well as talent, ability and a spirit of initiative, traits that prevailed over other more negative or random aspects such as: luck (15%), a lack of scruples (7%), and taking advantage of the work of others (6%). Of those surveyed, 11% have a highly positive view of the entrepreneur, seeing the role as an individual who creates wealth for society as a whole, and if it’s true that the essence of manufacturing lies in the creativity and the drive to create, this study has other important numbers to offer. On the one hand, 80% of the young people surveyed are excited about the world of small-scale manufacturing; however, less than 18% expressed an interest in starting their own business, and 28% feel that striking out on their own is too risky. For many, their future lies elsewhere, not in small-scale manufacturing.

Certain accusations have been directed at schools. When asked to assess the usefulness of their education in entering the job market, only 44% of the students surveyed expressed a positive opinion. The majority was particularly critical of the lack of specialisation in their education and of its inadequacy in terms of the real needs of the job market.

But the key point is that their remains a certain focus on manufacturing – and on small-scale manufacturing in particular – and on entrepreneurship and on that special spirit that drives in forward even in the challenging times of this digital age. The Censis study is a work that everyone should read very carefully.

Giovani, artigianato, scuola

CENSIS

May 2014

Restore a central role to the real economy and stake on companies and industry in order to restart the Italian growth machine. On two consecutive days last week clear signals were given out by the general assembly of Confindustria and the annual report of the governor of the Bank of Italy. Ignazio Visco, the governor, claimed “more credit for companies” in a report focusing more on investments and leverage for development and work than the need, although confirmed, for balancing public accounts (a neo-Keynesian strategy, according to some observers, far from the austerity-type ideological obsession which has caused so much damage to economic and social situations in the whole of Europe). As well as greater commitment by entrepreneurs towards investing, recapitalising their companies, putting their capital not in home finances but towards the support of production. More capital, in other words, and more loans, greater commitment by shareholders and more credit. A virtuous circle of development and an actual turnaround, therefore, with respect to the financialisation of the economy which had regrettably held court throughout the 1990s and the early part of this century, up to the time of the financial crisis. Bankitalia has sent out a call for co-responsibility of entrepreneurs, to end the chapter of the “poor monastery with rich monks”, a strong and authoritative call for a corporate culture focused on profit but with a long-term view and in a context of responsibility and sustainability, innovation and focus on productivity and competitiveness.

Visco warns that companies must do more in order to bring about radical renewal of the way of producing with respect to the digital revolution, able to generate new forms of business and employment in new areas of activity. Similar concepts were used by the chairman of Confindustria, Giorgio Squinzi, at the assembly of the organisation (engaged moreover in a radical reform, developed by the committee chaired by Carlo Pesenti, to improve its ability to represent business people and their needs and efficiency of services for the same member companies. In this case too a choice of innovation of corporate culture). “We still do too little”, said Squinzi, “for the recovery of productivity, for investments in research and digital technology and new activities with high added value, rich and unexplored areas of growth”. Therefore a favourable environment is needed for investments by Italian and international companies, creating the right climate and demolishing bureaucratic restraints, with reforms of the public administration (including proper laws against corruption and illegality), of taxation and civil justice (the exasperating judicial periods of time for recovering unpaid debts is one of the causes of the slowdown in investments). Legality, efficiency and development. It is definitely no coincidence that both Visco and Squinzi had very clear things to say about the fight against corruption and distortions within the administration and awarding of contracts.

The recovery underway, after years of crisis and still current risks of stagnation, is very fragile. It needs cooperation from all players. Bankitalia and Confindustria have made a move towards credit and renewal. Interesting signals are also coming from the Renzi government, in order to give strength to small and medium-sized firms, exports and research. At the assembly of Confindustria the minister for economic development, Federica Guidi, (who moreover came from this background) relaunched the themes of profit (as an essential condition for the life of companies, investments, the creation of wealth and work) and the pivotal nature of a word apparently fallen into misuse – “factory”. An Italy of factories, innovative and competitive, an Italy of quality manufacturing, suitable for gaining larger spaces on international markets and guaranteeing, in the medium term, qualified employment for the new generations.

Europe should also take action as part of this growth strategy. With the BCE leadership Mario Draghi has developed a strategy aiming at increasing credit for companies and encouraging development in European countries through the dual leverage of low interest rates and supply of liquidity. Good choices but more is needed: a strategy of an actual industrial compact which gives substance to investments and specific work according to the order from the EU to bring in a short time to 20% the proportion of manufacturing within the GDP (it currently standards at 15%, 23% in Germany and Italy which has dropped to 16% after the recession, having lost a fourth of its manufacturing capacity).

The term of Italian presidency of the EU can play a major role in this direction: strongly urging policies of innovation, investment, development with the support of France, Spain and Portugal and also close attention from Germany, aware that nothing good for the Germans can come of low growth in Europe. A political opportunity to be grasped in full.

Modern industry also has to take account of the so-called Big Bang Disruption, the devastation of innovation which basically stems from digital technologies and the consequent acceleration of production and commercial processes. Nothing to do with standard R&D, but something more and, more importantly, much more powerful. Something which does not appear only as a technical or management question but also and above all a cultural one. The product of latest technologies, the Big Bang Disruption implies a derailing in the actual idea of factory, production and labour, as well as sales. According to some this is a challenge which allows no draws – you either win or lose and close down.

In order to understand this new world of production better, the latest work by Larry Downes and Paul Nunes, recently translated into Italian, can be a good guide, also from the management standpoint. 

The book starts off with an observation: it has taken years, even decades, for disruptive innovations to throw out prevailing services and products. Today instead any sector can be practically devastated in one night by a better and more economical competitor. If we think that, until a short time ago, hotels, doctors and energy suppliers had little to fear from the digital revolution. Now, according to the two researchers, this is no longer the case and software-based products are replacing material goods. 

In Big Bang Disruption the two authors analyse therefore the origins, economic aspects and anatomy of this phenomenon. They also isolate four key phases of the new life cycle of innovation, which can help to identify in good time the potential disruptors. This produces twelve rules for defending corporate markets, launching new disruptors and, if necessary, changing the market fast before seeing the company wiped out. Big Bang Disruption is not, it has to be said, a book aiming at creating a sensation but the result of research carried out by the Accenture Institute for High Performance and in-depth interviews with businessmen, investors and managers in over thirty sectors.

The opening to the book is impressive and striking, giving an immediate understanding of the extent of the phenomenon. “Address books, video cameras, pagers, wristwatches, maps, books, travel games, flashlights, home telephones, dictation recorders, cash registers, Walkmen, Day-Timers, alarm clocks, answering machines, yellow pages, wallets, keys, phrase books, transistor radios, personal digital assistants, dashboard navigation systems, remote controls, airline ticket counters, newspapers and magazines, directory assistance, travel and insurance agents, restaurant guides and pocket calculators. What do all these products have in common? They have been or are becoming victims of big bang disruption”. An almost apocalyptical image which however must be understood fully. The work by Downes and Nunes serves this purpose. Above all because, in the end, it references the universal conditions of good business culture: the capacity for innovation, the perception of the entrepreneur and the skills of the work force.

Big Bang disruption. L’era dell’innovazione devastante

Larry Downes, Paul Nunes

Egea, May 2014 

Big Bang Disruption

Larry Downes, Paul Nunes

Viking Adult, January 2014

Companies are made up of people primarily rather than machines. A comment which may seem banal but which in actual fact implies something very specific: full knowledge of accounting and management methods is not enough for a real understanding of a company. It takes much more. Humanities and social sciences, grouped together under a single umbrella, are also required. History, psychology, anthropology and sociology, just to give a few examples. All these disciplines have something to contribute to the understanding of the mechanisms whereby companies are born, grow, live and, very often in certain circumstances, die.

This moreover is inevitable given that mankind, in every period of history, has made “production” a fundamental part of human life. Corporate culture, in other words, is true culture and therefore can also been seen with the tools of those who actually study culture in the field.

Those rare occasions when it is possible to grasp a collective understanding of how much social sciences can tell us about companies are therefore important.

This is the case with edition 3 (1) spring 2014 of the Journal of Business Anthropology, a sort of special edition containing a set of history and anthropology treatises on the theme of business.

Opinions: Business History and Anthropology is a sort of container of snapshots capturing a moment in complex corporate or business life from an unusual standpoint. Consideration is therefore taken of corporate practices, the changes in business with respect to markets and production technologies and the historical and anthropological interpretation of the legal aspects of corporate management. All this in order to succeed in defining how anthropology and history give a better understanding of the working of modern-day companies and, above all, the nature of human behaviour inside them, with tools other than the classic balance sheets but instead those, equally classic yet decidedly unusual for modern companies, of research in the field of anthropology. The study of a corporate set-up from the legal and anthropological viewpoint is interesting, as also the indications which emerge from application of the categories of analysis of a company taken from social sciences and which are normally applied to other situations and not production.

The authors are some of the most notable exponents of anthropology and history from US and European research centres: from Harvard to the Johns Hopkins University, the École Polytechnique in Paris to the Copenhagen Business School and many others.

The Journal of Business Anthropology thus reaches an important objective: in just over 70 pages it sums up a sort of compendium in stages, a travel guide for discovering business people and producers.

Opinions: Business History and Anthropology

Various Authors

Journal of Business Anthropology, 3(1), Spring 2014

The Pirelli Foundation has just started selecting candidates for the “Human Time: Work and Beyond” project. The skills and aptitude of each candidate will be assessed in preliminary meetings, with a view to organising the educational workshops which will be starting up at about the same time as the academic year (September-October 2014).

The workshops are designed for children and young people aged from 6 to 14 and will tackle a range of subjects, of different levels of complexity. Right now it is thus essential to identify those who are best suited to assist the Education Department of the Pirelli Foundation in the various workshops in its programme.

The training phase will start in September, when the selection meetings have come to an end. Those candidates who are selected will be provided with all the information and instruments they need to take part and to make their own contribution to the workshops with the kids. The first “field tests” are planned for October.

For further information, please write to senior@fondazionepirelli.org

Discrimination of any kind, whether on the grounds of race, gender, religion or nationality, is unjust. It violates the person’s fundamental human rights. But it is also economically irrational. Non-discrimination and recognition of the value of diversity not only benefits society, but also the economy. Greater integration increases competitiveness. This is the message of Gary S. Becker, winner of the Nobel Prize for Economics in 1992, “for having extended the domain of microeconomic analysis to a wide range of human behaviour and interaction, including nonmarket behaviour”. Becker was the first to try and really analyze and explain the value of human capital.

We would do well to remember Becker, who died recently (3 May 2014) at a time when Europe— following elections to the new European Parliament—the USA and other major democratic, advanced economies are looking around for radical new ideas and rules to put the crisis behind us and achieve lasting economic growth based on a more balanced, environmentally sustainable society that can generate widespread wellbeing, jobs and prosperity.

In other works, better development. How is this to be done? Partly by building a “generous society” (the title of a fine book by Pier Mario Vello and Martina Reolon for Feltrinelli-Life, on an economy focused on “living together”, and a form of benevolent competition that is faithful to the Latin root cum petere – to strive together). A society based on inclusiveness and not on discrimination, and a virtuous relationship between identity and difference. As Luigi Ruggio and Francesco Mora point out in Identità, differenze, conflitti, Mimesis, 2007: “The relationship between identity and difference is absolutely central to the life of peoples and individuals… Without identity there can be no community, but without difference, identity is hollow.”

Which this bring us back to the lesson of Becker. A liberal scholar mindful of the moral philosophy of Adam Smith (“mutual sympathy”) and the teachings of John Maynard Keynes, Becker explored the connections between enterprise, work, rights and economic growth, recognizing Smith’s “utility” as indispensable to the workings of the market economy, combined with a profoundly moral view of a more just society.

Becker’s early Ph.D. thesis examined discrimination as a cost to the perpetrator (Luigi Zingales in IlSole24Ore – 6 May). This was a highly original and provocative point of view. We are all aware of the burden of discrimination on the victim (little or no work, low wages, bad working conditions, poor career prospects). But Becker was interested in trying to explain to those whose lives, work and investments are guided by the pursuit of profit, that discrimination doesn’t pay. On the contrary, discrimination prevents firms from hiring the best resources, stifles human capital, and hinders competitiveness. If firms which discriminate suffer no cost, adds Becker, there is no economic limit to discrimination. But this only happens in an absence of competition. Instead the market (open and well regulated, of course, not a monopoly or an oligopoly or economies with a high degree of protectionism) is competitive. And the most successful are those companies which do not discriminate (e.g. against blacks, women, etc.) but choose and develop the best. Firms which discriminate, in a market economy, fail to act in their own best interests.

Of course Becker’s insight is backed up with scientific evidence and data, hence the Nobel Prize. And experience and later studies have shown that the opening up of the U.S. banking industry to competition has increased the quota of women in top jobs, with salaries closer to those of men, to the benefit of all. “If discrimination against women is still so widespread in Italy, it is because our markets are uncompetitive,” argues Zingales, echoing Becker’s moral and economic teachings.

We should bear this in mind in Europe and in Italy, where the presence of women in influential positions in business and politics is on the rise but has not yet reached an equitable level. This above all at a time when we still haven’t solved the serious questions of integration and discrimination, evidenced by the sporadic winds of xenophobia that still blow through Europe. Discrimination is unjust. What’s more it doesn’t pay. Development can only be achieved in an open, inclusive society that is able to adopt intelligent and farsighted laws to this end. Firms across the world who pursue dialogue and a healthy integration of diversity are more successful and can lead the way for others. Becker’s teachings are just as relevant today.

We know that true entrepreneurs are not like everybody else. They have courage and invention, daring. They take calculated risks, they thrill us and surprise us. They go beyond accepted conventions, create new ones and destroy them. They appear to act illogically, but in reality they live and work according to their won logic. There are not very many of them. Nor are there only a few, otherwise the economy would be very different. It has always been important to understand how they think, and today more than ever, in a period of economic crisis, when firms need to come up with new ideas to survive. 

Luc de Brabandere and Alan Iny (from Boston Consulting Group), have produced a book that explains how the entrepreneur thinks and, above all, how to invent something new keeping your feet on the ground. 

Thinking in New Boxes is about a new way of understanding the firm, how it works, its creativity, its cultural transformations. In around 260 pages the book explains that business management and creativity are rooted in pragmatism and the “freedom to have new ideas”. The chapter titles themselves outline the main themes: doubt everything, explore, diverge, converge, reevaluate. These are the five steps that the entrepreneur or company executive must take to come up with alternative solutions. Taken one by one, these steps will change the way we think about managing production and markets. 

The book gives a lovely example. When BIC invented the ballpoint pen it became a leading pen manufacturer. When it was looking to grow further someone suggested lighters. At first the idea seemed crazy. BIC made pens – what had that got to do with lighters? But once we think of BIC as a producer of cheap disposable objects, the idea doesn’t seem so absurd. And so it proved. Now BIC is a leader in disposable lighters, razors, and other items. The crucial move was to step outside the box of possibilities to free yourself of restraints to thinking. “Our brains pull us toward the familiar…. Relying on your existing boxes to simplify the infinite unknown is useful, indeed, unavoidable, but relying too heavily, or for too long, on any mental model can lead you to miss exciting opportunities. It can prevent you from seeing critical “breaks in the fences”, state the authors. 

Change is the basis of everything. But it has to be done wisely and with awareness. Because not everything that is new is also useful. De Brabandere and Iny point the way towards reaching this goal. 

Thinking in New Boxes

Luc de Brabandere, Alain Iny

Egea, 2014