Family and business. These two words describe Italy’s economy and still apply today, even in this season in which new rules of international competition are at play, calling for radical transformations in production, organisation and management. Of the 7,000 Italian firms earning over 50 million in total revenues, 4,000 are family owned, and the families of the founders control a great many of the 4,600 medium to large-scale manufacturers surveyed each year by Mediobanca and Unioncamere, which represent the core of Italy’s production system. These “pocket-sized” multinationals, those that innovate the most, exporting and investing abroad, have made Italy the second largest European manufacturer behind Germany and are the heart of Italy’s “fourth capitalism” (after the first industrial revolution, the second capitalism of the publicly owned corporations such as IRI and Eni, and third represented by the multitude of “small but beautiful” businesses which, fortunately, evolved into manufacturing districts and value chains).

The challenge faced by these family-run businesses now is that of change, while bringing together in original ways the ownership of the founders’ heirs (with many businesses being in the hands of the third generation) and management by outsiders, control through shareholdings and openness to new shareholders (listing on the stock market or investment by corporate banks and investment funds to finance growth), keeping ties with the company’s hometown (with roots to an organization’s local community being particularly strong in northern Italy and in many parts of central Italy) and international expansion, continuity in values and changing in response to the input from new cultures. These are complex issues that call for a new, flexible culture of enterprise centred around a link between past and future and based on an open, mobile identity that is able to take on the necessary contamination from the outside without losing site of the original values.

And how can this be achieved? This was discussed at length in September during a conference of the Aspen Institute Italia dedicated to the topic of “family businesses for responsible development”, which was held at the Vicenza headquarters of Zambon, an innovative multinational pharmaceuticals firm (featuring high-tech excellence in an elegant workplace designed by Michele De Lucchi) lead by Elena Zambon, the granddaughter of the company’s founder, Gaetano Zambon, and who is a keen believer in one of the organisation’s founding principles of both operations and social responsibility: “An economically free (capitalist) society can be morally acceptable only if individual wealth becomes collective wellbeing through the creation of the means of production, facts, jobs and opportunity for others. Any honest businessman should act this way.”

In other words, family can be a source of business values and of business ethics that drive growth in a socially responsible direction. A “multiform capitalism”, according to the Aspen Institute, one that concretely demonstrates its particular approach to combating the crisis. Since 2008, family businesses have grown more rapidly than other businesses, in terms of both revenues and workforce, thereby proving to be vibrant and able to adapt when needed.

And for the future? The basic idea is that of an open approach – open to partnerships with other firms (with original forms of value and supply chains, of consortia and other associations in order to make headway into international markets where size is key), to creating a new form of governance that selects and rewards managers based on merit, all the way up to the CEO, rather than on ties to the family, and to new shareholders so as to have the resources needed to grow, through acquisitions, into more dynamic markets.

Of course, the road forward is not an easy one, as fraught as it is with implications that are not purely financial, but also psychological, affective and historical, made up of contrast and contradiction, but it is a road that must be followed, led by the best organisations that have already begun. To remain vibrant, Italy’s family-run capitalism must avoid the traps of pure familism and continue to show that the primary concern of the family is the development of the business.

Teamwork, goals, motivation, mission. Or market, profit, environment. Increasingly, doing business, producing a product and growing, not to mention beating the competition and improving the bottom line, are concepts that are placed in relation to others – those that range from teamwork to working towards goals or being motivated to grow – concepts that are often overused and just as often misunderstood. But of course, in today’s complex landscape, working well and moving forward can be complicated, difficult and risky. 

It takes “thought leadership”, which is not easy to find or to master, but which lays the groundwork for marketing and inspires the culture from which a business acts and establishes its presence in the marketplace. And this is also the road that leads to the achievement of new goals. But what exactly is thought leadership? And why are so many of the world’s leading corporations investing so much on this concept?

With over 30 years of experience, Laurie Young takes a close look at the subject in here book “Thought Leadership: Prompting Businesses to Think and Learn”, which was recently published by Kogan Page (and is also available in digital format). The work has two key strengths. First, Laurie Young begins by clearly presenting the theory underlying the topic and illustrates all of its many facets through case studies of real organisations around the world. In the over 300 pages of this book, we encounter names such as IBM, Deloitte, Allen & Overy, Fairtrade, Philips and Unilever. But that’s not all. Young also based her work on over 50 interviews with some of the most prominent managers around. 

The result is a book to be read from cover to cover, one that is dense with stories of both companies and individuals, while also providing tools and approaches of marketing and operations to be learned and used.

Thought Leadership: Prompting Businesses to Think and Learn 

Laurie Young

Kogan Page, October 2013 

How do Japanese business work? What sort of culture underlies their success? Answering these questions could be important, particularly for business outside of Japan and especially if we are then able to compare Japanese culture with that of the West.

Exploring Japanese culture of enterprise is no easy task. We must first understand at least a little of how the Japanese see the world. This is what Ruth Wolf, out of Bar-Ilan University in Ramat Gan (Israel), sought to do in her article entitled “Management Relations in the Work Culture in Japan as Compared to that of the West”, a study of Japanese firms that was recently published in the Innovative Journal of Business Management.

Wolf looked specifically at ICT firms in the country, but both her method of analysis and the results of her study may be applied to all businesses. Emphasis is placed on the particular management relations that come from an ancient tradition in which work is seen as a privilege and not only as an obligation. But that’s not all. According to the study, one of the most important principles in Japan is the “virtue of work”, i.e. that particular set of attentions, duties and privileges that makes the job, the company and the worker a special collective to be safeguarded and developed in addition to respected.

The Japanese approach to work, Wolf notes, also entails a great deal of attention to the needs of the employee. As the study states, “A company owner or manager in Japan generally sees himself as responsible for his employee […]. This is in contrast to the American outlook, for example, which holds great consideration for the interests of the company’s shareholders in order to maximize their profits.” In short, culture and history continue to contrast on opposite sides of the ocean, including when it comes to management philosophy.

Management relations in the work culture in Japan as compared to that of the westRuth Wolf

Interdisciplinary Department of Social Sciences and Economics Department, Bar-Ilan University, Ramat Gan, IsraelInnovative

Journal of Business and Management, Vol 2, No 5 (2013)

Download pdf

Making things by hand is an ancient art. A more sophisticated approach is to use new technologies such as computers and 3D printers. Some, such as Aldo Bonomi, an Italian sociologist who studies the more innovative aspects of the culture of enterprise, would say it’s a question of craftsmen versus “smanettoni” (loosely translated: “computer geeks”). Had he been speaking in English, he might have used the term “makers”. The future of Italian industry may lie right here, in saving, rebuilding and re-launching craftsmanship through technology, whether in be in mechanics or fashion, interior design or ceramics, construction or cuisine – in other words, in all of those industries in which Italian tradition and modernity come together in a unique synthesis of past and future and where a culture of enterprise based on know-how, doing good and creating wealth can thrive.

So a sort of incubator, a workshop  brought to life by a collection of digital devices. A journey through the “open-source” world of new technologies to design a piece of furniture or a mechanical component and then produce it using a what is known as a “3D printer”, able to create one-of-a-kind, custom pieces or limited series of products. It’s a technology that could radically transform both the production of consumer products and even the most sophisticated supply chains in their entirety. And here in Italy, where innovation is traditionally adaptation and where there is a culture of quality, creativity and versatility (not to mention design), this new form of enterprise may find fertile ground in which to flourish, thereby making a key contribution to the recovery of productivity and competitiveness in Italian industry.

Brunello Cucinelli, a dynamic fashion magnate, summed it up brilliantly by emphasising craftsmanship and the goods we make and their importance in growth and the quality of living. Why? Because the works of the ironsmith or the glassblower, terracotta and fabric, and the workshops of other craftsmen have, for centuries, been the backbone of Italy. Behind every handcrafted product we see that typically Italian lifestyle that is famous throughout the world, Cucinelli says. And it’s not just nostalgia. In a few years, the modern-day craftsman will be seen as a master of his trade. Talented craftsmen, he says, will be the engineers of the future, but for this to happen we need to give them back their financial dignity. A craftsman deserves the wage of an engineer.

This rediscovery of craftsmanship is the result of a broader cultural trend, one which starts from an acknowledgement of crisis of the “paper economy”, of the extreme financialisation of the end of the 20th century and the start of this century, and of the importance of getting back to manufacturing and to the real economy. In 2008, just as we were seeing the first cracks in the giant financial pyramids of derivatives and the economy based on the illusion of speculation and chains of debt was wearing thin, one of the greats of American sociology, Richard Sennett, published “The Craftsman” (published in the UK by Penguin), a seminal work that marked a return to the material and moral importance of manufacturing by reassessing labour and connecting it with the opportunities made possible by new technology. Old and new brought together by hand and mind, technique and  creativity. “Today’s craft workshop is the small business,” says Sennett.

“Futuro artigiano” (Loosely translated: “A future of craftsmen”), by Stefano Michilli, is a nice book that explains how innovation is in the hands of Italians and, placing particular emphasis on the experience of the Italian northeast, identifies the keys to recovery for Italian manufacturing. Tradition and innovation (in the world of craftsmanship) and an ability to adapt to change and interpret new trends with creativity and quality. Manufacturing for the 21st century.

An enterprise is an adventure that transforms the world, even during the hardest of times and even when it may not seem like it, so long as the concept of enterprise and its execution are carried out by good people. When this happens, the enterprise is progress, and this then becomes an integrated part of the culture of the enterprise itself. 

But first we need to be sure we understand what we mean by progress – how it comes about, how it develops, and what roads we follow when putting it into practice in companies, in society and in science. 

“The Beginning of Infinity. Explanations that Transform the World”, by David Deutsch, is just what we need in order to unravel such a complex topic that overlaps many fields, from the economy and science to philosophy and society, and encompassing astronomy, artificial intelligence, creativity, the theory of decision-making and much more. The father of quantum computing and currently with Oxford University’s Clarendon Laboratory, Deutsch manages to cover topics both abstract and concrete with the ease of one who has command of many fields of knowledge. 

In regard to decision-making, which is of such great importance in business, Deutsch offers up a fascinating approach. “It is a mistake,” he writes, “to conceive of choice and decision-making as a process of selecting from existing options according to a fixed formula. That omits the most important element of decision-making, namely the creation of new options.” So imagination, creativity, moments of genius, and entrepreneurial inspiration.

It is a way of facing the need to choose – whether it be an organisation or an individual – that goes hand in hand with the overall sense we get as we read this book, that feeling of certainty that progress doesn’t have to end and that, underneath it all, lie the efforts of the individual who tends to grow by looking for “good explanations” in order to face challenges and difficulties in a positive manner.

The quest for new paths, for creativity, inventiveness, and a spirit of initiative. In Deutsch’s view, these are some of the things that lead to progress and something to keep in mind for anyone looking to turn a business into a true enterprise.

The Beginning of Infinity. Explanations that Transform the World

David Deutsch

Penguin, 2012

Image matters and it always has, but that has never been more true than it is today. This also goes for corporations as they find themselves forced to convey an image that reflects their culture and conveys their approach to product production and to the marketplace. Of course, the image that a company puts out is not the company itself, but it does come quite close. It reflects its corporate culture and is a window through which we can get a glimpse of its content.

This is also, and above all, true when as an organisation begins to approach the more social significance of its business. Corporate social responsibility is now a crucial factor, and this image and the manner in which it is conveyed is key.

Indeed, both the concept and the practice of the socially responsible enterprise can be examined and understood through the image that the organisation gives, including with the help of a few modern tools.

This is what Rachel Lim has sought to do for her Master of Arts thesis at the University of Texas at Austin, which is based on an assumption: observing how corporations build their image of social responsibility online can be an important means of better understanding the very nature of today’s culture of enterprise, as well as the meaning management wants to give to their company’s image and the values that underlie it.

The work begins with an examination of the theory behind the image of corporate social responsibility and then builds a model that, based on the organisation’s web sites, examines the conduct of the organisation along with other parameters such as ideology, operational aspects and social aspects in the relations that businesses create with the company. All of this is applied to the Fortune Global 500 corporations, and what emerges is a kaleidoscope of approaches to conveying corporate social responsibility via the Internet. As Rachel Lim explains, “These distinctive CSR approaches reflect the public’s needs and the local cultures of diverse countries.” She also states that the more or less evident involvement of stakeholders and the cultural nature of how they are managed also have a significant influence.

In other words, image and product expressed in an endless variety of ways depending on the culture found within each organisation.

Building a socially responsible image  in the homepage of the Fortune Global 500 companies 

Rachel Lim

Faculty of the Graduate School of The University of Texas at Austin.

Master of Arts Degree, August 2013

What is an archive? How do you make a tyre? How do you make an advertisement? What is corporate cinema? How did they illustrate stories back in 1400?

These are just some of the questions that will find answers in the free creative course devised by the Pirelli Foundation for the 2013-2014 school year for primary school children and lower- and upper-secondary school children.

The educational department of the Pirelli Foundation has set up the “Pirelli Foundation Educational” programme, the main purpose of which is to introduce young people to the world of production and work. The proposed activities cover a variety of subjects, from the history and technology of tyres to graphics and advertising, urban transformation, and corporate cinema, starting from the wealth of historical and documentary evidence preserved in the Pirelli Historical Archive.

The creative courses each last about 3 hours and are divided into a theoretical part, which involves the use of multimedia instruments, and a more specifically workshop section. Some of the courses will also include a visit to the Pirelli Historical Archive, to the fifteenth-century Villa della Bicocca degli Arcimboldi and to the R&D laboratories in the Pirelli area.

Participants can take part in the Foundation’s activities every day from Monday to Friday, from 9 a.m. to 5 p.m., depending on the requirements of each individual school.

You can download the creative courses from the “Related Content” page.

For more information and to enrol, please write to:

scuole@fondazionepirelli.org

Phone: +39 – 0264423971

What is new this year is the close collaboration with HangarBicocca, the space devoted to the production and display of contemporary art, of which Pirelli is a founding partner and promoter. From the HangarBicocca website you can download the HB School programme and all the information you need in order to take part.

Amidst the numbers and charts of a test report from 1937 – preserved in the Pirelli Historical Archives – you’ll find the story of the Pirelli MotoCord tyres that set the land speed record that year on Taruffi’s Gilera Rondine.

Mr V*, an engineer, put down the phone and took a moment to think. On the other end, Piero Taruffi had been categorical: the land speed record “had to” be set. He needed it, both for himself and for the good name of Gilera. The motorcycle, a Rondine 500, was ready. Taruffi had given it a special aerodynamic fairing to be able to draw maximum performance out of the engine, but, being an engineer himself as well as a famed racing driver, he knew that a great deal would also depend on the tyres. So this is what he had said on the phone to Mr V*, then the head of Office B for Pirelli’s Tyre Engineering department: “I’m sure your striped MotoCord is just what we need. I just think that the rear tyre should be looked at again and widened, don’t you think?”.

Taruffi was right. It all came down to the width of the rear tyre, because 80-plus horsepower isn’t easy to transfer to the road. Mr V* got up and went to the file where he kept the specs for the test tyres. There it was, dated 8 June 1937, just a few months ago. “Rigato Ultraleggero” (striped ultralight), tread pattern number 1134, size 3.75 by 19. They had managed to make an excellent rear tyre, but it may still have been a bit too narrow for the power and speed of the Rondine. So Mr V* took a clean sheet of paper and started jotting down some numbers. He reran the calculations, increased the widths by a few millimetres, and designed a new profile for the tread. He checked it all again. Alongside the phrase “Copertura speciale da primati” (special record-breaking tyre), he added his initials and sent it all to the factory where those record-breaking tyres would be produced the next day. It was 5 October 1937.

On 21 October, along the Brescia-Bergamo stretch of motorway, Piero Taruffi’s Gilera Rondine covered the flying kilometre in just 13.13 seconds at a record-breaking speed of 274.481 km/h. We don’t know if Mr V* was among the group of people on hand for the undertaking, and the photos taken at the time can’t tell us, but those MotoCord tyres “designed” by V* on that afternoon of 5 October were most certainly there, and they once again did their job to perfection.

As competitiveness in Italy falters, there are two numbers on which we should reflect: the ratios of investments in education and research to GDP, both of which are below European averages. This has serious consequences both for the Italian economy as a whole and for Italian businesses specifically, as they are forced to combat international competition in an environment in which human capital and ‘innovation capital’ are playing increasingly important roles. Here are the numbers: for education, we are spending just 4.7% of GDP, as compared to an average of 6.3% for all OECD countries; for research, a paltry 1%. Looking more closely at the OECD figures, we see that Italy has slipped to next-to-last place (31st out of 32 countries) in education spending at just 9% of total public investment, compared to the OECD average of 13%. University graduates are on the rise at 15% of the population, but this is just half of the OECD average (of 31%). If look at the 25-34 age range specifically, the generation which is now entering the workforce and becoming a part of the human capital that will be faced with the coming challenges of growth, university graduates account for just 21% of the population, compared to 39% on average for the OECD. Above all, we are lacking the skills most sought after by businesses, i.e. the engineering, economics and science degrees (not to mention the fact that many of the best and brightest take their talents abroad to find better work and living conditions). Italy is also lacking in degrees in the humanities, which could be of interest both in industry and in the service sector (in-house counsel, sociologists in tune with changes in the workplace, philosophers able to decrypt the complexity of social processes, changes in the marketplace, and the expectations of consumers and manufacturers). They are numbers that point to shortfalls in education both in quantitative and qualitative terms (although there are many important exceptions).

Things are a bit better when it comes to the female population, with women continuing to make inroads. In 2012, one out of four women had a university degree (59%), as compared to one out of six for the men, and this is in line with the OECD average. Italy is also in second place in the number of women with science degrees (52%) and has one of the highest percentages of engineering degrees in the OECD (33%), which is a direction to pursue with greater conviction and one where significant progress is already being made within the leading Italian universities. At the Milan Polytechnic, for example, female graduates accounted for 20.6% of all graduating students in 2008, and today they’ve reached 23.9%.

A recent headline in La Stampa (27 September) read “More technology and more women for the recovery” for an article about the meeting between Fiat chairman John Elkann, the managing director of Luxottica, Andrea Guerra, and a group of female researchers and managers, from the newly elected senator Elena Cattaneo to several female engineers from Pirelli, Telecom, the Milan Polytechnic and so on, all brought together by the association “Valore D” (which promotes female leadership in business). The Italian Education Minister, Maria Chiara Carrozza, pointed to the importance of this and to the outlook for the future, saying, “Italy’s decline is not irreversible, and taking care of the contribution of women is the first step to take on the road forward.”

What is needed is more education, greater public and private-sector investment in research and development, greater attention to rewarding talent, beginning with the contribution of women – the engineers we spoke of earlier, but also, of course, of anyone able to provide her own unique contribution within her own context to education and training, attitudes and a capacity to translate that “intelligence of the heart” that is so innately female in whole new ways – all of which will have a positive impact on business and on the number of women who choose a career in the world of science and within organisations with a keen eye for new technologies and for innovation in general. In fact, 66% of women find a job within a year of receiving an engineering degree, and 91% are employed within five years. So it’s a path that we should continue to pursue.

It’s not your typical nice story of Italian firms winning in the marketplace despite all odds, but is rather the tale of the many Italian companies that, when faced with the crisis, were able to react and race towards growth. “Lepri che vincono la crisi: storie di aziende (quasi medie) vincenti nei mercati globali (Nordest Europa)” (Hares beating the crisis: stories of (almost mid-sized) firms succeeding in the global marketplace (northeast Europe)) is a book of two parts, written by Paolo Gubitta, Alessandra Tognazzo and Saverio Dave Favaron. The authors begin with a detailed analysis of the financial performance of 1,548 Italian manufacturers which, on the eve of the crisis, had posted revenues of between 10 and 12.9 million euros, and the study looks at their financials from 2004 to 2010 in order to determine why certain businesses continued, unperturbed, to churn out positive numbers while the rest of the market crumbled around them. The work then moves on to an in-depth reconstruction of three case studies (Gervasoni in Udine, Terruzzi Fercalx in Bergamo, and Andrea Montelpare in Fermo) and how these three businesses continued to grow, telling the tale of how the art of manufacturing and strategic intuition came together with forward thinking and a sense of responsibility typical of the Italian family-run business.

What emerges is a portrait of three “hares of business”, scurrying along not to escape from Italy, but to remain here. Hares that, in their own way, show us various paths that can be followed. These companies were able to adapt their business models quickly and identify new competitive, often unexplored territories, and then started racing for them. The work of Gubitta, Tognazzo and Favaron describes the main stages of this path, the goals reached, and the road that is yet to be travelled.

Lepri che vincono la crisi: storie di aziende (quasi medie) vincenti nei mercati globali (Nordest Europa) 

Paolo Gubitta, Alessandra Tognazzo, Saverio Dave Favaron

Marsilio, 2013