Understand the crisis to figure out how to get past it. To easy task, but one which businesses are being called upon to do during these times which have been hard on us all. We are all facing the same challenges and must all make what contribution we can to overcome them. But at the heart of it all, there must be a clear understanding as to what, exactly, is happening.

Stefano Zamagni, an experienced economist with his own particular view on the economy, has once again made his contribution to shedding light on the complexities of our times. Una crisi di senso, dunque di direzione (A crisis of meaning, therefore of direction) analyses the nature of the crises that a company may experience, their causes and, above all, how to move past them. Zamagni starts with an underlying assumption that focusing the origin of wealth in finance, rather than in productivity, has had the devastating effect of amplifying the spread of the “pseudo-culture” of the activity. In other words, our current crisis, he claims, was brought about by the idea that it is speculative finance that creates much more wealth much more quickly than being productive.

And paying the price are, in part, businesses, the concept of healthy, constructive enterprise, and paying heed to the social and ethical aspects of being productive and making a profit.

Zamagni gets straight to the crux of these issues and leaves us with wise words to ponder, such as the question “Who do managers work for, the shareholders or the business itself?” In other words, who has actual control over the business? He also rejects, in no uncertain terms, the solution of “negative growth” to the problems of this crisis, explaining, “The antidote to the current model of consumerism is not negative growth, but rather a ‘civil economy’, a programme of research and a way of thinking that is typically Italian.” In short, we can get free from this quagmire by building a new economy and a different culture of enterprise from those that are currently dominant.

Una crisi di senso, dunque di direzione is a weighty, impactful tome to be read carefully if we are to become richer.

Una crisi di senso, dunque di direzione

Stefano Zamagni

Aiccon Ricerca – University of Bologna, 2012 (in Italian)

“There are more things in heaven and earth, Horatio, / Than are dreamt of in your philosophy.” These words of William Shakespeare’s Hamlet, offered to his philosopher friend, Horatio, come to mind when one thinks of the knowledge that a business owner or manager nurtures in order to face these particularly lengthy, challenging times of crisis. The words of Emil Cioran are also worth storing in our collective consciousness: “The mediocrity of a manager can be seen in the number of precise ideas he asserts with confidence.” That is an excellent barometer for measuring the quality of many we encounter in our jobs every day. In this new corporate culture that is to be recreated and redefined (and, in certain cases, created from scratch), it is essential we take heed of the words of both Hamlet and Cioran and seek out new ideas, new ways of interpreting and speaking about things, and new ways of governing unprecedented levels of complexity. In two of his recent works, Che cos’è il management (“What Is Management”, published by Mind) and Il lungo addio e altri racconti (“The Long Goodbye and other stories”, published by Metamorfosi), Pier Luigi Celli, a business manager known for his many success stories (with, for example, Olivetti, Enel, Unicredit, and Rai, where he was the general manager) and the current director general of the university LUISS in Rome, puts into question the traditional bag of managerial tricks, which are now unsuited to times that have cut into those hierarchical certainties and organisational powers governed by more “quantitative” parameters and standards of administration (i.e. the whole sub-culture obsessed with growth in volumes and not in quality),to, instead, focus on other cultures no longer based on mere authoritarian command, but on true authority in leadership, in motivating people and in developing the business. In short, a culture of values that go beyond just value as an expression of profit. We are living in controversial times made of uncertainty and change. Our vertical models have been torn down by knowledge and capabilities that prefer the horizontal (aided and abetted by the internet and other new information and communication technologies, as well as by the crumbling of out-dated social and political institutions),so managerial powers and the way businesses are organised must react to the metamorphoses and other radical revolutions that are taking place. In order to avoid “empty-suit” syndrome and the collapse of powers, organisations and functions, we must give room to new ideas and not just discount them as something that is “already known”. Ideas that look to the future, that raise questions and that are able to fit within the “crisis” and interpret both the threats and the opportunities for turning things around. A manager must be an innovator, Celli insists, one who is able to nurture and convey a passion for a challenge and for building something new. Someone with “a soul”.

Business creates value and this makes business work. Provided the person managing the business works in the right way and with foresight. On the other hand, thinking up a business capable of creating value beyond profit is not a timeless utopia. You only have to believe in it and act accordingly. There are plenty of examples.

Sixteen examples have been lined up by Vittorio Coda, Mario Minoja, Antonio Tessitore and Marco Vitale in 540 pages entitled Valori d’impresa in azione [“Corporate values in action”].

The authors have one aim: to reach out to managers of businesses to point out that value can be created beyond money and that, if successful, the balance sheets also benefit. After a theoretical analysis of the links between businesses, values and businessmen, the authors take into consideration stories of firms from the most widely varying sectors. Thus, parading one after the other, we have: Arti Grafiche Boccia, Banca Popolare di Sondrio, Calzedonia, Cassa Padana, Chiorino, Etica SGR, Gi Group, Kayser Italia, Manni, Mezzacorona, Palm, Sabaf, Sofidel, Solvay, Veronesi and Zambon. All cases featuring the ability to combine profit with other things.

An extract from the preface to the book explains more than anything else the spirit of the work. “The values in question, because they are in fact ‘in action’, are not suitable for being exploited in order to make fig leaves intended to mask improper behaviour. Nor can they be traced back to a single value (such as possibly, for example, ‘profit’ or the ‘creation of share value’ or ‘growth in size’) to which other values are systematically subordinated and to some extent sacrificed. They are therefore unrelated to those that cannot succeed in conceiving the management of a business without a goal function to be maximised or those who maintain that businesses are entities lacking in intrinsic objectives, pursuing the objectives of those who hold control of them pro tem.

Making a profit can be easier than creating true value, but it is the latter which leads the business to success. The pages by Coda, Minoja, Tessitore and Vitale tell you how.

Valori d’impresa in azione

Vittorio Coda, Mario Minoja, Antonio Tessitore and Marco Vitale

EGEA, 2012

Companies are involved in geopolitics and this has an effect on companies. In the past and in the present, and even more so in the future. It is a fact that in times of increasingly close networks, of increasingly interrelated economic and social nodes, production and business lead to constant involvement in world dynamics. This applies to all firms, even those that consider themselves to be small. Consequently the cultural system with which the company has to look beyond its boundaries also changes.

An attempt at reasoning about the links between geopolitics, companies and society has been made by Jean-Marc de Leersnyder, professor of international marketing at the HEC (l’Ecole des Hautes Etudes Commerciales) in Paris in his “Cultura d’impresa e geopolitica”, [“Corporate culture and geopolitics”], an article which in a few pages succeeds in describing effectively the powerful interweaving which has linked and still links production with the major political movements, corporations with states, decisions by entrepreneurs with those of international society.

“Geopolitics”, writes de Leersnyder, “is said to represent a privileged arena for public stakeholders (states, government organisations, international organisations) or for the stakeholders representing the non-profit sector (non-governmental organisations). In this way companies would have nothing else to do apart from undergoing the consequences of the geopolitical situation without being able to react to or influence this situation. Now companies have become some of the leading writers of geopolitics in that they maintain their own rationale with respect to world problems, so that the result of the games by the players, i.e. companies, definitely has effects and a considerable influence on the geopolitical situation”. The reality, well spotlighted by de Leersnyder, is that of a sort of coming alongside between the geopolitics of states and “corporate diplomacy”. With all the related risks and opportunities.

“There is”, de Leersnyder goes on to explain, “a single international environment. The commercial sphere is not separate from the political one. Geopolitics is the outcome of the games of all the players on the international scene”. In other words corporations and states are like two actors acting on the same stage but often with different scripts. Two different cultures which must however integrate in order not to disintegrate completely.

Cultura d’impresa e geopolitica

Jean-Marc de Leersnyder

ISTEI – Istituto di Economia d’Impresa

Università degli Studi di Milano – Bicocca

The “BES”, which stands for “Benessere Equo e Sostenibile” (Fair and Sustainable Wellbeing), is an index created by ISTAT and overseen by the respected, forward-looking economist Enrico Giovannini. It is a composite of twelve indicators that measure healthcare, education, employment, cultural and natural heritage, security, politics, and more, and the underlying idea is that we need to get past our obsession with economic growth at all costs, and so with GDP, and to learn the lesson of the Great Crisis (that came about from a series of imbalances that were feeding the financial bubble) in order to radically rethink our traditional economic paradigms of production, accumulation, distribution and consumption. It will be Italy, through ISTAT, to chair the UN statistics working group in order to define the new sustainability indicators by 2015. And in fact, despite not having the most long-lived of economic cultures, Italy already has excellent examples of this synthesis of the new culture of enterprise in production and product in many of the mid-sized and larger organizations that have already learned the lesson of the “green economy” and have used this as a tool in being more competitive and in improving relations with the local communities, with their employees and with all other stakeholders. Just a few weeks ago, here on this blog, we spoke of “PIQ” (which stands for “Prodotto Interno di Qualità”, or “quality domestic product”). Now we have this new indicator. What should a business do with the “BES” index? Manufacturers can save on energy and water, for example, and do so while following the strictest standards of safety in the workplace. Labour relations can place a great deal of emphasis on employee wellbeing (e.g. by providing a bright, pleasant and attractive workplace). And businesses can provide products that come with guarantees of safety, reliability and comfort. They can take extreme care to properly recycle and dispose of waste and promote cultural initiatives throughout the communities in which they work, so that business becomes a driver of social interests, not just a source of jobs, income and production (see, for example, the enterprise foundations). There is a whole world to be redesigned with a critical eye, one in which Italy is not, for a change, stuck in the starting blocks.

Obviously, St. Francis was no captain of industry, but his Rule does have a lot to say to businesspeople. Challenging ideas that make you think and that can lay the groundwork for a different way of running a business and of managing relations with both customers and employees. It may be that profits and the Franciscan Rule are not like the devil and holy water after all. Maybe they can go together, and not just because there are a few “good” businesspeople out there.

This is a topic that has been approached by Thomas Dienberg, professor of Theology and Spirituality, dean at Philosophisch-Theologische Hochscule Münster and, above all, a friar in the Order of Capuchin Friars Minor. His book, Economia e spiritualità. Regola francescana e cultura d’impresa (Economics & Spirituality. The Franciscan Rule and the culture of enterprise), isn’t a lengthy work, but it is profound and a definite page turner.

It begins with an observation. The Church made a significant contribution to the birth of the modern “society of organizations”, and the rules of the religious orders – from the Franciscans to the Benedictines – can be seen as an attempt to bring together the needs of governance and the desires of spirituality, the guidance of organizations and evangelical poverty. And it is this “spiritual dimension” that is increasingly being pointed to as a crucial component of our economic future and of the development of a more modern, more conscious and more responsible management of the public wellbeing, of change, of quality and of people.

In other words, and on the back of the scandals and misconduct that are popping up everywhere, we are seeing a growing desire to give meaning to our jobs, to manage business relations in a more open, honest manner, and to better govern conflict. We are looking for businesses that are innovating not only in their products, but also in their ability to restore service as a pillar of business ethics in a true and credible way.

All of this is to be found in Dienberg’s book, which opens with a general overview of the connection between economics, business and the Rule before focusing on the management of public wellbeing, the management of change, the management of quality, and the management of people.

Economia e spiritualità. Regola francescana  e cultura d’impresa

Thomas Dienberg

EDB, 2013 (Italian version)

The concept is not new. Together, we produce better and can grow more easily. Nonetheless, awareness of this principle has not yet led to the creation of the type of network of businesses that would point to a different approach to the matter or, above all, to a culture of enterprise that is able to look beyond obstacles.

This has even been reiterated by the Bank of Italy in a study led by three of its researchers (Chiara Bentivogli, Fabio Quintiliani and Daniele Sabbatini), the results of which have recently been published in the series Questioni di Economia e Finanza.  Le reti di imprese (The network contract) brings together economic reasoning, the legal framework and empirical evidence to describe the current state of the “network contract”. As the efficacy of the industrial district fades, these districts could actually become the means by which businesses can return to growth. Having been legally defined at least as early as 2009, these districts have found it difficult to get into the right gear.

And yet networks could do quite a lot. The could promote innovation, replace the need for growth of the individual component parts, create greater strength in research and in the marketplace, and bring together manufactures both large and small.

But why have they not yet taken off? Behind their partial success are technical matters, legal issues that have yet to be clarified, and age-old distrust of Italian businesses – especially the small to mid-sized ones – to “get together” and to work together towards a common goal. In short, many businesspeople still think that their own house is better, even if a bit rickety, because at least it’s theirs, rather than having to share the wealth with others.

To better understand this phenomenon, the authors also look into real-life cases such as the DicoNet network of businesses (in Trento and Bologna), the Olonetwork Companies (which includes businesses in Modena, Pisa and Pesaro-Urbino) and MecNet (made up of companies in Udine, Brescia, Naples and Milan).

And the result is clear: it’s the right way to go, but it needs to be perfected, both in the underlying rules and in the way in which businesses are approaching the topic.

Le reti di imprese (The network contract) 

Chiara Bentivogli, Fabio Quintiliani, Daniele Sabbatini 

Bank of Italy, Questioni di economia e finanza – Occasional Paper

No. 152, February 2013

A culture of enterprise. Like a market culture. And also (and this is key) like a culture of rules, of fair competition, of transparency and of merit. A culture in which democracy and capitalism come together in a virtuous union. It’s not just theory. It’s actually possible, something that has already been seen, even if hindered, both in the past and in the present day and something that must be defended and reasserted. This concept is reiterated in the words of a talented Italian journalist, Pierluigi Battista, in a recent article of his in Corriere della Sera (20 January 2013): “There is still the idea, one that is highly popular among the fiercest defenders of the ‘moral issue’, that the market is a place of immorality and greed and that, therefore, any attempts to return to the market that which was taken away by politics can only aggravate the terms of the urgent ‘moral issue’.” In fact, it was a certain political intervention (at times aided and abetted by the worst businesses) that upset the Italian economy, that made the cost of public works and services rise out of control (thereby distorting the market), that brought corruption to weigh on public resources, and that prevented fair, competitive selection among companies. As Battista continues: “It is the market regulated by laws, not asphyxiated by greedy, invasive politicking, that limits the opportunities for the political parties to get something in exchange for granting authorizations and contracts, which should not be given as magnanimous concessions of – unregulated and invasive – public power, but rather rights granted. Rights of the individual. Rights of the taxpayers. Rights of businesspeople, who shouldn’t be forced to ask for favours. This is the real ‘moral issue’: seeing it as blatantly obvious that it is being bestowed like a favour when it could, and should, be exercised as a right.” “Less government and more market,” it has been said. But that’s not quite right. It’s more about having better government, one that regulates and controls a market that is more transparent and efficient. And it’s about businesses that nurture a better culture of competitiveness, of rights, and of duty.

Manufacturing know-how, certainly. Excellent quality, of course. Unmistakable style, naturally. But as competition becomes increasingly fierce and necessarily global, and in the face of schizophrenic markets and unpredictable consumption models, all of this is no longer enough. It also takes a different sort of organization and, above all, a network of relationships, both within the company and with the outside world, that was unthinkable not too long ago.

In other words, if product quality and a reputable brand are no longer enough of a guarantee of competitiveness, something else needs to pick up the slack. But what? And how?

One way is by improving supply chain management (SCM). To understand how this is down and see how it has already been done, take one of the recent works of Raffaele Secchi, a researcher and instructor for the Department of Management at Bocconi University, Milan. On the 300 pages of his book Supply Chain Management & Made in Italy, you will not find mere theory, but also nine practical case studies regarding nine different organizations. And specifically Barilla, Granarolo, Lavazza, B&B Italia, Elica, Poltrona Frau Group, Loro Piana, Luxottica, and Piquadro. All Italian firms and all of whom have seen, in various ways, how much supply chain management contributes to their competitiveness.

The crux of the matter is simple. By adopting practices to integrate processes and developing strategies of collaborating with the players throughout the supply chain, an organization can significantly enhance its competitiveness. As readers of the book will discover.

In short, brand and product quality are still the strengths of Italian industry, but to remain competitive in the international marketplace, a third aspect can no longer be ignored: organization in the processes of supply chain management. And not just in the traditional Italian industries of food, design and fashion.

Supply Chain Management & Made in Italy. Lezioni da nove casi di eccellenza

Raffaele Secchi

Egea, 2012

Leonardo da Vinci had a different way of thinking from all of his peers. Albert Einstein, too, had an “uncommon” brain. Even Steve Jobs was of above-average intelligence. Call them geniuses or simply men who were able to face reality, analyse it and process it differently from the rest of society. This is why men like Da Vinci, Einstein and Jobs were, each in their own way, men of great success.

The same sort of thing happens for organizations, those that are able to make a splash, grow, overcome difficulties in the economy, or simply solve problems brought about by competition by being able to think “outside the box”. There are no pre-packaged formulas for success. Some organizations make it. Others – the majority – don’t, or they just scrape by. It may be easier for smaller businesses, but it’s much more difficult when large-scale corporations are faced with the need to “think differently”.

The mechanisms that it requires are both intriguing and complex and are yet to be fully understood. One of the many to try, though, is Rosabeth Moss Kanter – referred to, alternately, as either one of the 50 most powerful women in the world or one of the 50 most influential financial minds on the planet – in her book How Great Companies Think Differently, published by the Harvard Business Review in 2011 but still highly relevant and a greatly interesting read.

Moss Kanter shows that, far from being mere money-making machines, large corporations can combine financial and social strategies in order to create long-lasting success. At the heart of it all, according to her study, there is not just calculations, but also emotion, involvement, a spirit of adventure, and broad-mindedness. Because, according to the author, organizations are social entities that, when faced with uncertainty, are able to generate and transmit social values through those who work there. In short, a great company generates not only profits, but also its own culture, its own way of understanding business, and its own role in society, all of which becomes a powerful driver of growth and development. So long as they are able to make everything work the way it’s supposed to.

How Great Companies Think Differently

Rosabeth Moss Kanter

Harvard Business Review, 2011