Italy is still not firing on all cylinders in terms of competitiveness.  The country is lagging on international markets, is attracting declining levels of foreign investment, and is expected to remain in recession throughout 2013 and to post low levels of growth in 2014. Italy is hobbling along. Businesses are shutting their doors, and the country’s most precious asset, its manufacturing base, is dwindling away, having lost 15% in capacity and not looking good in terms of future development. In other words, despite it all, there is still a robust culture of enterprise that is holding off Italy’s collapse, but there are still no real strategies for growth, no good industrial policymaking, and not enough spending in research, innovation and education to keep pace with the other nations that are our competition. In short, and as Pirelli chairman Marco Tronchetti Provera said in an interview with Corriere della Sera (7 June), Italy doesn’t take good enough care of itself.

Figures released by the IMD World Competitiveness Centre in Lausanne show that Italy comes in at just 44th in the annual ranking of international competitiveness (behind the U.S. in first place, Switzerland in second, Hong Kong third, Sweden fourth, Germany ninth, the U.K. in 18th and France in 28th), slipping back four spots from its already low position of 2012. Spain, Portugal and Greece trail behind, but that’s no consolation. There are cyclical economic factors, i.e. the recession, as well as structural factors that haven’t helped, i.e. Italian bureaucracy, taxation, the lack of transparency, political uncertainty, and the consequent scarcity of foreign investment.

Indeed, here we have another aspect of the crisis: the lack of international investment. According to a recent study by Ernst & Young (see Il Sole24Ore of 6 June), Italy is driving away investors and losing ground on the other EU nations: Fewer projects, fewer resources, less employment, less innovation, and so less development.

Of course, there is some good news to be found if one reads the newspapers carefully.  For one, the French Alstom group is investing 34 million euros to build a premier research centre for energy transmission in Sesto San Giovanni. The U.S. multinational Valspar acquiring the Italian paints manufacturer Inver for its headquarters for European development.  And the U.S. Mohawak group, after acquiring the world-famous Ceramiche Marazzi, appointed an Italian, Mauro Vandini, to lead the business and, by investing in new technologies, develop an original alliance between multinationals and the manufacturing skills of the Sassuolo district with a keen eye on international markets. Or even the insurance giant Berkshire Hathaway, a leading shareholder of which is Warren Buffett, in the race to acquire Milano Assicurazioni. Not to mention the fact that international investors now hold 34% of Pirelli’s stock. These are all signs, in their own way, of faith in the capabilities of Italian multinationals, in the vibrant growth of small and medium enterprise here, and in the strength of our human capital (such as the engineers coming out of the polytechnic schools in Milan and Turin) in pursuing cutting-edge industrial research. So there are good investments coming into Italy, but it’s not yet enough to be truly optimistic.

There is some reason for this active, productive Italy to believe in growth, as called for by the president of Confindustria, Giorgio Squinzi, a staunch supporter of manufacturing as a cornerstone to growth and of the need for all of the EU to work to “reindustrialise Europe”. But we are still waiting for public policies and government decisions that are up to the challenge.

There are many businesses that are doing what they can, but government support measures are few and far between. No aid. No incentives. Not enough underlying policy decisions to create a favourable environment for business growth, for domestic and foreign investment, or for new and innovative start-ups. We need public investment in research and innovation, in education and the transfer of technologies, and we need to break free from the bureaucratic and fiscal shackles preventing investment. Through domestic policy and European policy. We need a true “industrial compact” that can support growth now that we have sought balance in the public accounts through the “fiscal compact”. Industrial Italy is showing that it knows how to face the crisis despite the heavy burden it has to bear. Government and policymakers have a duty to support resiliency and recovery.

The factory is life. A life full of workers and executives, battles and conquests, conflict and collaboration. The factory – manufacturing – doesn’t just produce things, but also sensations, sounds, odours, sights, experiences, memories, emotion and ingenuity, and makes men and women who they are. And it continues to do so to this day, although in somewhat different ways. Revised, more modern, more focused on social and environmental needs, more “comfortable” than it once was, the factory continues on. Although the second largest manufacturing nation behind Germany, there is still much to do in Italy, where manufacturing needs to serve as the foundation for a new season of economic development.

As such, it is important for us to understand how, and why, factories today continue to be so crucial and how they have become what they now are, especially when the input needed to understand comes not so much from cold, hard numbers and charts, but from the warmth of words and of stories.

This makes Fabbrica di carta. I libri che raccontano l’Italia industriale (published by Laterza with the support of Assolombarda, foreword by Alberto Meomartini and introduction by Antonio Calabrò; translation of title: “Paper Factories. The books that tell the tale of industrial Italy”) a book to be read over and over again. The work provides a sort of overview of what Italian literature, in just under a century, has managed to give us on the topic of industry and all that goes on in and around it. It’s nothing scientific and precise, but that’s what makes it so real and practical.

In just over 300 pages, Giorgio Bigatti (who teaches Economic History at Bocconi) and Giuseppe Lupo (an instructor of Italian Literature at Università Cattolica) have brought together the best of these “factory tales” by authors such as Volponi, Sereni, Levi, Calvino, Ottieri, Giudici, Fortini, Vittorini, Arpino, Gadda, Pratolini, and many more. The work is divided into three main parts: Panorami dell’Italia industriale (Views of Industrial Italy), Personaggi in cerca di lettori (Characters in Search of Readers), and an appendix entitled Scritture del presente (Writings from the Present). Within these sections we find abstracts and brief accounts of Italian factory life, both past and present.

The result is a highly enjoyable book to be read and reread. And even to be used in schools and universities to study a key aspect of “Italian identity”. It’s a sort of handbook to that culture of enterprise which is one of the most important parts of Italian society.

Fabbrica di carta. I libri che raccontano l’Italia industriale.

Edited by G. Bigatti & G. Lupo

Laterza, 2013

What happens when external agents, new ideas and, above all, new financial resources come to an established industrial system with a strong culture of enterprise and national identity? This is no rhetorical question, but one that points to something that can actually happen quite frequently nowadays. But to understand it well, we need more than mere theories. We need experience, empirical evidence, and the input of those who have already gone through it.

We need a work like Foreign Investors as Change Agents: The Swedish Firm Experience, a study published in May under the aegis of the Swedish Royal Institute of Technology by authors Kathy S. Fogel, Wayne Y. Lee (both researchers at the University of Arkansas), Kevin K. Lee (researcher at California State University, Fresno), and Johanna Palmberg (Research Director for the Royal Institute of Technology).

The study – conducted using both theoretical and empirical approaches – is an exploration into how foreign investors can act as agents of change in corporate governance. The system taken as an example is that of Swedish industry and the impact of the arrival of high volumes of foreign capital, which made for an ideal case study given that Sweden was, for quite some time, characterised by strong “economic nationalism”.

But beyond the history and the data, the four authors discover something that perhaps few would have expected: under the influx of foreign capital, Swedish firms made a cultural shift. In their conclusions, the authors explain, “What is remarkable in Sweden is that dominant owners of Sweden’s largest firms cooperated by conceding some control rights to foreign investors, and as a result, allowed informal reforms in corporate governance that made firms leaner, more capital intensive, and more profitable.”

What may, at first glance, have appeared to be a sort of colonisation by foreign capital turned out to be an agent of change, and not just technical and financial change, but also – and above all – a change in culture.

Foreign Investors as Change Agents: The Swedish Firm Experience 

Kathy S. Fogel, Kevin K. Lee, Wayne Y. Lee and Johanna Palmberg

The Royal Institute of technology, May 2013

Good corporate culture combines solidity of experience and a new outlook, the strength of those fully familiar with men and machines and the enterprise of those, also with a touch of rashness, try to radically overhaul consolidated processes and routines, the pride in success and the hunger for new experiences. A good corporate culture, all in all, builds original fusions of past and future. This is why the strategy of the so-called “generational handover”, as drawn up by Assolombarda and ready to be applied by large companies such as Bayer, Techint, Campari and A2A, has a basic meaning which goes beyond the albeit important expediency of employing young people. It can be expressed in a few words: employees set to retire in a few years’ time accept part-time work and the company hires a young person. The salary of the older person is cut but not his or her pension contributions (the difference is paid by Lombardy regional funds). The company saves on the cost of labour (the salary or wage of a young person is lower) yet is committed in the long term with the new employee. The part-time older worker can tutor the younger one, teaching him or her a profession. A virtuous cycle in other words. To be sustained either with national legislation (the approach taken by President Hollande in France) or with agreements between companies and trade unions, with support from the regional authorities and intelligent use of EU funds (the policy adopted by Assolombarda and the Lombardy regional authorities, which could soon be imitated by the regions of Lazio, Friuli, Piemonte, Emilia and Marche).

“New jobs are not created, only the existing pie is shared out”, say critics. This is true, but it is a very partial view of things. Because in the meantime there are incentives for turnover, the exchange of jobs. Young people are offered new opportunities: joining a firm and with the possibility of targeted vocational training on the job. For the older people the awareness of their usefulness is strengthened: feeling entrusted with the responsibility of teaching a job can give added motivation to tired-out sixty-year-olds, at the end or almost of their careers. Without counting, moreover, the strength of the original fusions of experience and innovation which we discussed at the start.

In order to restart the tired and often constricted motor of the Italian economy other measures are definitely needed: incentives for investments (also internationally), support for research and innovation, growth in size of firms, credit at favourable conditions, drastic cuts in taxes and useless bureaucracy, efficiency of the justice system (above all civil), infrastructure, quality training, etc. In other words it will take the building of an environment ultimately favourable to firms and, by the corporate world, the assuming of all the responsibilities typical of a ruling class.

In the meantime the “generational changeover”, ready to start, can make a good contribution in this very direction. With a further advantage for Italy as a system: preventing young Italians, possibly with a good diploma or a good degree in their pockets, from going off to seek out more welcoming job markets. A serious loss of human capital, damage to social capital, to be prevented. It would be better instead to keep to the good Italian tradition of making the “young and old” interact and prove once again that tradition and innovation are a trump card.

Small firms, the very small ones, so-called microenterprises, nevertheless tackle major competitors. A little like David against Goliath, there are thousands of businesses of this type which, in some way, take on the world and often succeed. Understanding how they do it is important and also fascinating. These firms have it all: Italian genius and production folly, creative flair and heedless calculation. As well as innovation and aggregation, craft production and haute design. What really happens is however often difficult to understand.

Microimpresa macrocompetizione. Innovare e aggregarsi per ripartire [“Microenterprise macro competition. Innovation and aggregation for a relaunch”] by Andrea Scalia makes an attempt by starting, as is explained, first of all from a great passion and experience with the microenterprise, that ideal place of production where humans are responsible for and play a leading role in their own working lives. A place that differs from the large factory, possibly slightly idealised, which also represents a different corporate culture. Aside form the contrasts which leave little space for anything else, the work by Scalia concentrates on the world of microenterprises in manufacturing, services, trade and agriculture which represent an organisational form which is much more widespread than is commonly thought: firms in Italy with fewer than 20 employees are approximately 98% of all those in existence.

Scalia therefore gathers together and investigates, and studies in depth, the typical features of microenterprises, eventually focusing on the increasingly strong need for aggregation also of these organisations whose basic value however remains unchanged. Starting from the special kind of innovation practised in them which, as the book says, is the keystone for Italian entrepreneurs who have always been careful to add special features and value to their work, that innovation which is often invisible, carried out day after day with an obsession for perfection, the unseen, that which is in global value chains, that which is now developed in the networks and in the connections of the global world.

Microimpresa macrocompetizione. Innovare e aggregarsi per ripartire 

by Andrea Scalia

Egea, 2013.

Globalised, yet often still influenced by the local culture where they were founded. Firms which attempt and succeed in negotiating international markets often find themselves in this situation. They think global yet still look back. They operate internationally yet are still identified by the culture which has generated them. It is important to understand the product of the union between global motivations and local emotions in order to gain a better understanding of how business is conducted today.

This is research which needs to be carried out in a team, given the number of cultures which have created different ways of understanding how to carry out business.

This is why The Effect of Cultural Infrastructure in Business Management: Comparison of Turkish and Japanese Business Cultures by Kürşat Özdaşli (professor of economics at Mehmet Akif University in Burdur, Turkey) and Oğuzhan Aytar (correspondent of Karamanoğlu Mehmetbey University in Karaman, again in Turkey) is interesting.

The study bases on a claim that the influence of globalisation, i.e. a standardised set of rules which influence production and consumer behaviour, has now been accepted. Yet while taking into consideration the principles of globalisation, the single corporate communities also reflect the features of the social culture which can integrate the technical side.

To understand this better the two authors examined and compared the way of carrying out business in Japan and Turkey. The typical cultural values and history of the two production systems and the differences and similarities in corporate management were therefore studied in greater depth and an attempt was made to establish the key points at the basis of the success of Japanese firms and the features of the “business culture” of Turkish entrepreneurs. This led to the confirmation, with proof coming from the investigation, of the uniqueness of Japanese companies and the function of “bridge” between different worlds of Turkish entrepreneurship. However Özdaşli and Aytar also arrive at a thought-provoking explanation that every firm has its own characteristic culture which touches on the beliefs, thoughts, behaviour and visions of the world. This culture feeds on the value and characteristics of the community.

The Effect of Cultural Infrastructure in Business Management: Comparison of Turkish and Japanese Business Cultures

Kürşat Özdaşli – Oğuzhan Aytar

Interdisciplinary Journal of Contemporary Research in Business, April 2013, vol. 4 no. 12

Managing a business. Making music. Creating harmony. Bringing people together. Tuning instruments. Learning to find unity amidst both consonance and, of course, dissonance. This intriguing cultural comparison is the basis of a book by Frank J. Barrett, “Yes to the Mess: Developing a Jazz Mindset for Leading in a Complex World” (Harvard Business Review Press, 2012), which is of great use to men and women in the world of enterprise. It has been published in Italy by the Bocconi University publishing house Egea, with the title Disordine armonico (translation: harmonic mess) and featuring an enjoyable foreword by Severino Salvemini. The original (English) title is even more explicit and alludes to two of Barrett’s great passions, as he both teaches management at Harvard and plays jazz piano, and the book flows naturally through the many levels that the best culture of enterprise can express. Organisation and improvisation. Teamwork and the creative flair of the soloist. Repeating a common rhythm only to escape from that rhythm to explore new landscapes. In short, research and innovation, backed by great skill and a command of the instruments at hand.

These are recurring themes on this blog, and faithful readers may remember the bold, ironic comparisons between the music of Eric Satie and the production of a tyre. Signs of a constant processing of ideas towards more creative relationships between running a business and creating a culture, and a quest for meaning amidst the many twists and turns in an “industrial metamorphosis” that calls for new and better tools for understanding how to change paradigms in production, product and use. This changing of the times in response to the Great Crisis that we are still suffering through is also evoking daring ideas concerning forms of organisation and relationships between the leading players within an organisation. Music, and in this case jazz, can be of great help.

Proof of this can be found in the discussion surrounding Barrett’s book that has been raised within Bocconi by Salvemini, as well as by Alfredo Scotti, the chairman of Aon; Francesco Micheli, a man of finance, chairman of MiTo, and highly cultured musically; Filippo Del Corno, musicologist and councilman responsible for culture for the City of Milan; and by jazz musicians Paolo Fresu, Cesare Picco, Bobo Ferra and Enrico Intra.  Various voices. Original points of view. A stimulating debate both for those who run businesses and for those who make music.

Why? In the words of Salvemini, “The new models of business management need to follow the example of a variety of contexts that are less rigid than traditional management.” This is the lesson we can learn from Miles Davis, Louis Armstrong, Charlie Parker and, more recently, the great Keith Jarrett, who all say that even the best soloist needs the backup of a steady rhythm, the efforts of an orchestra or other group (a trio, a quartet, etc.) to accompany, lead in, cue and otherwise support the voice of the soloist’s piano or trumpet. “To support the leader,” says Salvemini, “as it should also be in a company made up of a cohesive, tight-knit group of people.”

Every firm is a story to be told, a collection of past lives which should be known. In every case and above all when these are innovating firms which have staked on themselves, which have built their balance sheets on the future, their culture on people and on technology. Italy is full of firms like these and they are there for the discovering, as twelve writers did with twelve firms in the Turin area, one with the highest concentration of industry in Italy and also one of those hardest hit by the economic crisis. The exploration was sponsored by the Turin Chamber of Commerce, the Fondazione Human+, the Politecnico and the API, the association which groups together small firms. The result was a book, just under two hundred pages of corporate life.

Imprese d’autore [“Firms d’Auteur”] is the title of the book published by La Stampa which is a collection of twelve stories of corporate life, stories by writers who unearth stories of entrepreneurs, of what they have done in years of work. Not alone but instead with other people – factory workers, technicians, wives, sons and daughters, friends – who have shared a ground-breaking idea (a project in technical and dry terms) and have given their all in order to succeed in fulfilling this idea. Building up a corporate culture structured like a play in twelve acts, similar to thousands of others that are a feature of production in Italy and with the same number of technical discussions in between.

The line-up includes works by authors Stefania Bertola, Younis Tawfik, Enrico Pandiani, Carlo Grande, Giuseppe Culicchia, Alessandro Barbero, Margherita Oggero, Enrico Remmert, Luca Ragagnin, Anna Berra, Alessandro Perissinotto and Bruno Gambarotta who tell of the vicissitudes of small and medium-sized firms such as Amet, Blue Engineering, Corona, Criotec Impianti, Delgrosso, Ergotech, Inkmaker, Lma, Plm Systems, Poker, Sea Marconi and Sinterloy. All firms virtually unknown to the general public yet which hold something that is innovative and winning. Examples told with emotion and involvement which show the Italian way to well-being which has not yet been abandoned.

Imprese d’autore

AA.VV.

La Stampa, 2013.

Family businesses are special, the life of those who work in them and the entrepreneur who created them to the extent that, within certain limits, they are managed by special approaches. It is true that in family businesses, i.e. those created by a family who has invested everything in them, and not only in material terms, there may be an atmosphere different from others. Yet accounts and balance sheets have to be drawn up according to the same rules and the market bows to the same schizophrenia, to the same stimuli, whether it is tackled by a public limited company or a manufacturing company with sole partner, set up by the father and handed down to the son.

Understanding the movements of those which could be called “corporate families” is however important. This is what, from a particular viewpoint, Lori B. Gervais and Roger G. Gervais have done in Maximize What You Have Built. Overlooked issues in family businesses, a study of a few pages which, through a series of interviews with entrepreneurs, managers and consultants of family businesses, identifies the particular entrepreneurial approach with which this type of firm is run.

The two authors explain in a crucial passage that the owners of family businesses have a different genetic make-up. Business for them, more than a way of supplying means of subsistence, is the love of their life and the great plan for supporting their dreams. Dreams therefore and also balance sheets, obviously, and more. According to the analysis in fact there is a strong aspiration within these firms to create opportunities for members of the family.

The interlinking of corporate problems and family questions, production needs and personal emotions, shapes this particular type of business. However the dyscrasia between “family” goals and “corporate” goals at times becomes too extensive and unsustainable or in any case risky. Without mentioning, as instead the study does, the aspects linked to the handover from one generation to another.

Corporate equilibrium and corporate culture are therefore brought into discussion and display their complete fragility.

Lori B. Gervais and Roger G. Gervais seek to understand how and why and the way of solving this, succeeding in mapping out the situation of many family businesses with the effective image of the possible drawing of a line in the sand which nobody wants to cross.

Maximize What You Have Built. Overlooked issues in family businesses

Lori B. Gervais, Roger G. Gervais

The Gervais Group, Robert W. Baird & Co.

April 2013

A cute little mouse hides under the Pirelli hot water bottle in the place of Boccasile’s chick, Ezio Bonini’s fish now swim together with a pair of flippers, and the body of the girl wearing Alberto Bianchi’s cap will at last be revealed… What if the old Pirelli advertisements were suddenly transformed?

The fifth-year students of the Liceo Artistico Umberto Boccioni in Milan tried revisiting and reinventing the sketches of the great artists who made Pirelli’s visual communication famous.

The inspiration and the ideas they picked up during their recent visit to the Pirelli Foundation led to their original reformulations and unusual points of view, which came from an in-depth examination of the history of Pirelli graphics and the opportunity they were given to take a close-up look at the beauty of the works in the archive.

Their stunning works are on display at the school. For further information, please visit www.liceoartisticoboccioni.it

Meanwhile, congratulations to all those involved!