Brick by brick, a castle that remains standing, century after century, can be built. Toy building brick by toy building brick, some have even built up a company, Lego, beloved by millions of people but which, if we look into its history, has not always had an easy time of it. This story, the history of Lego, is however an example to be told in order to understand how a company with a successful product can even risk bankruptcy and later rise again.

The story of Lego has been told by Mikael Lindholm, corporate manager, and Frank Stokholm, journalist, in their Lego Story. A book which can be read like a game yet which covers at close hand the life of one of the most famous companies in the world, from its incorporation as a wooden toys factory in a Jutland village in the Thirties up to its decline, almost smothered by the success of its product which however could not beat competition from electronics, and subsequently its very recent rebirth.

The Lego story is also the story of a family of entrepreneurs, the Kristiansens, tackling all the problems of growth of their firm, of the generation change between fathers and sons, the approach to modernity and new technologies, common to very many other “family firms”. All this based on two principles that apply to everyone: the objective must not be that of becoming the largest toy manufacturer but the best, while it is important to consider not those who buy the product but those who use it.

The book also has a second part, written by Leonardo Previ, professor of economic history of culture at the Università Cattolica of Milan, which tells how Lego building bricks are also used to bring life to a methodology of organisational development born in the research departments of the IMD in Lausanne which has entered managerial training classrooms all over the world. In managers’ hands the building bricks become a tool for speeding up internal communication and decision-making processes. In other words, playing is educational too.

Lego story

Mikael Lindholm, Frank Stokholm, Leonardo Previ

Egea, 2012

Who is an entrepreneur? Many people from many parts have attempted to answer this question, a difficult one, the answer to which can lead to downfall. Yet there are some who have sought to answer it without any theories but instead by telling a story. This is the case of Luigi Einaudi who more than a century ago wrote Un principe mercante [“A Merchant Prince”], the story of Enrico dell’Acqua from Busto Arsizio, who travelled the world “doing it himself” and creating the concept of the Italian entrepreneur. This story made history in economics literature, possibly also because it was written clearly, and has been revived today by Paolo Silvestri in an article which appeared in Biblioteca della libertà, the online four-monthly magazine of the Centro Einaudi in Turin. The result is another story, a long ride through a century of economics and civics teaching in which names such as Piero Gobetti, Adam Smith, Norberto Bobbio and Joseph Schumpeter and, more recently, Sergio Ricossa and Giuseppe Berta, as well as that of Einaudi obviously, stand out.

Silvestri has written sixteen pages which reveal the basic features of being an entrepreneur, now as in the past, i.e. the person whose conduct cannot be theorised that much yet should be told and observed in order to be understood, even if it can never be grasped entirely. Despite this Silvestri, obviously using Einaudi as an example, daringly suggests that “the entrepreneur is the person who 1) chooses which goods are to be produced, 2) decides what should and should not be sold on the market, 3) establishes strategic policy and corporate objectives and weighs up the most suitable means for achieving them, 4) fulfils consumer requirements, even the “stranger” type”.

This is possibly a simplistic snapshot of doing business today, but it is also a living portrait which is worth examining. Above all for at least two concepts which emerge from the article. Good entrepreneurship travels at the same pace as good governance and the creation of a society open to inspiration and merit. Good entrepreneurship and good corporate culture then are born from a positive tension between caution and risk, tradition and innovation.

Il paradigma dell’imprenditore in una società liberale: tra prudenza e rischio-innovazione

Paolo Silvestri

Biblioteca della libertà

Online four-monthly magazine of the Centro Einaudi, 2012

Effective corporate culture is also about understanding people, building a network of positive relationships between them, and appreciating the value and values of the men and women we work with. And classic literature can give us some essential pointers. Take Shakespeare for example, and one of his most significant works – “King Lear” – which was discussed on Tuesday 22 January during a meeting organised by the HR Community Academy at Fondazione Pirelli. Organised by the Group’s Human Resources managers, the initiative was an in-depth debate between directors of leading Italian and multinational companies, experts in the field and academics.

So why King Lear? Because like many of his other works, this tragedy of Shakespeare’s explores the depths of human nature, looks into its heart of darkness and reveals some startling truths.

The story is well known. King Lear decides to divide his kingdom between his three daughters, according to the love that each declares for him. The first two, Goneril and Regan, go overboard with flattering, extravagant declarations, while the third, Cordelia, refuses to be drawn into the competition: avowals can be deceitful and duplicitous –  actions, and true feelings, speak louder than words. Lear flies into a rage and disowns Cordelia, splitting up the kingdom between the other two sisters. But tragedy lurks in the wings: once Goneril and Regan come into wealth and power they mistreat their father, turning him out into the wilderness. The resulting conflicts of interest tear apart the courts and countries of Britain and France and end in the deaths of the main characters.

There are important lessons to be drawn from this play regarding empty promises, and how avidity takes over in the absence of wise, just rules; on the importance of understanding people’s characters, aptitudes and values. Power dynamics are a part of all relationships, and the same naturally goes for businesses, which are shaped by rules, an underlying culture and aptitudes: in a word, values. The precipice is ever-present: if we want to steer clear of it we need to build long, positive pathways. In other words, effective corporate culture. Take Shakespeare’s word for it.

Eleven paths to achieve greater cooperation, to bring forth a different economy and production, to see business, markets, people and community in a new way. An experimental book, a breathless run through the labyrinths of economics guided by eleven different authors: economists, naturally, but also philosophers, jurists and literary scholars. “On Cooperation. Manifesto for a New Economy“, published by Feltrinelli along with Vita, magazine of the homonymous Italian non-profit, is all of this. But above all it is an attempt – largely successful – to open eleven optimistic windows onto a world that, to all appearances, has precious little to be optimistic about.

In just under 200 pages, the book attempts to respond to the question: what can we do to live together better? And it does so from every viewpoint, starting with economics – that is, the part of living together which, for better or worse, conditions most of the rest.

Each of the eleven chapters – one for each of the authors who participated in the undertaking – examine a particular aspect of economics: belief, the I, the We, the gift, generation, solidarity, the gesture, the remedy, cooperation (naturally), communication and “commons”. This is not a sentimental journey through the clouds, but an analysis conducted with different styles yet equal rigor that investigates the specifics of production, finance, currency and the market, all operating from the guiding premise stated in the Foreword: “Technical knowledge, by itself, is never enough. It’s not enough for people, nor for things, nor for their economy, nor the world. In this time of great disenchantment, there is a whole world out there to re-enchant”. By which re-enchant does not mean re-deceive, but quite the opposite – that is, find new reasons to look ahead, resolve problems, work together.

It is perhaps not by chance that the volume opens with a short essay on the economics of belief (wherein it is argued that one cannot move forward without faith – not the religious kind, but faith in the future), and concludes with a Nobel Prize winner explaining the economics of “commons”, or shared goods and resources that belong to everyone and have value for everyone.

On Cooperation. Manifesto for a New Economy

Various authors (G. Agamben, P. Barcellona, L. Becchetti, A. Brandalise, P. Dacrema, L. De Biase, M. Magatti, E. Ostrom, S. Petrosino, G. Sapelli, S. Zamagni)

Vita-Feltrinelli, 2012.

They’re called “communities of practice”, groups of people who share an interest, a passion or a problem to resolve and who, above all, manage to interact in a positive way. The concept aims to give form to numerous such situations in Italy, including businesses, particularly those located in territories characterized by a high concentration of small businesses, artisanal or otherwise. These communities can become a vehicle for relaunching production and the economy, for overcoming the current crisis. Because they produce not only wealth in the traditional sense, but above all knowledge and the evolution of the know-how that has made Italian industry great.

Among those studying these “communities of practice” is Massimiliano Costa, professor of the Economics of Training at Ca’ Foscari in Venice, whose article “Le comunità di pratica per valorizzare la cultura d’impresa e i saperi del territorio” (published in the Quaderni di ricerca sull’artigianato  of the CGIA, Mestre) investigates their origins and meaning and provides a detailed, though sometimes difficult analysis of their structural features. The article parts from a series of studies that refer to concrete experiences, including modern-day industrial Italy, in the most prestigious areas of the artisanal and small business sectors (clothing, footwear, electronics).

What comes out is a scheme with certain fixed points, starting with shared language and identity and on to negotiating ability and an understanding of the practices that contribute, all together, to the creation of such a community. Costa then examines these new communities more closely and, in accordance with other scholars, attains what he calls the “determinants” of the “communities of practice”: three necessary components, without which the community cannot be born. They are: reciprocity of relations, a patrimony of shared knowledge, and a common objective,  which is exactly what is created in many businesses.

But how are these “communities of practice” useful for companies and businesspeople? According to Costa, only in this way can the latter become “simultaneously providers and recipients of managerial knowledge”. And there’s more. Through these communities it becomes possible, for example, to envisage support services for small businesses, encourage the diffusion of networks, intensify ICT and e-learning, cultivate the creation of training and support networks for newly established businesses. Through them, we can reconfigure a business culture with multiple facets and identities, reflecting the best of Italy itself.

“Le comunità di pratica per valorizzare la cultura d’impresa e i saperi del territorio”

Massimiliano Costa

Quaderni di ricerca sull’artigianato, no. 47

CGIA – Mestre

General Electric buys Avio from Finmeccanica, the US giant Mohawk takes control of Marazzi, the historic brand of ceramics in the heart of the Sassuolo district. A few months ago, Audi added a majority share in the prestige motorcycle company Ducati to its portfolio. Just three of so many stories. “The Made in Italy label snatched by foreign multinationals!” Short-sighted provincial defenders of economic nationalism tear their hair out, calling for protectionism and impossible subsidies. All in an age of open markets and globalisation. What a country really needs to do is to attract massive international investments and, at the same time, have its own companies carve out spaces on foreign markets. The problem with Italy is unfortunately that it is at the bottom of the list of EU countries in terms of attracting investments and of those with powerful multinational corporations in the world. And this is a serious brake on growth.

Foreign industrial investments (except for those of the rapacious post-colonial kind) have a great advantage: they do not just bring wealth, jobs and continuity to historic companies that lack solid stock ownership (Ducati, as we have seen), but also new culture, research, skills and relationships. And they encourage fertile interactions with local expertise. The efficient organisation of the English- and German-speaking world coupled with the Italian flair for flexibility, creativity, adaptability and a perfect combination of quality and beauty (our finest design). In other words, investments can lead to a business culture that brings together the cosmopolitan approach of big business and the national talent for combining tradition and innovation for which Italy is famous. This is how Italian companies with a more competitive ownership edge are created. And it is they that inspire global competitiveness in the finest companies that are Italian not just in name but also in their ownership and management. Protectionism leads nowhere. Interaction, on the other hand, leads to development.

The age of the “small is beautiful” philosophy has ended yet the concept definitely has some useful meaning, even in large industrial companies. All it takes is to apply this thinking with moderation and learn from practice and observation. Starting, as Amy C. Edmondson (Harvard Business School) does for example, with a series of empirical investigations in different areas: from Toyota to GM, from the US health service to the IRS, via the failures of “ventures” such as the mission impossible to save the Chilean miners to the space shuttle Columbia tragedy.

Her “Teaming. How Organizations Learn, Innovate, and Compete in the Knowledge Economy” demonstrates that organisations prosper, or do not succeed in prospering, according to how well small groups work within them and among them. This is not a cliché but instead a working guideline which is often difficult to put into practice, because groups, the teams which make up every organisation, do not learn naturally to work in a team.

The book however is written by an American lecturer in management, practical and grounded, also taking into consideration those who have to manage groups and make them work with each other. The book thus contains a clear explanation of how individual and organisational psychology, the hierarchical set-up and cultural differences can prevent corporate success. It also includes important concepts to be “digested” in daily corporate management situations. According to Edmondson, for example, conflict and failure are needed in order to maximise learning. For this reason the book describes the factors that prevent effective collaboration in work environments, such as lack of interpersonal confidence, irrational fears about failure, so-called “group thinking”, the dynamics of power among individuals and the obtaining of information. The information gleaned throughout the book is that leaders can make up for the shortcomings through the understanding of the existence of these obstacles, also modifying their style of leadership in order to sustain and facilitate group work.

However one of the most significant parts of the entire book explains that the currency of the future is the ability to generate ideas in order to solve problems and that teaming is the way to develop, implement and improve those ideas.

Teaming

How Organizations Learn, Innovate, and Compete in the Knowledge Economy

Amy C. Edmondson

Jossey-Bass, 2012

IT (information technology) is apparently vital to companies for business growth, although it has to be applied judiciously. This is not simple and in fact is somewhat complicated, to the extent that some are devoting their academic lives to understanding how, where, when and why IT actually succeeds in its mission. This is the case of Kristina Steffenson McElheran, business administration professor at Harvard Business School but above all passionate empirical scholar of the interactions between information technology, corporate performance and competition strategies. All this with a single goal: to understand how companies use information technologies to work together and compete on the market.

Interesting and above all useful research for those who have to manage companies in real life.

The combined thinking and results achieved by Steffenson McElheran can be found in an article which appeared in Working Knowledge of the HBS – Why business IT innovation is so difficult by Maggie Starvish, two pages that sum up the theoretical ideas and practical conclusions of years of investigations.

The basis for the reasoning is apparently simple: IT has the power to flatten hierarchies, shrink supply chains and speed communications. In successful cases the result can be summarised in one sentence: “people can spend more time thinking up new products and servicing customers, and less time checking boxes”. One of the examples dear to Steffenson McElheran is Walmart, the US retail chain which currently claims to be, probably rightfully, the largest chain operating in the area of organised distribution.

However there is only one in the Walmart world, while many more companies struggle in the IT area and some, believing that they are really applying information technologies, are sensationally wrong. For Steffenson McElheran there is “a tremendous gap between the most IT-savvy firms and the IT laggards”. To understand this we only have to think that the former succeed in increasing their revenues radically while the latter only manage this through incremental input.

But what are the missing ingredients in companies that fail in IT applications? For Steffenson McElheran there are at least three essential conditions: so-called “organisational understanding”, then effective “executive backing” and, finally, the ability to look to the long term and live in the unknown rather than seeking fast fixes. IT translates properly into a competitive edge only when the company succeeds in changing the organisation. Which is not easy for many.

Why Business IT Innovation is So Difficult

Maggie Starvish

Harvard Business School Working Knowledge

October 2012

“We broke the bank at Montecarlo”, said the Pirelli advertising posters of January 1977. The bank was in fact broken – three times in a row. That Friday, 28 January, in ’77 Sandro Munari, the “Dragon”, driver for Lancia Stratos with Pirelli P7 tyres fitted, stood on the podium of the Monte Carlo Rally for the third consecutive year. With him the trusty navigator, Silvio Maiga.

Munari, Maiga, Stratos and P7 had already pulled it off in the Principality in the January of the previous year and the Dragon had declared to the corporate newspaper Fatti e Notizie [“Facts and News”]: “if the rally route had been completely covered in snow I would still have won: the Stratos is the strongest car and the P7 tyres would have done well on snow too. In fact in the only trial with snow we recorded the best time, with a considerable lead”.

Munari had embarked on the Monaco hat trick in 1975, paired with Mannucci and again driving the Lancia Stratos, the “wild beast” which for a year already had dominated the rallies thanks also to the super-low profile Pirelli P7 tyres. Years in which, in addition to Munari, drivers of the calibre of Bjorn Waldegaard, Walter Röhrl and naturally Markku Alen raced for Pirelli. For the Stratos the cars to beat were “rivals” in a certain sense, seeing as they were called Fiat 124 Abarth and, above all, Fiat 131 Abarth.

However Pirelli P7 succeeded in reconciling everyone, cool Nordic drivers and crafty and imaginative Mediterranean types, cars designed almost specifically for racing and the “racing” versions of popular models (cf. the 131…). It was possibly not just a question of product excellence: the legend of the organisational efficiency of the Pirelli racing team was created at that time. “The Magnificent Fifteen” as Fatti e Notizie called them as early as 1974 in an article dedicated to those working in this sport, interest in which was growing year after year. “They are not drivers, navigators or mechanics, yet they are part of the varied and multicoloured carousel of international rallies. The most important and delicate task of this specialist team is that of technical consultancy and organisation of the service points. Often the choice of one tyre over another turns out to be fundamental in terms of ranking...”

In the bank breaking operation of Montecarlo in 1977, the Pirelli rally team definitely also played its fiche…

The Bicocca district in Milan, where building started in 1908 in the area around Pirelli, is today radically different compared to the past. The original factory has become the location of the Università Statale and, where there were once vulcanisers and production machinery, today there are piazzas and modern office blocks. New roads have been opened and many small roads within the development are today city streets with busy traffic. Only the Borgo Pirelli, built in the 1920s as a housing estate for employees, has remained virtually intact and the starting point for a short walk between the Bicocca of yesterday and the Bicocca of today.

Borgo Pirelli is still confined within the corner between viale Sarca and via Emanueli, which in those times however was still called via Rodi. It was given the new name as late as 1971 to commemorate the death in 1959 of the engineer Luigi Emanueli who for forty years was the true brains behind research and development at Pirelli. The small houses in art nouveau style are grouped around the so-called Casone (literally “big house” or also “barn” or “barracks”), the large four-storey building which in the past housed local shops, from the grocer’s to the greengrocer’s and butcher’s. The current bar and tobacconist’s which looks out onto via Emanueli has been there for ninety years…

During our walk to the University we then proceed along via Emanueli, towards Greco railway station, passing on the right that which was once the Segnanino industrial area. The factory of Azienda Articoli Tecnici once stood there, gravitating around Fabbricato 184, which in the 1990s was the first embryo of the University. At the traffic lights we turn left into the wide and tree-lined viale Piero e Alberto Pirelli, between the shops and bars and restaurants of piazza della Trivulziana and the ultra-modern apartment block of piazza dei Daini. We are now in that which was once via n°13, among the tyre finishing departments and the tracks of the internal railway, with even a puffing locomotive…

Towering above us is the massive cooling tower, built in 1950 in order to recycle the process steam. Today it is “boxed in” and protected inside the large grey cube which we can see on the left – Headquarter 1, Pirelli group headquarters.

We’re there – here’s the last orange-coloured block with its overhead walkways which dominate the entrance, the long rows of large windows with white frames and the words in large letters “Università degli Studi di Milano Bicocca”. This is the torre (or tower) U6, built from the historic buildings 45 and 66, which in the company’s past has always represented the strategic location of Pirelli Pneumatici in Italy and overseas. The buildings at that time were obviously not orange but a very natural “pale factory yellow” and the glazing of the walkway was set in a dense forest of ivy…

Going up the ramp towards the entrance to the Faculty of Psychology, we try for a moment to imagine the monumental piazza dell’Ateneo Nuovo, crowded with factory workers and production machinery and long rows of workstations for the control and finishing of tyres. And the piazza goes back to being Fabbricato 262…