ECONOMY

Hard times require daring and innovation

In these uncertain times, the key to every business success is «preparation, strength and daring» – or so said Dr Bolko von Oetinger, director of the Strategy Institute of the prestigious Boston Consulting Group (BCG) and senior vice president of the BCG in Munich, in an interview with Kathimerini. He also argues that in a country like Greece, which for its population size produces a «large number of brilliant minds,» who, however, normally prefer to work abroad, what needs to be done is to concentrate on developing productivity, competitiveness and innovation. To what do you attribute the prevailing uncertainty in the global economy over the past few years? Firstly, there is the pressure of globalization on traditional industries that are desperately looking for new strategies, and on new industries that are seeking to make a dynamic entrance… Global economies are becoming increasingly interconnected and the ongoing concentration of industries is constantly changing the landscape of competitiveness. Secondly, there is a lot of pressure that stems from a lack of trust, from the feeling that the principles and values we had learned to believe in are no longer to be trusted. Corporate balance sheets are no longer reliable. Regulatory authorities appear hypnotized. The heads of non-profit organizations, like the New York Stock Exchange, make out checks to themselves for hundreds of millions of dollars and then keep these payments secret from the stock market itself and from the majority of the board. Suddenly, there is this feeling that you can’t trust anything anymore. The third source of pressure comes from rapid advances in technology and human knowledge. Computers, cell phones, the Internet, nanotechnology, biotechnology – all promise to make our lives better and sometimes succeed, but never as quickly as we hope and always with changes we find difficult to adapt to. People are being constantly bombarded by an increasingly huge mass of information that needs to be processed fast and efficiently if we want to understand this rapidly mutating world. How can a company overcome this uncertainty? First of all, one has to look at the bigger picture. To evaluate the position of the company in terms of the market and the competition. Then it’s time to act. There are three basic principles that BCG applies to all businesses today. These are based on our experience with some of the biggest businesses in the world: preparation, strength and daring. If you want to innovate you have to be well prepared, and this entails the ability to look at the markets without bias, strategically, and to think of all the likely scenarios and consequences. This may appear like a waste of time, especially in times of prosperity, but often those are the times when strategic planning is most important. Secondly, strength. This ensures a company’s ability to be competitive. Real entrepreneurship means facing and handling challenges. But change and endurance are only possible when a company is essentially healthy – financially and operationally efficient. This means investment – both in good times and bad – in continuous improvement and optimization of methods, human resources and innovation. Last, there’s daring. A well-prepared idea and an efficient company are valuable only when it comes to action. And in order to have added value, you have to present something different. Something bold. Something that is timely, especially in tough times like the present. Unfortunately, it is in tough times like these that it is hard to be bold. The slump creates a tendency to ‘flock together’ and seek security through numbers. But this is self-destructive for a company. Inspired entrepreneurs, like inspired leaders, do exactly the opposite; they lead. The greatest architects of contemporary capitalism were those men and women who went against the trends and often they received a lot of criticism. What about Greece? How does all this relate to Greece? I’m not certain that shock therapy will work in Greece. This method was applied to a few former Soviet bloc countries in order to speed up their entry into the free economy. We observed that in societies that had an extant, functional legal framework, it was success, while in others it was less so. When we talk about Greece, we talk about a society that is modern and quite Westernized and I don’t feel it’s correct to refer to Greece’s liberalization as shock therapy. The three principles are applicable to Greece and, furthermore, I would concentrate on three areas that need special attention in all European countries, Greece included: productivity, competitiveness and innovation. Productivity does not have to do with hours of work, but with results, which depend on two things. Obviously, one is management, that differs from one company to the next. But it also depends on the external environment. When a bank tries to improve its methods, it does not just increase the productivity of its own staff, but also of its clients, who, in turn, work for other companies. The State probably plays the biggest role here. A good educational system… creates people of quality who are eager to fight for greater productivity. Free opening hours increase productivity. Improvements in bureaucratic procedures, from the paying of taxes to issuing permits, increase productivity. A country may have the most productive work force in the world, but if it spends all day waiting in a queue in order to carry out the simplest of procedures or spends hours stuck in traffic on the way to a business appointment, its potential is going to waste. So far, Greece has an enviable growth rate… But it can do better. It is perfectly possible for Greece to double its growth rate and stay at that level for the next 10 years. This may sound like heresy to the economists in Brussels, but Ireland is tangible evidence that Europeans are capable of very high levels of growth that can last a decade. Of course, Ireland also had a bit of luck – but luck comes to countries with sound economic policies. What are they in Ireland? Cuts in taxes, policies favoring new businesses, easy hiring practices and the creation of a positive environment for foreign investors. The Irish worker may not enjoy the same legislative and union protection as his German counterpart, but he does have something priceless; the security that comes from knowing that he will find employment… This sense of security would be priceless for Greek workers as well. Innovation, furthermore, is not a luxury. It is a must for societies that want to continue enjoying a high standard of living and a world with endless labor resources. But for Greece, innovation would mean that the best people it produces have to work here. For a country of some 10 million, Greece produces a large number of brilliant scientists and has one of the highest percentages of young people in secondary and tertiary education. Unfortunately, many of them do not work in Greece, despite its attractive quality of life. That’s a tragedy. This interview was translated into English from the Greek.