The failure of a company is not the worst thing that can happen to the economy – failure is simply the price of success, stated Professor William Barnett to participants of the two-day Advanced Program in Business seminar.
Barnett, who teaches leadership and business strategy at Stanford, believes that Croatia must make significant efforts in the small business sector, which is currently insufficiently visible. With more investment in small entrepreneurs who generate numerous innovations, Croatia can quickly advance on the global competitiveness list and create conditions for a successful breakthrough into the vast European market.
Croatia is quite low on the global competitiveness list. How do you perceive our corporate sector? What must Croatian companies do to raise their competitiveness and what are their main shortcomings?
When I observe the Croatian corporate sector, I see three main categories. The first category consists of large companies from so-called traditional sectors like energy. Such companies are very visible; people in the country and around the world know about them, even though they are not nearly as large as their global competitors from the same sectors and other markets. These companies in Croatia predominantly have a very well-structured business model. The second category consists of regional branches of multinationals, such as Ericsson or 3M, which benefit precisely because they have positioned themselves in Croatia. In addition, such companies take talented individuals from the labor market, who would largely be overlooked without them. The third category – small and medium-sized enterprises – is the least visible in Croatia and receives the least attention, which urgently needs to change. In the last few years, the crisis has made business difficult worldwide, but despite the crisis, we have had the opportunity to see some excellent entrepreneurial stories in Croatia. Such stories from small companies can help Croatia improve its competitiveness through the introduction of innovations into the global market.
Can you provide an example of such companies in Croatia?
There are two very good examples. Regarding small businesses, the best example is the company Adnet, which develops innovative software solutions for managing complex networks. There are countless similar companies in the small business sector, but only with the significant entrepreneurial effort of the founders has this company soared and is now receiving scholarships for the development of new products and solutions. Of course, none of this would have been achieved if the company had not developed innovative software solutions that are needed by giants like Google or Facebook. An excellent example of a successful larger company is the Croatian branch of Ericsson. They have created a long-term sustainable business model while simultaneously attracting the best engineers from the labor market and universities.
How do you view Croatian companies in the context of the country’s upcoming entry into the European Union – do you believe that companies are well-prepared and do they have a chance for success in the European market?
It will be very difficult for Croatian companies to make a significant breakthrough into the European market. However, doing good business in Europe or globally is difficult for everyone today. What we must keep in mind at all times is that the global economy creates champions. Just look at Silicon Valley in California, Singapore, or South Korea. The list of countries that have produced globally recognized firms is indeed long, but alongside the successes in all these countries, a large number of companies have failed. This same failure should not be viewed as a catastrophe but as the price of success – a certain number of companies must have problems for some companies to succeed. This has already been expressed in Croatia, and this trend will continue in the future because if you want to develop entrepreneurship and create innovations, you must accept the fact that some companies will disappear in that process. This does not mean that the economy is not functioning; rather, it indicates that entrepreneurs are experimenting, and a certain number of those experiments lead to innovations that will be one of the engines of growth for the entire economy in the future. Likewise, Croatian entrepreneurs may also fear the competition that awaits them in the European Union, which is not good. Competition is what makes us better and more successful, and that should be the mantra for Croatian leaders. Of course, with entry into the EU, competition will become fierce, Croatian entrepreneurs will find it more challenging, but ultimately they will learn to cope with competition and create even more successful firms. This is the driving force that creates jobs and wealth and leads us to a more dynamic economy.
