Economics
Opinion Article
December 22, 2020

Trust, complementarity, and commitment

With the country about to receive huge amounts from the EU to support the recovery from the pandemic's effects, the urgency of ensuring greater efficiency in the application of funds is on the minds of all Portuguese. One of the important points is to ensure that national companies respond to the challenge in order to promote the creation of jobs and wealth that will allow sustainable growth in the Portuguese standard of living. Although the public debate remains stuck in the sterile dilemma between the role of the public and the private in recovery, a victim of the ideological alley we are in, the strategic transformation towards the future is based on a dynamic partnership between companies and the State. This is the obvious lesson from recent successes in Europe and the world.

In this sense, the country's recovery and resilience require transforming our business fabric based on three fundamental pillars: more exports, more digitalization, and more sustainability. Suppose large companies with professional management today have strategies and resources to work with these dimensions. In that case, the vast majority of our fabric is medium-sized, often managed by entrepreneurs with little training and insufficient awareness of the challenges created by the disruption of our day.

In reality, the transformation challenges often seen as technological problems in implementing this or that software or the creation of a website or platform are mainly strategic and cultural. If technology or sustainability are the drivers of change, the explosion waves will imply a complete change in the economy and all companies that are part of it. In a few years, all companies that survive will be more innovative, more agile, more focused on their purpose, more sustainable, in a word, it will be a new organizational culture for the future. Companies that refuse or delay this transformation will pay the price of survival. And the collateral damage will be to the national economy, employment, and the lives of the Portuguese.

This is the central transformation for the resilience of the Portuguese economy. This must be the fundamental concern of any strategic plan that focuses on the future of the country. This is also the opportunity created by the resources that will be available to us in the next five years. But for that, the country must recognize the trust, complementarity, and commitment required in the relationship between the State and companies. Confidence in the willingness to work together effectively, respecting each one's fundamental contribution, is the starting point. Complementarity in the recognition that the national economy is only as strong as its companies that are agents of wealth creation, employment and well-being, but that it is up to the State to provide the physical and institutional infrastructure, aggregate the national will and coordinate the agenda .Commitment in the sense that taxpayers' support to companies must have tangible results in the path of internationalization, digitalization and sustainability, in order to ensure an appropriate return on the support granted.

This commitment is more difficult when it is recognized that the transformation that will ensure the success of these companies in the new world is cultural and strategic. It is difficult to monitor the implementation of a specific software subsidized by public funds. It is impossible to monitor companies' strategic or cultural transformation, which is fundamental for this software or other investments to generate results. The only way to do this is to demand and contract results based on objective metrics; for example: exports, digital customers, emissions cuts.

These transformations demand from companies, and above all from entrepreneurs, an exercise in humility and generosity: the willingness to put the company's future ahead of its ego, its power, its control. I am convinced that a generational challenge will arise, with the passing of testimony to younger generations, more aligned with modernity's challenges. It will also be a challenge of professionalization, with the appointment to executive positions of prepared managers and effective governance.

Such a transformation does not imply a generational cut at all. The accumulated experience and knowledge of the companies are fundamental to their success. Generational transformation and professionalization will always be gradual and governance structures can be established in order to ensure such a balance. But it is important to recognize that in times of accelerated change in the external context, it is necessary to change the internal context. As Jack Welch said, "When external change is faster than internal change, the end is near."

The country's real strategy requires trust, complementarity, and a commitment to change in the private and the public. This work of national convergence is critical to ensure more success, more resilience and more progress in this new stage of the country's development. The responsibility rests with the State, namely the political decision-makers and the public administration staff, and each of the companies in Portugal, namely their managers and entrepreneurs. The resources at our disposal can help in this transformation, but the will to do differently towards the future must be first in each one of us.

 

This content was originally written in Portuguese and published in Jornal de Negócios.

Daniel Traça

Dean at Nova School of Business and Economics

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