Erwan Henry, Contributing Editor MFN

Italy, is not only the heir of the Roman Empire and the home of the Renaissance with a fascinating history and culture, but is the seventh largest economy in the world (GDP ranking, ref. IMF 2009), a leading force in fashion, stone processing technologies, food and automotive industries, sport and luxury vehicles in particular... The Italian business culture is very effective and the purpose of this column is to shed light on its salient features.

A Latin country

Italians are the ultimate Latin people (ref. MFN March & May 2008): they talk profusely and fast, verbal exchanges are lengthy and passionate. It is not unusual for foreigners attending meetings in Italy to watch discussions turning hot and people red, voices raise high, tension becomes palpable… then suddenly things calm down and the debate ends quietly. If asked “what happened, why this argument?” the reply is “nothing in particular”.

In Italy, one of the strongest bonds between individuals is the belonging to a local community, generally a city, the heritage of the Renaissance days! This makes most Italian businesses local: entrepreneurs are deeply rooted in their home towns, even leading companies such as Barilla or Ferrari are settled in the very place where the founder came from. They work with people they know, a token of trust and efficiency. A downside is however the low level of executives’ mobility, preferring to stay where they grew up and enjoy the proximity of relatives and friends.

Families vs Government

Italy was unified during the 1860’s but the various governments failed to create a strong sense of national belonging. There is hence a strong distrust of governments in general, not a kind of US Republican attitude (“the government is the problem...”) but rather the consequence of the struggle between local communities and a higher form of authority considered intrusive and abusive: the Italian State matters far less than cities and provinces.

In “Italia S.p.a.” 95% of businesses are family controlled (ref. Forbes Magazine) from Fiat and Versace to small metal workshop and fashion design studios. This is where unique features of Italian business culture blossom: the robust and resilient entrepreneur spirit has a stunning talent to think out of the box, team work is highly efficient thanks to the dependable bond between individuals, the management of resources is quite effective leading to productivity and low costs. This makes the Italian business model driven by making things happen rather than being a hostage to regulations and guidelines.

La Bella Figura

There is however a marked framework of hierarchy and formalism: the distinction between owner and employees, between family and non family, makes its print in the daily corporate life. Under the apparently easy going attitudes, business relations are governed by strict conventions.

Even in small companies executives are most often called by their professional title: “Ingegnere” (Holder of a graduate degree in engineering or science), “Ragionere” (CPA), “Dottore” (Holder of a higher university degree)... There is a genuine dress code in the Italian business world, difficult though to grasp and fit in: this is not about wearing a tie or a striped suit, this is about dapperly matching clothes, with a balance of designer style and conservatism, smartly mixing casualness and seriousness. “La Bella Figura” is essential, giving a first good impression, looking elegant without showing off, presenting oneself with a respectful attitude, displaying a courteous face, behaving politely.

Effectiveness and Creativity

These family focused businesses are good at using very efficiently limited resources to get things done.  They tend to rely on their own lean forces rather than expect government’s help (difference to the French), co-operating first with the group of people they trust: friends and neighbours, or friends of their friends, or further business connections such the Trade associations of their city or industrial sector... this is the Italian version of the Chinese Guangxi.

I am always impressed by the performance of Italian businessmen who are good at networking worldwide, quick to find the source of the relevant data through human intelligence, eager to go first to places where no other dare to travel. Do not allow the lengthy talks make you believe Italians are slow. They are quick to pro-act, their high emotional sensitivity enables them to grasp and meet the slightest changes in demand.

The Italians deserve the Gold Medal for creativity: this form of genius goes back to the “quatrocento” days of the early Renaissance. I think this is the combined effect of a high level of culture, a flexible working environment which lets people express themselves, the positive role of energetic debates which efficiently screen good ideas from others and push them up, the virtual absence of burdensome bureaucratic barriers which let vitality remain unimpaired. The outcome is a faster track from idea to product!

Innovation is in the DNA of the Italian business culture. Italian companies are good at creating competitive advantages thanks to their talent to think out of the box. Their flexible and down to earth management makes things happen at lower cost and faster than elsewhere in Europe. Italians are unbeaten in practical and informal connections to grow their business globally! An Italian member of an international management team or project group is a sure recipe to boost creativity and consider solutions rather than problems.

By Erwan Henry(*)
Contributing Editor MFN
E-mail: erwan@mfn.li

Author: Erwan Henry (*): Erwan gives International Business Strategy MBA lectures in Universities such as FIA-USP in Sao Paulo (ranked (N°1 MBA program in Brazil), I.Kant State University of Russia in Kaliningrad, Magister Management University of Indonesia  in Jakarta, PUC University in Rio de Janeiro, and other lectures at SUPELEC Paris and UPMF Grenoble.

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