Business News, December 24, 2009, Lithuania

Management in appropriate cocktail proportions

Interview: Economy requires balance

Most of the world's economies increasingly give priority to intellectual services development. Although export of intellectual services is supported in Lithuania, the country's entrepreneurs are often lacking management knowledge that enables them to effectively enter Western markets. What advice should management consider and how can companies use business management systems for business development are the questions we asked Søren Fink-Jensen, the chief executive of the company 1ClickFactory, which is a certified Microsoft partner.

Q: You established your software factory in Lithuania. Why Lithuania?

A: The reasons that influenced the decision to invest in Lithuania were based on a number of factors, such as a well-educated and English-speaking population and specifically a good, level of knowledge around Microsoft Dynamics products. Besides, Lithuania, as a member of European Union, ensures high protection of intellectual property rights, which is very important in the software industry.

Q: How do you evaluate the business management skills of Lithuanian people? Will you employ Lithuanians for management positions?

A: From what I have seen so far, there are many good managers and leaders in Lithuania and we will certainly have Lithuanians as part of our management team in 1ClickFactory, as well as foreigners. 

I see two different approaches to management in Lithuania.  There is still some of the old-school management style, where employees are managed and controlled in a detailed manner, but there are also many companies with younger leadership, where the focus is more on managing by objective, which is giving people the freedom, means and opportunity to drive their own decisions on how to reach their objectives.

In my many years as an international leader at Microsoft and Navision, as well as scientific data that shows this, I've seen that people, who work in a less controlled environment, where they have more influence, become more motivated to work and as a result, this releases more energy and creativity into the business environment.  In the end, it is this creativity and energy that creates new knowledge, some of which can become intellectual property that new business can grow on. I see the movement going in this direction in Lithuania for many companies, which gives me great hope for the future.

Q: What is your opinion about the role of intellectual services in the country's economy and business development?

A: I think that it is good for any economy to have a mix of primary industries, such as agriculture, manufacturing industries, service industries and a competitive and efficient public sector. This gives the economy a balance, which gives it more resilience in recessions.  If one industry is not doing so well, then others might be able to compensate.

You also need to identify, as a government, where your growth in the future will come from and to create a base which in turn will accelerate growth.

As you cannot make enough investments in all areas of the economy to gain an intellectual property advantage then it is important that you select a few to fast-track that you believe can give more growth to the national economy than others.  It is my belief that with the expertise present in the country today there is an opportunity within a number of high-tech industries such as the IT industry, particularly in software, the telecom sector, based on mobility and mobile computing and then maybe the medical industry.

Q: How do you evaluate the potential of Lithuania to export intellectual services and how could it impact the Lithuanian economy?

A: You have as big or even bigger opportunity than many other countries to create and export intellectual services. The knowledge and scientists are here and mixed with the right pieces of knowledge and right scientist from other parts of the world.

The reason why I think that there might be a big opportunity for Lithuania is that many Lithuanians left about 10 years ago and went to live abroad.  Some have stayed abroad but many have come back.  This creates a Lithuanian society that is very well connected internationally and where an abundance of people have large international networks. More creative thinking always happens in areas of cultural melting, as new things come out of combining different types of thinking. For example, in 1ClickFactory, all of our employees have either lived abroad or been involved in international projects (before 1ClickFactory).

In addition I think there is a difference in attitude.  The Lithuanians that I know and who work for 1ClickFactory all want to improve themselves.  Most of them study besides working full time.  This kind of motivation, commitment and sacrifice in order to make a difference is something you rarely see in Western Europe.

Q: What would be your advice for Lithuanian companies (not just for IT companies) that are seeking to expand in Western markets?

A: I think the most important thing is to understand the mindset of the Western markets.  In these markets you don't compete on price. You compete on (1) price/performance, (2) quality and (3) trust (which in many cases is related to number (2). So you have to have an interesting offering that is priced competitively.  If it is priced too low, then Western companies will think that it is bad quality and then they will not be interested.  Trust is also an important part of what you achieve with open and honest communications.

Second, do not boil the ocean.  Focus on one or two markets where you have good connections and weak competitors.  Analysis of the market and building a plan is very important.  Just running after random opportunities will most probably not get you there.

The third thing is to get western businessmen involved in your exports in the markets that you have selected.  Find a local person with expertise.  Make a joint venture, offer him shares in the local company that you will create.  Without local knowledge and connections in the markets you have selected, it will be difficult to succeed.

There is one other tactic that is important.  Entering Western markets successfully is not something that happens overnight. It is a long-term project.  It will take time and patience and good connections.  So in order to keep the continuity that is needed for this, you need to have a stable revenue stream that can ensure you can make the investments continuously over a number of years.

Q: How can business management solutions contribute to business success?  How do you evaluate the demand for these software solutions in Lithuania?

A: I think that there are three factors that are the most important in business success. First, the right idea and products or services with the right value proposition; second, having good and talented people that know how to execute and; third, having a level of automation that makes you competitive. Out of these three there is not one that is more important than another.  I think they are all equally important. 

My view is that there are many good ideas and great people here, but that the level of automation in general can improve.

Q: What kind of business management software will be leading in the future?

A: I think that business management software will continue to improve automation, so that companies can focus less on administrative tasks and more on the fundamentals of driving their business.  I don't think anything revolutionary will happen, rather it will be a continuous process of improvements being made.