|22 March 2013|
The Finnish economy is largely dependent on large corporations but, as focus areas, demand, employment and investments are gradually shifting outside Finland. This was revealed by a study involving the largest 250 Finnish companies, conducted by the Nordic Institute of Business and Society (NIBS), a think tank set up by professors of Aalto University School of Business.
Performed in cooperation with Pohjola, the study was published on Thursday. This is the first time that research data of this type and range has been gathered in Finland or the Nordic countries.
Its key observation is that, in relative terms, investment is fairly low in projects pivotal to business expansion and development. Such projects include new product and service solutions, improving the customer experience and digitisation of the business model and value chain. Investments of this kind are crucial in the long term.
‘Large corporations are targeting their investments at competitive strengths rather than competitive advantage. In terms of the national economy, this represents a major preference in terms of focus: survival on the current basis is being ensured, at the expense of the kind of far-sighted investment in competitive advantage that is critical to business renewal, such as new earning models, new offerings and digitisation’, says Pekka Mattila, one of the heads of the research team and Visiting Professor, Aalto University School of Business, and Group Managing Director of Aalto University Executive Education.
However, executives have already realised that the world has changed and success requires new formulas. Across the response material, better quality of leadership emerges as one of three key development targets, right after organisational efficiency and outperforming competitors.
‘The current fuzziness may be the new norm for a longer period of time. Executives must be able to make strategic choices and, above all, ensure that the working community feels important, even if visions and policies vary’, continues Mattila.
In fact, respondents highlighted finding and recruiting competent executives as one of the key challenges facing their companies.
Although investments are still mainly targeted at Finland, the trend is worrisome.
‘To use a banal comparison, the relationship between Finnish society and the large-business sector which is so crucial to the country is beginning to resemble a marriage gone sour. Frustrated by continuous disappointment, the more affluent party begins looking elsewhere. Finland’s national leadership should invest in this relationship now’, crystallises Mattila.
‘Public debate on large companies has often been negative lately. This study shows that, while in many respects, large corporations play an important role in our society, policymakers have failed to take account of their interests’, says Reima Rytsölä, Executive Vice President, Banking, Pohjola Bank plc.
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The Idea in Brief
The concept of shared value—which focuses on the connections between societal and economic progress—has the power to unleash the next wave of global growth.
An increasing number of companies known for their hard-nosed approach to business—such as Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever, and Wal-Mart—have begun to embark on important shared value initiatives. But our understanding of the potential of shared value is just beginning.
There are three key ways that companies can create shared value opportunities:
• By reconceiving products and markets
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Every firm should look at decisions and opportunities through the lens of shared value. This will lead to new approaches that generate greater innovation and growth for companies—and also greater benefits for society.