Grow East Congress 2020 „Restarting Growth in Central and Eastern Europe: Drivers and Barriers“
Grow East Congress 2020
On 27 November 2020, the 11th Grow East Congress took place for the first time in a virtual format. The Congress theme focused on the restart of the CEE economies after the breakout of the Covid-19 pandemic. Will the restart just be a continuation of the interrupted business or will the way the world does business be different afterwards? What are the lessons for management so far? Besides the two opening speeches related to the Congress theme, two panels dealt with the role of human capital and local innovations as growth drivers. The organizers Arnold Schuh, Competence Center for Emerging Markets & CEE at the WU Vienna, Manfred Berger, Neusicht Think Tank, and Gregor Postl, Advantage Austria, invited researchers, executives and entrepreneurs from the region to share their research findings, innovative business models, and management experiences from the crisis with the audience.
The first global crisis with “no big reason”
Patrick Sagmeister, Deputy Director General of Advantage Austria,opened the Congress with a clear commitment of the Austrian businesses to CEE. More than 20% of the Austrian exports and 10.000 branch offices and subsidiaries of Austrian firms give evidence of the huge importance of these dynamically developing markets for the Austrian economy. Arnold Schuh, Director of the Competence Center for Emerging Markets & CEE, highlighted the crucial role of digitalization, innovativeness and EU transfers for the further modernization of the CEE economies. Main barriers for a sustainable economic revival are the skills and labor shortages that will come back with the recovery as well as the weak and stagnating institutional quality. He expects a further increase of the pervasive corruption due to the inflow of enormous funds from the state and EU to mitigate the economic and social effects of the pandemic. This is a pity as institutional quality and economic development reinforce each other. Piotr Płoszajski, Professor (em.) of the Warsaw School of Economics (SGH), warned against perceiving this crisis as any other. The Covid-19 pandemic is the first real global crisis as it happens simultaneously and threatens all human beings. And it is the first global crisis with “no big reason”. He predicted that we will experience more of those crises that are triggered by small, unforeseeable and unique causes and then diffuse globally in a cascading effect.
Decentralization and upskilling as right response to the crisis
Sonia Ferencikova, Professor at the Bratislava University of Economics, opened the panel on finding and developing the right human skills. With the Covid-19 crisis, we arrived actually in the VUCA world. Although often talked about it, we did not understand that we were already living in this world shaped by volatility and uncertainty. This crisis makes human resource management to the partner of top management as the re- and upskilling of employees in areas such as digitalization, team engagement and remote management become central to business success. Roman Biller und Wolfgang Braunböck of Oracle, the global leader in data management solutions, reported an unexpected surge in public and private sector demand for their products and services since spring. A consequent orientation on business growth and good customer relations is more important for them than cost-cutting in the current crisis situation. They reckon that digital communication tools such as Zoom and Slack will become standard in their future work life. Jelena Cerar from WU Vienna presented the findings of her study on management practices in domestic and foreign manufacturers in the Western Balkan. Foreign investors are still attracted by the low-cost and well-trained workforce and have according to her study a huge upward potential for productivity enhancement in their plants. This can be achieved best by using more written procedures, instructions and trainings from headquarters.
Olga Knyazeva of Henkel CEE suggested two effective measures to cope with the crisis, namely the change to agile organizational structures and increased up- and reskilling activities. Agile structures favor decentral decision-making and the empowerment of local management. The willingness to learn quickly and to adopt new digital skills will become more important when recruiting and promoting employees. Günther Tengel, Managing Partner of the executive-search specialist Amrop Jenewein, underlined the current developments towards digitalization, decentralization and the new world of work with home office. Instead of the traditional three phases „education – work - retirement“ we now move towards 6 to 10 phases, all characterized by different combinations of private and work life. At the same time, he made a case for the company as a meeting place where employees get to know each other, exchange views and build trust – and where employer branding happens.
Innovative solutions „made in CEE“
At the panel on innovative and digital solutions “created in CEE“, executives of four successful innovators talked about their business models and the CEE innovation scene. Martin Němeček, Head of EU Strategy at ALZA, the leading e-commerce firm in CEE, explained why ALZA bet on innovativeness in the crisis. The prevalent startup-mindset helped ALZA to respond quickly to the fast growing demand in the last months. Teaming up with the weakly occupied Czech taxis in delivery services and beginning with direct deliveries to car trunks in cooperation with Skoda are just a few of the recent innovations – and they are here to stay beyond the crisis. Calin Vaduva, founder and CEO of FORTECH, highlighted the importance of cross-industry partnerships, which would allow grabbing sales opportunities quicker. Last year FORTECH launched together with a US-American consultancy a Chicago-based joint venture. FORTECH acts as technology partner of AIPERION that develops and sells AI-based financial portfolio-risk-management software.
Andrei Roth from the first Romanian Tech-Unicorn UiPath, the world market leader in robotic process automation, pointed to the strengths of the CEE countries in the innovation sector. A good research infrastructure and universities with broad supply on MINT graduates provide a strong human resources basis for the ICT industry. Generous EU funds support startups with sufficient seed money but often neglect the financing of the scaling-up in the following expansion phase. However, the „free money“ character of the EU funds has an adverse effect on the risk-appetite of the founders, too, who don’t have to fight so hard and are rather satisfied with small wins. Finally, Krisztián Kurtisz presented the underlying business model of CHERRISK, his successful InsurTech-startup from Hungary. CHERRISK is a fully digitalized app that sells household, travel and casuality insurances. Its business model combines easy access to insurances with the community and charity idea. In March 2020, CHERRISK expanded into the German market. CHERRISK is also a good example how a Hungarian startup can reach out to a larger geographic market by teaming up with a Western regional player, the insurer UNIQA. The traditional insurer is benefiting too: CHERRISK’s agility and startup thinking challenges the culture and beaten tracks of UNIQA and leads to process and product innovations there too.
The 11th Grow East Congress showed that CEE offers more than low-cost production. Foreign multinationals can expect highly motivated and well-educated employees as well as innovative entrepreneurs there. When the CEE businesses succeed in riding the digitalization wave, in entering win-win-cooperations with European and global players and in making best use of the EU transfers then the economic catching-up process will continue.
Ass. Prof. Dr. Arnold Schuh
Direktor - Competence Center for Emerging Markets & CEE
Welthandelsplatz 1, 1020 Vienna
Please find the Links to all presentations on the congress website. Once you view a presentation you will find a related Disqus Board to ask your questions - our Speakers will be glad to answer them as soon as possible.
Grow East Congress Homepage: https://congress.groweast.eu/de/congress/review