Newsletter 1/2010 - Our South East Europe

A BUSINESSWOMAN'S VIEW: Interview with Gordana Kovačević, President, Ericsson Nikola Tesla

“We need real visionaries and leaders who can make a change, to ensure survival of sound companies”

Ms Kovačević, what are the key effects of economic crisis in the region, in your opinion?

Crisis and recession are not our local or regional specificity which we can solve, metaphorically speaking, by putting things in order at home. This time, problems are far more serious and far-reaching than ever before. The crisis, which scientific theoreticians link with neoliberal globalisation reflected in a lack of control mechanisms, distinguished egocentrism and lost relation with practical economy, has already greatly affected the entire world and led to numerous far-reaching consequences on people and countries. Along with declared bankruptcy of some national economies, other countries are already introducing protectionism measures to protect their economy and decrease the pressure of competition in local market, while some, such as Greece, warn that their financial debts could lead to a new wave of global crisis.

I would however dare say that the common denominator of the most important crisis impact in our region is large instability and insolvency in all sectors of society – economic or real, public and civil. Lack of fresh capital, inadequate structure of national industries, indebtedness beyond possibilities of national economies as well as serious consequences of difficult circumstances in which our countries developed in the last twenty years are just some of the most important aggravating circumstances in which we have faced the current crisis. If large social expectations and enormous disproportion between results of real sector and spending of public and civil sector, i.e. expenditures and revenue of state budgets, are added to this, one can conclude that we are spending more than we have and that we have to think of large strategic reforms which would facilitate our coming out of the crisis.  

What would countries have to do to mitigate the effects of the crisis?

I am not a politician but a businesswoman leading a company with 1,650 employees which, regardless of the crisis, records solid business results. Ericsson Nikola Tesla is a regional leader in the area of information and communication technologies and a company serving as a positive example in local, regional and global environment. There are more such positive examples in our environment which is a good sign because, in times such as these, we need more examples of the synergy among prestigious people and organisations regardless of the part of the society they come from. In this context, I believe that adequate support from regulators of our business environment, i.e. the states, is also important. Namely, a company can work hard and have motivated staff, but if different economic measures have negative influence on business entities then the impact is far more modest and can sometimes even be discouraging regardless of understanding on the part of the employers, e.g. exporters, for certain measures of the legislator.

As I have once stressed commenting on a similar question, it would be fatal for our economy, especially for the most successful and most attractive businesses, if, in an effort to preserve social peace, the responsibility of creators of the state strategy and policy for further development of competitive economy and sustainable social development would be left out of the focus. I believe that even in the most difficult times, we have to have a vision of what we want; we have to stimulate those sectors and types of business which have an opportunity for growth and creation of new jobs. In order to be able to finance the state apparatus, public sector and society from the state budget, we have to have an economy, i.e. a real sector that will feed the state treasury with the expected, large amounts in the years to come. Propulsive and perspective sectors, research and development activities and everything that can be our competitive advantage in the global market have to be recognised by the governments of the countries of the region and supported with different measures.

We know that development-oriented strategy is a highly demanding and responsible task in particular at the time of crisis when pressures from all budget users are going sky-high. Gravity of all our hot spots has to be detected and, if necessary, something has to be cut off to ensure survival of sound companies. For this, we need real visionaries and leaders who can make a change.

Do you think that strengthening regional cooperation could contribute to an easier and faster way out of the crisis?

Strengthening regional cooperation can surely have a positive impact on each country individually as well as on the entire region in the sense of faster and good-quality flow of information, knowledge, technologies, money, people and other resources. Considering that markets are no longer protected, the only guarantee of one’s successfulness in this context is one’s own competitiveness in the global market.

It also has to be mentioned that our companies too are not operating in evenly developed and regulated domestic and foreign markets. Namely, some of them operate in competitive market conditions of regulated Western democracies while some are facing a large challenge of operating in markets of countries with high political risks which additionally underlies already high financial risk. In order to operate in such demanding markets, exporters have to have specially prepared scenarios and work models. Advantageous exporters are those that have, in their strategic contemplations, accepted global business and industrial trends, adjusted their businesses and processes to changing market and technological conditions, and have competitive products, solutions or services.

The crisis also emphasizes the issue of risk management especially due to the all-pervasive insolvency that makes business planning more difficult and slows down investment cycles. One of the largest generators of crisis curve, along with insolvency, is large indebtedness and a lack of inflow of fresh capital from banking and financial sources. All countries and business entities are facing these problems. This is precisely why I believe that in order to increase mutual cooperation, the real sector of all countries of the region should use systematic and elaborated scenarios of management of all business as well as financial risks which include different financial instruments and new business models of cooperation with buyers in all, including risky, markets.

When it comes to desired business conditions, I believe we need to be realistic, and already now accept the existing trends such is slowing down of investment cycles, which is a present reality in some sectors. We also have to stay focused on our priority activities and tasks. And finally, business conditions are constantly changing regardless of the crisis and in this sense, crisis cannot be an alibi if we fail to do something or do something badly. Bearing in mind that this is a global crisis affecting all countries and all industries, the things exporters from the region can possibly rely on are good-quality products, solutions and services competitive at global market as well as good-quality relations they have with their stakeholders. It is the only right response to all challenges in these difficult and demanding business circumstances.

In what way this cooperation could be strengthened and what are the prerequisites?

From the experience of Ericsson Nikola Tesla, which has been successfully operating in numerous export markets, including countries of the region, for six decades and is the biggest Croatian exporter of knowledge, I can stress that the key to success lies in respecting our partners and in joint work on development of operations of our companies or organisations.

The situation in various sectors differs from extremely negative scenarios to moderately optimistic tones. I would especially stress here the positive influence of ICT to development of society, people and business. Due to extremely positive impacts on businesses in the sense of savings, speed, transparency and satisfaction of citizens, the public administration as well as all other segments should as soon as possible implement contemporary ICT solutions in their business processes. Based on such positive experience, I believe that future strategic development of all countries from the region, regardless of the fact that we are going through a difficult period, has to consider the requirement of competitive industry which generates new ideas, products, solutions and services for global market. This is not possible without implementing contemporary ICT systems because if companies wish to be competitive, they have to use information and communication technologies to enhance their operations, at the same time using innovation of their employees as their comparative advantage in comparison with the competition.

In this I see a large potential for mutual cooperation on large-scale state infrastructural projects which need to be part of public administration reform in the region. Conscientious state strategists, in the sense of recognising priority areas of development and needs for mutual cooperation going beyond state borders, are necessary for this potential to be used. As a businesswoman, I advocate for connecting different industries and implementing best technological solutions which stimulate positive changes in the entire society.

In this context, our governments have to cooperate more closely because it is only when we know each other and are open to cooperation that our economies have the opportunity for stronger cooperation. Therefore, positive atmosphere in mutual relations can greatly assist real sector and thus development of our economic relations as well. 

What are the main obstacles in strengthening regional economic cooperation?

Closure into national economies, slowness in acquiring new knowledge, technologies and positive experiences, slowness in decision-making and large insolvency and insecurity in business environment is what I consider the biggest obstacles to strengthening regional economic cooperation.

I believe that regional leaders should, through their activities, create regulatory frameworks and necessary preconditions for developing incentive atmosphere while it is up to the very businessmen to prove themselves in practice in these markets with their work, high-quality expertise and competitive products. The principles of innovation, which represent the point of differentiation, are applicable throughout the world, and it is to be expected that cooperation in our region too will finally result in positive effects on our citizens and economies. In any case, the example of Ericsson Nikola Tesla and our partners and buyers in the region demonstrates that cooperation based on real values, open approach, exchange of knowledge and information is very much possible.

Gordana Kovačević has been the President of Ericsson Nikola Tesla since January 2005. She is also a member of the RCC’s Business Advisory Council for South Eastern Europe.  Ericsson Nikola Tesla is a Croatian member of the global Ericsson corporation, with a lead role in providing modern ICT solutions in South East Europe.


Gordana Kovačević is the president of the Croatia-based Ericsson Nikola Tesla company. (Photo/courtesy of Ms Kovačević)

Gordana Kovačević is the president of the Croatia-based Ericsson Nikola Tesla company. (Photo/courtesy of Ms Kovačević)