As an entrepreneur who takes terrible risks on a daily basis, the European model enhances the opportunity for what we as design engineers have always wanted, freedom.
If you have ever read this column, you know that I am a student of risk. All of New Product Development (NPD) is about risk on a corporate level. However, entrepreneurial risk is related in the sense that corporations both large and small, from start-ups to behemoths, are faced with risk, and the social systems in which they exist plays a large role in determining how that risk plays out. As a social psychologist, I am increasingly interested in understanding how these systemic influences affect us all.
I have traveled throughout Europe for the past 15 years, and recently opened a PCDworks European office in Pescara, Italy. The experience was both enlightening and maddening. From the excessive hand gestures to interrupting one another in conversation, I can certainly see the genetic roots of my behaviors that my wife dislikes — at least I now believe in DNA determinism.
In my years of travel, one question has always haunted me, but I may have finally found an answer. Across Europe, one is confronted with quaint little shops that sell everything from books to art supplies. Cities have small vendors, like model airplane shops, newsstands, neighborhood pizzerias, etc. Europe is known for these charming little stores, and what I find most interesting are the small enterprises, across the continent, that churn out pieces for bigger companies.
How do these businesses survive? How is it that people across the continent can work in restaurants or dry cleaners or small local hardware shops and earn enough to grow old and retire? How can one have a decent quality of life; buy a home; send kids to college; and go on family vacations while supported solely by these tiny enterprises? The answer lies in the realm of controlled risk.
Not surprisingly, most little endeavors get their start with equal parts of necessity and frustration — as similar ventures do in the U.S. Let’s take my friend Dominik Ottenbreit who, with his brother and mother, run Electronic Services Ottenbreit (ESO) of Hahnenbach, Germany. Dominik’s father started this booming circuit board business in the attic of the family home twenty years ago after losing his job in a similar factory during a downturn. His father started by simply populating boards by hand. He did such a great job that he eventually found enough customers to grow — and a bank willing to lend him money for the machinery necessary to succeed. It sounds risky.
Not really. In no case were the Ottenbreit’s threatened with foreclosure, nor did they lose their healthcare. Both Dominik and his brother are university educated and received that education while their father was starting the business. It’s a story about the containment of risk at a societal level. In Germany, the social system doesn’t tear a family apart if the main breadwinner loses his job. Of course, like here in the U.S., there is a level of expectation that he or she will get a job, but in the meantime, healthcare is not lost, education is not abandoned, and even retirement is not necessarily put at risk. The government provides enough funding for feeding the family. Housing is an issue, but the European penchant to pass housing down from generation to generation comes into play here. So, the risk for total family annihilation is minimized.
Let’s focus on my Italian partners, the owners of Wellynx, a well service company, and co-owners of PCDworks Europe. Two years ago, the three partners were employed as engineers and scientists for one of America’s largest oil service companies, but based in their hometown of Pescara. Typical corporate capriciousness finally took its toll and they left the company to start their own consultancy. After less than a year (albeit a tough year), they are in the black and have even been hired by their former big oil employer. They never risked family fortune, healthcare, starvation, or their kids’ college by leaping out on their own.
Throughout Europe, I see the same thing: people starting consultancies, starting businesses they love, and attempting technology startups that most engineers only dream of doing. Some are doing it because they have been laid off, like Mr. Ottenbreit in Germany, but in many cases they do it simply because they can.
A disproportionate number of small- to- medium sized enterprises exist in Italy, and most are started like ESO in Germany. They are trans-generational, family owned, family run, and mostly succeeding in a way that supports the family. This is not unique to Italy; it is common throughout Europe.
It finally dawned on me, after much discussion with my Italian, Swiss, German, Spanish, Danish, and British friends, that Europeans have the freedom to be entrepreneurial because they are not at great risk. In the U.S., whether we leave our jobs voluntarily or not, the risk is great. We will almost certainly go without healthcare; we risk losing our retirement (however paltry it may be these days); we risk our children’s college funds; and most importantly, we risk losing our homes. Europeans don’t face the same risks, so they can be more daring. They can, and do, live lives of their own choosing.
It’s food for thought for those of you in the U.S. hoping to start a small business, open a quaint shop, or attempt a startup. Our free market, laissez faire system is stacked in favor of those who will risk it all, and risk it all you certainly will, because if you fail, you will certainly suffer hardships.
Many would-be entrepreneurs like to rail against European social democracy as too controlling, too taxed, and an impediment to freedom, as disincentive to hard work. From my viewpoint, as an entrepreneur who takes those terrible risks on a daily basis, the European model enhances the opportunity for what we as design engineers have always wanted — freedom to create, to not be drones in the corporate hive, to show that our ideas have merit, and to test our metal in the crucible of the market.
Mike Rainone is the co-founder of PCDworks, a technology development firm specializing in breakthrough product innovation. Contact him at email@example.com and visit www.pcdworks.com.