First of all, let me just say that, wow, it’s been a long time since I’ve been in school.
We had two half day sessions today. The first was with Cooperative Economics professor Stefano Zamagni, who lectured on economic theory from Adam Smith to today. The second was with Pier Luigi Sacco, from the IUAV University in Venice. Yesterday we heard from Professor Zamagni’s wife, Vera, who is also an economics professor here.
Professor Zamagni is a world renowned expert on economics, who discussed the distinction between the political economy, which is composed of the exchange of equivalence of value and redistribution, and the civil economy which layers in reciprocity.
What does that mean? It means that beyond the negotiated cost of a product or service, in the civil economy there is the concept of reciprocity. Families often work this way, in that they will give each other money or their time knowing that they might need to call in a favour at another time, but the deal of that exchange is organic and isn’t set out ahead of time. I wouldn’t sell my car where the agreement was that I gave over my car but we’d negotiate the price later. With social capital in place, the value of the exchange can be negotiated informally over a longer period.
Lots of interesting concepts here, but what strikes me is that the history of the region created tight communities who cared about individualism. Social capital is extremely strong. People don’t care about growing singular large companies, but in creating smaller companies, often as coops, which partner and work together to create the goods or services they wish to produce. Because social capital is so strong, deals are done on a handshake, and contracts are avoided most of the time. Seventy percent of companies in Italy have less than 100 employees, and only 10% are large companies, defined as having more than 500 employees. Companies with 500 employees at home would not even be considered large companies, and here they are in the top 10%.
A lot of what seems to work here is not necessarily directly exportable to North America, which is a less trusting and more litigious society. Having said that, I think the search for partnerships and the building of reciprocity has some lessons for us back home. Imagine if, instead of starting a new division in your company, you partnered with another company to achieve what you wanted. What if these partnerships were tight and based on trust, so not everything had to have an SLA and a legal contract? Would that fly?
Another concept I find interesting is the two models of competition. As an employee of a cooperative, we discuss coopetition when I get together with my credit union peers, and that’s what they have here. Traditional companies have positional competition, where companies compete to take the top position, and only one can win. Here they have cooperative competition, where competition helps companies focus and hone their edge to make themselves better, but not to drive their competitors out of business. They need each other to stay lean and innovative. This seems to me like the way credit unions compete back home.
It strikes me that we actually have a lot of cooperative competition at home, but with one key difference. I share lots of ideas with my peers at the banks and credit unions, but only once I meet them and develop some trust. It isn’t the default. Because companies here are very small, they are often family run, and the default is to trust because families know each other. The trust is inherent as opposed to built.
Tomorrow we’re out of the classroom to visit Imola and meet with a couple of cooperatives. Will write more in the next two days.
Also, my first of three guest columns on ChangeEverything.ca was published today.