Polish IT entrepreneurs operating in the U.S. met with Polish President Bronislaw Komorowski and Deputy Economy Minister Ilona Antoniszyn-Klik during the Polish politicians’ visit to New York for the U.N. General Assembly meeting last week.
“Several years ago we could only dream that Polish firms could be in Silicon Valley,” said President Komorowski, according to the website of the office of the president of the Republic of Poland. “Today we should have another dream—that we create a Silicon Valley in Poland.”
Over the last 25 years Poland has metamorphosed from a gray, poor, post-communist country into a European economic powerhouse. It is now the world’s 23rd largest economy, and Europe’s sixth largest. It is the only country in the European Union that did not suffer recession during the recent crisis, and the projected growth rate for 2014 is 57% higher than for the EU as a whole.
Poland also has a very well educated population and creative professionals. As an example, a Forbes Insights/ACCA study, “Nurturing Europe’s Spirit of Enterprise: How Entrepreneurial Executives Mobilize Organizations to Innovate,” concluded that Polish respondents were most likely to say that they had championed an innovation. They were also most likely to say that they had succeeded in getting the innovation implemented. Meanwhile, UK, German and Swiss executives were least likely to say that they had proposed an innovation.
Innovation is what Poland needs to move its growth to the next level. Poland has creativity in spades. Still missing are the factors needed for its implementation, such as financing for new ideas and commercialization of university research. And, perhaps most important, what’s also needed is a cultural shift in approach to risk taking. That’s where cooperation with Silicon Valley can be helpful.
The country has been, however, lagging other European countries in R&D investment, and it is ranked in 49th place on the Global Innovation Index produced by INSEAD and WIPO (World Intellectual Property Organization). There is clearly room for improvement.
It is the holy grail of all emerging markets to create new, worldwide brands that would transform the countries into licensors and not just licensees or subcontractors. That’s easier said than done. The proof of just how difficult it is to create a global brand is the Forbes list of the 100 most valuable brands. Topped by Apple, a brand estimated by Forbes to be worth $87 billion, and ending with Kleenex, which clocks in at $3 billion, the list includes no brands from the European emerging markets.
Developing new technologies or designs depends on the level of innovation in a given country or region. This in turn requires openness of the economy and ease of doing business, pay incentives, financing opportunities for entrepreneurs—such as angel investors and venture capitalists—as well as an educational system fostering critical thinking.
Many of these factors, such as venture financing or commercialization of university research, are at embryonic stages in Poland. What’s most important, however, may be creating the right mindset for innovation. In terms of Poland, this means more appetite for smart risk taking, and eradicating the social stigma associated with making mistakes, said Marek Belka, president of the National Bank of Poland, at a recent economic conference at the Kosciuszko Foundation.
In terms of a business or professional reputation, in Poland it’s very hard to bounce back from a bankruptcy or a professional mistake, as these are often associated with fraud or incompetence. Such low tolerance for failure makes for a reliable and stable society, as crooks, incompetents or misfits find it hard to practice their trade again. As a result, there are relatively few financial scandals or ethical breaches.
But this also means there is less opportunity for second or third acts, and learning from mistakes, which is the only way to innovate and move forward. For a Polish financier, investing in a startup knowing that it’s got a 10% chance of succeeding would be hard to swallow. In contrast, U.S. venture capitalists like to invest their money with people who have participated in a failed startup before: the assumption is that they have learned from their mistakes. The venture capital financing business is, after all, a hits business, where one good exit such as Facebook can change the fortunes of a firm and make irrelevant many other losses.
What Poland needs now is some of that Silicon Valley spirit.
This is a repost of an article that appeared on the Forbes website on October 1, 2013