We need world class talent if our economy is to lead the world.
I’ve always wondered what Alex Ferguson says to his players at half-time. How does he size up the opposition and not only tactically read the contest, but also generate the right balance between the passionate and the clinical in his players, so that they don’t just win, but they control the game.
How, after all these years, with all the changes that he has seen in the game, does he manage to stay ahead of the posse? How does he know when to invest, when to sell, when to change strategy and formation and when to leave things as they are?
One thing is for sure: he didn’t stay at the top by copying the opposition, resting on his laurels or believing that he had found a permanent winning combination. The thing that defines Ferguson is that he is brave as well as visionary. He has courage in spades. He also knows that the buck stops with him.
In our hyper-competitive age of globalisation, national economies can learn a lot from successful football teams, and political leaders can probably learn quite a bit from looking at great managers.
If we compare Ireland Inc to a football team, it is clear that we have to change our formation. Our old model – the one that ran amok over the past five years, buying and selling houses to each other using someone else’s money – is now banjaxed. But as all good managers prove, we can change tactics.
Historically, one of the most peculiar episodes in football history was the perception in England that they had the best football team in the world. This myth was shattered by Ferenc Puskas and his Hungarian team in 1956.They (according to English football lore) were the first foreign team to beat England on home soil.
This is not true as that honour goes to Ireland, led by Peter Farrell, who beat England at Goodison Park in 1947. Bragging rights apart, the significance of this story is that the English believed they were unbeatable, despite the fact that other countries were perfecting their styles, England thought that it had a right to win, possibly because the game had started there.
The lesson from England’s fall is, of course, that things change, new approaches are discovered, better ways of playing the game are tried – skills, organisation and tactics improved. The major lesson is that no one national team has a comparative advantage. Successful teams simply have a temporary monopoly. The ones that fail are those that confuse a temporary monopoly with a comparative advantage.
The same goes for economies. So instead of burying our heads in the sand now that the land/houses/banking/easy credit model has been ruptured and might not recover for half a dozen years, it is crucial to see this as an opportunity. We have to accept that the budget position will tighten considerably, but that does not mean we should adopt a defeatist posture. The end of the property mania is a national liberation.
Ireland could build Europe’s Silicon Valley. This is achievable. We have the talent, a prime location and much of the infrastructure and the ambition. What we need to do is put our heads together and come up with a national plan. It was encouraging to hear Brian Cowen talk about patriotism the other day: we need a form of economic patriotism, which is governed by a plan for the economy and where it should be in ten years’ time.
To build Europe’s Silicon Valley we have to reverse our investment patterns. Last year we ploughed a ludicrous â‚¬8 billion into overseas property and only â‚¬162 million into high-tech start ups.
First, we need to make it attractive for investors to put their money into brains, rather than bricks and mortar. This means changing the tax system, so that entrepreneurial investment gets treated preferentially. So, for example, maybe there might be zero tax on profits (rather than 20 per cent capital gain tax) for investors who invest early in an Irish startup company, when it is ultimately floated or sold as a trade sale.
Second, we need to attract the American venture capitalists who make the system tick in America. One of the major problems in Ireland is not that we don’t have the technology, but that we don’t have the commercialisation skills to build companies from scratch. In the US, venture capitalists fill some of this void because they manage their investments actively.
They bring, not just cash to a company, but they come with management expertise, using their global networks. As many of them have failed in business before, they have learned from their experiences. If we don’t have this management layer in Ireland, then let’s make Ireland an attractive place for venture capitalists to invest and do business.
Third, we need the market to decide who will win and who will lose. The state can’t determine this, whether it be Google or Waterford Crystal. The state must ensure that our universities and schools are as good as they can be, so that the graduate base is as good as possible, and then let the commercial men and women offer these graduates the best career paths, using them to the extent of their abilities. Remember, also, that it’s not just university graduates who can win in a new economic future. After all neither Michael Dell, Bill Gates or Steve Jobs are university graduates.
According to Paul Graham, the entrepreneur who backed the Collison brothers in Limerick, all you need to create a European Silicon Valley is a combination of ‘‘rich people and nerds’’.
Graham saw the commercial opportunities in the Collison brothers way before Enterprise Ireland. This is no surprise. Graham saw the possibilities because that is what he does: he is an investor, interested in making money.
Enterprise Ireland is not in that business, no matter how much we would like to think it might be. Enterprise Ireland is a facilitator, helping the investing process. It is an indispensable part of the process. Investors see things that bureaucrats can’t and bureaucrats put in place infrastructure that investors won’t.
Fifth, we are in a talent war. When Steve Balmer the chief executive of Microsoft came to Sandyford last year, he wasn’t so much interested in costs and taxes, he was concerned about capacity. Did Ireland have the capacity, in terms of people, to ensure that Microsoft was getting the best and brightest? He went to the canteen and realised that the Microsoft headquarters in Sandyford sounds like the United Nations. It is a Babel of tongues.
If the Irish home market can’t provide the skilled staff, then we should continue to import them.
Our immigration policy could be changed to be part of the recruitment policy for this new economy. This is not as contentious as it sounds because, if we want to become Europe’s Silicon Valley, we will need world class talent.
Now is the time to change our game. If Brian Cowen sees himself as a world class manager like Ferguson, perhaps we will have little reason to fear the future.