Confident, independent and tough
Poland’s stunning economic recovery from the ruin of war and decades of communist mismanagement has been all the more remarkable for its speed, driven in part by Poland’s 15,000 midsized businesses. Collectively they make up 11.6 percent of the country’s GDP, employ one fifth of the labour force and are a real testament to Poland’s entrepreneurial spirit and determination. But selling to – and working with – these companies can be frustrating for foreign companies.
“This generation of entrepreneurs lived through a unique period of economic and political transformation,” Michael Dembinski, Chief Advisor to the British Polish Chamber of Commerce, told me. Poland’s mid-sized business owners are mostly male, predominantly in their 50s and 60s, and are, in the words of PwC Polska’s Head of Public Policy, Bartek Kwiatkowski, “not unlike 19th century American tycoons – confident, driven, independent and tough.”
Pan Prezes culture
Having cut their teeth in Poland and then Europe (over 70 percent of Polish exports go to EU markets) mid-size owners are now facing a series of challenges in order to grow and expand market share. In theory, they should be ripe for external consultancy services and supply chain sourcing. But international companies looking to sell to them often run up against a series of challenges only too familiar to experienced international business people in Poland. History and culture matters. Many businesses are run by the original founder (Pan Prezes) whose business style was forged when Poland’s business culture was very different. “Many have strong memories of fighting the old system,” Michael Dembinski said. “They’ve soaked up a command-and-control philosophy rather than a more democratic, open management style.”
I once met the new export manager for a successful Polish food production company. He was eager to sell his products abroad for the first time, but was visibly frustrated by his CEO’s refusal to consider a rebrand to suit the target market. If it worked in Poland,it should work abroad too, was the verdict from the boss. “We’re talking about strongly centralised businesses,” PwC’s Kwiatkowski said, “with key decisions concentrated in the hands of founders.” For better or worse, Pan Prezes still runs the show.
Even in a larger company, finding the right decision maker can be tough. One British businessman running a successful services company in Poland tells me that, “decision making is still in many cases being made and signed off only at the top by C-level executives who are notoriously difficult to contact.” This lack of contact is partly because, according to Poland’s Central Statistics Office, 15 percent of medium sized businesses have no website, and less than a third use any form of social media to communicate externally. That pattern is mirrored by individual behaviour – according to Megapanel PBI/Gemius only 16 percent of Polish Linkedin users are aged 55+, compared to 27 percent in the UK and 23 percent in the US.
As a result, companies looking to target these firms, frequently have to contact younger, mid-level managers to advocate on their behalf or get nowhere when they approach the boss. He’s likely to be the hardest person to connect to. He is also most likely to deeply rely on personal relationships, which, as a foreign company, your business is unlikely to have. Many Polish businesses closely guard their purse strings. This is partly about lack of capital but also about a powerful underlying corporate culture born from surviving tougher times.
‘Pan Prezes is […] unwilling to take advice. And to pay for that advice? Forget it!’
“There is a long-standing culture of frugality and a lack of liquidity,” in businesses which is, “predominantly equity-financed and not debt-financed due to both legacy issues and limited accessibility of capital for SMEs,” added PWC’s Kwiatkowski “which makes them cautious to spend money on non-core services.”
Stuck in the mud
International companies often fail to understand and adapt to this psychology. One British company which I consulted for, refused to shift their high-end Western pricing model to a bite-sized entry level scheme suited to Polish companies, and as a result failed to do business. For foreign businesses, discovering the differences can be frustrating. It s not uncommon for Polish mid-size companies to happily spend $50,000 on a production investment, but leave the design of product brochure to a family friend. “Polish mid-sized business – unlike those in Western Europe – still do not feel comfortable paying professional service fees,” De-Roy said. I was once asked to support a British services company whose initial approach identified flaws in their targets’ business models. Unsurprisingly, this didn’t get a positive reaction. Poles are entrepreneurial, hard-working and defiantly gutsy. But they can appear prickly in comparison to a fail-fast Western entrepreneurial culture. Michael Dembinski puts it in blunter terms: “Pan Prezes is authoritarian and unwilling to take advice. And to pay for that advice? Forget it!”
Bright future ahead
If this article has struck you as pessimistic then fear not, the future is positive. “The next generation of business leaders running mid-tier businesses will have grown up in democratic, free-market Poland,” said Michael Dembinski, “they will have studied abroad and gained work experience overseas – and they will still have a Polish determination and a fire in the belly required to succeed.” Poland and Polish companies have a choice. We can fall into the middle income trap of markets like South Africa or Brazil or continue to rise – individually and collectively – and break through the ceiling of inertia which early success can bring. Knowing Poles as well as I do, I’m optimistic that the next 15-30 years will be a time when Poland’s economy breaks into full gallop – with mid-size business playing a key role.