The fall of the Berlin Wall, which happened exactly 25 years ago, marked the dawn of a very complex transitional period for Eastern European countries. Yet even amid the tough environment, some entrepreneurs were able to overcome all the barriers and start businesses, some of which have since become thriving multinationals.
At that time, entrepreneurs were faced with numerous challenges that made it difficult to work on future-oriented projects, such as: a context of legal insecurity, political instability, lack of credibility, a culture of risk aversion deeply rooted in society and a lack of financing sources.
Despite this, a quarter century later, we can learn from their experience – albeit different in some aspects from that of entrepreneurs in stable economies – and take away ideas that will help others who start their ventures in transition economies:
- Learn to sail in a zigzag course, moving upwind, and be agile enough to change on the fly guided by experience.
- Consider that an opportunity is a means, not an end: seize opportunities when they arise and dump them when better ones emerge. An opportunity can be the springboard to capitalize on another one that creates more value.
- Trust in the company’s potential and stubbornly resist the consequences of political instability and legal uncertainty normally seen in transition economies. By doing this, entrepreneurs become true agents of change, helping build a more favorable institutional framework.
- Attract and develop the necessary talent: in a transition economy, skilled workers can be found if you know where to look. But the growth rate and lack of certain key skills requires seeking out more imaginative solutions.
- When traditional financing sources are not available, use an existing business to build the next one. Use basic formulas… even bartering! Entrepreneurs know how to get things started with scarce resources.
Work, agility, optimism, active resistance to the difficulties… These are common traits among the founders of companies such as Selena (Poland), Big Filter (Russia), Linet (Czech Republic), Atlantic Grupa (Croatia), Avangate (Romania) and Pipistrel (Slovenia). With their experience as pioneering entrepreneurs, and their leading position in many traditional markets, they are ideally positioned for continued growth in developing countries, among conditions similar to the ones they ran up against 25 years ago.
And for those of us not living in such environments, they show us how to sidestep overly rigid and outdated structures, how to redefine value creation or change our mindset to adapt to the hostile ground of transition economies.
Júlia Prats holds a Ph.D. in business administration from Harvard University, an M.B.A from IESE Business School, and a degree in industrial engineering from the Universitat Politécnica de Catalunya.
She has taught at Wharton Business School, IPADE (México), INALDE (Colombia), and AESE (Portugal).
This post is the result of a research project jointly conducted with 18 professors of Entrepreneurship in Eastern Europe and will be published in “Entrepreneurial Icebreakers” (Palgrave Macmillan, 2015) and in the article Learning From the Entrepreneurial Icebreakers from the IESE Insight Review.