Venturing into Swedish Business

Swedish business news dwells heavily on layoffs and shutdowns among manufacturers because the bad news sells papers -- and anti-ingestion pills.  Except for entrepreneurship groups, most news overlooks the major shift to services going on in Sweden.  The old social democrat-led manufacturing era of the 20th century is dying and being outsourced to China, but the media acts as if the service economy didn't exist.   

Many visibly worried professionals and students ask me:  Is there a future for Sweden?  Should I leave and move abroad?  Will I be able to return?  How can I leverage Swedish business overseas?

I tell them to look carefully at Stockholm, which accounts for 30% of the GDP and 70% of its tax receipts.  Like other European cities, Stockholm has virtually no heavy manufacturing.  Its economy consists mostly of services -- legal, finance, education, healthcare, IT, communications, media, tourism, entertainment, greentech, biotech, etc. -- which are growing and dominated by thousands of tiny companies serving niche markets.  This isn't that different from the U.S., which is becoming a service economy.  The problem is that Swedish politicians and older citizens are living in the past.  They still see Sweden as a manufacturing country even though factories are dying a rapid death.  They have not yet entered the 21st century and understood the importance of global services.  Sweden's future is bits, not just atoms.

When asked what I think of Sweden, I tell people it is one big lab because of its heavy R&D spending and environmental policies.  Like the U.S., Sweden has an amazing number of innovative technologies but it fails to commercialize and export them as new products and services. 

How can Sweden break this bottleneck?   Here are some ways:

- Encourage school children to study global markets and learn persuasive presentation and marketing skills.  Like Japanese, Swedes are terrible presenters -- stiff, robotic and boring.  They need to loosen up and smile more.

- Universities should require all students to learn how their field of study can contribute to exports and encourage them to study and travel abroad as much as possible to become global citizens.  The Vikings were great traders and town builders, not just pillagers, so their positive achievements are a shining example for homebound Swedes.

- Small business groups and universities should partner with foreign business associations, trading companies, distributors, and marketing agencies to promote service exports.  My school, JIBS.se, is partnering with the International Trade Management association to offer degrees in exporting.

- Encourage wealthy Swedes repatriating their wealth due to lower estate taxes to invest in small businesses trying to go global and export.

If Sweden gets off its duff and works harder to help small businesses export services, it can avoid a job collapse and a "lost generation."  Fortunately, Sweden is a small country -- almost a big, extended family -- so changes are easier to make here.  I wish it well.  I'll be cheering and helping from San Francisco.

The more I talk with Swedes and immigrants, the more I believe the "Jante Law" (i.e. don't think you're better than anyone else) is seriously holding back Sweden in all endeavors.  Many friends and business colleagues are so frustrated and fed up that they prefer leaving Sweden to achieve their dreams, which are regularly crushed here.  Many take short breaks to revive their spirits, but have to return to an oppressive conformity.  

Swedish startups have scored a couple of times -- Skype, MySQL, and perhaps Spottify and Dreamhack.  Today, JIBS met with Tillvaxtverket, a government agency promoting regional economic growth.  Their latest mission:  nurture young entrepreneurs into the next Skype.  Where are the next Swedish Steve Jobs?

Aside from the question of whether government programs can effectively nurture startups, it's a good challenge worth pursuing.  With unemployment rocketing past 20% among youth like elsewhere around the world, Sweden needs to help young people before they become a "Lost Generation."

There are three youth groups that could realize Mother Sweden's goals:  university spinouts, immigrant ventures, and women ventures. 

The first is a challenge since there's little angel money in Sweden, so startups rely on university incubators.  The only way to really grow is to go global fast and find foreign investors.  ISA.se is trying to help, having taken some groups to Silicon Valley.

Immigrant youth are the explosive potential (see my articles below).  Currently isolated from the labor market, they have the potential to develop ventures for fast-growing immigrant communities and their home countries.  SEB and other banks are beginning to target this group since it's the most entrepreneurial in Sweden.

Young women are another big opportunity.  Chalmers School of Enterpreneurship reports that 60% of its entrepreneurs are female students, which bodes well for the future.  But like guys, they need mentors, coaching, seed financing and export training. 

JIBS and Chalmers have a great track record in launching student ventures and are very international, so they hold the key to Sweden's entrepreneurial aspirations and, most importantly, reducing youth unemployment. 

Skype and MySQL prove that Sweden can produce their own Steve Jobs.  The country just needs thousands more like him -- and fast.

As a Northern Californian, I knew little about Sweden, which many Americans view as a distant, quiet land in the far north known primarily for its Nobel prizes, IKEA and Abba.  Beyond that, Sweden is totally unknown to most foreigners. Having lived here for two years, I have found many delightful things about Sweden. Here are my favorites:

- Gorgeous environment - Sweden is one of the most beautiful, environmentally clean countries I've ever visited.  Its forests, coastlines, and lakes are absolutely pristine and stunning due to tough environmental laws enacted during the 1970s.  Sweden ranks at the top in environmental quality, which I believe should be a model for the world.

- Urban design - As one trained in urban planning, I love walking and exploring Swedish cities and towns because of their thoughtful layout and design -- walking and bike paths, traffic patterns, parks, river and lake fronts, historic buildings, small cafes and shops, and street sculptures and landscaping.  I wish the U.S. would study Swedish towns, which are very energy efficient and conducive to walking, biking and outdoor activities.  Definitely visit Sweden to learn what I mean.

- Interior design - I love Sweden/Scandinavian interior designs because of their simplicity, clean lines, and affinity for woods and nature themes, which are very similar to Japanese design.  In fact, my ideal is a mix of Scandinavian and Japanese design because they create islands of calm, reflection and thoughtfulness in a hectic world.  In particular, the colorful furniture and wall hangings designed to counter winter depression are very comforting. 

- Cool technologies - Sweden invests heavily in R&D, about 3% of GDP, so it offers leading-edge technologies, products and services, but Swedes are modest and self-effacing (except for IKEA and Absolut Vodka) compared to Americans and other foreigners so many people overlook them.  This country is like an R&D lab that tests the latest and greatest, and serves as a springboard into the European market. More companies and investors should investigate the incredible variety of cool ventures and companies here.

- Swedish culture of respect - Unlike the U.S, which has gotten rather rude and uncivil, especially in its politics, Sweden is like Japan in that it is a nation that values a certain formality, reserve and respect among generations.  One area that requires improvement is intercultural relations, but in general I like Swedish politeness. It will probably be a shock for me to return to the U.S., where disrespect has become mainstream. We could learn much from Sweden.

These are just my initial thoughts.  I welcome your comments and will add more as I think of them. 
 

Although I've only lived here two years, I think Sweden could improve in many ways.  Here are my top recommendations to policymakers, educators, students and entrepreneurs:

- Overcome the "Jante Law" - Like other conservative societies, Sweden keeps its people down by discouraging initiative and enforcing conformity through ridicule, isolation and ostracism.  This may have worked in rural towns, but Sweden is becoming a multicultural service economy that needs to encourage excellence.  More training in personal growth, presentation skills, teamwork, and entrepreneurship are sorely needed in schools and companies.

- Integration of immigrants - As discussed in my previous articles, Sweden is rapidly becoming a multicultural society so it needs to totally revise its immigration and immigrant policies to encourage social, economic and cultural integration. 

- More SME exports - Like most nations, small and medium enterprises (SMEs) in Sweden stay close to home, thus missing the huge growth potential in developing nations.  The Swedish Trade Council is trying to promote exports, but it needs help from municipalities, business schools and chambers of commerce to get SMEs to wake up and export since big corporate exports are often flat or declining.

- Promotion of arts and culture - Sweden has many artists, musicians and designers who cannot find venues both locally and internationally.  Greater effort to brand Sweden should be made by the foreign ministry and companies.

- Openness to foreigners - Foreigners have a tough time getting into Swedish society, which tends to be very tightknit and closed to outsiders.  Sweden needs more "welcome wagons", international studies programs and student exchanges, collaborative projects, sister cities and regions, and international events to promote intermingling.  No region is an island in a global era.

These are just some suggestions. I welcome other ideas for how Sweden can become a more dynamic, open nation. 

My Japanese business friend says Sweden seems like a Nordic Hawaii since people here are so relaxed, mellow and slow moving.  I agree with his impressions, but why is this?  Definitely not the freezing weather half the year.

I think this mellowness is due to two factors. The "Jante Law", which says that nobody should think himself or herself better than anyone else, keeps Swedes in their place; everyone must conform or is criticized and ostracized. Also, the 65% effective tax rate on higher incomes, including the 25% VAT tax on goods, discourages Swedes from working hard.  Why do it if you're basically working for the government.  Easier to relax and enjoy the "nanny state." 

The result is that Sweden is a mellow place, but it's slow and boring for a lot of Swedes, especially students and creative people who tell me they need to go to New York, Paris, or LA to wake up, be inspired and free themselves. Otherwise, they get totally frustrated and depressed.  The problem is they have to come back, then get depressed again.  A vicious cycle.  Many envy that I'm returning to San Francisco, which is more open, diverse and free.

Some of my artistic and entrepreneurial friends are struggling to change Swedish society by battling against the Jante Law and encouraging people to stand up and challenge conformity, but it's an uphill battle that tires down even the hardiest Viking soul.  I encourage them, knowing it's easier said than done.  Hopefully, a new generation of Swedes, many immigrant in origin, will bring more openness and diversity so Sweden can break out of its self-imposed "Jante Law."  Then Sweden can truly tap its true potential as a nation.  Until then, it's a long, hard, dark winter coming. 

• New economic realities (finance, government regulations, manufacturing, services)
• New business challenges & opportunities (China, green, aging, pop culture, developing nations, etc.)
• How can Japanese companies thrive in the post-crisis global economy?

A great comedy on Swedish socialism:  http://www.facebook.com/home.php#/video/video.php?v=89141853352
But they forgot the moose...

The Swedish government has finally admitted that its immigration policies are a total failure. Immigrants are concentrated in few dozen cities and increasingly isolated from mainstream society, which runs counter to Sweden's self-perception as a humanitarian society.  http://www.thelocal.se/22244/20090923/

Some officials think this "apartheid" is acceptable, but as Paris and Malmo have shown, it is a political, social and economic dead end and will only end in social unrest and violence. 

How can Sweden get out of this rut?  How can it integrate its immigrants into mainstream society?  As a Silicon Valley native who has watched the City of San Jose become one of the most integrated cities in the U.S., here are my suggestions:

- Encourage all Swedish companies to set up affirmative action recruiting, hiring and promotion policies through tax incentives, government procurement, training subsidies and other means.

- Require all immigrants to master the Swedish language by offering more classes, especially e-learning and mobile learning technologies so students can learn anywhere, anytime.

- Promote international cultural and job fairs in all cities and towns in partnership with immigrant groups, visitors and foreign embassies.

- Encourage young people to learn about each other's cultures by promoting school exchanges, partner schools, and multicultural team projects.

- Involve top Swedish universities, such as JIBS.se -- the most international business schools in Sweden -- in offering intercultural management training workshops and courses to all Swedish companies, municipalities and professionals to raise their international, intercultural sensitivity. 

- Study immigration experiences in other nations.  Sweden reminds me of California in the late 1960s just after President Johnson signed the immigration act allowing more non-white immigration into the U.S.  Like other countries, the U.S. still has major challenges integrating immigrants, but places like Silicon Valley have shown how to integrate people from over 200 nations successfully into the workforce. Sweden should send study missions of educators, businesspeople, politicians and community organizers to learn best practices from the U.S., U.K., France, Germany, Singapore, Brazil and other nations with large immigrant communities, as well as invite top scholars, policymakers and activists to offer suggestions.  Leaders like Nelson Mandela would be excellent for setting the tone.

- Encourage banks to set up retail banking centers in immigrant communities, hire immigrants, lend to immigrant small businesses, and promote commerce with the mother countries of the immigrants.  In Silicon Valley, Chinese immigrants are our best business "diplomats" with China and Taiwan. 

- Collaborate with international professional groups, such as TiE.org (India), and immigrant business, student and cultural groups to promote greater integration of immigrant communities into Sweden and with other trading partners. 

- Offer scholarships, research grants, prizes and public recognition to people who help integrate immigrants into Swedish society and economy

- Encourage government agencies to study and develop more progressive immigrant policies in collaboration with immigrant community organizations.

- Encourage more immigrants to get involved in politics and run for political seats, especially in the Parliament (Riksdag)

There are many more things that Sweden can do to integrate immigrants, but these are just starters.  As the EU Presidency this fall, Sweden has the opportunity to show political leadership in totally reforming immigration and immigrant policies, not only in Sweden, but also as a model for Europe.  It must "walk the talk."  It will not be easy, but the alternative is remaining a large "Nordic apartheid" that faces increasing disparities and unrest, which will be not politically, economically, culturally or morally sustainable for long. 

The Swedish government just passed emergency guidelines to accelerate the mainstreaming of immigrants into the workforce, but is it too late?   Like Paris, Swedish cities face a growing number of arsons and crimes, especially in immigrant communities.  Anti-immigrant racism among neo-Nazi groups is rising.  Unlike the peaceful image projected by Sweden, my African immigrant neighbor and his Swedish girlfriend who taught in suburban schools dominated by immigrants and their children say the suburbs are ready to explode. 

The seeds of this social unrest are many.  Viewing itself as humanitarian, Sweden accepted many immigrants from Africa, Asia, the Mideast and Latin America, but warehoused them in Soviet-style suburban housing built during the 1960s under the "Million-Home" program.  Isolated, unable to speak Swedish and far from jobs, these immigrants ended up on welfare, which was reinforced by Sweden's generous welfare policies.  Recently, the government has reformed welfare laws to mainstream immigrants into the workforce, but it's coming two decades late. 

According to SEB bank, 18% of Sweden's population is immigrant, which is forecast to reach 30% in several decades.  As in the U.S. and Europe, immigrants have the highest birth rates so minorities account for most of the youth, whose unemployment rates are skyrocketing. 

A Telia diversity manager told me his job is to recruit immigrants trained in math, engineering and science to replace the retiring baby boomers, but Swedish companies are already too late.  They are already running out of qualified engineers and programmers since most Swedish youth prefer easier, non-scientific studies. Sweden recently began recruiting Indian programmers from India, even though its minorities cannot find jobs -- similar to the H-1 visa situation in the U.S.  It will get worse because of the huge mismatch in job skills.  

Sweden has little time to defuse this immigrant time bomb. It must totally revise its immigration, labor, educational and cultural policies immediately to prepare itself for a multicultural future or it faces major social unrest.  The U.S., U.K., Singapore, Canada and other nations provide useful lessons, but the ultimate policy choices must fit Swedish realities and Swedish politicians, educators and business people must move fast before it's too late.

Sweden has the ability to overcome its late-to-the-game cultural and political challenges since the country is very systematic, pragmatic and organized.  This is a nation that pursues "social engineering" with a passion.  Now is the time to apply its humanitarian principles at home to solve its festering immigrant challenge. 

However, it's openness to non-European immigrants will be sorely tested. If it meets this challenge, Sweden could become a model for Europe. If not, the famed Swedish "workers paradise" will be just a fond memory.  Unless there are tens of thousands of new jobs for immigrant youth, this country faces major turmoil.  Many Swedes and immigrants may prefer to leave the country since the government forecasts unemployment to climb from 8% now to 12% by 2011.

Sweden is leading the EU presidency this fall.  All the EU's and world's eyes will be watching to see if the nation can solve its immigrant youth and racial challenges.    

http://www.thelocal.se/22042/20090912/
http://www.thelocal.se/22008/20090911/