A whirlwind few days in Spain – a flurry of business meetings at fashion kingpin Zara, Banco Santander, and telecom giant Telefónica. Super late nights, early automated wake-up phone calls. After meeting with these three powerhouse companies, we came away impressed with their extensive internationalization over the last decade. These companies mean more to Spain than probably any three in the U.S. Banco Santander and Telefónica have their own self-contained complexes on the outskirts of Madrid.
While these three companies employ large numbers of Spaniards and reap healthy profits, Spain falls short is in its productivity in middle and smaller sized businesses. Spain is starting the painful and long-overdue process of reforming its labor system, hoping to boost sagging productivity, reduce unemployment and spark latent entrepreneurial spirit in the country. Interestingly, after some discussion with the country’s leaders, we learned that cultural reasons can be largely attributed to Spain’s lack of innovation and tepid venture capital industry. Many people view failure of a business as untenable and people generally operate under a much more conservative approach to business.
Public policy measures to stimulate investment in start-ups and encourage innovation will be critical for building viable mid-sized businesses. Even Telefónica has its own, albeit small, venture capital arm to fund early stage businesses. The process of tweaking Spain’s business culture will no doubt take time, but it was encouraging to see many of the country’s top business leaders on the same page with what steps need to be taken.