Company and community: a strategy that knows how to belong

In this Italian-language video, shot in the Boboli Gardens in Florence, I say that a company is like a garden: it grows within a context, feeds on the environment around it and gives back part of its energy to the community. Here I describe what a Florentine economist, Giacomo Becattini, understood about this by studying Italian industrial districts, and when the bond between a company and its community becomes a limit.

Video transcript (translated from Italian)

When you enter a garden, like this one at Boboli in Florence, you get the feeling of being in an isolated place, cut off from the world.

But a garden never lives on its own.

It is always part of something larger: it is in dialogue with the city, with the light, with the architecture that holds it.

And this thought applies not only to gardens, but also to every company, wherever it is.

Because a company is like a garden: it grows within a context, it feeds on the environment around it, and it gives back part of its energy to the community.

No strategy can exist without listening to what surrounds it.

The economy, culture, people, the values of the time: everything influences the direction of a project.

The business strategist’s task is to build this balance, to bring the inside and the outside of the company into dialogue, like a landscape architect who harmonizes nature with urban form.

Every garden is designed to be lived in, not just looked at.

In the same way, a strategy has to be inhabited: it has to speak to people, be in dialogue with reality, adapt to the climate and the soil in which it grows.

Because strategy, like nature, is never final: it adapts, it evolves, it responds to time.

And if it can enter into dialogue with its own context, then it becomes something more than an action plan: it becomes culture.

In the end, this is what makes the difference: not only knowing how to build, but knowing how to belong.

Boboli is a garden tied to the city

The Boboli Gardens were begun in 1549 for Duchess Eleonora di Toledo, to a design by Niccolò Tribolo, on the hill behind Palazzo Pitti. After Tribolo’s death the work passed to Bartolomeo Ammannati and then to Bernardo Buontalenti, and in the seventeenth century Giulio and Alfonso Parigi enlarged them (Gallerie degli Uffizi). Since 2013 they have been part of the UNESCO World Heritage site of the Medici Villas and Gardens in Tuscany.

Anyone who walks in today gets the impression, as I say in the video, of a place cut off from the world. It does not last long. From the highest paths you can see Florence. And since 1565 the Vasari Corridor, commissioned by Cosimo I de’ Medici and designed by Giorgio Vasari, has linked Palazzo Pitti to the seat of government in Palazzo Vecchio. The prince’s garden was joined to the city physically too, by an elevated walkway that crosses the Arno.

A company lives within a community that gives it people, know-how and trust, and a strategy holds up when the company knows what it receives from that community and what it gives back.

In Italian industrial districts, companies and communities grow together

Giacomo Becattini (1927–2017), professor of political economy at the University of Florence, spent much of his life as a scholar explaining a phenomenon he had right in front of him. In some parts of Italy, such as Prato, about twenty kilometers from here, many small companies in the same industry thrived together, and their strength could not be understood by looking at them one at a time.

In 1989, in the journal Stato e mercato, Becattini defined the industrial district as “a socio-territorial entity which is characterised by the active presence of both a community of people and a population of firms in one naturally and historically bounded area” (I quote the English version he published in 1990). He added that there, unlike in other environments, community and firms “tend to merge.”

Giacomo Becattini, an economist at the University of Florence, defined the industrial district in 1989 as the coexistence, in a bounded area, of a community of people and a population of firms, with community and firms tending to merge.

The idea goes back to Alfred Marshall, who in 1890, in his Principles of Economics, described the advantages of industries concentrated in one place: “The mysteries of the trade become no mysteries; but are as it were in the air, and children learn many of them unconsciously.” Becattini took up this idea from Marshall: part of the advantage belongs to the place, more than to the individual company.

The idea still carries weight in the Italian economy. Istat, Italy’s national statistics institute, published its latest map of industrial districts in 2015, based on data from the 2011 census. The map counts 141 districts, and more than a third of the people employed in Italian manufacturing work in them: 37.9 percent.

A company knows what it receives from its community, and what it gives back

A company born in a district receives things from its local area that stay off the balance sheet: people who already know the trade, suppliers a few kilometers away, a reputation that arrives before its name does. In the video I say that a company gives back part of its energy to the community. That is the half of the relationship a strategy tends to forget, because on the balance sheet it shows up only as a cost, not as what the company gives back: jobs, training, orders to local suppliers.

Knowing this helps in making decisions. A choice that breaks one of these ties, such as moving a stage of production elsewhere or replacing long-standing suppliers all at once, can look good in the numbers while taking away part of what made the company hard to copy. That is why the place a company comes from is part of the work on identity and positioning: where a company belongs is one of the answers to the question of what it is.

It is a different question from how to read the context, which I discussed in the piece on the many lenses of a strategic vision. There, context was something to observe in order to decide better; here, the place a company belongs to is part of what the company is.

Roots can become a cage

Belonging also has a downside. In 1993 the scholar Gernot Grabher analyzed the Ruhr, Germany’s coal and steel region. He described how overly tight ties between companies, institutions and ways of thinking had ended up defending existing structures and slowing the region’s renewal. He spoke of the weakness of strong ties and of a lock-in of regional development.

Ties that bind a company too tightly to its own community can become the reason it does not change.

That is why in the video I speak of “knowing how to belong”: it is an ability, and you exercise it by choosing which ties to keep and which to loosen. This also applies when a company looks abroad. Work abroad begins in Italy, and a company that presents itself in a distant market carries its origins with it, provided it knows how to tell that story within its business strategy.

What to do and what not to do

• Write down what the company receives from its community: people, skills, suppliers, reputation.
• Weigh every important decision in terms of the ties it breaks or strengthens as well.
• Give back visibly, through jobs, training and suppliers that grow with the company.
• Do not confuse loyalty to a place with a refusal to change.
• Do not use the company’s home region as a backdrop for its communications.

Sources

• Giacomo Becattini, “Riflessioni sul distretto industriale marshalliano come concetto socio-economico,” Stato e mercato, 25, April 1989, pp. 111–128.
• Giacomo Becattini, “The Marshallian industrial district as a socio-economic notion,” in Frank Pyke, Giacomo Becattini, Werner Sengenberger (eds.), Industrial Districts and Inter-firm Co-operation in Italy, International Institute for Labour Studies, Geneva, 1990, pp. 37–51. https://institute.coop/sites/default/files/resources/079%201992_Pyke_Industrial%20Districts%20and%20Inter-Firm%20Cooperation%20in%20Italy.pdf
• Alfred Marshall, Principles of Economics, Macmillan, 1890; 8th edition, 1920, book IV, chapter X, p. 271. https://www.econlib.org/library/Marshall/marP.html?chapter_num=25
• Istat, I distretti industriali. Anno 2011, February 24, 2015. https://www.istat.it/it/files/2015/02/Distretti-industriali.pdf
• Gernot Grabher, “The weakness of strong ties: the lock-in of regional development in the Ruhr area,” in G. Grabher (ed.), The Embedded Firm: On the Socioeconomics of Industrial Networks, Routledge, 1993, pp. 255–277; on his thesis, Robert Hassink, “The strength of weak lock-ins,” Environment and Planning A, 39 (5), 2007, pp. 1147–1165.
• Gallerie degli Uffizi, “Giardino di Boboli. Storia.” https://www.uffizi.it/giardino-boboli/storia
• Gallerie degli Uffizi, “Corridoio Vasariano. Storia.” https://www.uffizi.it/corridoio-vasariano/storia
• UNESCO, “Medici Villas and Gardens in Tuscany,” 2013. https://whc.unesco.org/en/list/175