On politicians and companies

The parliamentary elections are upon us again, which certainly explains the amount of point gathering that is going on in the press again. Of especial interest to me are the comments that politicians are throwing around about the state of Finnish high-tech industries. They are certainly right: something needs to be done about it if we ever hope to become a world leader in the arena. Because we sure as hell aren't leaders, nor have we truly been leaders.

So, with the latest strategy change done by Nokia, which was widely publicized yesterday, many Finnish politicians are rushing in to say how they will mitigate the amount of unemployment that will arise from these changes, as it is obvious even when observed with your forehead that there are just too many people in the company doing the wrong things. Additionally the center party has been heard to say that they have "started investigating about how this type of structural change (or even crisis) in high-tech sectors can be turned around." Perhaps that's good, but the track record of politicians understanding what's going on and what needs to be done has been so appallingly bad, that I'm not entirely convinced that it's a good idea to have them anywhere near this situation.

What, then, should be done? The politicians seem to think that the software industry should be strengthened and that there will be an ample supply of engineers being freed up from Nokia which can create the software sector. But if we actually look at the situation, we will find that most of the problems that the company has faced over the past decade have been due to software. So I'm sorry if I sound a bit pessimistic, but pray-tell, what are the chances that this bunch is in any way actually competent with software.

The politicians aren't too worried about this. They have also figured out that education always helps, so they have thought up of a brilliant plan of devising new educational venues at which people can be trained in the skills of software. Ugh... I have a bit of a background in software development, even prior to receiving any formal education on it. I tend to agree that higher education in software will widen your thinking, but in actual software business, the best way to learn is by doing it. You don't need formal training for it. Instead, with software I believe that you absolutely need a passion for software: if you never felt like writing software on your spare time or just playing around with code, don't bother wasting precious resources on schooling yourself in software. 9-to-5 coders often end up making more problems than they are able to solve as they easily engineer themselves into a corner, introduce fatal flaws and bugs, and so on.

Then there is the slight problem regarding geographic region: the Finnish market is small and it is so far away from where things happen that it's not even funny. This means that any company wishing to actually grow will need to go abroad, and fast. For a startup this means packing your most extroverted guy in a plane and sending him to London with a suitcase and orders not to come back for the next couple of years. Oh, and the budget, as with startups typically, is shoestring. So it's not a picnic. Combine this with the hostile environment towards entrepreneurial activities in Finland: high taxation, tough labor laws, stigma associated with bankruptcy, difficulty with gaining access to capital (lack of angels and VCs), and the list goes on.

So yes, the politicians can do something, but it is more involved with changing laws and taxation to encourage entrepreneurial activities. The world is already so complex that you cannot merely say that "we will train more software developers!" and hope that the problem is solved. Instead you must carefully craft the boundaries of the system to encourage a certain type of behavior. Shoveling out government resources in the form of cheques to small businesses if they are able to navigate a maze of paperwork is also not good: it's not only one or two startups that I've heard about which have gotten fairly confused regarding who their customer is. In these cases the company has yet to sell anything real to a customer, but the government keeps subsidizing it and giving it more money. This isn't doing anyone a service: if the business plan isn't working out, it's in everyone's best interest to fail fast and move to the next idea. That's what entrepreneurship is about.

And as an interesting side-note, I'm actually starting a process of preparing a paper about these things during the Spring, so hopefully I'll be able to make a clearer argument about what I think the problems are and what should be done about them.