Interview with Airton Carlini, CEO, and Valter Pieracciani, Partner Director of Pritchett Rummler-Brache

Brazil is a commodity-driven economy, where there’s no significant transfer of technology. That might bring what specialists call a ‘commodities-curse’, making Brazil deplete its resources and have no sustainable economy in the years ahead. What’s your take on this matter? Is Brazil in this ‘commodity-curse’?

This is a picture of Brazil from 15 years ago. That does not reflect our reality anymore. We have many companies implementing their centers of research and development. There are incentives to technology innovation, as well as high-quality scientific production in our universities. Brazil is preparing to become an international innovation hub. Although our history was based in commodities, with Brazil relying on cheap labor force and exporting commodities and food, this scenario will radically change in the next 10 years.

What’s the state of innovation in Brazilian companies? How is Brazil’s innovation management approach?

The world acknowledges that innovation drives development. Brazil has a great chance to stand out in this field. We have flexible, creative and quick-thinking professionals, along with great scientific production. We are confident that a new management style is being born here. It’s the Brazilian management style, characterized by agility, flexibility, and risk tolerance. These things are inherent to Brazilians.

What do you mean by Brazilians’ risk tolerance?

That is shown when we launch new products, when we learn by trial and error. By definition, innovation involves a great deal of risk management. We think that American and European markets are more averse to taking risks. It’s worth mentioning that we’ve spent the last 20 years riding out 6 or 7 economic crises. Every three years we faced a crisis, with government administration changes and inflation rates at a 6% a month. Having to cope with these factors gave us strength and developed in us the ability to improvise while dealing with difficulties. I think we have all the tools to develop innovation successfully, even skipping some steps that developed countries had to take to achieve their goals.

Brazil is now number 6th in economic development, but what’s the country position when it comes to innovation and patents?

We haven’t reached the position we’d like to have when it comes to patents. We are trying to change this situation. Although we lack a higher number of patents, we are taking large steps so that our patents numbers can measure up to our economic development level.

I’d like to reinforce our previous comments on Brazilians’ impressive ability to adapt. It’s hard to see this trait in people from other countries, where they tend to be more centred, moderate. Because of our miscegenation, we became very flexible. The Brazilian way of innovating goes hand-in-hand with the Brazilian way of managing.

What’s the role of your firm in supporting innovation?

We are contributing to speeding up the innovation process in Brazil by turning regular businesses into innovative businesses. That’s possible because innovation is a manageable system. We have already assisted about 160 Brazilian and also international organizations with branches in Brazil over 20 years.

Innovation is not only important to companies, but also to Brazilian government. To exemplify, the Ministry of Science and Technology changed its name to Ministry Science, Technology and Innovation from 2012 onward. Also, Brazil has already published its own Innovation Management Standard. Only four countries in the world have their Standards for innovation management in place and Brazil is one of these countries.

How competitive are Brazilian companies compared to multinationals? What still needs to be improved in order for business to compete internationally?

In the beginning of 2000, Brazil adopted some strategies to delineate its industrial policies for the first time. Back then, President Fernando Henrique Cardoso’s administration chose some key sectors to compete internationally. Back then, we didn’t have record in the aircraft industry, but the country started investing in small jet planes. Nowadays, Embraer is well-known in the world and has surpassed companies such as Bombardier. Many times Embraer has been awarded as the most innovative Brazilian company, combining innovation with competitiveness.

We have other important sectors such as oil & gas. One great step we took was to become self-sufficient in fuel, which led us to developing not only ethanol itself, but also the entire automotive industry. We have also found oil in the ‘Pre-Sal’ deep levels. We have developed diesel from vegetable oil. We also have Embrapa, a success case in the food genetic engineering field, a great example of technological development and patents generation. All of these initiatives have contributed to put Brazil among the most competitive countries in the globe.

The international companies that operate in Brazil also find opportunities to become extremely competitive. Fiat Brazil exemplifies what we are discussing. During many years, the Brazilian branch was ahead of its Italian office in terms of innovation and launching of new products. We have other great success cases in the pharmacy field, communications sector, and so forth.

Brazil is going well, but are there any areas of improvement?

We need to get companies and universities closer to each other to speed up the innovation process.We need to depend less and less on commodities and focus on value-added and technology-related products. It’s important to keep the economy stable without inflation, which was a brake on our economic development process in the past. In addition, Brazil has to invest more and more in education.

What are some of the challenges that your company faces? What’s your competitive advantage?

We are competing with powerful international companies that are coming from the U.S. and opening their branches here. Our differential is that we make entrepreneurs believe in the unique Brazilian management style. Also, we have a full understanding of the Brazilian companies’ reality. Over the last 50 years we’ve copied management models developed in the Northern Hemisphere, but now we have the opportunity to create different standards and make them work successfully too. Perhaps we can even inspire our Northern colleagues a little bit.

What could be considered original in the Brazilian management style?

Maybe we can mention one success case to illustrate. Recently, we advised one of our biggest clients in the telecommunications field to not hire more people to develop apps for the 2014 World Soccer Cup. Instead, we managed to set up an open network where young software developers could collaborate and work in small teams over the next few years. This approach proved to be very efficient. There will be a high volume of quality work done by very motivated people in a very short time.

In the past, many Brazilian executives had to leave Brazil to learn and work abroad. Now the opposite is happening. Many multinationals are sending their executives to Brazil to learn from our positive experiences.

How do you predict the mergers and acquisitions in Brazil in the years to come? What are your expectations regarding your sector?

There has been an intense flow in mergers and acquisitions by large companies in the pharmacy, banking, cement, among other sectors. We believe that there’ll be more merges in the service sector in the next 4 or 5 years. Another trend is the fusion of small and middle-sized companies to increase their competitiveness and growth.

We hope to see super Brazilian companies such as BR Foods standing out in the international market. We could also have big pharmacy and telecommunications companies in international strategic spots.