October 7, 2007

The soft approach to wealth

Posted in International Economy · 10 comments ·

By using the ‘soft power’ of his brain, energy and will, Tony Ryan became one of our most successful businessmen. He is an example to aspiring entrepreneurs everywhere.

In 2001,while working for Jack Welch, the chief executive of GE, I chaired a discussion in Dublin on Welch’s biography, which had just been published.

This was part of a European tour, but Welch – a second generation Irish-American – wanted to spend time in Cork, the birthplace of his grandfather, so the Irish leg of the book tour was unusually laid-back for a man described as ‘‘Neutron Jack’’.

Welch spoke at length of his admiration for one Irish businessman. He believed that Tony Ryan was a one-off. Maybe Ryan demurred, because he was forced to sell his debt-ridden GPA to Welch for a song in 1993.Welch saw it differently.

Yes, he acknowledged Ryan was in trouble and, yes, he battered down the final price, but he kept saying: ‘‘I’m a corporate man, but this guy Tony Ryan built the company on his own using his own brain, energy and willpower.”

Welch, no shrinking violet himself, was in awe of Ryan’s achievements. By the time they met in Dublin in October 2001 at Welch’s book tour, Ryan had remade his fortune and was unstoppable.

When one man builds, not one, but two world-beating maverick businesses, you know you have something special. Particularly when that man does it in a country that had not, up till then, instilled in its business people the idea that Irish companies could be global. Ryan was a one-off. He saw Ireland as a global player, and refused to think that Ireland’s size was an impediment to ambition.

He was the embodiment of what is called ‘‘soft power’’. This will determine the success of countries in the future. It is the power of creativity, enterprise, risk-taking and brainpower. Soft power lies between the ears of individuals, not buried under the ground.

In the years ahead, the country with the best brains is going to thrive. The world will be divided between those countries that inherit ‘‘hard power’’ and those that generate soft power.

Brain power is the ultimate soft power. In the past, hard economic power – such as steel and coal reserves, large populations and political or military clout – mattered enormously. The country with the best and most natural resources won.

Britain, Germany and France had these resources and, for years, they were the most successful nations in Europe. Today, hard power matters less. Take Russia, for example. It still has more natural resources than any other country on earth, yet today its population is falling. Russians see through the vanities of hard power, and have decided either to emigrate or stop having children. Hard power guarantees nothing.

Tony Ryan saw this. He traded in ideas and surrounded himself with individuals who could conjure up projects from nothing with that unique combination of a willingness to dream and a discipline to execute. This combination is unstoppable and countries should try to foster this type of mental creativity. Ireland has to become a hub for soft power — which was the dynamo driving Ryan.

In Ireland, we have been in danger of becoming beguiled by hard economics. There is nothing harder than land, and our land obsession has meant that most of the country’s resources have been sucked into this most useless of assets, property. It is also the least modern, least tradeable asset and is the polar opposite of brain power.

Land is fixed, dirty and unimaginative. Brain power is flexible, clean and, most importantly, renewable. Ryan proved that there was another way.

Globalisation rewards countries that invest in their soft power. Look at the countries that have thrived in the past 15 years: Ireland (because of the multinationals), Singapore, Hong Kong. None of these countries is remotely capable of defending itself in the traditional sense of the word. Soft power is light power – power that you can’t measure. It is the power of imagination, the muscular strength of creativity. It is inspiration over perspiration.

The lighter the economy, the more grey matter applied, the better. The world will pay for ideas and the ideas are created by frontal lobes, wireless networks, imagery and branding.

Societies should try to foster business as well as artistic creativity. James Joyce, arguably our finest and definitely our most celebrated writer, saw no contradiction between the artist and the entrepreneur.

When he ran the Volta cinema in Dublin – the first cinema in the country – he was doing what he did best. He was thinking for himself and using his energy to generate something from nothing. A fine business brain is as interested, irreverent, creative and as alert as a fine artistic mind.

The artist sees himself as outside the mainstream. So, too, does the entrepreneur. Both celebrate the individual over the collective. Both regard security with a certain distance.

There is a striking similarity about their worldview. Both regard the rest of society’s obsession with certainty and security as bizarre. Neither can bear the idea of working for someone else for a wage. The very thought of taking orders from a bureaucrat strikes fear in both. Working is about creating, beating the competition and expressing themselves, not about pointless committees, political games and promotion.

They don’t do corporate away-days. Tony O’Reilly, Tony Ryan and Sean Quinn have much more in common with Neil Jordan, Colm Toibin and Pat McCabe than either group imagines.

In the end, artists and entrepreneurs are the only people in society who do not retire. They rarely become jaded or washed-up, and they are precisely the type of people who give a country a competitive edge in a period of globalisation, where hard power, borders and armies won’t contribute an ounce to national wealth.

In addition, they are the only people who can pay their way. They live on their wits. Ultimately, they are both disobedient, and the future will go to the disobedient, the questioners – the lads at the back of class who asked why. The future belongs to the messers. They are the ultimate soft power exponents. Globalisation demands that a country promote these non-conformists.

Tony Ryan was a great exponent of the dynamism of soft power. He didn’t see Ireland as the limitation of his business world. Rather, he saw it as a perfect springboard from which to launch businesses.

He should be a model for every budding business person in the land.

  1. Paul

    Indeed. Both groups are creatives. I saw an artist in a gallery recently who sported a baseball cap which said …

    “Why wait? Create!”

    Any entrepreneur would proudly wear that.

  2. [...] David McWilliams can take credit for the phrase ‘Celtic Tiger’, can I be first to use the phrase [...]

  3. vince

    The people with the best and more flexible brains is where the future stands.

  4. Philip


    Hmmm…would not shun hard power that easily

    Soft and hard power go together – pretty well like the brain and the hand. One helps the other. Ask any practiced artist or practised anything for that matter. Improvement and excellence only comes from the interaction of the two. You need the tools and the resources.

    Russia split the two by sticking a ridiculous bureacracy between the two. Intellects relegated to chess playing on one side and coal mines wasting away on the other. The bureacracy absorbed the soft power and emasculated it. And you see the same thing anywhere else they decide to confuse regulation with strangulation.

  5. David,You say that ” Tony O’Reilly, Tony Ryan and Sean Quinn have much more in common with Neil Jordan, Colm Toibin and Pat McCabe than either group imagines.”
    Tony Ryans main claim to fame was to be the first to try and break a government supported, European wide, cartel/ monopoly activity .i.e. the airline industry.He succeeded because he found the right man,Miichael OLeary.
    Ditto with Sean Quinn who saw the same situation in the cement monopoly of Cement Roadstone,just as he now sees another opportunity in the private health insurance monopoly- the V.H.I.monopoly.
    I think half the nation saw these opportunities, which were hardly “Eureka!” moments.
    It simply takes somebody with a lot of capital- and a lot of determination- to make the breakthrough.

  6. paddy cullen

    Well written david ….

  7. john

    “Britain, Germany and France had these resources and, for years, they were the most successful nations in Europe. Today, hard power matters less. Take Russia, for example. It still has more natural resources than any other country on earth, yet today its population is falling. Russians see through the vanities of hard power, and have decided either to emigrate or stop having children. Hard power guarantees nothing.”

    I would not agree with this statement, britain, germany and france were some of the most successful nations in the world not just because they had natural resources but also because they developed the know how to use these resources to develop their countries and change the whole world. They used their “soft power” to develop their hard power. If natural resources on their own result in hard power why is most of africa so powerless, they were used by the nations with the hard power, namely britain germany and france. Basically technical know how which you might posess but which another country does not posess is hard power. But technical know how is also soft power. For example america is one of the most successful nations on earth it used its soft power to develop its hard power. You can bet on it that some of its brightest engineers and scientist from silicon valley end up working for the pentagon and defence companies. The same happens in britain and france. Basically soft power and hard power are not seperate entities but are linked and the most succesful countries in the world have both.

  8. The softest approach of all to getting rich has to be the PPS schemes now increasing in popularity with profligate governments throughout Europe.Is the inventor of the Public -Private partnership scheme funding by syndicates like the Macquarie bank (Australia) a genius (whoever he is). Is the concept a brilliant new idea or a “Ponzi scheme” (as described by some american financial analysts)?
    At present the airwaves are rippling with news of the pending construction of some 30 badly needed schools in various parts of Ireland. What is not mentioned is the fact that at a time of unprecedented prosperity and tax revenue, the state are not using any of this revenue stream to improve our infrastructure, and build the new roads, tolls, public offices, schools or hospitals so badly needed.
    Who then you may ask is building them.Well its a politicians dream scheme.Its like buying a new house.one normally gete a loan from the bank, pays it off and in 40 years you are the proud owner of a house.! However in the Public- private partnership you dont even have to borrow the money, the investor builds the house and rents it to you in perpetuity.!Check out the web site http://www.macquarie.com/mpfi/index.htm for starters and be enlightened. Syndicates like the Australian Macquarie bank are the new owners of Ireland.ie. They will rent the country back to Fianna Fail on your behalf, ad infinitum, with no doubt, regular rent reviews to ensure that Macquarie continue to pay their current investors a whopping 20% annual dividend on their cash.The children who will occupy these new schools will still be paying rent on them in 30 years time.!!
    Where, you may ask, is the unprecedented revenue stream being spent? We would love to know too. Anybody with that confidential information please tell me.Perhaps its not availible on a Freedom of Information request.? For my money the Public -Private Partnership is genius.A pawnbroker only gets a loan of an asset for a few months,and charges interest on it until it is returned,or sells it off quickly if unredeemed.This scheme is better, because you finance the project and rent it out for generations- and then perhaps sell it to the tenant after 30 years for a huge sum of money-as in the case of the Westlink toll bridge, for example.Pure genius.

  9. dc

    Well put David.The only problem you have in Ireland is to get people to use their cerebrum.
    The hardest thing for any person to do is think it eats up more calories than any other form of physical work or excercise.
    We have in Ireland some great entrepreneurs and thinkers big and small put there are to little of them ,why?
    1. The Education system is old fashioned still on the lines of get the permanent pensionable job ,don’t risk it .
    2. An inbuilt fear of failure and insecurity because of what people might think in Irelands very parochial society(its amazing when the Irish immigrate how the entrepreneur comes out in them)
    3 No incentive high taxes ,rents ,rates , labour costs,Long Hours small reward and most important the bureaucratic bullshit you have to put up with (would be better of in the Public service like 22% of the population,can earn €45000 to €1500000 for working 38 hr week with little or no responsibility and guaranteed a nice pay rise every year because Bertie loves us).
    4 Banks in Ireland dont like soft economics it has no walls or roof no bricks or mortar
    5 The Government turned its back on innovation in favour of construction and put no money or little money into research and development for indigenous Irish tech and bio companies (so when our bright young people go for help to create and develop their meet with gombeens in enterprise boards that have not a clue what there on about and don’t believe them anyway,because most of them have been public sectors workers all there life and know nothing about real life commerce and can’t even calculate their own personal tax.
    6.If people try to take on sectors where the government are making a pigs ear out and know that they can provide a better service and profit from it the government of the day hates it because they know they will start to loose control and will use every propaganda stunt to disrupt and stop it.
    7 People in Ireland find it hard to get away from the welfare state mentality,it is inbreed in our psyche by our mothers and fathers ,and has been reinforced even more so by this present government with all the easy handouts to public servants, single mothers, fassers,dolers etc so why should they think, Bertie and the lads will take care of it anyways.
    8. Irish people in the last 6 years think the Sun goes round Ireland and we are the center of the universe and if you dare to think or question it you will end up like Galileo.They have got lazy and complacent and feel that there is no reason to think or innovate our cousin the Yank will look after us.
    Sorry for ranting on got a bit sidetracked

  10. If this is true i will be loaded :))

    Anyone that reads your website is already a thinker so you are clapping your readers on ther back.

    Well done. We deserve it.

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