Danes at Work: 7 Business Secrets from the World's "Most Networked" Economy

February 16, 2009

By Mathew Schwartz

What is the most networked economy in the world?

For the second year running, top honors go to Denmark, with Sweden taking second place. Those results come from the seventh annual Global Information Technology Report 2007-2008 (GITR), which ranks the information and communications technology (ICT) readiness of 127 countries.

The report, sponsored by Cisco, is a joint project between the World Economic Forum and graduate business school INSEAD to assess countries' ICT infrastructure, regulatory environments, intellectual protections, educational systems, workforce talent, and business innovation by using the GITR Networked Readiness Index. Countries that excel in these areas are "fertile ground for innovation," says report co-author Irene Mia, associate director and senior economist for the Global Competitiveness Network at the World Economic Forum.

Just what makes doing business in Denmark different? Based on interviews with executives and workplace experts who are well versed in Danish society, the following seven attributes seem to make it an especially innovative environment:

1. Live networked. According to Christian Brylle, head of Quality System, a Dragor, Denmark-based lamp manufacturer with retail partners in approximately 50 countries, "compared to other regions of the world, Denmark is very wired—we are always on." Corporate tax breaks have long encouraged employers to provide workers with home PCs, and he notes that the typical Dane is very tech-literate: Internet-proficient by the age of 5 and an e-mail regular by 10 years old. During waking hours, the normal response time to any business e-mail is 30 minutes; this is made possible by the country's high rate of use of mobile telephony and broadband.
2. Embrace new technology. "Danish people in general are first-comers," says Peer Kølendorf, CEO of Copenhagen-based Comitel Holdings Ltd., a holding company for 16 companies in Denmark, the United Kingdom, and Dubai (in the United Arab Emirates). "Many international companies use Denmark as a test market for IT products. If you can sell in Denmark, you can sell anywhere, because Danes are very critical of new technology. They do want to try it, but it must function perfectly."
3. Keep innovating. "We have a long tradition of being the merchants of Scandinavia. We buy the salmon in Norway and prepare it in Denmark," Brylle says. That brings us to the long-term business imperative for Denmark: Find the "value-add." Success has come from constant innovation and enlisting the latest technology to enhance business operations.
4. Improve society. Technology pervades Danish society, albeit sometimes in almost invisible ways. "You know it's there making life easier and smoother," says Soumitra Dutta, dean of external relations and Roland Berger Professor of Business and Technology at INSEAD in Fontainebleau, France, who highlights Denmark's advanced public sector strategies. "For example, a lot of the administrative processes, like getting car licenses and paying parking fees and parking fines, are more automated." In other words, businesses are not the only ones pushing the innovation envelope. "The government is both a leader and a facilitator, and this has helped produce a highly digitized society with numerous e-government and digital citizens' services."
5. Avoid authority. Danes shun workplace hierarchies, Comitel's Kølendorf says. "The typical Danish company has a flat organizational structure. Although there might be an official organizational structure, there is normally a very short distance between the guy working on the floor and the CEO, even in large corporations."
6. Make quick decisions. "We prefer quick decision-making, despite the potentially increased risk of failure," he says, "versus a long decision-making process that minimizes the risk of failure. And when decisions are made, we stick with them."
7. Don't dictate, negotiate. "Danes are consensus-oriented, but not in the way that decisions are delayed due to time-consuming negotiations. We tend to find a win-win situation to avoid conflict," Kølendorf says. "We believe that everything can be negotiated."

How did Danes get to be this way? "Danes tend to be more forward-looking than people in the bigger European countries," says Jakob Nielsen, a Dane who is well known as one of the pioneers of Web usability. He is now principal of Fremont, Calif.-based usability firm Nielsen Norman Group. "The past in Denmark was miserable: Everybody was dirt poor from living in a cold northern climate, the food was inedible... and the country lost all the wars the stupid kings got involved in," ceding territory in the process.

"This led to a famous 19th Century saying: 'What is lost to the outside must be regained inside.' Meaning that as Denmark got to be ever smaller, it was necessary to utilize the remaining bits better, which led to a movement for more intensive farming and better education of the peasants," Nielsen says. "This philosophy of utilizing modern advancements and of emphasis on education remains to this day. Only instead of cultivating the heath, they're cultivating the Internet."

Is it time for all countries to now emulate the Danish—and, indeed, the broader Scandinavian—approach to business technology? Perhaps, but not entirely. "Let's not forget that they're relatively small countries with small populations," says INSEAD's Dutta. Denmark has only 5.4 million residents; Sweden, 9 million. "Certainly if you're a larger country such as India (50th on the list), China (57th), or Brazil (59th), I'm not sure Denmark provides the complete solution."

Of course, larger countries require more infrastructure and education than smaller countries to achieve the same technological readiness levels. And interestingly, among the larger developed countries, only the United States made this year's top 10. Although a notable achievement, it also suggests that fostering high levels of technological readiness uniformly across a large country "is more difficult to do," Dutta says.

Thus, although many large countries can learn from the Danes, they will still have to discover their own strategies for success.