It was a cool and crispy autumn day when we sat down with Esko in a restaurant located next to the Helsinki Market Square to discuss the bridge between the private and the public sector, the importance of long-term thinking in both business and politics as well as what Esko thinks will shape the future of growth companies.
Our 10th-floor location provided a view of the capital city of Finland spreading out all the way to the bordering Baltic Sea. Esko has a special history with his country and its citizens.
At the age of 36, he was the youngest Prime Minister in Finnish history. During the four years Esko ran the Finnish government, he played a significant role in anchoring Finland more strongly to Europe and led the country into the European Union.
At the age of 36, he was the youngest Prime Minister in Finnish history.
29 years later, the man sitting opposite us exudes youthful enthusiasm and energy. Esko has had an incredible international career in politics and business behind him. He served as the president of SITRA, the Finnish National Fund for Research and Development, from 2004 to 2008, and was an Executive Vice President of Corporate Relations and Responsibility, as well as member of the executive board at Nokia, from 2009 to 2012.
Always intent on building bridges rather than walls Esko joined the board of directors of the largest bank in Russia, Sberbank in 2016. Most recently, at the beginning of 2019, he was appointed to J.P. Morgan’s Europe, Middle East and Africa Advisory Council. Over the years, he has also lectured at leading universities, including Harvard, where he was a resident fellow at the Institute of Politics.
Most people would retire after such an extensive career. Others, like Esko, have the energy, interest, and passion to keep on learning. “Crossing the borders between the public and private sectors was a big learning curve for me. It has been rewarding to move laterally in my career,” Esko explains with a smile and a wink.
Accelerating growth companies
Esko’s latest move is joining NGP Capital’s Advisory Group. “I’m glad to work with NGP Capital. They are a brilliant team who operate at the brink of disruptive innovations and work with top-notch growth companies around the world. This resonates not only with me but also in a broader context.”
Looking back, Esko notes that technological breakthroughs have always been big milestones for societies. “The biggest wins have been those where innovations have replaced the old way of doing things. NGP Capital accelerates growth-stage companies, encouraging them to strive for more, and that’s exactly what we need in Europe and elsewhere. Older industries and service providers need to realize that they need technological innovations in order to succeed and transform.”
"NGP Capital accelerates growth-stage companies, encouraging them to strive for more, and that’s exactly what we need in Europe and elsewhere."
Having operated at the intersection of the public and private sectors, Esko thinks tomorrow’s innovators have a huge impact on our society. “We need to understand that these growth companies are driving big, significant societal changes when they develop new technological innovations. Technology is and will be the fundamental reason why our societies look like they do.”
Encouraging long-term thinking
Esko thinks one of the growing challenges of capitalism is determining how private companies and the public sector will find new ways to build relationships with each other.
“The private and public sectors both need to understand the division of labor better. The public sector should understand that the market mechanism is an effective tool for getting things done. The private sector should understand that regulations are needed for everyone’s benefit. Michael Porter’s concept of creating shared value and integrating it into both business strategy and public policy fits well into this discussion. It’s all there.”
He also sees an increase in the pressure to regulate. “According to the New York Times, the five biggest platform companies say that the government is their biggest enemy. But I see that solving the world’s biggest problems requires cooperation. And arrogance is one of the biggest threats to both entrepreneurs and established companies. Unfortunately, the arrogance of some companies stems from the incredible results they have achieved in the short term, making it difficult to fight.”
Esko believes a company that only concentrates on shareholder value can’t make it in the long run. “Over-emphasizing shareholder value has given us short-sighted thinking. As Andy Haldane, Chief Economist of the Bank of England, says, ‘Patience is one of the factors that explains economic growth.’ It’s alarming that we discuss patience so little nowadays. In politics, we tend to think only in terms of the next election. In business, companies have difficulty investing in anything that doesn’t provide short-term profit. I read that the average public-company CEO work period is five years. How can you expect patience and long-term thinking in that kind of work environment?"
"It’s alarming that we discuss patience so little nowadays. In politics, we tend to think only in terms of the next election. In business, companies have difficulty investing in anything that doesn’t provide short-term profit."
Lessons from politics
Over the decades, Esko has created strong networks in the areas of business, technology, and society, as well as accumulated invaluable insights during the journey.
“From politics, and especially from my time as Prime Minister, I learned that crises, while they may seem bad at the time, can be beneficial. Without a crisis, changing things can be difficult, and sometimes a crisis makes it easier to make necessary changes.”
Starting his career in the 1970s Esko has lived through several crises, every one of them characterized by a certain decade. “There’s always a crisis going on somewhere. In the 1960s it was the Cuban missile crisis. In the 1970s it was the oil crisis. In the 1980s, it was a global recession. In the 1990s, it was the Soviet Union and the downfall of European socialism. In the 2000s, it was an economic crisis. We have to take every crisis seriously, but we also must put them into perspective. Every decade is going to have a crisis of some sort, and many of them turn out to contain opportunities.”
Keeping an eye on the future
The global megatrends Esko thinks everyone should keep a close eye on include technology, globalization, sustainability, population aging, and geopolitics. He believes that the combination of all five will shape the world.
“Technology is a disrupting power, and artificial intelligence is probably the biggest technology disrupter today. Not even a trade war can stop globalization – our mutual dependence globally will continue to grow, and that’s a good thing. Sustainability will shape the world, and people are finally waking up to that fact. The aging of our population is difficult to see since it is happening slowly, but it will have significant effects on companies and societies, as well as on how technologies develop. Geopolitical tensions had been forgotten until recently – but you only need to look at Brexit, which will negatively affect both Europe and the UK, to realize that the world is not free from geopolitical tensions.”
"Not even a trade war can stop globalization – our mutual dependence globally will continue to grow, and that’s a good thing."
How does Esko think innovation and entrepreneurship will shape our future? First, he feels it’s clear that we don’t need just a corporate world or a startup world, but rather, we need both and everything in between.
“We need big and small actors side by side. In the digital age, this sort of mixture actually increases the possibilities for entrepreneurship. I believe there will be more entrepreneurs in the future and globalization will be one of the driving factors behind this shift. I look forward to contributing to the NGP Capital mission and supporting entrepreneurship and growth companies”