Execution is the most important thing in the strategy

To be successful, you need to be active - says Zbigniew Jagiełło - former long-term President of PKO BP, and currently a member of the supervisory boards of Asseco, Blik, MCI and Ekoenergetyka, who was a special guest at the conference organized by WP2 Investments.

What does life outside the bank's management board look like and is it possible to effectively fulfill yourself as an advisor?

Zbigniew Jagiełło: I was preparing for my departure from the bank and I knew what I wanted to do. For over 20 years I worked as a CEO, first at Pioneer Pekao TFI, and recently at PKO bank. Being a CEO in such companies is a 24-hour job that never ends. Especially when these modern possibilities of transferring information and decisions at a distance have come, we are "at work" all the time.  This requires a lot of self-discipline from every entrepreneur and manager today. The human brain likes crop rotation, and the homogeneity of the things we deal with is certainly not conducive to creativity, which I like very much.

Why achieve success when you can't taste it? Now I feel happier in what I do, because I went back to the times of my youth, when I wanted to be a Renaissance man, that is, to deal with various things. This curiosity about the world remained in me. I always asked questions, disagreed with authorities, tried to go my own way.

What challenges do founders of startups in the technology industry face in the face of the current economic downturn, high inflation, economic growth slowed down to virtually zero and general high uncertainty? The business model in which technology companies operate, i.e. financing development in subsequent rounds, is becoming more and more challenging. What would you say to entrepreneurs, based on your experience - what should they focus on now in this difficult period to wait out this economic downturn?

Zbigniew Jagiełło: First of all, you are lucky that there is a crisis. For a good entrepreneur or a good manager, the best situation is when things are difficult, because companies that do not see any risks, proverbially push the pedal to the metal and drive 300 km/h are out of the game... and they fly out at the first turn. When everyone has easy access to money, when there is a large increase in GDP, the market grows on its own, there are no problems in sight...  Now is the time for verification.

Referring to what you said about difficult times, it was already mentioned today at the conference that we have 3 main types of financing - bank debt financing, venture capital financing and grants. As representatives of venture capital and banking, don't you see subsidies as competition, as something that can make entrepreneurs lazy?

Zbigniew Jagiełło: If there is money that someone gives away, you have to take it. Why? Because you will be uncompetitive in the sense that if others take this money, and this is our competitor, it is simply worse for us - and this is the first issue regarding subsidies. The second one - concerning debt and equity. For a large part of my work in a bank, I was surprised when I talked to entrepreneurs, because they wanted to receive equity in the price of debt. They did not understand this difference, and I still remember a man who applied for a loan "which does not have to be repaid". I asked where I could get one, because I would be happy to take one too. Inevitably, every credit institution wants to repay the principal, interest and make it highly probable to repay through a financial plan. At the same time, it is best to protect yourself even more. I maintain the thesis that if there is money in the form of various types of grants, then you should simply take it and demand more. It seems that this may simply be a wise complement to other forms of financing.

What does the financing of young companies that have no revenues look like? Do companies that come to large banks receive financing from them or do they rather leave empty-handed?

Zbigniew Jagiełło: As I said, if someone wants to borrow money, they have to make this repayment more probable by showing the business model, customers, etc., and only then can they get a loan. On the other hand, you can become a bank customer by opening a current account where you generate various types of flows. Only later, when these flows appear on our account, we show the so-called financial history of the company.

How to make such an institution as a large bank enter into cooperation with a startup?

Zbigniew Jagiełło: We have a big change today, which probably began about 10 years ago. I was at PKO BP at the time, we were looking for ways to stimulate the market, we discussed various ideas with employees. One of them was to use a program created by MIT (Massachusetts Institute of Technology), which is the "most important technical university" in the world. As PKO BP, we invited them to cooperate to create an acceleration program for Polish small companies. This is how we started to stimulate this type of activity. From the bank's point of view, it was a non-profit activity, we were not able to come up with a business model, but I believe that every large company, regardless of whether in a small or large environment, has some kind of social responsibility. So, since I am a large entrepreneur in my town, I should feel responsible to create and make the social environment better than it is. Of course, this can be done in various ways. Nor is it about taking action in this direction to replace our core business. At that time, we at PKO BP came up with, among other things, this cooperation with MIT, under which we invited small companies with interesting ideas to such a laboratory. We chose such companies and tried to make a "pilot" with them, taking advantage of the size of the financial institution, and then the project could live its own life. Whether in symbiosis with our bank, with other banks, or in symbiosis with our economic environment.                                 

Today, there are many institutions of this type, some are more transparent, others less. On the other hand, in order to be successful, an entrepreneur cannot be passive, he must "sit in the front rows", he must constantly try – search, build relationships, visibility, simply be active. That is what I would expect from the young entrepreneurs I see in this Chamber.

From the point of view of banking activity, but also from the point of view of investment, and now from the perspective of a mentor, what recipe would you give to those running companies at different stages of development - should you look for synergies, shared benefits with other companies, or rather create your own model and possibly convince others to it?

Zbigniew Jagiełło: Again, I don't have one recipe. When you look at your own life, you will certainly notice that you were and are more active than your peers. This definitely distinguishes people who later achieve success in various fields. The success of your own company in which you are managers requires interpersonal skills, emotional intelligence, conversations with people and teamwork. These are not exactly things that can be learned from books. Coming to an event and entering a new community, establishing and maintaining contact in a random situation, on a train or in an elevator, in such a way that people feel positive, is certainly a valuable skill that can bring many benefits. Perhaps thanks to it, in such a random situation, you will meet someone who will prove helpful in your businesses. I have just such good experiences.

Why does no bank try to specialize in any innovative branch of the economy in order to understand these businesses and be able to become a leader in financing, for example, gaming or mobile application solutions, which can grow into really large enterprises, which can also ultimately be a large customer of the bank for many, many years.

Zbigniew Jagiełło: This is a simple asymmetry of knowledge. If we have a new industry, such as gaming, which has been around for just over 10 years, then on the side of financing institutions, (probably with a few exceptions), on the side of the credit process, there has not been a segment specializing in financing this part of the economy. Such companies did not need a loan at the beginning, but equity. This industry is an example of the fact that as Poles we have a certain skill regarding broadly understood information technologies. I am a "non-practicing IT specialist" myself, about 35 years ago I graduated in computer science and management at the Wrocław University of Science and Technology.

However, something has changed in this banking in the last year or two, there are the first banks such as BNP Paribas or Santander, which have already started to create teams to cooperate with the technology and startup industries, so this will probably change step by step, but don't banks lose out on the fact that they do not react faster?

Zbigniew Jagiełło: The most important thing is that there is competition in this area. The fact that the first banks are interested in this is not enough. It is important whether they will make money on it. I don't feel like a specialist here, I don't know what the situation in the world looks like - whether there are banks that specialize in this area - when it comes to lending. Certainly, at the level of investment banking, there are special sections dedicated to these new technologies, which are scalable and can be quickly sold, listed on the stock exchange or vice versa.

Coming back to the European Union's strategy, you are young and you do not remember the European Union's Lisbon Strategy, which has not been implemented. Why? Because what is the most important thing in strategy? Execution! I will recommend you something that I invented a few years ago - "Jagiełło's product". What does it consist of? We multiply "strategy times execution". If we describe the strategy on a scale of one to ten, and the execution also on a scale of one to ten, we can have a maximum of 100 points. During execution, we must remember whether our intellectual and material resources can allow us to implement the strategy. And it is not always the case that a very good strategy can be implemented by the assets we have. It may turn out that we are unprepared to implement such a good strategy and we simply have to simplify it to make it feasible in our conditions. Because 10 X 1 is 10 and 5 X 5 is 25. However, the most important thing is execution. So what if the first factor is well prepared, if multiplication by zero is always zero. Therefore, each strategy should be prepared in terms of whether we can actually implement it.

From the perspective of the strategy, we will ask for predictions regarding the economic situation in such a horizon as one, two, three, because this is the maximum period in which startups are able to plan anything, taking into account interest rates, general economic growth or the availability of capital?

Zbigniew Jagiełło: We have elections at the end of this year, which is very important from the point of view of the Polish economy. This means that any talk about fighting inflation is pointless. No government, neither the current one nor any other government that will govern after the autumn elections, is able to change what is the actual state of affairs today in the short term. We have populist governments, spending related to social factors is enormous, the sooner we understand that this is not good for Poland, the better. There will also be a large impact of the external factor, especially in the long term - how and when the war in Ukraine will end, which is paradoxically both a threat and an opportunity for Poland, because we will have a chance to be a logistics and technological hub during the reconstruction of Ukraine if it ends up with an attempt to build a modern economy - just like Germany after World War II.

From an inflationary perspective, is there hope that the system of communicating vessels and a more responsible fiscal policy of the European Union, Germany and other large EU countries is somehow able to save us a little?

Zbigniew Jagiełło: No:) I would like to treat it more broadly. From the point of view of the Polish economy, we should operate in the area where decisions on climate changes and regulations are made. Let's do it at the right pace, not too fast, so as not to harm ourselves. Let's not be top performers - expensively and without impact, but let's also not act too slowly, so that we are not perceived as those who do not want to care about the climate. Let's also approach the topic personally - each of us should, to the best of our ability, contribute to the improvement in the environment in which we operate, when it comes to these climate issues or, more broadly, in the area of circular economy.

Recently, I was invited to a conference on financing decarbonization in Poland. And I read the document "Polish Energy Programme 2040". Nothing came out of it in terms of strategy. It states that PLN 750 billion will be spent on the production of electricity of various types, including renewable energy, with a nuclear component. A huge amount! However, in the coming years it will be 50 billion, and the rest only at the end of the entire plan. And this is, unfortunately, our Polish approach - today we don't have to do anything, tomorrow we will start thinking, and when the deadline is approaching, we will start nervously "running".

One more question in the area of managing the motivation of people and the team. You have a lot of experience in building large teams. We build smaller and larger teams in startups, and it is not always easy, especially in the area of sales motivation. What detailed advice do you have on how to motivate the team, especially salespeople, to work a little harder?

Zbigniew Jagiełło: Thank you for this question. I started my professional career with sales. I had to overcome my inner shame of opening up to another person. Of course, I'm not talking about the elements of conversation that are practiced in sales teams - allowing you to recognize the customer's needs and so on, but about opening up to start talking to a human. I was an explosive extrovert at the time. I had to learn to be calm, to listen to the other side. Even 20 years ago, when training bank employees, I used this metaphor: when a customer comes, you have to let him talk, because at home no one listens to him, at work no one listens to him, at least at the bank someone should listen to him. And it was a message to sellers not to be just senders. When we have small teams, such as five or ten people, the leaders have the need for them to decide about everything. However, you need to give your colleagues a chance to say their own line. Do not start the meeting with "I". When building teams, remember that people want to participate in decisions, they expect the right to their opinion, to have a voice. Give them a chance to make decisions, notice them, praise them.

I have already mentioned the emotional intelligence that characterizes you. It is needed to "read people" - what they need, what can be helped for them. We are social creatures, we need the attention of others. It is worth taking this into account when thinking about motivating teams.

Where would we be as entrepreneurs and where would our country be if there were no subsidies? Where will we be when these subsidies are no longer available, i.e. after 2027, when we will cease to be a beneficiary and start being a net payer. Where will the economy be then, where will we be then as entrepreneurs?

Zbigniew Jagiełło: We compete with each other in various ways. As I said, when subsidies are available, you have to use them. If we do not take them, we act to the detriment of our own company. We are part of the European Union, within which national economies also compete with each other. Then there is competition between economic blocs - the European Union, the United States, China. So, Poland must also fight for its interest – it must fight and strive for subsidies, taking no less than others. You always have to think in such categories. 

Referring to the question that we will be a net contributor in the EU, I would like to ask you who is in favor of us being net contributors in the EU? Because I don't mind! 😊 "We should remember that those whose GDP is higher than average pay. Politicians also do not understand this mechanism, I had the opportunity to find out about it.

The debate took place on April 19, 2023 in Warsaw, during a conference on new subsidy programs, organized by WP2 Investments for portfolio companies.