Issue 17 summer 09

PDF Downloads This article All articles in issue 017 Create 'My eIQ' Email send via email Contact EIRMA send us a messageLinks Synpo Technical University of Pardubice Institute of Chemical Technology, PragueInstitute of Macromolecular Science of the Czech Academy of Sciences in Prague

Martin Navratil is chairman of the board and managing director of Synpo, a polymer research and manufacturing company based in Pardubice, in the Czech Republic. Navratil took a chemical engineering degree at the Institute of Chemical Technology in Prague, and a PhD in physical chemistry at McGill University in Montreal, Canada. He then spent 18 years climbing the technical career ladder in Canada, before moving to the US to become vice president of business development at Reichhold Chemical in North Carolina. In 1996 he became chief technology officer at Reichhold, remaining there until 2001, when he returned to the Czech Republic to run Synpo.

Synpo, a polymer and paints research company based in Pardubice, in the Czech Republic, was founded in 1952 as a state-owned research institute. It became a publicly held company in the wave of privatisation that followed the ‘velvet revolution’ of 1989. Synpo does contract R&D and product formulation in synthetic polymers, coatings, composites and adhesives, application and process development, custom manufacturing, as well as providing analytic and testing services in accredited laboratories. The company has 135 employees, around 85 of them researchers, and turns over €5 million, two thirds of it from R&D.

Synpo has links with other polymer research centres in the Czech Republic, including the Technical University of Pardubice, the Institute of Chemical Technology in Prague and the Institute of Macromolecular Science of the Czech Academy of Sciences in Prague.

The company does three types of contract work

The company does three types of contract work. The first is ‘mission-based’, where a client asks for a defined piece of work such as the development of a new material feature or the study of an unusual polymer property. The second is routine product testing or modification, work that builds on the fact that Synpo has a pilot plant where it can make small batches of products. The third is helping companies build their businesses in central and Eastern Europe.

Day to day

Because Synpo is a relatively small company, it can be run without a lot of the formal systems that larger companies rely upon. This means Navratil has to play many roles during the course of a business day. He copes by setting aside some of the orthodoxies of what is otherwise known as ‘management best practice’.

“I may spend a day working with one of our project leaders to prepare a customer proposal or to finalise a project report, or to prepare ourselves for a meeting with a customer,” Navratil says. “Or I might spend several hours at a technical seminar at which some of our researchers present their latest results.

“Effectively, I am also head of new business development and chief salesman, travelling to see customers. And when I am not travelling, I may spend a significant amount of time on the phone or e-mail, communicating with them. In most cases, I regard the key contact person as a personal friend and treat them as such. I try to convey to my co-workers a strong sense of responsibility to do what is best for that person.

By making it personal, I believe that we can build high level of mutual trust, which is critical in R&D. Results are never guaranteed

“By making it personal, I believe that we can build high level of mutual trust, which is critical in R&D. Results are never guaranteed.”

Navratil keeps formal meetings to a minimum, apart from a monthly review with the heads of departments to look at the previous month’s financial results, hear about progress in each of the departments and make an action plan. He also has regular meetings of an informal credit committee to decide what to do about customers who don't pay their bills. And there are meetings with smaller groups to discuss problems and opportunities with specific customers.

He makes time for his broad role by spending less time on things such as email, which is filtered for him by an assistant who also types up the replies he dictates onto a Sony microcassette recorder. “I only very seldomly activate my computer, other than to glance every morning at the New York Times.”

Managing the numbers

Navratil is also cautious about spending too much time on ‘managing the numbers’, obsessing over budgets and forecasts that, he believes, serve little purpose.

“Managers feel that they have to manage. And the easiest, most visible things we can manage are the ones we can measure,” he said. “And so I ask my business manager to explain why our inventory went up in the last quarter by 12%. I praise her for increasing gross margins in May - while strongly suspecting that the effort and time I spend on this is essentially pointless.

“And yet, I feel I have to do it, to show that I pay attention to these numbers. I sometimes feel almost guilty because I have to do things which are pointless, but which have to be done so I look like a good manager.”

Navratil’s aversion to budgets and forecasts was born in the US, where he grew tired of the tremendous attention that was paid to managing the numbers.

It is far more important to concentrate on things that you can do something about than what you think the numbers will be

“It takes an enormous amount of time to make these budgets but specific action plans are really the key things,” he said. “I’ve been in meetings trying to predict raw material and selling prices and two weeks later you know those numbers are not going to work. It’s reality that counts: try to maximise revenues and try to minimise costs.

“The problem is that you’re spending so much time on these budgets that they become a bible. We don’t measure ourselves against a budget but against targets, such as whether we are growing the business or the margins compared to last year. So we’re measuring against real numbers rather than the skill of people in negotiating a budget.

“It is far more important to concentrate on things that you can do something about than what you think the numbers will be.”

Navratil recognises that major investments need payback forecasts.

“But there are uncertainties in business that you can never overcome. You cannot forecast the behaviour of competitors in several years’ time, whether they have new products on the shelves or their pricing policy. So we spend an insignificant amount of time on the budget. We must have a budget for expenses control but the total amount of time that we spend on this is only a couple of hours a year.”

Lightweight operations

I don’t force training on those who don’t want it

There are plenty of other things that Navratil does without in his quest to keep Synpo ‘fast, fluid and flexible’. The company doesn’t have a legal or HR department, relying on one person to handle salaries, benefits and pensions. Navratil deals with all the legal issues, insurance, contracts, negotiating the supply of electricity, and arguing about confidentiality agreements.

He doesn’t believe in detailed career planning either, having spent time in US companies making succession plans for his own role that were never used.

“Instead I do it automatically as part of normal working with people. I don’t do many formal training plans either, doing short-term plans instead and not regarding them as absolutely fixed. One way to do this is not to have people in human resources who have it as a priority.”

Navratil is also not a fan of broad training programs that attempt to teach many people certain skills.

“Nine out of 10 people will get nothing out of them. I don’t force training on those who don’t want it. For example, in teaching creativity, perhaps 3 to 4% of people are creative and the rest just aren’t. But if you know a person has shown creativity, then they may benefit from the training programme. The rest won’t.”

IT systems are also another sore point with Navratil. Having been what he describes as a ‘victim’ of the installation of a comprehensive management system in one of his US roles, he keeps Synpo’s IT as simple as possible.

“We have a simple system that provides all the information we need, and is maintained by one person, who also does the accounting. That means he doesn’t have time to mess around with what he has.”

Eastern Europe

Navratil is very open about what he charges for his staff’s time. He says a lab technician’s time would be charged out at €15/h. A graduate with a Masters degree would cost €31/h and an experienced PhD and research project leader would cost €46/h.

“When you look at the actual cost of having a person employed it is between a quarter and a third of US costs,” Navratil said. He says top scientists are earning substantially more than the average salaries in the Czech Republic.

Navratil rates the skills of a lab technician in Pardubice as being as good or better than the average lab technician he could hire in North Carolina.

“They’ll be better at maths and have a better chemical knowledge, they can work with all the laboratory glassware, and know how to work with high temperatures. And they’ll have a good safety record compared with the US,” he said. Engineers and chemists at the Masters level maybe as good as an average graduate from a US university, as are the PhDs. There is much less mobility in the Czech Republic, which is why Synpo mostly hires local graduates. In part this is due to subsidised and rent-controlled apartments, which cost four to five times less than free-market rentals.

Navratil also had to adjust his expectations of work on his return from the US. Although it is almost 20 years since the Berlin Wall fell, Western attitudes have not swept the Czech Republic. So many of Synpo’s staff will go to work, do their 7½ hours and then go home – asking them to do more is unlikely to be met with a positive response. A profit-sharing scheme is partially successful – some people make the link between the effort they put in, the company’s success and their personal reward, but most feel the bonus should be in the base salary. And some don’t think it fair that the bonus is set as a percentage of salary: they say “We all have the same stomachs so we should get the same salary”.

This means that of the 135 people Navratil employs, he estimates only about 25 to 30 of them are highly motivated. On the other hand, he says that that’s probably enough in a company of Synpo’s size.

The other cultural issue is the staff’s private nature. When Navratil suggested he should run an annual barbecue for the staff, borrowing from America’s tradition of company picnics, he was met with a lack of interest. He was told that if he held it on a Friday or at the weekend that no-one would come, so one Thursday in summer the company closes early and the staff stay on. But they never bring family or spouses.

“They’re not interested in socialising with their co-workers,” he said.

Bureaucracy

Although Navratil takes many key roles within Synpo, one of the most important is signing things.

“I have never signed so much paper in my life,” he says. “Here in the Czech Republic virtually all correspondence with various governmental agencies must be signed by an authorised member of the board and I must have authorisation signed by all board members and all their signatures must be witnessed. So I sign all the routine correspondence about paying VAT and the requests to get it back, information to the Czech Ministry of Social Affairs about our payments and enormous amounts of correspondence related to R&D subsidies. Sometimes up to 12 copies must be signed and sent in paper form and on discs.”

Old-fashioned attitudes can extend to partnerships as well. Navratil sees more caution on the industrial side of such relationships than he has experienced elsewhere: “They think their know-how is too valuable to share with us, so it’s easier to partner with Western Europe or the US than with local partners who exhibit excessive caution.”

Part of the problem is that the partners he can find in the Czech Republic are fairly small, so they can’t afford a global patent and so keep commercial secrets instead. Navratil also claims that there is little trust the judicial system in the Czech Republic, because the courts are unpredictable, relying on formula rather than common sense or a sense of justice. And decisions can be overturned several times, stringing out the legal process to the point where creditors can avoid paying by going bankrupt.

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