Relative to its size, Denmark is the home of many businesses that have become leaders in their fields: Grundfos is the world leader in hot water circulation pumps, Oticon is world leader within hearing aids, Mærsk is the world’s leading container shipping line, Radiometer leads the blood-gas instrumentation business, Unimerco leads tool management and Lego is the brand for construction toys.

How can such a small country produce so many world leaders in such diverse industries?
      Besides size, many other factors would seem to militate against success:

- Denmark lacks raw materials other than a minor share of the North Sea oil and gas reserves.
- The climate is unpleasant for large parts of the year.
- Denmark lacks a big domestic market. With a population of only 5.4 million people and one of the world’s most open economies, Danish companies don’t get much for free.
- Danish is a tiny language – adding the other Scandinavian countries there are less than 20 million people in the world who understand Danish.
- Denmark lacks a heavyweight industrial tradition. Danish business is fragmented and consists primarily of small businesses with less than 100 employees. There is a handful of industrial corporations with more than 10,000 employees, but none are big according to international standards.
- The cost of doing business in Denmark is high, partly due to the high taxation level.
- Although Danes would never agree to this, many people consider Denmark’s location on the map to be remote relative to the financial and cultural centres in Europe and the rest of the world.

But Denmark seems to offer hidden competitive advantages that may be particularly relevant in the knowledge economy that we are entering.

The fact that the Danish language is spoken only by such a small number of people has forced the Danes to become proficient in languages such as English, German, French and Spanish. That palette is now broadening to languages such as Chinese and Russian and the international role of these countries broadens. Students in the 9th grade often speak two foreign languages (English plus French or German) and many students go abroad to improve their language skills.

The small home market forces corporations to think about export much earlier than a German or American company would do. The Danes tend to make their mistakes in export much earlier in the lifecycle of the firm than do the Germans, the French and the Americans.

Denmark’s lack of raw materials has forced the Danes to learn to stretch resources further. Denmark has taken the lead in exploiting wind power because oil was scarce and expensive. Industrial products are designed for minimum material usage and energy savings as a completely natural strategy.

Small companies do not have the resources to develop high technology for manufacturing and product performance. The Danes have been forced to use new technologies that have been developed by others. Most Danish companies that enjoy a leading position within their field, master user driven innovation and therefore can be competitive without developing the high technology themselves. User driven innovation builds on empathy and modesty. The Danes have learned such modesty because they know that they come from a small country that cannot beat competition through power.

The lack of an industrial tradition has made it easier for Denmark to embark upon the knowledge society. The Danes have no "big company industrial culture" to unlearn before they can start competing in the know ledge economy. This applies to both employers and employees. In the classical industrial tradition, employers tend to view their employees as nothing more than a production factor. If you come from a small business you know that individual employees are much more than this – they are the company. Likewise from the employee perspective. They know that the pay cheque doesn’t come automatically. Only if the business makes money will they be paid.

The high cost of doing business, especially the cost of paying people, has taught the Danes to work together efficiently.

The examples above indicate how the apparent shortcomings of Denmark as a business nation have been turned into advantages. They are some of the reasons why a surprising number of Danish companies enjoy strong positions within their niches.

In a world of increasing competition from low-wage countries such as Eastern and Central Europe, Latin America and of course China, India and Vietnam, Denmark needs to build further on its strengths to stay ahead. Five elements of the Danish approach to work are especially valuable in boosting competitiveness. The more of these components that are present, the closer a company will be to the Danish ideal:

- Professional skills
- Interdisciplinary co-operation
- Creativity
- Customisation
- Environmental consciousness, social responsibility and aesthetics.

This combination of components may be found in a large variety of industries, but some sectors tend to stand out as particularly appropriate for Denmark: medical instrumentation, environmental management products, specialised communication systems, creative media and solutions for health care, for children and for the elderly.

Despite a favourable starting point, Danish business needs to make a major effort to develop the right organisational setup for the 21st century knowledge business:

- It needs to be driven by a rationale that goes beyond profit and return on investment.
- It must reflect a genuine partnership between owners, management and employees.
- It should offer unique opportunities for staff to work flexibly, to enjoy maximum freedom and to team up with other employees of their choice.
- It must be managed by leaders who can communicate mutual trust, integrity, passion and vision. Such businesses will benefit from the informal and autonomous nature of the Danes. While a German worker will look into "policies and procedures" in order to find the solution to his current problem, a Danish worker will attack the issue directly in order to solve the problem. Afterwards he may consult the "policies and procedures" to find out if he may have done something wrong. This attitude often leads to faster and more creative action.

In summary, Denmark’s future world-class business will most likely be found in industries and sectors that can successfully combine professional skills with collaboration, creativity, customisation and pragmatism.

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