Analytics, Direct Speech, EU – Baltic States, Financial Services, Forum, Latvia

Hjörtur Smárason is a specialist in place branding and has been working with several cities and areas, from the unmapped wilderness of East Greenland to one of the wealthiest cities on Earth, Oslo, and is one of the founders of Phønix, the international place branding panel. He has a background in anthropology and political science and has taught both marketing and innovation at universities. Hjörtur is also an advisor and board member of several startup companies and is developing crowd sourced city innovation projects for cities around the world with Innovation Embassy. 

In his talk "Never Waste a Good Crisis" Hjörtur Smárason will explain how Iceland managed to turn their economic crisis and volcanic eruptions into a booming tourist industry with an average growth of over 20% per year.

What do you think about the crisis in Iceland? Why it was so strong?

Hjörtur Smárason: Iceland is a small country with big ambitions. The banking sector had grown way too large for the economy with large operations over seas. The foreign debts where much higher than the economy could bare so as soon as the balance was tilted with the global economy crisis in 2008 the whole Icelandic system crumbled with all the major banks going bankrupt simultaneously. Over 90% of the Icelandic stock market disappeared over night. The currency collapsed and inflation sky rocketed. With all mortgages either in foreign currency or with an inflation guarantee the homes took most of the burden. The nation went from being number one over the happiest nations in the world, to being number one in the use of anti-depressive drugs.  

If I understand you correctly, you think the difficulties caused by volcanic eruption, ended finally with strengthening of the Aviation industry. How did it happen? Which aspects played a positive role?

H.S.: Everyone remembers the volcanic eruption in Iceland that shut down the airspace over most of Europe. While the media was filled with images of heavy ash fall, horses suffering and apocalypse like images of lightnings in a terrifying ash plum Iceland was unconvincingly trying to deny there were any problems in Iceland. Even though that was true for everything except a few farms right below the volcano that wasn't really working. It wasn't until we realized the value of the media attention and how we could build on that to draw attention to the wonders of Iceland, the amazing volcanic landscape and, thanks to the economic crisis, the now reasonable prices that we managed to turn those events to our favour. The process, which I explain better in my talk on April 10th at the World Trends Forum, has resulted in several new airlines flying to Iceland and an average increase of over 20% per year in number of tourists. 

According to some opinions, it is easier to cope with really big, even catastrophic difficulties (for example: with consequences of the natureal cataclysms), than with financial, economic crises. Do you agree with this opinion?

H.S.: Not necessarily. It depends on the size and nature of the crisis. It is easier because natural catastrophes are obviously out of your hands and often bring big media attention. They are usually also very short lived and you can start the rebuild almost the following day. People unite in their reaction to a natural catastrophe while they are more likely to divide during economic crisis blaming each other. But to build tourism and aviation you need functioning infrastructure. In the case of Iceland we got maximum publicity with minimum damage to infrastructure. Additional to that we had an economic crisis which helped the tourist industry a lot. Travelling to Iceland became cheaper, thus making it more competitive, and a lot of skilled workforce became available to start up new travel companies and cope with fast growth of older ones. So catastrophes bring more media attention and are easier for PR but economic crisis tend to be better for the actual build up of a competitive tourism industry.

How do you think we could extrapolate experience of coping with difficulties, caused by volcanic eruption, on other areas of economy?

H.S.: In Iceland the growth of the tourism industry wouldn't have happened after the volcanic eruption if it wasn't for the economic crisis. What we can learn is that any crisis, whether natural or economic mean changes - and changes mean opportunities. If your crisis are big enough to attract media, you have an opportunity to get your story heard, to focus on areas where there is hope and where you build a future. Identifying the opportunities and the stories you want to get out there is key to success in coping with difficulties.

Could we use this experience for other countries? 

H.S.: Sure we can. What is really important is not the crisis you're in, but how you react to it. The tragic collapse of the shopping mall in Riga last fall caught the attention of the international media. I only know of that event because of what the international media has written. At first, it signals bad housing, bad building regulations or monitoring of them or bad working ethics. Then we hear the prime minister has resigned because of it and that sends out a completely different story. It signals democratic values, politicians that face consequences when mistakes are made and that the interests of the people come before their own. It helps restore faith in the Latvian system. Of course this is not an event you use for marketing or promotion in any way, but every crisis and reaction to it sends a message to the outside world and affects the image of the country.

What does independence mean for a small country? How can a small country stay independent among such big "players", as USA, Russia, Germany, France?

H.S.: It means freedom. Freedom to adjust to its own specific needs. Freedom to self determination. But with freedom comes responsibility - and consequences. Being an independent country isn't just a political thing. A country must make sure it is not heavily dependent on a single foreign country in any sense, whether it comes to politics, economics or resources - energy in particular. That is often difficult for a small country with limited resources. In Iceland we have learned that the size of a country is not measured in landmass or population, but in reputation. That is why it is important for Iceland not to have an army. It is part of the defense strategy because it becomes very difficult for a nation to justify an attack on a peaceful country with no army. The stronger and more positive image a country has, the harder it is to "bully" the country in international relations. And the public opinion tends to support David over Goliat, as both Iceland and Latvia have seen. I was 15 when Latvia reclaimed her independence and watched the events through television with great interest. I still remember seeing the images from the camera man that was shot by the barricades in Riga in January 1991. Coming from a small nation that had itself recently become independent, we could better understand what the Latvian people were fighting for. These events contributed to my decision later to study political science specialising in diplomacy and peace negotiations.

What do you expect from the future?

H.S.: I can hardly wait. I think we are experiencing some of the fastest and most amazing changes in history. We've only just begun to see the impact the internet is having on societies. The internet is not just technology. It is a new social structure and it is now starting to spread beyond the virtual world. We are seeing the start of "the sharing economy", work and employment is changing, education and learning is changing, politics and international relations are changing. Power is increasingly shifting from nations to cities, which changes the dynamics in the world. Contrary to what has been said about globalisation I believe we will be seeing a better connected but at the same time a more varied world than before and I welcome that. Most cities and companies are likely to fear those changes at the beginning, but we will see those rise to the top who do not fear the changes that are awaiting us, but rather embrace it and grab the opportunities they open up. Turning Riga into a hub for air traffic and thereby ensuring the importance of the city for international business is a great example of an opportunity that has been taken full advantage of and creates an important foundation for the future growth and prosperity of the city.

Is there any sense to forecast or predict the future? And the answer is “yes», please give us a few examples, when the prognoses were really useful and helpful.

H.S.: The best way to predict the future is to create it. That is why I'm involved in several startup companies and innovation projects, including crowd sourced social innovation on a city and national scale. To create a successful startup it is important to understand where we are heading, monitoring changes, realizing strengths and weaknesses and spotting opportunities. It is important to identify and meet with thought leaders, watch trends, innovation and scientific advancements and - dream! That is why imagination is more important than knowledge. We need to be creative when thinking about the future, putting today's knowledge into new context. Electricity was a fantastic discovery but the greatest changes were in all the appliances that we could run on electricity, with new appliances still being invented today. The same goes for the internet and the next big thing will be wearable technology. The big revolution there is not that we will be able to wear small computers, but the value of the information they will be able to record and share. Monitoring our health being the first big trend within wearable technologies, again shifting power to the people, this time from the hospitals, taking increased control of our life - and even our death.  

Could you please give us the priorities of values in your life? 

H.S.: "Live every day like it's an adventure" is my motto in life. I try to constantly challenge myself, explore and learn new things. I try to keep an open mind and embrace changes and opportunities. Being a family man with 5 children helps me keep my feet on the ground at the same time. Travelling is very important to me and one of the most valuable thing I can give my children. I have taken my 5 children to well over 20 different countries as it widens our horizon, our understanding of others and makes us more adjustable to changes - and thereby, better prepared for the future and the unknown. 

What do you expect from the World trends Forum? New ideas, new information or something else? 

H.S.: I really look forward to hear the ideas and visions that will be shared at the forum. There will be some of the most powerful companies in the world at the forum and their role in shaping the future can be pivotal. 

What would you like to wish the participants and the organizers of the Forum? 

H.S.: I hope to see an open discussion about the future, leaders who realize that winners of tomorrow are not those who manage to resist changes the longest, but those who embrace it and become the leaders of the changes that bring us into the future. I hope we all make new friends and business contacts, enjoy the beautiful city of Riga and return home with a clearer vision of the future. That will make us want to come again.

http://www.world-trends-forum.com/en/