7 Minutes
In a candid, often humorous fireside conversation conducted in Lithuanian, Petras Narbutas—a veteran entrepreneur and founder behind one of Lithuania’s best-known office-furniture brands—traced three decades of building in a transforming economy. Moderated by Vilius Bernatonis, the exchange moved from personal war stories to hard-edged advice on what will keep Lithuania competitive when cheap labor is no longer an advantage.
Narbutas argued for deep automation, investing in intellect (R&D, design, software), evidence-based regulation, and a long-horizon national strategy insulated from election cycles. Along the way, he explained why success isn’t a “secret recipe,” recounted driving through the 2008–09 crisis “on the limits of control,” and—despite optimism about a major new factory investment discussed on stage—warned that labor shortages and policy indecision could choke growth unless addressed pragmatically.
From the “Wild West” to World-Class: How the Ground Shifted Since 1991
Narbutas began with context: the company was registered in February 1991, when Lithuania’s business environment felt like the “Wild West.” Wages were tiny (he quipped that USD 20/month was then a “good salary”), yet the talent pool was extraordinary: over half of early manufacturing staff had university degrees—many, like him, from physics.
That combination—high motivation + high education + scarcity mindset (“hunger”)—powered the first stage of growth. But the ground has shifted:
Lithuanians aren’t “inherently superior”; the early edge was situational—education quality, some healthy habits, traditions, history.
Hunger has eased: after a historic sprint, people expect a comfortable European standard of living. That’s a success, but it removes the old fuel.
The cost advantage is gone: labor is no longer cheap; productivity is where Lithuania still lags—because for years, firms could win with skilled hands rather than expensive automated lines.
“We own great standalone machines—but not full automated lines. That was rational when labor was affordable. Now it’s changed. Either we cross the bridge to lines and intelligence—or we’ll be overtaken.”
Competing After the Cost Advantage: Automation and Intellect
Narbutas split the investment agenda in two:
Hard Automation — moving from isolated equipment to integrated production lines, even if the capex goes to line-makers “likely in Western Europe.”
Intellectual Investment — design, engineering, software, data, R&D, where the savings and differentiation can be greater than in metal.
“We didn’t invest in intellect because it simply wasn’t there—now we must. Our edge can’t be national or geographic anymore; it must be firm-specific.”
What Really Explains Success? (Hint: It’s Not “Secrets”)
A reporter once pressed him: “Why are you so successful—what’s the one reason?” He listed 17 competitive advantages in 2017, then realized competitors already knew those advantages.
“The secret isn’t what advantages you have—it’s why you have them and others don’t. Knowing the checklist is easy. Building the capabilities is the hard part.”
Labor Shortages Are Real—So Make Migration Policy Logical
For the first time, he said, the company cannot produce as much as it can sell because there aren’t enough workers. He criticized the stalemate over labor migration:
The public fear is that firms “just want cheap labor.”
Yet some rules would force higher pay for foreign hires than locals—“illogical” if the aim is to fill gaps, not undercut wages.
“If we all agree the population is aging and workers are scarce, then design a logical migration policy—who and under what conditions—so companies can plan.”
Evidence Over Aesthetics: Regulate with Data, Not Round Numbers
Narbutas challenged policy by ‘nice round numbers’—from overtime multipliers to talk of a four-day week—asking whether these claims rest on serious research or political aesthetics.
“If we want to be competitive, decisions must be evidence-based—grounded in research and impact analysis, not just opinion.”
Crisis Driving: The Mario Andretti Principle
He likened entrepreneurship to racing on the edge:
“If you drive too comfortably, you’ll be overtaken. If you’re at the limit, you risk sliding off in a sudden curve.”
In 2008–09 they did slide—but survived. “Luck played its part,” he admitted. “Had we not made it through, we wouldn’t be where we are now.”
The lesson: controlled risk is inherent to growth—complacency kills champions.
On Government: Praise for the Past, a Prescription for the Future
Having seen every Lithuanian government over 35 years, Narbutas refused to dunk on politics:
“We became champions in 20 years of the EU—so governments and business together did something right.”
But for the future, he wants strategy above parties:
A non-partisan institution to craft a 20–30-year national strategy (vision → strategy → execution), beyond election horizons.
A bold cultural target: make politics a prestigious profession—then it becomes realistic to make teaching prestigious next.
Why Lithuania Can Still Win (and What Could Trip It)
Why it can win:
A track record of building from scarcity to quality.
A culture that can choose to pivot from hands to minds + machines.
An economy ready to deploy automation lines and intellectual capital together.
What could trip it:
Labor shortages without pragmatic migration.
Regulation by aesthetics, not evidence.
Under-investment in automation/R&D, leaving productivity behind rising wages.
Complacency after two decades of catching up.
“We used to be the hungry ones. Now we must become the smart, automated ones. That’s the only way to stay champions.”
A Note on Investment and Outlook
On stage, Bernatonis referenced a major €170 million factory investment decision tied to Lithuania—framed as a vote of confidence in the country’s future. Narbutas kept optimism grounded: optimists can be ‘under-informed’ if they don’t see the bottlenecks. The economy needs talent inflow, productivity leapfrogging, and policy clarity to translate capex into durable competitiveness.
Key Takeaways (for Investors & Policymakers)
Cost advantage is over → Compete on productivity (automation lines) and intellect (R&D/design/software).
Labor is the binding constraint → Build coherent migration and talent policies.
Regulate by research → Test assumptions (overtime multipliers, workweek changes) with impact data.
Institutionalize strategy → A non-partisan, long-horizon economic strategy keeps momentum beyond elections.
Embrace controlled risk → Growth requires operating at the edge, not comfort.
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