Transcript of "Developing innovative businesses the importance of culture"
1Developing Innovative Businesses: The Importance of Culturehttp://wisepreneur.com/entrepreneurship/developing-innovative-businesses-the-importance-of-culture A marketing manager noticed my LinkedIn profile and sent me an email to ask about my approach to innovation, here is an extract of his message: “I stumbled across your profile by chance and happen to read your methodology. What I find missing is “risk taking” or “an approach for radical innovation instead of incremental”. Please do not mind the critic in me, but from your experience don’t you think companies should be looking outward first to commercial pockets that they could explore and then come back to transfer of technology? I mean to ask, how many companies that you have worked with, spent time working on a radical innovation intent before deciding to engage in innovation.” by Mr. Altaf JasnaikI would like to share my thoughts about disruptive innovation with Wisepreneur’s readers. I apologize inadvance for my French sense of humor.Yes, I totally agree with Mr. Jasnaik. Companies should be looking outward first to market niches, comeback to research & development, and then propose new products with new benefits. The scholarRoberto Verganti (Professor of Management of Innovation at Politecnico di Milano) calls this kind ofinnovation strategy “Design-driven innovation”. This way of creating radical innovation is much moreefficient than that the technology-push strategy.But unfortunately, it is difficult to do in my country. We prefer Technology-push or Market-pull innovationstrategy. Why? You talk about “taking risk”. Are you crazy? Don’t even think about it! Here are thereasons: The French are a part of Latin Europeans; we are not part of the Anglo-Saxon world. Thismakes a huge cultural difference. French hate taking risk, they are Cartesian which means they rejectfeelings in their decision making. A sound decision should only be taken based on rational reasoning. Incontrast, the Anglo-Saxons are known to combine their feelings with rational reasoning. They put theirrational reasoning at the service of their feelings, of their instinct, of their dreams.Which model is right? Which model is the best to produce wealth? Most of the current cognitivepsychological researchers such as the famous neuro-scientist Dr. Antonia Damasio indicates thatfeelings, emotions and instincts play a central role in a clever human decision making. Proof ofimportance is that Americans have companies such as eBay, Google, Apple, Amazon, Procter &Gamble, and Pixar and : we, French, don’t.Our bankers, angel investors, venture capital firms, academic research and researchers, politics andour politicians … all our economic and management systems are based on our cultural peculiarity.Fortunately, we are beginning to have more and more entrepreneurs, and they have dreams and crazyAri Massoudi / Consultant Strategy of Innovation / www.strategy-of-innovation.com / www.linkedin.com/in/arimassoudi
2ideas. But without the support of the capital, it is hard for them to create successful,innovativecompanies.I never saw a French angel investor put his money in a crazy idea. Remember the Google mythology,two computer science engineers aged 23-24 – one could say geeks. – were able to collect $1 millionfrom the 3F’s – family, friends and fools. French business angels invest only in already existing firmshaving 3-4 years experience, having patents, having clients and having revenue. To collect $100,000 to$300, 000 in France, it’s normal to see 10 to 20 angel investors on a single start-up. Not because theyare poor, but because a single angel investor with $100,000 prefers to invest on 10 start-ups at $10,000per start-up. That’s what the investor has learned at business school: “dilute the risk”. Our venturecapital firms invest in innovating projects of already growing companies with high level of revenues, andvery few investments are done in seed and early stage start-ups. How would anyone want to dobusiness in such conditions, in a world in which competition is global and so harsh?“how many companies that you have worked with, spent time working on a radical innovation intentbefore deciding to engage in innovation?”Most of the existing, “regular” companies that I have worked with don’t even care about having astrategy of radical innovation. They think investing into “the differentiation” of their products (color, size,packaging …) is already innovation enough! Or they think trying to get a foreign country market is aninnovation. As you might guess, a lot of education toward CEOs, executive managers, andowners/stockholders is still necessary.Why I pointed “existing” and “regular” companies? My consulting practice is dependent of the culture ofthe country I work in. In France, the major part of companies are family businesses includingcentenarians firms. According to Wikipedia, “A family business is a company in which one or moremembers of one or more families have a significant ownership interest and significant commitmentstoward the business’ overall well-being.” Although the CEO (often a member of the owner’s family) andhis executive teams could have been trained by the best business schools, they have to convincestockholders who are family members. Because the French risk adverse, when an opportunity isrevealed, the CEOs prefer using a strategy to kill this opportunity by lobbying state officials (from theMayor to the President) who will, in turn, announce a tax or law to prohibit the opportunity.Still, I admit, I really don’t work with those companies. The major part of my clients are seed and early-stage start-up companies created by people from academic research, or by people needing academicresearch to implement their business idea. My job is to support them in their global strategy ofdevelopment (to grow by themselves or to sell the patent/license to a bigger company), in theirbusiness development (helping them to connect with bigger industrial partners, to academic partners…), in their marketing, sales and communication strategy, and support their fund raising (connect themto business angels or venture capital investors). So, I can say that I am a consultant in technology-push/technology-transfer innovation, and the innovation could be radical or incremental (but thisdescription is too long for my LinkedIn profile).You may think that my statements about French business are perpetuating common stereotypes … butit is so true. As you see, my working conditions are harsh, but I like challenge!Ari Massoudi / Consultant Strategy of Innovation / www.strategy-of-innovation.com / www.linkedin.com/in/arimassoudi