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π Economy

“There is no one right way to manage innovation, it’s about organising the menagerie!”

Rémi Maniak
Rémi Maniak
Professor at École Polytechnique and researcher at the Centre de Recherche en Gestion (I3-CRG)*
Nicolas Mottis
Nicolas Mottis
Professor of Innovation and Entrepreneurship Management at the Centre for Management Research of the Interdisciplinary Innovation Institute (I³-CRG*) at the École Polytechnique (IP Paris)

Your book “The Inno­va­tion Jun­gle” (La Jun­gle d’Innovation) talks about a ‘menagerie’ of dif­fer­ent types of inno­va­tion in com­pa­nies. Can you explain this metaphor? 

Rémi Mani­ak. What we point out in the book, and in light of the hun­dreds of com­pa­ny cas­es and projects we have sup­port­ed over the last 20 years, is that the way inno­va­tion in busi­ness is more excit­ing than a sim­ple dog-eat-dog men­tal­i­ty. In real­i­ty, there is room for a sort of bio­di­ver­si­ty, with com­pa­nies man­ag­ing their inno­va­tion accord­ing to dif­fer­ent per­for­mance log­ics. The metaphor we use in the book is indeed that of the jun­gle, which con­tains dif­fer­ent species, each with its own way of behav­ing. For exam­ple, in the inno­va­tion jun­gle, there are gazelles whose ulti­mate goal is to come up with cut­ting-edge offers with a rapid fre­quen­cy of renew­al. There are also lions that are sta­t­ic and sure of their strength, but­ter­flies that con­stant­ly mutate or piv­ot around their assets, boa con­stric­tors that lock cus­tomers into offers and so on. These are dif­fer­ent strate­gies, with dif­fer­ent ways of steer­ing inno­va­tion strategies.

In the inno­va­tion jun­gle, there are gazelles, rapid­ly chang­ing their cut­ting-edge offers; lions that are sta­t­ic and sure of their strength; or but­ter­flies that con­stant­ly mutate or piv­ot around their assets.

Nico­las Mot­tis. At the com­pa­ny lev­el, as we point out in our book, research has shown that there is no cor­re­la­tion between R&D expen­di­ture and the company’s per­for­mance in terms of inno­va­tion. As such, we know that inno­va­tion per­for­mance is due to more than the bud­get. Even if R&D spend­ing is still sig­nif­i­cant­ly low­er in France than in Ger­many, for exam­ple (2% vs. 3% of GDP) and the gap should clear­ly be reduced, our point of view is that to suc­cess­ful­ly inno­va­tion, we must focus on the artic­u­la­tion between strate­gic choic­es, organ­i­sa­tion­al fac­tors and oper­a­tional steer­ing tools that could be man­aged differently. 

There have been many reports on the sub­ject in the past, which show that there is a prob­lem of trans­fer­ring inno­va­tions to larg­er mar­kets in France. We can talk about ecosys­tems here, because a lot of inno­va­tion is sys­temic (5G, smart cities, ener­gy tran­si­tion, etc.) and there­fore requires align­ment between local author­i­ties, large com­pa­nies, and research institutes. 

The Ger­man cul­ture of coop­er­a­tion between the var­i­ous play­ers in the same sec­tor or ter­ri­to­ry is par­tic­u­lar­ly ben­e­fi­cial in this respect. On the oth­er hand, a struc­tur­al weak­ness in some Euro­pean coun­tries is still the lack of investors capa­ble of inject­ing the 100 mil­lion euros or so need­ed to scale up projects at an ear­ly stage. The start-up seg­ment is boom­ing, and the num­ber of uni­corns is increas­ing rapid­ly, but there is still a long way to go to cre­ate the glob­al tech­nol­o­gy lead­ers our econ­o­my needs.

What can there­fore be done to improve the chances of a suc­cess­ful scale-up?

NM. It’s a ques­tion of align­ment between strat­e­gy, organ­i­sa­tion­al choic­es, and resource man­age­ment. In the Sil­i­con Val­ley, there is a huge local ecosys­tem, with play­ers inter­act­ing amongst them­selves, whilst know­ing each oth­er well. In Europe, much of the demand is frag­ment­ed, which makes life very dif­fi­cult for inno­va­tors.  There is also a gen­er­a­tional gap, although that is clos­ing. The Unit­ed States has ben­e­fit­ed great­ly from two or three gen­er­a­tions of entre­pre­neurs with expe­ri­ence in start-ups, which is some­thing we lack in Europe. This gap is now being closed with renowned entre­pre­neurs such as Xavier Niel, founder of Free or Jean-Bap­tiste Rudelle, founder of Criteo (adver­tis­ing tech­nol­o­gy), who are now sup­port­ing new gen­er­a­tions of entre­pre­neurs, effec­tive start-up incu­ba­tors in research insti­tu­tions and increas­ing sup­port from ven­ture cap­i­tal funds. 

RM. In addi­tion to the fac­tors men­tioned by Nico­las, I would add that gov­ern­ments can be very good cat­a­lysts for com­pa­nies to reach this crit­i­cal mass. In Chi­na, Huawei was able to ben­e­fit from large state orders in the ear­ly days to deploy telecom­mu­ni­ca­tion net­works over a large part of Chi­na, which gave them a con­sid­er­able lead, par­tic­u­lar­ly in terms of tech­nol­o­gy. The Unit­ed States is also play­ing this game, with gov­ern­ment agen­cies (NASA, CIA, NSA, DARPA, etc.) hav­ing played a fun­da­men­tal role in the scale-up of com­pa­nies such as SpaceX (space launch­ers) or Palan­tir (data analysis).

This is all the more nec­es­sary as most of the chal­lenges that com­pa­nies face today are part­ly pub­lic chal­lenges. For exam­ple, the dri­ver­less vehi­cle must help reduce road deaths, and invest­ments in eco-design, recy­cling, renew­able ener­gy should help pre­serve the plan­et. It would be absurd to place the bur­den of inno­va­tion sole­ly on pri­vate com­pa­nies, or sole­ly on the pub­lic author­i­ties. There is a real need for pub­lic-pri­vate co-invest­ment to bring out nation­al and even Euro­pean champions.

With­out appro­pri­ate mea­sures, how can we mea­sure the fail­ure of an inno­va­tion project? 

RM. I think we need to shift our focus from the P&L [oper­at­ing account] of a com­pa­ny to the main­te­nance or cre­ation of assets in the eco­nom­ic and social ecosys­tem. A project can be a com­mer­cial suc­cess but neglect the recon­sti­tu­tion of the company’s strate­gic assets and, at the lev­el of the ecosys­tem, destroy the jun­gle and its bal­ance. Of course, this requires shak­ing up the cal­cu­la­tion con­ven­tions of cor­po­rate and mar­ket finance, but on this point it seems that the machine is final­ly in motion.

NM. Indeed, today almost all investors are inter­est­ed in ESG (envi­ron­men­tal, social and gov­er­nance) per­for­mance fac­tors. The impact on the plan­et is becom­ing a real con­cern for many finan­cial play­ers. And that is not all. As we show, there is no one right way to man­age inno­va­tion, it’s more about pre­serv­ing a vari­ety of species and organ­is­ing the menagerie!

Interview by James Bowers

Contributors

Rémi Maniak

Rémi Maniak

Professor at École Polytechnique and researcher at the Centre de Recherche en Gestion (I3-CRG)*

Rémi Maniak teaches strategy and innovation management. He has published numerous articles and books on these subjects, notably on the basis of studies carried out in public and private organisations.
*A joint research unit CNRS, École Polytechnique - Institut Polytechnique de Paris, Télécom Paris, Mines ParisTech

Nicolas Mottis

Nicolas Mottis

Professor of Innovation and Entrepreneurship Management at the Centre for Management Research of the Interdisciplinary Innovation Institute (I³-CRG*) at the École Polytechnique (IP Paris)

Nicolas Mottis obtained his PhD in economics from the École Polytechnique (IP Paris). His research focuses on strategic control and innovation management (*I³-CRG: a joint research unit of CNRS, École Polytechnique - Institut Polytechnique de Paris, Télécom Paris, Mines ParisTech). Since 2008, he has been a member of the jury of the FIR-Eurosif awards and was a member of the academic committee of the Principles of Responsible Investment - United Nations Finance Initiative from 2010 to 2017. He is also a member of the panel of experts of the French National CSR Platform and a member of the Scientific Committee of the French Public SRI Label. He has also been a member of the Board of Directors of the Ecole de Paris du Management since 2008 and of the Fondation Médecins Sans Frontières since 2019.