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Developing Innovative Businesses: The Importance of Culture


http://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 dont 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 Jasnaik I would like to share my thoughts about disruptive innovation with Wisepreneurs readers. I apologize in advance for my French sense of humor. Yes, I totally agree with Mr. Jasnaik. Companies should be looking outward first to market niches, come back to research & development, and then propose new products with new benefits. The scholar Roberto Verganti (Professor of Management of Innovation at Politecnico di Milano) calls this kind of innovation strategy Design-driven innovation. This way of creating radical innovation is much more efficient than that the technology-push strategy. But unfortunately, it is difficult to do in my country. We prefer Technology-push or Market-pull innovation strategy. Why? You talk about taking risk. Are you crazy? Dont even think about it! Here are the reasons: The French are a part of Latin Europeans; we are not part of the Anglo-Saxon world. This makes a huge cultural difference. French hate taking risk, they are Cartesian which means they reject feelings in their decision making. A sound decision should only be taken based on rational reasoning. In contrast, the Anglo-Saxons are known to combine their feelings with rational reasoning. They put their rational 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 cognitive psychological researchers such as the famous neuro-scientist Dr. Antonia Damasio indicates that feelings, emotions and instincts play a central role in a clever human decision making. Proof of importance is that Americans have companies such as eBay, Google, Apple, Amazon, Procter & Gamble, and Pixar and : we, French, dont. Our bankers, angel investors, venture capital firms, academic research and researchers, politics and our 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 crazy

Ari Massoudi / Consultant Strategy of Innovation / www.strategy-of-innovation.com / www.linkedin.com/in/arimassoudi

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ideas. But without the support of the capital, it is hard for them to create successful,innovative companies. 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 million from the 3Fs family, friends and fools. French business angels invest only in already existing firms having 3-4 years experience, having patents, having clients and having revenue. To collect $100,000 to $300, 000 in France, its normal to see 10 to 20 angel investors on a single start-up. Not because they are poor, but because a single angel investor with $100,000 prefers to invest on 10 start-ups at $10,000 per start-up. Thats what the investor has learned at business school: dilute the risk. Our venture capital firms invest in innovating projects of already growing companies with high level of revenues, and very few investments are done in seed and early stage start-ups. How would anyone want to do business 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 intent
before deciding to engage in innovation? Most of the existing, regular companies that I have worked with dont even care about having a strategy 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 an innovation. As you might guess, a lot of education toward CEOs, executive managers, and owners/stockholders is still necessary. Why I pointed existing and regular companies? My consulting practice is dependent of the culture of the country I work in. In France, the major part of companies are family businesses including centenarians firms. According to Wikipedia, A family business is a company in which one or more members of one or more families have a significant ownership interest and significant commitments toward the business overall well-being. Although the CEO (often a member of the owners family) and his executive teams could have been trained by the best business schools, they have to convince stockholders who are family members. Because the French risk adverse, when an opportunity is revealed, the CEOs prefer using a strategy to kill this opportunity by lobbying state officials (from the Mayor to the President) who will, in turn, announce a tax or law to prohibit the opportunity. Still, I admit, I really dont work with those companies. The major part of my clients are seed and earlystage start-up companies created by people from academic research, or by people needing academic research to implement their business idea. My job is to support them in their global strategy of development (to grow by themselves or to sell the patent/license to a bigger company), in their business 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 them to business angels or venture capital investors). So, I can say that I am a consultant in technologypush/technology-transfer innovation, and the innovation could be radical or incremental (but this description is too long for my LinkedIn profile). You may think that my statements about French business are perpetuating common stereotypes but it 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