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Stimulating the Innovative Capabilities of SMEs in an Ever-Changing World

2.1. Introduction

In Chapter 1, we saw how changes in the SME environment can weaken them and how difficult it is for them to make proactive decisions in a context of strong change. Yet, when change intensifies to the point of leading to a real mutation in the environment, action is a matter of survival, and innovation is often the cornerstone. The role of innovation in company competitiveness and the growth of countries is no longer disputed (Baumol 2002), but innovating in a changing world is an increased challenge for SMEs. By the term mutation, we mean the existence of successive transformations in the environment, involving those of a profound and enduring level. These are generally complex developments at different levels: technological, economic and social. They are characterized by an evolution in economic and social regulation. They sometimes even involve a crisis.

The impact of these changes was already questioned in the 1980s, at the time of the Ford crisis and the birth of post-Fordism (Piore and Sabel 1984; Leborgne and Lipietz 1988; Coriat 1990). It was then a question of considering the consequences of the shift from one triptych (mass production – mass consumption – standardized products), to another (flexible production – individualized consumption – differentiated products). However, the very use of the term “post-Fordism” underlines how difficult it is to characterize a mutation that is in progress and how difficult it is to avoid referring to what existed before. At the time, this reflection reflected the desire to understand the transformations of capitalism and their impacts (Benko and Lipietz 1992). It has continued in the work that envisages the emergence of new forms of capitalism (Granstrand 1999; Paulré 2000; Vercellone 2003). This study also responds to the need to study its impact at company level: the transformations of the sources of competitiveness, production organization structures and work organization.

The mutations of the time also had an impact on innovation. For example, during Fordism, innovation was characterized by a long exploitation of the results of sequentially conducted R&D. During post-Fordism it was characterized by permanent R&D with increasingly shorter applications.

The search for competitive advantages based on the differentiation and permanent activation of the market/product pair then results in a race for innovation, with the result that product and technology lifecycles are shortened. Sometimes it may imply planned obsolescence here. In this context, the dynamic of innovation has a completely different face (Gay 2012). However, the flexible production paradigm has highlighted another phenomenon, namely the increasingly important role played by SMEs, particularly in the framework of districts and other territorial innovation systems (Piore and Sabel 1984)1.

Since the mid-2000s, the economic situation has again undergone significant changes, at a pace not seen since the end of the last century (Aubert 2014). Technological, economic and social changes can also be witnessed, which act in an interdependent way. They transform companies’ sources of competitiveness and their relationship with the environment. They also translate into new ways of producing and working – to the point that some people are once again considering a transformation of capitalism (Rifkin 2014) – as well as new forms of innovation (see Introduction, “The capacity of SMEs to innovate”) and new ways of innovating.

While it is impossible to say whether the current mutations are characterized by a radical paradigm shift, it is certain that, for SMEs, these changes in the environment have a strong influence on their innovativeness/capacity for innovation. Therefore, without being exhaustive, we present, first, a framework for understanding these major changes, with an emphasis on digital transformation, and, second, we develop proposals for SMEs to boost their capacity for innovation in this context.

2.2. An understanding of current mutations

As in all major periods of mutation, the technological dimension takes center stage. It must be said that it raises many questions, due to the different evolutions of digital technology (see the current development of artificial intelligence and its integration into the industry). Beyond technological and material developments, the questions mainly concern work, employment, as well as social relations, education and even humanity2. Without entering into debates between futurists and “futurologists” about the emerging world, we want to return here to the changes that SMEs are facing. To refer to the work of philosopher Gaston Berger, we consider that the future cannot be predicted, it is being prepared. SMEs therefore have a strong interest in better understanding these changes. We will therefore discuss here recent developments related to the development of digital technology in order to consider the current consequences for SMEs. We will discuss the issue of “platformization” (section 2.2.1) and its impact on the development of a qualified collaborative economy (section 2.2.2).

2.2.1. Understanding the emergence of the economy of platform

As Michel Serres (2013) points out, the advent of digital technology implies phenomenal economic and social changes, although they are not new. It is, in fact, the third transformation of the support/message pair in the history of humanity, after the invention of writing and printing. According to the philosopher, during the previous transformations of the support/message pair, gigantic mutations took place: legal, political, economic and even religious changes. This is also the case in this third revolution. Today, the spectrum of changes is enormous: it goes so far as to transform the relationship with time, with a requirement for immediacy and the relationship with space, slipping from a space of concentration to a space of distribution.

SMEs are not spared and must therefore be aware of what this means for them, especially in terms of innovation. To do this, in this section we develop an economic analysis of the development of the platform economy. So, first, we describe the advent of digital technology that led to this economy, and second, we discuss the mechanisms of this economy in more depth.

2.2.1.1. From the new economy to society at zero marginal cost

Technological advances in the digital field are based on multiple advances, which are not addressed here. They are based on scientific and technical developments over the past 60 years, ranging from the application of mathematical theories to communication, the development of new languages for structuring data on the Web, the massive development of ICT (Information and Communication Technologies) and today’s NBIC (Nanotechnologies, Biotechnologies, Informatics and Cognitive Science).

The economic impact of these advances was not immediate: they were first characterized by a false start, that of the “new economy”. An expression disseminated and popularized by the media and politicians, before being a concept used and questioned by economists (Brender and Pisani 1999; Gordon 1999; Bomsel and Leblanc 2000; Gadrey 2000), the “new economy” refers to an increase in growth in the mid-1990s in the United States, without inflation and with full employment. In fact this growth was attributed to the development of new ICTs. This “new economy” was then conceived as the basis for a new period of growth similar to the Trente Glorieuses3. It has led to a sense of euphoria in financial markets, particularly the NASDAQ4, and to the emergence of business model thinking (see section 1.4.2). This bubbling feeling came in particular from hopes of productivity gains resulting from better information management. However, since the profit forecasts that created the increase in share prices did not materialize, the bubble eventually burst in 2000. From that point on, the “novelty” of this economy, its spillover effects and its real impact on productivity were debated to the point of making the term less used.

While not really new5, this economy foreshadowed what is now known as the “zero marginal cost” society (Rifkin 2014). At first, the “new economy” did not have the expected effects on productivity gains. This is called Robert Solow’s “productivity paradox”. In statistical work on the impact of information technology on productivity, he concluded in 1987: “You can see the computer age everywhere but in the productivity statistics” (Solow 1987). But, while the impact of ICT on growth is difficult to measure at macroeconomic level, various studies have shown a real impact of ICT use on business productivity (Greenan and L’Horty 2002). It is gradually, as ICTs are adopted, that digital technology has led to an improvement in productivity in some companies, rather than serving as a massive lever for macroeconomic growth.

Beyond the adoption of ICT in companies, it was the vast digitization movement that followed that had the greatest impact on the economy as a whole. By transforming more and more private goods (rivalrous and excludable) into public goods (non-rivalrous and difficult to exclude), digital technology has first helped to reduce production and access to information costs, before producing lower transaction costs and access to new markets. The development of digital technology has also created, since the 2000s, the conditions for a major crisis in the content sectors (photography, music, publishing, press, audiovisual). The reproducibility at zero marginal cost of the goods produced by these sectors has called into question their traditional economic model, essentially based on the sale of products (Bomsel 2006; Fiscal et al. 2006; Le Blanc 2006; Bourreau et al. 2007; Sonnac 2009).

For example, this is the case for the music industry, which has seen its worldwide turnover fall since 1999, for 15 consecutive years. It has only recently recovered, supported by the development of streaming, without however returning to previous levels6. The recorded music industry being a bilateral oligopoly with competitive fringe, it is mainly very large companies that seem to have absorbed this crisis. Yet, among the many independent producers, SMEs that provide 80% of music titles but account for only about 25% of sales, many have closed down. Others have managed to survive thanks to lower production costs (Vulser 2008). Like a domino effect, performing arts SMEs in France saw their concert and festival sales fall by 25% in 2010 (Supertino 2011).

Thus, the reproducibility of digital goods at zero marginal cost has called into question many economic models, to the point of legitimizing the free nature of these goods. This was prophesied by Chris Anderson in 2008, then editor-in-chief of Wired magazine: “the ever-decreasing cost of production in the digital economy would drive most companies to donate their products for free” (Anderson 2008). It is on the basis of this constant decrease in the cost of production of the digital economy that Rifkin (2014) bases his analysis of the end of capitalism.

However, the development of digital technology in content sectors is only one phase in its development. A second one has followed, based on the development of platforms in all sectors. It poses many challenges, particularly for SMEs.

2.2.1.2. Development of digital platforms: a challenge for SMEs

In the wake of Web 2.0, that of social media, the development of mobile Internet has encouraged, since 2010, the expansion of a new organizational form: the platform. The latter has contributed to the “platformization” of the economy or development of a platform economy (Choudary et al. 2016; Lambrecht 2016). In this second phase of the digital transformation, all sectors of activity are affected – and not only those providing content. From a website and/or a mobile application, the digital platform, combined with practices such as geolocation, algorithms, user evaluation and crowd mobilization (see below), enables the development of new services. In these platforms, it is a question of putting in direct contact, in an almost instantaneous way, actors who exchange goods, services and content thanks to the platform. There are different types of platforms:

  • – marketplaces are platforms on which an operator connects sellers and buyers. Amazon, Alibaba or eBay are the best known examples. Some are pure market places, meaning they only play a role in connecting people. Most are also trading platforms that sell their own offers. This is the case for distribution companies, such as Fnac or Darty, which find a way to extend the offer to customers at a lower cost;
  • – platforms for exchanging and sharing assets make it possible to pool, or even enhance the value of assets already depreciated, or even access, if we take the example of the BlaBlaCar platform;
  • – networking platforms, such as online booking platforms such as the pioneering example of the Booking.com platform, promote a significant reduction in transaction costs;
  • – content platforms allow people, who are in turn providers and requesters, to share content, as in the case of YouTube;
  • – jobbing platforms bring together labor demand and supply. The consequence is a return to work on task and self-employment;
  • – innovation platforms connect people with ideas/solutions and companies looking for them.

All these platforms therefore bring individuals closer to other individuals, individuals with companies, companies with companies. While it is common to talk about disintermediation for these platforms, it is more accurate to talk about disintermediation/reintermediation. Because within the platform, there is not a market, but a focal company that sets its own rules of the game. The role of the focal company is multiple:

  • – to create and provide tools for the development and networking of contributors;
  • – to host, filter, qualify, organize and manage content;
  • – and above all, to play the role of trusted third party by securing payment, sharing opinions and user ratings, or even by geolocating the offer.

Sometimes, their role is also to certify this offer (such as Airbnb, BlaBlaCar, Booking.com, eBay, Uber). At the heart of the platform, these focal companies operate numerous economic procedures (Box 2.1).

The economic development of platforms is gigantic, contributing to the deployment of major market capitalizations such as Apple and Alphabet/ Google. However, it must be acknowledged that it is essentially start-ups that are developing these digital platforms: they are thus taking advantage of this opportunity to position themselves as intermediaries and penetrate sectors that are sometimes saturated. Indeed, one of the main characteristics of digital platforms is their ability to capture value by having access to a multitude of customers to whom to offer various services while benefiting from increasing returns of scale. These digital platforms, which D. Evans and R. Schmalensee (2017) describe as “matchmakers”, are far from being merely technical tools: they support the development of new business models. One of the main effects of this is the destabilization of historical players8, like Uber that has destabilized taxi activity, but also large and small companies and even microstructures. In this context, it is common to speak of “disruption” to mean the way in which these start-ups are able to compete with established companies, or to capture part of their value, through platform mechanisms. Beyond what constitutes a strategic innovation lever, platforms actually promote organizational innovation, because they allow the companies concerned to be flexible and agile in their more decentralized operations (Benavent 2016).

Despite all these observations, we note that the effect of the platform economy on SMEs remains poorly addressed in the literature. It is far from being surrounded. However, the very existence of these platforms, developed by new entrants, represents both an asset and a risk for SME activity. On the one hand, these platforms can be perceived by SMEs as a new service offered to them; they provide them with better market access, lower transaction costs and greater readability. On the other hand, they present a risk for SMEs: that of capturing a significant part of their own value. This question arises in particular in fragmented sectors (artisan, services, DIY, construction, catering, etc.), where SMEs are the most active companies. Indeed, these sectors are a pool for the development of platforms for three reasons:

  • – their lack of legibility;
  • – the scattering, even a fragmentation of the offer;
  • – a significant lack of trust.

In this context, digital technology makes it possible to compare, evaluate, control and therefore partially solve these problems. Thus, new platforms are developing, which are dedicated to the artisan industry. What is the impact on the profitability of SMEs? Research is needed to answer this question. We see another reason why platform development has an ambiguous effect on SMEs. The main strength of SMEs, highlighted at the end of the Fordist crisis, is their agility. However, the latter could appear to be supplanted by the mechanisms of platforms valued in particular for their capacity for adaptability and flexibility. Whether they are an opportunity or a threat, we consider that it is the way to develop new business models for SMEs, without specifying its aims. Thus, to better consider the impact of the economy’s platform on SMEs, it is necessary to describe more precisely the type of economy that this evolution accompanies.

2.2.2. Meeting of the platform economy and social aspirations: which collaborative economy?

The platform economy is not only based on technological innovations, but also on a combination of technological and non-technological innovations (organizational, commercial and business model). In addition, it should be stressed that it is nourished by new social, societal and even environmental aspirations. Thus, it is reputed to have accompanied the development of a collaborative economy allowing these aspirations to be expressed, as illustrated by the development of e-health (Gay 2018). However, the widespread use of the term “collaborative economy”, which covers companies with very different motivations and purposes, leads to uncertainty and even ambiguity (Servet 2014; Vallat 2015; Lambrecht 2016). This led Arthur de Grave, co-founder of the OuiShare think tank, to declare: “The collaborative economy is dead simply because, as a concept, it has lost all explanatory power” (De Grave 2016)9. This in turn led some authors to define limits and categorize the different types of collaborative economies (Bauwens et al. 2012; Servet 2014; Lambrecht 2016). However, even when, for example, the collaborative economy is differentiated from the lucrative economy, according to criteria such as the search for profit, there is sometimes “a clever mixture of the two” (Vallat 2015, p. 5)10.

Without entering into definitional debates, we propose to use the term collaborative economy in a generic way, like all the various practices related to the development of the platform economy. It is the ability for a company to develop and exploit the networking and collaboration of interdependent user groups. On the other hand, we distinguish two extreme types of them, which are related to two different purposes:

  • – Uber-like platforms: the key challenge is to disintermediate to reintermediate while improving a value proposition and satisfying clients’ expectations of horizontality;
  • – platforms aimed at the sharing economy and social innovation: in particular, they support the development of more solidary or sustainable economic models.

In between, the boundaries are blurred, with collaborative consumption platforms detailed below. There are also platforms whose challenges are the development of collaborative projects or mutualization between organizations. This concerns, for example, innovation or crowdfunding platforms or competitions, contributing to the development of open production and innovation (Liotard and Revest 2015).

2.2.2.1. The collaborative economy, between uberization and collaborative consumption

The term collaborative economy sometimes refers to uberization. A neologism that comes from the name of the company Uber, the term can be dated back to 2014. It is now so popular that it gave rise to an entry in the Collins dictionary, where it defines the term as: “to subject (an industry) to a business model in which services are offered on demand through direct contact between a customer and a supplier, usually via mobile technology.” It should be noted that Uber is not the first company to have developed this economic model. Rather, it would be the Booking.com site, a hotel reservation site that has replaced the yellow pages by displaying room availability in real time.

That said, we are using the example of Uber to better understand how such a platform could disintermediate to reintermediate market players. This platform develops and operates mobile applications to connect users with drivers providing transport services. Its business is therefore not the transport of people; it is a mobility service. As proof, let us look at its value chain: it competes with taxis without owning a single vehicle itself. It exploits vehicles beloning to others through a mobile application. If customers find an advantage through a value proposition that guarantees them an efficient and simple offer, the break with the passenger transport sector, particularly taxis, is controversial. Indeed, the latter accuse it of unfair competition, tax optimization and declare the precarious nature of work. Without getting into these debates, we note that at the heart of Uber’s successful business model is a technological innovation, geolocation, which, via a smartphone, tablet or computer, makes it possible to locate the nearest vehicle. If the use of the two-sided market concept is discussed in this case, in view of the link between Uber and its drivers, all the platform procedures described above are present here. Reducing the production steps in the mobility service and reducing transaction costs improves value proposition. The automatic payment made at the end of each journey by direct debit is also a lever for this. The integration of the customer into the value chain through rating options also allows Uber to play two essential roles: as a trusted third party and a regulatory and supervisory authority for drivers’ activities. In this conception of the collaborative economy, coordination is intended to be horizontal: it allows independent drivers to collaborate with the Uber platform and the users of the platform to create value by evaluating the services provided.

Beyond the extreme case of Uber, this first type of collaborative economy refers more generally to what Botsman and Rogers (2011) call collaborative consumption. This concerns the organization of exchanges and consumption (group purchases, concierge services, instructions, P2P rentals, resales and donations of objects, bartering, local exchange systems, complementary currencies, etc.), carried out on a rather ad hoc basis. It also concerns different sectors such as housing (shared housing, apartment sharing, housing exchange), mobility (car clubs, carpooling on short or long journeys), energy or food (associations for the maintenance of peasant farming, consumer networks in short circuits, etc.).

In this case, the term “collaborative” is first used to highlight the revitalization of social ties within a network or community.

Supported by collaborative consumer activists, one of whose leading figures is Rachel Botsman, the central assumption is that this economy is based on trust between people, however unknown it may be (Botsman and Rogers 2011). Thus, Rachel Botsman states:

Because as its core, it’s about empowerment. It’s about empowering people to make meaningful connections, connections that are enabling us to rediscover a humanness that we’ve lost somewhere along the way, by engaging in marketplaces like Airbnb, like Kickstarter, like Etsy, that are built on personal relationships versus empty transactions. (Botsman 2014)

In the case of collaborative consumption, it is therefore an aspiration for horizontality and the revitalization of social cohesion that makes its work, through a sometimes idealized vision of social relationships (Slee 2016).

In the context of collaborative consumption, the term “collaborative” is also used because of another social aspiration: to favor use over ownership, because of the limitations of the post-Fordist economic model. Indeed, the collaborative consumption model optimizes the use of goods and services and leads to a reduction in the waste of material resources. For example, a carpooling platform such as BlaBlaCar clearly states the objective of reducing the ecological impact of car use.

2.2.2.2. The collaborative economy, between the sharing economy and social innovation

In this second type of collaborative economy platform, social aspirations are more significant and are even at the heart of the development of this economy’s activities.

However, this is not a question of drawing a dividing line between actors who would be virtuous and other opportunists. This would not make sense, as the motivations for using collaborative consumption are diverse. Some studies even point out that financial reasons are at the top of the list, just after environmental reasons11.

In any case, in this context, the collaborative economy is understood here as a way of consuming more in solidarity, outside commercial and lucrative channels. This type of platform, in which platforms such as CouchSurfing are integrated in the housing sector, or La Ruche qui dit Oui! in the food sector, questions, in a more militant way, the economic system. It is generally recognized in the governance movement of the Commons (Coriat 2015). In this case, it is a question of promoting social innovation, an innovation that provides answers to the challenges of today’s society, particularly those related to unemployment, poverty, an aging population, climate change, etc.

While platform mechanisms do not shed light, in particular, on the nature of the impact of this economy on SMEs, the collaborative economy can be a source of inspiration for SMEs in terms of two characteristics.

The first source of inspiration is the fact that this economy takes into account different social aspirations and developments:

  • – expectations of authenticity, proximity, meetings and participation on the part of the consumer;
  • – the development of alternative collective forms, communities and social networks on the Internet;
  • – aspirations for a change in business model that is more environmentally friendly and reduces waste.

The second source of inspiration is the fact that the platform economy is a lever to do better with fewer resources, which is a common problem for SMEs. In order to extend this invitation to take up these changes, we now propose to identify in the case of SMEs how this stimulates their capacity to innovate.

2.3. Evolving in a changing world: how can we boost the innovative capacities of SMEs?

This is not the first time that changes have questioned the innovative capacities of SMEs. This is reflected in the title of the article published in 1988 in Revue d’économie industrielle: “Dynamique des PME dans un monde en mutation” (Le Roch 1988). The author lists the various works of the time on the evolution of SMEs in the context of post-Fordism. These show:

  • – the development prospects of SMEs, whose culture was then considered to be conducive to new individual aspirations and management changes;
  • – their growing economic weight;
  • – their ability to resist the crisis, in particular through their ability to adapt to change.

It is in particular innovation, essentially technological, that makes it possible to overcome “the size complex” (Le Roch 1988, p. 94).

The context of current changes, described in the first part, can be perceived as a threat to SMEs, as it is accompanied by sectoral restructuring, with job losses. For example it has a direct impact on companies, and indirectly on the territories and sectors concerned. It therefore presents a risk of the disappearance of a number of SMEs and, in so doing, a dispersion of competences that is harmful to the territories. This is why the public authorities are trying to intervene as closely as possible in companies, mainly within the framework of “hot” public policies, to accompany the crisis, with the aim of maintaining employment12.

These may, more rarely, be anticipatory measures aimed at supporting and developing employment with companies and sectors taking into account changes, particularly in the digital age13. These measures are based on a prospective analysis of future developments in sectors, territories and, above all, in the professions in order to adapt company organizations and employee skills as far in advance as possible.

There are only a few examples of successful measures specifically targeted at SMEs (Dietrich 2013). However, beyond these SME support measures, and in view of the risks mentioned above, it is first necessary to

detail the specific barriers and drivers of innovation specific to SMEs (section 2.3.1), in order to consider solutions to boost SME innovation in the context of current changes (section 2.3.2).

2.3.1. The barriers and drivers of SME innovation

Regardless of the size and stage of the company, innovation is characterized by many barriers. The main barrier is related to the innovative activity’s uncertain nature. Indeed, innovation exposes risks and is characterized by a high failure rate14. Innovation therefore requires breaking with the status quo and creating an innovation culture (Soken and Barnes 2014). This is all the more difficult in times of change, as a withdrawal reflex usually develops. Finally, as evolutionists show, innovation is based on a complex and interactive process (Dosi 1988; Lundvall 1988), based on the accumulation, transformation and production of new knowledge (Nelson and Winter 1982): this de facto reinforces this uncertainty and the difficulties in the implementation of innovation.

Many economists have worked on the determinants of innovation (Mairesse and Mohnen 2010). Based on econometric work, they show that these determinants are heterogeneous and numerous, helping to recognize the complexity of innovation. Among the determinants are, indeed, the role of size, as well as the sector of activity. Despite the advantages that SMEs represent in terms of innovation, in particular the agility of their organization and the strength of their motivations, they suffer from barriers to innovation, which should be explained15.

2.3.1.1. Barriers to innovation for SMEs

In econometric studies on the determinants of innovation effort, generally approached by R&D spending, the most studied factors are the size and sector of firms. In a highly technological vision of innovation, the positive link between firms’ innovation effort and size is generally explained by fixed R&D costs: these require significant resources and are difficult for small firms, while large firms have the opportunity to diversify R&D opportunities and thus spread risks (Cohen 1995; Cohen and Klepper 1996). However, it is difficult to draw general conclusions from these studies, due to sometimes contradictory results (Rahmouni and Yildizoglu 2011) and due to the differences between industries (Cohen and Klepper 1996) and types of innovation. In research that studies the impact of size on innovation production, that is on R&D16 productivity, the result is indeed mixed. The survey by Pavitt et al. (1987) produced a contrasting result depending on the sector: the ratio of the number of innovations to R&D expenditure tends to decrease with the size of the company, even if it has a “U” shape in some sectors.

Faced with mixed results, various studies are developing another approach and examining the barriers to innovation through survey data on firms’ perception of barriers (Mohnen and Rosa 2000; Baldwin and Lin 2002). The advantage of this work is to overcome the barrier that is usually encountered, namely the financial barrier, and to test barriers related to the very organization of the company. For example, in their analysis in Canada, Mohnen and Rosa (2000) tested a variety of barriers to innovation: those related to feasibility and commercialization risks, high costs of the innovative project, financing difficulties, availability of resources to carry out the project, resistance within the company itself, and the regulatory environment. In addition, they showed that the perception of barriers is linked to size, but also to the sector, and to the perception of the competitive environment by companies. Small companies are more sensitive to financial difficulties and the lack of specialized equipment, while large companies are rather hampered by feasibility problems, high costs and generally internal barriers.

Among their results, there is one that may seem paradoxical: firms that carry out R&D encounter the major barriers at a higher rate than those that do not. This is consistent with the findings of other studies that show a positive relationship between innovation intensity and perceived barriers to innovation (Baldwin and Lin 2002). One of the explanations for this paradox is that some companies used to innovating have not succeeded in overcoming certain barriers; they therefore speak more easily about it, because of their experience. However, companies not very familiar with innovation are not (yet) aware of their existence. Thus, for D’Este et al. (2012), it is necessary to distinguish two types of barriers:

  • – revealed barriers that are related to the direct experience, or experiential learning, of innovative firms;
  • – deterring barriers that effectively reduce commitment to innovation.

Based on the CIS4 survey conducted in the United Kingdom, D’Este et al. (2012) also test the influence of a wide range of innovation barriers: they identify 11 factors that could hinder innovation efforts. They group them into four categories:

  • – cost factors;
  • – knowledge factors;
  • – market factors;
  • – others.

They show that the dissuasive factors are cost and, above all, market barriers. Companies, on the other hand, are less sensitive to knowledge and regulatory factors. With regard to the effect revealed, linked to the company’s experience, the barriers are more related to costs and knowledge. This reflects the difficulties experienced a posteriori by companies, resulting from their learning about innovation, and therefore being more sensitive to certain factors. In addition, we find that firm size significantly influences the perception of barriers to innovation: large firms perceive them as less relevant than small ones. Furthermore, being a new company increases the likelihood that cost and market barriers will be considered significant. Regarding the impact of innovation intensity, the result is that the four types of barriers to innovation are higher at the extremes: firms that innovate little and those that innovate a lot are more sensitive to them. From this study, we understand how important it is to better analyze the history of SMEs in terms of developing their capacity for innovation, as well as the manager’s perception of the barriers encountered.

Another study also sheds light on these barriers in SMEs. Based on their research conducted in France and in three different sectors (manufacturing, service and aerospace), Dos Santos Paulino and Tahri (2014) confirm the importance of financial barriers within the company (for 15.7% of the companies in the study), the excessive cost of innovation (for 15.5%), market barriers dominated by established companies are slightly less important (9.5%), as well as the lack of qualified personnel (10.3%). The authors also show that barriers are higher in services than in industry. The originality of this study lies in its demonstration of the greatest importance of non-technological rather than technological barriers: companies are less constrained by the lack of technological information than by the lack of market information. For the authors, this result is related to the type of innovation strategy pursued in France, largely driven by technology, as well as the innovation culture in France “generally supervised by engineers who leave little room for sales managers” (Dos Santos Paulino and Tahri 2014, p. 78) 17. It is therefore non-technological skills, particularly commercial skills, that the barriers affect most, as they are less well controlled and insufficiently combined. One of the authors’ recommendations is therefore to strengthen commercial skills and, above all, to better combine them with technical skills in terms of human resources. This may involve recruiting more technical sales representatives or setting up an organization more conducive to this combination (regular training of the staff concerned).

In all these studies, the most commonly cited barriers are cost, funding difficulties and access to resources. This highlights the major barrier to SME innovation: resources. Moreover, we note that innovation is still perceived as an issue of an essentially technological dimension, while commercial resources are a disadvantage for many companies, particularly in the French context. The development of research on the barriers perceived by companies has made it possible to significantly improve the detailed knowledge of the barriers to innovation compared to traditional econometric and monetary approaches that cover a limited number of variables. They open the door to a more clearly based approach based on the resources and skills specific to innovation in SMEs.

2.3.1.2. Key factors for success in SME innovation

Despite the barriers, it must be noted that SMEs are at the origin of many innovations. In contrast, innovations led by SMEs are more often non-technological and incremental, rather than technological and radical, and as a result, are less visible and recognized. It is often a question of imitating competition or reproducing what the entrepreneur already knows, having “an original location, a particular involvement or a slightly different form of organization and distribution, a particular approach to customers or a minor addition to the product offered” (Julien and Carrier 2005)18. This underestimation should not lead to the belief that SMEs have a low capacity for innovation, despite the fact that SMEs have many advantages in terms of innovation. Very early on, Scherer (1984) suggested that the strength of innovation in SMEs comes from their structure and organization. Unlike large firms, which can be blocked due to bureaucratic behavior, Scherer (1984) shows that the innovation benefits of SMEs are: decentralization of their decisions, employee participation, systemic behavior, direct and informal relationships with the market to capture ideas. This is also suggested by the evolutionary approach: given the tacit dimension of knowledge, the flexibility and informal organization of SMEs are an asset for innovation. This characteristic is an asset both internally and externally, in the company’s ability to benefit from externalities of knowledge from its environment (Audretsch and Feldman 1996).

Indeed, like large companies, SMEs, particularly high-tech SMEs, benefit from cooperation between companies (Mowery 1988). This is confirmed by Lasagni (2012) based on an empirical analysis of 500 SMEs in six European countries. Lasagni found that innovation performance is higher in SMEs that are proactive in strengthening their relationships with suppliers, users, but also customers. However, cooperation is only a guarantee of success in innovation if it is accompanied by the development of absorption capacities (Cohen and Levinthal 1990).

In a systemic approach, St Pierre et al. (2013) identify resources and capacities necessary for SMEs to innovate, based on a sample of 123 manufacturing SMEs. This stimulating analysis is based on the in situ observation, over more than 10 years, of SMEs that have experienced strong competitive pressure. It makes it possible to analyze in detail the practices, behaviors and innovation strategies of SMEs. From there, the authors developed a model of global understanding of innovation called “Innostic”.

While the barriers to SME innovation are more related to the lack of experience in innovation, the relative unavailability of competent human resources and the difficulty of marketing, which somewhat relativizes the scope of the financial barriers mentioned above, the research emphasizes the constant role of the manager in innovative SMEs, through having a vision and clearly expressed objectives. This study also shows the importance of collecting and circulating information throughout the organization and updating of staff knowledge. We also note the positive effect of collaborations, while the use of technological tools, particularly ICTs, is a plus.

However, what seems to us to be most important concerns the lack of a standard profile for “the” innovative SME. St Pierre et al. (2013) point out that there is no magic formula for successful innovation in SMEs. On the other hand, a common point emerges: the importance of a well-defined strategic direction by the leader. Also, if the barriers to SME innovation are linked to a lack of resources, these various studies show that the main assets of SMEs in innovation are their manager and an organization that allow entrepreneurial dynamics. This conclusion explains why in the following chapters we will focus in particular on leadership.

2.3.2. Boosting the innovation capacity of SMEs in times of change

Driving SMEs to innovate is a major concern for public authorities. This has led the European Union to make SMEs one of the major levers of the Lisbon Strategy, ensuring a climate favorable to creation. This policy has been extended as part of the Europe 2020 strategy. Given the work we have just studied on the key factors for innovation in SMEs, it would be illusory to think that improving access to SMEs’ financial resources and promoting cooperation, through clusters and other territorial innovation networks, would be sufficient to strengthen SME innovation. As we have pointed out, innovation in the context of SMEs requires multiple and varied ingredients that have financial and technological, commercial, managerial and above all organizational dimensions. In the face of current changes, we therefore propose ways to boost SME innovation.

2.3.2.1. Coping with the risks of disruption: anticipate it so as not to be surprised

In 2014, Maurice Lévy, then Chairman of the Publicis Management Board, told the Financial Times: “Everyone is afraid of being uberized” (Cuny 2014). Beyond the question of the deployment of digital platforms, it is clear there is a concern among many companies of seeing their historical activity disappear and being victims of disruptive strategies. The reason why this sentence has had so many repercussions is that it expresses a shared but, in general, hidden concern. Because, faced with the risk of disruption, or more generally of a sectoral crisis, the temptation to deny any problem is great. The first edition of “Baromètre économique des risques des PME” by the Compagnie nationale des commissaires aux comptes (CNCC) confirms this trend: in 2017, only 28% of managers considered that their company would be confronted with a risk related to digital transformation. This is a result that worries the president of the CNCC19.

The problem with denial is that it inhibits the ability to innovate, especially in small businesses. This is all the more true because they have been successful (Duquesnois 2011) or because they have specific expertise. The speed of the current disruptions reinforces this danger of the status quo, which is reflected in habitual behaviors and a reference to professional standards.

Anticipating the threat of disruption requires, first of all being lucid, as in any crisis situation. This is illustrated by Jean-Christophe Garbino, General Manager of the ready-to-wear company Kiabi between 2014 and 2017:

“When I arrived at Kiabi, the weak signals were clearly visible. The company had lost its direction and meaning: it was searching for more, instead of ever better. It had reached the end of a model, but it still worked pretty well, hence the denial of reality. The revealing factor was the cotton crisis, the price of which increased by a factor of 2.5 in 2011. This electroshock facilitated transformation. We have communicated the truth in all transparency by presenting an overview of the company’s situation20.” (Cigref, Enterprise et progrès 2018)

His comments also illustrate the fact that listening to the environment is not enough, we must transform this listening according to a strategic meaning, as specified in Chapter 1, and it should be communicated within the company. The latter advice is particularly important for fostering innovation in SMEs. Clear communication of the innovation strategy is an asset for innovation. In addition, the digital dimension of current changes makes it more difficult to anticipate for two main reasons. First, it overestimates the technical dimension of the threat, whereas it is more at the level of the business model. And, second, the threat of disruption may come from competitors, but more likely from new entrants who have no connection to the sector. Carrying out this risk analysis exercise therefore requires SMEs to listen to their environment, beyond the boundaries of their sector, and to listen to weak signals.

If it is appropriate to anticipate change, it is also because disruption takes time to take place. As a result, companies may have time to find a solution.

To illustrate this point, the example of Netflix, the video streaming giant, is emblematic. In the 2000s, many DVD rental stores ignored the disruption caused by Netflix, which began its activity by delivering DVDs by post. On the other hand, Netflix, which took many years to become profitable with a business model characterized by high logistics costs, did not ignore the threat posed by video-on-demand. This lucidity and the research led by the company have allowed it to develop streaming video, in addition to its diversification in content creation.

One way to listen to your environment is to monitor the periphery of the market, where needs are not fully met, as the most dangerous disruptions often occur there. This requires listening to the customer, even more than to competitors. The disruption and business model approaches offer tools to improve value proposition. For example, the “empathy map”, proposed by Osterwalder and Pigneur (2011), makes it possible to get to know customers better, particularly through a precise analysis of the customer’s activities, expectations and even “pain”. It is easy to use for an SME that would like to explore scenarios of how its business will evolve. Through the Home Depot case (see section 1.3.2), Kim and Mauborgne (1999) also demonstrate the relevance of also analyzing customers of substitute products.

Listening to the environment is a way not to be surprised by a disruption strategy. On this occasion, SMEs can find sources of inspiration to really engage in an innovation project.

2.3.2.2. Innovation as a means of consolidating existing activity and cultivating independence

In times of change, the difficulties in innovating are increasing. The temptation is great not to innovate, to continue doing what you know how to do well or what has been the source of past success (Renard and Soparnot 2012). This is particularly true for SMEs, which are more sensitive to hostile environments (Covin and Slevin 1989; Torrès and Gueguen 2008). This is shown by Duquesnois et al. (2010), or Celhay and Cusin (2011), in the case of SMEs that are both prisoners of their past success and resistant to innovation.

The solution for an SME is not necessarily to lead the disruption. The challenge may be to continue innovation, rather than to remain inactive, in order to consolidate its acquired positions. If the disruption caused by potential new entrants is temporary, it ensures a rapid return of customers. The challenge may also be to strengthen its independence, in a context where SMEs are dependent on major clients who are themselves destabilized by current changes. In the plastics sector, a fragmented sector largely made up of SMEs, some have developed an innovation strategy in order to free themselves from a locked-in position vis-à-vis prime contractors (Debrand 2018). These are differentiation strategies, driven by the advanced expertise of these SMEs, but also the integration of digital technology and robots. This strategy allows them to protect themselves from competition through costs, and it helps to rebalance their relationship with purchasers, to the point that “gradually, the dependency relationship can be reversed through innovation” (Debrand 2018, p. 22).

To avoid upsetting the company too much, another solution is to support what Alan Lewis and Dan McKone of L.E.K. Consulting call “edge strategy”. The aim is for companies to examine the possibilities of exploiting the edges of their markets. The first tactic is to “squeeze” the product or service to generate more revenue. This is the accessory method widely used by Apple. It is fully accessible by SMEs that recognize their customers’ needs. Another edge to exploit involves linking services with existing products. It is a strategy that can develop into an SME if you think carefully about how to capture the value created by the service. The third edge is what the authors call the “client’s journey”. It is about understanding what problems customers solve by buying a product or service. This can help both to focus on the essentials and to develop important associated services. The authors take as an example ESAB, a manufacturer of welding tools: its welding expertise also allows it to sell welding training and engineering consulting. In agriculture, the exploitation of edges is to be taken at first sight: more and more farmers are renting the unusable edges of their fields to renewable energy production companies.

Of course, the difficulty of the edge strategy is not to add innovations just to improve the existing value proposition. This strategy must create new sources of value and capture them by finding an appropriate earning model model. In any case, this strategy has the virtue of reducing the current obsession with the search for revolutionary ideas.

2.3.2.3. Diversifying forms of innovation: going beyond technological innovation

It is increasingly recognized that innovation develops in different forms, going beyond the myth of technological innovation. While it is always important to develop technological innovations, particularly for specialized or SMEs on niche market, it is first necessary to integrate them into a broader reflection in terms of business models. It is also necessary to conduct a reflection in terms of commercial and organizational innovation. This is a lesson to be learned from the Uber case: what makes the strength of the model is not, in itself, technological innovation, that is the use of geolocation, but its combination with other factors, around a clear value proposition for improving uses. This global approach remains accessible to SMEs, given their proxemic and integrative management, from the moment the manager clarifies this strategy and the entire organization takes it over.

Thinking about innovation in a global way also implies referring to the notion of strategic innovation and the business model (see Chapter 1). It also means thinking, rethinking and therefore, constantly reconfiguring the SME’s activity and the outlines of its business. The central axis of this reflection is not necessarily the traditional market/product pair. Instead, the resource-based approach seems to make it possible to have a more original reflection, as illustrated by the case of Capsa Container, which is innovating around a main resource: the redevelopment of containers (Box 2.2).

Capsa Container is the example of a company that designs innovation in a global way around a resource to be developed. Thus, it is a company that does not position itself in a single sector, but in several, building an ecosystem around it. While it does not strictly speaking pursue a strategy of disruption, in the sense that it develops a new activity, it supports its clients’ disruption strategies by allowing them to break the codes of their sector, as in the alternative tourism sector.

2.3.2.4. Seizing digital opportunities

Many reports show that SMEs are lagging behind in digital technology and are using it as a growth lever. This is the case with the Monitor Deloitte report (Deloitte 2016), which highlights that French SMEs are lagging behind their European counterparts in the digital field. This delay poses problems for them in terms of overall visibility on the Internet, presence on social networks, online sales21, but also in terms of integrating this channel into their value chain to improve their productivity. This is especially so since French consumers are more likely to use digital solutions than French companies. The report by the Lyon Chamber of Commerce (CCI Lyon 2015), published in 2015, highlights a lack of awareness of the digital benefits and an overestimation of the costs and complexity associated with the development of digital technology in SMEs. This issue of French SMEs lagging behind in the development of digital technology is a policy concern on the agenda of public actors.

But developing digital technology in SMEs is not an end in itself, as illustrated by the two main testimonies in this chapter (see the appendices in section 2.5). First, it is a way to improve the SME’s value proposition and its relationship with its customers. Beyond the development potential of e-commerce, digital technology enables SMEs in particular to reach consumers more easily and to better understand their needs. This is proving to be a strength in a context where the shortcomings of companies, particularly French ones, in terms of their commercial resources have been highlighted. This possibility of improving customer relations with digital technology is all the more important as, with the development of online sales, marketing, with editorial content issues, is regaining its reputation. This can be achieved by developing platforms that foster more participatory relationships with the customer. This strategy may even make it possible in the long term to revitalize the sales force in situ. Rossignol, which has made significant investments in digital tools, now makes the majority of its sales through its distribution network.

This strategy is not just for large companies. In order to build a business relationship based on content and customer experience, there are digital solutions that are not expensive for SMEs. For example, uploading videos to YouTube is easy and inexpensive. This type of digital strategy, essentially based on social networks, also makes it possible to support niche strategies: small companies, even artisans, as well as young digital start-ups, can thus make themselves known. The aim is to exploit innovative solutions in a more open economy. The negative effect of this type of tool is, on the other hand, that it induces greater transparency, which must be controlled.

2.3.2.5. The collaborative economy as a source of inspiration: innovating in an ecosystem

As we have seen in section 2.2, in digital technology, though the platform economy is a lever for developing a more collaborative economy, it is far from being the only lever. It sometimes happens that the digital mutation even reinforces an already existing collaborative economy project. This is particularly illustrated by the case of PME Centrale (Box 2.3). In the case of of this French SME, the collaborative dimension has been at the heart of the company since its origins. We note that, beyond the traditional advantages of cooperation for SMEs, the innovation process itself benefits from such openness (Vanhaverbeke 2017).

Innovation in the collaborative economy requires us to move away from the classic pattern of competition, to rethink our competitive space. A reflection in terms of the ecosystem can be stimulating in this respect. An ecosystem is first and foremost a “coalition” of companies linked to each other that provide complementary offers, around a community of interest or a common objective (such as increasing the value of their offers). Ecosystem thinking allows us to think differently about the positioning of a company in relation to its partners. In an ecosystem, a commercial activity develops first to meet an original need, then it generates a multitude of induced needs, which in turn can generate new commercial opportunities. It is a different way of perceiving an opportunity: it is also a different way of perceiving partners around the pooling of resources and skills. From this perspective, there is no limit to the number of elements to be shared. Box 2.4 suggests ways to help SMEs develop an innovation ecosystem.

2.4. Conclusion

The current economic situation is characterized by significant changes, to the point that we have considered that they constitute a structural mutation that we have compared, probably to excess, with the transition from Fordism to post-Fordism. We have shown that this transformation is multifaceted: while it is driven by the digital revolution, it is also driven by strong social aspirations of more horizontality in exchanges and more sharing. It contributes to radically changing economic models. This transformation is characterized by the emergence of new economic mechanisms, some of which are new, and contributes to the development of a qualified collaborative economy.

It is difficult to say whether this economy is an opportunity or a threat for SMEs. While one aspect of this collaborative economy, uberization, may present a risk of destabilization for the latter through the upheaval it induces in and on different sectors, another aspect, that of the sharing economy, may present new development levers, or even a source of inspiration, particularly in terms of innovation.

Continuing with our discussion on innovation, the characteristics of this economy seem to us to reinforce the structural strengths and weaknesses of SMEs. In terms of barriers, what limits SME innovation is always resources, especially access to financial resources. While technological resources are still the focus of SMEs, the commercial resource is a resource that needs to be taken into greater consideration, which digital technology can improve. In terms of assets, what favors SMEs is the coherence of the innovation strategy provided by the manager, provided that they have a clear vision and communicate it to the rest of the company. The mechanisms on which this strength of the SME manager is based will be discussed in more detail in chapters 3 and 4. Another asset is the organization of the SME, its ability to mobilize resources, its potential for adaptability and responsiveness, provided that environmental changes do not lock them into a status quo.

Without claiming to be exhaustive, the crossover of the characteristics of current changes with the characteristics of SMEs in terms of innovation has led us to present various proposals for boosting innovation in today’s world. These recommendations concern first of all the attention that the SME must pay to its environment, beyond the traditional boundaries of its sector and beyond the observation of its competitors. In terms of innovation strategy and marketing, we have shown that the customer, real or potential, can serve as a basis for this observation. The proposals then focus on the type of innovation that needs to be developed. If technological innovation is a relevant lever to consolidate an acquired position, or even to cultivate its independence from principals, it must be integrated into a more global approach to innovation, placing the business model at the heart of the debate. In terms of improving the efficiency of innovation, we have stressed the role of digital technology in strengthening resources, particularly commercial resources, of SMEs. Finally, if the platform economy can be perceived through digital technology, we have suggested that the collaborative economy is an important source of inspiration for designing a more ecosystem-centred way of innovation.

2.5. Appendices

2.5.1. Digital transformation and servitization: disruptive innovations for SMEs?

Interview with Martine Seville, Professor at the université de Lyon – université Lumière Lyon 2, in charge of the AURA-PMI project.

In your opinion, what are the important levers today for developing SMEs?

Martine Seville – To continue to develop, industrial SMEs (now SMIs) must constantly improve the quality and scope of their offer, their value proposition. However, while internationalization has been their preferred means of development in recent years, its real impact on their profitability and survival remains controversial (Martineau and Pastoriza 2016). Moreover, as the possibilities of digital platforms, collaborative economy and extended networks multiply, the proposal of a digital industrial offer becomes crucial, for example, for a French industry lagging behind other countries. Finally, recent work has highlighted the importance for SMIs to seize servitization opportunities (Coreynen et al. 2017). Thus, digital transformation (known as “digitization”), which corresponds to a company’s ability to use digital technologies internally and with the outside world (Tarutė and Gatautis 2014), and servitization, known as the transformation of an industrial company’s “product” offer into a combined offer of “products and services”, or even into a “use” offer of an industrial process (Baines et al. 2013), are two new value creation tools available to French SMEs. These are two interdependent performance levers. Servitization means knowing the customer’s needs perfectly through data exchange and data mining; digitization speeds up servitization (Coreynen et al. 2017) and reduces costs, while simultaneously simplifying standardization and customization of service (Karimi and Walter 2015).

Digitization and servitization provision would thus promote the increase in organization performance (Kowalkowski et al. 2017). At the same time, they would increase the price that the customer is willing to pay for a higher quality of the offer, and reduce their costs by increasing their efficiency (Loebbecke and Picot 2015). They would also facilitate their internationalization by promoting access to new markets (Shneor 2012), thus making their offer more differentiated.

However, recent studies have highlighted the surprising and worrying delay both in terms of digitization (Deloitte 2016) and servitization (Boucher et al. 2014; Dachs et al. 2014) of French SMEs.

How can this delay be explained when the managers of SMIs are fully aware of the need to seize new economic and technological opportunities to remain proactive “in the competition”?

One of the hypotheses we put forward is that digitization and servitization imply a complete transformation of the SMIs’ business model. This represents a strategic shift, and in this respect constitutes genuine disruptive innovations whose risks are currently being assessed by company managers. It is this obligation to transform their business model that makes them fear, beyond the existing technical difficulties but which they can more easily overcome, that their financial equilibrium, their independence, their mode of governance and even their sustainability will be called into question. Creating value through digital transformation and servitization requires a “strategic realignment” of all dimensions of the organization (Celuch and Murphy 2010) and a business model that can be pivoted. This requires, beyond the dematerialization of processes, increased temporal and spatial flexibility and organizational agility, as well as significant and irreversible investments requiring the use of external funding.

The delay in digitizing SMIs could therefore reflect their anticipation of low short-term returns on the digital and service investments they would have to bear, and a significant aversion on the part of their managers to the risks of distorting their business that these processes would generate. These business model transformations can therefore be considered as disruptive innovations with major consequences for the SME and serious risks that managers are currently seeking to assess, anticipate and manage.

In your opinion, how can we make up for this delay?

We need better support for SMEs. For example, the AURA-PMI project, which brings together the universities of the Lyon Saint-Étienne site supported by the Auvergne-Rhône-Alpes region as part of the “Research Ambition Pack”, aims to rethink the conditions under which SMEs can simultaneously adopt a digitization and servitization strategy, considered as forms of disruptive innovation (Karimi and Waler 2015). Our objective is to remove the scientific, technical, managerial and financial barriers that would prevent them from fully exploiting the leverage effects allowed by these processes.

The aim is to understand the risks that managers associate with such disruptive innovation strategies as digitization and servitization. It is also a question of helping SMIs to carry out “pivots” to their BM, taking into account their capacity at three levels: first, to articulate their industrial activity with digital technologies, second, to explore the synergy effects of better coordination of their investment choice between digitization and servitization, and, third, to open up to new financiers. For the members of the project team I lead, this meant exploring four interacting dimensions:

  • – aligning the company’s new value proposition with the value offer expected by its customers;
  • – an organizational model capable of changing scale and design to meet the growing demand induced by digitization and servitization and data processing requirements, but which places the “person” at the heart of its functioning;
  • – an economic and governance model that allows the SMI to finance the required investments and “monetize” its new offer;
  • – adapted business intelligence systems.

At our level, we are therefore developing targeted actions to support all the actors concerned by these dimensions. Thus, case studies, working sessions with company managers and representatives of public authorities, financiers and consulting and investigation firms, thesis and dissertation topics are proposed or implemented to define the challenges and limits for SMIs. This set of changes is related to these disruptive innovations. This also allows us to collect data, the analysis of which has a dual purpose. On the one hand, it is intended to enlighten the public authorities on the support to be provided to SMEs so that they do not get bogged down in a “valley of strategic death” by renouncing to transform themselves. And, on the other hand, it has an educational vocation among students, in order to train future senior managers in the challenges and limits of these transformations.

2.5.2. New approaches needed for the digital revolution and innovation

Interview with Loïc Moura, expert in strategy, management of transformation projects and speaker to economic, academic and political leaders.

After a 15-year international career in finance, innovation project management and sales management, within large groups but also within SMEs, Loïc Moura completed an Executive MBA at EM Lyon Business School specializing in the management of transformation projects. Since then, he has supported Cisco Systems, the world leader in Internet networks, in leading a project in partnership with the French government to accelerate France’s digital transition. He also collaborates with the French Ministry of Education, universities and high schools to create programs aimed at boosting regions via large-scale developments of innovation skills, horizontal collaboration, and social or societal initiatives.

Based on your professional experience, how is technological change now essential in order to study SME innovation?

Loïc Moura – First of all, it seems important to me to emphasize that even throughout the history of humanity, globalization is a new phenomenon. This global revolution in societies highlights the limits of a model that often does not respect nature, human beings and cultures enough. It must also be recognized that the universalist vision and financialized models are not neutral in the way we approach the digital revolution and the management of this great societal transformation.

Take the approaches of Disrupt or Be Disrupted (Morgan 2017; EY 2018) or Digitize or Die (Windpassinger 2017): the digital transition is now presented by lobbyists and multinationals as a vital and urgent need for technological change. The proposed vision is based on a “sink or swim” approach, which is now widespread and yet counterproductive. It raises fears, creates resistance and sterilizes the creativity, adherence and commitment necessary to collectively reinvent models of society and organization.

Certainly, society and its constituent human organizations (companies, institutions, etc.) must undergo profound transformations. However the limiting approach and sense of urgency often push them to tackle their digital transition by focusing almost exclusively and superficially on the technological angle. This does not allow for the transformation of professional practices, cultures and ecosystems, or ultimately the underlying models of thought and action.

Indeed, the digital revolution implies a systemic and strategic approach that goes far beyond technology. To illustrate this point, let us refer to Daniel H. Pink’s presentation on the types of motivation (Pink 2009), a former advisor to Bill Clinton. In his view, there are three distinct registers of motivation, based on different motivational sources and serving different objectives:

  • – motivation 1.0: assumes that humans are biological beings and that they struggle to meet basic needs (food, safety and sexual);
  • – motivation 2.0: assumes that humans also respond to rewards and punishments. It works for routine tasks, but it is incompatible with the search for meaning, the ability to motivate reflection and the willingness to change things. This is a questioning of the Disrupt or Be Disrupted or Digitize or Die approach;
  • – motivation 3.0: assumes that humans also have a desire to learn, create and perfect the world. This is the intrinsic motivation that researchers in the psychology of creativity, such as Teresa Amabile, talk about. This motivation model is one of the main elements in creating a humanistic, responsible and respectful digital society based on competence/knowledge.

I am thus defending a particular approach: a digital transformation of society and its organizations, based on a strong intrinsic motivation, liberating commitment, innovation, cohesion and encouraging change management. And this is clearly within the reach of SMEs.

The 20th Century managerial model (Taylorism, lean, financialization of models, etc.) was then largely challenged, in favor of a new managerial era much more agile and collaborative. However, this requires a profound evolution of leadership and management styles in order to foster motivation and innovation. The transformation of models begins with our own individual evolution, involving the development of our personal resilience, our understanding of the world, our knowledge and skills.

Hence the need to create, within the framework of the digital revolution, a more committed vision of support, showing a different path and not rejecting sole personal responsibility, the ability to understand, to train, to progress, to succeed, etc. This humanistic approach is a long-term one, for individuals, companies and society as a whole. It is a question of successfully guiding the digital revolution, by positioning it on a constructive motivational register, to reduce, if not annihilate, fears and unleash the potential of individuals, organizations, territories, etc.

Because of the privileged links that SMEs have with their partners, and the proximity that exists between the members themselves, these companies can, in my opinion, play a pioneering role.

Why is there an urgent need to change the model and approach to managing companies?

It is worth recalling here the impacts of the digital revolution on employment, presented in Davos in 2018 by leading political and economic decision-makers and by the World Economic Forum. The world is changing at a high speed. However, the novelty lies not so much in the acceleration of change as in its nature: we are experiencing the end of a model. The model of economic growth that has driven globalization now seems to be leading the world to an ecological and human impasse. At the same time, the digital revolution is profoundly changing all our references: our relationship with time and space, social and human relations, cultures and professional identities, etc. We therefore need to change the paradigm to invent new practices and new models of organization and management.

Yet, we are witnessing an increase in the power of management methods that respond only to the model of neo-American capitalism (Albert 1991)22, and is reflected in strong impacts on the work, social framework and education systems of all countries. For example, we are witnessing the uberization of employment, which is the result of a combination of technological and financial factors. The platformization of companies, the economy and institutions is often even perceived as the ultimate stage of digital transformation of organizations. Artificial intelligence allows companies to divide and model tasks and trades, regardless of the level of complexity.

These observations lead to several statements. Firstly, a large number of trades will disappear in the coming years, in all sectors of activity (Figure 2.2). Moreover, we know that the precariousness of employment is, among other things, linked to the quest to optimize results by reducing fixed costs, and in particular the wage bill. This pushes organizations to outsource more and more of their human resources, thinking in terms of task or mission, and looking for the best flexibility/cost ratio. The second observation is that digital technology facilitates this evolution, by creating multiple statuses that facilitate external and occasional collaborations. On the other hand, it raises new issues of protection and workers’ rights.

While digital technology is transforming trades and can destroy jobs, it is not in itself responsible for the precariousness of the labor market, which results from political and management choices made by companies.

However, we would like to point out that this approach to digitization, which may at first sight appear to be a godsend for companies, does not allow for the sustainable management of their human resources, i.e. their main asset. It also raises ethical and societal questions... In which society do we want to live and work? It therefore seems essential to undertake a real overhaul of the “social contract”. Humanism must be placed at the heart of this reflection, in order to allow the emergence of a responsible digital society.

You mentioned that some trades would disappear. Nowadays, what are the most significant consequences that a young person should pay attention to?

The future of society depends on its youth. However, much research shows that the evolution of technologies and the need for skills is challenging the education system to define programs to meet the future needs of the economic, industrial and intellectual world.

Today, it is estimated that 65% of children entering elementary school will work in occupations that do not yet exist23. Beyond education, it raises the question of how to learn and the skills that need to be developed. The priority, historically focused on disciplinary skills, is thus increasingly shifting towards interdisciplinary qualities, such as creativity, collaboration, initiative and the individual’s confidence in their own capacities and development potential. The individual gradually emancipates from the traditional constrained frameworks of personal and professional development to enter in an era of uncertainty, where they are obliged to ensure their own adaptability. This can exacerbate the individualism which is already very present in our society.

Generations currently experiencing working life are already feeling this pressure related to the evolution of their professions and professional practices as part of the digital revolution.

Figure 2.1 shows the extent of the ongoing automation of jobs, which is accelerating, according to the OECD (OECD 2018) and Oxford University (Frey and Osborne 2013) studies.

Figure 2.1. Percentage of occupations experiencing disruption by the use of digital technology in OECD countries and their automation rates.

Source: OECD

The OECD stated in 2016 that 40% of workers who had received less than an upper secondary education were employed in jobs at high risk of automation, compared to 5% for college graduates. However, a study by Roland Berger (Dujin 2014), devoted to the categories of jobs impacted by the digital revolution, shows a contrario that it is middle managers and the middle classes who are particularly affected by the partial or total automation of their jobs.

In France, the strategy consulting firm Roland Berger estimates that 3 million jobs could be destroyed by 2025. Many professions requiring a high level of training, such as radiologists, lawyers, consultants, middle managers, logisticians, etc., are likely to be “disrupted” in the coming years.

Figure 2.2 presents a diagram of the business typologies and their level of exposure to automation.

Figure 2.2. Probabilities of automation by occupation established by Carl Benedikt Frey and Michael A. Osborne (2013), applied to the French employment structure (INSEE). Roland Berger’s analysis from October 2014 (Dujin 2014)

For example, many researchers predict that within 20 years, there will be virtually no more employees in the banking and insurance sectors. There is even a mapping of professions at very high risk of disruption in finance (Kishan et al. 2017). In short, from taxi drivers to farmers to maritime transport, all occupations are changing.

Some are already feeling the effects of this revolution; others are questioning each other or worrying: how can we reorient ourselves in order to bounce back? What skills should be acquired? Still others, the vast majority, do not yet see how the digital revolution could impact them. However, this employment revolution has begun and will not stop.

According to INSEE24, France currently has 29.55 million working people. According to OECD projections, if 14% of jobs are destroyed by digital technology in the coming years, the country will have more than 4 million additional unemployed citizens. Not to mention the more than 10 million people who will see their jobs automated increase by 50 to 70%. Thus, a total of 14.2 million French people, from all socio-professional categories, will be strongly impacted by the digital revolution. We are already talking about “robot managers” managing workforces.

The purpose here is not to stress young and more experienced workers in SMEs and large companies. However, this perspective makes it possible to become aware of the scale of the ongoing revolution, both at company and society level. To counterbalance these projections, it should be noted that other analyses highlight the job creation generated by new technologies. Nevertheless, the GAFA (Google, Apple, Facebook, Amazon) (Mirlicourtois 2017), whose market capitalization was equivalent to France’s GDP in 2017, ahead of the major players in distribution and industry, currently employ fewer people than the Volkswagen group alone. As historian Yuval Noah Harari explained during the Davos 2018 summit organized by the World Economic Forum (World Economic Forum 2018), the replacement of man by machine is a source of concern, because this hypothesis becomes plausible with the digital revolution, artificial intelligence and the platformization of entire sectors of our developed economies.

All these remarks lead us to conclude by saying that it is important to develop innovation and creativity in order to generate new ideas. But we must take up the challenge of human support for these changes. This requires the evolution of individuals, organizations, including SMEs, and ecosystems, so that innovation is not only technological, but also social and societal, managerial and sustainable.

  1. 1 Finally, it must be acknowledged, a posteriori, that post-Fordism has not hindered the role of large companies in favor of SMEs.
  2. 2 The emergence of the increased figure of man, and the resulting theme of transhumanism, is probably the most anxious form of this question. Nevertheless, the impact of technological change on the evolution of professions, work and employment also raises questions about everyone’s contribution in today’s society. In his interview (see the appendix to section 2.5.2), Loïc Moura explicitly raises the question of the reconstruction of the social contract.
  3. 3 A period of 30 years after the Second World War in France.
  4. 4 To give an example: Netscape’s initial public offering (IPO) increased its share price from $28 to $75 in one day. At the end of its first trading day, the company reached 2 billion dollars of market capitalization.
  5. 5 In the sense that the surge in market capitalizations in a context of uncertainty about the sources of value inevitably ends up exploding in a bubble.
  6. 6 Global recorded music sales were $17.3 billion in 2017, according to the Global Music Report (2018), or about 68% of the 1999 level.
  7. 7 See Appendix to section 2.5.1. The interview with Prof. Martine Seville allows us to detail the service procedures.
  8. 8 For an understanding of the procedures of disruption strategies, see Chapter 1.
  9. 9 Translation by the authors.
  10. 10 Translation by the authors.
  11. 11 In 2015, according to the ING survey of Europeans, it is mainly a question of saving money (58%), for the environment (53%), a simple way to earn money (52%), to maintain community links (47%).
  12. 12 For example, through reclassification units, training and employment support for people affected by redundancies, but also through territorial planning.
  13. 13 This is the case in France of the AME (Appui aux mutations économiques) scheme developed by the Ministry of Labor, in association with the social partners, company networks and local authorities. This is financial support and support from the State, which can be mobilized at the level of professional branches, territories or companies; it is organized by the Fonds paritaire de sécurisation des parcours professionnels (FPSPPP). This support involves the signing of employment and skills development commitments and the implementation of training. Another example in France is the creation of the Pôle interministériel de prospective et d'anticipation des mutations économiques (PIPAME), which makes it possible, through comparative studies in France, Europe and internationally, to understand the developments in new markets. In 2015, it initiated the study on “Challenges and prospects for collaborative consumption”, setting out prospective scenarios for 2020 and framework recommendations. The MUTECO system, for its part, makes it possible to develop training courses to help construction companies facing economic and/or technological changes, and to support them during the energy transition, digital technology and fiber optic.
  14. 14 St Pierre et al. (2017) cite a study that puts it at around 70%.
  15. 15 We choose to focus on research on obstacles and barriers to innovation in companies in general and in SMEs. There are many of them, but they converge on similar results, which is why we present them sparingly.
  16. 16 R&D productivity is understood in this research as the ratio between the number of innovations and R&D expenditures.
  17. 17 Translation by the authors.
  18. 18 Translation by the authors.
  19. 19 Baromètre launched at the 30th annual conference of the profession on November 21, 2017, conducted by OpinionWay among 500 executives or senior managers of companies from 10 to 249 employees.
  20. 20 Translation by the authors.
  21. 21 For example, the report shows that SMEs are four times less likely to make online sales than large companies (11.5% of SMEs compared to 47% of companies with more than 249 employees). It also shows that in 2015, one in eight SMEs received online orders for a turnover of almost 3% of the total turnover of French SMEs, half as much as online sales in Germany during the same period.
  22. 22 Michel Albert is a member of the Académie des sciences morales et politiques along with Yvon Gattaz.
  23. 23 Karl Fisch and Scott McLeod in their joint research “Shift Happens”, cited by the World Economic Forum in their publication The Future of Jobs.
  24. 24 Tables of the French economy, INSEE, February 27, 2018.
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