Innovations are generally considered to be technological innovations, which have their roots in research in universities and research laboratories. They find their way into the market through large companies or start-ups financed by angel investors and venture capitalists. Most publications on innovation management provide this simplified picture and, as a result, small- and medium-sized enterprises (SMEs), which represent the majority of European firms, are rarely mentioned as a major source of innovation. This book by Claudine Gay, professor at the Université Lumière Lyon 2, and Bérangère L. Szostak, a university professor at the Université de Lorraine, takes the reader on an interesting journey to explain why SMEs can excel in innovation and surprise customers, competitors and value chain partners.

Academics and policy makers have paid little attention to the innovative potential of SMEs. It is only recently that SMEs have been recognized for their high innovation potential and the European Commission is currently implementing specific innovation policies for SMEs. There are several reasons why SMEs have not been in the spotlight for very long: for example, most SMEs work in B2B markets, which are usually hidden from most of us. However, SMEs do not only focus on product innovations: they also gain a competitive advantage by intelligently applying process innovations, organizational innovations, product commercialization innovations and strategic and business model innovations. This book provides an interesting overview of how SMEs innovate, challenging the traditional and narrow vision of innovation and innovation management that has been developed based on observations from universities and large companies.

One of the most challenging aspects of this book is that Professors Gay and Szostak integrate different perspectives and methodological approaches to examine the innovative potential of SMEs. They focus on the role of the entrepreneur, organizational culture and business model innovation in understanding this potential. Second, they focus on employee selfmanagement as a source of innovation and the role of design thinking in managing creativity in small businesses. Last but not least, the role of open innovation for SMEs is highlighted in Chapter 3, which summarizes an interesting and refreshing approach to unlocking the innovation potential of SMEs.

I published two books on open innovation in SMEs in 2017 and 2018 respectively. This book by Professors Gay and Szostak builds on my previous reflections and integrates the search for external knowledge by the management of innovative SMEs. What are the typical advantages and challenges for innovative SMEs?

First of all, the good news for small businesses is that because of their small size, they have the ability to be faster and more adaptable than large companies. Experimentation is the key to innovation, and collaboration with partners helps companies with limited resources to carry out the discovery process on a larger scale. By tapping into open innovation networks, SMEs can change their business models without having the necessary technology in-house. However, while open innovation networks have the potential to make SMEs more profitable, they only work effectively when the value created jointly is significantly higher than the value produced by the companies when they work on their own. And the true value of open innovation lies in the ongoing experimentation process, which produces new and unexpected opportunities for partners. SME managers must therefore develop and maintain such networks of innovation partners in order to improve their own business success.

In addition, personal connections and trust are essential for open innovation partnerships between SMEs, and the entrepreneur who launched the network generally leads the network. The advantage highlighted here is that an SME can activate this network and therefore innovate faster than anyone else in the industry because it knows the capabilities of each partner and can activate these external skills, which leads to faster innovation. The reason? Relationships are based on trust, and trust relationships lead to open and rich collaborations, accelerating innovation in SMEs. The strength and survival of an innovation network also depends on how SMEs manage mutual aid and conflict: SMEs in the network must support partners in difficulty, as they are the weakest link in the chain. Similarly, conflicts between partners undermine cooperation: managers must address them quickly.

However, it must be recognized that this type of collective collaboration is not a natural reflex for many SMEs. Small businesses do not like to involve others in their decisions. The recent acceleration of new collaborative innovation models by large firms can help stimulate new thinking among small companies. As multinationals seek to accelerate their innovation pipeline, opportunities for SMEs to partner in open innovation platforms are increasing. In this sense, two steps seem important for me to highlight.

Because trust is so important, the first step for a small business looking to forge open innovation partnerships is to think about its best customers and suppliers – those with whom it has worked the longest and those in whom it has the most confidence. By discussing ongoing projects with these value chain partners, savvy entrepreneurs can propose solutions to innovation challenges in the medium term, creating a new dimension to the partnership. The second step is to establish relationships with local research institutes or universities, which can help provide the expertise needed to bring new ideas to market. Small businesses should look for such partners. Face-to-face contact with a partner is necessary and this implies an essential proximity. For example, a local university with a good track record of partnering with companies can help SMEs adapt new products, change business models and introduce new technologies.

Innovations do not have to be radical. SMEs can stimulate sales and profits by importing ideas already used in another industry or by innovating the business model. In the solar energy sector, for example, First Solar has boosted sales to consumers by offering them an innovative financing package that requires no cash payment to install a solar panel system on their roof. Instead, the buyers rent the solar panels in combination with a 15-year contract to purchase the electricity produced by the panels. SMEs are very innovative in the development of new business models, so we should not focus simply on technical or product innovations.

To conclude, I would like to remind you that SMEs are the backbone of the European economy, but most of them are not yet innovating or are not fully using their innovation potential. I hope that this book will help SME managers to start their innovation journey. Once the decision is made to choose a new product or business model, SMEs will automatically open up and innovate with partnering organizations because they do not have the necessary internal resources and skills. Managing the partner network is new for SME managers and is the most difficult challenge in their transition to an innovative company. With this in mind, this book is a must read for anyone interested in how to successfully manage the transition to an innovative SME.

Wim VANHAVERBEKE¹

NEOMA Business School

ESADE Business School