Is France prepared to make the sacrifices necessary to foster the innovation ecosystem it claims to want?

October 28, 2015

rudevc_innovation-disruptionOpen Innovation, the Year of Innovation, Young Innovative Enterprises, etc. we cannot stop talking about innovation. But we also should acknowledge that innovation comes with certain demands.

For example, innovation requires flexibility. For companies to be innovative, they must be agile. Lack of agility is one of the reasons large established firms are caught flat-footed when the market shifts.

Take the media business. This sector already experienced its first tectonic shift, from print to digital — over the past decade. Now the industry is bracing itself for disruption 2.0, or a “fundamental restructuring” as Goldman Sachs puts it.

For companies operating in the media sector, startups and large groups alike, this second wave of disruption will inevitably require a repositioning of strategies, a refreshing of product offers, and a retooling of workforces.

It is on this third dimension in particular that the costs can be quite tangible. Retooling a company’s workforce might mean enhancing the skill sets of existing personnel, but it also usually means a change in some personnel, resulting in layoffs. Some workers might not posses the skills necessary for the company to operate in the new paradigm. Others might be capable to enhance their talents with minimal disruption but due to their labor classification cannot be shifted (to paraphrase the old tasteless joke in France, “you can’t touch a journalist unless you’re DSK”).

And finally, we cannot ignore the probability that a company navigating through a period of disruption will suffer a financial hit during the transition, meaning it must reduce its absolute cost base in order to survive.

Please don’t get me wrong. I am not trivializing the pain of job losses nor even advocating that France make it easier for companies to layoff employees without a trade-off. Since the wisdom of Emile Zola, France has constructed some of the strongest worker protection laws of any developed country. There’s a lot to admire in the philosophy behind these frameworks.

At the same time, during this European arms race to demonstrate which country is the most innovative, during this period where captains of industry and government officials crow about innovation, let’s not forget that innovation does not come without sacrifice.

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posted in technology, venture capital by mark bivens

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