France invents “Slow Innovation”: deconstructing Montebourg at #leweb



Minister Montebourg (to his credit) took a chance at LeWeb to talk about innovation and the French policy towards innovation, together with Loic Le Meur, Fabrice Grinda and Jeff Clavier.

Montebourg is trying to convey a core message:  France is a great creative nation and is innovating today, as proven by its R&D and its technology giants.   In other words, you can build great companies in France today.  

It's a truly fascinating panel where Mr Montebourg is name-dropping LiKaShing and the MIT, talking about France being extremely successful in attractive foreign direct investment, singing the praises of tax rebates (CIR) and "solemnly" indicating that the Capital Gains Tax of France is no worse than that of California (hum).  Mr. Montebourg takes issue with the Financial Times and the Economist  doing France bashing.  It's mostly a set of half truths, but his apparent level of conviction is somewhere between impressive and scary.

The most striking moment (by now well publicized) comes with a question on Uber.  The Minister finds that disruptive change is acceptable, but that it needs to be done in a measured manner to "protect those who do not accept change" and "are affected by change".

Here are his exact words: "When innovation destroy systems, we have to go slowly.  This is what we call balance, equilibrium, balance.  We never say the world is not changing.  Beware, when we destroy sector of the economy, you have to use caution".  He adds: "You can innovate without destroying.  We have to protect the Producers; the Consumers are not the Kings of the world". 

It sounds perfectly reasonable, but let me make this clear for you : this is code speak for what is effectively an entire society built on the "defense of vested interests".  The entire country is in the grip of small or large vested interest groups who view change with hostility or at least suspicion and are intent on slowing it down for as long as they can.  

You can compare and contrast that with Fred Wilson's views on "bureaucratic hierarchies" and  "technology-enabled networks" ability to disrupt them.  I know who's going to win this battle : those who live in the real world.

Bottom line: after the Slow Food movement from Italy, I guess we now have the Slow Innovation movement.  Good luck with that.

snail
Mascot of the Slow Innovation Movement

By the way, when Mr Montenbourg says macro data proves that France is a highly innovative nation, it's completely untrue.   Here is one example for you (from end 2010):   in the last 40 years, we have seen the emergence of only 4 new French companies with R&D budgets exceeding EUR100M compared to 83 in the US.  Looked at another way: in Dec 2010 there were 25 French tech mid caps (market cap $100M to $1bn) compared to … 562 in the US. That's 22 times more.

Bottom line: France is facing technological decline. It's now allowing any new leaders to emerge, and it's underinvesting in its future.

Alcatel/Lucent, ST Micro or SAGEM are names you can keep pointing to, but they're pretty long in the tooth by now. Where are the new leaders ?

Whilst there are some interesting success stories (Free/Iliad, Business Objects, Gemalto, Soitec, Meetic, Corevalve, Dailymotion, Seloger, Vente-Privée, Inside Secure, Ilog, Sequans Communication, Sophis), none can really be considered a global leader or a future Alcatel. Business Objects was acquired by SAP, Dassault-Systems came out of Dassault and is not really a start-up and Vente-Privee let the US market slip.

I like a minister that has an ambitious and dynamic message.  I don't like a minister that entirely ignores reality, data or the people he pretends to enable to sing a tune that has nothing to do with reality.  Let's get real.

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  • http://www.startupmanagement.org/ William Mougayar

    Fred. Je suis d’accord avec toi. Kestu penses des remarques de Fleur Pellerin?

    But on the positive side, there’s Parrot too who is a world leader in drones. Henri Seydoux was so funny yesterday at LeWeb.

    • http://www.freddestin.com Fred Destin

      A/ re Pellerin she definitely talks the right language but I don’t know what’s hiding behind the slick facade yet. For example their first proposal on crowdfunding was incredibly limiting (un “carcan”) and hard to see how anyone could build a world leading platform with that kind of regulation (not to mention that they are 2-3 years late).

      b/ the mega incubator. It’s cute, in a way very typical (mega project, highly visible, big personalities involved) and i personally would have preferred 5 mid sized incubators, possibly thematic, instead of this Island of Innovation, but very positive on it overall as this may well be an important factor in changing the mindset, having a physical space for innovation that changes perceptions and show the way.

      • http://www.startupmanagement.org/ William Mougayar

        Yup. The extent of the French government’s grip on everything is a scary reality. I’m surprised Sarkozy wasn’t able to loosen that up a bit more during his 5 years.

        All the panelists were asking the minister was to treat the tech startups differently, cut them some slack, and let them rip, but that message was going totally over his head. Suppose they could give a special status to startups up to 50 employees (lower taxes to their investors, relaxed labor rules for hiring/firing, R&D credits, etc.), that’s plenty to allow 1000 flowers to bloom. Most of the innovation comes from small teams of 3-5 or 5-10 people anyways.

        • http://www.freddestin.com Fred Destin

          Well that’s a dangerous path too. When they started taxing CGT like “revenue du travail” (wages) they ended up with marginal taxation that was extremely high (>70, 80%) and a complete disincentive–> they then proceeded to make an exception for entrepreneurs (not investors) PROVIDED that funds were being re-used in France etc. The double whammy here: it does not work for the funds (ugly evil capitalists) and it does not work for foreign founders. So they did something socially acceptable but completely inefficient.

          • http://www.startupmanagement.org/ William Mougayar

            Interesting. This clearly shows they don’t get. Everything has strings attached to it, which often defeats the purpose of the intended benefit. It may look good on the outside, so they can get the headlines, but it’s rotten as soon as you pry it open.

  • Marc Brandsma

    Stop your French bashing, you Belgian !

    • philjeudy

      GRUMPY

    • http://www.freddestin.com Fred Destin

      Belgium is too small for anyone to care about and totally screwed anyway, whereas France is a real strategic linchpin of Europe and worth fighting for.
      Actually Belgium is a mix of Flanders (doing really well), Brussels (doing OK) and Wallonia a.k.a. Northern France so it’s very hard to do sweeping generalizations.

  • Isabelle Roughol

    Amen on everything you just said. The cultural divide between him and people in the room (just as French and proudly so, thank you very much) was abyssal. He missed an opportunity to humbly learn what digital entrepreneurs were thinking and instead confirmed all of our fears.

  • Laurent

    France is constantly protecting the past from the future. The situation is not as bad as it seems (see for example Marc Giget’s excellent overview of French innovation) but finding a positive sign in the country’s politics in the past 5, 10 or even 15 years is really hard. This country is lucky that some of its citizens ignore a completely clueless political system and still try to create value using new technologies.

    • http://www.freddestin.com Fred Destin

      amen

  • Tobia De Angelis

    Hi Fred,

    Nice post, but there’s one thing I strongly disagree: despite similar name, Slowfood is a truly disruptive model, and it’s completely different by this “slowinnovation” non-sense word. Slowfood is sustainability-centred-design concept for food. And it’s one of the biggest trend in food mkt. Slowinnovation is something that just a politician can understand.

    • http://www.freddestin.com Fred Destin

      I am a huge fan of the Slow Food movement and think it’s wonderful. I am on purpose drawing the analogy using cooking and food (which the the French love) and applying to a segment where speed is part of the process itself (innovation) to highlight the absurdity.

  • Timo Elliott

    I was with you until the statement “none can really be considered a global leader or a future Alcatel.” I’m not sure that’s the right criteria to be using.

    For example, Business Objects was explicitly created based on the Silicon Valley model, and the sale to SAP was therefore a very natural and successful next step. While “BusinessObjects” now only exists as a product brand, SAP is now the clear leader in the analytics market that the company helped create.

    I agree that Business Objects didn’t turn into an “Alcatel,” but isn’t such a national-oriented statement more of a Montebourg point of view? After all, such “defense of the national interest” was the reason given for blocking Yahoo’s offer to acquire DailyMotion.

    • http://www.freddestin.com Fred Destin

      Yes you are correct but ultimately every market deserves a few very strong leaders that can act as acquirors, pools of talent etc. Silicon Valley is so powerful exactly because it has so many massive tech giants headquartered there who acquire around themselves. New York has had a similar problem with AOL the only giant in town, and I would argue this is the main thing holding boston back today. Not nationalistic, looking at “building leaders that can endure” and ultimately build their own ecosystem around them.

  • Claude

    comparing French and US figures without somehow normalizing is a bit unfair.

    • http://www.freddestin.com Fred Destin

      On the figures I chose this one and there are 5-10 more I could have chosen. The track record of innovation esp. in sectors that matters (“true” high tech) is dismal including when compared to Germany, Scandinavia. The gap is so blatant that frankly it did not need normalization.

  • enzooosellers

    Is it the same minister that was promoting 34 disruptive innovations among which one “plane without a single drop of kerozene” ? What about the actual turboprops makers ? Mr Montebourg is wandering outside of his competency domain. It takes more than a nice suit to be pertinent.

  • philjeudy

    According to your comment on this newly famous Montebourg quote, let’s say this: the “balance” is not a valid comment since the industries (if not lobbies) he wants to be “protect” are firing people in France by hundreds now.
    There is no balance anymore, and it’s urgent to find alternatives that NO traditional brick and mortar business will compensate.

    Montebourg’s balance is not a valid explanation to ask for slow innovation. The country is in danger, loosing a bunch of jobs every month, it’s more than urgent to do something…

    • http://www.freddestin.com Fred Destin

      Yes this is a classic delusional case of “jusqu’ici tout va bien”. We’re selling out our kids frankly (unsustainable pensions, public sector, cuts in research) and doing a lot of arm waving to hide it.

  • philjeudy

    Bertrand Diard was interviewed in French media this week, and the title of it was about how it’s good to have innovation in France. Medias like to please Montebourg, he’s a good client.

    But actually, what Bertrand and entrepreneurs means by innovation is the money you can get in France while leading R&D here. See what BPI is doing to. This is what innovation means in Montebourg’s clan: finance jobs through grants and public funding.

    There won’t be another Daily Motion miracle happening (I guess you will like this example), since the market is not there, and there are a few of French entrepreneurs able to push a company to the next level. The few ones, as Jeff Clavier said not really appropriately, will probably develop their company out of the country. And that will mean no new jobs created.

  • Ex-resident

    Mwahahaha!!! Oh, France. I think anyone would choose to start a business in that country is beyond me.

    Ridiculous bureaucracy? √
    Class-embedded, social mores and impeded access to resources? √
    Anti-entrepreneurial thinking? √
    High taxation? √

  • http://vedovini.net/ Claude Vedovini

    I agree there is a problem with entrepreneurship in France, bureaucracy is maddening, taxes might be too high and there’s not the spirit. French people fear failure and don’t really have an incentive at risking anything since the safety net is not really that good.

    But most of what you say sounds like a sad and selfish view built on what you think others should do for yourself. I wouldn’t talk about “slow innovation” here but rather “responsible and sustainable innovation”, like “slow food” is a code name for “responsible and sustainable food production”.

    You come again with Uber as an example, but I fail to see where Uber “innovation” is so an important thing that it must be given way to disrupt existing businesses that actually support families so that US investors can gorge. Wanna talk about disruptive innovation that would do good to humanity? Let’s talk about renewable energy, stem cells, graphene and stuff like that but, please, give me a break with Uber.

    Especially because Uber have problems in the US too (and they are not the only ones, see AirBnB) where they are also disrupting existing businesses (and violating the laws).

    You criticize the French society and government for defending vested interests? Mostly, those vested interests are those of the French people. What do you think a government is about if not protecting his people’s interests? Yes, innovation is an important long term interest, but Uber and most startups are not about that.

    And since you like to compare with the US, I hope you’re not naive enough to believe they don’t do exactly the same thing, sometimes against the better of the entire human race.

    And to expand on my earlier comment about fairness in figures: You write “in Dec 2010 there were 25 French tech mid caps (market cap $100M to $1bn) compared to … 562 in the US. That’s 22 times more.” given that the US GDP is about 8 times bigger than that of France (with 5 times more population) it’s still not good but I don’t think it’s so bad considering the French are entitled and spend most of their time eating cheese and drinking wine.

    • http://www.freddestin.com Fred Destin

      Claude I think the general point you are raising is great (“how do we combine a fast moving chaotic world with a desire to have a supportive social system and a society that does not break at the seams”) and I will address this in a separate post.

      • http://vedovini.net/ Claude Vedovini

        Looking forward to read it.

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  • Michael El Baki

    My comment won’t bring much to the subjectif but nice to see Sophis recognized for once.

  • Epelboin

    “We have to protect the Producers; the Consumers are not the Kings of the world” > That’s what we call Socialism… Wait… What?

  • http://markbivens.com/ mark bivens

    Nice piece.

    Could it be that LeWeb’s Headspace meditation session simply inspired Montebourg to pay homage to meditative zen-master (and baseball hall-of-famer) Yogi Berra ?

    Montebourg’s [Innovation is fine, as long as it doesn’t disrupt the incumbents] worldview conjures memories of Berra’s enlightenment: “It’s tough to make predictions, especially about the future.”

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