By Fernanda Arreola and Dr. Gregory C. Unruh

When we think of innovation, our minds often jump to startups or young tech firms. But what about institutions that are centuries old? How do they adapt and remain relevant in today’s world? Business schools—some with origins dating back more than 200 years—offer a compelling case study.

Despite their heritage, business schools today are under immense pressure to change. They must train future leaders for jobs that do not yet exist, respond to societal challenges such as climate change and inequality, and prove their relevance to stakeholders ranging from students to governments. Their transformation shows us that innovation is not only the domain of the young and agile; it is possible even in organizations with deep traditions and entrenched systems.

The Pressures That Drive Change

Business schools no longer operate in isolation. They are embedded in a wider ecosystem of expectations and regulations. External drivers—including accreditation bodies like AACSB, EFMD, and PRME, as well as government regulations and corporate demands—set the standards for relevance and accountability. Rankings and media scrutiny amplify this pressure, while alumni and donors demand proof of long-term impact.

Innovation is not only the domain of the young and agile; it is possible even in organizations with deep traditions and entrenched systems.

At the same time, broader sustainability challenges—climate change, inequality, resource scarcity—force schools to prepare graduates for a future that will look very different from the past. As one dean recently put it, “Our students expect us to prepare them for jobs that don’t exist yet, in industries that are only being invented.”

Examples abound: HEC Paris has integrated sustainability projects into its core programs, ensuring that students graduate with hands-on experience in tackling real-world challenges. IE Business School in Madrid led the way in digital learning long before the pandemic made it essential. Harvard Business School now embeds ESG and climate risk across research agendas, influencing global boardrooms. These cases show how external pressures translate into innovation.

Innovation Through Teaching, Research, and Engagement

Through interviews with leaders at top European business schools, we have constructed a framework that shows how schools innovate. We call this the value chain of sustainable education, and it highlights the systemic way in which institutions translate pressures into impact. First, inside business schools, innovation takes shape through three primary activities: teaching, research, and engagement with stakeholders.

1. Teaching: Curricula are redesigned to reflect sustainability, digital transformation, and societal responsibility. Traditional case methods are being complemented by experiential projects, hackathons, and cross-disciplinary approaches.
2. Research: Faculty redirect efforts toward questions of pressing societal importance. Climate risk, digital ethics, inclusive finance, and governance innovation are no longer niche topics but mainstream research streams. This is reinforced by research funding, collaborative events, and stronger dissemination strategies.
3. Engagement: Alumni networks, boards, recruiters, and donors push schools to stay relevant. Businesses want actionable insights; governments expect policy contributions; and students demand meaningful career preparation. Together, these stakeholders ensure that innovation is not confined to classrooms but extends into society.

Second, business schools follow a four-stage process that leads them to produce relevant and sustainable innovation. This value chain of innovation works as follows:

1. Inputs: students, faculty expertise, financial resources, voluntary and regulatory standards.
2. Processes: teaching, research, and institutional practices that absorb and reinterpret these inputs.
3. Outputs: knowledge creation, trained graduates, and transparent impact reporting.
4. Outcomes: contributions to society and business practice, from advancing sustainable strategies to influencing government policy.

This framework makes one thing clear: innovation in business schools is not about isolated initiatives. It is about designing a chain of activities that systematically link education to broader societal impact.

From Knowledge Providers to Future Architects

Through our study, we’ve unveiled a reality that is becoming increasingly evident: the role of business schools is shifting. No longer just knowledge providers, they are becoming architects of the future of business. Their legitimacy now depends on their ability to align education with societal needs and business realities while preparing students for a world in flux.

The task ahead is clear: innovate boldly, engage deeply, and measure impact transparently. By doing so, business schools will not only secure their own survival but also actively contribute to the reinvention of business itself.

This transformation, however, extends beyond academia. The evolution of business schools offers important lessons for managers across all sectors. Like schools, companies must navigate a complex landscape shaped by external pressures—regulators, investors, customers, and civil society—while also grappling with internal challenges related to culture, processes, and strategy.

In this context, organizations can draw inspiration from how business schools are reimagining their value chains. The way schools innovate provides three takeaways for leaders in business:

1. Innovation is systemic, not cosmetic. Adding a sustainability initiative or a digital pilot is not enough. True innovation requires redesigning the value chain—aligning inputs, processes, and outputs with broader goals.
2. Stakeholder engagement is a catalyst. Schools innovate because alumni, students, boards, and accreditors demand it. Companies, too, must listen to and integrate feedback from stakeholders who increasingly expect responsibility and transparency.
3. Impact is the ultimate measure. For schools, success is not about courses created but about the graduates they shape. For companies, it is not about projects launched but about the value delivered to society, employees, and customers.

In short, the innovation journey of business schools is a mirror of the challenges all organizations face today. For managers, the message is clear: embrace innovation as an ecosystem endeavor, measure what truly matters, and prepare to shape—not just respond to—the future.

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences. 

Dr. Gregory C. Unruh is the Arison Professor of Values Leadership at George Mason University and an outstanding voice on sustainability and leadership. He serves as guest editor for the MT Sloan Management Review and is the author of the upcoming Academic Authority: The Professor’s Guide to Becoming a Sought-After Thought Leader.

The post How Do 200-Year-Old Institutions Innovate? The Example of Business Schools appeared first on The European Business Review.

Addiction often hides in plain sight, crossing social, professional, and cultural boundaries with ease. In this article, Fernanda Arreola, Nora Guessoum, and Elizabeth Walker invite reflection on how silence, stigma, and misunderstanding sustain addiction, and why open conversation, compassion, and connection are essential for meaningful prevention and recovery.

The Elephant in the Room

Addiction isn’t something that happens to “other people.” It isn’t confined to dark alleys, broken homes, or the sensationalized stories splashed across the tabloids. It’s present in boardrooms, classrooms, hospitals, and households across the globe. Gender, occupation, and social status were thought to be limiting environments for an addiction to install itself. However, recent research invites us to consider that addiction concerns us all, and chances are you already know someone who’s quietly struggling.

Still, “being an addict” remains one of the heaviest taboos in our society. Those affected often suffer in silence, and families touched by addiction rarely feel able to share their stories openly. Instead of being met with compassion, they are too often met with shame.

The truth is, addiction isn’t about alcohol, drugs, shopping, or even social media. It’s a coping mechanism, an attempt to soothe inner pain, disconnection, or distress. Until we start to recognize that, we’ll keep looking at the wrong end of the problem.

The reality is stark: addiction doesn’t discriminate. It affects the executive and the janitor, the teacher and the student, the parent and the child. Until we recognize addiction as a human health issue rather than a moral failing, we perpetuate cycles of silence that prevent healing and recovery.

Changing the way we talk about addiction is one of the first steps to changing how we respond to it.

And here’s where language matters. Words shape the way we think and the way we judge. Labels like “addict” reduce people to their struggle and reinforce stigma. By shifting towards more accurate and respectful terms, such as substance or behavioral use disorder instead of “addiction,” or “recurrence” instead of “relapse, we not only describe the reality better, but we also create space for dignity and recovery. Changing the way we talk about addiction is one of the first steps to changing how we respond to it.

The truth is, addiction isn’t about alcohol, drugs, shopping, or even social media. It’s a coping mechanism, an attempt to soothe inner pain, disconnection, or distress. Until we start to recognize that, we’ll keep looking at the wrong end of the problem. 

Addiction is a Health Issue, Not a Moral Choice

Addiction is not a weakness, a lack of willpower, or a character defect. It is a health issue, a neurological condition that develops over time. Neurobiological research shows that addiction is an unhealthy coping strategy that gradually alters the brain’s reward system. This process often begins during adolescence, when the still-developing brain is especially sensitive to outside influences such as alcohol, drugs, or other high-reward behaviors. Over time, the brain starts to rely on these quick hits of relief rather than learning to regulate stress and emotions in healthier ways.

For understanding addiction as a medical condition, we must accept that it is not a sign of weakness or a lack of willpower. It is a chronic brain disorder recognized by DSM‑5 and ICD‑11, defined by:

• loss of control over use,
• continued use despite harmful consequences,
• tolerance and withdrawal,
• impairment in social and professional functioning.

Neurobiology: How the Brain Rewires Itself

Addiction represents one of the most complex challenges in modern medicine, involving intricate neurobiological processes that fundamentally alter brain structure and function. At the neurological core of addiction lies the brain’s reward circuit, which addictive substances hijack by activating the dopaminergic pathway connecting the ventral tegmental area to the nucleus accumbens. Research has consistently demonstrated that chronic substance use leads to persistent changes in brain reward systems, fundamentally altering the neural circuitry responsible for motivation and decision-making.

The concept of neuroplasticity plays a paradoxical role in addiction. While typically enabling learning and adaptation, repeated exposure to addictive substances exploits this mechanism harmfully. Over time, motivation circuits become increasingly sensitized while the prefrontal cortex’s ability to exert control becomes progressively weakened, creating a neurological environment where compulsion overtakes conscious choice.  

Clinical examples

Modern clinical care begins with systematic assessment using DSM-5 and ICD-11 criteria. The DSM-5’s dimensional approach categorizes severity based on criteria met (mild: 2-3, moderate: 4-5, severe: 6 or more). Validated screening tools such as AUDIT, DAST-10, and ASSIST provide clinicians with reliable methods for early detection, which research has shown to be associated with improved treatment outcomes (Babor et al., 2001).

1. The Glass That Becomes a Habit

Marc, 45, a successful executive, begins with a glass of wine to relax after work. Over time, this ritual becomes a necessity. Without it, he feels tense and restless. Daily drinking eventually disrupts his sleep and family life. What started as a social habit evolves into alcohol dependence, driven by changes in the brain’s reward system.

2. Online Gambling That Consumes the Nights

Sofia, 22, a student, discovers online sports betting. At first, it feels like harmless fun, and early wins boost her confidence. Soon, she spends nights gambling, neglects her studies, and falls into debt. The thrill and illusion of control fuel her behavior. Her story shows how behavioral addictions can hijack the brain just like substances.

3. Painkillers That Become Indispensable

Claire, 35, receives opioid painkillers after surgery. Initially, they provide relief, but tolerance develops quickly. She increases doses and seeks multiple prescriptions. When she tries to stop, withdrawal symptoms and anxiety appear. What began as medical treatment turns into opioid dependence. Claire’s case highlights how addiction can emerge in medical contexts without any intention to misuse.

What These Stories Show

• Addiction has no boundaries: it affects executives, students, and patients alike.
• It often begins with ordinary behaviors (a drink, a game, a pill) that become survival strategies.
• Behind each case lies emotional or physical pain that the person is trying to soothe.
• Science explains the mechanisms, but society must provide compassion, support, and integrated solutions.

Building on this scientific foundation, the most crucial shift in understanding addiction is this: it’s rarely about the alcohol, the drug, or the behavior itself. Those are simply the visible outlets. What’s really happening is that the brain, wired for survival, finds a way to manage emotional pain it can’t otherwise regulate, stress, shame, loneliness, trauma, or that aching sense of emptiness that shadows so many of us.”

For one person, that might show up as a glass of wine that turns into a nightly necessity: for another, it’s gambling apps, compulsive overworking, or the quiet reliance on cocaine to fuel performance. And in younger generations, it often surfaces through shopping platforms or hours lost to online gaming or the endless scroll of social media.

The common thread isn’t the substance or the screen, it’s the brain’s need to fill emotional gaps, to quiet discomfort, and to cope with what feels unmanageable.

Understanding this changes everything. Addiction is both a disease that reshapes the brain and a coping mechanism for emotional pain. If we keep focusing only on the “thing”, the drink, the drug, the gambling app, or the email inbox, we’ll keep treating the symptoms while missing the causes. Real progress begins when we address the deeper conditions that drive people towards substances or behaviours in the first place.

Addiction in Today’s World

If addiction begins as a way of filling emotional gaps, then today’s culture has only multiplied the options for doing so. Each generation faces its own constellation of potential addictions, shaped by cultural pressures and whatever substances or behaviours are most accessible. Among younger people, the patterns increasingly point towards shopping, sugar, beauty culture, vaping, and the endless scroll of social media as ways to regulate difficult emotions. The rise of weight-loss drugs such as Ozempic reflects the resurgence of body-image pressures, fuelling disordered eating and unhealthy ideals that echo the “heroin chic” era of the 1990s.

In the professional world, the picture looks different but no less concerning. Research from France highlights how “stress at work, changing schedules, [and] repetitive tasks” are strongly linked to alcohol and tobacco consumption. It paints a picture many will recognize: workplaces that look busy and connected on the outside, but which, on the inside, foster hidden isolation, competition, and a lack of genuine support. In these environments, alcohol after hours, smoking breaks, or quiet reliance on stimulants often become socially accepted ways of coping, even framed as team bonding or informal networking.

Today, quick fixes have never been closer to hand. From gambling apps to prescription drugs to surgical shortcuts, our culture offers quick fixes but little room for the emotional vulnerability that drives them.

The Real Cost of Quick Fixes

The trouble with quick fixes is that they rarely fix anything for long — and sometimes, they make things much worse. Research shows, for example, that gastric band surgery can carry serious risks: suicide rates post-procedure are 2.7 per 1000 patients, and self-harm is nearly twice as likely compared to non-surgical groups. In real terms, that means hundreds of people each year end up in crisis, not because of the surgery itself, but because the underlying mental health challenges that drove their eating in the first place were never addressed.

When food becomes someone’s way of coping with loneliness, boredom, or sadness, taking it away without providing healthier tools can leave them more vulnerable than before. Studies confirm this: people who undergo bariatric surgery without adequate psychological support face a significantly higher risk of crisis. It’s the equivalent of removing a life raft without teaching someone how to swim. And it’s not just food; the same principle applies across alcohol, gambling, overwork, or any other behavior that hides emotional pain.

Weight-loss drugs like Ozempic raise similar concerns. While there are clear medical benefits in some cases, research and clinical experience suggest they can also become another shortcut, one that bypasses the deeper emotional and psychological work needed for lasting wellbeing. Put simply, no pill or procedure can substitute for addressing the whole person. Lasting recovery depends on treating both the behavior and the underlying challenges, whether the struggle is with food, alcohol, or anything else.

Why Silence Makes It Worse

We don’t whisper about cancer. We don’t shame people for grieving. We rally, we cook meals, we send cards, we offer compassion. Yet when it comes to addiction, the tone shifts. Instead of empathy, people are too often met with judgment, shame, and moral condemnation. This double standard is not only unfair but also dangerous. Shame drives addictive behaviors underground, making recovery harder and recurrence more likely.

The workplace adds another layer to this silence. Research from France shows how degraded working conditions, long hours, shifting schedules, repetitive tasks, fuel increased alcohol and tobacco use as workers look for “escapes from work constraints.” In plain terms, people turn to substances to manage pressures their workplace won’t acknowledge. And when organizations ignore systemic issues like toxic management, impossible deadlines, or a lack of psychological safety, they inadvertently reinforce the very struggles their employee assistance programs are meant to solve.

If silence fuels the problem, then conversation must become part of the cure.

Moving Towards Solutions

Real change starts when we bring substance and behavioral use disorders out of the shadows and talk about them as openly as we now talk about depression or anxiety. Conditions once weighed down by stigma are now met with greater compassion, information, and support. Addiction deserves the same treatment.

That shift requires a few concrete steps:

• Open conversations: replace hushed judgments with honest dialogue in families, schools, and workplaces. Speaking with the same matter-of-fact tone we use for depression creates space for people to seek help openly without shame
• Accessible, diverse support: therapy, recovery coaching, community groups, and alternative approaches should be readily available. Effective care always addresses the physical, psychological, and social dimensions together.
• Treat the whole person: moving beyond symptom control to address underlying needs. Integrated approaches, not isolated interventions, give people the best chance of sustainable recovery.
• Employer responsibility: go further than surface-level wellness programmes. Inclusive cultures, genuine mental health support, and awareness of how management practices create stress or isolation all make a difference.

Research consistently shows that people need genuine relationships, purpose, and belonging, not another quick fix. At its core, the shift is simple but profound: addiction flourishes in isolation, and the antidote is connection.

A Collective Responsibility

Substance and behavioral use disorders reach across every community, every workplace, every family. Yet so does the possibility of recovery. The moment we replace silence with conversation, stigma with understanding, judgment with compassion, we begin to change the landscape.

The moment we replace silence with conversation, stigma with understanding, judgment with compassion, we begin to change the landscape.

This is not about excusing harmful behaviors or denying responsibility. It’s about recognizing that no medical condition has ever been improved by shame. Recovery requires courage, support, and often professional guidance, but it begins with connection. And connection is something each of us can offer.

Together, we can create environments where recovery is not hidden but openly supported. Where schools educate without fear, where workplaces foster safety, and where communities open their doors instead of closing their eyes.

In a culture built on quick fixes and constant disconnection, choosing to honor real human needs, belonging, purpose, and relationships is an act of radical hope. And hope is contagious.

It’s time to talk, time to listen, and time to build communities where recovery can thrive.

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

Nora Guessoum holds a PhD in Clinical Psychology and specializes in Cognitive Behavioral Therapy. A hypnotherapist and psychoanalyst, she has over 21 years of experience supporting adults, adolescents, and families through an integrative, evidence-based approach.

Elizabeth Walker is a dedicated recovery coach with over 20 years of experience supporting individuals on their journey to wellness. Having worked in addiction treatment centers and lived the recovery process herself, she brings deep empathy and practical insight. She empowers clients to break old patterns and build a meaningful, purpose-driven life.

The post Addiction Has No Boundaries: We Must Start Talking About It appeared first on The European Business Review.

By Fernanda Arreola and Sabine Bacouel-Jentjens

In the spring of 2020, during a global pandemic, a revolution began in a quiet French village when an image caught the eye of a man as he was poring over vintage postcards. His discovery set in motion a remarkable journey of entrepreneurial vision, resilience, and the sustainable transformation of cultural heritage.

The history of the discovery of the Van Gogh Roots site

In the spring of 2020, during France’s COVID-19 lockdown, Wouter van der Veen, scientific director of the Van Gogh Institute in Auvers-sur-Oise, discovered the exact location of Van Gogh’s final painting, Tree Roots, by matching a vintage postcard to the scene depicted in the artwork. After confirmation from the Van Gogh Museum in Amsterdam, it was determined that Van Gogh painted this scene on July 27, 1890, just some hours before his death. The site was located on land owned by the Serlinger family, who had purchased and renovated a dilapidated farmhouse in Auvers-sur-Oise years earlier.

The discovery was announced on July 29, 2020, the 130th anniversary of Van Gogh’s death, drawing international media attention and positioning Auvers-sur-Oise as an even more significant destination for Van Gogh admirers.

For three years, as they awaited confirmation that they were the lawful owners of the Van Gogh Roots site, the Serlingers started growing the idea of giving this site a new life, making it available for visitors, and preserving it as a cultural heritage destination. They collaborated with the Van Gogh Museum and, in 2023, joined the Van Gogh Europe Foundation to ensure the legitimacy, authenticity, and educational value of the visitor experience. They installed protective measures, created multilingual informational panels, and registered the site as a non-profit association.

In spring 2024, they finally opened the site to the public, proposing guided tours retracing Van Gogh’s final steps. The addition of international interns enabled the development of multilingual tours, digital marketing, and global outreach via social media and travel platforms.

The Serlingers emphasized the emotional and symbolic value of the site, focusing on maintaining its authenticity and offering a reflective, immersive experience rather than commercializing it with large-scale infrastructure.

The Roots site quickly became part of international Van Gogh travel itineraries, attracting hundreds of visitors in its first season. The Serlingers emphasized the emotional and symbolic value of the site, focusing on maintaining its authenticity and offering a reflective, immersive experience rather than commercializing it with large-scale infrastructure. They kept operational costs low, relying on modest visitor numbers to sustain the site, while exploring further development opportunities and partnerships with regional and international cultural organizations.

Ultimately, the story illustrates how a serendipitous discovery, combined with perseverance, legal resilience, and strategic partnerships, enabled a private family to transform a piece of world art history into a sustainable and meaningful cultural heritage site.

From private passion to public legacy

For Jean-François and Hélène Serlinger, the newfound fame of their property was both a blessing and a challenge. With backgrounds in finance and art, the couple had retired to Auvers-sur-Oise to enjoy their retirement. But suddenly, they found themselves at the center of a global media storm. The Serlingers became accidental cultural entrepreneurs, but the feeling was bittersweet; they now owned a piece of world heritage but, with it, came the responsibility of preserving, interpreting, and sharing it.

Their story is a case study of the complexities and opportunities of cultural entrepreneurship. How does one transform a private discovery into a sustainable business that honors both history and community?

Building a heritage experience—one step at a time

The Serlingers’ approach was rooted in authenticity and incremental innovation. Instead of grandiose museums or costly infrastructure, they focused on creating an immersive, low-impact visitor experience. Guided tours retrace Van Gogh’s final steps, blending art history, landscape, and personal reflection. Informational panels, designed in collaboration with the Van Gogh Museum, offer context in multiple languages. QR codes and social media campaigns—devised with the help of international interns—extend the reach to a global audience.

This “low-tech, high-touch”¹ strategy has proved remarkably effective. In their first season, The Roots site welcomed hundreds of visitors from across Europe, Asia, and the Americas. The site’s emotional resonance—walking the very path Van Gogh did—became its greatest asset. As Hélène Serlinger notes:

“The trail should remain untouched so that each person can travel the path of Van Gogh… to confront themselves with the symbolism that Van Gogh expressed in his painting and writings: the cycle of life.”

Lessons for accidental entrepreneurs

The Roots venture² offers several key lessons for entrepreneurs, educators,³ policymakers, and cultural leaders, especially for those who find themselves with the unexpected and sudden opportunity to become cultural entrepreneurs:

1. Authenticity drives engagement

Visitors are increasingly seeking genuine, immersive experiences. By preserving the natural landscape and focusing on storytelling, the Serlingers created a site that resonates on a personal and emotional level.

2. Partnerships are essential

Collaboration with established institutions—such as the Van Gogh Museum and Van Gogh Europe Foundation—brought credibility, expertise, and international visibility. Regional partnerships opened doors to funding and promotion. Future partnerships with the regional authorities and European institutions may allow them to finance the necessary works to improve the hosting facilities and services provided.

3. Digital tools amplify impact

Simple technologies—multilingual QR codes, social media, and online booking—enabled the site to reach and engage a diverse, global audience with minimal overhead.

4. Sustainability is key

By keeping costs low and leveraging volunteer and intern support, The Roots site achieved financial viability with just 1,500 visitors per year. This model prioritizes long-term preservation over short-term profit.

5. Emotional value matters

Beyond economics, the true value of heritage sites often lies in their ability to inspire, heal, and connect people across generations and cultures.

A blueprint for the future

As Europe’s cultural sector faces mounting pressures—from over–tourism to underfunding—The Roots stands as a model for sustainable, community-driven heritage entrepreneurship. Its success is not measured in ticket sales alone, but in the stories, memories, and connections it fosters.

For business leaders and policymakers, the message is clear: innovation does not always require high-tech solutions or massive investment. Sometimes, the most profound impact comes from recognizing the value beneath our feet—and having the courage to share it with the world.

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

Sabine Bacouel-Jentjens is a professor of management at ISC Paris, where she leads the ‘International Business & Management’ Master and directs the Management & SI Department. She holds a PhD in HRM, has global teaching experience, and over a decade of financial industry experience with Allianz Group in Germany.

References

1. How to Change the World with Low-Tech Innovation? April 03, 2024. The European Business Review. https://www.europeanbusinessreview.com/how-to-change-the-world-with-low-tech-innovation/.

2. Accueil – Tree Roots. https://vangoghroots.com/en/home-english/.

3. Accidental Entrepreneurship: Uncovering the Value of Van Gogh’s Last Painting Inspiration. Journal of International Business Education. https://www.neilsonjournals.com/JIBE/abstractjibe20vg.html.

4. van der Veen, W. (2020). On the trail of Van Gogh’s Tree Roots. https://vangoghroots.com/en/the-mystery-en/

5. The European Business Review (2023). “How to Change the World with Low-Tech Innovation”. https://www.europeanbusinessreview.com/how-to-change-the-world-with-low-tech-innovation/

6. Data and insights from the Serlinger family case study https://www.neilsonjournals.com/JIBE/abstractjibe20vg.html

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Brilliant yet difficult leaders have long driven some of the world’s most transformative innovations. Fernanda Arreola and Gregory Unruh explore how traits linked to neurodivergence often power this impact, while also posing sustainability challenges. They argue for systems that support such leadership styles to ensure lasting organizational and societal change.

History is full of brilliant yet difficult leaders—visionaries who transformed entire industries but often clashed with the expectations of polite society. From Thomas Edison to Steve Jobs and Elon Musk, these innovators shared not only a relentless drive but also a social edge that often made them hard to work with.

Edison’s genius helped electrify the modern world, yet his aggressive business tactics and treatment of collaborators like Tesla revealed a deeply divisive side. Jobs revolutionized consumer tech but was famously abrasive, demanding, and obsessive about perfection. Musk’s intensity, social awkwardness, and controversial communication style have drawn widespread criticism, but his unorthodox approach has also redefined the auto, space, and energy sectors.

Jobs revolutionized consumer tech but was famously abrasive, demanding, and obsessive about perfection.

These leaders didn’t just build companies; they reshaped systems. And in doing so, they displayed traits increasingly recognized as markers of neurodivergence^[1]—including intense focus, emotional detachment, and nonconformity. Rather than viewing these traits as deficits, a new understanding is emerging: cognitive diversity may be a hidden engine behind some of the world’s most transformative innovations.

This is where the concept of systemic entrepreneurship comes in. Unlike traditional entrepreneurs who focus on local or niche solutions, systemic entrepreneurs generate large-scale change. They build new value systems, not just products—often disrupting entire industries in the process.

Figures like Coco Chanel, Henry Ford, Walt Disney, Estée Lauder, and Jeff Bezos fit this profile. What unites them? A visionary mindset, obsessive attention to detail, and a refusal to compromise—even at the cost of strained relationships or workplace tension. Ford, for instance, not only pioneered mass production but also imposed strict moral codes on his workers. Chanel’s authoritarian style caused friction, yet she revolutionized fashion for generations.

But there’s a catch: what fuels breakthrough innovation may not sustain long-term success. As organizations scale, the same traits that drove early transformation—rigidity, defiance, perfectionism—can become liabilities. That’s why many founding leaders are eventually replaced by those better suited to institutionalize their vision. Apple’s evolution from Jobs to Tim Cook is a case in point: bold disruption gave way to operational excellence.

If companies are to truly benefit from neurodivergent or nontraditional leadership styles, they must build systems that support—not sideline—cognitive difference. This means creating structures that allow visionary founders to thrive without stalling growth, and recognizing when a shift in leadership style is necessary for long-term sustainability.

In a world facing complex, systemic challenges, embracing leadership diversity may be the key to unlocking our next great transformations.

The Visionary Yet Difficult Leader

Thomas Edison: Relentless Inventor, Ruthless Competitor

Thomas Edison is one of the most iconic inventors in history, responsible for developing and commercializing innovations in electric lighting, sound recording, motion pictures, and telecommunications. However, while Edison is lionized today, he was widely known in his time for his ruthless business tactics and harsh treatment of employees. His competitive clashes with Nikola Tesla and George Westinghouse over AC vs. DC power not only highlighted his arrogance but also the level of aggression he employed to dominate markets. Edison also took full credit for many team innovations, demoralizing employees and cultivating an atmosphere of mistrust.

Edison’s behaviors—such as sleeping very little, obsessively protecting patents, and demanding extreme commitment from his team—align with traits sometimes associated with neurodivergence, such as single-mindedness, rigid thinking, and limited empathy. Yet, it is these very traits that allowed him to build not just products, but entire technological ecosystems and industrial research paradigms.

Steve Jobs: Creative Genius, Difficult Visionary

Steve Jobs similarly embodies the archetype of a visionary yet abrasive entrepreneur. Co-founder of Apple Inc., Jobs revolutionized computing, mobile communication, music, and design. He was known for his intense perfectionism, emotional volatility, and unrelenting standards, often belittling employees and dismissing dissent. Yet, many former employees noted that his vision and passion could also be deeply motivating.

While difficult to work with, Jobs’ insistence on controlling every aspect of Apple’s product development ensured a consistent and visionary output that set new industry benchmarks.

Jobs’ behavior has been linked in the popular and academic press to traits associated with autism spectrum disorder and obsessive-compulsive tendencies—his focus on detail, aesthetic coherence, and functional simplicity being legendary. While difficult to work with, Jobs’ insistence on controlling every aspect of Apple’s product development ensured a consistent and visionary output that set new industry benchmarks.

Elon Musk: Erratic Genius and Institutional Challenger

Elon Musk’s leadership style further supports this profile. As CEO of Tesla, SpaceX, and other ventures, Musk has faced criticism for his erratic tweets, harsh treatment of employees, and unsustainable work expectations. Yet, these same traits have allowed him to defy conventional industry logic and accelerate innovation in areas previously deemed impossible, such as reusable rockets, commercial spaceflight, and widespread electric vehicle adoption.

In a 2021 TV appearance, Musk acknowledged his cognitive differences and controversial behavior, saying:

“Did you also think I was gonna be a chill, normal dude?”

His openness about being on the autism spectrum sheds light on how neurodivergent traits such as intense focus, systems thinking, and discomfort with social norms can both challenge traditional organizational cultures and simultaneously drive world-changing innovation.

Henry Ford: The Authoritarian Innovator

Ford’s development of the assembly line revolutionized manufacturing, enabling the mass production of automobiles at an affordable price. However, his leadership was marked by rigidity, intolerance of dissent, and control over employees’ personal lives. Through his Sociological Department, Ford monitored employees’ home behavior, ensuring alignment with company norms. While he doubled wages to reduce turnover, his obsessive standards created a culture of surveillance and discontent.

Coco Chanel: Perfectionism at the Price of Dialogue

Chanel’s contributions to fashion and gender norms were radical, yet she was uncompromising, authoritarian, and emotionally distant. Employees reported fearing her wrath if they questioned her vision, even as they admired her genius. Her perfectionism and high standards led to both excellence and internal conflict. Despite this, many remained loyal, drawn to the creative energy she generated.

Anita Roddick: Ethical Rebel with Sharp Edges

Founder of The Body Shop, Roddick pioneered ethical business practices before sustainability became mainstream. She was known for her confrontational style, her disdain for corporate norms, and her willingness to challenge regulatory systems and advertising norms. While charismatic, she was also often described as difficult to work with due to her relentless passion and refusal to compromise.

Beyond the Individual: Understanding Systemic Entrepreneurship

To understand how these types of entrepreneurs generate such broad and lasting change, we turn to the concept of systemic entrepreneurship. This term describes entrepreneurial activity that operates at a macro-level, influencing not just firms or products, but entire industries, ecosystems, and societal systems. Unlike conventional entrepreneurs who typically address discrete market needs, systemic entrepreneurs reshape value chains, stakeholder relationships, and institutional practices.

These entrepreneurs did not merely create products. They built entire systems—including supply chains, cultural narratives, and technological platforms—that influenced how people live, work, and interact.

From Disruption to Sustainability: The Leadership Transition

While their accomplishments were exceptional, many of these figures faced friction in organizational settings due to their leadership styles. A few illustrative examples include:

These cases illustrate the paradox of systemic entrepreneurship: while these individuals catalyze progress, their intensity often clashes with the social, emotional, and procedural needs of the organizations they create.

As organizations mature, the skills that initially drove innovation often become misaligned with the demands of stability, scale, and collaboration. Research in leadership studies highlights a typical pattern: the entrepreneurial founder gives way—voluntarily or not—to a professional manager who can institutionalize the vision and sustain growth.

Examples of this include:

• At General Electric, Thomas Edison was succeeded by Charles Steinmetz, who brought a collaborative and structured management style necessary for long-term viability.
• At Apple, Jobs was ousted in favor of John Sculley, a more conventional executive. Later, Jobs returned to reignite innovation but was ultimately replaced by Tim Cook, known for operational excellence.
• At Ford, after years of autocratic control, managerial teams eventually took over, ushering in more scalable systems of production and labor management.

This transition is not a failure of the entrepreneur but a necessary evolution in the lifecycle of systemic change. While disruptive innovators break paradigms, builders and integrators ensure that the change they introduced becomes embedded and sustainable over time.

Understanding the contributions and limitations of neurodivergent or “difficult” leaders offers an important lesson for organizations and ecosystems that aim to foster innovation and longevity.

Understanding the contributions and limitations of neurodivergent or “difficult” leaders offers an important lesson for organizations and ecosystems that aim to foster innovation and longevity. These leaders are often catalysts of systemic change—able to envision what others cannot, persevere through extreme challenges, and create entirely new ways of operating. However, without structures and cultures that can recognize, accommodate, and complement their leadership traits, the change they produce may remain fragile or short-lived.

By recognizing cognitive diversity in leadership—especially the contributions of individuals who deviate from  neurotypical norms—organizations can develop more inclusive and resilient systems. This includes designing teams that complement the strengths and limitations of visionary founders, creating feedback mechanisms that support communication across cognitive differences, and planning for leadership transitions that honor the founder’s vision while building for scale.

Ultimately, sustainability in business is not just about the longevity of a product or market share. It is also about sustaining the innovative spirit that initiated transformation while evolving the organizational capacities required to anchor that change in the long term.

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

Dr. Gregory C. Unruh is the Arison Professor of Values Leadership at George Mason University and an outstanding voice on sustainability and leadership, He serves as guest editor for the MT Sloan Management Review and is the author of the upcoming Academic Authority: The Professor’s Guide to Becoming a Sought-After Thought Leader.

Reference

^[1] Neurodivergence describes natural variations in brain function and cognitive processing. It often refers conditions such as autism, ADHD, dyslexia, but more broadly neurological differences that shape how people think, learn, and experience the world.

The post When Difficult Leaders Change the World: Making Neurodivergent Leadership Sustainable appeared first on The European Business Review.

By Fernanda Arreola, Damien Guermonprez, and Renaud Redien-Collot

The skills required to successfully lead one type of enterprise may not fully apply or be relevant to lead a different kind of business, even within the same industry. Adapting one’s approach is often necessary to meet the unique demands of each venture. The following article focuses on the differences between a startup’s business transfer (also known as a takeover) versus an established small or medium-sized enterprise (SME).

The business transfer market is set to grow significantly, with France expecting a 10 per cent increase in 2024 compared to 2023.¹ This surge is driven by baby boomers retiring, COVID-19-induced cashflow issues, and managers’ growing interest in partial ownership. France alone has around 80,000 firms for sale, impacting one million employees and leading to 7,000-9,000 takeovers annually.²

New research has attempted to understand how the strategy-building process differs between smaller firms and innovative start-ups. While SMEs are smaller versions of traditional corporations, start-ups are newer entities with innovative technologies or business models. Start-ups’ pace of development is more intense and irregular than that of small businesses.³

The business transfer process involves three phases and six steps⁴: the entrepreneurial decision phase (with the trigger to purchase, and the personal reflection), formalization (the implementation, and the turning point), and the buyer’s entry into the target (with the transition and the setting of a new direction). Emotional rebounds during this process can cause ruptures between buyers and sellers. But in the end, if the process is achieved, the acquirers will find themselves with three objectives: creating or defining their job, leveraging the transfer for economic advancement, and setting a strategy.

Building a strategy post-transfer involves identifying new opportunities, creating an entrepreneurial decision-making process, and focusing on performance. Leaders must balance a new strategic vision with their acceptance as legitimate leaders. Historically, one in five external business transfers in France fails after six years due to transparency issues and execution challenges⁵.

Case Study: Sme VS. Start-Up in the Financial Sector

At 36, Damien Guermonprez had a vision of his future while attending a business meeting in Lisbon. He realized that, like many high-level directors in his organization, he might end up in a non-strategic role before retirement. Determined to avoid this fate, he considered his options. He wanted a career filled with challenges and novelty in a high-paced environment and contemplated owning a firm. A decade later, when he found himself unemployed, he saw this as his opportunity. His main question was: How does a CEO become a small business owner?

Damien’s Origins

Damien was born into a family with a tradition of business ownership. His father was a successful businessman who provided a good standard of living for his seven children. Observing his father, Damien realized that owning and running a business in France could be complex due to bureaucracy and a high tax burden. He also feared the personal and financial consequences of entrepreneurial failure.

After graduating, Damien embarked on a remarkable career in financial services. By 2008, he was the CEO of Oney Bank, the banking division of Groupe Auchan. Under his leadership, the bank’s activities multiplied sixfold, expanded into a dozen countries, and established strategic partnerships with major brands. After nine years at the head of the bank, despite his success, Damien knew he had to evolve and he sought a new challenge.

Damien accepted a proposal to run the French operations of Aon, a global leader in insurance brokerage. However, a year later, a global restructuring ended his mandate, leaving him uncertain about his next career move.

A Unique Opportunity

Damien analyzed his options and decided that acquiring a small firm was the best path forward. He joined Cédants et Repreneurs d’Affaires⁶, an association for people seeking acquisition targets. Many members were former executives like Damien, lacking entrepreneurial experience. He believed that former CEOs were not always suited to buying small companies, due to their lack of operational management experience and necessary funds.

In 2010, Damien learned that Cetelem Belgium, a subsidiary of BNP Paribas, was for sale. Despite the financial risks, he saw potential due to his experience in consumer credit. He convinced Apax Partners to finance the acquisition, securing a 7 per cent ownership stake and the CEO position. The transaction required an initial investment of 13 million euros.

Transforming Buy Way

Damien rebranded the company as Buy Way, involving employees in the process to build a shared vision.

In September 2010, Damien moved to Brussels to lead Cetelem Belgium. The company had accumulated significant losses, and employees lacked trust in its future. Damien rebranded the company as Buy Way, involving employees in the process to build a shared vision. He implemented a new strategy within 100 days, emphasizing independence from BNP Paribas and collective effort.

Damien’s approach restored employee confidence and encouraged innovation. He introduced training plans, a Buy Way award for innovation, and upgraded IT tools to support e-banking. New partnerships and market entries followed, leading to rapid growth and profitability within a year. Four years later, Buy Way was sold to a London-based investment fund, Damien received his share of the proceeds and reinvested half of them. In 2024, Buy Way bought a Dutch consumer credit company to cover all Benelux markets.

Joining lemonway

In 2015, Damien joined Lemonway, a fintech start-up facing growth challenges. Founded by Sébastien Burlet and Antoine Orsini, Lemonway initially focused on mobile payment solutions. However, competition and financial losses forced a pivot to B2B services, providing payment solutions for platforms. Obtained in 2012, a new Payment Institution license enabled Lemonway to serve marketplaces, which had to delegate their payment operations to trusted third parties for regulatory reasons. The fintech provides them with payment processing, wallet management, and third-party payments within a “know your customer” (KYC)/anti-money-laundering (AML) regulated framework.

As CEO, Damien fostered a dynamic workplace culture and empowered young employees. He secured Series A fundraising and later became Executive Chairman, focusing on relationships with regulators, investors, and the payment industry. Antoine managed day-to-day operations, while Damien drove strategic direction.

Skills and achievements

Damien’s strategic vision and adaptability were crucial in both Buy Way and Lemonway. At Buy Way, he built trust and collaboration, leading to rapid profitability. At Lemonway, he navigated a constantly evolving business model and high employee turnover, maintaining a vibrant and motivating culture.

By 2021, Lemonway had become a leading pan-European payment institution, with significant growth in transaction volumes and revenues. Despite not yet achieving profitability, Damien remained committed to the company’s success. He balanced the customer portfolio and established partnerships with major banks, positioning Lemonway for future growth. Lemonway reached €40m revenues in 2024 and had become highly profitable the year before, certainly doubling its 2021 valuation.

Reflecting on the journey

Damien’s journey from Buy Way to Lemonway highlights the differences in leading an SME versus a start-up. His ability to adapt, build trust, and navigate complex situations was key to his success. He recognized the importance of leveraging existing resources, fostering strong relationships, and maintaining a strategic vision⁷.

The business transfer processes for Buy Way and Lemonway differed in business model evolution and ownership transfer. Buy Way’s transfer had no impact on its business model, while Lemonway’s new investors influenced key market decisions. Buy Way’s ownership transfer was complete and immediate, whereas Lemonway’s was gradual.

Many differences exist in both companies, starting with the fact that Buy Way continues in its existing market while Lemonway radically pivots. Buy Way’s opportunity is to become autonomous and more agile and to gain market share, whereas Lemonway seeks to exploit a regulatory opportunity. Finally, in the case of Buy Way, Damien is in sole charge of operations. In the case of Lemonway, Damien is associated with Sébastien Burlet, the co-founder, who left in 2018. Damien then forms a dynamic tandem with Antoine Orsini, who takes charge of operations, while Damien adopts a more strategic and political stance, focusing on the company’s external relations (regulators, payments, and crowdfunding associations).

To sum up, Buy Way and Lemonway’s business transfer processes differ in two respects: (1) from the point of view of the evolution of the business model, and (2) from the point of view of the transfer of ownership. Regarding the business model, Buy Way’s business transfer has no impact on its business model. Meanwhile for Lemonway, the arrival of new investors affects many key market decisions, including the consumers, the market where it operates, the size of its clients, and the services proposed. Regarding the transfer of ownership, the ownership of Buy Way is transferred in full and in one go from BNP Paribas to Apax, whereas in the case of Lemonway, the transfer of ownership is gradual. Damien’s approach to legitimacy differed between Buy Way and Lemonway. With Buy Way, Damien was experiencing more direct leadership than he had ever known in his professional career as CEO. At Lemonway, he learned to deploy his leadership skills by participating more directly in the ownership structure.

Business transfers require strategic vision and adaptability, with different approaches needed for SMEs and start-ups.

A final important point is the mobilization of the skills of the new head. Damien’s motivation and self-confidence, bolstered by prior achievements, enabled him to adapt to different leadership roles and create trust. His ability to navigate complex negotiations and pivot strategies was crucial in relaunching Buy Way and Lemonway. Entrepreneurial legitimacy, based on demonstrating and sharing motivation, was key to facilitating change. At Buy Way, he involved staff in organizational changes, while at Lemonway, he built relationships with founders and the core team. High turnover in start-ups made relational legitimacy more challenging than in SMEs.

Meanwhile, not all skills were processed by Damien. During the entry phase of the business transfer, Damien relied on existing teams for information and support, consolidating his legitimacy. Socialization dynamics helped him gain recognition and respect from employees, boosting their motivation.

In summary, Damien’s skills and legitimacy played a critical role in the successful transfers of Buy Way and Lemonway. His ability to adapt, build trust, and navigate complex situations ensured the development and growth of both entities.

Finally, we must point to the fact that the motivation will be stimulated by a sense of self-efficacy. For such a reason the acquirer must have identified one of three possible objectives of the business transfer:

• Using the business transfer to create a job for oneself to no longer be dependent on a sometimes-burdensome hierarchy. This implies that the targeted business is small and is currently capable of providing a salary over the long term.
• Leveraging the business transfer as a vehicle for economic and social advancement. The targeted business therefore has the potential to increase its profitability, resulting in a higher level of income for its manager.
• Leading the business transfer as a personal fulfillment project⁸. The targeted business has a structure and stable day-to-day operation, providing the acquirers with the possibility to free themselves from repetitive or operational tasks and assume a directive role.
• In summary, business transfers require strategic vision and adaptability, with different approaches needed for SMEs and start-ups. Successful transfers depend on clear strategic action and the ability to navigate complex emotional and operational challenges.

Even if Damien’s case remains unique, we could make the hypothesis that a first experience of taking over an SME can be an excellent test bed for taking over a start-up. Of course, the takeover of start-ups in France and Europe primarily raises the question of the flow of capital that can be mobilized. However, Damien’s leadership with both investors and employees could inspire a new generation of start-up buyers. To improve the management of start-ups in Europe, we may need to encourage more systematic research into serial business transfer, which combines the takeover of SMEs and start-ups.

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

Passionate about innovation in financial services, Damien Guermonprez has managed some fifteen credit institutions, leasing and insurance companies for major groups. He was CEO of Oney, the bank of the Auchan Group. Then, he became an entrepreneur by buying out a Belgian credit company and running the Lemonway payment institution.

Renaud Redien-Collot (Ph.D Columbia U., New York and HDR,URCA) is dean of faculty at ESCE International Business School (OMNES GROUP). His research interests cover the study of gender in the fields of entrepreneurship, organizational theory and strategy. He is a member of the ERD and RIPME editorial committees.

References

1. Source: https://lexpress-franchise.com/articles/panorama-2024-de-la-cession-reprise-dentreprises-les chiffrescles/#:~:text=Selon%20une%20%C3%A9tude%20r%C3%A9cente%20de,d’entreprises%20ont%20eu%20lieu.

2. Lamarque, T., & Story, M. (2023). I. Le marché de la reprise d’entreprise en France. Hors collection, 2, 13-26.

3. Source: https://businesscloud.co.uk/news/startup-vs-small-business-key-differences-every-entrepreneur-should-know/?utm_source=chatgpt.com

4. Deschamps, B. (2018), “Évolution de la connaissance autour des pratiques de transmissions-reprises réalisées par les personnes physiques: vers le concept de transfert d’entreprise”, Revue del’Entrepreneuriat, Vol. 17, No. 3–4, pp. 175–213.

5. Meghouar, H., & Ibrahimi, M. (2021). “Financial characteristics of takeover targets: A French empirical evidence”. EuroMed journal of business, 16 (1), 69-85.

6. Source: https://www.cra.asso.fr/

7. Joensuu-Salo, S., Viljamaa, A., & Varamäki, E. (2021), “Understanding business takeover intentions—The role of theory of planned behavior and entrepreneurship competence”, Administrative Sciences, Vol. 11, No. 3, p. 61.

8. Angel, P., Jenkins, A., & Stephens, A. (2018). “Understanding entrepreneurial success: A phenomenographic approach”. International Small Business Journal, 36(6), 611-36.

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By Fernanda Arreola and Dan Hammond

As leadership roles move from merely directorial to creating great conditions for team success, leaders should employ the three Cs framework— a structured and effective way to get the best out of teams.

Abstract

In an increasingly complex and fast-paced work environment, the role of the leader has evolved beyond directing tasks to enabling the conditions necessary for team success. This article explores the foundational responsibilities of leaders and introduces a practical and validated leadership framework known as the 3Cs—or Conditions for Success—which provides a structured approach to managing and developing teams. Grounded in insights from The Leadership Pipeline and supported by research conducted by the London School of Economics, the 3Cs framework emphasizes the importance of Clarity, Climate, and Competence as the three essential pillars leaders must foster. Clarity refers to the team’s purpose and collective direction; Climate encompasses the structural and relational environment; and Competence highlights the skills and behaviors required for high performance. By diagnosing and addressing each of these conditions, leaders can prioritize effectively, align team efforts, and significantly improve both engagement and results.

What is the role of a leader? The role of a leader is to create the conditions necessary for the success of his or her teams. However, in today’s environment, many leaders wonder how these conditions may become an accessible reality. What makes everything more complex is that there is an overload of information and many daily decisions need to be made.

Leaders must question what they need to stop doing so they may be able to concretize what they should do.

In a book called The Leadership Pipeline, the authors suggest that to face these challenges, leaders must question what they need to stop doing so they may be able to concretize what they should do. To decide where to focus, leaders must start by defining their principles,which will help them establish how they allocate their time while putting their values to work.

But once a leader has “cleaned house,” they require tools to consciously assess and coordinate what their teams should be focusing on. In other words, they require a framework. This is where the 3Cs come into play. The 3Cs or the “3 Conditions for Success” is a leadership framework that has been used for more than 30 years and validated in academic studies developed by the London School of Economics. The 3Cs bring simplicity to the role of the leader, giving them the organizational skills and tools to help their team and team members achieve their goals.

The first C is Clarity. Why are we doing what we are doing? What are we trying to achieve? And how are we going to get there? Clarity states why a team exists, what they are doing together, what role individuals play, and, crucially, how the team members interconnect.

The second C is Climate. Climate splits into a soft and hard side. The hard side includes the structure that defines the organization and the processes that underline the day-to-day routines inside of the team. The soft side is the relationships with stakeholders and the culture.

The final C is Competence. This relates to the behaviors, attitudes, knowledge, and skills of team members. These competencies can be below or above a desired performance level, and it is observing this and working with team members to possess the abilities and expertise necessary (this can be done through coaching, training, feedback, and motivational actions). The competencies will build the Climate, and ultimately, the Climate will deliver Clarity. The role of the leader is to create all three conditions.

As we begin planning for next year’s objectives, we suggest you test this tool with your team members. A simple way to do this is to have a discussion with your team members about each condition or use a diagnostic tool to identify the biggest gaps so that targeted action can be taken. The use of the 3Cs has yielded double-digit improvements in both engagement and performance.

About the Authors

Fernanda Arreola is Professor of Strategy, Innovation & Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

Dan Hammond is the co-founder of Squadify, the platform that helps any team build engagement and performance. He has over 30 years of team leadership experience in pharma, tech, and professional services.
.

References

1. BUILDING LEADERS AT EVERY LEVEL: A LEADERSHIP PIPELINE. May/June 2001. Ivey Business Journal. https://iveybusinessjournal.com/publication/building-leaders-at-every-level-a-leadership-pipeline/.

2. An introduction to The Leadership Pipeline. March 18, 2019. Leadership Pipeline Institute on YouTube. https://www.youtube.com/watch?v=FSJcPoDMXBU.

3. The Tools of Cooperation and Change. October 2006. Harvard Business Review. https://hbr.org/2006/10/the-tools-of-cooperation-and-change.

4. The Conditions for Success. Squadify. https://www.squadify.net/resources/3Cs/.

5. New research gives team leaders a fresh approach. Squadify. https://f.hubspotusercontent40.net/hubfs/7942349/Squadify%20LSE%20Research%20onepager.pdf.

The post Innovating Your Team’s Conditions for Success: Use the 3 Cs! appeared first on The European Business Review.

By Fernanda Arreola

While startups and SMEs are often lauded for their agility and innovation, one critical dimension is frequently overlooked: governance. This article explores the risks associated with neglecting governance innovation, emphasizing that effective governance is not merely a compliance function but a strategic enabler of growth, resilience, and ethical integrity. Drawing on recent research and global case studies, the article demonstrates how informal and stagnant governance structures expose young firms to fraud, scaling failures, and reputational risks. It argues for a proactive, dynamic approach to governance that evolves with the firm’s lifecycle, supports sound decision-making, and aligns with organizational values. 

Last year, a scandal erupted in France when news broke that a large clothing retailer had lost more than 100 million euros. A 39-year-old employee had orchestrated a fraud while being a manager in the accounting department. Unfortunately, this fraud is not an exception to the rule. In Canada, frauds against Small and Medium Enterprises (SME) touch 36% of companies. In France, it is estimated that SMEs have 67% more incidence of fraud than larger firms.

The reasons for explaining this phenomenon vary, but one of the main conditions that can explain such statistics is that one crucial area is frequently overlooked, especially by startups and small to medium-sized enterprises (SMEs): governance. As Huse points out, governance in SMEs must evolve from being a tool of control to a source of strategic value creation.

​Research has demonstrated that effective governance mechanisms in small and medium-sized enterprises (SMEs) positively correlate with firm performance, particularly during critical growth phases. For instance, a systematic literature review by Teixeira and Carvalho analyzed 19 studies and found a direct relationship between corporate governance mechanisms—such as board composition, ownership structure, and CEO characteristics—and various aspects of SME performance, including innovation and risk of failure.

However, for varying reasons, many founders do not consider governance while founding or managing SMEs. The fear of losing control, the budgetary limitations to hire a dedicated employee (s), and the belief that governance will develop excess bureaucracy make it difficult for leaders to engage in a rigorous and ongoing governance exercise.

What Do We Mean by Governance?

Governance is more than compliance or board meetings—it’s the system that defines how decisions are made, who holds power, how accountability is ensured, and how a firm adapts to uncertainty. In early-stage ventures, governance often emerges organically based on trust, shared vision, and founder charisma. But this informal structure rarely scales.

​A study in Nigeria suggests that small and medium-sized enterprises (SMEs) that establish early governance structures are less susceptible to issues such as embezzlement. This research emphasizes the importance of proactively implementing internal control systems at the onset of business operations to mitigate employee fraud. The study suggests that a proactive approach in setting up internal controls can significantly reduce the occurrence of fraudulent activities within SMEs. ​

As an article published in Harvard Business Review notes, many young firms fail not because of poor products but because of poor execution and decision-making, much of which can be traced back to governance gaps. Governance should evolve alongside the startup. Unfortunately, many entrepreneurs continue to treat it as a legal formality rather than a strategic enabler.

The Innovation Imperative in Governance

As McKinsey & Company points out, governance is becoming increasingly strategic, especially in environments defined by rapid growth and uncertainty. For startups and SMEs, governance should be a dynamic framework that supports agility, scalability, and resilience.

In the early stages of a startup, governance tends to be informal and founder-driven. This can work temporarily, but as the firm grows, such informality can morph into opacity, unclear responsibilities, or even conflicts of interest. As Huse indicates, strong governance in SMEs correlates with better decision-making and improved performance, especially during periods of growth or crisis.

Innovating governance doesn’t mean replicating corporate board structures. It means designing governance mechanisms that align with the company’s vision, culture, and stage of development. Startups and SMEs that invest early in governance systems benefit from greater clarity and alignment. As Huse shows, boards and governance mechanisms can play a crucial role in value creation, especially when firms are dealing with uncertainty, complexity, and limited resources.

The Risks of Stagnant Governance

Ignoring governance innovation comes with serious risks:

1. Losing Investor Confidence: Venture capitalists are no longer just looking at product-market fit; they increasingly assess how governance frameworks will support sustainable scaling. As noted by Noam Wasserman, many founders face the “control vs. growth” dilemma—and poor governance structures often make it harder to let go of control when it’s strategically necessary.
2. Ethical and Legal Vulnerabilities: Without formal governance mechanisms, SMEs are more exposed to reputational and regulatory risks. For example, Elizabeth Holmes’s Theranos debacle is a stark reminder of what happens when governance is weak, boards are passive, and transparency is sacrificed.
3. Scaling Failures: As Thomas Eisenmann notes in his article Why Startups Fail, many businesses’ growth stumbles not because of bad ideas but because of execution problems—including unstructured governance, chaotic decision-making, and unclear leadership transitions
4. Organizational Fragility: Poor governance limits a company’s ability to adapt. Startups and SMEs without formal decision-making processes and dedicated teams are more prone to misalignment, mission drift, or ethical lapses—especially in fast-scaling environments.
5. Inability to Adapt Governance also shapes how a company learns, pivots, and adapts. Dynamic governance systems as a core attribute of organizational resilience. As Ma, Xiao, and Yin, suggest an integrated concept of organizational resilience that consists of three dimensions including cognitive, behavioral and contextual resilience, and this dynamic capability should be examined from three different levels, including individual, group and organizational? to better conceptualize organizational resilience and for better applicability in management practice. ​ Firms that rely solely on intuition and informal rules often struggle to survive crises.

Innovating Governance: Concrete Strategies

So, what does it mean to innovate governance? Some practical approaches include:

• Establishing diverse advisory boards with external experts, investors, and mission-driven leaders.
• Using agile governance frameworks with flexible decision rights and clear escalation paths.
• Implementing governance charters that reflect company purpose and stakeholder values—not just shareholder primacy.
• Developing transparent communication protocols, performance evaluation tools, and succession planning, even in early stages.

Conclusion: Don’t Wait to Innovate

As founders and business leaders, the instinct is to focus on what’s urgent—customer acquisition, product development, fundraising. However, governance is what holds these pieces together. It doesn’t have to be rigid or bureaucratic. The most innovative firms are those that treat governance as a living system—one that can grow and adapt with the organization.

In a world marked by complexity, uncertainty, and ethical challenges, innovating your governance may be the most innovative move you can make.

About the Author

Fernanda Arreola is a professor of Strategy, Innovation & Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

The post You Must Innovate Your Governance too! The Risk for Startups and SMEs appeared first on The European Business Review.

Extreme users are individuals whose needs, behaviors, and experiences diverge significantly from the mainstream user base. They may include early adopters, power users, or those with specialized requirements due to physical, cognitive, or contextual factors. Research suggests that studying extreme users can drive innovation by uncovering latent needs and pushing design beyond conventional constraints. This article explores the concept of extreme users, their role in innovation, and the methodologies for incorporating their insights into the design process. 

Theoretical Background 

The concept of extreme users is deeply rooted in user-centered design and lead-user innovation theories. In 1986, Eric von Hippel introduced the notion of lead users—individuals who experience emerging needs before the broader market. The definition of extreme users builds upon this idea, encompassing not only lead users but also non or marginalized users. Expanding on this perspective, Norman argues that extreme users push designers beyond incremental improvements, encouraging them to explore disruptive and transformative innovations. 

Characteristics of Extreme Users 

Extreme users can be categorized based on various attributes that are based on the excessive or early use of the product (early adopters and power users and those who are challenged to use the product (users with disabilities, users in extreme environments) : 

• Early adopters: Technology enthusiasts who experiment with new products before mass adoption  
• Power users: Individuals who push the limits of a system’s capabilities, often demanding advanced features  
• Users with disabilities: Those who require adaptive solutions, often leading to innovations that benefit a wider audience  
• Users in extreme environments: Individuals working in high-risk or unconventional settings, such as astronauts or deep-sea divers 

The Role of Extreme Users in Innovation 

But how do we target and use information from extreme users? To do so, we need to catalogue the customers that are outside of our normal or traditional user. These users play a crucial role in driving innovation by challenging conventional design approaches and revealing new opportunities. Their unique needs and unconventional interactions with products push companies to rethink assumptions, leading to groundbreaking advancements. In observing their behavior, extreme users may help: 

1. Identifying Unmet Needs 

Extreme users often modify or adapt existing products to better suit their specific needs, offering valuable insights into potential areas for improvement. By analyzing these adaptations, companies can uncover gaps in the market and develop effective solutions 

2. Driving Technological Advancement 

Many technological breakthroughs have emerged from research focused on extreme users. Innovations such as voice recognition software and ergonomic keyboards were initially developed to assist users with disabilities but have since become widely adopted by mainstream audiences  

3. Enhancing Inclusivity 

Designing with extreme users in mind often results in more inclusive products that benefit a broader audience. This approach aligns with the principles of universal design, which advocates for creating solutions that are accessible and usable by as many people as possible, as was the case with the design of the Nintendo Wii. 

4. Testing Product Robustness 

Extreme users frequently encounter edge cases that mainstream users may never face, helping to uncover usability challenges and weaknesses in product design. Their feedback helps enhance durability, functionality, and overall user experience.  

Where do I get started? Engaging Extreme Users 

To effectively incorporate extreme users in design and innovation processes, several methodologies can be employed: 

• Ethnographic Research: Observing extreme users in their natural environments to gain deep insights  
• Participatory Design: Actively involving users in the design process through workshops and co-creation  
• Usability Testing with Edge Cases: Conducting tests with extreme users to identify performance issues  
• Analyzing User Modifications: Studying how users hack or adapt products for their needs 

Case Studies 

1. The Development of the OXO Good Grips Handle

OXO’s kitchen tools were inspired by the needs of individuals with  arthritis, but their ergonomic designs benefited a broader consumer base  

2. The Evolution of Text-to-Speech Technology

Originally designed for visually impaired users, text-to-speech systems are now widely used in GPS devices, virtual assistants, and audiobooks  

3. Nike’s FlyEase Sneakers

Developed for athletes with disabilities, these shoes introduced an innovative, easy-entry design that has gained popularity among all users  

Challenges and Considerations 

While engaging extreme users offers significant benefits, there are challenges to consider: 

• Balancing Niche vs. Mass Market Needs: Ensuring that innovations for extreme users translate to broader usability. 
• Ethical Concerns: Ensuring that user insights are used responsibly. 
• Resource Allocation: Conducting extensive research on extreme users can be costly and time-consuming therefore, the design of research activities designed to better understand extreme users must be treated with project-based frameworks; and use as precise information as possible.  
• Extreme users serve as a valuable source of inspiration for innovation and inclusive design. By systematically studying their behaviors, needs, and adaptations, companies can develop products that not only address niche requirements but also enhance experiences for mainstream users. Future research should explore how digital tools, and AI can further facilitate extreme user engagement in product development.

About the Author 

Fernanda Arreola professor of Strategy, Innovation & Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences. 

The post Extreme Users: Understanding Their Role in Innovation and Design  appeared first on The European Business Review.

One of the most frequent questions I receive is if an innovative idea should be kept secret or not? My answer is usually the same. For the majority of entrepreneurs, it will be difficult to find a 100% original idea. Therefore, instead of spending energy on keeping it secret, I suggest putting that motivation to use for pursuing the development of their idea. 

But in recent years, we hear more and more often speak about a strategy that involves the exact opposite. This strategy consists on doing our best to hide the idea and keep it confidential until launch. This is what we call Stealth Innovation. Stealth innovation involves therefore developing new products and technologies in secrecy, allowing organizations to maintain a competitive edge while minimizing market risks. But what exactly is stealth innovation and is when is this the right strategy to choose.  

What is Stealth Innovation? 

Stealth innovation refers to the practice of keeping research and development projects under wraps until they are fully realized. Companies employing this strategy often create a culture of confidentiality, fostering an environment where teams can work without external pressures or distractions. Notable tech giants like Apple and Google but also many startups have famously utilized this approach, successfully launching groundbreaking products that leave competitors scrambling to catch up. 

Why Do Companies Embrace Stealth Innovation? 

The rationale behind stealth innovation is that it offers a competitive advantage. This is because stealth innovation is based on the principle of first mover advantage, the edge and market place gained when a product or service is the earliest to become available. This concept is rooted in the idea that being first can provide several strategic benefits, including loyalty, branding, setting industry standards and acquiring a large market share. 

Further, organizations believe that stealth innovation may help teams avoid having their ideas copied or misinterpreted. This helps them gain time to adequately perfect products for their lunch, until they are fully developed and ready to meet customer expectations. Furthermore, stealth innovation can help mitigate risks associated with new product launches. Without the noise of public speculation or competitor interference, companies can allocate resources more effectively and focus on creating high-quality innovations. 

But if it’s such an advantageous idea, why is stealth innovation not the norm? 

The benefits of stealth innovation are evident if we can respect three principles. The first is having the time to develop the innovation. The second is being able to ensure its confidentiality. And the third, is having sufficient resources to pay for the R&D required before being able to commercialize or advertise the product. Without these conditions, a stealth strategy is likely to result in one of the following outcomes. The first is running out of funding before the product or service is can be commercialized. The second is that, due to a culture of secrecy, the team’s morale and collaboration may be impacted. Third, the lack of market feedback may make the final products miss the mark, resulting in wasted resources and potential backlash.  

Furthermore, recent research has pointed out to the fact that in many industries, access to transparent information from the projects the competitors are working on, leads to improved performance in the advancement of the entire sector. Therefore, stealth innovation may hinder the ability of certain crucial industries, as pharmaceuticals, to advance at a faster pace.  

To stealth or not to stealth 

Stealth innovation tends to thrive in certain industries, particularly technology and digital services, where competition is fierce. The size and culture of a company also play critical roles in the success of this strategy. Smaller companies might find it easier to maintain secrecy, while larger corporations may struggle with the internal communication needed to foster innovation. 

For most organizations, because of the reasons presented before, stealth innovation is not an option to consider. Furthermore, If the structure wants to encourage a culture of transparency, keeping a project under such secrecy, make create further internal conflicts. Therefore, the recommendation for companies willing to act with stealth innovation is to question before if their values and culture align, if they have the resources to accompany such development and if the timing is right.  

Therefore, stealth innovation should be considered with precaution and viewed as a double-edged sword. While it can offer significant advantages in certain contexts, businesses must carefully consider its impact on their culture and market alignment. As the business landscape continues to evolve, finding the right balance between secrecy and transparency may be the key to sustainable innovation. 

Here are some examples of firms that have managed to use stealth innovation to gain a competitive edge.  

1. Apple: Known for its culture of secrecy, Apple has developed many groundbreaking products under the radar, including the original iPhone and iPad. This approach allowed the company to fine-tune its innovations and surprise the market upon launch.  
2. Tesla: During the development of its first electric vehicles, Tesla operated in a quasi-stealth mode. It kept technical details under wraps, focusing on perfecting battery technology and scaling production quietly before entering the competitive automotive market  
3. Biotech Startups: Many companies in the biotech sector, such as those conducting clinical trials or developing new drugs, often operate in stealth mode to protect intellectual property, address regulatory challenges, and avoid premature scrutiny. These include emerging firms aiming to disrupt healthcare with novel therapies​.

About the Author 

Fernanda Arreola professor of Strategy, Innovation & Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences. 

The post Unveiling Stealth Innovation: The Secret Weapon of Companies that Want to Hide Their Revolutions  appeared first on The European Business Review.

For customers in B2B and B2C environments, the true providers of the services they consume have become invisible. In this review, we gather the opinions of service providers and service managers in the airline, banking, telecommunications, beauty, education, retail, packaging and automotive sectors.

Our interviews and supportive research allow us to gather very important insights and to contextualize certain realities of the importance and value that is given to service in each sector. We finish by pointing to some key factors that may encourage leaders to recognize the value of services, in order to take service excellence back into their strategies for the future.

Invisible Service Providers – A side effect of efficiency and technological progress?

In this article we define “service invisibility” as an evolving trend that, thanks mostly to technological advancements we now have, has significantly reduced the interaction with the people who provide or create the services we consume and buy.

Many years ago, it would have been impossible to do a bank transaction without queuing, filling a slip and interacting with a teller. Today, this process would be difficult to explain to an adolescent. Many sectors have been highly touched by such digital revolution. Banking, insurance, travelling, entertainment and telecommunications, have partially or fully automated many of the once humanly-driven operations, giving the illusion to customers that technology is their new service provider.

What is inside of this illusion is that, even when technology is the face to the customer, it is still humans that conceive and make the delivery of these services available. As an interviewee in the retailing sector signaled, companies went from people gathering data for consumption studies directly at the supermarkets, to analyzing huge piles of data captured through the use of loyalty and easy-shopping cards. In the banking sector, tellers were replaced by IT specialists that must make sure that sufficient computer power and cybersecurity are available to make online banking safe and possible. For telecommunications companies, humans have to create powerful automated call centers and chatbots in order to respond to never ending demands and requests from customers.

Automation and technology have taken people out of our view and this has led to a very concrete situation: we are becoming less aware of the value of humans in service. This is not very obvious in our daily activities, with three exceptions to the rule: when we want to feel what we are acquiring is special (or luxurious), when we face a problem that seems too specific and when we want to ask for help or advice.

The value of service in a B2B environment

As we explained, the real need or visibility of the people in services is, according to our research, only perceived when we suddenly believe that we have already paid for it, when we find ourselves in front of a specific issue, or when we need advice. However, these situations are lived differently in B2B or B2C, and we will try to illustrate the impact further below.

Automation and technology have taken people out of our view and this has led to a very concrete situation: we are becoming less aware of the value of humans in service.

First of all, let’s address businesses in a B2B environment. Traditionally the day-to-day service in these sectors are the responsibility of key account managers or established service officers. However, as we will explain, clients usually like an effective way of understanding the cost (and value) of such services. Our research shows that businesses can therefore three different approaches. First, specifying the value of such services and make clients to pay for them (such as in consulting or fiscal services). The second one is to include a “service pack” in all contracts. The third one is to leave the responsibility of the level of services at the discretion of service or key account managers. The last one is to provide no service at all.

An example of the first comes from an interviewee in the telecommunications industry. As this manager explained, all contracts for the implementation of information technologies have a “hardware” component and a “service component”. The complexity of such arrangement is that although customers will understand the value of hardware, they will underestimate the value of the service or consulting for implementing new technological tools and therefore negotiate less consulting or service hours. Businesses may believe that their inhouse IT staff will have enough tools & knowledge to deploy the system, but in reality, they are making a very risky bet. The hardware they are buying will be useless or wrongly implemented if the expertise necessary for these highly sophisticated tools is not available within. And they will end up paying more in delays, lack of appropriate exploitation of the tool or failed deployment programs.  They also run the risk that the system is not aligned with the company requirements. IT people are not business people, so they know less about the required processes, interactions, daily challenges, customer needs, etc.

The second example is when companies offer a service pack. This for example is very normal in the automotive industry according to another interviewee. When a dealer buys a car from a manufacturer, a number of “service” or “contact” hours as well as a timeline for their use are defined within a contract. However, the inclusion of such pack is not visible to the dealer, and manufacturers mostly play on a natural “balancing” effect of those that require services against those who don’t require contact to drive sales. The problem of such “invisible offer” is that when things go wrong, the responsibility turns to the manufacturer and most importantly to the service teams, who must find solutions to the problems because regulations makes them responsible for eventual technical defaults. So, in cases of unanticipated issues, it is the manufacturer who pays for the additional service.

Businesses may believe that their inhouse IT staff will have enough tools & knowledge to deploy the system, but in reality, they are making a very risky bet.

The third case is when the responsibility for service offering is delegated to the employee. This, as explained by a person working in beauty products, makes service dependent on the abilities of each key account manager. Therefore, customers or, in this case, distributors, will have a very difficult time understanding the value of the service agreement because it is very heterogenous. An example is one of our interviewees, she is very invested in finding solutions but she knows that a possible replacement after she leaves the position is unlikely to be as invested.

One more scenario is when companies don’t provide any service at all. Another manager in a technology company shares that her firm has made a clear statement to provide no service. They provide their users with sufficient online guidelines and information and a number of certified partners that could eventually help them if necessary. Their justification is that their tools are intuitive enough and therefore there is no need to provide additional support. Strategically, this is justified by the fact that little service or support allows their company to move faster and to continue to provide innovation, but some customers have a hard time accepting that “there is nobody to pick up the phone”.

Another reality in B2C?

In B2C the issues are similar, but what is different is the value of those services as perceived by customers, and their willingness to pay for it. As we mentioned earlier, one clear dimension is the belief of having bought a luxurious product. The problem here, as explained by a manager, is that many people in the beauty and retail sectors play with aggressive marketing techniques, pretending to sell a very unique product or service. However, these are not backed by differentiated service processes, which may lead to massive issues when the quality of the products is not achieved. An example of this is Estée Laundry, a collective Instagram account that spotlights unsubstantiated product claims.

Interestingly enough, customers in B2C will highly appreciate automation of many day-to-day services (vending machines, payment services and others). Take the example of an interviewee working in Higher Education. Their recruitment and admission processes were inefficient and required heavy human intervention. By implementing an automated system, handling of documentation became easier and quality of data was increased. This has eventually allowed them to better organize the classes in terms of diversity & backgrounds. Overall, the user experience is extremely positive, and this level of automation has become a “must have” for high reputation institutions.

Another issue in B2C is what we can call “digital discrimination”. Elder people and kids are the great losers in the passing towards automation. Elder people because they are less literate in new technologies and they have more difficult adapting to change. And children because they are being deprived of necessary human interaction in many early stages of life (image doing only online education or thinking that we can put pause of any moment in life).

An expert in the retail industry explained that they have data scientists trying to understand customer behavior on a permanent basis and to work on better placement and visibility strategies for grocery shopping. Banks and insurance companies rely on very complex algorithms to speed up decision making and reduce unnecessary costs for standard products.

As service managers, it is our responsibility to make sure these valuable resources become visible again.

But this obsession with artificial intelligence implies a risk of “losing touch”. A person seeking an insurance or a service plan needs someone who understand very particular needs (e.g. kids living abroad, family structures that are changing, new ways of conceiving money, reasons for the willingness to save) and this information is fundamental for them to design adapted products.  For some of the financial services, customers don’t want any human interaction (e.g. buying an insurance for a car, or to make a money transfer), and the importance of the people who delivering these services becomes evident when things don’t work.

We can however list a few simple and powerful ideas to improve the value perception and visibility of the services provided by any company:

• Make your service offering explicit
• Be honest about the strategic value of services
• Make coherent compensation and role definitions that recognize the value of service
• Be innovative for creating the business case and KPIs for good service
• Highlight the importance of services inside your organization
• Be proactive and not reactive, when it comes to service issues
• Use real people to understand real people, data can be deceitful
• Make sure that you engage with your customers in a different manner (real community management)
• Empower the organization to sell & deliver services, and walk the talk

Technology has played a major role in the development of new and very innovative services, but this has made customers much less aware of the value of humans delivering them. As opposed to technical gadgets and apps, interaction with humans cannot be put in pause at any moment, and thankfully so. As service managers, it is our responsibility to make sure these valuable resources become visible again.

The article was first published on 31 May 2020.

About the Authors

Fernanda Arreola professor of Strategy, Innovation & Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

Alfonso Castañeda is the Customer Service Director at the COESIA Group, where he leads a transformation program to implement best-in-class processes, methods and tools for after sales service management, with a special focus on developing a customer-centric mindset.

The post Services have Become Invisible to Customers in B2B and B2C appeared first on The European Business Review.

Bureaucracy is important. It makes our life comfortable, because it guarantees that rules will be in place to ensure that we all act according to plan. They are “designed to maintain uniformity and control within the organization¹.” Bureaucracy ensures that trains get on time and at the right destination. But as we know bureaucracy disincentivizes innovation.  

Innovation as an act of disobedience 

Innovation involves challenging established norms and conventional thinking to find answers to emerging problems. This concept is often referred to as “intelligent disobedience,” meaning that breaking or bending rules is necessary to stimulate creativity and foster business transformation. 

But who is most inclined to break the rules? In large organizations, innovation is traditionally driven/carried out by established teams working under the umbrella/under the aegis of an R&D unit or an Innovation Directorship. The members of these teams are likely to be engineers or managers that come from top-level universities. And they all have something in common: they are not concerned with the problem they are solving. They are neither the direct consumer nor the personnel facing them at the front of the organization. They are not what we will refer to as « makers ». 

The Rock and Roll method 

There is however a less conventional model that has been proven to be successful. The particularity of this method is that it has been introduced in the most bureaucratic organizations we have ever heard of: government structures.  

This method consists first of all of in transmitting empowerment to the “makers” of highly bureaucratic organizations (which could be public or private), granting them the resources they need to produce a digitized answer to a problem they have been faced with. These makers are the people on the front line, struggling with the situation that requires an innovative solution. These are the people who, sometimes sadly, receive insults because the process is slow, who feel the loneliness of not having the right answer to repetitive questions, and who know exactly what could be done to provide a solution.  

This method is inspired by agile methods and the “lean startup” movement. It was conceived by one of the authors of this article, Pierre Pezziardi, advisor to the interministerial director of digital directorate (DINUM), and observed by the other author, Fernanda Arreola, as part of an academic research project. During this research project, we have witnessed the particularity of this approach and how it has led to outcomes other than innovation. It has enabled the organization’s personnel to adopt new management tools, recruit new talent, develop new capabilities, offer new careers and provide positive media coverage for an organization often viewed as “obsolete”.  

The six commandments of “rock and roll” innovation  

(or how to build up intrapreneurial projects in bureaucratic organizations) 

To undertake this type of innovation within a bureaucratic organization, it must follow six commandments and adhere to three key ideals. The first is that it is possible to innovate with very few resources. In the end, in 1950, it took more than thirty farmers to feed one hundred people; today, it takes less than five. The second key principle is to trust the people who will become project holders. The third is that the problem must use a digital solution (or any scale mechanism operating at very low marginal cost). Once these principles are set in stone, the organization can launch an open call for intrapreneurial projects for which it must implement the following six commandments.  

Look for an Innovator, Not an Innovation 

Only an intrapreneur genuinely outraged by an imperfect that he or she systematically deals with will dare to undertake a radical innovation.  

Write it in one page 

The person concerned must be able to answer the questions: Why are we here, what is the problem, what is the pain for the stakeholders? Which metric best describes this problem (delays, errors, violence, school failures, etc.)? What will people say when the product is available? By answering these questions in a just few lines on a single page, the project owner will constitute the product specifications.  

Invite an Open Working Group 

The person who has the idea may or may not be the right project manager. Help him or her figure it out, and have him or her to recruit an open working group the very next day: clients/customers and partners of the future product will meet every 1 or 2 weeks for a demonstration and discussion of the directions to take.  

Guarantee Strict Autonomy 

The team chooses its technologies and their hosting solutions. It does not depend on any cross-functional department, such as: procurement, IT, HR, communications. It can go into production without any further authorization, as long as it adds “beta” to its product, if it is not initially a nation-wide supported public service. 

Design to Cost (vs Cost to Design) 

To avoid Parkinson’s law, according to which “work expands to fill the time available for its completion,” set strict deadlines. Whatever the subject, the innovation team must be composed of a maximum of four people and have 6 months to complete a first version of the innovation. The team usually includes a product manager, a digital coach and two senior developers. This represents less than 200,000€ over 6 months for a market launch.  

Give it 6 months 

An innovation team that does not find its market in 6 months should be disbanded. Conversely, the product team that finds its market should be preserved by receiving another round of funding. Finding a market means that the solution is undertaken for a pilot program within the organization. Afterwards, there will be a development phase and a consolidation phase, often followed by formal integration into the organization. The whole process takes between 18 and 36 months after launch. 

Does this work? 

Today, more than 100 government startups have been created following these principles. Some have been listed in the “50 Govtech Gems”: PIX, mes-aides (now the National Social Rights Portal), Signaux Faibles, LaBonneBoite, Pass Culture, the Public Service for Integration, Démarches Simplifiées (20,000 online procedures, 500,000 files processed per month), and other less visible, such as API Entreprise, a digital pipeline that saves companies tens of millions of supporting documents every year. 

More resources: beta.gouv.fr 

About the Authors 

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience. 

Pierre Pezziardi is a French entrepreneur and essayist. He is known for his work in the digital sector and has made significant contributions to technology and startups. Pierre Pezziardi currently works with the Direction interministérielle du numérique (DINUM), the French government’s digital services department. Pierre is an advocate for the promotion of digital solutions that help empower individuals and foster collaboration. His entrepreneurial ventures include involvement with OCTO Technology, OpenCBS, and Kisskissbankbank. More recently, he was responsible for the inception of BetaGouv, the Frech government’s incubator. 

The post Let’s Rock and Roll: How to Innovate Sustainably in Bureaucratic Organizations? appeared first on The European Business Review.

We have often wondered if there are examples of businesses that have overcome the social challenge of providing equal opportunities while generating sustainable business models. In this article, we review some staggering examples of businesses in sports that have just managed to find such equilibrium.   

The quest for equality 

It is natural today to think that women and men must earn the same living when withholding the same competencies. However, in Europe, in 2022 the gender gap was 12,7%, which means that women make 87.3 euros for every 100 euros earned by men. The issue is complex, and it requires the distinction between different terms. This is why we want to begin by establishing the definitions of equality, parity, and equity.  

When we speak about gender equality, we refer to a situation that grants equal access to rights and obligations regardless of gender. At work, this means that any person should be capable of earning a living based on the capacity and skills that he/she provides. In the business arena, gender equality means that we have access to whatever product or service we want. In human rights, it means that regardless of our background, during our lives we will receive equal opportunities. 

Meanwhile, parity is a numerical concept. It means that in any situation we consider that there is an equal representation of men and women. This is often measured as the ratio of female to male, aiming for a 1:1 ratio to indicate equal numbers. 

Finally, gender equity emphasizes fairness. This involves that we acknowledge the differences between men, women, and LGBTQIA+ and that provided such differences we grant access to similar opportunities. As an example, while equality would mean that we give the same number of holidays to women and men, equity would take into consideration situations like pregnancy, handicap, and others.  

And if sports were a lighthouse for women in business?  

Granting equal access to the practice of sports is a subject that has sparked long debate in the fields of education, politics, and NGOs. Today, the access, resources available, and remuneration in sports are far from equal to all. Just last month, a tournament that had been champions of equality sparked controversy due to the scheduling of men’s and women’s matches (during Roland Garros a single female match was scheduled in the evening, the prime time of most sports).  

What struck our attention is that under such complicated circumstances, some examples of organizations have started to set new conditions and standards to reduce all these gaps.  

When it comes to equality, some governments are creating legislation that suggests minimal levels of salary for women who are practicing professional sports. For example in Spain, the government has established that men and women representing the country in international tournaments must receive the same remuneration. 

Regarding parity, the 2024 Olympic Games will come to history as the first to achieve full gender parity.  Out of the 10,500 athletes, 5,250 will be men, and 5,250 will be women  

Regarding equity, in the United Kingdom, a new guidance has been published where women, men, and governing institutions can grant access to all resources and aids available for professional pregnant sportswomen. 

As the reader can note, these examples concern institutional initiatives. But what about when it comes to making change while assuring economic sustainability? Our next section seeks to answer this question.   

Businesses that have broken the glass ceiling (and their secret)  

Some years ago, Natalie Portman was watching a soccer match with some A-list friends when she realized there were still many issues to make sports genderblind. Portman, a founding member of Time’s Up, a movement that seeks equal pay for women in sports, realized there was an opportunity to merge the need for fair treatment of women in sports and a new business with a mission. 

Along with two Co-founders (and many Hollywood personalities), she gave birth to Angel City FC. Angel City is a club where mission and capital can coexist. The business model is built on driving the sport forward, delivering a great experience to fans and players, and positively impacting the community. Building on this passionate quest, Angel City has been able to pack stadiums with fans, pay fair salaries, and contribute 10% of its revenue back to the community of Los Angeles. Angel City FC is today valued at 180 million dollars, the highest club’s valuation in the league.  

A second example is the Olympique Lyonnais, the most successful women football club in Europe. Michelle Kang bought the women’s section of Olympique Lyonnais in December 2023 to form the first MCO (multi-club Ownership) dedicated entirely to women’s football. Already the owner of the Washington Spirit franchise in the NWSL and the London City Lionesses club in the English Championship, she stated from the beginning that, to be successful, the club should generate new synergies in favor of women’s sport and create a favorable ecosystem. 

In building momentum toward its breakeven point, Michelle Kang has bet on innovation as the key source to attire a new public. She seeks now to develop the infrastructure of OL Féminin by building for its use, both a training center as well as a new stadium of capacity between 15,000 and 20,000 places. Her approach is simple “we need to train the players like women. We shouldn’t follow a training methodology designed for men.” 

In her spirit to train women as women, Michelle Kang is investing in the creation of an innovation lab that uses research and technology to develop ideas and then adapts them to the particularities of American and European soccer. Finally, Kang is also known for keeping an eye on the career opportunities that she provides for her employees. Amongst her initiatives are scholarships and internships oriented for example to first-generation college students or women in STEM. 

A last example is the NCAA (National Collegiate Athletic Association). Representing more than 500,000 athletes in the United States this association organizes the activities of 90 championships in 24 sports. Founded over 100 years ago, the association has always kept the mission of regulating sport and protecting young athletes. In the last couple of years, its efforts in providing higher visibility to its women’s leagues have paid off with record-breaking seasons. In 2023, the University of Nebraska’s volleyball game against Omaha became one of the highest-attended women’s sporting events in history, being watched by a crowd of over 92,000. More recently, the record-breaker basketball player Caitlin Clark has propelled the attendance, media mentions, and coverage of the entire sport.   

The NCAA has implemented several initiatives and policies over the years to advance women’s sports. First, they have often reviewed the state of parity in women sport’s, taking after each audit time to generate changes thanks to the recommendations from such reports. It has also developed tools to measure equity amongst college students. In using 200 questions, the NCAA can assess if their gender equity principles are appropriately applied across all leagues. Finally, the NCAA works on promoting the training of female coaches and leaders, to improve the existing imbalance in sports leadership roles.  

What can I learn from these examples?  

We believe that these examples shed light on opportunities, and practices that can help businesses across industries, to work on gender equity, parity, and equality. Following we propose some ideas to better use these insights.  

1. Leapfrog to move faster 

Instead of making gradual progress, you can just leapfrog and propose major changes in your organization. As with our previous examples, set new rules that defeat existing practices and force action amongst your different business units.  An audit can help understand where equity in your organization is, leading to actionable objectives to take it to the next level. 

2. Leverage Feminism  

Regardless of your industry, if you want to work on innovating for gender equality use imagery, language, phrases, quotes, or slogans that speak about feminism and social justice. Similar to what happens in sustainable businesses, speaking out about your actions, in a language that is known to your audience, will favor the progress of your business in response to the values and leadership that you undertake. If you do things to make progress, speak about it, share your successes, and generate a conversation. 

3. Tie smart partnerships 

Michelle Kang and Natalie Portman understood that to make their businesses prosper, they had to work strategically along with key stakeholders within their ecosystem. If your business is engaged in supporting gender equality, you must consider reaching out to other members of the community including public servants, suppliers, thought leaders, regulators, and whistleblowers. Working with them can help you influence new regulations, anticipate changes, incorporate new alliances, and help others move in the same direction. 

In conclusion, investing in equity is not only a form of engaging in a fair world but also a smart business opportunity. Organizations that have gone far beyond the glass ceiling have found an expanded business opportunity driven by a larger public and new forms of generating engagement. As with our examples, we hope investors will see that investing in women is a good bet. 

About the Authors 

With 15 years of experience in sports management and entrepreneurship, Bernard Goudard is committed to fostering sustainable and equitable football. Known for significantly boosting revenue and cultivating team spirit, he is now dedicated to advancing women’s football. By leveraging his expertise, he aims to drive positive growth and create new opportunities in the sport. 

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience. 

The post What if We Told you that Women in Sports have Broken the Glass Ceiling? appeared first on The European Business Review.

Taking as an example the cloud industry, we help break down the different types of services and innovations that create value in technological markets where large leaders have taken a lead. 

The new technological “El Dorados” are a great opportunity for many. From quantum computing to regenerative language, large firms like Google, Microsoft, and Amazon are taking a leading role and experiencing significant growth. However, similar to what happened during the gold rush, not everyone will find gold. 

In this article, we take a look at what happened in the late 18th century and try to shed light on how you may reformulate the real value that your startup or innovation can bring to novel technological markets. We use as an illustration some observations from the cloud industry, showing the different types of services that can retrieve a precious sustainable stance. 

The California Gold Rush 

The California Gold Rush began around 1848 when gold was discovered at Sutter’s Mill in California. This led to a massive migration from around the world, with people seeking to make their way to the West Coast in hopes of becoming rich. The influx of new workers accelerated changes in the region, leading to the displacement of many native settlers and the development of what we know today as San Francisco.  

With time, the easily available surface gold ran out, making extraction available only to a few bigger players who could invest in more sophisticated mining techniques. Those who did not have the means to invest in heavy equipment were set to fail.   

However, a new group of entrepreneurs found success by understanding that the large new businesses couldn’t fulfill all the needs of the newly created territory. They developed successful firms to satisfy those needs, with examples like Levi Strauss (selling jeans) and Samuel Brannan (selling gloves and shovels). But how can this first “El Dorado” help us to identify whether we appropriately serve the leading technological players? 

Selling more than shovels 

The activities of gold mining firms required other complementary businesses to facilitate production, the recruitment of workers, or the distribution of gold. When a new business activity is created, companies that manage to take an early and large market share will be difficult to overtake by young and small competing firms. However, new “value gaps” will be generated, leaving the chance for other actors to create such value. This is what we call, “selling shovels”.  

But today, selling shovels is not enough. Therefore, we came together with an easy-to-understand concept that shows how entrepreneurs, inventors, and innovators fill “value gaps” in technological environments where large leaders prevail. We call our concept “building around innovation houses”. An innovation house is a synthesised version of an innovation ecosystem. Like your own house, innovation houses require maintenance, surveillance, cleaning, refurbishing, tools that facilitate efficiency, moving services, storage, recruiting, and training.  

Therefore, when tech giants such as AWS, Google, and Microsoft, have established their “houses” it will be difficult for newcomers to take over their position, or, in this analogy, to outbig a big competing house.  But there are a lot of complementary products and services they need that newcomers can position themselves in. First, several services are completely out of the strategic scope of large tech firms (maintenance, cleaning, banking). Secondly, there are activities that, even within their own set of skills, are too specific or time-consuming for them to engage internal resources (repairs, training, and recruiting). Third, some activities require an “external eye” (security, advisory, strategy) and must be undertaken by independent structures.  

Filling the value gaps 

If you are attracted by any new technology, and you want to create something that serves the needs of this community, we suggest you use the concept of innovation houses to see the fit that exists for you, the value you can propose, and your likely competitors. Targeting value will increase the chances of survival of your innovation and clarify your positioning in sometimes overcrowded or generalist markets. 

To illustrate how the concept of innovation house works, we can take the example of the cloud industry. 

Actors working within the cloud innovation house 

• Storage: Snowflake, Teradata  
• Refurbishment: Nvidia, Dell, Lenovo, Apple, very integrated sectors  
• Security: Snyk, Datadog, Orca Security, Wiz, CrowdStrike 
• Movers: Consultants, PWC Implementation 
• Legal (regulation): Lawyers, Law Schools  
• Efficiency: Consultants, Energy Providers 
• Accounting Services: Deloitte 
• Specialised Recruitment: Welcome to the Jungle, Manpower 
• Training: Ecole 42, Universities  

As you can see, when thinking about the ensemble of products and services that a technological giant requires to subsist, it is easier to foresee a sustainable positioning. Regardless of their choice, all new firms must be attentive to secure a place where they generate a value proposition that is as rare, difficult to imitate and adapted to the capacities of the organisation, as possible. 

About the Authors 

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience. 

Robert Pickering is an experienced software engineer and published technical author with over 20 years of experience. He currently works at Datadog building out their security product suite. 

The post It’s Too Late to Become a Technological Leader. Just Become a Shoveller! appeared first on The European Business Review.

By Fernanda Arreola and Dr. Michel Philippart

Operational excellence is critical to entrepreneurial success, but it is too often ignored by aspiring entrepreneurs. In this article, we gather insights from incubator managers to explore why it pays to master operations fundamentals when launching a new venture. Furthermore, we gather how operational efficiency is not only a tool to strengthen the internal value of an organisation but also a powerful barrier to would-be imitators.

Entrepreneurial ventures continue to have a large percentage of failures. The American Bureau of Statistics indicates that a staggering 70 per cent of startups will not survive the first five years. The causes of failure are usually associated with the market (non-existent market, lack of sufficient research to understand the customers, etc.), financial (not enough money to operate, cash flow issues, etc.), and human resource issues (mismatched team, conflicting views, lack of leadership, and poor management skills). Understanding and training for such issues has become the core focus of entrepreneurship education. Meanwhile, to our knowledge, little is said about what is somehow considered to be a less pressing topic: internal operations.

It is no different when you talk to young entrepreneurs. They enthusiastically speak of their concept, and about how they will meet existing or new needs. If you ask them how they want to move forward, the discussion turns around the financing. But we have rarely observed them asking about the “How”, the essential operation, and performance values that must be put in place to make their idea work. Operations remains an unexplored dark box.

Let’s define first what “operations” is for an entrepreneur. This is a broad subject, ranging from supplier strategy to quality management, that can be summarised as “the power to deliver”, or “the enablers”. It ranges from the daily routines that enable a business to satisfy value delivery to the long-term planning of relations within an ecosystem. It is a lot more than just the “supply chain”. It includes all that contributes to user experience, such as quality, consistency, process optimisation, timely delivery, and after-sales support. Necessary elements for success, even for web-based ventures.

Unfortunately, operations does not appear to be on young entrepreneurs’ radar and is often not taught broadly in business schools. It is considered “unsexy”, a second order of priority. Consequently, operational aspects are too often overlooked by would-be entrepreneurs and their support systems. The following are some anecdotal examples.

• Ana has a project proposing an entertainment kit for small children visiting luxury hotels. The content of the box, the potential to please children, and the benefits that it would represent for clients of upscale resorts are very detailed. However, when Ana is asked about the sourcing of the toys, she replies, “There is no problem, I will simply find them in China, I just need to send my specifications,” ignoring the intricacies of supplier management internationally.
• Julio plans to launch an online sales platform aimed at artisanal food products. The site will consolidate hundreds of products, claiming to be “the best épicerie in France”. However, when asked about the delivery, Julio believes that “he can simply leave that to the producers”, ignoring the importance of consistency, transparency, and information to meet the expectations of customers already used to high standards.
• Vanessa and Vladimir were aware of the challenge of paying fair prices for agricultural products coming from Africa and Latin America. Their project aims to guarantee products coming from these regions, claiming to be a “responsible business”. However, when asked about their positioning as an ethical and environmental firm, Vanessa and Vladimir were unable to measure the requirements and impact of shipping from such faraway locations.
• Alex wants to develop and market a super-comfortable shoe that can also be marketed as a slipper for people working standing up. However, when asked about the initial inventory, Alex did not consider the cost of carrying all the different sizes and colours, resulting in hundreds of SKUs. He therefore underestimated the inventory costs associated. He also neglected the gap between supplier payments and revenues.
• Constance wants to develop a personalised catering service for people with diabetes. Her idea is original and serves a growing market. She also wants to be the first meal delivery service that can be 100 per cent customisable. However, she has a hard time determining how much time it would take to assemble each personalised package reliably.

Few would-be entrepreneurs realise that operations is one of the three legs of a successful business launch, alongside the development of the market concept and the financing. If entrepreneurs were to observe larger businesses, they would understand that operations management offers the potoential to increase the success rate of their venture. For instance, operational excellence is at the root of the success of Doctolib. The company was not the first in the field. A company in the USA, ZocDoc, had shown the way. Dozens of copycats existed in the French market before Doctolib launched but Doctolib out-executed its competitors. It captured its right to win in a crowded market by doing it better, by its operational excellence. Doctolib had the best booking management system, focusing on doing what the patients expected more efficiently than the competition ^{[1], [2]}.

Insights from the field 

For this article, we interviewed incubator managers and entrepreneurs who successfully passed the first stage of growth, ready for, or already engaged in, a second round of fundraising. Our experience tutoring business school entrepreneurial projects shows that many problems are linked to operations, but we wanted to expand our view to incubator managers who have accompanied hundreds of diverse projects.

The main issue regarding the lack of operational awareness is the lack of entrepreneurial training in this sense. Let’s begin by talking about entrepreneurial education. Entrepreneurship training is an effective way to increase the success of entrepreneurial ventures ^{[3], [4]}. As we mentioned previously, many of the subtopics that are encompassed in operations as a management field are not attractive or exciting. For students willing to discover the world of entrepreneurship, the key focus becomes the innovativeness of the idea and the viability of the “market side” of the business model. Also, for many, entrepreneurial studies should favour passion over a precise skill set, which means that the academic components are often granted less importance than the fact of generating a prototype. Finally, there is a lack of specific competency in terms of entrepreneurial professors who are also experts in the field of operations, which reduces the ability of programme managers to dedicate more time to this subject.

As witnessed by the incubator manager, this issue is also encountered in incubators, which must be structured to offer expertise in operations alongside finance and market understanding. Incubators provide coaching by mentors, but the choice of a mentor usually privileges a business sector over a precise skill set. As is the case in academia, there are few experts in entrepreneurial operations. Therefore, even when startups must develop their operational readiness for launch and growth, they are unlikely to easily access the type of expertise that will equip them with a learned approach.

What it takes to be operationally smart 

However, creating an operating environment that will help startups succeed is possible. In our review, the first key is to build a business model that includes the targeted operational parameters from the first day. Second, all businesses must undergo the exercise of designing a complete delivery cycle. The analysis must begin with the customer’s journey, with this basic question: “What do I need to do to receive five stars from my customers?” The answer must drill down to identify the components of satisfaction, such as:

• Ease of ordering and delivery.
  • How accessible am I?
  • What are the outbound logistics (making it to your distributor or final customer)?
  • Does it meet customer expectations in terms of ease and effectiveness?
• What is your value chain?
  • Does the building / assembly / order preparation allow customer expectations to be met?
  • Where do you source? Is it reliable, ethical, and sustainable?
• Actual and perceived product quality.
  • Are the products you sell and the services you deliver consistent in meeting customers’ expectations?
• Service components, such as support and personalisation.
  • What are the distinctive components of your commercial strategy, targeted to your specific clients?
  • What are the expectations of your customers in service and what have you implemented to deliver them?

The next step is for the entrepreneurs to analyse what they need to build in their operations to meet these targets every time, for every customer. This means giving early attention to service processes, production methods, supplier selection, delivery infrastructure, staff training, and more. These elements must be laid out in the business plan, to demonstrate to the potential investors that the business model is sound and includes the right operational considerations to make the venture stand out in a crowded competitive field. In a nutshell, the first step that would-be entrepreneurs need to accomplish is the “pre-certification” of their idea ^[5]. Finally, retrace the customer journey considering these elements and define the key success factors and what it takes to satisfy the customer every time they interact with us.

The best news is that a great operational design provides an edge. Our interviews with The Ridery and Comme Avant, two startups that have successfully passed the first hurdles of growth, indicate that an additional bonus of efficient operations is the creation of barriers to entry. Our interviews show that ideas can be easy to copy but perfect implementation is much more difficult to replicate. Therefore, superiority in operations is a predictor of market success, better margins, and a higher return on investment, arguments that investors are sensible to. So, building a successful operations system is more than “the power to deliver”; it can become “the right to win” in a competitive marketplace.

Conclusion 

The field of operations is probably the most powerful, but also the least exploited, lever to success for entrepreneurs. Enlightened startups have identified the link between optimal satisfaction of customers’ expectations and operational enablers and included operational expertise in their initial staff. This enlightenment comes either from experience or from effective coaching. So, the role of operational guidance is essential in entrepreneurship education and incubation. The coaching chain, from education programmes to entrepreneurial ecosystems, must be geared to developing those operational competencies for the entrepreneurs and adding the required expertise early on in the incubation process.

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience. 

Dr. Michel Philippart shares 40 years of experience in production, consulting procurement, then academia. He was Associate Principal at McKinsey, Global Purchasing Director for GSKBiologicals, Director of the MSc SOC at EDHEC andManaging Director of Glion IHE. He focuses on procurement strategies, digital transformation and competitiveness through operations.

References

1. L. Brouat, « Startups santé : Comment mondocteur a perdu la guerre face à Doctolib ? », Inspire Média. Consulté le: 29 mars 2024. [En ligne]. Disponible sur: https://inspire-media.fr/startups-sante-comment-mondocteur-a-perdu-la-guerre-face-a-doctolib/ 

2. A. Dewey, « ? Doctolib – The All-In-One Solution for Independent Healthcare Professionals », Overlooked by Alexandre Dewez. Consulté le: 29 mars 2024. [En ligne]. Disponible sur: https://alexandre.substack.com/p/doctolib-the-all-in-one-solution 

3. K. M. Bischoff, M. M. Gielnik, et M. Frese, « When capital does not matter: How entrepreneurship training buffers the negative effect of capital constraints on business creation », Strategy. Entrep. J., vol. 14, no 3, p. 369395, 2020, doi: 10.1002/sej.1364. 

4. C. E. Eesley et Y. S. Lee, « Do university entrepreneurship programs promote entrepreneurship? », Strategy. Manag. J., vol. 42, no 4, p. 833861, 2021, doi: 10.1002/smj.3246. 

5. C. H. Fine, L. Padurean, et S. Naumov, « Operations for entrepreneurs: Can Operations Management make a difference in entrepreneurial theory and practice? », Prod. Oper. Manag., vol. 31, no 12, p. 45994615, 2022, doi: 10.1111/poms.13851. 

The post Unsexy? Think About it Again! Delivering on Startup Potential Through Operations appeared first on The European Business Review.

By Fernanda Arreola and Pierre Daems

Fernanda Arreola and Pierre Daems explore how small, accessible changes can lead to significant impacts, while providing a practical framework for integrating low-tech innovation in modern businesses. But they begin with a reference to a very well-known world-changing event.

Do you know what was written on the Berlin Wall just before it was destroyed in 1989? 

• “You can’t change the world, but you can change the facts
• If you change the facts, you change points of view
• … and if you change points of view, you can change the world.”

The destruction of the Berlin Wall …

• … was a significant fact.
• … It changed points of view on the relationship between citizens from the East and the West sides of the wall,
• … and it gave birth to other facts and contributed to profoundly changing points of view on Europe,
• … and it finally changed the world!

Could we say that the destruction of the Berlin Wall was a form of low-tech innovation? 

To respond to such a question, we must provide answers to the following.

• Was it useful? Yes, indeed. It allowed families separated between the East and West to reunite after many years.
• Was it accessible to all? Yes. There was no need for powerful machines or big investments. Each citizen played their part with a sledgehammer or whatever they could find.
• Was it sustainable? Absolutely. It had an incredible social impact in the long term!

Low-tech innovation is not a new idea. It is the way in which humans find answers to commonly found issues. But, for reasons beyond our understanding, it is a way of thinking that has almost vanished from the solution-making frameworks of firms. Today, companies find that they must address big challenges with large changes and high technological investment. However, this approach is very resource-consuming, as it requires time, human resources, and money. Furthermore, employees may become disengaged when they perceive that these changes are irrelevant to their daily jobs and are not concerned with their competencies.

However, as in ancient times, simple solutions can sometimes have a significant impact on employee and customer experiences. And these first facts change points of view (“we can do it!”), which will help to implement the next facts, and so on … up to the big change that everybody expected in the organisation. For example, one of the authors worked with a large hospital in France where employees, such as nurses and caregivers, often felt frustrated due to the lack of tools and conditions to provide better patient experiences. While significant investments were made in new equipment and renovations, employees remained frustrated because essential needs, such as providing water to patients in the waiting room, were neglected. Here comes low-tech innovation! Simple initiatives, such as encouraging patients to bring their water bottles or installing a tap and a sink in the corridor, can address these issues effectively. These initiatives empower employees and make them less frustrated, fostering a culture of innovation and problem-solving.

To implement low-tech innovation in your company, you can follow these four steps:

• Engage Employees: Encourage employees to identify areas for improvement in customer and employee experiences.
• Identify Low-Hanging Fruit: Focus on simple initiatives that require minimal effort and resources but have a significant impact.
• Ensure Sustainability: Emphasise the importance of initiatives that are sustainable and have a positive social and environmental impact.
• Share Innovations: Foster a culture of innovation by sharing low-tech innovation initiatives within your organisation.

To facilitate the identification of low-tech innovation initiatives, we have created a Low-Tech Innovation Typology (see figure 1). This typology categorises low-tech innovation into four classifications, enabling organisations to leverage internal resources and create easily identifiable forms of low-tech innovation.

Figure 1 – Low-tech innovation typology

• Behavioural Tangible Innovation: the word “behavioural” helps describe human reactions to affect the psychological and social responses. This includes meeting minutes, tags, signals (giving directions, changing conduct), objects (cartons, figurines, marketing materials), and lines (queueing, waiting, organising groups). Examples include making new signs to show directions to a specific destination or giving tags with students’ names to personalise interactions.
• Technical Tangible Innovation: the word “technical” helps describe the fact that an art, craft, technique, or simple mechanical, electrical, and digital tools are used to deliver this type of innovation. This type of innovation therefore involves items such as glue or tape, bricks (of the type used in construction, or smaller-scale ones such as Lego), simple mechanisms (poles, gears, magnets), simple circuits, sewing, books, or fabric (embroidery, clothes). Examples include creating models to facilitate the visualisation of a project or changing electrical equipment (for example, bulbs) to make it environmentally respectful. It could also be using simple soap instead of using a liquid soap dispenser.
• Behavioural Intangible Innovation: these innovations include human actions encouraged by power, repetition, or training. These include rituals, routines, attitudes, and emotions. A simple example is asking employees to make customers smile when arriving in a store.
• Technical Intangible Innovation: intangible technical innovations include all those technologies that we cannot touch. These include recordings, videos, music, SMS, emails, and simple websites and applications. An example is a simple website with information for new employees at a firm.

The best way to use this framework would be to identify real examples of what has been done by your organisation in the past month that could be identified as low-tech innovation in the four different categories and to demonstrate that it was:

• useful for your customers and employees,
• accessible (implemented by your teams with limited resources and time),
• sustainable (social and / or environmental impact)

These operational examples could then be part of your four-step culture change programme, to inspire your teams to change facts, … change points of view, … and change the world!

About the Authors 

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience. 

Pierre Daems is CEO of Aube Conseil, a strategy and management consultancy based in Canada and France. Pierre is a certified expert in customer experience management (CCXP) and co-founder of the CXPA (Customer Experience Professional Association) in Montreal and Paris. He contributes to making organisations more sustainable, helping them to develop a purpose that takes into consideration the experience of all stakeholders (“human experience”). 

The post How to Change the World with Low-Tech Innovation? appeared first on The European Business Review.

Innovation is essential, yet not always easy. This article, based on lessons from the perfume industry, discusses how to innovate in business sectors where differentiation is difficult to achieve. 

France holds a unique position as the epicentre of the perfume world. This is thanks to its historical heritage that has helped build an empire of luxury and mainstream brands that proudly present the citation of Paris on their bottles. Throughout history, people from all corners of Europe have turned to these perfume houses for the latest elegant fragrances, made possible by them capturing scents from flowers, wood, and spices, but most importantly, thanks to nonproduct-related innovation.

The roots of French perfumery can be traced back to Louis XIV, known also as the Sun King, who played a pivotal role in its development. Renowned for constructing the opulent Palace of Versailles, Louis XIV established what would later be known as the perfumed court. Historians narrate that Louis XIV was scared of bathing, believing that doing so would make him sick and spread disease. Therefore, the members of his court were encouraged to spray themselves with perfume upon entering the vicinity of the palace. 

This particular hygienic belief made perfumery to be treated almost as a science, implicating the idea that fragrances also have medicinal benefits. As a result, both men and women incorporated substantial amounts of fragrant elixirs into their grooming routines. Fragrances were even sprayed on furniture and, as rumours suggest, the fountains. 

The fragrance legacy continued over time, despite a halt as a result of the French Revolution. The execution of the perfumed nobility led perfumers to scale down operations and conceive new ways to impulse the popularity of perfumes. Over time, France’s perfume industry experienced a resurgence, evolving into one of the largest creators and suppliers of perfumes. Today, it caters to a diverse audience, ensuring that everyone, not just the nobility, enjoys a fresh and fragrant experience.

THE NON-SO-INNOVATIVE NATURE OF FRAGRANCES

Parfums are made of base notes, middle (heart) notes, and top notes. Base notes include patchouli, vanilla, sandalwood, and musk. Heart notes are made of floral notes, spices, and herbs. Top notes include citrus, fruity notes, and certain herbal notes like basil. After mixing these ingredients, perfumers must apply fixatives (amber or resins) and modifiers (they can give a fresh or cleaner note to the fragrance). Once the perfumer has made a choice, he or she will carefully blend the ingredients to create a fragrance.  

However, not all fragrances are pleasant to our senses. We are also not all equally sensitive to the sometimes-infinite differences in ingredients between one parfum and another. Perfumers want to evoke in us a sense of proximity, and other fragrances lost in our memories, which makes it more likely that they will include aromas that were popular in the past. For example, patchouli, a base note, has been used since ancient times. To this date, it is a largely used base note that is included in a wide range of fragrances. Some people even simply use patchouli oil. Yes, we often smell patchouli in our daily lives. 

IF IT IS NOT THE PRODUCT, THEN WHAT? 

Gaining inspiration from what is done in the perfume industry can help you look at your product’s commercialisation and communication efforts differently. Most importantly, it can give you hints on how to innovate in sectors where competitors propose very similar products and where product innovation is unlikely to provide an edge for differentiation.

Container

If you cannot change the product then you can change its packaging. Furthermore, this packaging can change in nature (box, bottle) but even in terms of the raw material it uses (recyclable, reusable, washable). A recyclable example of a container in perfumes is Bois Imperial, the bottles are made of glass, without a case, with a sustainable approach. Other examples include SEXY by Honoré des Prés with original packaging that exudes authenticity and the charm of yesterday. We can also take the example of Angel by Mugler, the pioneer of bottle refills. 

Concept

The concept proposed by the product can be altered by simply changing its colour and how it addresses a community (gay pride, cancer survivors, nationality, etc.). An example is Blood Concept, a brand where you choose the blood type you want to wear.

Communication

This consists of changing the messaging. For instance, if you can’t make people smell your product, how do you make them buy it? You can for example evoke other things that can give a sense of the sensorial emotions that will be experienced once used. For example, the candle company Promenade à Auvers bases scents on the original scenery that Vincent Van Gogh used to inspire his paintings. As for storytelling, we can also find the incredible job of Eight & Bob which comes packaged as a book. 

Retail

A product’s positioning can be based on the messaging around it, the discourse a vendor uses to present it, or even the concept that the buyer is searching for. The Nose perfume diagnosis allows you to create your olfactive portrait and receive personalised recommendations. 

Technology

Industrial innovation can help producers innovate the processes around the manufacturing of your products. Furthermore, it can make your product available otherwise. A great example is the sniffing device, P’tit Sniff. Le P’tit Sniff is a mini personal olfactory diffuser to take with you everywhere, adjustable according to your desires thanks to interchangeable cartridges.  

Network

People rely more and more on where they find the product as a basis for their decision to purchase or not. It is not only about selling online but also about who the distributor is. Perfumist is the first collaborative perfume advisory application, created by perfume enthusiasts, to help you discover fragrances that best suit you. 

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience.

Johann VITREY-TARDIF is a lecturer at ISC Paris, IESEG Paris, Paris Perfume School and Thelma Business School in Dakar (Senegal), teaching Luxury Marketing, International Trade and Cross Cultural Communication. He is the founder and CEO of SESAME, an expert in olfactive marketing and olfactive identity. He also owns two niche perfumeries in France. Late deafened, he is the President of the French OHNS Ethics Committee.

The post Smells Like Patchouli! appeared first on The European Business Review.

By Olimpia Modorcea and Fernanda Arreola

Entrepreneurs make economies turn and prosper. They create a large proportion of new jobs, take economies out of recessions, propose disruptive innovations, and change how we live. Further, those of us who have had the opportunity to develop a product, service, or even a firm know the unique sense of accomplishment and pride that comes with it.

The hidden side of such achievement is also common to all entrepreneurs: failure. According to the Bureau of Labor Statistics, in the US, at least 20% of businesses will fail in their first two years, and up to almost 50% will do so by age five. Therefore, we question what is there to be said (and known) about failure, and most importantly, what do we know about eventually coming back?

Failure is more common than we think 

Embarking on an entrepreneurial journey is a rollercoaster ride filled with trials and triumphs. Some entrepreneurs face unexpected roadblocks that force them to pause or close their businesses for an extended period. Despite the setbacks, many individuals force themselves through a process of time and resilience that helps them reactivate themselves and recreate ventures and careers.

Embarking on an entrepreneurial journey is a rollercoaster ride filled with trials and triumphs.

In our research, we gathered insights from successful entrepreneurs who navigated through business failures and comebacks. The first example that comes to mind is Elon Musk. The visionary behind Tesla and SpaceX faced significant challenges in Tesla’s early days. Financial strains, production delays, and scepticism from critics led Musk to stop production temporarily. His pivotal lesson from this experience was the importance of planning strategically and adapting to unpredictable circumstances. Musk emphasises the prerequisite of a resilient mindset, urging entrepreneurs to perceive obstacles as opportunities for growth.

Steve Jobs, the co-founder of Apple, endured a turbulent period when he was expelled from his company in the mid-1980s. After his departure, Apple faced stagnation, and its future seemed uncertain. In 1997, Apple acquired NeXT, a company Jobs founded during his time away, leading to Jobs’ return. He introduced ground breaking products like the iPod, iPhone, and iPad during his second tenure at Apple. Jobs’ takeaway is about the power of reinvention and the ability to turn adversity into innovation.

Howard Schultz, the former CEO of Starbucks, temporarily stepped down in 2000 after the company faced a challenging period. During his absence, Schultz realized the critical significance of staying true to the brand’s core values. Upon his return, his primary focus was rejuvenating the Starbucks experience and overseeing global expansion. Schultz’s counsel emphasises the importance of maintaining a solid connection to the company’s mission and values, especially during challenging times.

Reed Hastings, co-founder of Netflix, faced a setback when the company’s stock plummeted in 2011. A price hike and an unsuccessful attempt to separate the company’s DVD rental and streaming services led to a substantial loss of subscribers. Hastings, nevertheless, demonstrated resilience by learning from mistakes and redirecting the company’s focus towards the streaming platform. Netflix became a prevalent force in the entertainment industry. Hastings advocates pivoting, quickly changing direction, and adapting to new circumstances.

Sometimes, it is a matter of self-care 

For some, the need to pause their businesses arises due to personal challenges such as health issues, family matters, or personal crises. Arianna Huffington, the co-founder of The Huffington Post, faced a health crisis in 2007 when exhaustion and burnout led to her collapsing from sleep deprivation. This incident prompted her to reevaluate her priorities and step back from her role. Following her recovery, Huffington became an advocate for well-being and sleep. Her story underscores the significance of self-care and its impact on an entrepreneur’s overall success.

Richard Branson, a British tycoon and co-founder of the Virgin Group, experienced a pause in his business due to a severe health fright in 2016. A bicycle accident left him with severe injuries, forcing him to reassess his work habits and priorities. Branson’s journey to recovery reinforced the importance of resilience and a positive outlook, particularly in the face of personal challenges. His advice for entrepreneurs is to listen to their bodies and prioritise their health.

Oprah Winfrey, media mogul and founder of the OWN Network faced a challenging period in 2011 when she decided to end her iconic talk show, “The Oprah Winfrey Show”. This significant personal and professional transition allowed her to focus on other aspects of her life and career. Winfrey’s experience highlights the power of making tough decisions for personal well-being and the potential for new opportunities to emerge from those choices.

Mark Zuckerberg from Meta took a two-month paternity leave in 2015 after the birth of his first child. During this period, Zuckerberg prioritised his family, experiencing the profound impact of a work-life balance. His journey underscores the significance of celebrating personal milestones. It emphasises the need for entrepreneurs to prioritise their well-being and family commitments, even amid the demands of managing a thriving business.

This insight accentuates the holistic approach to success that recognises the close connection between personal and professional aspects of life.

Personal hardships can be powerful catalysts for positive change.

Pausing a business due to health, family, or personal issues requires a unique strength and self-introspection. Entrepreneurs like Mark Zuckerberg, Arianna Huffington, Richard Branson, and Oprah Winfrey showcase that embracing personal well-being and addressing life’s challenges head-on can lead to renewed success in the professional realm.

Personal hardships can be powerful catalysts for positive change.

The stories of these accomplished entrepreneurs underline the inevitability of hardships and strains in the entrepreneurial world. Pausing a business for an extended period may seem like a setback, but the pivotal perspective is to see it as a strategic pause for recalibration. Learning from industry giants like Elon Musk, Steve Jobs, Howard Schultz, and Reed Hastings, entrepreneurs can adopt resilience, strategic planning, reinvention, and adaptability as essential elements in their track to success. Remember, the pause is not the end, just like the theatre’s intermission is not the play’s culmination. Instead, it’s a time for recalibration, upgrading, and rearranging the stage to prepare for the next act.

Is this a failure? 

These examples make us question if these situations can be classified as failure or if we should reassess how we refer to unsuccessful business ventures and recalibrations of businesses. For instance, research has found that 65% of novice entrepreneurs will make a comeback and try their chances again at launching another business. Interestingly, only those who do not acknowledge having failed will have limited chances of ever trying it again.

Furthermore, when the decision to close or pause a business arises, what is necessary is taking time to complete what we will define as a rebounding cycle. From our research and observations, for entrepreneurs to fully reinvest themselves, they must allow themselves to undergo the following process.

First, they must acknowledge the need to pause or stop. Second, they must seek support to make such a decision. Third, they must take a step back and take time to gain perspective and learn (this is when they need to ask why and what). Then, they must integrate what they’ve learned and prepare for a comeback. Once these steps are completed, they can consider a comeback. What is essential for each step is that entrepreneurs gain awareness about the importance of undergoing each of them consciously.

The rebounding cycle.

Our how-to guide for improving your rebounding cycle 

As we said before, pausing or stopping a business is a necessary choice to make. Either because the business model is not working as you expected or because of family or health issues, most entrepreneurs will face such a decision soon. Therefore, we have conceived a five-step guide that may help you pause, rest, and make a successful comeback!

• Avoid denial. The first important thing to do is to avoid denial. Life experiences include unsettling periods, but it is necessary for our mind and spirit to go through such periods to accept the situation. As presented in our framework, the decision to stop includes a moment of grief. Although denial is a natural reaction that protects us from the unknown, achieving a stage of acceptance is the final point necessary to stabilise our emotions and move on. Furthermore, research indicates that entrepreneurs who do not accept the situation are highly unlikely ever to undertake a new entrepreneurial challenge.
• Build psychological capital. Research shows that our psychological capital will help us rebuild ourselves after difficult times. Psychological capital is a collection of four psychological states that make us feel good: hope, efficacy, resilience, and optimism. To build this capital, entrepreneurs can rely on specific techniques like humour or defensive pessimism (imagining how a situation can go wrong to prepare oneself).
• Anchor in an entourage. If you are about to go through a halt to your entrepreneurial career, do not do it alone! Although not largely talked about, there are several relevant resources that you can use to make you better surrounded while you are going through this difficult time. In France, associations like 60000 rebonds or Second Souffle allow you to contact free coaches and mentors who are there to support you and guide you. Other events include fuckup nights, gatherings where other entrepreneurs in the same situation join to share their experiences and gain perspective.
• Look after yourself. Maintaining good mental health is fundamental to developing resilience and overcoming change. According to a recent study of almost 300 entrepreneurs, 70% acknowledged mental health concerns. The findings of this study are significant because they suggest an underlying relationship between entrepreneurship and many of the affective, cognitive, and mental health conditions that a stressful situation may trigger. Entrepreneurs must note this trend and act accordingly, seeking medical help if necessary when overcoming this moment.
• Take time. If you need time, take it! Time will allow you to recover psychologically and physically. It will also give you the space necessary to complete a full cycle of rebounding, for which learning and gaining perspective are required.

About the Authors 

Olimpia Modorcea is a certified coach, therapist, and published author who brings over 25 years of international experience in corporate technology to her passion for personal development. Dedicated to empowering professionals and business owners, she helps them navigate and accelerate their careers with purpose, ease, and emotional stability. 

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience. 

The post You Did Not Fail! You Are Just Rebounding! appeared first on The European Business Review.

In the pursuit of engaging employees in innovative endeavours, a pressing need emerges for firms to establish new, inclusive settings known as innovation playgrounds. Fernanda Arreola explores some of these strategies pivotal in crafting playgrounds that cultivate an environment that nurtures inclusivity, sparks innovation, and fosters elevated employee engagement.

In the mid-1980s, Frito Lays faced challenges, prompting then-CEO Roger Enrico to initiate a groundbreaking initiative. Encouraging his 300,000 employees to “act as an owner,” Enrico inadvertently opened the door for inclusive innovation. A janitor, Richard Montanez, seized this opportunity, presenting an idea that would cater to the underserved Latino community. This story, along with others like it, underscores the potential within organizations when they create an open playground for innovation.

The playground analogy aptly describes the environment needed for fostering innovation within companies. However, similar to school playgrounds, today’s innovation playgrounds in companies may not be as inclusive as needed. Research in diversity and sports indicates the complexity of encouraging underrepresented groups to participate in activities marked by gender, access, or perceived competence. Such factors lead to the creation of stereotypes, limiting willingness to participate in activities marked as “out of one’s reach.”

To address this issue and engage all employees in innovative practices, firms must create new inclusive settings, referred to as innovation playgrounds.

Three insights to create innovation playgrounds

Start with Space

The design of office space becomes the initial vector for encouraging inclusive innovation practices. Similar to sports, the layout of the “playground” should entice contribution, collaboration, and creativity while facilitating access to tools. Although architectural firms are increasingly fostering the design of innovative office spaces, ensuring the existence of such areas across the entire organization remains a challenge.

Additionally, studies have long attested to the direct relationship between personal interactions and innovation. Many companies, including Google, Samsung, and Facebook, are generating new measuring metrics to certify such encounters. Zappos, for example, introduced “collisionable hours,” ensuring sufficient people walk through different office spaces daily to encourage new interactions and spur innovation.

Propose New and Safe Games

Similar to reclaiming a playground, organizations can propose new activities to reinvest otherwise invested innovation spaces. Companies often overemphasize the need for product innovation, making other areas uncomfortable. Focusing solely on product innovation may lead to fear of judgment, hindering contributions from different departments.

Creating a psychologically safe atmosphere is crucial, where employees feel comfortable challenging ideas and taking initiative. This fosters a culture of creativity and innovation. To encourage more people to innovate, firms should open new ways for employees to deliver alternative types of innovation while promoting a culture that embraces diverse perspectives.

Train and Teach the Rules of the Game

Research shows that people avoid engaging in certain activities, such as sports or innovation, when they feel incompetent. Therefore, innovation training becomes crucial to help everyone understand what innovation means within the company. IBM’s use of artificial intelligence to accompany first-time museum visitors showcases how training can prepare individuals for new experiences.

Innovation training enables organizations to cultivate optimal conditions for fostering creativity, equipping employees with the skills to respond to industry disruptions positively. Moreover, research indicates that innovation training leads to greater employee engagement.

In conclusion, creating inclusive innovation playgrounds involves providing access to facilities and resources, fostering psychological safety, disseminating information, and implementing comprehensive training programs. These efforts contribute to a culture of innovation and increased employee engagement, propelling organizations toward sustained success.

About the Author

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience.

The post Creating Inclusive Innovation Workplaces: Insights from the Playground appeared first on The European Business Review.

The rapid adoption of AI in today’s organisations leaves workers with two choices: waste their energy in a futile attempt to stop it or support the technology and develop a personal perspective that makes them an asset in this evolution. This should be an easy choice to make!

Throughout history, technological waves have transformed society, challenging individuals to resist or adopt a decision that determines their fate.

For instance, when textile mills spread across Europe in the 18th century, craftsmen rioted against the machines that were displacing them. As a symbol of protest, they threw their wooden “Sabot” shoes into the mechanical workings and became the world’s first “saboteurs”. Despite their efforts, the machines proliferated, and manual labour was dramatically devalued.

Nearly one hundred years later, in the 19th century, another technology – photography – threatened the livelihoods of classically trained painters. Cameras simplified image reproduction with near-perfect realism and became a menace to the painters exhibiting in Paris salons. For some artists, however, the response was different. Instead of competing with the camera’s photorealism, painters leaned into something the camera did not have – a subjective interpretation that infused their work with emotional depth and personal perspective. By doing so, they gave birth to a new artistic movement: Impressionism. 

As history repeats, we must ask ourselves a question. With the advent of Artificial Intelligence in today’s organisations, will we react like sabotaging 18th-century craftsmen or like impressionist painters in the 19th century? 

Becoming an Impressionist

As professionals, we should all be concerned about optimally positioning ourselves in an era of accelerated technological change. Not only is technology moving faster, but so is our capacity to adapt and use it. 

Contemplating the different responses of the 18th and 19th centuries craftspeople is helpful. Remember that both eras faced a common threat: a technology that produced faster and more consistently and could therefore replace what had been the sole domain of skilled workers.

But it is the response to that situation that matters. While saboteurs responded with outrage, Impressionists recognised the futility of confrontation. This leads us to the first key difference, dissociation. Impressionists leveraged human abilities beyond the camera’s reach; the ability to translate the world of subjective experience onto canvas. Instead of faithfully replicating the objective world, impressionists conveyed their as-lived experience, along with the emotions arising within, to capture the fleeting nature of human perception and existence. 

Second, impressionists understood that there was no cherry-picking regarding technology and were motivated to leverage the advancements technology was bringing. For example, the evolution of oil pigments made it possible for painters to get out of the studio and experiment with the transient effects of natural light and colour in the portrayal of landscapes and everyday life.

Finally, impressionists explored how competing technologies, like photography, could enhance their artistic development. Learning from the science of photography, impressionists were able to use a wider variety of images and ideas from around the world, leading to more original creations. They also understood that, as when taking pictures, an artistic subject could extend beyond posed sets to include scenes from urban and suburban venues, enlarging their creative scope. 

So, what can today’s professionals take from impressionism as we confront AI? 

What is the knowledge worker’s analogue to an artist’s impressions?  

In a word – perspective.

Perspective is the filter we use to understand the world, assess problems, and arbitrate for solutions. Perspective is a unique result of our accumulated knowledge, skills, relationships, and life experiences. Collectively, this makes us cognitively different – unique even – from others. This sometimes-undervalued asset is one of our greatest sources of differentiation in an emerging world of thinking machines that can challenge the professional class of knowledge workers.

But it is not all about thinking. Perspective also means tapping into our humanity, connections, and individual vulnerabilities. The “soft skills”, which are difficult for algorithms to replicate, are essential because of their inimitability. Revaluing our individual positioning in today’s technological turn is therefore essential. Like the impressionists, we can evade a frontal assault, and instead build our unique perspective as the foundation of our personal value proposition as we leverage Artificial Intelligence for our own expression. 

Becoming a Professional Impressionist: Three Practices

Cultivate Your Unique Perspective 

Artists cultivate a unique way of perceiving the world and develop an ability to evoke that perspective both cognitively and emotionally in others. Professional and public figures frequently traffic in their unique perspectives. Think of the author Malcolm Gladwell. He is often retelling known stories but crafting and sharing them in his unique way to serve his literary goals. Political candidates habitually publish a book to introduce their life experiences to the electorate and frame the perspective they will bring to the office. Transformational executives like Steve Jobs, Elon Musk and Bob Iger derive much of their vision from their perspective and their ability to share it in compelling ways. 

We can all do this but we must cultivate the skill, and that begins by becoming clear about the value our personal story has wrought. What is unique and differentiating about you, beyond your training and expertise? Is it in your unique work or life experiences? Your work ethic or values? Your ability to forge group cohesion? Clarifying the unique perspective that differentiates you from others, and algorithms, is a powerful impressionist starting point. 

Seek the Perspectives of Others 

When leaning into your personal perspective, you must also be aware of its limitations. The world is too big and our brains are too small to capture the whole of reality. We only perceive a subjective sliver of the objective world we are immersed in. You can see this right now if you look. As you read, you only attend to a word or two at a time. The rest of the page is a peripheral blur. In that liminal perceptual edge are your unseen risks and opportunities. How can you access what you aren’t perceiving?

Because of our unique perspectives, other people are seeing a different slice of the world than you. To access their individual reality, you must become curious about the perspectival world in their head. It is here where the managerial power of the Diversity, Equity, and Inclusion movement lies. While DEI is inherently fair and can help overcome structural inequities, a managerial utility of DEI is bringing diverse perspectives into our organisational realm. Doing so allows us to “see” what is beyond our perceptual periphery. Those perceptual insights are there, but the only way you can access them is if the person chooses to disclose them to you. Cultivating curiosity in your colleagues’ perspectives and developing the interpersonal skills needed to elicit them is the next step in becoming a professional impressionist. 

Master the Creation of Shared Perspectives

Something unique happens when we connect. You feel it. It enhances the experience of a scary movie. It’s why you prefer a live concert instead of listening to perfectly reproduced music through your Air Pods. It also happens at work. Not always, but sometimes, like when you are part of a team and have a feeling of shared purpose and accomplishment, it clicks. You are together, on a collective mission pursuing something worthwhile. 

For now, only humans can create those feelings, not algorithms. A professional impressionist can become conscious of this collective, intersubjective realm and can learn to influence it. It’s the realm of engagement, motivation, ambition, excitement, loyalty, and other collective spirits. It is as much art as science, but those who master it often change the world. Gandhi, Malala, Mandela, Sirleaf, King, and others arguably changed their worlds, not through titular power and authority, but by mastering the ability to forge shared perspectives for change that motivated large swaths of the population. You may not need to change the world, but you can learn to cultivate shared perspectives among your community, tapping into both logic and inspiration in pursuit of shared goals. 

For now, AI does not have access to human perspectives or human impressions. This makes personal perspective a durable point of differentiation for professionals in a rapidly changing digital workspace.

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience.

Dr. Gregory C. Unruh is the Arison Professor of Values Leadership at George Mason University. His most recent book is Strategy on the Sustainability Frontier (Global Leadership Academy Press, 2020).

The post Artificial Intelligence: Will You Be a Saboteur or an Impressionist? appeared first on The European Business Review.

While it makes sense that governments should use social media for effective communication with the public in times of crisis, research suggests that they should understand that their well-intentioned efforts might actually have the effect of exacerbating the problem, rather than mitigating it.

When a crisis occurs (an economic recession, a natural disaster, a health emergency, or an armed conflict), it is essential to establish an appropriate communication process between central governments, emergency response agencies, and the public. The purpose of such communication must be twofold. At one end it must help intensify the efficiency of the emergency response teams. At the other, it must inform the population and contain public concern.

Today, a particularly intense period of simultaneous crises is touching our world. One of its most critical vectors is an unparalleled climate crisis. Global warming is the result of the increasing concentrations of greenhouse gases in the atmosphere. It jeopardises not only the natural environment but also economic stability by increasing both the frequency and intensity of natural disasters and weather extremes, threatening global food security. Combined with the increasing global inflation rate (the World Bank¹ estimates that almost 90 per cent of all countries have seen a food price inflation of over 5 per cent between April and June), it has immediate and long-term repercussions for society, leading to poverty and malnutrition.

The role of the government in attenuating such effects is fundamental. Public officers must find a way to organise regulatory responses that can reduce the impact of the crises while mitigating the fears of the population. To develop an efficient communication strategy, one must consider and understand matters of public concern and how public attention might react; otherwise, such communication may not have the expected impact, and it might even have the opposite effects, generating more concern and uncertainty. In our opinion, the moderating effect of public attention affects not only government agencies involved in disaster management, but any institution or large corporation implementing a sensitive communication strategy.

To better understand the behaviour of such communication, we produced an academic study that sought to understand the effects of social media activity and the interaction (either positive or negative) with public attention.

In this study, we analyse the relationship between the social media activity of government agencies involved in disaster management and the agricultural commodity market during a natural disaster or extreme weather conditions and the role that public attention towards global warming plays in intensifying or reducing such effects. Our research shows a significant relationship between social media activity and agricultural commodities futures prices. We also show that higher levels of public concern about global warming intensify the impact of social activity, provoking a more intense market reaction. We go on to explain the results of our study, while providing some insights into how government agencies may better control the impact of social media.

Crisis and use of social media

A natural catastrophe requires timely, targeted, and reliable information. This makes social media a far-reaching tool that facilitates transmission, engagement, and accessibility, at a relatively low cost. Given the high penetration rate across demographic groups², social media are increasingly being used as a primary source of news and information³, playing an instrumental role during emergencies, crises, and disasters⁴. Therefore, government agencies involved in crisis management have turned more than ever to social media platforms to alert the population, share information, and enable a two-way channel of communication.

Government communication effects on commodity prices

To explore the effect of social media communication, we analyse⁵ the use of Twitter by several government agencies involved in disaster management in the United States. For our analysis, we collected Twitter activity related to natural disasters and extreme weather conditions. We chose Twitter because is well established and widely used by government, emergency agencies, and first responders and because it is known as a source or reference of rapidly available information.

Our results indicate that when a crisis occurs, government agencies use social media as communication channels with targeted audiences. The higher the intensity of the natural disaster, the higher the social media activity and traffic, triggering public and market concern about the aftermath and potential losses. The threat of potential shortages and financial losses increases the demand for the commodity, as well as the hedging positions in the futures market, pushing up the commodity price. In other words, social media and trending topics related to natural disasters might act as public attention catalysts and enable a market reaction, leading to increasing demand for the commodity and hedging positions. In addition, our study shows that higher levels of economic policy uncertainty and public concern about global warming intensify the impact of social media communication.

What should governments, citizens, and companies do?

As our results conclude, social media are increasingly being used as a primary source of news and information. Higher levels of social media activity and traffic are associated with more severe natural disasters and extreme weather conditions and, in consequence, with deeper repercussions for the agricultural commodity market. This effect tends to be more pronounced during periods of high economic policy uncertainty and public concern about global warming.

The lessons gathered from our research allow us to provide two simple recommendations that should help to implement a resilient and efficient social media communication strategy.

1. Our first piece of advice is simple: “Gauge public concern.” Public attention plays an instrumental role in influencing and moderating the market reaction in periods of crisis. In particular, public attention and concern about global warming has been shown to intensify the impact of social media during periods of natural disasters and weather extremes. Equally important, government agencies involved in disaster management should take into consideration the economic environment when implementing a communication strategy, as higher levels of economic policy uncertainty are associated with deeper market reactions.
2. On the other hand, governments should start a practice of measuring the market reaction to each one of their communications. To our knowledge, there is no precise agency in charge of understanding the consequences of government social media behaviour for economic tendencies. We therefore suggest that governments (and companies) should start a data and information analysis practice, for which they can take advantage of academics and scholars that can perform objective inquiries. In following these two recommendations, they will be able to tame (and therefore reduce) the negative impact of such types of announcements on commodity prices and be more aware of the wording, hashtags, images, and overall content that provides a less excessive response of concern from the public.

This article was originally published on May 19, 2023.

About the Authors

Federico Platania is Full Professor at ISG INTERNATIONAL BUSINESS SCHOOL. He holds a PhD in Banking and Quantitative Finance jointly offered by the University Complutense of Madrid, University of the Basque Country, University of Valencia, and University of Castilla-La Mancha and a HDR (Habilitation à Diriger des Recherches) en Sciences de gestion from Aix Marseille Université. His research interests include the study of energy and agricultural markets, climate change, and information and communication technologies.

Celina Toscano it is a passionate professor currently working at ISC Business School in Paris and a PhD candidate at CY Université Paris Cergy. She is a curious person with an interdisciplinary spirit and the willingness and eagerness to explore different topics and opportunities in order to expand her research and teaching repertoire.

Fernanda Arreola is the Dean of Faculty & Research at ISC Paris. She is also a Professor of Strategy, Innovation & Entrepreneurship and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience.

References

1. Food Security Update | World Bank Response to Rising Food Insecurity. Last Updated: 13 March 2023. The World Bank. https://www.worldbank.org/en/topic/agriculture/brief/food-security-update
2. 2 The 2022 Social Media Demographics Guide. n.d. Khoros. https://khoros.com/resources/social-media-demographics-guide
3. 3 Exposure to opposing views on social media can increase political polarization. 28 August 2018. PNAS. https://www.pnas.org/doi/abs/10.1073/pnas.1804840115
4. 4 Social Media and Disasters: Current Uses, Future Options, and Policy Considerations. 6 September 2011. Congressional Research Service. https://mirror.explodie.org/CRS-Report-SocialMediaDisasters-Lindsay-SEP2011.pdf
5. 5 Social media communication during natural disasters and the impact on the agricultural market. Technological Forecasting and Social Change. June 2022. https://www.sciencedirect.com/science/article/abs/pii/S0040162522001263

The post Digital Communication and Public Concern During Natural Disasters. appeared first on The European Business Review.

Have you ever noticed how successful entrepreneurs seem to be driven by a kind of inspiration? But where do they get that inspiration, and how can an entrepreneur be sure that their proposition has the innate value that will carry it towards success? In this article, Fernanda Arreola and Gregory Unruh uncover the power of the “why”.

The past 50 years have witnessed major shifts with regard to what fuels entrepreneurial drive. The type of new businesses that emerge have been moving from a low-innovation and opportunity-led entrepreneurship into a new quest for originality and impact. The result is new entrepreneurial strategies and concepts incorporating sustainability concepts, including reuse, recycling, repair, product sharing, ergonomics, circular economy, and so forth, demonstrating an emerging concern for the social, economic, and environmental impact of firms. The result is a new trend of emerging entrepreneurs: those that move with purpose.

In this article, we attempt to share three leading patterns that define these entrepreneurs. First is falling in love with purpose. Second is living their purpose. And third is creating a laboratory for experimentation and innovation inspired by purpose. But first, a little review of how the evolution took place and led business creators to care more about reasons and less about form.

A short history of how we started caring

Although it would be impossible to trace the exact moment when new sustainable and responsible initiatives started to consolidate, we can identify key moments where first-movers started giving greater importance to purpose than just profit. The first steps go all the way back to the 1960s and 70s with a shift in government policies, specifically with the inception of the Environmental Protection Agency, and the Occupational Health and Safety Administration in the United States. These new regulations forced business leaders to incorporate social and environmental considerations into their decision making. Some decades later, a trend began, with large corporations giving visibility to their sustainability impacts, such as the Body Shop’s Values Report in 1995, which publicly and voluntarily disclosed the social and environmental impacts of the business. Around the same period, emergent “online whistleblowing” rendered public a legal dispute against McDonald’s regarding some of its traditional practices, which included child employment and animal cruelty.

As such examples became more present, they impacted the content of classes and courses in business schools. In early 2000, pioneering programmes were incorporating sustainability and, by 2006,¹ the first ethical code of conduct within a business school was signed. By 2007,² the United Nations Principles of Responsible Management Education were launched and gained thousands of business schools as signatories. As the discourse and examples continued to develop, so did students’ and young people’s interest in questioning the justification for the existence, prosperity, and success of businesses. Students wanted to know “Why?”

Start with why

A lot has been said about the practice of starting with why. The speaker Simon Sinek³ is one of the voices popularising the idea that, for leaders to inspire others to act, they must start by justifying the reason why they should act. In our most recent research, we have explored the notion that responsible entrepreneurs tend to start with a powerful why. Our search indicates that the success of why comes from three powers of purpose: love, live, lab.

Love the purpose!

Entrepreneurs who start with purpose tend to fall in love. However, this love is not with an idea, but with the reason that the idea exists. This reason (or purpose) is an intention, a resolution, a higher objective, a meaning, and a motivation. It is therefore not a concrete object, but the compelling desire to make a situation change. Take the example of Alejandro Souza, founder of the social enterprise Pixza.⁴ The company is a “social empowerment system, hidden behind a pizzeria” with an underlying purpose of helping homeless people find a way to employment and personal independence. Inspired by an college assignment that asked him to write the life of a homeless man named Joe, Alejandro fell in love with the idea of finding a way to support homeless people in developing self-reliance. And the idea – a pizzeria that hires homeless people in hopes of letting them start a new life – came later as a natural outcome of his purpose.

Live by the purpose!

The second characteristic of this new generation of entrepreneurs is the notion of “living by the purpose”. Living by purpose means becoming an example of the entrepreneur’s aspirations. These founders become speakers, ambassadors, and emissaries of the reason why the firm exists. It is inspiring others by becoming the soul of the purpose and defending it unlimitedly. An example is the CEO of Lush, Mark Constantine. In 2021, he took the decision to shut down all social media in recognition of the negative impacts on users. To this end, in his eyes, “I’ve spent all my life avoiding putting harmful ingredients in my products. There is now overwhelming evidence we are being put at risk when using social media.”⁵ Living the purpose of Lush implies bold choices, because respecting the reason why a firm exists often means defending the purpose against mainstream attitudes and trends.

Lab the purpose!

Our final discovery is the need to lab the why, that is, to create a real laboratory for exploration and experimentation that allows entrepreneurs to test the various opportunities that exist for making purpose a reality. And when we speak experimentation, we do not speak about expensive R&D. Take the example of Sal Khan,⁶ the founder of the non-profit Khan Academy. While tutoring his cousins on their maths homework, he received some unwanted feedback: they preferred seeing him online to in person. Instead of taking this as an insult, he instead decided to experiment with his tutoring delivery and improving the education opportunities of young children. Kahn’s 10-minute YouTube tutorials became a huge success, and his dream of impacting millions of children and teachers with free access to pedagogical support a reality.

An opportunity for a new design

In conclusion, our “triple-L” model suggests a simplified perspective that can help entrepreneurs question the feasibility of their purpose-led ideas. First, they need to make sure they love the purpose (or reason) behind their idea. Second is to be ready to live by such purpose, representing and exemplifying its meaning daily. Third is to enable a laboratory for innovation, one that admits new ideas and permits quickly testing new possible products, services, and business models that can let the purpose exist.

This article was first published on November 22, 2022. 

About the Authors

Fernanda Arreola is the Dean of Faculty & Research at ISC Paris. She is also a Professor of Strategy, Innovation & Entrepreneurship and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience.

Dr Gregory C. Unruh is the Arison Professor of Values Leadership at George Mason University and an expert on sustainable business strategy. He currently serves as the Sustainability Editor for the MIT Sloan Management Review.

References

1. The Oath of Honor. Thunderbird School of Global Management. https://thunderbird.asu.edu/degree/students/graduates/experience/oath-of-honor.
2. History of PRME. Principles for Responsible Management Education. https://www.unprme.org/history-of-prme#:~:text=The%20Principles%20for%20Responsible%20Management,business%20schools%20and%20academic%20institutions.
3. Simon Kinek on Millennials in the Workplace. YouTube. 29 October 2016. https://www.youtube.com/playlist?list=PLmgBZDhActpR25e9odZ6R4mvB6fJHYG1B.
4. Pixza. https://pixza.mx/
5. 4 Inspirational Examples Of Purpose-Driven Brands. Neuromagic. https://sdg.neuromagic.com/en/brand-purpose/
6. What is the history of Khan Academy? Khan Academy. https://support.khanacademy.org/hc/en-us/articles/202483180-What-is-the-history-of-Khan-Academy-

The post A New Generation of Entrepreneurs: Moving with Purpose appeared first on The European Business Review.

A start-up company entering any given industry may well find itself in competition with incumbent businesses that have powerful advantages in the form of operational experience and brand track record. What, then, can a start-up do to stand a chance of being an effective challenger to such giants? There is a well-known biblical precedent.

We may all know the story, but let’s take some time to go back into mythology. In ancient times, the Israelites were fighting against the Philistines but had a huge handicap: a gigantic and strong fighter called Goliath (according to the Book of Samuel, Goliath was 2.9 metres tall¹). The Philistines were so confident of Goliath’s power that they challenged the Israelites to a one-on-one encounter. The winner of the fight would win the war.

Over 40 days, Goliath comes out between the lines and challenges the Israelites to send out a champion of their own. A poor young man named David finally accepts the challenge. David, concerned by starvation in his family, supposed that if he won, he would be able to change the destiny of his family. Once on the battlefield, he was offered several weapons, but he chose a simple one: a sling and five stones.

In his first move, he managed to launch a stone straight into Goliath’s forehead, which made him fall to the ground. David then seized the opportunity to take Goliath’s sword and cut off his head. He won the battle and Israelites won the war.

But why go back to mythology when talking about start-ups? We believe that this analogy can help many young entrepreneurs understand that resources, strength, and power are not the only weapons available to successfully launch a new company. And, as we will learn by looking at the Treacy/Wiersema framework, guess what … you can be a David, too!

It’s not about cutting off heads. It’s about understanding the underlying strategy of your competitors.

The Treacy and Wiersema² framework can help us to take David’s way to win the war against a powerful competitor when launching a new product or service. The Treacy/Wiersema perspective is simple. To delight our customers and “win the war”, we have the choice between three strategic approaches: operational excellence, product leadership, and customer intimacy.

Let’s begin by speaking about operational excellence, and for this there is no better example than Amazon³. This is the pillar of their success and the keystone of their strategy. What matters for them is the right product, in the right place, at the right price, at the right time. But, as a start-up, such efficiency seems unattainable, primarily because in the majority of cases there are still a lot of tests and learning⁴ and also because infrastructure is minimal. So, coming back to our analogy, it is as if we had wanted David to master a martial art in one day, with the knowledge and precision needed to defeat his opponent.

Second, we have product leadership. We recently visited the Apple store at Opera in Paris. It looks as if they give away products for free. Queues are enormous and customers come out with great smiles and a contagious feeling of satisfaction. Are they giving away phones? No, they are giving away something worth more than that: product leadership. Every customer that comes out of the store may have a slight idea of the cost of production of an iPhone (which is around $500⁵), but what they have in their hands is worth way more than that. It is worth a couple of thousand dollars of exclusivity, a couple hundred more for seamless interaction with their other devices, a couple extra from the latest camera features, a bit more for the best screen resolution, and a lot more just for the brand. All the value adds up differently depending on our perceptions but, in the end, it is the product leadership and the fact that we have the state-of-the-art guarantee of almost every single component that makes us feel like we are buying a little piece of heaven. And, yet again, if you are a start-up, you cannot dream that your POCs (proofs of concept) and prototypes, regardless of their advanced technology, could compete against that. So, coming back again to our analogy, it is as if we had wanted David to invent instantly a magic sword to defeat his opponent.

So, dear start-up leaders who want to act like a David, there is, as you may have guessed, a last-case scenario that we have been able to explore through our research. That third strategic approach seems like an effective weapon to have a chance in this competitive battlefield. Through a review of interviews, research, consulting, and interaction with customers, we have come to see that there is this very secret source of magical power: customer intimacy. The concept is not necessarily new, as it is something that in the late 90s used to be called KYC⁶. But today, it’s not only about knowing, it’s not only about dragging, it’s not only about getting acquainted, but it’s developing an intimacy that allows you to perceive the little tweak, default, lack, problem, or addition that would change what your customer experiences from day to day. What did David know about Goliath? For 40 days, he observed and tried to understand everything Goliath could do and not do. It was not about strength, it was not about dexterity, it was not about resources. All he needed to identify was his weak point – one that no one had noticed before, but that would be impossible to defend. He looked at his opponent, he realised his fragility, and he pointed straight at it (let’s forget about cutting heads). For a start-up, developing an intimate understanding of the environment (customer experience, partner experience, competitors’ strengths and weaknesses, …) is key to “winning the war”.

A lot of start-ups, today, are customer-experience native, because they were launched to solve a “problem” experienced by customers. Moreover, the “prototyping” spirit naturally includes regular feedback from customers. It makes it easier to find the specific moments in the experience of a product/service, that will be unforgettable for customers, with a clear impact on recommendation and, finally, on financial results.

For a start-up, customer intimacy is not an option. It’s clearly the winning strategy to build success. The customer experience culture needs to be present from day one, and specific practices and tools to understand and design customer experience should be a priority for leaders. But as mentioned by Treacy and Wiersema, it is essential, even if you have to choose one of the three strategic approaches, to be good enough on the other two. It means that start-ups need to be good enough at operational excellence and product leadership, never forgetting, while growing, that customer intimacy needs to stay top of mind for all employees!

About the Authors

Fernanda Arreola is the Dean of Faculty & Research at ISC Paris. She is also a Professor of Strategy, Innovation & Entrepreneurship and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience.

Pierre Daems is CEO of Aube Conseil, a strategy and management consultancy based in Canada and France. Pierre is a certified expert in Customer Experience Management (CCXP) and co-founder of the CXPA (Customer Experience Professional Association) in Montreal and Paris. He contributes to making organisations more sustainable, helping them to develop a purpose that takes into consideration the experience of all stakeholders (“Human Experience”).

References:

1. Goliath. n.d. Wikideck. https://wikideck.com/Goliath
2. Value Disciplines: Customer Intimacy, Product Leadership and Operational Excellence. 23 October 2018. Business to you. https://www.business-to-you.com/value-disciplines-customer-intimacy/
3. Operational Excellence Pillar – AWS Well-Architected Framework. 15 December 2022. Amazon. https://docs.aws.amazon.com/wellarchitected/latest/operational-excellence-pillar/welcome.html
4. The Cost of Making an iPhone. Updated 27 December 2022. https://www.investopedia.com/financial-edge/0912/the-cost-of-making-an-iphone.aspx.
5. Test and Learn: La stratégie des entreprises agiles. 9 September 2021. https://www.amazon.fr/Test-Learn-strat%C3%A9gie-entreprises-agiles/dp/2311625160
6. Know You Customer in banking. n.d. Thales Group. https://www.thalesgroup.com/en/markets/digital-identity-and-security/banking-payment/issuance/id-verification/know-your-customer
7. Treacy, M., & Wiersema, F. (2007). The discipline of market leaders: Choose your customers, narrow your focus, dominate your market. Hachette UK

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Innovation is a crucial driver of success for organizations. It is a tool for nurturing a competitive advantage, and it is the key to strengthening the sustainability of a firm over time. In this article, we explore how innovation can be hindered by the firm’s choice of a business model. In using as an example Consulting Firms, our article presents a dynamic representation of the way in which the elements of the business model interact, penalizing the ability of consulting firms to develop an innovation capability. 

As Peter Drucker said, “Culture eats strategy for breakfast”, a clever way of acknowledging that something larger than strategic alignment, could impede a firm from accomplishing its objectives. When it comes to innovation, a similar reality seems to explain why firms cannot develop an innovation capability. A strong force exists within organizations, and it is often referred to as organizational inertia, an installed opposition that makes it difficult to ignite an innovation-focused culture.   

Being unable to innovate jeopardizes a firm’s future. According to a recent McKinsey survey 90% of executives believe they are forced to not only generate product innovation but to actually question and bring considerable change to how they generate profits. Otherwise said, they must question their business models.   

Business models are the ensemble of complex business choices that determine how a company creates value and makes a profit. They concern the “products or services the business plans to sell, its identified target market, and any anticipated expenses“.  The business models should, therefore, be the drivers for each strategic choice of the firm, and establish not only what a firm does, but what it does not do. As David Teece, a leading scholar in this subject explains, “The essence of a business model is in defining how the enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit” (2010, pg. 174).  

But what is in a business model?  

Traditionally, practitioners and academics have been concerned with how the reconfiguration of the components of a business model can lead to strengthening the competitive positioning of the firm. One of the most cited visualization tools is the RCOV model (figure 1). In this model revenues, costs, organizational design and the value propositions interact in order to determine the unique configuration of a firm’s business model. This configuration is limited by “trade-offs” or, otherwise said, an admission of the fact that engaging a resource for an activity or action, compromises its use elsewhere. 

Figure 1: the RCOV model (resources & competencies, organization, and value proposition) 

What is special about the business models of Consulting Firms? 

Some years ago, we started paying attention to the business model of consulting firms. We noticed that there seemed to be sufficient evidence that, although consulting firms were able to provide innovative ideas to organizations, they were, themselves, lacking innovation from within. Otherwise said, they lacked an innovation capability. 

The consulting firm sector is a mature one, with management consulting firms having existed for more than 100 years. Since their inception, consulting firms have been able to produce growth for their customers, by means of producing value-oriented insights that leverage their capacity to take an objective position and an external perspective.  These solutions highly anchored in operational excellence and strategic positioning have been shown to produce improvements and innovation for their customers, with at least 50% of them claiming to have seen a significant improvement in their operations.

To be profitable, consulting firms (and most importantly consultants) must develop an ability to standardize approaches (or methodologies) that have proven successful with other clients. This means that the business model of a consulting firm consists of adapting acquired knowledge and experience, to propose, through the lens of previously proven ideas, solutions to their customers. However, this does not answer the question coming from our observations. Why are consulting firms not innovating themselves?   

It’s the business model stupid

To find an answer we interviewed more than 50 managers, partners, and consultants within a variety of management consulting firms. During these interviews, we were able to gather the elements of the business model and to understand the interactions that exist, and inhibit, innovation.  

From our research, we gather that the functioning of consulting firms can be summarized as follows. The consulting firm possesses a revenue model that is based on its ability to sell projects (and billable hours) to its customers. The productivity and profitability are reliant on the standardization of a set of solutions (value proposition), the optimization of staffing of consultants, and the standardization of competencies amongst them that can guarantee similar outcomes regardless of the customer. To date, although recruitment policies are evolving, our interviewees still discuss the fact that most business consultants share key behavioral traits and academic qualifications, which hinders diversity.  

Consequently, consultants are chosen to participate in projects, favoring the staffing of the highest number of billable working hours. The teams are requested to delocalize to the customer offices or to work on siloed teams for the duration of the project. The volume of costs is fixed, which means that there is great pressure for managers to attempt to get close to the largest percentage of potential billable hours possible. It is well known that business consultants are expected to work shifts that are beyond the classic employee contracts. It is sufficient to see the example of Goldman Sachs, mentioned by one of our interviewees.  

The value proposition resides on the ability of the teams to provide solutions within the expected framework of time that is granted by their clients. To induce such result orientation, consulting firms have an “up or out ” mentality, which intends to leave behind consultants that are unable to either adapt to the intense intellectual demands or incapable to adapt the standardized analytical procedures, to efficiently produce business recommendations.

If we consider these elements in the RCOV model we can see clearly that resources and competencies will focus on billable hours, impeding employees from engaging time for producing innovation. The Value proposition will emphasize the knowledge management practices structured towards the standardization of business approaches, with limited flexibility. As for the organizational structure, the delocalization of employees reduces the number of occasions for formal and informal conversations, both necessary as catalysts for the generation of social links that lead to the inception of product or process innovations. Finally, the lack of recruitment diversity, the impulse for competitiveness amongst peers, and the stressful results-oriented environment provide a short-sighted results orientation for consultants, all detrimental to generating an innovative capability with a mid- or long-term orientation. Our results are illustrated in Figure 2.  

Figure 2: the relationships between the elements of the business model and innovation 

In this sense, our research finds that it is the business model itself that acts as an inhibitor of innovation from within. This explains why, in most cases, large consulting firms have not been known to produce transformational innovation or new management practices in the last few decades. In fact, a vast number of consulting firms have mostly put into “fashion” practices that have proven themselves successful in the environments where they operate, produced by outsiders (either academics or practitioners).  Our research opens an exciting new path for research, but also to better understand the effects of a specific business model choice on other relevant variables, such as innovation. 

As a final recommendation, we believe partners and managers must really question the place that innovation has in the organization. Is there time, incentives, resources, and practices that encourage innovation? and most importantly, what are the processes set in place to actually develop the capability to innovate as an organization? 

About the Authors 

Fernanda Arreola is the Dean of Faculty & Research at ISC Paris. She is also a Professor of Strategy, Innovation & Entrepreneurship and a researcher that focuses on service innovation, governance and social entrepreneurship. Fernanda has held numerous managerial and possesses a range of international academic and professional experiences.

Raphaël Maucuer is an Associate Professor of Strategy at ESSCA School of Management, France. He holds a PhD in Management Sciences from the University of Paris-Dauphine. His research explores business models in various contexts such as multinationals, startups, consulting firms, and NGOs. 

Adrien Terlier is a senior management consultant with a passion for strategy and innovation topics. He started his career in consulting through different experiences in Big 4 (Deloitte & KPMG) in Luxembourg thanks to several project in the financial industry. Today, he works as a consultant in the healthcare sector where he helps hospitals, laboratories, re-education centers and others healthcare actors to review and align their strategy with their core values and the objectives of the parties involved.

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During the period of confinement, organizations around the world were forced to develop new tactics and strategies for orchestrating new forms of work and collaboration. This extreme situation, that we can observe as a natural experiment forced companies to try a fully virtual work environment. In this article, we share our views of 10 managers around the world, who were forced to engage in new ways of collaboration with their teams, gained a new perspective towards the limits, opportunities and new challenges of virtual coordination. 

Motivation in the workplace

The study of motivation in the workplace had its formal beginnings in the theories of Abraham Maslow¹, who contended that motivation is the natural desire of humans for always wanting to improve their belongings or to satisfy more ambitious needs. The research on motivation has therefore acknowledged that we all are at different levels of a “needs pyramid” and that our demands belong to the desire to achieve a superior level of accomplishment of such needs.

Research on engagement at work also acknowledges that, the needs of the workplace are composed by different aspects of our environment that pertain to at least three domains: the fit with corporate values and the strategic sense we find in what we do (“want”), the support, empowerment and collaboration to be able to concretize our work (“can”) and the consideration and recognition we receive (“be”)². Other studies signal, that a “good place to work” is one in which we are able to, other than finding sense to our contribution, we can profit from a social environment where we are able to collaborate and a leadership that drives us in the right direction³.

But for all of these variables, the undergoing confinement conditions make us consider if a virtual collaboration is a good enabler of the central items in the motivation or engagement at work framework. This is because, while online collaboration can bring beneficial effects to the incorporation of new practices, the improvement of the efficiency of more available teams (less concerned by travelling or transport times) and more information for managers (thanks to an increased number of meetings⁴) other more human and practical aspects of face to face collaboration, may have been endangered or disrupted.

A multi-country perspective: learnings and practices in a fully virtual environment

For our study, we interviewed 10 managers with direct reports around the world, who worked under confinement conditions, in order to evaluate if their perspectives and experiences, brought a similar and comprehensive understanding to the challenges and opportunities of working online.

During the confinement, working fully online, our interviewees experienced the following advantages and limits:

Advantages

• More efficiency when working on specific task – in the finance team of a French Insurance company, 40% of managers said that remote working is more efficient than working from the office, particularly for production work – excel sheets – only 3% consider it less efficient
• More engaged teams – in the same finance team of a French Insurance Company, 35% of managers said that teams are more engaged with remote working – only 3% less engaged
• Increased personal well-being – depending on individual situations, for example, people appreciated working from home if they had a house with a garden and a designated workspace/office
• Openness of managers for encouraging alternative ways of collaboration including letting people work on less traditional schedules – for example a manager shared that he let his web designers work from 1pm to 10pm every day, which fit their preference and lifestyle
• Increased transparency in the communication – one of the managers expressed that for his company it was fundamental to be open about the number of COVID cases, the financial state of the company and the strategic steps taken during the period. This reassured workers and made them trust their management
• Shorter and more efficient meetings – for example, a manager expressed that it’s the first time that meetings are starting on time and that everybody is focused on achieving objectives in the best possible timing
• Discovering people (or rediscovering) – a manager in a service firm said she was pleased to see many people, who would usually be on the field and therefore hard to cross, connected to virtual meetings
• Discovering humanity (the personal lives of others) – a great majority of managers shared that, in looking at the personal lives of others (pictures, kids crossing, decorations, pets and other) they felt a redeemed proximity and a more human interaction
• Boosting creativity in some tasks – a manager said that he saw a peek in the ability of marketing designers to create nicer visuals (the employee said he felt more comfortable working in a dark room from his home). This was also the case for another manager, who’s marketing budget was cut by 25% and saw his team’s implementing free digital tools that led to a similar number of leads than with the previous budget
• Team’s cohesion – a feeling of fairness and shared situation was seen on the majority of managers, expressing it as a sentiment of “being on the same boat”
• The Hero’s syndrome – some employees gathered a sentiment of heroic or exceptional performance, which, boosted by a feeling of recognition, boosted the confidence of many employees.

Limits

• Personal well-being – many managers talked about a decrease in their employee’s (and their own) well-being, either for having uncomfortable settings (lack of appropriate chair, or workspace) or for the loss of some services (a manager in IT said that now, she had to spend one hour cooking, when before she had a very good cafeteria on site, where she could eat for free in 20 minutes) about people being in uncomfortable personal positions that (depending on individual situations – e.g. not for women )
• The personal schedule interrupting the day – many managers discussed the lack of separation between private and professional life
• Lack of personal interaction with colleagues and clients – managers mentioned that because of the need to schedule a meeting the informal interaction became non existing (small talks – coffee machine + share and help each other)
• Lack of willingness to cooperate – many managers expressed some employees were too impacted by the sudden change and conditions and felt unable to collaborate.
• Lack of competence for working from home – some managers discussed that some of their employees were simply not fit to work from home. A manager even mentions a case of an employee drinking an alcoholic beverage during a meeting.
• Lack of tools – many managers said they were simply not ready from an IT perspective, to face the online environment.
• Lack of trust – some managers mentioned they were still dubious of the fact that their workers were doing their activities as expected.
• Lack of accompaniment – managers said that they had received complaints about a feeling of “loneliness” from their direct reports, who did not feel the same level of follow up and availability from their managers.
• Very difficult to welcome and integrate new employees –  a manager said that newcomers had a specially hard time understanding the organization and taking confidently over their new job
• More difficult for teams to work on projects, especially when practicing the agile methodology – manager mentioned that It’s very difficult to work remotely at the beginning of a project

What we know and how to make our work better?

The list of the activities and actions that are more likely to engage collaboration and enhance performance, gives us an idea of the considerations that companies must have when rethinking the future of online and offline collaboration. In observing some of the advantages and disadvantages experienced during the confinement period, we notice that it is essential to connect online and offline collaboration practices to the employee experience and a firm’s culture. Following, we make some recommendations on the considerations companies must have if they decide to permanently change their online and offline collaboration practices.

• A firm’s online/offline practices must be adapted to the overall working conditions of the individuals that make part of each team (personality types – DISC, personal situation – home/family, type of function in the organization, …). Neglecting the fact that individuals are limited by their personal environment, can lead to inefficiencies in teams were wide gaps of accessible or appropriate resources and competences exist
• A firm’s online/offline Practices should be adapted to the different moments of the employee experience  (production of a document, meeting to discuss a project with colleagues, seeking help, welcoming a new employee, evaluating a team member, fostering small talk amongst colleagues, hosting a creativity session, leading a seminar, holding an executive committee meeting, animating a workshop on engagement/values,  ….)
• A firm’s online and offline practices should acknowledge the cultural adaptation curve. This curve explains to us that peaks of frustration and of excitement exist in the deployment of a novel cultural environment. During the Covid firms experienced such curve, and therefore they may be capable of determining at which phase of the curve they are located, in order to avoid overcharging teams during periods of frustration or confrontation.

In conclusion, choosing the right practice (online, offline or hybrid) for the right moment is not an easy task. This requires a strong organization of work that can assure that employees are on-site when the moment requires a physical connection (meet a new employee, seminar, creativity session, …) and online when they must work remotely. It also demands a lot of flexibility and trust so that employees can adapt their agenda to be either online or offline. Managers must also leave space for employees to adapt to these new methods, and avoid taking the upper phases of the cultural adaptation curve, as the new level of performance expectations. Managers should therefore acknowledge that more virtual exchanges do not mean increased productivity for all.

About the Authors

Fernanda Arreola is the Dean of Faculty & Research at ISC Paris. She is also a Professor of Strategy, Innovation & Entrepreneurship and a researcher that focuses on service innovation, governance and social entrepreneurship. Fernanda has held numerous managerial and possesses a range of international academic and professional experiences.

Pierre Daems is CEO of Aube Conseil, a strategy and management consultancy based in Canada and France . Pierre is a certified expert in Customer Experience Management (CCXP) and co-founder of the CXPA (Customer Experience Professional Association) in Montreal and Paris. He contributes to make organizations more sustainable helping them to develop a purpose that takes in consideration the experience of all stakeholders (« Human Experience »).

References
1. https://sg.inflibnet.ac.in/bitstream/10603/7182/7/07_chapter%202.pdf
2. Based on the MC2 model available on https://www.aubeconseil.com/documents/Fiche_MC2_Aube_Conseil.pdf
3. https://www.greatplacetowork.com/best-workplaces – international /world – s – best – workplaces/2019
4. https://hbswk.hbs.edu/item/you – re – right – you – are – working – longer – and – attending – more – meetings
5. https://www.mckinsey.com/business-functions/organization/our-insights/covid-19-and-the-employee-experience-how-leaders-can-seize-the-moment

The post Advantages, Limits And Strategies For Online And Offline Collaboration appeared first on The European Business Review.

By Fernanda Arreola and Gregory Unruh

New demands are emerging in the service sector that require people-oriented managers who also understand the technical aspects of operating large facilities. Our research shows a need for new “transversal” professionals capable of merging hard technical abilities with soft relational ones. A prime example is a new generation of Hospitality Managers that fulfill the hospitality needs of employees in ways that facilitate organisational happiness and engagement.

Capturing the Organisational Value of Hospitality Service Offerings

Executives are increasingly aware of the value that attending to the humanistic needs of an office can bring to the organisation. Research shows, for instance, that providing the basic elements of ergonomy, such as good lighting, workplace ventilation and green spaces, can result in greater work satisfaction with an eventual positive impact on workplace performance.^1,2,3 Other companies are employing perquisites and assistance services to attract talented employees and encourage deeper engagement.^4,5 Facebook or Alphabet (Google), for example, have rendered their facilities into “campuses” with spaces meant to generate collaboration and informal exchanges while reducing stress levels. The companies further facilitate many of the personal life activities of employees, such as dry cleaning, child care or even making dinner reservations or arranging for flower delivery.⁶ The goal of these services is to free employees of mundane concerns so that they can attend more fully to their professional work.

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While the value of these services may be more obvious to a generation of younger firms, the reality is that gaining control over the management of an office space, understanding employee needs, creating new spaces for innovation and assuring performance, is not an easy task. This has led some employers to rely on outside service firms as specialist providers.⁷ Companies normally externalise service-activities that are considered to be outside of the “productive” scope of actions. With this logic, a large number of firms have chosen to abdicate control over an activity that until recently was not considered a performance tool; the management of the workplace. However, when companies outsource an internal service there is a loss of information about the status of the company’s workforce. The firm is no longer aware of the problems their employees regularly face and thus have limited information about the value that such service provides. Furthermore, the possibilities for internal discovery and innovation are lost when control is ceded to an outside provider.

To address this concern, a growing number of companies are establishing a new function to regain links with the elements that increase performance and agility within an office that generally goes by the title of Hospitality Manager.

What is Hospitality Management?

Hospitality management is most often associated with the food, lodging and vacation sectors, industries focused on “hosting” and providing “hospitable” services to leisure clientele. How is the concept of translating to companies and their workforces? To find out we engaged in a 12-month research effort to study the workplace service industry in France. We interviewed the key strategic actors responsible for employee hospitality services including those with the title of Facility Manager, Hospitality Manager and Concierge services, as well as directors of work-environment and human resources. Our interviewing gathered the viewpoints of traditional players, larger firms and new entrants that are finding a demand logic for such services.

While our interviewing did not indicate that there was a universal definition for what a hospitality manager is, there was a recognition to the unique skill set they require. Importantly, successful hospitality managers are capable of balancing and employing both hard technical skills that attend to the objective management of the business and soft relational skills that address the humanistic needs of company employees. As a key account manager facilitating HM services explained, “We are seeing more than anytime before, the need to know our employees, those that work directly with firms providing or facilitating services. We recognise we need to be capable of assessing and measuring their level of expertise on a technical and also on a relational level”.

One interviewee defined this suite of skills for Hospitality Manages as a combination of “know-how” and a “know-how-to-be”. By “know-how” she meant the ability to accomplish the technical aspects of the business and by “know-how-to-be” she indicated knowing how to engage effectively with employees in a way that engages the managers emotional and social intelligence. 

The “know-how” task expected of some Hospitality Managers can be very technical, especially when there is an operational facilities management (FM) focus to the company. Furthermore, facility managers must take into consideration not only the services provided within an office space, but also how the design of a workspace impacts employees and their performance and satisfaction at work. As one interviewee, an owner of an architectural firm specialised in office spaces stated  “Our activity is the building brick for the management of a facility, is the key for generating services. This is because, when we conceive spaces, we create a distribution of movement, a logic of work”.

While perspectives are diverse, a preponderance of managers highlighted that hospitality management requires someone who can establish a community and become very visible to the organisation. They need to be able to produce a transversality that allows communication between people (and what they need) and teams of service providers (and what they are able to propose). As one interviewee told us, in a site with over 1,000 employees and more than 10,000 visitors, it is impossible for people to know who to go to when something is not working. Having a centralised person that can facilitate the interactions of the entire community was so important to the interviewed HMs that they acknowledged the need to create ambassador programs with “referents” that can help them transmit and gather information.

For many companies, the hospitality managers responsibilities are not limited to attending to employees inside the company, Many are expected to consider the needs of customers as well. As one executive from one of the largest Facilities Management providers put it, “We started providing Hospitality Management services because we noticed how difficult it was to make our customers happy. In our sites, in those in which we have an HM, we have a better view and a closer relationship that allows us to be in touch with our technical teams”.

A new generation of Factótums

Ideally a hospitality manager blends in unique skills that make him be a translator of information, a communicator of needs, a problem solver that understands technical standards, and a process-oriented innovator. These skill sets are very hard to find in a market that has a very straight line division between soft and hard skills. So how are Hospitality Managers recruited and trained?

Interviewees noted the difficulty in identifying the empathy and emotional intelligence elements, something that renders the process of filling the available positions very burdensome. One director of FM, argued that there is no obvious answer to this question. In recruiting, she relies on a key interview question to illuminate a candidate’s suitability for a hospitality position. She presents candidates with a stressful situation, sometimes taking it into a roleplay. Beyond the specific answer, she is looking to see that the candidate knows how to listen, can ask clarifying questions, can show empathy and can relate to the problem from an insider’s perspective.

Other executives see the challenge as confronting one of two choices. You can hire on the “know-how” technical employees and train them on the “know how-to-be” relational skills, or you can train emotionally intelligent service employees on the technical aspects of the business. Complicating the challenge is the fact that a recruited employee, has no visibility of the type of site that he will be assigned to. An employee that could perform well on an office-only space, may be ill-prepared for a more technical, industrial site. This is where the leadership skills of the recruiter and manager comes into play.

While the hiring and training criteria for hospitality managers is still evolving, there was general agreement on the measure of their success in the position.  The real test of a hospitality manager is the ability to be imperceptible. “If everything goes well,” noted one interviewee, “we do not get called. It is when things go bad that people remember we exist.” And this is also one of the key challenges for this particular field, turning employees proactive as opposed to reactive, and being able to communicate in this regard.

For the VP of a service-provider that recently launched an HM arm stated, “For us it is very important to bring a certain degree of excellence to the services we provide; to guarantee that people will be working in ideal conditions. To anticipate their needs.  The challenge is therefore on communication, on rendering the invisibility of the job of a good hospitality manager, visible”. 

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About the Authors

Fernanda Arreola professor of Strategy, Innovation & Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

Dr. Gregory Unruh is the Arison Professor of Values Leadership at George Mason University in Washington, DC and an expert on sustainable business strategy. He serves as the Sustainability Editor for the MIT Sloan Management Review.

References
1. De Croon, E., Sluiter, J., Kuijer, P. P., & Frings-Dresen, M. (2005). The effect of office concepts on worker health and performance: a systematic review of the literature. Ergonomics, 48(2), 119-134.
2. Roelofsen, P. (2002). The impact of office environments on employee performance: The design of the workplace as a strategy for productivity enhancement. Journal of facilities Management, 1(3), 247-264.
3. Singh, A., Syal, M., Grady, S. C., & Korkmaz, S. (2010). Effects of green buildings on employee health and productivity. American journal of public health, 100(9), 1665-1668.
4. https://www.forbes.com/pictures/ 56b3b990e4b062f6b5994e 8b/the-top-10-employee-perks/#508d637564c3, retrieved on July 23, 2019
5. https://fortune.com/2016/03/28/these-32-companies-have-concierge-services-for-employees/, retrieved on July 23, 2019
6. https://www.inc.com/business-insider/14 – popular – perks -for-new-parents-that-go-beyond-paid-parental-leave.html, retreived on July 23, 2019
7. http://workplacemagazine.fr/Archives-article/Fiche/6925/De-l%2592accueil-a-l%2592hospitality-management, retreived on July 23, 2019

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The rise of Neo-populism presents risks to multi-national corporations in  Western markets. The authors outline practical strategies corporations can take to combat such risks.

Populism is no longer a business risk confined to emerging markets. In fact, measured by the share of votes for anti-establishment parties, populism in developed economies is at its highest levels since the 1930s.¹ Given the multiplicity of factors driving this “neo-populism” and the type of institutions shaping its evolution, multinational corporations (MNCs) need to respond to it differently than they have to classical populism. Neo-populism is directly or indirectly costing MNCs profit margins, customer loyalty, strategic footholds, and talented employees. It is manifested in Brexit, Italy’s recent elections, the Trump administration’s trade war, and populist party control of parliamentary seats in many European countries.²  It is leading to stringent security reviews of foreign acquisitions in the US and Europe and to fears of tightening immigrant policies. However, little practical advice is available regarding how to navigate these hazards.³ In this article, we discuss several ways that MNCs can weather neo-populism: (1) resetting risk scenario-planning differently than in classic populist regimes, (2) ramping-up creative stakeholder-engagement, (3) timing high-profile M&A better, and (4) localising smarter.

Populism, in the broadest sense, is a movement supporting ordinary people rather than those perceived as “elites” to hold powerful positions within governments.⁴ There are variants of how populism is more specifically conceptualised in some countries, for example France, compared to others.⁵ However, for our purposes, we define “neo-populism” as a set anti-establishment, authoritarianism, nativism, and anti-cosmopolitan values that underpin the political views of a growing number of people in the West today.⁶ Neo-populist sentiment takes the form of public opposition to liberal international trade and investment regimes,⁷ resistance to mass immigration and cultural liberalisation, and continuous protest against actions that are perceived as a surrender of national sovereignty to international bodies.⁸ These risks are cited among the top ten faced by MNCs operating in the US and Europe today.⁹ 

Neo-populism can also be seen as a consequence of the significant economic changes driven by businesses over the past few decades. The globalisation of value chains and rise in automation¹⁰ – while generally good for firms’ efficiency and productivity – have contributed to increasingly stark income inequality in favor of the higher classes of society.¹¹  It has also resulted in unemployment in industries characterised by repetitive tasks and/or low-skilled labour.¹² In the US, for example, the share of national income of the bottom 90% of the population held steady at around 66% from 1950 to 1980 but fell to just over 50% at the start of the financial crisis in 2007.¹³ This situation has created an identity crisis among many citizens.¹⁴ Further, information silos enabled by social media have catalysed and reinforced this upheaval.¹⁵ The multiplicity of these factors driving neo-populism in the West today distinguish it from classic populist movements. Trade, foreign investment, and immigration are most often blamed for these woes as they are perceived to create unfairness and because foreigners are attractive scapegoats.¹⁶  

Another notable difference in neo-populism in developed countries today compared to traditional populism in developing countries is the way in which the ideology is to some extent restrained by relatively robust institutions (e.g., the rule of law, the formal free press, the chance to elect new leaders, and the independence of the academic community). These institutions are not always present in developing countries. At the same time, the grounding-effects that such institutions may have are somewhat offset by the aforementioned effects of information silos and social media, and, in some places, a rising polarisation in the formal free press. This new economic and political environment requires different responses from incumbent MNCs (IMNCs) and MNCs from emerging markets (EMNCs) relative to the strategies they have employed in classical neo-populist regimes. 

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An actionable perspective for neo-populism

The new market and non-market¹⁷ conditions that current neo-populist economies impose on corporations require a diverse set of responses by MNCs. In this climate, firms face strategic choices to mitigate the negative effects of neo-populism and/or to benefit from positive effects of local-orientation. Based on the expertise and insights of several executives along with additional data and examples from MNCs established in these regions, we provide insights about how to respond to neo-populism. Table 1 summarises these responses which we then expound upon.

Table 1. Strategic responses to rising neo-populism

1. Risk forecasting: reset scenario planning minding nuances in neo-populist regimes 

As mentioned, the multiplicity of factors driving neo-populism in the West distinguishes it from classic populist movements. Meanwhile, the long-term manifestations of neo-populism in policy, law, and other forms of institutional change is to some extent restrained by Western institutions in a way that is not always the case for populist movements in developing economies. Further, IMNCs often concentrate most of their operations in neo-populist markets whereas EMNCs are often new to these markets. These dynamics often require top management of MNCs to think about rising neo-populism somewhat differently depending if they are operating in their home market or a foreign host market. For instance, IMNCs operating in their home markets should think about ways to exploit neo-populism in their own interest and be wary of fighting it visibly. In contrast, EMNCs and IMNCs operating in a foreign host market should think of ways to mitigate its results. These dynamics are reflected in the recommendations throughout the remainder of this article.   

The first important recommendation is to ensure a continuous assessment and revision of the frameworks used for identifying and measuring risk. These updates should be placed on the monthly, or even (if acute) the daily, executive agenda. They will require renewed scenario analyses of the likelihood that populist-related shocks to policy and law will take place and an evaluation of the magnitude of commercial hazards they pose. 

Some MNCs are already following this logic and revising their risk forecasting frameworks. For example, Citigroup has recently released a new method for evaluating European equities taking into account neo-populist political risk.¹⁸ Risks from neo-populism span exchange rate volatility, various supply chain disruptions, changes in immigration policy (especially relevant for employing foreign talent), tax issues, and other areas, all of which need to be carefully delineated. For example, Panasonic, a Japanese electronics firm, has cited Brexit as the main reason for moving its European headquarters from the UK to the Netherlands. Firms operating amidst surging neo-populism that sell directly in high-risk industries or have suppliers in such industries need to be especially careful. 

2. Non-market strategies: ramping up creative stakeholder-engagement 

Ramped up non-market and marketing strategies can help MNCs navigate the dangers of neo-populism by explicitly considering political risks next to more economic-centric risks. Such non-market strategies may require MNCs to smarten up in the policy formulation process in key countries, an area that many firms are not well prepared for but in which they should especially vigilant and attentive. An obvious example of a smart approach in this regard is the mobilisation of many MNCs under the National Association of Manufacturers in the summer of 2018 to quietly lower US tariffs on hundreds of components produced in China that are used in US operations.¹⁹ Working quietly and directly with government officials in neo-populist states can help circumvent public criticism of pro-trade policies. This approach may also help MNCs to secure important allowances or even incentives to recruit and retain foreign talent – which is becoming increasingly challenging amidst proposed changes to US immigration policy, Brexit, and stricter immigration policies in some EU countries. 

MNCs can also mitigate risks from neo-populism by contributing to certain important items on the political agenda of the host county’s government, such as job creation. Ford, an American auto manufacturer, has grappled with how to best do this amidst US neo-populism. In early 2017, Ford promised to scrap a plan to build a $1.6 billion car factory in Mexico and instead add 700 jobs in Michigan. Later that year it decided to go-ahead and assemble new battery-powered cars in Mexico rather than Michigan, but pledged to invest even more significantly in the Michigan plant, now focusing on self-driving cars. The importance of similar investment decisions is not only in their deployment but a pre-conceived marketing agenda that positions the discourse of corresponding choices within the media and amongst key politicians. Mass communication is key to effectively respond to neo-populism.²⁰  

A third non-market strategy considers the compatibility between firm discourse with the one held by key government officials. An example is the rivalry in the washing machines industry between US firm Whirlpool and competitors LG Electronics and Samsung Electronics, both from South Korea. Whirlpool, who employs thousands of union workers in the US, recently argued that these South Korean firms have undercut its US business by exporting washers at unfairly low prices.  By building on the semantics of the Trump administration’s fight against foreign production of US consumed goods, Whirlpool engaged in an aggressive non-market strategy intent on garnering favor with US politicians to levy trade barriers against its South Korean rivals. Even when the strategic response to this movement was that both South Korean companies invested in new plants generating jobs in the US (LG is spending $250 million to build a 600-worker factory in Tennessee, while Samsung is investing $380 million to renovate a factory in South Carolina that will employ 950 people),²¹  this did not prevent the Trump administration from imposing a tariff of up to 50% on large residential washing machines penalising Samsung and LG. As positive reinforcement for the government’s decision, Whirlpool announced it was adding several hundred jobs in the US.

Of course, the liability of foreignness does not predestine all foreign MNCs to suffer from neo-populism. Nor does the so-called “liability of country of origin”, which is primarily an issue for EMNCs, such as those from China.²² One of the executives we interviewed from an auto MNC with operations in the US told us about their desire to adapt their non-market strategy. For instance, the firm is now engaging, for the first time, select factory workers at its plants in the US to reach out to state and federal lawmakers. The firm provides the workers with training about how trade and investment issues affect its US operations and then flies the workers to state capitols and Washington D.C. to lobby key politicians. The main message the workers pass to politicians emphasises the firm’s contribution to the US economy and society. Despite technically being a foreign firm, the workers highlight the firm’s contribution to the US in terms of jobs, production, and other economic value, as well as corporate social responsibility activities. While such messaging is not entirely new, the method of such outreach is more strategic and builds a new approach that is rooted not only in the host country but also its own citizens.

Both IMNCs and EMNCs can also benefit from heavily lobbying their home governments to negotiate with foreign host nations. This recently worked for ZTE, a Chinese MNC in the telecom equipment industry, who was able to facilitate a high-profile agreement between the US and Chinese government to limit sanctions imposed on the firm. Of course, not all firms will benefit from such explicit agreements. However, if and when a firm employs enough people in its home country in an industry of strategic importance, and if its home government is engaged with a smart non-market strategy, the home state has a strong incentive to proactively support the firm abroad.

In addition to a government-focused non-market strategy, our interviews suggest that both IMNCs and EMNCs can benefit from ramping up non-state stakeholder engagement and public relations. This can include stepping-up social and traditional media advertising campaigns to highlight how the firm’s values align with those of the host/home nation and otherwise contributes to the sustainability of that nation. The indirect societal benefits that firms offer are easily overlooked, so specialised skills are required to articulate them.

MNCs are well advised to engage the neo-populist public and governments even if, or sometimes especially if, they are often suffering from the effects of their neo-populist ideologies and policies. Firms, such as GM, Caterpillar, and Harley Davidson have reported that they are losing money due to neo-populist policies, especially new US tariffs on foreign steel and aluminum. Tech firms, such as Apple, are also being hurt by the US’ trade wars.²³ A clearly failed response to this new environment is Harley Davidson’s poorly articulated public plan in 2018 to move production overseas in response to rising tariffs in the US. This mistake has resulted in Harley’s patriotic US consumer base rethinking their loyalty to what they thought was an “all American” company.²⁴  

3. Integration & organisation: time high-profile M&A better and/or localise smarter

Recent revisions to national security reviews in neo-populist states can complicate, if not fully scupper, attempts by foreign MNCS to merge with or acquire local firms. For instance, in the last three years, the inbound investment laws of the US, UK, France, Germany, Italy, and Lithuania, have all been made notably more restrictive.²⁵ 

It appears that the risk of failing security reviews currently disproportionately affects Chinese EMNCs. Such firms are often seen as opaque extensions of the Chinese Communist Party’s allegedly strategic “mercantilism”. Many Chinese EMNCs are also seen as serious competitors, often supported by the state and with growing innovation and strategic capabilities.²⁶ In 2016, almost $75 billion in Chinese overseas deals were cancelled, in part due to inward investment restrictions by neo-populist states.²⁷ Most recently, in July 2018, the German authorities intervened to block a Chinese investor’s attempt to acquire Leifeld Metal Spinning, a German machine tool firm. This follows German state intervention earlier in 2018 to block the acquisition of Cotesa, a German aerospace company, by state-run China Iron & Steel Research Institute Group. 

Our discussions with Chinese EMNCs indicated that the most straightforward response to these regulatory shifts was to delay acquisitions of US and European firms in sensitive industries in the short-term. Such acquisitions are more likely to be approved when public attention is elsewhere. Sensitive industries have traditionally included ones where dual-use (civilian and military) technologies are prevalent, but now also include new energy, banking, information technology, and a range of other high-technology industries, some of which the Chinese state has explicitly targeted as part of its “Made in China 2025” plan for economic and technological leapfrogging.

At the same time, not all Western countries are equally restrictive of Chinese investment. In fact, several central and eastern European countries, for example, Hungary, Bulgaria, the Czech Republic, Croatia, have recently attracted significant investments from Chinese EMNCs.²⁸ Greece, and Italy are also embracing certain Chinese investments. These investments are, ironically, also part of rising neo-populism, fueled by a sense of disenfranchisement with the EU and the search for powerful yet distant partners in their quest to retain their independence. This phenomenon provides continued opportunities for Chinese and other EMNCs looking to make inroads into Western markets.

A related issue for firms and individual investors is the need to be careful about how they are funded. Chinese SOEs are not the only targets of neo-populist government suspicion. Recent research for the US Department of Defense has raised concern that much of the venture capital (VC) originating from China is orchestrated by the Chinese state to strategically sap the US of its crown jewel technologies.²⁹ Similar concerns have recently been raised about Russian VC.³⁰ In order to avoid regulatory hurdles that may accompany these suspicions, firms should seek to diversify away from such funding, at least in the near-term. This is understandably very difficult for domestic startups, the typical customers of VC investment, as they have limited options for internal funding and market entry timing is a major strategic concern.

In the case of MNCs, our interviewees suggested that, in addition to more cautiously approaching M&A and financing, MNCs need to re-evaluate their localisation strategies. The most intuitive strategy is to work on a “local” production strategy for all international products. By reducing any reminiscent foreignness of the MNC’s products, especially in consumer goods industries, it is more difficult for the general public – the source and target of neo-populist governments – to develop negative perceptions about the foreign firm and its products. The Japanese inventors of Pac-Man deliberately rebranded their product to sound more American in order to avoid US populist backlash in the early 1980s. Today, amidst neo-populism, Lenovo, a Chinese technology firm, has increasing pursued “agnostic branding”: positioning itself as a global technology firm rather than a Chinese one.

A more significant strategy is to localise leadership. This decentralisation of decision-making into populist countries ensures that there are high-level executives from such countries heading key corporate units. Such decentralisation should not be limited to merely local management but could also include top-level appointments to the global board of directors, as illustrated by the many Westerners sitting on the board at Lenovo. Local faces reduce the perceived foreignness of the MNC while increasing local influence and representation among key stakeholder groups. Of course, global management must still ensure that the local country management remains strategically aligned with the rest of the MNC.

Our interviewees suggested that to make an even stronger statement companies should consider the local establishment of strategic operations, such as R&D centres. R&D investments are the most desired form of FDI as they are pure cost-centres, i.e., foreign money pays for local salaries and taxes, creates local knowledge and spill-overs for the local ecosystem, and trains local talent. Local R&D centres also help quickly establish a “good local citizen” image – which is much needed when foreign MNCs, especially those from China, are increasingly viewed as raiders of Western technology with the only intent of helping themselves and the Chinese state. Setting up formal R&D centres can also enable bypassing of nationalist regulations, facilitate the localisation, and groom local talent for global leadership positions.

Shifts in sourcing arrangements might also be considered alongside new localisation initiatives, but should be approached with caution. On one hand, multi-sourcing is recommended for the non-strategic supply chain.³¹ On the other hand, multi-sourcing runs counter to the trends of supply chain integration, as well as streamlined product quality and safety performance improvement. 

Last but not least, MNCs might consider local stock-market listings as a final tool to combat rising neo-populism. Listings raise local shareholder ownership and therefore protect the firm’s global leverage.³² This option is equally valid for IMNCs as it is for fast-developing startups and EMNCs.

Conclusion

We have outlined several practical strategies that MNCs can take to combat the risks posed by rising neo-populism in Western markets. These strategies include (1) resetting risk scenario-planning differently than in classic populist regimes, (2) ramping-up creative stakeholder-engagement, (3) timing high-profile M&A better, and (4) localising smarter. Of course, the strategies should not be considered in isolation: they should be aligned with the firm’s core values, profit orientation, culture, and organisation. If designed and implemented right, the strategies can make neo-populism far less of a business hazard than it may seem at present. 

Dan Prud’homme is an associate professor at EMLV Business School (École de Management Léonard de Vinci) (Paris, France). He is also a non-resident senior researcher at the GLORAD Center for Global R&D and Innovation at Tongji University (Shanghai, China).

Max von Zedtwitz is Professor at Kaunas University of Technology and Southern Denmark University, and Director of the GLORAD Center for Global R&D and Innovation. Previously, he was Professor at Tsinghua, Tongji, and Peking Universities in China, as well as Vice President Global Innovation for PRTM Management Consultants based in Shanghai.

Fernanda Arreola professor of Strategy, Innovation & Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

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