Interview with Patrick Llerena, Professor at the Faculty of Economics and Management, Strasbourg and Director of research at the Bureau d’Economie Théorique et Appliquée (BETA)
1. What is the difference between innovation and entrepreneurship?
Entrepreneurship is a necessary but not sufficient condition for innovation.
You can’t be an innovator without being an entrepreneur first but you can be entrepreneurial without being innovative.
2. Are young and disruptive innovators generally more successful than “intrapreneurs” (entrepreneurs within a corporate environment) or does the vast majority of disruptive and incremental innovations come from larger, commercial organizations?
You can be innovative everywhere because innovation doesn’t depend on the size of the organization.
There is a common belief that big companies engage mainly with incremental innovation but this doesn’t correspond to reality. If it was true large and old enterprises wouldn’t survive. Everybody innovates while adapting to the environment. Innovation can take many forms and can be a long process but it is needed in order to stay competitive. The coffee industry is a great example for that. Many of the food products we used to buy from supermarkets can now be bought in special boutiques. There is a strong marketing tendency of converting even the ordinary food products in luxury goods, just like Nespresso did.
3. How does an entrepreneur become innovative entrepreneur?
The innovative entrepreneur is not a risk-lover; instead he is an optimist. Entrepreneurs have similar utility function compared to the other economic agents but the innovator puts higher probability to success than the rest of the people. He is sure that his idea can help to solve certain problems and that it is the most efficient way of solving the problem.
4. What are the skills and tools needed for a young entrepreneur to successfully put into action his innovative idea?
To start off, he needs a particular vision about the future value of a product and the future demand that this product will meet. An entrepreneur is someone who is confident in himself and his idea and thus able to convince people that it is the winning strategy. He has to demonstrate that his method/product/service will be efficient and better than the already existing solutions.
5. Does the success of the innovation depend also on the industry and are there areas/sectors/markets where it’s easier to be an innovative entrepreneur?
No, it certainly doesn’t. Innovation can be introduced in any industry and sometimes it even leads to the creation of new industries. Google is a relatively recently created company but it wouldn’t exist without the invention of Internet. At the same time there are enterprises with 100 years of history like Ford, GM and Renault that have been able to operate for so long because of the continuous innovation they engage in.
6. What are the risks that a young innovative entrepreneur must be aware of?
The thing that most innovators neglect is the fact that the opinion of others is one of the determinants of success for an innovation. The correct evaluation of the influence of the environment and the frame condition should be of extreme importance to an innovative entrepreneur.
7. What are the government policies that support innovative entrepreneurs in the EU?
As already mentioned, entrepreneurship and innovation depend on the environment and that is where governments can intervene. For example, I believe that education is a relevant channel to inspire young people to innovate. The way you teach is very important for innovation. The maximum note you can get in France is 20, and for every error the teacher subtracts some points thus exams are assessed negatively by subtracting. In other countries, students start from 0 points and then get an additional point for every positive result they get, it is additive and positively assessed. To have an educational system that values success instead of counting errors allows people to keep trying. To succeed you need to try and trying means you will do errors and that’s normal. This isn’t a seemingly enormous change but it can make a difference when it comes to the incentive to innovate.
8. Considering the fact that companies can become more innovative as governments adjust tax policies, intellectual property rights and a number of other components of regulation and legislation, what aspects of public policy can be better coordinated or designed to create a bigger incentive for innovative entrepreneurs?
The same goes for the access to funding. Why is it so hard for a start-up company to receive funding from financial institution in Europe? The probability of getting a loan after you have failed is much lower than in Anglo-Saxon countries where the fact that you tried represents a priori a positive experience. It means you had the courage and besides the chance you fail a second time is considered lower than the chance for failure the first time. This type of framing is not directly related to the government, but it can certainly change a great deal of the aspects we discussed. Also, the government can make a change in the tax system in order to motivate entrepreneurs realize successfully their innovative idea.
9. Are there any other recommendations that you’d give to a young entrepreneur who wants to start his own business based on an innovative idea?
Be firm and certain in your idea and look for help and advice from others. If you are convinced in its relevance then there is high enough chance of success. We never know if it is possible without trying first. The only thing you get by not trying is regret. So you should measure your willingness to implement and develop your idea to the level of your regret if you don’t. What would happen to you if somebody else realized the innovation you didn’t? If you wouldn’t regret it at all, then you are not confident enough and you shouldn’t invest further time or efforts. It takes extreme optimism to make your idea successful.
Interview réalisée par Dalia Srebreva avec la participation d’Alexis Martin
Faculté de Sciences Économiques et de Gestion de Strasbourg