[Web2day] “Major firms need SMEs capable of acquiring the necessary technological skills to meet their supply chain requirements”

By June 23, 2014
Laurent Manach

At the Web2day digital festival, of which l’Atelier is a partner, which took place on 4-6 June in Nantes, L’Atelier interviewed one of the speakers, Laurent Manach, on the current status and issues for collaboration between major firms and startups in France.

Laurent Manach is Director of the E=MC2 competitiveness hub and Head of the Jules Verne Institute of Technological Research, a shared research centre for heavy industry in the Loire region of France.

At Web2day he took part in a round table session entitled: ‘Web is industry: manufacturers, major accounts, startups – how can we go through the digital transition together?"

L’Atelier: People talk about Open Innovation, collaboration between startups and majors, and so on. Does that means that our traditional ways of doing things don’t work anymore, that they’re obsolete?

Laurent Manach: Basically, that’s not the case, no. The models we’ve been using so far may well survive but the issue we’re facing today is that there’s an increasing overlap between sectors. There’s also a financial aspect to this which means that Open Innovation and cross-fertilisation are increasingly important and necessary. We need to deal with these issues so as not to miss out on a good idea or overlook the increasing influence of a rival model.

Our approach is always to try to make structures lighter, using existing technical solutions, finding responses that can be made right away, removing technological barriers, looking at the necessary skills, the way you launch a collaborative project, methods of financing projects, etc. It’s a model that works well because these are after all very technical processes we’re involved in. And it should be stressed that we’re in manufacturing industry, which is not at the moment directly threatened by totally disruptive models. We’re not talking about Amazon and the bookshop business here. However, an entire digital ecosystem is currently being established around smartphone use, and companies’ use of Internet-based services, and this is something we can draw inspiration from.

Isn’t there a risk that non-innovative companies will be overtaken by startups, which have more innovative and disruptive ideas?

That’s exactly the real difficulty for companies such as Barnes & Noble, which track their current competitors closely but don’t see completely different challengers coming over from the digital world. In the digital world there’s a certain agility which doesn’t necessarily exist in the world of manufacturing industry.

What are the recipes for collaboration between major firms and smaller organisations to be really effective?

The way we work in manufacturing is based on intellectual property agreements and patent use agreements. It’s important for a major company to have innovative SMEs around that are able to take a fresh look at what they’re doing, acquire technological skills and share risk. And at the same time it’s important for these smaller companies to be able to count on contracts from the majors. So there’s a buy-and-use side of things and an innovation-development side. It’s essential to find the right balance to avoid both parties wanting to hog all the benefits of the collaboration.

Aren’t some types of collaboration just a question of external supply?

At the E=MC2 hub, we attach a descriptive label to the type of project we’re involved in. What we offer smaller firms is basically co-development and the chance to progress. It’s true that this might also be a risk, yes. But the risk does not lie so much on the sub-contracting side. The real issue is that the major firms need SMEs capable of acquiring the necessary technological skills in order to meet their supply chain requirements.

Should collaboration be a long-term journey with the same SME?

Collaboration must develop over time. The work being done at the moment by major firms is very much along these lines. Now, to be completely clear, a company such as Airbus would not give eight years of orders to the same SME even though the order book extends over that period. There’s a principle of competition here. It’s important to ensure that the smaller firm doesn’t get stuck with one technology or rely on a single customer. Everything to do with cross-fertilisation, i.e. transferring technology from one sector to another, helps us to drive forward this kind of diversification.

So what are the prerequisites for long-term collaboration?

For a major firm the prerequisite is to have a strategic plan. Is this about making a prototype? Testing a technology? Winning a new contract? And so on. Meanwhile the SME must have the desire to grow, to find new customers and pursue growth based on innovation.

If we compare the world of heavy industry to the digital world, the difference lies in the fact that sometimes digital business models are simpler. For example, a startup develops a new piece of software and then gets taken over by a larger firm which is itself swallowed up by a major corporation as part of an industry consolidation process. In manufacturing, a company is committed over a three or four-year period and has to go out and fight tooth and nail for contracts. Plus of course the fact that the 2008 crisis had a major impact on the industrial sectors as well.

And don’t the differences in processes – faster processes for startups, longer and more complex processes for large firms – create yet another obstacle to collaboration?

That’s right, but what we’re trying to do here at E=MC2 is to get engineers in naval construction to work with aeronautical engineers. There’s no difference in scale between the two industries but progress often flows from two different types of setup. And I try to ensure that we draw a lot of inspiration from what’s happening in the digital world. Having said that, I’m also convinced that the digital world can equally draw plenty of inspiration from the industrial approach, especially in terms of productivity.

How can we make collaboration a real innovation driver, both for the economy and for the company concerned?

We see medium-sized firms as the centre of development in our ecosystem. It’s usually a family firm, deeply-rooted in the fabric of a given region, and playing the role of go-between for large corporations and small companies.

For this to work you have to understand the problems SMEs face and at the same time look at the market from the large company’s point of view. We’ve created a tool known as ‘fast track medium-sized companies’ to help small firms work out why they’re not yet medium-sized, what they ought to be doing in terms of management, going international, innovation and production capacity. These are not issues which startups face. In addition, at the Jules Verne research centre we’ve set up a fablab with 3D printers. Our goal is to help the general public, young people and people in the digital world to make use of these tools and technologies.

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