Boosting Employment

To give employment a shot in the arm

By Raphaël Cohen*

To give employment a shot in the arm. When the tree hides the forest, we miss certain opportunities. Entrepreneurship unfortunately plays the role of the tree, while a magnificent forest remains underexploited: job creation in existing companies, by Raphaël Cohen, company director

*Company director, HEC Geneva, [email protected]

When the tree hides the forest, we miss certain opportunities. Entrepreneurship unfortunately plays the role of the tree, while a magnificent forest remains underexploited: job creation in existing companies. While we must not burn the tree, neither must we neglect the forest.

A start-up is a young shoot that has the desire to exploit an opportunity. To succeed, it generally lacks the necessary networks, money, access to the market, experience, know-how, qualified staff, equipment, the capacity to scale up quickly, etc.

An already established company, by contrast, has established networks, cash reserves, access to the market, experience, know-how, facilities, and the capacity to scale up on a larger scale. The only thing it often lacks in order to move into a higher gear is... the idea and the tools to exploit it.

In established companies, there are many good ideas, but few are put into practice. The problem, then, is not the generation of ideas, but rather the transition from the idea to its exploitation. Thus, most existing companies show an innovation capacity below their real potential. Fortunately, experience has shown that new methods for exploiting opportunities make it possible to get round this obstacle.

If statistics show that the dynamics of job creation are fed more by start-ups than by established companies, I have the feeling that these statistics reflect more the weak capacity of existing companies to activate their innovation capability than the ability of start-ups genuinely to create jobs. It is the deficit of the former that highlights the latter.

In reality, it is much easier and considerably less costly to help existing companies make better use of their innovation capability than to help start-ups fill their own gaps. Since I have been supporting established companies systematically, I have seen that their capacity to exploit opportunities is incomparably superior to that of start-ups. In some companies, the value of a few projects launched each year by a few employees trained in innovation tools exceeds one hundred million francs in additional turnover.

Established companies, able to capitalise on their foundations, exploit opportunities that reach critical mass much more quickly. Since the number of jobs created is directly proportional to the size of the opportunities, to maximise job creation it is enough to maximise the size of the opportunities. Unfortunately, very few start-ups manage to create more than a few dozen jobs.

Once their innovation capability is activated, established companies thus represent a far more powerful lever for creating jobs. These jobs obviously help to stimulate the economy and recovery, both essential to maintaining our well-being. If economic promotion policy has as its primary objective job creation, it should not only continue to support start-ups but also commit itself to helping established companies develop their innovation capability.

The argument most often put forward to justify focusing on start-ups is that existing companies have the means to manage on their own, whereas young shoots are more deprived. Without calling into question the soundness of support for start-ups, we must not believe that, because existing companies have resources, they are doing everything right. It is not just a question of means. It is also a question of know-how. The authorities can play the role of facilitator, in particular by making best practices in innovation within existing companies better known.

A first step has been taken in this direction with the CTI programme, which partly finances R&D work entrusted to universities of applied sciences and higher education institutions. This now needs to be complemented by other measures encouraging other forms of innovation in business models, marketing, processes, management techniques, etc. (and that is a very beautiful forest!).

There is an obvious lack of a national innovation champion that supports technological innovation and business creation, but also activates the other levers of innovation in existing companies. Unfortunately, political and administrative circles do not master the tools needed to promote innovation effectively beyond R&D. Experts do exist, and it is not because they are in the private sector that we should deprive ourselves of them.

This ignorance costs dearly to a population that cannot benefit from this real lever for job creation. We could be even more ambitious and, within the framework of a national policy, teach everyone to seize opportunities. That would amount to promoting agility, the primary key success factor in a world that changes faster and faster. This is moreover the aim of the Entrepreneurship and Business Development degree at HEC Geneva.

Continuing to focus on technological innovation and start-ups is like walking with only one leg. By grafting on a second leg, the one that activates innovation in existing companies and fosters the desire to seize opportunities, there is no doubt that the economy would be revitalised. As with two legs one runs faster than with one, our leaders should hurry to graft on the second leg.