Rebooting France with Innovation Networks

Forrester's Radjou says the next President must wire France into fluid, global systems linking R&D with finance and broker services in order to drive growth

by Navi Radjou

The French economy is getting sicker and losing its global competitiveness. In 2006, it grew at a meager 2%, making it Europe's laggard, and posted a record €29 billion ($39 billion) trade deficit.

To shore up France's sagging economic fortunes, Nicolas Sarkozy and Ségolène Royal—the contenders in the May 6 French presidential elections—conjure up one magic word: innovation. Both argue the best way to drive innovation is by investing more in research and development. Sarkozy wants to inject an additional €4 billion ($5.4 billion) into the public R&D budget, while Royal pledges to increase R&D to 3% of France's gross domestic product.

Alas, both candidates' outspoken emphasis on R&D spending risks ushering France into yet another political term with a flawed national innovation agenda that suffers from a view of France as a closed innovation system as well as from confusion between invention and innovation.

Nations Are Not Closed Systems

Politicians fail to realize that the innovation value chain encompasses not just R&D itself but also how inventions are realized in society at large. Detailed analysis by Forrester Research of 26 Organization for Economic Co-operation and Development nations shows that while developed nations like France continue to spend on average, $1,270 per capita per year on R&D, these knowledge investments lead to more patents, but do not generate more jobs or greater wealth.

Indeed, new jobs and economic growth don't actually come from patented inventions themselves, but from their intersection with business practices such as manufacturing and sales.

The biggest flaw in many innovation agendas promoted by policy-makers in developed countries like France is that they look at nations as closed systems, as if they must possess for themselves all the capabilities needed for innovation: to invent, commercialize, finance, deploy, and operate. That's unrealistic and undesirable. In the emerging global market structure—shaped by the huge populations and vast talent reservoirs of emerging nations such as India, China, Brazil, and Poland— global demand for innovation can fluidly match worldwide— not just French—supply.

Poor Marks In Innovation

Forrester believes that France, rather than clinging to an insular innovation approach, can most easily reap the rewards of innovation through a global ecosystem in which companies, universities, non-governmental organizations, and governments collaborate. We call this an innovation network. Within such a global network, nations fluidly weave internally and externally available inventions and innovation resources by taking on one of four specialized roles: inventor, transformer, financier, or broker.

In late 2006, Forrester set out to assess the state and quality of national innovation systems in 26 OECD countries, including France, to see how these nations stacked up against each other in the four complementary innovation network roles. Here is a description of each innovation network role we evaluated, and France's ranking in that role among the 26 OECD nations.

1. Inventor nations are intellectual powerhouses that lead in scientific research and/or design of patentable products and services. France's ranking: Good (#7).

2. Transformer nations convert inputs from inventors into valuable business and societal innovations. They excel in manufacturing and marketing. France's ranking: Abysmal (#20).

3. Financier nations fund innovation network service providers, especially inventors and startup transformers. We therefore look at a nation's provision of venture capital for international innovation. France's ranking: Decent (#9).

4. Broker nations find and connect the other roles, buying and selling or enabling service delivery, both within and among nations. Broker nations boast multiculturalism, workforce diversity, cross-border scientific collaboration, and venture capital funding. France's ranking: Poor (#12).