Rebooting France with Innovation Networks

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These rankings clearly indicate not only that French firms struggle to transform, fund, and broker inventions themselves, but they also fail to attract and build links with other nodes in emerging global innovation networks.

Instead of isolating France with nationalistic policies, the next President must support French firms' ability to win in the nascent global innovation network market model. The good news is that leading-edge French firms such as Groupe Danone (DA), France Telecom (FTE), and CNP Assurances are already embracing this networked global innovation agenda. But these pioneering corporate initiatives must be replicated all across the country to competitively position France in an interdependent, global, knowledge economy.

Forrester believes the incoming French President must implement a bold public policy agenda that drives France's success in global innovation networks. Here are key policy recommendations to bolster France's performance across the inventor, transformer, financier, and broker roles:

Recast the industrial inventor role to drive service sector innovation

To make France's services sector—which accounts for 77% of GDP—innovative, the new government must encourage leading French banks, retailers, health-care providers, and infotech providers to finance academic research programs in services and sciences at leading business schools like INSEAD and the Paris School of Economics. This nascent, multi-discipline approach integrates engineering, business, psychology, sociology, and operations (see BW Online, 3/29/07, "Service Innovation: The Next Big Thing").

Shore up the transformer role by accelerating tech transfer to private sector

To speed the invention-to-innovation cycles, the French government must pass a law similar to the U.S. Bayh-Dole Act, which lets U.S. universities and labs license federally-funded research to the private sector. French companies and international firms operating in France must be able to directly partner with French R&D institutions like the Centre National de la Recherche Scientifique (CNRS) without government mediation.

Give tax breaks to financiers investing in small and medium-size entrepreneurs

To encourage innovative small- and medium-sized enterprises (SMEs), including French subsidiaries of foreign corporations, to grow their transformational activities within France, the government must alleviate the tax burden crushing SMEs, which are deserting to tax havens like Britain and Luxembourg. And to encourage large corporations and venture capital firms to invest in high-risk startup transformers in France, capital gain taxes on these short-term investments must be drastically cut.

Decentralize the broker function to individual regions

The government must stop treating international cooperation as a state prerogative. Instead, it must collaborate with the conseils régionaux (regional councils) to empower local academic and R&D clusters, including the blossoming Pôles de Compétitivité. Such agencies should be allowed to directly broker foreign R&D and go-to-market partnerships, in part by tapping into the Invest in France Agency (AFII), a government-funded agency with offices worldwide that channels job-creating foreign investments to France.

Given its insular, R&D-biased innovation system, France seems ill-equipped to win the new global innovation game. The onus is on the incoming French President to implement an innovation network agenda that will strengthen French firms' global competitiveness.

Navi Radjou is a vice-president at Forrester Research. He advises senior executives worldwide on innovation-led growth strategies. The Innovation Networks Study on 26 OECD nations referred to in this article is available on Forrester's Web site (registration required).

Navi Radjou is a vice-president at Forrester Research. He advises senior executives worldwide on innovation-led growth strategies.