22:31 GMT +315 November 2018
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    Academic: Governments and Private Organizations Can Work for Mutual Benefit

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    The 7th International Forum “Open Innovations” is underway in Moscow. This year’s event focuses on issues arising from the spread of digital technologies and the impact they have on our lives. Radio Sputnik talked to Jean-François Manzoni, president of IMD Business School.

    Sputnik: Your motto is “Prepare your organization for the future, develop your people and transform your organization”; what is the precise meaning of it?

    Jean-François Manzoni: The tagline is “Developing leaders. Transforming organizations.” I think what this is meant to signal is the fact that we work with individuals, and we work with organizations; and we have different kinds of offerings or programs depending on whether the person, the client, is an individual – we call these ”open programs” – or if the client is an organization – we call these ”custom programs.” I think the other meaning of this tagline – and it’s a very conscious choice because we changed it last year – another aspect of our tagline is ”real learning, real impact.” We really wanted to signal that we work both with individuals and organizations, but we do so in a way that we really intend to have impact to help them be more effective in their current activities and also be better prepared for the future.

    Sputnik: In your opinion, what role should the state play – encourage business, set an example, or not intervene at all?

    Jean-François Manzoni: I think that we live in a world where we know that some form of intervention and guidance by the state is helpful. For example, look at a country like Singapore, it started 50 years ago with extremely limited natural resources of any kind; of course, they have a great location, but that was really related to trade routes when everything was done by boat. I think that what we’ve learned over the last few years is that intelligent interventions by national or regional states – regional in the case of Europe – can help greatly. Financial markets are not all-powerful and they are not all-knowing; on occasion, there are market breakdowns and there are market inefficiencies. In fact, the two people who were selected for the Nobel Prize in economics this year have in common the fact that they have studied market inefficiencies and market breakdowns – areas where we need to help markets provide the right solution. So, I think some degree of intervention, or guidance, or specifying the rules of the game by the state is necessary.

    Sputnik: Do you agree with the statement that government institutions and business could work together to achieve mutual interests?

    Jean-François Manzoni: Absolutely. In fact, I have a colleague at IMD who directs our World Competitiveness Center; I heard him speak recently at another conference, and one of the things he said is that, from his point of view, what we will observe in 2018, 2019 and 2020 is the growing role of governments. I think that governments and private organizations can, indeed, work – I don’t know about working hand in hand, because sometimes there will be frictions – but they can work for mutual benefit.

    Sputnik: What problems could large companies and corporations face in the field of innovative development?

    Jean-François Manzoni: I guess there’re two types of issues. Firstly, competitors are coming up with innovations that are incredibly difficult for you to fight. We live in a world where not so long ago, competitors typically looked like us; and when they attacked us, they were either better or cheaper, but they usually had to choose one of the two. Increasingly, we live in a world where competitors arrive from completely different business models, very often owning no assets and really relying on leveraging digital technology and the control of information. So, they come in and they are both better and cheaper; and that, of course, is very difficult to fight. The first thing that happens is that the forces of competition have become a lot more intense, and the speed at which competitors attack you is increasing. Then, of course, there is what you can do about it. There are all sorts of difficulties that businesses might face, but one of them is that large organizations are complexity-creation machines. As an organization grows, it will create more inner complexity; some of that is unavoidable and some of that is avoidable. But, of course, great organizations manage to deal with the unavoidable complexity, but also manage or eliminate the avoidable complexity. Another aspect is when you’re a large successful organization, you’ve got things to defend; so, very often large organizations try to defend their existing products and markets. Meanwhile, of course, the newcomers don’t have anything to defend, so they can move rapidly; and also they can attack existing products. One of the things that we encourage organizations to do is not to be afraid to cannibalize themselves. The word ”cannibalization” is not a good word, and we know that cannibalization isn’t good in real life; but I think that in corporate life it is important to be able to compete with yourself and, if necessary, to harm one of your product lines. The last thing is don’t be afraid as a large organization to enter into areas that look less profitable today than your main product lines. Of course, your main product lines are already very profitable, but they didn’t start out this way. Too often organizations say that they could do this or that, but it’s not as profitable as what they do today; that’s true, but maybe what they do today is extraordinarily profitable and this new thing will grow into a profitable line of business. So, you have to accept that in the short run it may be less profitable than your current activities. And again, startups have an easier time doing this because they start from nothing.

    Sputnik: What are the main factors that help companies survive in five-ten years in the time of digital transformation?

    Jean-François Manzoni: Clearly, the first factor is your capability to continue to innovate. This is a world where innovation is absolutely crucial, and five to ten years from now you will not be around if you don’t continue to innovate. Obviously, we live in a world where innovation is going to be, often, either based on or very much connected with technological developments and digital transformation. The second factor is the ability of your organization to remain agile; agile means the ability to move quickly and effectively. I think that organizations need to maintain the ability to change their structures, business models or their ways of operating quicker than they did before. So, the factors are your ability to keep innovating on the product and service side, your ability to remain agile and to change processes, structures, business models and ways of operating, and managing the change process – helping your organization to move from point A to point B or point C.

    Sputnik: How do you assess the success of business development in Russia and what do you suggest to improve?

    Jean-François Manzoni: I am not a specialist of Russia; we are very fortunate to work with a few Russian organizations. One of the challenges of Russian organizations, of course, is the business and the geopolitical environment. Things are still moving quite rapidly; and again, in some areas organizations are facing some barriers, either internally or externally. Our job at IMD is not to pass judgement or even advise the government, we are not a school of public administration; I know that you have excellent schools of public administration, I’m on the advisory board of RANEPA, so I know that you have excellent advice internally. What we do is we work with organizations and we try to help them face the challenges that they face in order to accelerate innovation and change. That’s all that I can say on this. I think that Russian organizations face challenges that every organization faces anywhere; and there’re some additional challenges that are Russia-specific.

    The views expressed in this article are those of the speaker, and do not necessarily reflect those of Sputnik.

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