Based on the article “La recherche dans les écoles de management apporte une réelle valeur ajoutée” – Published in News Tank.
While the relevance of research in business schools is now widely recognized, two criticisms resurface from time to time and cast doubt on this faculty activity.
The first criticism concerns the synergy between research and teaching. Detractors state that business schools, under the pressure of accreditations and rankings, pay consequent amounts to resident professors whose sole activity is to conduct research. The task of teaching is therefore left to non-research teachers, which implies that students don’t benefit from the skills of the most expert professors in their discipline.
The second criticism deals with the very nature of research. Academic journals select articles based on academic rigor. They don’t take into account their interest for practitioners. Students have no interest in joining a school whose research will be of no use to them.
In an article published last October 25th in News Tank, I show that these criticisms erroneously depict the state of research in business schools for at least three reasons.
First, rankings and accreditations don’t only take into consideration research performance, far from it. Consequently, business schools do not base their entire policy on this sole component: they evaluate teachers using many other criteria such as quality of teaching, innovation, engagement, institutional involvement, managerial responsibilities ….
Second, if the most active researchers have indeed lighter course loads (which is a common practice in higher education), it is wrong to say that students do not benefit from their skills. Many business schools have defined a minimum threshold for teaching hours, which cannot be crossed by any teacher, regardless of his/her research activity.
Finally, most of the research articles published in the best-ranked scientific journals have managerial implications and are selected with this criterion in mind. In addition, schools are increasingly aware of the impact of their professors’ research on stakeholders.
All in all, questioning research in business schools on the grounds that researchers do not teach and that research is not relevant does not hold up to serious scrutiny. On the contrary, over the past fifteen years, research in business schools has made remarkable progress both in terms of quantity and quality, and fully contributes to the schools’ success with students and companies !
Photo: David Slater via Wikimedia Commons
Monkeys can surprise you. This photo of a crested black macaque is a selfie. Aside from photography, monkeys are reputed to be surprisingly good at picking stocks. In his now-classic 1973 book A Random Walk Down Wall Street, Princeton University professor Burton Malkiel wrote that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.” In recent years, research showed that monkeys (or, more precisely, randomly-generated stock portfolios) significantly outperform the stock market over the long run.
What may seem to be monkeys’ great handicap – their utter lack of interest in publicly traded companies – turns out to work to their advantage when it comes to portfolio formation. The stock market index represents companies in proportion to their size and is therefore dominated by large and fast-growing firms. By contrast, randomly selecting stocks into a portfolio tends to allocate more money to smaller and less glamorous companies, as well as breaking the link between portfolio weight and recent performance. Over extended periods, this blindness to company characteristics is rewarded with better investment returns. (While the reasons for this are subject to debate, overvaluation of in-vogue stocks seems to be one plausible explanation.)
If being oblivious to what’s going on in the market is what it takes to beat it, then you may not need a professional stock picker to manage your money. Or at the very least, you shouldn’t give investment managers credit for “the monkey effect” in their performance. This is the basic premise of our recent research paper.
Our approach is simple. On average, the performance of randomly chosen portfolios over the market index is similar to that of a portfolio where all stocks are weighted equally. We therefore study the correlation between the performance of active fund managers’ investment portfolios and the spread between equal-weighted and market-weighted portfolios’ performance. This can tell us how much of a fund’s performance could be replicated by mechanically tilting its portfolio toward an equal-weighted one. Of course, we also control for a range of other factors that have been known to impact investment returns.
Our results are striking. The equal-weight tilt is common among more than one thousand US mutual funds seeking to beat the S&P500 market index, and its extent is a key factor in explaining fund performance. On average, the size of the tilt is equivalent to investing 20 to 30% of a fund in an equal-weighted portfolio. Recognizing this fact in performance evaluation lowers the average fund’s risk-adjusted performance by as much as 0.7% percent per year.
Why might actively managed portfolios have a tilt toward equal weights? There are two possible explanations. One is that fund managers do this intentionally as they are aware that portfolios with random or equal weights generally outperform the market. Another is that this tilt is an unintended byproduct of their investment process (for example, the hit-and-miss nature of stock analysts’ recommendations could be analogous to throwing darts). Regardless of the underlying cause, an investor can acquire an equal-weight tilt much more cheaply than delegating the task to an expensive active manager – it is enough to combine a passively managed index fund (which can have fees of as little as 0.02% per year) with an equally-weighted one (with fees of as little as 0.2% per year).
After a series of legal and public-opinion battles, the credit for the monkey selfie was deemed to belong to the photographer; he did, after all, go to the trouble of travelling to the jungle, befriending the monkey, and setting up the camera – all necessary steps for us to enjoy the surprising photo. But when you come across surprisingly good performance by active fund managers, think twice whether they should get the credit (and the fees). Hint: they shouldn’t if a monkey could do it.
The authors evaluated the investment performance of actively managed U.S. mutual funds benchmarked against the S&P500 market index over the 1980-2009 period. They focused on the performance evaluation impact of including the spread between equal-weighted and market-value-weighted portfolios’ returns alongside established factors commonly used to assess fund performance. The article, titled “The equal-weight tilt in managed portfolios”, was published in Economics Letters in June 2019.
By Secil Bayraktar
Based on the article “How Leaders Cultivate Support for Change: Resource Creation through Justice and Job Security” – Published in Journal of Applied Behavioral Science in 2018.
Change is inevitable in the agenda of the 21st century. Consequently, organizations must adapt to the rapidly shifting business contexts through ongoing reorganizational practices to increase their effectiveness and stay competitive in the market. In this context, employees’ behavioral support is crucial for the success of change initiatives since it facilitates reaching strategic change objectives. On the other hand, lack of employee support usually is associated with failed change efforts.
Unsurprisingly, leaders have an essential role in creating behavioral support for change. Compared to senior managers, the immediate supervisors are more influential on employee attitudes and behavior during change since they have more direct contact with their team members. Research shows that the quality of the relationship between a supervisor and a subordinate influences employees’ behavioral support during organizational change.
Change is a stressful experience for employees. Many employees are unwilling to support the change because of feelings of anxiety, negative emotions, and uncertainty. In that context, employees need more resources than during stable times to cope with this stressful event, reduce strain, and increase positive reactions such as support for change. Moreover, during an organizational change, employees already face loss in their resources (e.g. increased workload, change of positions, or losing good coworker relationships) which in turn increases their stress and may lead to change-resistant behaviors. Under such circumstances, receiving sufficient resources from the supervisors is expected to help to reduce the stress, cope with change with more resources, and hence be more positive towards the change.
In my recent study, I found that two resources, namely perceptions of procedural justice and job security, help employees to cope with the stress and uncertainty of the changing situation, to overcome their challenges, and subsequently to display supportive behaviors. Moreover, I found that leaders have a crucial role in building up such resources by establishing high-quality supervisor-subordinate relationships. These two types of resources are especially crucial during organizational change periods (i.e. context of uncertainty). First employees become more sensitive to justice related acts and fairness becomes particularly critical when a high level of uncertainty is experienced. Secondly, during change periods, substantial concerns about job insecurity persevere among employees.
Leaders and their attitudes and behaviors are an important source of justice perceptions in the workplace. Employees who are treated in a fair manner tend to reciprocate by their favorable attitudes and behavior. When their leaders use fair procedures in allocating outcomes, their team members become more supportive of their goals and act in more cooperative ways. Procedural justice becomes even a more crucial resource under uncertain situations like change because employees are more sensitive to justice in the decision-making procedures and they expect more constantly applied, bias-free and ethical decisions in order to support the change. Moreover, fairness makes employees feel as valued members of the organization.
Value of clear communication throughout change process has been confirmed to increase the perception of fairness. In addition, managers also need to make sure that employee concerns are heard before making decisions. These decisions should be applied consistently across all affected employees, additional information should be provided about decisions when requested, and employees should be allowed to challenge the choices made by managers.
The second resource that leaders can generate is the perception of job security. Job insecurity refers to a sense of powerlessness and a subjectively perceived likelihood of involuntary job loss. Especially during an organizational change, job insecurity may constitute an important variable that is negatively related to behavioral support for change. On the other hand, when employees are equipped with the valuable resource of employment (i.e. perceptions of job security), they will be less likely to withdraw from their work, identify more with corporate objectives without the anxiety of a possible job loss, feel more powerful and acquire predictability over their future jobs. Consequently, they will be less likely to display change resistant behaviors and be more supportive.
Leaders are found to be influential in this subjective appraisal: high-quality relationships with the leader involving open communication, empowerment, support, assurance, and trust may play a role in increasing the controllability, predictability, and perceptions of security. In addition, individuals who have high quality relationships with their supervisors may receive updated and transparent information about the ongoing changes and may feel more certain as to whether they will keep their jobs. Such high-quality relationships with the supervisor may create a supportive workplace which makes the employees feel less threatened by the uncertainty. For those reasons, leaders provide an important job resource for employees to reduce the threat to their future jobs, which in turn leads to better coping with the uncertainty of change.
On the other hand, there may be times in which managers may not guarantee job security in the future. Some types of changes (e.g. restructuring, downsizing, mergers) by their nature involve the reality that some people will lose their jobs, by either being laid off or being reassigned to new positions. Even in such cases, it is crucial that managers act transparent and do not lie and demolish trust. Moreover, when job elimination may be a reality, managers can use certain levers to reduce the adverse effects of such an environment by, for example, discussing the personal situation of each employee and planning the steps ahead with them. Although the current environment may not promise job security, organizations may offer re-employment counseling or outplacement assistance services to dismissed employees to increase their likelihood of future employability.
Given the significance of organizational change in today’s business context, it is vital to understand how to successfully manage change. Managers who want to increase their employees’ behavioral support for change need to consider providing them with certain resources to help them cope with change. This study demonstrates the positive role that leaders can play in the success of change initiatives by providing the right set of resources that employees need during the organizational change process. Justice and job security are two of these critical resources. Therefore, it is suggested that managers create the perception that processes are conducted in a fair manner and that the employees feel secure about their jobs. In other words, a climate of justice and security would help employees to be more supportive and thus less resistant to ongoing changes.
In this study, a survey was conducted with 269 employees and their supervisors from 30 organizations going through a significant change process. Examples of types of changes that the organizations were going through included mergers and acquisitions, restructuring, downsizing, CEO change, sector change, ERP system change, new markets, and new processes. All organizations were private companies in a variety of industries, including electronics, information technologies, food, finance, health, logistics, manufacturing, and media. The majority of the organizations were mid-sized firms in Turkey.
By Christina Theodoraki
Based on the article “A social capital approach to the development of sustainable entrepreneurial ecosystems: an explorative study” published in Small Business Economics, 51(1), 153-170.
The creation of sustainable entrepreneurial ecosystems is at the heart of public policy concerns. This type of ecosystem is composed of interconnected actors, within a territory, committed to facilitating the creation of new sustainable businesses. In this context, many questions need to be asked: Is it possible to replicate Silicon Valley’s success? Should governments continue to ‘infuse’ the ecosystem eternally with financial endowments or can the ecosystem reach a maturity threshold that allowed it to self-finance itself to evolve? What action plan must be considered to reach this maturity threshold? The social capital perspective is an interesting integrative framework that deserves to be analyzed to answer these questions.
The evolution of the entrepreneurial environment reinforces these questions. The economic crisis, the decline in public funding, the increase in the number of actors who revolve around the entrepreneur, competition between public, semi-public and private actors, the emergence of new entrants are new factors that threaten the survival of existing actors and force them to review their economic model or their contribution to the proper functioning of the ecosystem.
Thus, the university is one of the historical and founding actors of entrepreneurial ecosystems. The contribution of universities to the sustainability of the entrepreneurial ecosystem is important. They contribute to the creation of knowledge that they transfer to students in order to prepare them to integrate the entrepreneurial ecosystem. In parallel, the establishment of academic incubators promotes technology transfer, commercialization and value creation through the creation of spin-offs and young innovative companies. These incubators are intermediate actors who build the bridge between the supported companies and their external environment. Their objective is “to act as a neutral coordinator to promote the interests of academic entrepreneurs, remove barriers to their success, and connect them to entrepreneurship support mechanisms both inside and outside the university” (Hayter 2016, p. 651-652).
However, even if the role and contribution of some actors in the ecosystem seems obvious, current research fails to explain why some ecosystems are more “sustainable” than others. The synthesis of studies in this field distinguishes three characteristics to promote a sustainable ecosystem: (i) the consideration of territorial specificities; (ii) the effect of a supportive entrepreneurial culture; and (iii) the continuous interaction and interdependence of its components. The social capital perspective represents the configuration of a sustainable entrepreneurial ecosystem.
Social capital is composed of tangible and intangible elements grouped into three dimensions: the structural one, the cognitive one and the relational one (see figure 1). The structural dimension describes the properties of the ecosystem (the number of ties between members, the configuration of these ties and their stability); the cognitive dimension refers to the shared culture within the ecosystem (shared goals and language, shared narratives); the relational dimension refers to the behavior of members (the norms to be respected, the members’ obligations, the identification of each member – who does what -, and the trust they build between them). Combining these dimensions promotes the optimal configuration of the ecosystem and contributes to its sustainability.
We can therefore assume that if we have devoted resources to structuring the ecosystem, creating a shared culture and languages, and fostering stakeholder relationships with norms and obligations of members, our ecosystem will be sustainable. Unfortunately, it is not enough to only build the structural, cognitive and relational dimensions of the ecosystem. These dimensions are interconnected, and their interactions promote the adaptation of the ecosystem to the specificities of each territory and each ecosystem.
The key ingredient for the well-functioning of the ecosystem is to consider the interactions of its dimensions. It is important to build bridges between these dimensions to promote exchanges and the interconnectivity of the elements. It is this interconnectivity that is the key to the success of a sustainable entrepreneurial ecosystem.
Figure 1: The Social Capital Perspective of the Entrepreneurial Ecosystem
This study provides a better understanding of the composition of the entrepreneurial ecosystem and proposes a framework (through the social capital perspective) for configuring a sustainable ecosystem. Despite the focus of this study on academic incubators, our results are applicable in different sectors and contexts. In order to build a sustainable entrepreneurial ecosystem, it is advisable to: 1) create dense and strong relationships between members to compensate for the scarcity of resources; 2) develop a common culture and values within the ecosystem to ensure solidarity among members; 3) develop trust and rules respected by members to strengthen a climate of security conducive to value co-construction; 4) create bridges between mechanisms to fluidize and make flexible the evolution of the ecosystem.
The qualitative method using multiple case studies was conducted in Montpellier between 2013 and 2014 on 3 academic incubators. The choice of these incubators met four selection criteria: (i) proximity and commitment to an academic university, (ii) access to university services, (iii) transfer of scientific knowledge and support for the creation of new innovative businesses, (iv) geographical area. In total, we conducted 48 semi-directive interviews with all members of the entrepreneurial ecosystem (incubator managers, staff, incubatees, academic partners, funding entities, other types of incubators, etc.). This collection of ecosystem data with various groups of stakeholders allowed us to have a holistic view of the observed phenomenon, to cross-reference different points of view and to generate results by triangulation. The interviews were conducted using an interview guide, recorded, transcribed and coded to provide a synthesis of the results.Co-authored by Christina Theodoraki (Professor, TBS Education), Karim Messeghem (Professor, University of Montpellier, co-director of the Jacques Cœur Chair at Labex Entreprendre), and Marc P. Rice (Provost at Babson College).
By Lambert Jerman and Evelyne Misiaszek
Successful companies like Sigfox, BricoPrivé or Hellocasa all belong to the world of scale-ups. Whether these companies are young or old, their hypergrowth phase is a highly critical period.
These days, the idea of « scale-up » includes businesses with an annual turnover greater than €5m, with growth of at least 10 to 20% over three years. After graduating from being a start-up and having validated its business model, the scale-up must transform rapidly on several levels : internationalization, recruitment, new business, technical or financial partnerships. Its internal piloting system must keep evolving so that the company can face new challenges, while at the same time the director has to ensure that any new management tools put in place are adapted for hypergrowth. It’s a situation that requires a delicate balance between short-term decisions and the company’s long-term strategy.
A loss of proximity and a delicate balance to be achieved
Recruitment needs being, by definition, substantial in companies in hypergrowth, employee numbers are inclined to increase so quickly that before long the director finds him or herself unable to directly supervise the workforce or get to know them personally. This loss of hierarchical proximity is often exacerbated by an ever greater geographical distancing. Information flow can be threatened within that structure, and jeopardise the business’s culture and cohesion. The director’s charisma, values and personal commitment are no longer enough.
To get to grips with this new reality, the director of a scale-up has to adapt and reinforce the way the company is governed and strengthen its piloting system, without curbing the creativity and innovation so vital so its development.
Achieving this delicate balance in a way that maintains responsiveness and the informal coordination inherited from the start-up alongside more formal and rationally-defined procedures necessary to a larger group, is anything but easy. Four drivers of action can nonetheless be identified to make transforming the company less complex, and to maintain as far as possible the proximity necessary for it to remain cohesive.
To tackle the two major risks associated with piloting hypergrowth – a more complex business environment and the loss of proximity to its teams – the director of a scale-up needs to let the company find a balance between the very informal piloting system of a start-up and the more formal control of the big groups.
This article has been written under the partnership “Scale UP – Gérer l’hypercroissance”
Ingrid Molderez and Kim Ceulemans
Will our future business managers be able to tackle sustainability challenges? Can art contribute to acquiring sustainability competencies in management education? Our study explored the power of art to foster systems thinking, one of the key competencies of sustainability, and to help business students think more creatively about divergent views on sustainability.
Thirty years after the Brundtland Commission popularized the concept of sustainable development, the issue has become more urgent than ever. Global challenges such as climate change, loss of biodiversity, poverty and migration are omnipresent and are affecting everybody in spite of place and time. There are no easy or instant solutions, but education plays an important role in raising awareness on sustainability and in how to respond to these challenges.
Paul Shrivastava, an influential management and sustainability scholar, argues that education for sustainability requires more than just cognitive understanding. We need alternative ways of teaching that incorporate physical and emotional engagement (Shrivastava, 2010). However, pedagogical approaches that combine head, heart and hand are rare in management education. Management students are used to studying topics that immediately impact the knowledge and skills that they will need in a business context. Spiritual and/or creative ways of teaching are nearly absent. Yet, this is what we focused on in our research. We used art as a pedagogical way to enrich the whole person, to encourage critical and creative thinking around sustainability and we explored how management students react to this.
The concept of sustainability brings the importance of interconnections between human beings and nature back to the surface. The boundaries that have been created as splitting forces between humans and their environment have to be perceived as binding again, so that we can see ourselves again as functioning in togetherness. Changing towards sustainability generates intense emotions and at the same time, intense emotions are needed to be able to make a change towards sustainability. Art generates and encourages emotions, triggers our criticism and challenges our comfort. In relation to systems thinking and sustainability, art can help us to regain focus on the connections and interdependences of our systems.
In our study, we exposed management students to paintings during their Master’s level corporate social responsibility course. We did not especially focus on artists that use their art to criticise the negative environmental impacts human beings have. We opted for painters who are not known for their ecological engagement, but whose artwork makes us reflect upon the role human beings have in society. René Magritte’s painting Les Jours Gigantesques was a source of inspiration and reflection to help them think about and discuss boundaries as connecting and disconnecting forces in a sustainability context.
After class, we surveyed the participating students to study their receptiveness towards art in a management course. We explored whether they found art relevant to study three aspects of systems thinking, i.e., the system/environment relationship, thinking in patterns and relationships, and understanding the interactions between system and environment. For each of these aspects, the majority of the surveyed students agreed that art can be very relevant to discuss such issues. The students noted that using art was helpful for showing different points of view, that it facilitated understanding the topic from another perspective, and that it helped them to see the importance of connections within sustainability.
In this study, the majority of the students were receptive for using art because it acts as an eye opener and makes them think differently about sustainability. Nevertheless, some students were also very critical, because they had a fixed idea about art, i.e. only being relevant for an exhibition about sustainability rather than in a more abstract way to understand or discuss sustainability. They thought that showing pictures about what is really happening in the world would be more effective. However, it has to be underlined that art cannot be used in a functional way, as this goes counter to the core concepts of what art is about. Hence, we were not looking for a causal relationship between using art and effectively learning about sustainability, but we intended to explore ways to connect head, hand and heart in management education.
What can we learn from this research?
While management education is known for its functionalist approach, we should remember that business students can be receptive to alternative learning methods. Using paintings can be a relevant method for explaining sustainability topics, encouraging critical thinking, and adopting a holistic approach by triggering their creativity. Art can help students to think critically about sustainability concepts addressed in class, and shows them that there is space for different approaches and interpretations of such complex concepts.
Higher education has an important role to play in sensitising students towards sustainable development, and in helping them to develop competencies for addressing sustainability issues. Art and artists have a gift to make people think in a critical way, to go beyond boundaries, to initiate emotions which are all very relevant if we want to change our mindset on a topic (such as sustainability). Higher education could consider no longer reserving art for students in art-related disciplines, but to surpass the strict boundaries between disciplines. Art can be inspirational for every discipline and is worthy of a place in every study programme, including disciplines that are perceived as less receptive, such as management, engineering, law among many others.
This article was originally published at Economists Talk Art, based on: Molderez, I. & Ceulemans, K. (2018). The power of art to foster systems thinking, one of the key competencies of education for sustainable development. Journal of Cleaner Production, 186, 758-770.
By Amadou LÔ
Order or disorder? Stability or flexibility? Control or ‘laissez faire’? Issues linked to the management of long-term collective action have long been presented in a binary logic where choice fell within the scope of exclusivity. Today more than ever, the development of competitive strategies involves a logic suited to economic dynamics whose trends appear contradictory at first glance. At the same time, the evolution of collaborative practices and spaces are playing an important role in the transformation of our ways of working. The company Fab Lab is a manifestation of this which is interesting to analyse.
What is a company Fab Lab?
Recently, a new collaborative workspace dedicated to exploration was born: the Fab Lab. The Fabrication Laboratory [1] – commonly abbreviated to Fab Lab – is a workshop given over to innovation and rapid prototyping. It’s a space where people are free to come and go, swap ideas in a non-formal setting. The Fab Lab was developed at the Massachusetts Institute of Technology (MIT) by professor Neil Gershenfeld in the 2000s. It’s a place that’s open to all, complete with equipment ranging from simple – like a soldering iron – to very sophisticated – like a 3D printer or a laser cutter. Creative and prototyping activities emerge through the interactions of an active community made up of individuals with a range of skills. This all takes place without hierarchies or orders being given.
Originally, Fab Labs were open areas, free and independent facilities located in community settings, whether educational or open to the general public. Up until now, this type of facility existed only in this form. Today, though, big businesses are getting interested in the concept and wish to put it to use in their own organisations in order to stimulate innovation. By opening its exploratory activities to members of production teams, the company Fab Lab poses an interesting challenge: how to reconcile employee production activities and exploratory activities. We worked within the innovation directorate of the French car manufacturer Renault, which has been a pioneer of this process since 2011.
The company Fab Lab, a chance for employees to explore
The Renault Group operates an internal Fab Lab which is a carrier for the upstream phase of the innovation process which is transversal to Renault’s matrix organisation. This process is defined as a regulatory process for all the “vehicle projects,” using precise signposting and a formal distinction in the distribution of functions. However, the people belonging to units of this process dedicated to production activities have complained about poor access to exploration activities.
The Fab Lab was therefore developed within Renault with the aim of bringing new opportunities for employees to get involved in exploratory activities alongside their usual activities. Through its location, its charter, its activities and its digitally-operated machines and tools, the company Fab Lab aspires to be a codified space which is also inclusive and permissive. It was conceived to be directly accessible by employees, so that they can individually carry out exploration activities alongside their production activities, ie, develop their individual ambidexterity.
Practices promoting employee ambidexterity within the company Fab LabWe have been able to put forward four main practices (table) which characterise the Fab Lab and which explain the emergence of this dynamic: improvisation, innovative design, DIY and rapid prototyping.
Table – practices promoting employee ambidexterity within the company Fab Lab
Improvisation
DIY
By manipulating and reorganising what is available, individuals learn to cope with a lack of resources and surmount conceptual obstacles “by doing”
Rapid prototyping
Through activities that bring ideas to life and accelerate the development of innovative projects
Our results show that the company Fab Lab constitutes a space conducive to exploration which supports employees wishing to carry out innovative projects alongside their usual production tasks.
It’s a space conducive to social interaction, open to all and all occupations, giving employees the opportunity to organise their time as they wish, between their usual occupation and their exploratory projects. Through this structure, employees get support for their exploratory activities, in the form of the practices we have highlighted – DIY, improvisation, prototyping and innovative design. The Fab Lab acts as an additional support alongside ordinary work, thus rectifying the lack of exploratory activities for employees. It therefore constitutes a facility for the development of employee ambidexterity.
As a physical space lending itself to social interaction, it is open to all and to all types of occupations, offering employees the chance to freely organise their time between their usual production activities and their exploratory projects. This facility allows employees to avail of assistance for their exploratory activities in the form of the practices already highlighted – DIY, improvisation, prototyping and innovative design. So the Fab Lab offers support that complements the workers’ ordinary activity by fulfilling employees’ need for exploratory activities. It therefore constitutes a facility which allows employees to develop ambidexterity.
Conclusion
The in-house Fab Lab offers an opportunity for businesses to use the digital revolution to deal with and adapt to the ever-changing environment of the markets and innovative practice. By offering employees in production units the chance to carry out exploratory activities, we’ve seen that the in-house Fab Lab plays the role of a valuable tool and a support for emerging employee ambidexterity. It takes the form of a safe space for exploratory activities and offers every employee the chance to manage their own work, between production and exploration, and hence to become ambidextrous.
We saw that when offering employees in production roles the opportunity to carry out exploratory activities, the internal Fab Lab is a useful tool and a support to the emergence of employee ambidexterity.
Table – summarises our collection methodology and the analysis of our research.Synthesis of the methodological framework of our research
By Lambert JERMAN and Alaric BOURGOIN
At a time when many professions are questioning their own deep meaning, torn between economic constraints and impending automization, the auditor for the Big Four accounting firms has provided a useful insight into what makes work meaningful for today’s service professionals.
From the empowering stature of the expert to difficulties on the ground
On the ground, auditors face a series of difficulties which tend to nuance the idealised vision of the numerate professional. In practice, auditing demands that the practitioner resist and sometimes transgress their company rules, while adjusting continually to the constraints of their missions according to their own subjective logic. Refractory clients with packed schedules or accounting papers in chaos 1 means auditors grapple with a permanent sense of anxiety about their ability to accomplish their missions. The fear of doing damage is omnipresent, since an undetected error in the financial statements can have serious legal and financial consequences. All these facets of the work of the auditor suggest that the construction of his identity does not always bring a sense of worth, reassurance, or inner harmony. It is also linked to an intense relationship between an individual and his or her weaknesses, where the exercise of his professional activity confronts him with the limits of his expertise, his failures, his mistakes.
This is why we tried to understand the practices and the discourses that the auditor uses to construct the image of a “good” professional. How do difficulties on the ground determine the auditor’s ability to match up to his own expectations as a professional? To answer this question, we carried out an ethnographic enquiry over six months in a big international audit firm.
Negative identity: constructing an identity as a “good” professional through experiencing, confessing and managing one’s weaknesses
Our results show that the construction of professional identity takes place under conditions of stress, when an individual is driven to examine himself objectively in the hope of embodying an idealised professional image in public. Our study of the auditor allowed us to pinpoint the notion of “negative identity” which lies at the heart of our argument. Negative identity equates to the practices and discourses by which the auditor constructs him or herself as a “good professional” in intense and continuous relationship to his or her weaknesses. Specifically, these practices and discourses revolve around (1) experiencing, (2) confessing and (3) managing the auditor’s own weaknesses.
By experiencing his weaknesses, the auditor engages in a practical investigation which enables him to become aware of the distance which exists between his image of himself as a numerate professional and the reality in the field. Ambiguous situations, equivocal subject matter, the constant pressure of error-avoidance and clients, mean he can’t rely solely on the company rules to regulate his behaviour. This dawning awareness brings anxiety and forces him to question his areas of vulnerability, to take risks, to put himself in a “lower position” in response to the demands and limitations of clients. This attitude echoes observations made in other service professions like consultancy 2, where professionals have to contend with anxiety linked to the proliferation of short-term contracts, new environments and contact with demanding clients.
By confessing his weaknesses, the auditor operates a convergence of his vulnerable position and the more empowering image of the numerate professional. This practice maintains the tension between the individual’s negative self-perception and the more laudatory discourse carried by the firm. Confession is in the first instance linked to an exercise in humility, where the auditor again confronts himself in a reflexive endeavour. He must learn to “self-assess as bad”, ie, externalise and verbalise his weaknesses on a voluntary basis in the firm’s appraisal system. These systems then encourage the definition of “progress axes” which operate a fundamental reversal. The detailed factoring-in of the individual’s weak points leads to the stabilisation of a professional profile appreciated at its proper value. However, this transformation is never completely achieved because confession safeguards the imperfectability at the heart of professionalism.
Finally, by managing his weaknesses, the auditor rationalises the key issues of the job and discovers interpersonal and official support which allows him to contend with the challenges of the field. Since the reversal operated by the confession is largely rhetorical and confined within the walls of the company, it isn’t sufficient to enable the individual to contend with his weaknesses in a lasting way. The overall vision of the missions and the client’s issues, team solidarity and official concerns, allow him to make a virtue of necessity, and assimilate the constraints and vagueness of the job, on an intellectual as well as a practical level. The auditor, characterised by doubt due to the challenges on the ground, is thus repositioned within the prestigious social identity of the professional, creating in the individual a temporary equilibrium which must be forever created and recreated between these two poles.
The “good” professional, Sisyphus of imperfection
By taking the auditor’s weaknesses and on-the-ground challenges seriously, “negative identity” reintroduces personal identity behind the well-delineated and high-status image of the expert affixing a final judgement on the correctness of the accounts. We can discern a vulnerable auditor, as invasive with himself as he is with his client. Faced with the ambiguity of the situations in which he has to intervene, the auditor feeds his professionalism with his ability to doubt himself and with an anxious view of his ability to bring his missions to a successful conclusion. A veritable Sisyphus of imperfection, he presents as an individual in tension between a sometimes painful experience of the job and the positive image carried by the firms.
Our observations show how the construction of identity also takes place in and through challenges, placing the individual in an introspective position, maintaining constant doubt 3 about his own value. Beyond the threat of economic circumstances or of the coming automization of verification operations, our study suggests that the auditor owes his success as a professional to the adaptable nature of a practice fed by constructive questioning of his own value.
The first author worked as an auditor himself and logged his observations (in his firm and when on mission) in a working journal. This ethnographic method let researchers get close to the issues on the ground and acquire insider knowledge of observed phenomena. This method is relevant in analysing the construction of identity, which is experienced intimately by the players and therefore difficult to verbalise during interviews. The rôle of the second author was crucial in order to check immersion bias and find a proper balance between professional distance and the personal involvement that is indispensable to ethnographic research.
Reference for the complete article: JERMAN, L., & BOURGOIN, A. (2018). L’identité négative de l’auditeur. Comptabilité – Contrôle – Audit, 24 (1), 113-142. doi:10.3917/cca.241.0113.
By Yuliya SNIHUR
To establish an innovative business model, disruptive start-ups use a strategy resting on two complementary processes: building a discourse which will engage clients and partners in the new ecosystem, also known as framing, and continuous adaptation of their business model in response to the needs of clients. This will be illustrated by the case of Salesforce versus Siebel in the business software industry at the start of the 2000s.
Cases of successful disruptive innovation, where a start-up manages to radically transform the functioning of an industry, remain exceptional. Among the best-known are Amazon with the distribution and sale of books or Netflix which revolutionised the film distribution industry in the United States. They have resulted in the creation of a new business model which shifts the industrial ecosystem’s centre of gravity away from the historic leader and towards the start-up, and ends up creating a new ecosystem around the start-up. Businessmodel innovation is characterised by new sources of value creation, the arrival of new clients and partners and the implementation of a new kind of organisation, which rivals the business model of the historic leader and gradually replaces it.
Up until now, studies of disruptive innovation have been more interested in the reaction of existing businesses, and much less in the manner in which the start-up succeeded in establishing its business model. Hence, the importance of understanding the processes setin motion by the disruptor, which starts off with slender means with which to attract clients, partners, the media and analysts, and ends up taking the lead over an established and much more powerful competitor, and in some cases, making it disappear.This is the process that we call the disruptor strategy, whose aim is to reduce uncertainty in order to engage consumers and partners as players in the creation of the new ecosystem: from the outset, in order to get their attention and support, the start-up reveals itsintentions and ambitions through framing, ie, the construction of an effective discourse and presentation. At the same time, it must adapt its business model and its product to achieve the best possible offer for its clients and partners. The combination of these two actionscreates a virtuous circle and puts the historic leader on the horns of a dilemma: retaliate at the risk of legitimising the new business model, or do nothing and risk being overtaken.
The study of the emergence of Salesforce between 1999 and 2006 against Siebel in the management and client relation (CRM) software sector illustrates the concept of disruptor strategy. Originally, software publishers (Siebel, SAP) sold their clients CRM software andcostly products associated with maintenance and consulting services. Salesforce’s innovation consisted of coming up with a much less expensive business model, based on cloud computing, with SaaS services available by subscription. In the first instance, this product was aimed at consumers who were not part of the Siebel ecosystem.Before Salesforce had even launched, it was already addressing the ecosystem with a discourse emphasising its unique affinity with the “no software” revolution, and then its leadership, via press releases, interviews and dramatic stunts. This framing found an echo with start-ups and small-to-medium-sized businesses lacking the means to invest in a heavy system; with partners interested in the new ecosystem; and with the media and analysts who relayed and amplified Salesforce’s discourse and took up a more critical position in relation to Siebel. At the same time as new consumers were starting to get interested in the product, Salesforce was continually improving it to reach the standards expected by the majority of existing consumers. By combining these two framing processes and adapting the business model, the start-up had started to seduce Siebel’s clients and partners within two or three years.In the face of Salesforce’s offensive, Siebel didn’t react at first. The firm stayed with its old model without taking account of the new needs created by a competitor which it didn’t yet perceive as such. It only launched into the cloud in 2003, three years late. A vicious circle, symmetrical with Salesforce’s virtuous circle, falls into place: poor responses, mounting criticism in the media and from analysts, mass exodus of clients and partners to the new ecosystem. Finally, in 2006, Salesforce became the leading supplier of CRM services, while Siebel was bought by Oracle.
The Salesforce-Siebel case is a prime example of the establishment of a new business model. It highlights the importance of these two complementary processes of framing and adaptation in the disruptor’s strategy. This is, of course, an individual case, but it shares elements with other cases of successful disruption like Amazon and Netflix. For businesses, there are a number of lessons to be learned from these results. For the disruptors, it’s about the importance of pulling on both levers at the same time, given that the temporal window is limited. That means they have to find a way to reveal themselves clearly, but without being too precise, so as not to limit their scope for adaptation. In its framing, Salesforce presented itself as the leader by stating that it was offering a better value product and that its service was cheaper, but without going into the key points of the new business model.
For the leader, it’s hard to know how to react. Siebel had logical reasons for not responding to Salesforce in a market sector in which – at first at least – it had no interest. It’s very tricky to predict whether a start-up will be successfully disruptive or not. The problem is that Salesforce gained a competitive advantage by learning faster than Siebel. Siebel didn’t ask itself the right questions for several years, and the needs of Salesforce’s start-up clients were ahead of the needs of its own clients. When the firm did finally take action, its cloud didn’t function as well as Salesforce’s one, despite an R&D budget and far greater human resources.
To avoid this, existing businesses must therefore develop a strategic vision, an understanding of what is happening in their environment, in order to try to learn more quickly than the start-ups and be attentive to the market of tomorrow. But it’s very difficult for a firm to say that in 10 years’ time its clients will want products that are completely different from those it has on offer today.
This article is a synthesis of the publication “An Ecosystem-Level Process Model of Business Model Disruption: The Disruptor’s Gambit”, published in the Journal of Management Studies. It presents the results of a longitudinal study carried out by Yuliya Snihur (Toulouse Business School), Llewellyn D.W. Thomas (Imperial College London, Universitat Ramon Llull) and Robert A. Burgelman (Stanford School of Graduate Business), from the case study of Salesforce and Siebel, combining a theoretical approach and the analysis of a documentary base of historic data.
By Michaël Laviolette
It seems that every day, the media is full of examples of entrepreneurs and their success stories. They are often presented as heroic characters whose prowess leads most often to successful outcomes, and rarely to unsuccessful ones.
These entrepreneurs are therefore held up as exemplary rôle models according to a concept developed by Albert Bandura, social psychologist and expert in the theory of social learning.
In entrepreneurship, the impact of rôle models is significant because they offer examples which impact on the potential and the intention to engage in entrepreneurship. Many of today’s business people say they took their first steps in entrepreneurship after observing or being influenced by a rôle model. Often, it was someone in their close circle (friend, relative, etc). These are real-life rôle models. But what about symbolic rôle models? By this, we mean people we never actually meet, but whose stories we can identify with. For students, it might be the testimony of Mark Zuckerberg, a Harvard graduate, that they saw in a newspaper, or a former student of a ‘grande école’ turned entrepreneur they hear at a conference. How do these symbolic models influence our own students’ intention to engage in entrepreneurship, depending on whether their stories are of success or failure? What impact do they have relative to certain characteristics (sex, previous experience, etc) of the people exposed to their stories?
We will look at these issues in the educational context because teachers use a lot of these rôle models in the form of testimonies, quotes or case studies. At a time when experiential learning is the order of the day in business schools, these models are being used prescriptively to show the path to follow or not follow when engaging in entrepreneurship. Are these professors’ persuasive tactics effective? What is their impact on student self-efficacy and their intention to be entrepreneurial? In other words, let’s focus on those who are looking at the model, rather than the model itself.
A number of experiments were carried out involving 276 students in a French business school. Some students had been exposed earlier to success or failure stories of former students turned businesspeople. Other groups heard the stories along with a message of encouragement from their tutors. In keeping with the literature, we tested several main and secondary hypotheses of this causal chain which begins with student attitudes to the rôle models’ messages and ends with their intention to engage in entrepreneurship.
Our results were published in three articles in the Journal of Entrepreneurial Behaviour and Research, in the Revue Internationale PME and in the Journal of Enterprising Culture. The first article 2 reveals that symbolic entrepreneur models, whether of success of failure, had a significant impact on students’ intentions to engage in entrepreneurship. The more positive the students’ attitude to the message, the more they were affected or moved by these stories. This “emotional awakening” reinforces their perception of their capacity to be entrepreneurs (‘entrepreneurial self-efficacy’) and, ultimately, their intention to engage in entrepreneurship. We can therefore validate the central hypothesis of the impact of these symbolic models. Positive messages increase the intention to engage, while negative messages reduce it.
However, these effects change depending on the sex of the person receiving the message. Men are more influenced by models of success than women are. The latter are more influenced by negative models. This difference is explained by social norms which exemplify entrepreneurship as an eminently masculine activity. Indeed, men identify more easily with models of success. This upward and positive comparison comes easier to them. Women, on the other hand, have more difficulty identifying with female entrepreneurs and they are more affected by stories of failure. The downward and negative comparison unfortunately comes more easily to them.
The fact that the impact of the messages varies according to the recipient leads us to envisage two persuasive communication tactics in class. It’s important to expose students to both success and failure stories in order to avoid idealising entrepreneurship. It’s also important to emphasise positive models at the expense of negative ones. For the sake of realism, the latter are not to be banned but the lecturer should play a moderating rôle to ensure that the failure models are not too discouraging.
The second article 3 focuses more on the rôle of teacher encouragement when students receive these testimonies of success or failure, As well as the entrepreneurs’ messages, we exposed our students to a second message of encouragement from the teacher, reformulating the messages in order to reinforce their effects.We thought that this persuasive tactic would strengthen the impact of the initial message if it was positive and weaken it if it was negative. However, the results show that the encouragement discourages rather than encourages when its content is identical whether the receivers are men or women. A finer analysis of the results nonetheless shows interesting differences according to the sex of the students receiving the message.
Although a distraction effect can’t be ruled out with the second message, the principal explanation can be found in Brehm’s reactance theory. When a student is exposed to the message of an individual with whom s/he identifies (a former student), s/he is free to attribute any value s/he wishes to it. On the other hand, when a lecturer intervenes to try to convince or persuade, s/he reduces his or her freedom of interpretation. Indeed, students can re-establish their autonomy by resisting the lecturer’s remarks.
However, reactance is stronger among men than women. This difference can also be explained by social norms which construct entrepreneurship as a fundamentally masculine activity. Encouraged by these norms, men are likely to express an opinion contrary to that of the lecturer to express their free will even if they really think the same thing. For women, the lecturer’s encouragement is sought in order to confirm their opinion and to gain social approval. Indeed, our research shows that lecturer encouragement is more beneficial when female students are exposed to female rôle models.
Our articles also show that in order to understand the impact of rôle models, the characteristics of the recipients (sex, in this case) are important. Thus, our third article 4 focuses on the moderating effects of the characteristics of the recipients, notably self-esteem, locus of control, and previous experience. The locus of control is our feeling that events are within our control or not. Previous experience is students’ past experience of entrepreneurship.
Our results show that the better the students’ self-esteem, locus of internal control and previous experience, the less the recipient is impacted by the message. Indeed, students with high self-esteem and a belief in their capacity to control what happens to them, are naturally less influenced by external models. In other words, they rely more on their own resources in order to believe in their capacity to engage in enterprise, and ultimately, to decide to create.
In contrast, students with weak self-esteem, a weak locus of internal control and weak experience are more influenced by external models. Indeed, these students have a greater need to look for external validation to compensate for the weakness of their own belief in their own capacity for enterprise. These results round off our analyses by showing that it’s just as important to analyse the profile of the recipients if we want to understand the impact of the messages.
What conclusions should be drawn from our studies of the relationship between rôle models and the intention to engage in entrepreneurship in the educational context? First of all, they validate the importance of these models for students’ capacity and intention to engage in entrepreneurship, even if they are only symbolic. They also underline that a variety of models of both failure and success is crucial to offering more credible representations to a student audience. Nonetheless, these rôle models do not impact men and women in the same way.
In view of the predominance of masculine models of entrepreneurship, it is important to temper the impact of these models using lecturer encouragement tactics, particularly for female students. Nonetheless, it should be noted that this encouragement is not effective for men who are often more confident in their own capacity for enterprise. Finally, on the whole, these models have a greater impact on students who doubt their capacity for enterprise due to their weak self-esteem, weak locus of internal control and weak experience.
In conclusion, this research confirms that a single model of entrepreneurial success is not the most effective method for every audience. A plurality of models is needed to convince a diverse audience. Beauty is in the eye of the beholder, as Oscar Wilde reminded us. Look at the model but above all, look at the person who is observing it.
This article synthesizes our work on the influence of role models on students’ intention to engage in entrepreneurship. The work was undertaken jointly with Olivier Brunel, Senior Lecturer in Marketing at the Lyon School of Management (IAE de Lyon) and Miruna Radu-Lefebvre, Professor of Entrepreneurship and chair of Family Business and Society (Entreprise Familiale et Société) at Audiencia Business School, Nantes.