France's Competition Clusters Seek To Boost Industry Innovation

Whence the term entrepreneur, that all-American classifier for the successful man or woman industrialist? It comes from Jean-Baptiste Say, economist and a captain of the textile industry in 1805. Who invented venture capital? It was military engineer General Georges F. Doriot, while teaching management

Yet in today's France it is waywardness in entrepreneurship and the frustrating lack of investment capital that have limited world-class innovation. Well aware of this endemic shortcoming, President Nicolas Sarkozy has been urging the nation to "earn more money by working more," and his government is pushing hard on specific measures to ensure a maximum of innovation.

One characteristic step in this direction is the combined role of the Agence pour la recherche (ANR) and the innovation authority known as OSEO (France's Small Business Administration). ANR, for example, is headed by mathematician Jacques Stern, an experienced handler of innovation funds. These bodies are the government's catalyst to coordinate financing and help innovative production to materialize. They feed 71 geographic clusters-emulations of Route 128 and Silicon Valley in the U.S.-called pôles de compétitivité, best translated as competition clusters or hubs. The idea is to turn laggard manufacturing centers of earlier times into coordination points for inventive synergy to meet 21st-century technology requirements head-on. The scheme is a direct translation in France of the EU's "Lisbon strategy" to promote growth and employment. It commenced around 2000 and the 71 clusters were completed by 2004-5.

The innovation clusters are literally all over the map below-from the balmy Aerospace Valley and home of the Airbus around Toulouse in the south to the former machinery and textile region roundabout Lille in the north. The six-dozen clusters are divided among those deriving from 1) French specializations (high-speed trains, marine technology, quality cosmetics), 2) new industries seeking global roles (agricultural and food biotechnologies, ICT), and 3) those already competing aggressively on world markets: pharmaceuticals, automotive and commercial air transport, opto-electronics, telecommunication networks.

There is a complex cluster specializing in plastics, near the Gallo-Roman city of Lyon. Another typical hub centers on the city of Limoges, once famous for its luxury chinaware and today developing quality industrial ceramics.

The French Approach

Beginning early in the 21st century, when the fashions of marketing and total quality analysis had taken hold among designers, engineers and production controllers, the new buzz words became knowledge society and economic intelligence. These quickly made their way into France's boardrooms and management schools, and by 2004-5 had translated into the new geographic clusters of technical innovation. Thus, keen competition is now solidly in, notably affecting a conservative society that has spent the past two centuries trying to rationalize why the latest business philosophies need not apply to France's economy.

The nation-wide network designed for excellence in management as well as innovative approaches is also France's specific contribution (worth [euro]31 million) to the EU's [euro]77 million, eight-year project known as Osiris. The aim here is to develop new solid-state fermentation processes and specific products meant to improve to biofuel yields. Companies involved are the French Soufflet and Maguin firms, working together with biochemists of the Institute of Science and Supermolecular Engineering in Strasbourg. Here, EU approval in October 2007 was contingent on appreciation of the scheme's Europe-wide applicability. Biofuels may not meet universal approval, but France and the EU are developing them.

Financing the efforts of the clusters represents a typically French approach: some cash from the Paris government, other funds contributed by the political regions (of which there are 22), sometimes contributions from cities and towns hosting research or manufacturing centers, and money, of course, from corporate budgets and venture capital. The total for 2008 is near the [euro]1 billion ($1.55 billion) mark. Some private funds come, too, from neighboring countries such as Belgium and Germany-with Finland, Poland and the Czech Republic now debating the risks.

The EU also makes available money for certain R&D feasibility studies; for example, in the new fuels category, one project is intended to concentrate research on hydrogen as an energy source. Another effort is to develop badly needed software for the pharmaceutical industry.

Program evaluation combines the financial monitoring of all research undertaken among the clusters as well as annual reviews of specific achievements. Criteria observed concentrate on three phases:

* Growth of resources available to industrial innovation (education and training included).

* Refining the processes of innovation management.

* Faster development of business products for both national and world markets.

Education and Training

France is undergoing a vast re-examination of its teaching potential, beginning with the role of tomorrow's university. Long specializing in the humanities and social sciences, universities have played a minor role in interacting with the business sector. The current Minister of Education and Research, 40-year old Valérie Pécresse, announced in mid-2007 that she wanted big changes, making many of the country's 86 state-financed universities autonomous. She told the Le Monde daily newspaper that the 2008 universities/research budget, 7.8 percent over that for 2007, is "a historical effort, [and] will continue to rise accordingly until 2012." And money from industry for contract research is no longer disparaged; for France, this is a real reversal of received ideas.

The weakness of the university in equipping France with sufficient applications-oriented scientists and engineers dates from Napoleonic times, when the first grandes écoles were created outside the university sphere specifically to enable the French to compete in the industrial revolution. Today these specialized centers are insufficient, so Minister Pécresse stresses that "we want France to become once again an economy of innovation. . . One aim is to prevent French corporate research centers from outsourcing; rather [the idea is to] draw foreign firms here."

Long France's answer to the technologically non-performing universities, the grandes écoles are not standing idly by. A significant initiative in this respect comes from France's top engineering institution, the redoubtable École Polytechnique, founded in 1794. Its leadership has thrown in its lot with those of HEC (a major management school) and Renault (cars, trucks and tractors) to create a chair in multicultural management. Carlos Ghosn of Renault distinguished himself at Japan's Nissan auto manufacturer when Renault took over its management and saved the firm-making Ghosn a superstar in managing cultural diversity in industry. He will oversee the new chair in this complex, "soft," but badly needed, discipline.

Injecting more money into research demands unrelenting quality control. The French government is trying to monitor this closely, together with those industrial sectors that need innovative research in order to compete with globalized economies of scale and market penetration. Setting up new, government-directed panels may not be the perfect solution but, in a country whose mindset is often opposed to endless profit-making, corporate management operating under official oversight may be the optimal way.

Making Contact

A new feature on the French innovation scene since 2005 is the annual European Research and Innovation Show, unique on the Continent as a whole, whose scientific director is physicist Jean Audouze. This year's version drew nearly 350 exhibitors from more than 30 countries to the Porte de Versailles fair grounds in Paris, and the fifth "edition" (June 2009) promises to be bigger yet.

Within France, industry and government are exploiting the research potential and the competition clusters themselves in close association with both the Ministries of Education and Industry and the Centre National de Recherche Scientifique (roughly comparable to the U.S. National Science Foundation). But as the futures-study journal Futuribles asked in its June 2008 issue, "Can you make a flower grow by yanking on its stem?" The new clusters testify that French research-based industry is certainly working more closely with other vital actors, whether within the EU or beyond.

French industrial research is not averse, by any means, to foreign investment or partnerships. Interested readers will be welcome contacts at www.competitive.gouv.fr or www.agence-nationale-recherche.fr. A complete list of the 71 clusters is at www.competitive.gouv.frspip? rubrique36 and www.enseignmentsuprecherche.gouv. fr/drrt. Ask for "La recherche au coeur des po? les de compétitivité."