Hollande needs to get Big Business off of Engineering School Boards

Innovation

François Hollande, the socialist candidate currently running for the French presidential election, will be elected in May. He says he counts on the small and medium companies to boost the French economy, which dearly needs it.

This is a guest post by Regis Behmo. With a PhD in applied mathematics, he has worked at Moodstocks and Criteo, and is currently working at LTU Technologies researching image recognition and computer vision applications. You can follow him @regisb.
François Hollande, the socialist candidate currently running for the French presidential election, will be elected in May. He says he counts on the small and medium companies to boost the French economy, which dearly needs it. Of course there is not much novelty in this campaign theme which resurfaces every five years in France during the campaign for the presidential election. And of course startups, which are great at creating value quickly with little initial investment, should be instrumental in the pursuit of growth through entrepreneurship.
So who are those most likely to build successful startup businesses in France today? Who has both the technical skills to create an innovative and scalable web service and the business skills to transform it into a viable product? The closest thing to this rare bird that comes out of the French higher education system are the ingénieurs. Engineers are far from being perfect, but generally speaking, they do a good job at solving technical problems.

Where the engineers at?

The problem with French engineers is that they don’t create enterprises. In last year’s French Engineer Association annual report on the employment of engineers, a formidable report of ninety-six pages that cover all things engineer, from engineer salaries to “process innovation”, a grand total of six lines are dedicated to entrepreneurship (page 43, at the bottom). Engineers don’t give a fart about entrepreneurship. More precisely, they do give a fart, but they don’t create enterprises. What this otherwise underwhelming report teaches us is that 6.32% of all engineers under 65 are “considering” (“envisagent”) creating or acquiring an enterprise in the following two years. I’m not sure of what that means, but that sure seems like a lot. But on the other hand, only 5.3% of engineers are currently working in a company they created of acquired. On an estimated total of 722.500 engineers, that represents a measly 38.292 engineers. To put that in perspective, according to an INSEE report, about 262.300 enterprises were created in 2011 only, in addition to 360.000 auto-entrepreneurs. In other words: engineers would like to create enterprises, but they don’t do it. François, don’t start to worry now because I have worse news for you.
The reason why engineers are not creating enterprises is that they don’t have a clue how to do it. Market validation, basic business law and marketing, none of these are being taught in the state-owned most famous engineer schools. Hell, I have to check what these concepts truly mean as I am writing this very article. (btw, I’m an engineer) Oh, sure, most engineers know what is a patent and an SARL. But have they done any hands-on work during their scholarship? Not one in a hundred.
Entrepreneurship is simply not in the DNA of French engineer schools. But for once the French government is not to blame, which will sound very unusual to any self-respecting French citizen. The curriculum taught in an engineer school is decided upon by its education board (conseil de la formation). Of course, representatives of the school and teachers sit at this board. But these state representatives largely follow the opinions of the corporate board members who also have seats at each and every engineer school education board. McKinsey and Renault are at the Ecole Centrale Paris, Essilor and Michelin, among many others, at the Institut d’Optique, McKinsey (again) and SFR at Télécom-ParisTech, Dassault Aviation at Supaero-ISAE. Your future employer, now available at your favorite engineer school near you.
These large companies have no immediate interest in seeing young engineers create competitors to their own businesses. On the contrary, they would much rather see them join their ranks with specialized knowledge. In effect, some engineer schools have largely become custom-tailored hiring pools for a handful of companies that hire the bulk of a class each year. While small to medium enterprises (PME) represent more than two thirds of French jobs, less than a quarter of French engineers work there.
Engineer schools do little to disrupt the status quo because they don’t have any incentive to. They are evaluated on one hand by the AERES, which measures both the efficiency of the research in the engineer school and the quality of the education provided in the school. They periodically publish their observations and engineer schools usually try to take actions to comply with recommendations. On the other hand, top engineer schools are evaluated by yearly reports from magazines such as L’Express. The rankings produced in these reports, which are about as surprising every year as the Cesar movie awards (i.e: not), are essentially based on the average post-graduation salaries. A high “Express” ranking, along with abundant sports facilities attract better qualified school candidates, who will eventually make the school perform better in the AERES evaluation.

Nobody moves, everybody wins

How could engineers schools break out of this not-so-vicious-but-decidedly-rather-confortable circle? Creating a product and making all the preliminary work necessary to bring it to market could be a mandatory part of the engineers’ 5-years curriculum. Such projects would greatly benefit from cross-domain collaborations, for instance with business schools. Engineer schools could count on the success stories of its alumnis to attract ambitious entrepreneurs-to-be from preparatory school. The performance of engineer schools could incorporate their financial contribution to local entrepreneurship, including toincubators, or to startup events. Incubated companies could share their experience with students and would benefit from a larger pool of potential interns.
Levers exist in the national evaluation commitees and in the commitee in charge of the definition of the engineer curriculum. Once new incentives are created, engineer schools and their education boards will have to adapt to the new situation.
In their current state, engineer schools have no reason to change, they simply don’t have to. They provide the French industries with young, extremely qualified people who will earn confortable salaries by addressing modest challenges. Paradoxically, engineer schools are victims of their own success.
The effect of entrepreneurship-friendly measures on the rate of enterprise creation can be rapidly estimated on a single candidate engineer school. François, it’s up to you.

18 Responses

  1. Avatar
    JSC

    It looks to me as an interesting but a little bit distorted point of view.
    As a former student at the Ecole Centrale Paris, and an actual seminars animator there, I see your point, but I respectfully disagree.
    Yes, McKinsey, Renault, and a bunch of other big corps (Total, Bouygues, Danone, etc.) are paying to sponsor classes, chairs and students groups. But first, that does not mean that every student (over the 500 or so that graduate each year) will choose one of these companies. And second, the school “needs” this money to improve the quality of its teaching and its research, as the state is not raising its financial contribution, and as the entire cursus remain “free” (like 500€/year + cost of living).
    By the way, some (or most) of these schools also have entrepreneurship majors or classes, with first approaches to innovation and business creation in their first year of classes (I know it, cause I did one last week). You probably can’ expect a full class to create a company, but having about 10 startups each year, and a growing entrepreneurs alumni is a good start.
    So yes, Engineering Schools can do better, but I believe they’re already on the way, and removing sponsors won’t speed it up a bit.

    • Avatar
      Pierre Chapuis

      I agree with that comment, especially when it comes to Centrale Paris (where afaik the author has studied). They are one of the few French engineering schools with a whole class dedicated to entrepreneurship: http://www.ecp.fr/cms/Formations/Cursus_ingenieur_centralien/3e_annee/filiere_centrale_entrepreneurs (fr)
      Moreover, I don’t think it’s wise to throw students fresh out of engineering school into an entrepreneurship endeavor. They lack at least two crucial things at that point: money and experience. You can improve on both by working at a company. Of course, for experience, smaller companies are better, and I strongly encourage students to go work at one. But that’s *work at*, not *found*.
      This whole idea that the Young should create companies straight out of school is plain wrong and dangerous, and engineering schools are not helping with that. When I was studying at one of them we had a course dedicated to “entrepreneurship” that had nothing realistic about it and was doing more harm than good.
      So yes, engineering schools have a role to play on the French startup scene, as they produce and will keep producing a large part of the technical talent pool. But if they really want to help their students become *successful* entrepreneurs, they should consider doing so several years *after* their graduation, by providing incubation space, good mentoring, maybe funding (I’m still undecided about that last one).

    • Avatar
      Stanislas Marion

      I disagree. Founding a company straight out of school (usually starting in school) is possibly the best choice, because you very likely have zero responsability other than yourself (no mortgage, no family for most people), you’re still foolish enough to think of new things and try them. You don’t have the time to get used to the comfort of a monthly paycheck which is probably the single most important reason that people don’t start companies in France: they get used to the security. In France you can’t get fired as easily as in the US, so there is little incentive to be your own boss other than for people who love a challenge and the freedom enough to dive in.

    • Avatar
      Pierre Chapuis

      So you just have to take care not to get used to security. I’m not sure the only way to do that is to “found a company” and live like a hippie.
      Let’s be honest: that mentality works in the US because you can get angel/seed funds way more easily. If you want to build a sustainable business in France you need to know where you’re going. Or at least you need to figure out you don’t.
      Engineering students (especially software engineers) learn project management techniques that result in 80% failed projects even with well-defined specifications. They have no idea what a market is other than their classes about BCG / SWOT matrices and stuff like that.
      If you throw a fawn alone into a pack of wolves he will be eaten, no matter how optimistic he is.

    • Avatar
      Stanislas Marion

      who said you had to live like a hippie? Being an entrepreneur means you need to get by and if you can’t earn 2-3k/month without a CDI you’re probably not born an entrepreneur. There are so many ways of earning money: consulting, airbnb, babysitting, writing an ebook, selling stuff you don’t need anymore, ads, affiliate programs, poker, etc. 
      Being an entrepreneur means you need a bit of hustle and streetsmarts or it’s unlikely you’ll go very far.
      Plus I hate this myth that it’s easy to raise seed money in the SV. That’s very far from the truth and only the fruit of Techcrunch issuing so many press releases about fundings. In fact it’s probably easier to raise seed money in France with a few connections, thanks to the deductibility on the ISF, and the lack of competition for serious engineering companies. (I’m not talking about selling socks for dogs online or some other super niche ecommerce market here).

    • Avatar
      jason

      You are right.  You are a true French man.  Happy with his CDI, Renault Clio and Carte Vitale. Please never ever think about be an entrepreneur.  Entrepreneurship is not on French’s blood.

    • Avatar
      Régis Behmo

      I don’t really have an opinion on whether entrepreneurs should create their first company right out of school; but that doesn’t mean they shouldn’t have been taught basic entrepreneurial skills in hands-on projects. Currently, this aspect of teaching is, at best, lacking. The whole point of this article is to highlight the reasons behind this issue and to offer solutions.
      And yes, I have studied (and taught) at the Ecole Centrale during my PhD. I must say they are among the good students in the class, with a whole major dedicated to entrepreneurship and an incubator not far away. But the 1st year entrepreneurship class is crap. I think they can do much better.

    • Avatar
      JSC

      About the 1st year entrepreneurship class… maybe it’s crap, but the point is not to make them entrepreneurs.
      I did one over 3 days last week, and made my group of students use the Business Model Generation canvas to study an idea they just pitched at the beginning of the seminar. 3 days later, they had built their idea, called experts or clients, and finally presented it to young entrepreneurs.
      At the end, they don’t know what it means or what it requires to create a startup, but they have an idea of what it is, and most important, they have the idea that they could do it.
      As soon in their 3-years cursus, I think it’s a pretty big step away from the “I’m gonna work at [big company name here]” goal…

  2. Avatar
    Sam Bessalah

    I don’t think the problem is having big businesses on those engineering schools boards. It’s more of a mindset problem, and hopefully it’s changing. And besides Engineering schools, you have universities, research institutes(INRIA) where graduates and PhDs are more and more turning into entrepreneurship and build businesses around some neat tech products formerly research projects.   
     But I sure won’t count on any politician to help change this mindset. It’s more a matter of mentoring, and culture change that’s already burgeoning.
    By the way, you guys have seem to have figure out  the winner of the next election, how did you do that ? 🙂

  3. Avatar
    Stanislas Marion

    I’m not sure I agree with that. As an ECP alumn, I really didn’t feel McKinsey or Renault knocking too heavily at my door. In any case, entrepreneurs are really not the type of people McKinsey is looking for, and if they recruit one, she’ll probably leave soon (as a few of my friends did). Not everyone is born to be an entrepreneur, we also need people to join big companies, as they are part of the startup ecosystem.
    Instead, the big companies should take notice of startups and try to acquire them instead of cloning them which results very often in a lose/lose situation, and the best place to look is inside engineering schools.
    I am also a Stanford alumn, and make no mistake, McKinsey and Goldman were very present as well on the Stanford campus. The only difference is there were also VCs and entrepreneurs. What needs to change is the emphasis on high-tech and dreams. People need to have a dream to start an engineering company, and IT needs to become cool again in France, which won’t be easy. The way Stanford did it for me was by having countless VCs and entrepreneurs guest talk in classes and being present on campus. When I arrived to Stanford it was primarily to find a job in finance in an American firm, the crisis notwithstanding, But Stanford made me dream of bigger things.

    • Avatar
      regisb

       Exactly 🙂 I’m a big fan of high tech and dreams, and I have seen so little of them during my seven years or so in engineer school. The whole point is that engineer schools have no incentive at all to make you “dream of bigger things”.

  4. Avatar
    Alon Rozen

    Hi Liam, interesting post. FYI, the ENPC (les Ponts) has an MBA (the only engineering  school I think in France that has a business school) in which we teach entrepreneurship, technology management, innovation management, etc. While about one third of our MBA and Executive MBA participants are engineers, many of them are more interested in our International Business specialization  (to increase the chances of international mobility, i.e. a “good” international job) than in our Entrepreneurship specialization. That said, many do choose our entrepreneurship, business model and technology management electives and quite a few have gone on to launch, work at or consult for start-ups. Personally I have been involved in mentoring “Projets de fin d’études” (end of year final projects) for engineers from the Ponts and increasingly I am seeing start-ups (e.g. Buypacker – a Groupon for students concept) and/or requests for incubation services, mentoring, resources, etc. So the situation is still bleak but there is hope…
    Alon Rozen, Asst. Dean and Prof of Business Plan Development, ENPC MBA PARIS

    • Avatar
      regisb

       Thanks for your input Alon. Would you have some stats on the success of entrepreneurs to be that went through the entrepreneurship specialization? What about the cost of the program?

  5. Avatar
    Yves de Montcheuil

    @Regis:twitter, no argument from me on the fact in French, “ingénieur” does not rhyme with “entrepreneur” (exceptions apply, of course).
    But I am wondering which crystal ball you are using, to decide and proclaim that Hollande “will be elected in May”? I did not know that the Rude Baguette had turned into a political blog?

  6. Avatar
    Marc Fleury

    Mais non, c’est pas complique.  C’est le systeme des grandes ecoles qu’il faut eliminer.  There is too much incentive to not do anything for graduates. Their life is too easy, they are not hungry because once you leave the school you are set for life.  The board has little to no impact on the curriculuum.

  7. Avatar
    Patrick

    I was today at the “journée de l’entrepreunariat”
    which is compulsory for all second year student (bac+4)
     at l’Ecole des Ponts ParisTech.
    Clearly the school is trying new ways to push us into entrepreneurship, and it seems to work (about a quarter of the students said they were considering creating a startup). As you underline in your article, most of them will probably be hired in the industry before they can do anything, which lead us to the real problem  (I think)  :
    We don’t have enough engineers! (has most developped countries)
    Which make us take the easy way out of the school…
    By the way, the lecturer told us of your website as one of the touchstone we should keep an eye on.

  8. Avatar
    jason

    French and Entrepreneurship are not suppose to be in same sentence.

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