Rico Baldegger, dean of HEG-FR, speaks at the ICSB World Congress

On Day 3 of ICSB 2022s World Congress, ICSB called on its community to defend the Entrepreneurial Revolution, protect society’s smallest units, and reshape our world for the better. The participants, including our dean Rico Baldegger, joined together to ensure the strength and sustainability of this movement at the US Capitol. Inside the Ways and Means Committee room, ICSB members and guests testified for the progression of the Entrepreneurial Revolution, and learned not only about the issues facing MSMEs today, but also with solutions - real and tangible solutions.

Rico Baldegger: Sustainability squared – the high impact SMEs can have in sustainable markets

As Dean and professor at the School of Management Fribourg (HEG-FR), and president of a sustainability foundation in Zurich, Switzerland the topic of high-impact SMEs is of primary interest to me. Furthermore, my broad professional experience in entrepreneurship and management includes the fields of leadership, human resources, IT, and branding.  I was involved in the creation of several start-ups in Europe and the US and was the founder and CEO of a management consultant company.  As a board member of several companies and Business Angel, I’d like to share some thoughts about my definition of an entrepreneurial revolution.

The background upon which I develop my ideas is that most economists would agree that SMEs play an essential role in every economy, both in high-income and low-income economies. There are numerous SMEs in most places, but the real issue is their social, economic, and engagement impact. It takes an entrepreneurial revolution to achieve and implement a positive social and environmental impact through SMEs. I’d like to share with you what we are doing to develop our economy in this direction.

I will focus on the innovation capability of SMEs. I see this in relationship to business models of such SMEs that are sustainable, fostering whole markets that are capable of deploying the UN’s 17 SDGs. A key role in this process are young talents. Because this has the potential to create win-win situations for SMEs, regional markets, and young, ambitious individuals, I call my approach “Sustainability squared.”

Here is our point of departure: Most SMEs are doing R&D, and they do it well. But most R&D is in-house, and SMEs are reluctant to use open-innovation concepts. If these SMEs could be encouraged not to keep innovation within their own confines but to share it and make its development openly accessible, their own ideas and competences would be complemented with innovative ideas and competences from external sources.

Now, more specifically, SMEs often do not have the competence to manage sustainability; however, this competence could be brought in from outside and substantially enrich the innovation process. But the big question is, what should we do, or rather what should we do better to further introduce sustainability models into SMEs and through these SMEs to the markets they are in?

Firstly, we should invest more in scalable business models with a long-term perspective. In our opinion, we should focus less on innovative business models alone, but we should also focus on business models with scaling, support successor entrepreneurs in existing SMEs, and look for impact rather than for technology.

Secondly, to be the backbone for stability in a regional ecosystem and for society, such business models should, optimally, always be related to sustainability. This has the potential to foster decentralized regional sub-hubs in national ecosystems. This would certainly be in compliance with sustainability ideas that has been established to make a difference in the world by investing in regional ecosystems.

Thirdly, the young generation, particularly ambitious young talents, plays a key role in this generation. SMEs can and must be mobilized by such young talents because they can drive Sustainability and Prosperity. However, The interrelation between young talents and SMEs is often neglected, even though SMEs could be a training field/playground for young talents to collect managerial and entrepreneurial experiences or to see SMEs as a future career step. Instead, unfortunately, we invest too much in start-ups and the relationship between big companies and start-ups concerning technology scanning and innovation processes, and we do not focus enough on how SMEs could profit / benefit from the young talents – and vice versa – in fostering their innovation process.

Now, what could this look like in the “real world”? Let me give you some concrete examples of activities we have already implemented to create more win-win-win situations for SMEs, their markets and social environments, and young talents.

1. We must foster an awareness that SMEs are offering interesting job opportunities. Young talents with ambition must be able to see the challenging projects inside SMEs, and Sustainability-related projects could play an important role here. Or they can fulfill the dream of their own company by being a future owner, entrepreneur, CEO of the SME, or as successor entrepreneur.

To go off on a little tangent, such a focus on sustainability will likely also increase diversity because it attracts, among other people, women. We have seen this at our own institution.

3. SMEs can normally not offer the same salary condition as big companies or fast-growing start-ups. So, we are creating a voucher system for SMEs to foster the motivation to recruit young talents with ambition. The vouchers are offered to SMEs if they recruit a student or graduate of our university. Our foundation of excellence covers one part of the salary and supports the future employees in the new job, e.g., coaching, or special training. Therefore, young talents can foster SME’s innovation management capability, and young talents can do their first career steps. Again, win-win.
4. But, we need to start thinking differently to prepare for the future. This starts for me by how we educate. In my 30+years as a professor and 10 years as a dean, it has become obvious to me that business schools are facing different challenges and have to implement innovation rather than offer classical products in education, research and consulting.

With international colleagues, we are just now in the process of publishing a book on “the future of business schools.” Business schools should act as catalysts for the entrepreneurial ecosystem and foster education first as INSPIRATION. In such schools, the human being is at the center. What we need to teach our students, or get across to our students, is a particular type of mindset an entrepreneurial and growth mindset this should be the backbone of our teaching. Teaching content is no longer king in such a humanistic approach. An adaptive growth mindset, agility and adaptability can be fostered, and the young talents are ready for a complex dynamic environment.

To build the business school of the future, one solution could be to adapts elements from innovative, globally oriented SMEs or big, entrepreneurial companies. Therefore, I focus on two points: closing the theory-practice gap in education and research and fostering co-creating and empowering/emotional intelligence.

Efforts to close the theory-practice gap should be based on the mission and vision of the business school, and a clear statement about it is needed. To close the gap, the faculty portfolio plays an essential role, and the integration of entrepreneurs and experienced managers as lecturers supports the practical approach. At the same time, a business school is able to support companies only when the school`s orientation is practical, but all the while does not lose focus on long-term investment in research and education.

Hence, the ambidexterity/versatile professor and/or staff member is a solution to closing the theory-practice gap. On the one hand, exploration plays a vital role in global research, entrepreneurial behavior, decentralized and project-oriented structures, and adhocracy cultures. Faculty members have to broaden their networks and strengthen any weak connections, and support and stimulate our entrepreneurial ecosystem. A culture of high trust plays an important role and improves performance in research and development projects.

On the other hand, schools have to invest in exploitation competencies to ensure the current projects and the “existing business”. The business school must be a serious business partner, and efficiency-oriented project management is needed, often secured by staff members. In addition to the exploration activities, incremental innovation and local activities are required to avoid losing contact with the regional economy.

Foster learning trough emotional integration and intelligence: To be fit for the future, business schools must be forerunners in training and multidisciplinary education and research and make students aware of the tremendous social and technical challenges which await them. Consequently, business schools have to foster empowering leadership. Co-creation is a type of alliance that pools additional competencies and the expertise of social entrepreneurs, public enterprises, and authorities to address challenges that none of these actors would be able to solve on their own and, at the same time, to access new strategic opportunities.

Finally, business schools, like companies, are forced to be ready for the future. A Master student in our Entrepreneurship program once asked, “Where will our business school be in 10 years?”: this is a highly important question and proof that the student understood the philosophy of visionary thinking. But his question is also a day-to-day motivation/guideline for every business school dean. We must both implement well-grounded business concepts and develop new and original ones. Business schools can only play an important role in the entrepreneurial ecosystem when they are role models of an entrepreneurial mindset and innovation. If not, they lose their credibility among stakeholders.

So, what I have elaborated now amounts to what we could call "tripled sustainability":

A focus on a sustainable business model in the sense of long-term viability can stabilize the SME. Furthermore, sustainability as a playground and market opportunity for the SMEs, and corporate purpose for young talents are playing an essential role: a win-win situation could be created. And in this complex context, business schools should act as a catalyst for all stakeholders and related actors in business and society, with the open question: are we a School for business or a School for Business and Society!