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Connections with Leading Thinkers: Antonio Botelho

Antonio Botelho discusses roadblocks to entrepreneurship and collaborative innovation in Brazil.

As part of the Accenture Institute for High Performance's mission to develop cutting-edge new ideas and insights, researchers often seek the views of academic leaders, business executives and industry analysts. The Connections with Leading Thinkers series captures some of those interviews, showcasing interactions and discussions with some of the world's leading experts.

Angel investor and professor, Antonio Botelho discusses roadblocks to entrepreneurship and collaborative innovation in Brazil—and ways to overcome them.

Antonio Botelho is director and former CEO (2011-14) of Gávea Angels, an angel investment group in Brazil, and professor of Innovation Policy and Entrepreneurship at the Rio de Janeiro Institute for University Research (IUPERJ), a postgraduate unit of University Cândido Mendes. Eduardo Plastino of the Accenture Institute for High Performance interviewed him as part of a research project on innovation in the Brazilian economy. 

EXPLORE MORE ABOUT WHY BRAZIL MUST LEARN TO TRUST IN COLLABORATIVE INNOVATION

In your different professional roles, you’re in a good position to observe the innovation space in Brazil. What assessment do you make of its current state and direction?

We are still lagging behind when it comes to innovation. You see that in the business world, where companies face a plethora of difficulties, and in the policy world, where the country still lacks a coherent innovation strategy. When it comes to policy, different government agencies offer a large number of innovation-related programs. This creates confusion and leads to duplication of efforts. We need clarity about where these different innovation-related initiatives are taking our economy.

But isn’t it true that innovation efforts have been incorporated into the country’s wider industrial policy?

That attempt has been made, but careful analysis shows that we still have an old-fashioned, protectionist industrial policy. The penny hasn’t dropped for our policymakers that innovation policy must be dynamic. For about five years, I wrote reports for the EU about Brazilian innovation and science policy. The EU policymakers’ objective was to understand what was going on around the world, so they could refine their own practices as quickly as possible, given that speed is critical in the innovation game. Here, unfortunately, we don’t monitor what is going on elsewhere in terms of innovation policy, let alone use that knowledge to inform our own policies and to update them in real time.

This is not to say we haven’t seen some progress in terms of innovation policy in Brazil. We have some modern policy tools that support start-ups and entrepreneurship, which are key for innovation. However, they have been in place for only four or five years—so we are latecomers to this game.

Yet there seems to be strong momentum behind entrepreneurship and start-ups in Brazil right now.

It’s good that people are seeing entrepreneurship more favorably, but to make the most of it, we have to address a number of issues. For example, we now have the Start-Up Brazil program, modelled after Start-Up Chile, which preceded it by half a decade. It’s great that we have this program, but it lacks a wide enough vision. Start-Up Chile has a strategic vision aimed at addressing a number of deficiencies in the Chilean economy. Another serious issue here is the poor education of most of our entrepreneurs. Few are prepared to navigate in today’s economy. I see this very clearly as an angel investor.

What explains this inadequate education?

Opportunities to build capabilities and knowledge related to entrepreneurship are located in the wrong places in Brazil. You can take entrepreneurship courses in a number of places such as Sebrae (a quasi-state agency that supports micro and small businesses) and universities. But in universities, most of those courses are offered at the undergraduate level, which is not the most appropriate level. We need many more such courses at the postgraduate level, from where innovative entrepreneurs are more likely to emerge. At Gávea Angels, we see entrepreneurs submitting financing requests who don’t know how to analyze the market or make good use of the money they are asking for. As a country, we need a better understanding of the true nature of successful entrepreneurship.

Could you say more about what you mean by that?

It’s great that people want to start new businesses, but they need to think about the business’ ability to innovate and grow in the long term. Just having new businesses is not enough in itself. Sebrae, for example, offers great services, but they seem to believe we should preserve companies no matter what. I believe that inefficient companies shouldn’t be kept alive, and that we don’t let them die as soon as we should. Our entire system seeks to keep all companies going. We need to think about which companies should be supported. And we must focus on those that are generating the most innovation and knowledge, those that can have a positive impact on an industry, a supply chain or a region.

You are also an academic. What role do universities play in innovation efforts in Brazil?

Unfortunately, with a few exceptions, our academia is poorly prepared to innovate. Most of our universities have a culture that is not conducive to innovation. In this culture, academia is seen as something isolated from the economy. On top of that, we don’t have the right incentives. Academics progress in their career only if they publish new papers all the time. Participating in innovation efforts isn’t very useful for them in that sense.

Despite that, do you see examples of successful collaboration between businesses and universities in Brazil?

Yes, and the best examples are those in which academic researchers and people in the companies they have worked with managed to build a relationship of trust. But trust can emerge only if certain mechanisms are in place.

What would those mechanisms be?

We need rules governing collaboration that are clear but that also give all sides some flexibility to adapt their work to their needs. Today, many researchers are collaborating with the private sector but outside the university framework. This is because most leading universities in Brazil are public (state-owned) and have rigid rules about collaboration with businesses. This creates uncertainty, because researchers never know what they will be allowed to do. And they would often have to circumvent some pointless rules to achieve something worth working on.

Also, in some situations, the government offers financing to support joint efforts between universities and companies. But the money comes too late, or the university’s execution of the project is delayed. This discourages companies from seeking that kind of partnership.

In short, we need to think more strategically about long-term cooperation between academia and business. When we have the right conditions for trust to emerge, this relationship will become more sustainable, and we will see a strong flow of innovations.

Is there also a lack of trust between companies in Brazil? If so, what steps could companies take to engage with other firms in existing or potential innovation ecosystems?

You can only trust who you know, so to build trust with other firms, companies need to interact more often with each other. They also need clear rules regarding how any rewards coming from their engagements with others will be shared. But the problem in Brazil is that our corporate culture is powerfully shaped by the large role that family firms play in our economy. In traditional family firms, contact with outsiders is discouraged. You must keep everything in the family.

A famous Brazilian anthropologist, Roberto da Matta, discussed how, in this country, “house” is a place of order and reliability, while “the street” is a place of competition and struggle—a place where you could suffer painful losses. This logic influences our business world and discourages collaboration between companies. That’s because it makes it hard for business people to envision win-win possibilities they could capture by working with other companies.

In addition, many family firms are large, vertically integrated and diversified groups. That kind of company tends not to focus on its core capabilities and seek cooperation with other, smaller firms.

How, then, can start-ups and other small companies improve their chances of collaborating with large organizations?

These companies should grow a bit before seeking to appear on large firms’ radar screens as potential collaboration partners. Even when they are innovative, small companies are weak, not least because many of them have poor management skills. Therefore, the first step for them is to build up their size and capabilities.

Thank you very much for this interesting and engaging conversation.

It’s been my pleasure.

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