Finance and business in the face of societal transformations

The crisis we are going through is probably one of the most serious that living generations have ever experienced.

It is a major economic crisis that is speeding up the transformations already underway in the competitive landscape. It is a societal crisis that calls us to stop and reflect on the structure of our economy and the models we want to promote within our society: our health and social cohesion systems, our eating habits, our places and lifestyles, but also business models and growth paths.

The reaffirmation of SMEs/mid-caps‘ leadership, their continued growth and even their sustainability depend on their ability to take the right steps on these issues and to respond to the societal challenges of the future.

1. An asymmetric shock

The fierceness and uniqueness of this crisis are now reflected in major sectoral asymmetries, documented by the Bank of France‘s economic studies. Entire sectors of the economy that are more affected by the health situation have now come under severe strain. For some sectors, these problems come on top of more structural problems linked to transformation issues that existed prior to the emergence of the Covid, such as the inevitable consolidation of the aeronautics sector, which is too fragmented, the transformation of business models in the tourism sector under the effect of digitisation and new societal expectations, and the upheaval of distribution channels in the retail sector.

For these sectors of French excellence, a rebound will require massive investments to tackle these transformation challenges, but also consolidation strategies.

Conversely, this crisis is already strengthening companies that are positioned on fundamental societal trends and/or committed to strong social and environmental responsibility initiatives¹.

At Geneo Capital Entrepreneur, we have seen this with a number of companies that for several decades have responded to transformations in the world of work, which resonate with the current context.

Focus: Covid crisis and transformations in the world of work

Feedback from China² but also studies by European and US specialists³ show that the impact on employees’ psychological health is extremely significant. And that in any case, the relationship with work has already changed. How can companies address these challenges? Several companies that Geneo Capital Entrepreneur has invested in in provide answers.

• Putting people at the heart of the company and improving psychological health at work: the example of Human and Work. With its subsidiary Stimulus, born from the rise of psychosocial risks in large companies, Human and Work provides psychological support to employees to relieve tensions that may arise from, inter alia, crisis-related fears, disruptions caused by transformation projects, difficulties in reconciling work and family life and the deployment of digital tools and remote working. It also supports local managers to help them manage the emotional aspects of these managerial challenges.
• Rethinking the premises to adapt it to the new situation: the example of Kardham. Based on a study of 3,000 employees during and after the first lockdown⁴, Kardham supports companies in reinventing the workspace. In a phygital world, the experience of the premises must create commitment, collaboration, innovation and facilitate “nomadism” and harmonious development of remote working, which requires managerial support but also specific equipment (connection, acoustics, image, etc.)

Supporting companies in their transformations: the example of HR and Valtus. By providing high-level managers, in particular in the areas of general management, finance, HR, information systems and digital technology, Valtus supports companies in their reorganisation. Through its consulting services for HR managers, ConvictionsRH facilitates change management and strengthens the corporate HR function, particularly through the use of digital technology.

Between these two extremes, the majority of companies affected by this crisis have to speed up their transformation in order to bounce back by participating in building the world of tomorrow.

2. Human capital, a key rebound factor

Economic champions know that to have great adventures, to survive, to cross generations and to maintain or acquire leadership positions, or simply not to fall behind, they must continue to invest, whatever the economic climate. This obviously includes tangible investments (capacity, competitiveness, external growth), but also intangible investments, in people and R&D.

This is the great strength of family-owned businesses in particular, which have proved their resilience in times of crisis⁵.

Companies still need to invest in the right directions. In addition to the challenges specific to each company and each sector, the quality of investments in digital and human resources will be decisive in the post-crisis period.

Taking the digital turn. While France is at the bottom of the European ranking in terms of the digitisation of SMEs/mid-caps, the current environment has forced many companies to jump in the deep end in order to survive. And it has to be pointed out that that digitisation has been growing rapidly and massively in our economy over the past few months. But for digital to rhyme with productivity rather than complexity, with collaboration rather than stress and burnout, strategic, technical and, above all, managerial support will be crucial. Digitisation is above all a human and cultural issue.

Being an actor in societal transformations. The pandemic has challenged our consumption patterns, our organisational choices and our location strategies. It has highlighted the extent of the health and environmental challenges we face. Our society will have to rethink its development model, imagine a new social contract, put health, the environment and people back at the heart of our growth models, take a long-term perspective, respond to the rise in inequality and question the value sharing.

It is up to each entrepreneur to take stock of these changes and innovate to meet societal expectations by creating around him or her, with his or her teams, suppliers, customers, regional and sectoral ecosystem, the human collective that will forge the company‘s ability to bounce back.

Whether we call it raison d‘être, mission or commitment, bouncing back will therefore require a reflection on the company‘s purpose, which is crucial to ensure a lasting commitment from the employees and to reposition the company on the path to growth.

3. Positive finance: financial capital and human capital

The world of finance has a key responsibility in this context. By including Geneo‘s raison d‘être in its articles of association⁶ in May, Geneo‘s shareholders reiterated their determination to contribute to positive finance in the service of the real economy.

Thanks to the recovery plan, the government and banks are providing massive support to the economy, which should allow as many people as possible to get through this crisis and have the time and means to work on these transformations. Additionally, the Private Equity industry is mobilising, under the impetus of France Invest, to strengthen companies‘ capital.

In addition to the contributions of equity and quasi-­equity, and their virtuous knock-on effect on banks, our responsibility is to embody positive finance that reconciles performance and meaning, financial and human capital, and to include them in a long-term vision to build the future. In doing so, we will meet to the greatest challenge, which is to superimpose time and survive in the short term without sacrificing the long term.