Michelin: 130 Years of Systemic Innovation
Context
In 1889, two brothers take over a struggling rubber factory in Clermont-Ferrand. By 2024, that company is a €28B global leader that has survived two world wars, multiple recessions, and complete industry transformations.
How? Not genius founders (they died in 1931 and 1940). Not lucky breaks. Not government support.
Systematic innovation embedded as core DNA.
The Challenge
The challenge Édouard and André Michelin faced wasn't technical — it was structural: How do you build innovation that lasts beyond the founders?
Most companies innovate through founder brilliance. When the founder leaves (retires, dies, sells), innovation stops. The company becomes a cash cow, then declines.
Michelin needed innovation to continue for generations. Not despite founder changes, but independent of them.
The System They Built
1. R&D as Sacred Commitment (1920s)
Michelin institutionalized 6% of revenue to R&D — every year, boom or recession. This wasn't a budget line that could be cut. It was treated as sacred as paying salaries.
Result: Consistent innovation capacity for 100+ years.
2. Documentation Culture
Every innovation, every experiment, every failure was documented. Not just results — the process. Why it worked. Why it didn't. What was learned.
This created institutional memory that survived personnel changes.
3. Long-Term Cycles
18-month innovation cycles. Not quarterly pressures. Not short-term shareholder demands. 18 months to develop, test, iterate, perfect.
4. Cross-Generational Knowledge Transfer
Senior researchers mentored juniors. Retirement didn't mean knowledge loss — it was embedded in documents, processes, and trained successors.
5. Institutional Autonomy
R&D operated with academic freedom within structure. Not chaos (do whatever) or rigidity (follow orders). Structured freedom.
Results
System Score Evolution
Lessons Learned
Innovation is a System, Not Individual Genius
Michelin didn't have better engineers than competitors. They had better innovation structure.
Sacred Commitments Create Consistency
6% R&D spending for 100+ years. Never cut, never negotiated. This predictability enabled long-term planning.
Documentation Beats Memory
When founders died, innovation continued because knowledge was in systems, not heads.
Long-Term Beats Short-Term
18-month cycles allowed depth. Quarterly pressures create superficial innovation.
Systems Outlive Founders
Édouard (d. 1940) and André (d. 1931) built something bigger than themselves. That's true legacy.
How You Can Replicate This
You don't need to be Michelin. Any business can build systematic innovation:
Commit Fixed % to Innovation
3-6% of revenue, non-negotiable. Treat it like you treat salaries — sacred.
Document Everything
Processes, experiments, failures, successes. Create institutional memory.
Set Long-Term Cycles
6-18 months depending on industry. Resist short-term pressure.
Build Knowledge Transfer
Mentorship, documentation, cross-training. Knowledge can't leave with people.
Build Your Innovation System
The BE Scale methodology helps businesses build Michelin-style systematic innovation. Assess your business with the BE Fit Index.
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