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Defending Europe, Including the Brits, on Innovation

Paul Hobcraft , Agility Innovation Specialists
18 Feb, 2019
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Europe does seem to be always lagging. You get the impression those in Europe’s leadership are beating back the waves of progress, not embracing them- it is all self-serving. They also seem to operate in a fortress mentality. They seem to be spending all their capital on trying to make this (unholy) alliance of 27 + 1 to function.

The herculean task of integrating the impossible; in rules, regulations, attempting to reduce centuries of proud independence, individual cultures to be boiled down into the Super-European one. For me, it just can’t work.

I had an incredible 15 years living in Asia and came back to Europe some years ago and noticed a real difference, in many ways it has simply gotten worse, not better. Europe has been intent on institution building, forging an EU out of all the different countries that make up the European Union. In this “obsession” it has become very inward focused, the different leaders of the individual countries are battling to save their turf, yet the world continues to turn on different axes, that Europe seems not to have grasped.

This institutional building has forgotten the people-related building where aspiration, identification, inclusion makes the transformation happen or not. The EU has forgotten to translate all its work into true meaning for the people, believing in a worthwhile future. In Asia, you feel vibrancy, energy, opportunism, dynamism, that chance to get “part of the action”, here in Europe you sense a drifting, a separation, and growing fragmentation.

I certainly feel Europe is backward-facing, it is busy protecting individuals and (self-serving) countries focusing on grabbing their piece of the pie. They have such tension within the very institutions themselves, hanging on to noble causes with 20th values of out-of-date concepts. They at the European level are blocking mergers to build European champions, fining those that challenge the European status because they have different models of operating.

I continue to feel Europe is isolating itself in much of what it does, failing to really grasp the imperatives of real change needed in a connected world, to effectively compete. Yet we see growing polarization as people can’t see the future as the European leadership itself, bickers and argues. It is not a pretty picture of the future when you look at Europe.

I have read recent reports from the WEF, McKinsey, and Deliottes all coming to the defense of Europe.

They are defending, perhaps in the hope, something will finally change. Of course, the Brits are to blame! They want to leave the EU party and go their own ways. Regretfully that has been Shambolic to witness, a further symptom of our present-day Europe. For a nation that has a lot to offer, the UK process of exit has been agony to watch what is happening.

Yet in that separation, as hard as it comes, it might offer them the independence and some re-emergence of reconnecting to the world in their own ways of seeing things. You can re-ignite that sense of freedom, independence, and spirit of adventure if it can be seized. The United Kingdom is most probably better equipped than all other European countries to accelerate a digital future. What are Europeans loss, is the UK’s gain, in being unshackled from others, not just lagging behind in digital technology and innovation but many seemingly blocking progress, dragging others down to their level, all for the “collective union”.

Europe offers incredible history, the same as Asia.

The history is there, waiting for you to learn lessons, to draw insights. The difference is it is easy to look back, with the benefit of hindsight but when you are caught up on something as transforming as we are presently experiencing, a digital transforming world, you are just that, caught up. How do the Europeans understand they need to change, to understand digitally embracing might give them a better chance than holding onto old ways?

We are in a globalization revolution, one where the world continues to connect, to increasingly rely on the internet, to seize opportunities to transform business, form different society values and where the balance of power will eventually reside in those that dominate in technology dominance. At the moment Europe is so out of the race it begins to get frightening for those situated here.

The failure to embrace change happens universally. Yet in Europe we fail to grab change in ways that can transform, we settle for status quo unless it is forced by crisis.

Let me take my area of focus – Innovation and Digital Technology.

Europe is no different to many, they are enthralled by technology, they are clearly fixated on implementing all technology. Rightly so as there is a massive amount of implementing to do. Yet technology enablement needs the right people to understand it and the right organizational structures to capitalize on it. Europe seems to lag, some still call it an innovation powerhouse but they lose me just on that point alone, they have stopped taking risk.

Eight of the top innovation countries of the world are within Europe surprisingly (source the Global Innovation Index) with Switzerland, the Netherlands, Sweden, and the United Kingdom being in the top five globally. Now how that is measured might be stacked again on historic measurements (Universities, patents) but does not address the phenomena of Digital Technology weighting or digital communications that will transform innovation and the countries that make deep investments in this. Innovation and Digital Technology are in the future so intertwined.

To emerge out as winners in a connected world, centred on digital, seeking new business models, experimenting, exploring and taking risk is essential. It is a world full of speed and opportunitiy. The EU seems the oppositie, holding (desperately) on to stop others from the disrupting of (their) industries, not wanting to redefine business or society.

This approach means you might be hanging on to a notion of being very innovative, in those selected measures, yet set in a previous time but in reality, you will face a very different future as you hold onto mistaken, outdated approaches.

We are caught in the wrong measures in a connected world, connecting ideas, value points, supply chains that are global, that crosses borders and challenges the very notion of national states, to measure progress. Silo’s do not just exist in ortganizations they exist in measuring one nation against the other on “selected” criteria that can be measured. Today it is the intangibles that give the value not the tangibles.

Europe is trapped in legacy.

They suffer high costs, aging workforces, very high social costs in most of their current ecosystems, designed for the 20th century. The rapid shifts towards the new triggers of innovation based on the underlying technology of AI, Blockchain, cloud, and cognitive computing, data analytics and the prevalence of IoT, are all changing innovation dramatically.

Deloitte had a report or survey that came out on 29th January 2019 called “Innovation in Europe“. It offers some excellent insights on the state of innovation but I loved their Executive Summary opening:

In many ways this sums Europe up. The issue what can be done about it?

Deloitte asked the question “what triggers innovation in your company?

This list is universal in its challenges and recognition. Europe today is trapped in not fully recognizing and embracing technology, they do lack the “innovation dynamism effect” but they do recognize the triggers they need to respond too.

My view is they have not really tackled these from an innovation solution perspective, they just know them. The World Economic Forum in a report called Innovate Europe: Competing for Global Innovation Leadership rightly point the point “that in Europe they still have not identified Europe’s innovation model to compete with other pioneering regions“.

The problem in Europe is we are not facing up to Six of the Nine shown above. This is why I’m in the bleak camp. We know them but we are not resolving them

The three “taken care of” are our focus on cost efficiency, the fixation in the change in regulations and government incentives and those three are imposed at levels so disconnected from the competitive forces at work globally, they are focused on but defuses away from the ones to really tackle on this list.

The other six are where our troubles begin in Europe.

We focus on internal markets in Europe and mostly fail to make a more global connection. We know where we need to go but here in Europe can’t seem to translate these into the winning business models that are needed.

There is plenty of counter-arguments with this Deloitte report, they claim many assessments of Europe’s present position are excessively bleak. I sadly am still in the “bleak” camp but will come out and fight for the possibilities, as I believe there is a real future, if only we really can leapfrog and see many of the connecting points needed for this future.

My view is Europe will not progress and really compete without something radically happening.

The World Economic Forum in a report called “Innovate Europe: Competing for Global Innovation Leadership“ rightly point the point “that in Europe they still have not identified Europe’s innovation model to compete with other pioneering regions”. They are not in Europe overcoming the challenges, as we continue to see Europe remains highly fragmented, firstly to complete the single market but with so much uneven investment in Innovation and digital solutions, it will remain a real laggard unless something changes.

I, for one, do not think any completing of a single market as being pursued in Brussels will make Europe competitive. The task is far too complex and counter-intuitive to Europe’s history.

What Deloitte’s Executive summary points out that there is still hope for Europe:

They (Deloitte) did present some positive thinking from their survey of 760 European companies in 16 European countries,. across 20 major business fields. These were top line and mostly give some hope but these need a very different “collective” whole and a greater dedicated push. Unfortuneatlythe issues have been identified but are they being worked upon, with the energy and force they should be?

Innovation is a strategic priority – 88 percent want to increase budgets over the next two years.

Technology is the main trigger for innovation in Europe. Ninety-two percent of businesses across Europe see advances in new technologies as the primary trigger behind innovation with new consumer expectations (86 percent) as the second most important.

Advanced technologies are not expected to destroy jobs. Most companies (41 percent) expect full-time headcount to increase, while 29 percent expect it to remain the same

Investment in data analytics and cloud computing is already advanced. Investments in data analytics (69 percent) and cloud computing (62 percent) are already well advanced, with another 26 percent of firms expecting to invest in data analytics in the next two years, and 29 percent in cloud computing. Artificial intelligence (AI) (43 percent), augmented and virtual reality (38 percent) and robotic process automation (RPA) (36 percent) will also be areas of focus over the next two years.

Ecosystem innovation is not fully embraced by European companies. European companies do not seem to embrace the role of clusters and networks in dynamic innovation. The potential for collaboration with external partners to share knowledge, stay abreast of developments, expand market reach and provide complementary expertise appears underutilized

The biggest hurdles to innovation are cultural – and resistance to change is high. Cultural resistance is identified as the main obstacle to fostering innovation by 32 percent of companies. In addition, data security is seen as inhibiting data-driven innovation (30 percent).

So Deloitte’s summaries their report with the following – Innovation is far from dead in Europe.

There is no denying that Europe is feeling competitive pressure. European companies face the need to undertake substantial investment in digital infrastructure. They conclude the continent is neither poorly positioned nor lacks confidence in its ability to compete.

Do I see it differently?

There are a lot of clues within the Deloitte report that makes me feel Europe is missing the future as they are stuck in the traditional ways to innovate. Take a look at this visual from the Deloitte report. What is wrong and missing?

So at first glance, you think well these types of innovation being pursued is not wrong……..but they are.

They are primarily islands of pursuit. The value in the model is not in their individual pursuit it is finding new business models of growth by investing in as many combinations as possible, to explore and build innovation around. Innovation today is about multiples of combinations, not one rigid innovation approaches. It is not one business model it is about “multiple pursuits”.

We need flexibility, agility, rapid reaction and (real-time) understanding to deliver back what is needed in quicker ways, at a pace and intensity and capable of scaling when the market reacts in positive ways I still feel we focus on discreet pockets of innovation and never seek out ways to combine them in radical ways.

Let’s take the “classic” Doblin ten types of innovation. It is not the pursuit of one, the combination of two or three, it is seeking out innovation across all ten simultaneously and in constant making multiple combinations to extend your business model and options.

We MUST leverage all our assets, not just within one company but across an ecosystem of partners. Europe is very reluctant to embrace more collaborative partnerships, use platforms to exchange upon and build ecosystems to capture and leverage all the knowledge out there.

We need to really push open innovation through the use of this digital technology we have at our disposal. We need to learn how platforms will work for each of us, we need to understand ecosystems principles and its management, we need to work through open and collaborate in imaginative ways.

Then there is the notion of cross-sector innovation, one that can be realized through digital collaborations. Where is the engagement with start-ups, with Universities, these are still grossly undervalued and utilized in Europe Venturing is a powerful catalyst, not just for the start-up but for the large organizations yet Europe struggles to be offering new capital, it is constantly supporting old capital, why? We continue to lag other parts of the world in funding innovation as we are locked into a model of compromise to satisfy the uneven state of innovation development. Europe is channeling its capital to support those who are lagging, as against accelerating those that can seize the opportunity.

In Europe, we are around 50% of the US on digital ICT. We are struggling to embrace Big Data, we are piloting Robotics mostly, we are exploring far more tentatively than other regions of the world advanced neuronal machine learning, the effective use of AI tools, exploring algorithms and pushing outsmart workflows, cognitive agents, language processing (In Europe please).

Lastly here, Europe is still caught up in responding, as it is in a lagging position. We mimic competition or crave for it but cannot find that necessary appetite to understand how to compete in new digital and business models. Europe holds much back due to its regulations, its propensity to interfere or impose for the good of the greater community. Something really has to change. Where are those innovation sandboxes for experimentation, for supporting their evolution? So much gets caught up in internal fights and squabbles, in regulation or oversight.

We lack a vision in Europe that gives belief yet “we” have it in us.

The Brits have said “enough” and even as they leave the party in the same way as they entered it, reluctant and full of questioning, they might actually seize this European void on Innovation and Digital as they are chasing and investing. Maybe not in the same levels as China or the United States. Why? Well, the share of digitization potential realized by all countries is all to play for. The digitalization share in the US is 18%, the UK 17%, and Europe as a block 12%. So as the Brits seem set to leave, the Europeans have lost one of the leading powerhouses of innovation and digitalization.

Out of the top four in Europe, two seem to be at logger’s heads with the powers in Brussels, Switzerland and the UK. Others will follow unless Europe can find there own distinctive innovation model, based on digital technology enablers and solve so many of the internal problems bedeviling Europe.

The biggest challenge is getting identification and belief back into the people of Europe. Innovation for one, stands no chance within belief. All I hope is it does but on many days I am not optimistic. let’s say just perhaps hopeful.

Europe has its strengths, we need to learn to accelerate not pull back. We need to grasp the very essence of innovation, to explore and exploit experiments and breaking opportunities and bring back that sense of vibrancy, embracing the global forces at work to shape them, not constantly be defensive, adapting to outside influences.

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