From ideas to products: time to create a single market for innovation

Europe has experienced one of the worst crises in its history, with more than a decade of economic and social progress wiped out by the financial collapse. The crisis has exposed some significant structural weaknesses and processes across the EU and member states – many of which are now being addressed by the EU.

The fallout has been dramatic: we are experiencing an unprecedented jobs crisis – 3.5 million jobs have been lost in European manufacturing since the global crisis hit in 2008. Nowhere is this more profoundly visible than in youth unemployment, with 7.5 million 15 – 24 year-olds currently without a job and not in full time education across the EU. 

But the crisis offers us an opportunity to stand back, reflect and to look at how we can do things differently, more efficiently and better.

Globalisation is posing a significant competitive challenge for Europe. We run the risk of becoming ‘the salami in the sandwich’ squeezed competitively between developed and developing economies of the world.  We need to get our act together to ensure that we regain our lost competitiveness and gain competitive advantage by exploiting our size and scale. I believe that innovation will be central to our next phase of sustainable growth but this will not happen in a vacuum. We need to create an innovation eco-system across Europe which can help drive the next phase of growth from ideation to commercialisation.

My view is that this next stage of growth will be technology driven. With Europe having failed to fully exploit the potential of the first Internet revolution, we need to ensure that the next phase of growth, which we call the ‘Industrial Internet’ will provide Europe with the opportunity to drive growth and create much needed employment.

One thing that has become clear to me is that the innovation needed to propel Europe to growth and competitiveness will not be driven by one player alone – none of us, large companies like GE, SMEs or even individual entrepreneurs, have a monopoly on ideas, or for that matter, skills and expertise. Collaboration is the new model for innovation, as borne out by the findings of GE’s global Innovation Barometer, an annual study of the opinions of over 3,000 business leaders across 25 countries.

Without a doubt, universities have an important and central role in shaping the talent landscape. They can foster the skills of creativity; innovation and entrepreneurship that help people thrive in our ever-changing world. But this calls for a significant change in mind-set to shift the focus towards new, innovative, creative and relevant approaches to teaching and learning, and the formation of new relationships with the outside world. 

In order to prepare individuals to adapt to change, to take initiatives, to be creative, we must ensure that our education systems become more responsive and relevant to the fast-evolving society in which we live.

The GE Innovation Barometer examined what businesses believe to be the main priorities for supporting innovation. Fifty per cent of respondents, the highest result, called for the creation of a stronger entrepreneurial culture in the education system through deeper linkages between students and business savvy individuals. Over 40 per cent said there should be better alignment of universities with the needs of business. Clearly there is a message for us all in this.

One issue of concern for companies like GE is the potential skills gap that is emerging in Europe which poses a real risk of inhibiting our growth potential. Even today when unemployment is so high, there are over two million vacancies in Europe that cannot be filled, many of which are in high tech sectors

If Europe faces a huge skills challenge now, the ageing population means the problem will become even more acute over the next decades. The impact of technology on manufacturing, including the advent of the Industrial Internet, will mean that the skills and talents required are changing. For example, by 2020 a third of jobs in the EU will require tertiary level qualifications.

The number of digital jobs has been growing by three per cent per year during the crisis but the number of new ICT graduates and other skilled ICT workers is shrinking.

Estimates state that by 2015 there will be a shortage of 700,000 qualified technicians and engineers. This poses a huge challenge as we move towards the development of high tech and advanced manufacturing sectors. We need labour market reform in Europe addressing the urgent need to bridge the skills and labour gap allowing greater mobility of labour, including labour market reform to allow for greater mobility of talent, changes in immigration rules, pan-EU recognition of qualifications, investment in attracting people to high tech related skills, including investment in education and in particular in STEM subjects.

In the past there has been a frustration from industry that the focus of academic institutions in Europe had been primarily (if not solely) on academia as opposed to being drivers of the economy. This has changed significantly over the past two decades and my experience is that there is now a greater openness and willingness on all sides to collaborate together and build partnerships.

More and more spin-outs are being created by academia and other research institutes across Europe. We came late to the game relative to the countries like the US, but Europe is increasingly becoming more effective at nurturing entrepreneurs.

Despite the economic aftershocks of the economic crash, including a sharp decline in VC investment, Europe’s ability to innovate has not been diminished. In fact, it’s gaining momentum. In 2010, Europe produced a record crop of spin-offs from life sciences to IT. And the trend appears to be an upward one.

That data may show a turning point but Europe has long suffered from a syndrome of producing great basic research but failing to commercialise it. Now, despite Europe’s risk-averse culture, spin-offs seem to be multiplying – giving rise to hope that Europe can create the companies and jobs we need to continue to compete in a global knowledge economy.

In industry we recognise that companies like GE have a role to play in supporting and working with universities to create partnerships which will translate innovation into real products, services and jobs which will help drive a European ‘economic renaissance’. In GE we are doing that. We have also been leaders in embracing new models of open innovation.

Finally, if we are serious about driving innovation across Europe – we need to create a Single Market for Innovation across the EU, an innovation ecosystem from ideation to commercialisation, which will reduce bureaucracy, allow greater cross border co-operation and promote the development and mobility of talent and skills.