Why do we need a European Innovation Council?

As EU Research Commissioner Carlos Moedas pushes ahead with his plan to establish a European Innovation Council (EIC), sceptics are standing up to voice their doubts.

One case in point is Hans-Olaf Henkel, a German centre-right MEP, who is not convinced of its potential. “I have not finally made up my mind. I have to see more details. But at the outset I’m very sceptical about these kinds of initiatives,” he told Science|Business.

From his perspective as deputy chairman of the Parliament’s Industry, Research and Energy Committee, Henkel does not dispute claims Europe has problems when it comes to commercialising its research, or that new opportunities are too often exported across the Atlantic.

But this is not a dragon the EU needs to slay, he argues. “I suspect that amongst the Commission’s objectives for the EIC is to create new companies and new jobs with grants… but the state has a limited role here and the EU, quite frankly, none.

“And how many millions will it cost to set this new council up? Shouldn’t we rather give this money to research institutes? Or reduce taxes in EU countries to make it easier for start-ups to survive?”

And he has another suggestion for how the Commission can make itself useful. “How about it uses its power to put pressure on Germany and other countries to spend 3 per cent or more of GDP on research? That’s the right role for the Commission.”

Failed attempts

Henkel speaks from the perspective of three decades he spent at IBM, rising to become the computer company’s head of operations in Europe, the Middle East and Africa.

After leaving in 1995, he became the President of the Federation of German Industries. From 2001 to 2005 he was President of the Leibniz Association and later he served on the board of Bayer, the German pharmaceutical company, and advised the Bank of America. He resigned these posts before becoming active in politics.

Now in Brussels, Henkel recalls clumsy attempts to maintain a computer industry in Europe which, in his view, were doomed from the start.

“I have been a victim in the 70’s, 80’s, even the 90’s, of so-called support programmes for industry. They all failed,” he said. “At that time we had an industry: France’s Bull, Italy’s Olivetti, ICL in the UK and a few others. They’re all gone. Virtually billions of what were then deutschmarks or francs were spent to avoid this and it didn’t help,” he said.

No wonder then, that from his office in the Parliament, Henkel casts a wary eye on the warm words and reports promoting and measuring innovation that stream out of Brussels daily. Politicians make speeches telling people to be innovative, he notes, “And then what? You can’t teach it. Rather, you make sure there’s an attitude in your country that stimulates freedom.”

“As soon as the government gets involved, there’s no innovation. I could even say government and innovation contradict each other. It’s not the job of the government to innovate.”

He is not even prepared to make a case for EU initiatives like the European Investment Fund (EIF), which many venture capitalists say is the bedrock of finance for companies in Europe. “It’s another source of capital, why should VCs reject it? he says. Rather the question should be why every member state does not have an EIF equivalent. I don’t see a reason why it couldn’t be,” he said.

But while he has fundamental reservations about the ability of governments to pick winners, public support for frontier research is another matter entirely.  

“I see the European Research Council (ERC) differently,” he said. “I don’t deny the necessity of state funding for basic research. The state must do it, in fact.”

How to perfectly form the EIC

Many ideas are flying around about what form the EIC could take, ranging from a simple web portal to a brand new funding institute.

One scenario put forward by the Commission involves adopting the model of the US Defense Advanced Research Projects Agency (DARPA), the government agency responsible for ‘moonshot’ research such as the internet and stealth technology.

In such a format, the EIC would support small, excellent, commercially-minded researchers to run “high risk, high gain projects implemented under tight time constraints”, according to a leaked Commission memo.

But as Henkel notes, DARPA works for a client – the US military. So it’s not Europe’s game, he said. “Look, we all know US research capabilities have a lot to do with defence spending. If Germany had the same percentage spend on defence it would have a knock-on effect on innovation. I don’t say though, because of this, I’d like the spending on defence go up – that wouldn’t be for the right reason.”

Another option being discussed is to create several mini-EICs spread around several EU member states. A Commission memo said they could resemble ‘Airbus-type’ clusters of excellence.  

Henkel shoos this idea away too. “Airbus was a result of German and French entrepreneurs,” he said. “If it had been conceived by the EU, the company would have long since gone broke. Malta and Poland would have insisted on getting small plants. Bulgaria would have insisted it have a few people designing the wings in their country,” he said.

Wanted: a business plan

Henkel is waiting to hear a clear explanation of why the EIC is required. Where’s the Commission’s business plan? he asks. “If I ran a big organisation, I’d say to my employees, here’s what I’d like to do. These are the objectives. I haven’t seen them for the EIC; this the strategy to achieve these objectives – I haven’t seen it; this is the action plan and how I’d like to control it.”

However, Henkel does acknowledge what works well for business might not neatly fold into politics, saying Moedas’ necessarily elastic statements on the EIC remind him of the diplomatic language of Germany’s Chancellor Angela Merkel.  

“She lets things evolve and sees what the media and other people think. If they don’t like her proposal, she quietly drops it. If other people change her idea and she sees there’s a potential majority for it, she says ‘it’s my idea and let’s do it’”.

But he does not think the Commission should adopt this ever-shifting approach. “The Commission has one advantage over the cabinet of a national government. It’s not directly elected. So it doesn’t have to worry so much about popular opinion. It has a stronger capability to do what it thinks is right.”

Moedas will have to produce something special to bring the German MEP around. “But I’m always open to a good rationale,” Henkel said. “If I have those four elements – objectives, strategy, action plan, control – I may change my mind. Maybe I’m wrong. I’ve made a couple of mistakes of judgement in my life. I used to be in favour of the Euro – that was a mistake.”

And his parting shot; “This council is a cloudy idea so my answers for now can only be cloudy too.”

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