Viewpoint: Europe needs innovation ecosystems to power growth

In the past year, two important reports regarding European competitiveness, innovation and research were published: one led by former Italian Prime Minister Mario Draghi, and the other by former Portuguese minister Manuel Heitor. With these reports as background, the EU Commission, Parliament and member states are now planning the next EU research and innovation programme. 

The complexity of all this is evident from the hefty size of both reports – but one may well wonder why Draghi and Heitor wrote two separate reports. After all, the topics, EU competitiveness and R&I respectively, are inherently interdependent.

The very fact that they were separate reports illustrates the shocking disconnect between economic policy and R&I policy in the EU. Other disconnects include the poor alignment of EU public and private R&I investments, and of EU and member state economic policies. These disconnects have led to the relatively weak position of the EU economy compared to that of the US and China. 

It is now past time that we end these disconnections; and that will take a comprehensive and coordinated effort across EU institutions and member states. That’s a view shared this week in the EU’s new Competitiveness Compass report, which laments Europe’s lagging position and urges we “rekindle productivity based on innovation.”

All at the same table

European societies are now facing serious “transition” challenges due to climate, digitisation, geopolitics, demographics and agriculture, to name a few. To have our next Framework Programme for research and innovation facilitate these transitions, programme development needs to go hand in hand with the development of economic, industrial and societal transition agendas. In short, everybody involved in these agendas needs to be at the same table, with common objectives.

That work must start with an understanding of the role governments play in creating the right conditions for these transitions – such as through regulation, financial incentives, public procurement, R&I funding, and education. In R&I policy specifically, it requires some important choices: which applications and technology to focus on, and which research and innovation instruments will facilitate that focus.

The Draghi report identifies three main areas where Europe needs to act: new growth engines, climate (more specifically energy), and geopolitical changes. Combining these three with the big transitional challenges in climate, digitisation, healthcare, defense, and agri-food gives an unambiguous focus to both the R&I programme and the economic, industrial and societal transition agendas. We must focus on digital, cleantech, biotech, health-tech, and dual-use technologies..

To achieve that, the instruments we select also need careful planning, reflecting the different tasks involved. Research is about discovering and inventing the unknown. Facilitating transitions is about applying available know-how and technology. And innovation is in the middle: choosing between various known, yet unproven, technology-market combinations. These tasks are fundamentally different and their financing mechanisms should respect their differences. 

How to build a global tech player?

It is often argued that the US puts the successful individual first, China prioritises the state, and Europe tries to find a middle ground. The ability of the US to develop and dominate completely new industries, such as digital, is often cited as an example by people criticising European innovation. Europe, they say, should adopt the American way and support European tech entrepreneurs with investments to build European unicorns. 

But such an approach overlooks an important aspect: the environments that allow such entrepreneurs and unicorns to emerge. Although they are often depicted as individualistic heroes, in fact entrepreneurs can only emerge in those environments that deliver the right conditions. Why else did American Big Tech develop in Silicon Valley and not in Florida?

Environments that give rise to global industry players have an essential number of key characteristics that make them cradles of innovation and industry dominance. These environments have a clear track record. They focus on value creation, which allows them to attract the necessary investments. They have the capability to breed, retain and attract the necessary talent. They focus on specific technology and applications. They have an excellent research, development and deployment infrastructure. And finally, they have a culture of competitive collaboration, interdependencies, and value chain creation.

Focus on the ecosystems

Such environments are called ecosystems, and they flourish from open innovation and interdependencies. They can be found around the world, notably in Silicon Valley and Shenzhen, but also in Europe. Brainpoort Eindhoven in the Netherlands is one such example, that created past or present global players like Philips and ASML.

If Europe wants to get back on the world stage, Draghi tells us to create new growth engines. These new growth engines are the ecosystems described above. And it is especially the task of public research and innovation instruments to support the creation and development of these ecosystems. 

An orchestrated set of focused, coherent and connected instruments allows such ecosystems to flourish. Public universities bring the indispensable knowledge and talent. Through investment in public infrastructure, governments support such environments. Through public-private partnerships, governments and companies support collaboration and the flow of knowledge, technologies and talent.

The next Framework Programme, FP10, needs to be drafted strategically to provide a unified approach to competitiveness, coordinated across the EU. This should come by building ecosystems that are engines of development in digital technologies, cleantech, biotech, health-tech, and dual-use technologies. They in turn will support the transitions in healthcare, defense, agri-food, mobility, and energy. And to achieve this, the programme should consist of a coherent set of instruments that create value; attract investments; breed, retain and attract talent; excel in technology and infrastructure; and are based on the principles of open innovation.

This is no small task. It is a significant deviation from the current fragmented FP9 programme structure, and different from the approach advocated by the Heitor report that promotes instruments focused on individuals and suggests eliminating instruments building strong ecosystems. However, it is a necessary task to counter the global trends so well illustrated by the Draghi report and thus secure European prosperity for future generations. 

Willem Jonker, experienced in industrial and European research and innovation, is currently chairman of the board of the AI coalition 4 NL focused on boosting the Dutch AI position. He is also a professor of computer science at the University of Twente.