European Innovation Ecosystem Cramp

This is summary of European Innovation Ecosystem policy synthesis reviews. It is solely based on several US non-profit policy hearings, analyses and reviews available publicly to anyone to read, listen and watch. The senior individuals and organization behind these analyses serve US senate and congress on technological innovation and trade policy topic as professors, researchers, think tanks and policy makers. Their mission is to provide first had expert insight and knowledge on technology-driven productivity, competitiveness and globalization for US to remain in leading position. Their prime task is to combat in the global technology scene to save the US jobs and to retain US as the leading and the most competitive nation. It has been insightful to know how little we know in Europe about failures, gaps, impediments and limitations of our own local innovation ecosystem.

While writing this I have started to wonder how badly EU policy analysis has failed in recent decade regarding similar views in Europe? Who is charge of strategic technology-driven productivity, competitiveness and globalization views? I recommend one reading the insights US analysis have openly provide and very little has been done on these in past decade. These are serious problems that cost jobs loses, outsourcing on key industries and loss of startegic thinking to remain competitive.

Innovation ecosystem foundation is based on two assets 1) idea generation and 2) talent creation leading to industrial activity with commercial goals in revenues and profits. Government incubators like Denmark, Holland and Switzerland are very active in building commercially focused innovation ecosystems. What is not in the European innovation policy agenda today, which may affect the performance of the systems and outcomes form current innovation systems. It is crucial to identify the “blind spots” what science and public policy experts have not been able to identify while safeguarding their interests for funding and fame. Europe has severe misinterpretation failures in identifying and using the term innovation policy in policy planning and making. The misconception may be one of the key reasons why European innovation systems is not delivery impact despite huge investments to scientific basic research and skills. The misconception may have roots in narrow conception of innovation, in separation public and private innovation systems, in separation of science and enterprise innovation, or in the limited value lifecycle approaches where actual value is created and attained back to national system.

The European innovation systems consists mainly about the public scientific basic research. There are obvious “basic" or "elementary textbook” elements such as risk capital formation and investment, entrepreneurial formation, knowledge networks and brokers, technology transfer, IP commercialisation from universities, university reforms, some legal reforms and large investment to the easiest part to say infrastructure (broadband, science & tech parks and laboratories). In Europe everyone loves and promotes infrastructure project since they deliver visible outcomes for the policy makers. The innovation system is lacking commercial outcome-oriented focus, seed funding mechanisms, economic growth orientation and innovation perspectives in the university transformation.    

European innovation systems are not evolving as the national governance systems are silos where the science, technology and education ministries are separate entities from trade and commercialization. This has to do with very traditional model the states have been founded in the non-industrial era by governing class of public servants and national banks, while US system has been founded on enterprising and entrepreneurial values. This has generated a custom where majority of enterprise lack innovation competencies for "product design" (new product development & production technology) and strategic development of ICT (software & hardware) technologies. In this context the "product design" means design, engineering and business in one technical dicipline with commercial goal plus the reguired productions technologies, product engineering methods, tools and practices. Concept of product is not limitted to "commercial off the shelf" catergory rather meaning also complex technology systems products which require multidiciplinary engineering competencies such as software engineering, mechatronics and systems engineering. In Europe many of these fields have drifted away from product systems to mathematical simulation sciences lacking the in-vivo reality application and end use in context.

This state level national culture has led to laid-back financing of science and research without analysis of output, performance and effects to society. At European level there has been barely any focus on commercialization of research programs – in many cases commercialization has been views as obstacle for funding, generating obstructions for research community and not a role of universities operating in self autonomy. All this has led to state where European enterprises and companies are underperforming in productivity.

This is embarrassment to European policy makers causing European industries, enterprises, companies, firms and infant industry on a serious disadvantage in technology-driven productivity, competitiveness and globalization. European structural impediment is caused by absence of broad over institutional innovation programs integrating both public and enterprise activities to commercial goals. The universities are still operating in deep fox hole silos with focus on scientific success, rankings and merits in models that ostracise innovation as commercial mission. European universities are focusing on inventions without practical use and relevance. This development has led competency shortage in product design, engineering and conception of ICT (software & hardware) as strategic technology for government and enterprise to compete globally. As organizations are not able get modern up to date competencies, they are locked to current value and business models. The common form of business ownership in Europe is family based, which inhibits growth and has embraced closed business networks only within the national and linguistics lines restricting access to information and broader customer base. 

One of the major structural impediments in the European national innovation systems is separations of business schools from engineering and medical schools. In USA engineering and medical schools are the epicentres of innovation which contain supporting business school. In the most productive US university models 80% on students are in the engineering and medical schools. The European model has led to artificial and academic technological competitiveness leading to state where the strategic understanding has died down. This cultural development has drastic consequence as business leaders and even engineers do not anymore have understanding of product design, engineering and commercialization. This is called lack of “product design tradition” in a country. There are only four countries with “product design tradition” Germany, Nederland, Denmark and Sweden. The lack of understanding has opened the market for US companies to enter easily European market space and expand without leaders, managers and policy makers even realizing this development – and allows US companies grow above the industry average. There is even no discussion how to fix this – not people who would see this problem to exist. This negative “separation” development has been accelerated by the few world top leading business schools delivering graduate, executive and industry classes. The separation of business and engineering school has led in Europe to very large cohort of leaders and executive lacking technological understanding in business strategy, innovation, new product development, productivity, competency development and technology investments - specially software. This gap has given a significant competitive advantage to US leaders and executives specially in case software systems-based competition, market innovation and monetarization’s. European universities have not even understood what kind of problem they have generated with this large leadership and management class lacking technological comprehension and technology-based business foundations where technology is on considered cost and incremental factor in competition. European university institutions are mainly teaching universities or scientific research institutions lacking commercial product or stakeholder impact goals as research universities in US. The lack of know-how and experience makes leaders very weak with the “product design” realities such uncertainty and risks which lead to short term focus, narrow scope problem solving, local pathways and limited searches for alternative solutions.   

European nations and institutions are very poor to form strategic innovation networks that would deliver technology-driven productivity, competitiveness and globalization related outcomes for Europeans. In USA many of the innovation agents and contacts help Europeans to network with other Europeans – not with the US innovators. Inside Europe there is very little cross nations and language regions innovations programs that would have commercial goals. There is not sustaining networking and collaborations structures for innovation with commercial “product development” focus. The European Union research funding and framework programs do not allow commercialisations, which allows US companies to exploit these contacts and opportunities. The closed “friend” based networking permits information sharing, contacting, collaboration, communications, ideas to evolve and new innovative views to emerge. Europe is lacking opens technology experts and entrepreneur networks that would be agile and swift in reacting to new opportunities. The institutions, organizations and enterprises are not supporting this as in US. This has to do with lacking innovation systems structures that are able scale and create cross arching trusted networks between nations, regions and major commercial innovation hubs. This development could be potentially changed by implementing new EU innovation foundation model reaching over all EU nations to boost local and regional technology-driven productivity, competitiveness and globalization activities.

Enterprise market of firms is not working in a way the US where ownerships are changes, sold and transformed to circulate assets in more efficient way than in family owned business model. These family owned enterprises are very good and valuable foundation for the economy but also there is tremendous value locked into them for very long time. This low value firms are potential target for takeovers to exploit the under utilised assets. These companies are excellent target for US scale capability companies focusing on rapid global expansion.

In general Europe is seen as lacking vision, direction, structures and innovation that would deliver scale in the technology-driven productivity, competitiveness and globalization. There are very few activities that would or are seeking to break these developments and make engineering education programs more entrepreneurial and commercial product focused. The institutional innovations are key in turning societies toward new innovation policies. The university industry collaboration seems to be very challenging question for the narrowminded academic leaders only focusing on basic science merits, indexes and peer forums. The key stakeholders, leaders and policymakers do not have understanding of the historical roots and paths the university systems are directed – nor an idea how to change the system to become commercially oriented and deliver "product design" competencies from engineering schools. This knowledge gap remains fundamental challenge in Europe.

The European research framework programs do not have link between research and commercialization. The EU framework programs only focus on “basic scientific quests” and “pre-competitive explorations” academic parts of innovations systems. US call this approach “black box” approach to innovation, since there is no information what came out as commercial results to benefit society. The European “black box” approach is only helping in integrating academic institutions while lacking commercial goals and metics in technology-driven productivity, competitiveness and globalization goals. The European “black box” innovation ecosystem model is missing two critical phases: 1) Productizations from lab to concept to prototype as biz venture and 2) Market introduction, start-ups, infant industry and established scalable firm innovation with buz-savvy engineering leaders. The European model should be reconfigured to have path from research to marketplace to add the knowledge, competency and market exploitation. It is also notable that in many cases the technology based product development (namely software products) it is more question about competency availability (rigth education programs) rather than focus on scientific discovery or research.

Europe has a lot improve in innovation policy and in conception of what is innovations. What is astonishing I have met many of there experts in the past, have been writing about these for a decade …. and still there is no change taking place in Europe.

Your sustaining innovation ecosystem evangelist,

Mika

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