Europe’s innovation imperative: how can the region emerge stronger and more competitive?

The ability to innovate has never been as critical to growth and prosperity: more than 65% of global GDP will be digitized by the end of 2022.

However, Europe’s rate of innovation is not keeping pace. In Boston Consulting Group’s annual ranking of the world’s most innovative companies, there are no European businesses in the top 20. Companies across the region have deployed technology to navigate the pandemic, but for Europe to close the innovation gap, there’s more to be done.  

 â€œTechnology has had a key role in helping businesses keep things going during the pandemic and it will keep playing a key role in the recovery that we are moving into. But in Europe we do have something of an inconvenient truth in that Europe is lagging in innovation on the global stage.” -- Azeem Azhar innovation expert and producer of Exponential View

Europe’s innovation potential lies in the digitization of its world-class industries. With 15% of global exports and imports, the EU is the biggest international trade player next to the US and China. How can these businesses effectively embrace technology and innovate to drive growth – not only creating new products and services, but forging new business models as well?

This week, I took part in a virtual roundtable to explore this question, joined by two leaders from wonderful European businesses that really understand the innovation imperative: Shahram Ebadollahi, global head of data science and artificial intelligence, Novartis and Simona Kijonková, the CEO of Packeta – a logistic company founded in the Czech Republic and operating in 28 international markets.

Helping drive the discussion was Ramon Baeza, MD at Boston Consulting Group and one of the lead authors of  â€œThe Most Innovative Companies” report. I wanted to share some of their perspectives here as they are relevant and timely for organizations across the region.

The future belongs to data

The pandemic has highlighted the critical role data plays to drive efficiencies as well as improve products and services. Simona compellingly summarized: “The future belongs to data.”  

“We work with small retailers and small businesses worldwide. The pandemic – and resulting government restrictions – changed everything. With shops having to close, 50% of our pickup points were also closed. And of course, at the same time, demand for ecommerce went up. Because we are a data-led company, we were able to react very quickly. What might have taken months, took days.”

Bringing innovation into the fabric of an organization  

For close to 10 years, I saw Asian companies rapidly innovate and deploy new technologies with a strong data-led culture underpinning this approach. But I know what European companies are capable of, and there is a huge opportunity for them to embrace a data-led culture. 

Simona Kijonková, the CEO of global logistics firm Packeta

Shahram talked about Novartis' transformation, discussing some of the incredibly innovative projects that are currently underway. Novartis and Microsoft have a close partnership around AI and innovation, announced just over a year ago, and these initiatives underscore just how essential innovation is to them: 

Shahram Ebadollahi, global head of data science and artificial intelligence, Novartis

“At Novartis, we are leveraging digital solutions to make a real difference in the lives of patients and transforming our clinical trials. As an example, over the past few years, we have built a technology called Nerve Live that brings all data of clinical trials together, enabling us to make performance predictions to take preventive corrective actions and make better-informed and faster decisions. At our headquarters in Basel, we have our SENSE operations center – essentially a state-of-the-art control tower using this Nerve Live technology – from which teams can monitor live data from more than 500 trials – tracking thousands of patients without any disruption.”

The power of partnerships

Europe’s innovation opportunity goes far beyond any individual company and seizing it will require a deep bench of trusted technology partners to support businesses along the journey. Ramon pointed to the auto industry to draw an analogy that illustrates how businesses might think about partnerships in the digital age: 

“The value that you get when you have a car is impressive, but it doesn't mean that they have to manufacture everything. And as cars are becoming more and more software, that does not mean they become software companies. They should use the best of software companies. So they get the best artificial intelligence, the same way they might source the best hi-fi system or the best breaks.”  

I’d like to close with an additional observation from Ramón that speaks to mindset we leaders need to keep as we unlock the Europe’s innovation opportunity:

Ramón Baeza, managing director, Boston Consulting Group

 â€œEvery company now has access to technology like AI.  To use technology to drive one piece of innovation is not enough. We've seen the most successful companies become serial innovators, where they are driving new innovations year after year. That's why it's important to have the culture, the human resources and to have the and the partnerships to support continual innovation.”