Written by Olaf Groth, Professor for Global Strategy, Economics, Management and Innovation at Hult International Business School. Read the full article here.
For the past five years, Europe has been engaged in fierce debates about the best way to master the current economic crisis. The discussion has tackled everything from austerity packages and their socio-cultural appropriateness to stimulus programmes and the need for balance, the flawed split between monetary and fiscal responsibilities in the region, conflicts inherent in rating agencies, bankers’ incentives and corporate pay schemes.
All of these issues, however, while valid in their own spheres, are missing a larger point when it comes to Europe’s economic future: the continent’s economic development system is outdated and cumbersome and it is vulnerable to the shocks that the global economy (characterized by disruptive innovation and the flow of capital towards it) will continue to serve up. The model lacks the key ingredient that would lend speed, agility and robustness to an economy: an entrepreneur-driven innovation ecosystem (EDIE).
A system such as this can maintain growth when the rest of the economy stalls. It survives downturns because it is too well distributed to suffer near-death experiences, unlike automobile, heavy or banking industries. And it restarts quickly because the people who drive it thrive on uncertainty and are comfortable deferring safe pay cheques. This makes them more adventurous than larger organizations with more to lose when considering new activities.
It is unreasonable, however, to expect Europe to be like California. In Europe, security and stability are essential cultural values that traditionally outweigh gold rush-like striving for opportunity. But Europe can still become more fluid and more welcoming of entrepreneurial innovation. The secret is in the design of the system. It must develop an EDIE that fits its cultural paradigm.
Factors that could jumpstart Europe’s EDIE include:
- A network of idea, opportunity and risk-share forums to generate a framework of engagement rules for the trust-based exchange of ideas and transactions.
- A network of hybrid joint-venture institutes that synthesize new ideas and ventures, while lowering transaction costs between parties.
- An innovation economy think tank to foster:
- Thought-leadership on European-style entrepreneurial innovation.
- Sharing of entrepreneurial abilities throughout the professional community, with a view to creating opportunity out of uncertainty, connectivity and complexity.
- Insights into projected high-growth convergence spaces (eg smart infrastructure and cities, autonomous and electrified transportation, bio-informatics, synthetic biology, neural computing).
- Educational case studies of successes and failures.
- Exchanges with hubs in the global innovation economy on ideas, talent, capital and “trust equity”.
- Tools that visualize and make more transparent the value of network interactions in the ecosystem.
- Social and commercial entrepreneurship programmes
- Public media programmes, which feature entrepreneurs as creators of public goods, who are valued and respected by society.
- Intrapreneurial career tracks for corporate employees, with the prospect of several opportunities or the return to established businesses, if initial ventures fail.
- Exchange programmes for corporate executives with entrepreneurial start-up teams.
- Angel and venture-capital tax legislation, with tax deductions for new venture investments, to validate the risks taken.
Europe needs innovation-driven growth now more than ever. There are too many young Europeans with talent and ideas ready to go elsewhere in the global innovation economy.
Read the full article here.