The U.S. is the world leader in software, and Asia Pacific leads in hardware. So where does Europe- which lacks an Amazon, Google or Samsung- stand in the digital landscape? In my mind, it matters because economic studies from around the globe consistently link entrepreneurship—particularly the fast-growth, digital variety- with rapid job creation, GDP growth, and long-term productivity increases. And Lord knows, Europe could sorely do with some of that, right?
Check out my latest study Europe—Digital Superpower or Second-rate Peripheral Player. I set out to investigate where work of the future was scaling and how Europe's business leaders could benefit. There is some good news for a continent that has been battered of late (let's not mention the "B" word). Last week, in a piece on talent and where leaders can find it, I explored Europe's burgeoning entrepreneurial culture and the raft of brilliant ideas emanating from a homegrown start-up scene. Granted, it looks good on the surface, but are the ingredients really there for a digital superpower to rival that of the US and China? The answer is a cautious "yes," but it needs to move faster.
Let me put Europe's digital ambitions into context. In my mind, start-ups are the lifeblood of digital innovation, and despite the increase in start-up activity in Europe, it has some way to travel before we match the start-up firepower of the US. For example, the ratio of start-ups between the US and Europe is 4:1; Moreover, US start-ups raise eight times more funding than their European counterparts, meaning its easier to find VC money for good ideas. Then, on the other side of the world, there's China. For some reason, we don't hear much about Chinese tech innovation, but trust me, it's happening and its on fire! The Chinese model for digital innovation moves at an astonishing rate (warp speed) copying and augmenting good ideas with an industrious and entrepreneurial mindset sanctioned by the state (and I don't mean that in an ominous way). When it comes to digital innovation, China is the country to watch. eCommerce, autonomous cars, ehealth, smart cities, agri-tech, etc. it's all there and it's developing fast.
Last year I had the pleasure of visiting China for the first time. Everyone told me I would be astonished. I was. For example, there is a tech metropolis called Shenzhen which was once home to 200,000 people a mere 30 years ago. Now it's home to a whopping 15 million people. Shenzhen is where you Chinese tech superstar Tencent is based; Tencent is like Amazon on steroids and now sells web services faster than Amazon. And it's worth remembering that 10 years ago Shenzhen was the place to build and ship cheap, low-quality products; today it's a high-quality, fast-prototyping hub for makers and start-ups all over China. This is why Europe's attempts to sustain a start-up culture needs all the help it can get—and in true European style, I think this region has the seeds that could be a third way between the US and China.
What my research has uncovered in Europe is a haphazard landscape of rapidly percolating, pockets of digital activity scaling at different trajectories. If we can figure out how to string them together, coordinate and orchestrate them, then business leaders can adapt to the ever-evolving consumer expectations and the radical new technologies that appear seemingly instantly on the digital landscape (we need a drone/blockchain/Adtech strategy NOW). Basically, Europe needs a compelling unifying vision for work in the future. Because until it gets one, its digital firepower will be left fragmented and scattered.
I know there has been some good work done under the auspices of the digital single market, but the raft of regulations mostly focus on copyright issues around music streaming services like Spotify, video-on-demand platforms like Netflix, news aggregators such as Facebook, and user-uploaded-content platforms found on YouTube. As I say, the DSM is good but business leaders and European firms now need an activist approach to shaping markets and regulations and channeling stimulus downwards through cross-regional funding. This is what Europe does so well (check out Horizon 2020) and it could be a third way for Europe to thrive between the entrepreneurial firepower of the US and a rapidly emerging China that is throwing everything at the Digital wall.
I know it might sound emotive, but the watchwords for a Europe forged on the back of two world wars- open, collaborative, pluralist- are the same as those for mastering the digital economy. This, and an activist approach to shaping markets and regulations and channeling stimulus could provide the ingredients for Europe to be a digital power. My analysis in the study found a rich mix of factors in play—not least the growing presence of an ambitious entrepreneurial class, talented workers and dense support networks that enable people to thrive. Taken together and they represent a growing digital ecology stretching across Europe that could encourage companies to look inward into Europe, rather than turning toward the U.S by default.
PS. Yep, the term "digital superpower" sounds a little corny, hubristic, but for a country or a region to be an economic power in the future, then that means mastering the new tools for work. And those new tools are digital at their core. Mastery with data is everything as new software tooling, interactive technologies and innovative ways of working proliferate. So with its form in regulating data, it could be very interesting to watch Europe's position evolve. More later.