How do you see the future of work in Europe? Historically, the most damning indictment of Europe’s digital prowess was that it wasn’t even considered a contender in the question of world domination in the Fourth Industrial Revolution? Among the U.S., China and Europe, the continent was barely an afterthought: “Europe? Europe regulates the digital economy, right?”
Not quite. Europe is still gunning for Amazon and Google. Yet, after years of seeming indifference and inaction, business and political leaders appear to be awakening to what the future of work means and the defining role technology will play in it – a that’s a fact emphatically underscored by the pandemic. European companies quickly recognized that digital touchpoints with customers, employees and suppliers are essential survival tools. So, what’s next for this part of the world when it comes to a world that is rapidly digitizing?
I think the penny has finally dropped for European policymakers. Even when newly installed European Commission President Ursula von der Leyen laid out her vision for Europe in late 2019, she urged European "mastery and ownership of key technologies," citing quantum computing, AI, blockchain and critical chip technologies". The region has done impressive work so far on quantum, for example. One area that needs close attention is artificial intelligence because this set of technologies will be critical to our future prosperity as we leave the pandemic behind (see our take on The True Meaning of AI: Action & Insight).
My take is Europe will not win the arms race for AI as it currently stands (how, for example, could Europe possibly match China's 10-year multi-billion-dollar strategy to be a leading AI powerhouse by 2030?) Europe is behind on R&D investment, and it's going to take a generation to catch up on the innovation required. Exhibit A: startups, the lifeblood of tech innovation. Despite rising numbers of successful startups and capital raised, Europe is far behind the rest of the world. We did the analysis, and the number of startups in the U.S. is roughly four times higher than in Europe, and they raise eight times more funding than their European counterparts. Do read the analysis on innovation in Europe: Digital Superpower? Or Second-Rate Periphery Player?
The structure of the European economy, particularly in its large core nations, shows why technology leadership matters. Here's my take: The first wave of digital played well to consumer services and, not surprisingly, was dominated by U.S. tech businesses offering a host of intangible services (search, social media, e-commerce, ridesharing), transforming service delivery. This second wave, predicated on AI and IoT, works for Europe's traditional industries like manufacturing that drive our economy (particularly in Germany, which accounts for one-fifth of European GDP). The nexus between emerging digital technologies and the challenge from new forms of international competition (read China) signifies a need for a more active European industrial policy and a desire to own those technologies that will dominate the Fourth Industrial Revolution. Europe wants and needs to be digitally sovereign.
What Europe actually needs is another Airbus event – and this time for AI. At the 1965 Paris Air Show, the major European airlines informally discussed their requirements for a new aircraft capable of transporting 100+ passengers over short to medium distances at low cost. While many European aircraft manufacturers were more innovative than their U.S. peers, even the most successful didn't have the scale to challenge U.S. manufacturers.
Two years later, and Airbus was formed from a patchwork of small-scale aviation manufacturers eager to challenge the status quo, and the rest is history. Perhaps we need to look at Europe’s quest for digital sovereignty in a similar way. What if Europe’s industry titans got together at Davos (or whatever the next Davos is) to discuss how they could form the equivalent of a European Palintir or DARPA that channels regional R&D AI funding for impact? While Europe needs to rely on others for AI capabilities for now, Europe’s newly minted industrial policy, a strong commitment to climate change, and a patchwork of digital capability, means it’s got the right ingredients for long term success. Read my take on why Europe’s Digital Ambition Scales with more posts to follow.
PS. Do check out the rest of Cognizant’s Work Ahead research that went live a month ago. The Work Ahead is a research series providing insight and guidance on how organizations are evolving to the next stage of the digital economy. With the rise of new machines, new generations of talent and new business models based on insight and intelligence, the rules of global competition have changed. Now, these tectonic shifts are being further catalyzed and accelerated by the global pandemic.