In 1815, a volcanic eruption in Indonesia caused harvests to fail, making horses too expensive to keep. This adversity led to a significant European invention to solve the problem of personal transportation: the bicycle. Around half a century earlier, the industrial revolution began in Europe, driven in no small part by the broad adoption of the steam engine. Throughout human history, people have innovated to overcome challenges and unlock opportunity.
Across the region, businesses are innovating not only to navigate the impact of the health crisis, but to emerge from it stronger, with a focus on creating new products and technologies, increasing efficiency, and creating entirely new business models.
Technology is at the heart of much of the innovation we are seeing today. This is critical, not only for Europe’s recovery, but for ensuring the region’s global competitiveness. The pace of technology-driven innovation is accelerating, with estimates that more than 65% of global GDP will be digitized by the end of next year, according to IDC FutureScape: Worldwide Digital Transformation 2021 Predictions, Doc # US46880818, October 2020.
But for European companies, the rate of innovation is falling short on the global stage. In Boston Consulting Group’s annual ranking of the world’s most innovative companies, not one European business was in the top 20. The EU currently holds just 11% of all world-class digital patents, 50% less than countries from East Asia and not even a third of those from the U.S.
Despite this, Europe has strong economic foundations to build on to fuel recovery and drive growth. With 15% of global exports and imports, the EU is the biggest international trade player next to the US and China. Europe’s innovation potential lies in the digitization of its world-class industries.
Building on the initial momentum of Europe’s accelerated technology adoption during the pandemic (such as remote working and process automation) companies must now go a step further. Beyond supporting efficiencies and productivity – technology has a key role to play in driving growth, helping companies create new products, services and experiences that exceed the expectations of their customers.
Data is the new currency
Many of the most innovative companies have business models increasingly built on effective data understanding and usage. Data is leading to companies creating entirely new products, significantly changing market strategies, and helping employees make better decisions. This might involve accessing, categorizing, and analyzing data on disease progression in a research laboratory, or knowing how much stock to keep and where critical components are in a supply chain.
This extends up to the c-suite, where more leaders are combining longstanding management experience with up-to-date data snapshots to help their businesses stay ahead.
Innovation on European terms: shaping an inclusive, sustainable recovery
The way European companies embrace technology and digitization will be different from the rest of the world and needs to align with European values.
To prepare for a future where data is part of every business, we need to ensure that people have the right skills to succeed. However, 42% of European citizens lack basic digital skills, and access remains inconsistent across the continent. Every citizen should be able to receive training that enables them to thrive in an increasingly digitized labor market. This is why Microsoft is aiming to bring digital skills to 25 million people worldwide by the end of this year.
Power of partnerships and collaboration
The innovation opportunity goes far beyond any individual company and seizing it will require the right skills and talent in the region. It will also require a deep bench of trusted technology partners to support businesses along the journey.
With Europe’s strong values, history of collaboration – especially in scientific advancement – and deep global connections, innovation is always likely to have its own distinctive characteristics in the region. Just as products from Europe are proudly ‘made in Europe’, so ‘innovated in Europe’ should become a hallmark that signals the region’s ambition and distinctive contributions.