Europe’s digital future: deep tech innovations and policy

Europe's digital future: deep tech innovations and policy
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SciTech Europa met with EIT Digital’s CEO Willem Jonker at their annual conference to discuss some of the challenges and opportunities for the digital future of Europe.

In September, SciTech Europa attended EIT Digital’s annual conference in Brussels, Belgium, as the official media partner, to find out more about Europe’s digital future. The event attracted over 900 participants from 40 countries and featured 50 deep tech innovations and scale-ups in digital finance, infrastructure, wellbeing, cities, and industry.

In his presentation at the conference – and in his address to the press event on the sidelines – EIT Digital’s CEO, Professor Willem Jonker, highlighted numerous challenges and opportunities for the digital sector in Europe, and SEQ caught up with him to expand on a few of these points.

In the digital space, it is crucial for industry, academia, and education to all work together, a topic touched on by Jonker, who explained that this is important because innovation is not only about conducting excellent research or even about transferring the results of that research to the marketplace; it is also about ensuring that the talent and skills base is in place. “This is not only with regard to the creative minds who are, of course, necessary, but also with regard to the people with the right skills to build the companies and help them to grow. As such, it really is fundamental that all of these actors work together,” he said.

Industry

This, however, is not as simple to achieve as it may sound. In Europe, while there is often a culture of collaboration between universities and large industries, for smaller companies things tend to become a little more complicated. As Jonker highlighted: “Large corporates very often have PhD collaborations and internships which work well to cement their relationship with academia. However, smaller companies will very often find it difficult to access the universities and, if they do, they may then find it difficult to navigate the system in order to find what they need. This is because universities are very often collections of individual research groups with their own specialities, and so it is not a one-stop-shop with a clear interface to the outside world.”

Of course, large corporates often have similarly large R&D departments – Samsung, for instance, spent over €11bn on research and development last year alone – and so they also have the leverage to be able to attract the top talent. For Jonker, it is therefore necessary to not only stimulate an increased collaboration between smaller companies and academia, but also between SMEs and start-ups, as the latter often originate from universities and so have a good relationship with the academic sector and/or have knowledge of the academic environment because they have evolved there.

As Jonker also pointed out, there are numerous large, very often public research organisations that try to address the needs of smaller businesses – such as the Fraunhofer Society in Germany or Nederlandse Organisatie voor Toegepast Natuurwetenschappelijk Onderzoek (TNO), an independent research organisation in the Netherlands that focuses on applied science. However, SMEs and start-ups can also find these organisations difficult to navigate, which has led to some national governments stepping in to help (Jonker mentioned the voucher system which had been introduced in the Netherlands where SMEs were given vouchers to spend on what might be termed knowledge-intensive consultancy questions with such public research organisations).

Despite such efforts, challenges remain, and EIT Digital therefore includes this as a part of its ‘knowledge triangle integration’ approach, whereby it works to not only ensure that the collaborations work as well as possible (with a specific focus on the start-up and academic worlds) but also to enable the mobility of the people within those different sectors. “Having people rotating between those organisations creates a culture of open innovation,” he explained, adding: “The fact that we are working so hard on this and that the majority of our expansion has been on the industrial side (with SMEs and clusters where many SMEs are represented) is indicative that this effort is both appreciated and that there is a real need for this kind of activity.”

Academia

There is also a need for academia to change the way in which it approaches these issues, and perhaps one way is to better incorporate digital skills into the wider curricula – a topic expanded on in the following pages of this section by Frank Baaijens, Rector Magnificus at Eindhoven University of Technology (TU/e). For Jonker, it is clear that universities operate in quite a demanding environment, especially when it comes to digital because the demand for digitally educated people has increased dramatically in recent years. And while a change to the curriculum can play a role here, it is also important to address the issue of collaboration between the university and business environments, which, he said can be boiled down to a matter of incentives. He told SEQ: “Within the university system in Europe, scientific publications determine the lion’s share of an academic’s career, and if that is the main driver for career advancement then that will, of course, be focused on by those in the academic environment. That could be changed, and patents and industry collaborations, for instance, could be included as a metric for success and thus career advancement.

“Increasingly, we are seeing that the acquisition of funds is being included here, but this is slightly different from a true industrial collaboration because, essentially, this is centred around obtaining money in order to address the financial needs of the university.”

For Jonker, universities are often seen by governments as talent factories, meaning that they have very tight financial constraints depending on how many graduates they produce, how many drop outs they have, and so on. As such, there is a sense that those universities under financial pressures are much less likely to have room for experimentation because, for instance, students may leave to start their own companies as a result of their work at the university, but this would still be seen as contributing to the drop-out rate, and so the university would be a victim of its own success.

Jonker concluded: “The incentive system should also change so that there is a better balance between being a good educator, a good inventor, and a good researcher, while the financing of the university system should be explored so that it really encourages true collaboration, rather than just a hunt for money.”

A stronger digital Europe

For Jonker, alongside adapting the education system to the digital reality there are four other key elements involved in building a stronger digital Europe:

  • To bring European values to the digital world
  • To better address the fragmentation of the sector
  • To raise R&D investment in digital technologies
  • To increase investment in innovation

He told SEQ: “Regarding the first of these, it is important to ensure that people feel included in the digital space; that people feel respected. This means that there has to be an inclusive approach on the part of the technology industry, which perhaps too often focuses on technological advantages, rather than making sure that people are kept on board and that they have trust and confidence in digital technologies.”

Concerning the issue of fragmentation, there is indeed a sense that Europe remains quite fragmented, with many national approaches existing in terms of both regulation and in joining forces on specific technologies, where a heightened level of competition often exists. Addressing this issue is crucial if Europe is to be able to compete at the global level in the digital space.

Regarding R&D investment, while Europe invests considerably in research and development in a general sense, and is a world leader in technologies such as semiconductors and fields such materials sciences and physics, Jonker explained that when it comes to investing in areas such as software development, Europe is lagging behind countries such as the USA and China.

Persistent investment in innovation will be crucial moving forwards. Jonker said: “The amount of capital available in the USA for private investment, for instance (and the same is also true of China) is due to the fact that success creates success and attracts money to take new risks. In Europe, we really need to step up here. And that is not only in regard to governments (although, of course, they have their role to play), but European companies must also be willing to become involved in riskier innovation investments.”

Fragmented resources

The amount of money available – and, indeed, its accessibility – to support spin-offs, start-ups, and SMEs in the digital space in order for them to be digitally competent and so fit for purpose in Europe’s digital future is also something which is lagging behind both that which is available in other countries and that which is available in the private sector (again, Samsung’s investment in R&D is a case-in-point). However, as Jonker pointed out, that is not to say that there is nothing happening in Europe – the problem is that what does exist is considerably fragmented, resulting in relatively small sums of money being made available in most instances (such as, for example, via the SME Instrument). He added: “Europe’s start-up situation is comparable to the rest of the world, but the issue is that many of these start-ups remain start-ups; what we lack is scale up instruments.”

This has, it seems, now been recognised by the European Commission, and the European Innovation Council (EIC) may go some way to help rectify the situation. EIT Digital will also be able to assist, with its accelerator maintaining its focus on scaling up.

Over the last decade, the EIT has done an excellent job in creating the ecosystems necessary for companies to scale up and go on to be acquired or sold. As Jonker said, this has been indispensable because innovation is much more complex than research alone: “It is not enough to just give money to fund excellent research which will generate great ideas; innovation requires the building of businesses and the conquering of markets; it is a very complex system with a lot of different actors. EIT Digital has created the foundations for that and, in my view, the EIC should now work together with the European Investment Fund (EIF) and the European Investment Bank (EIB) to mobilise the necessary resources.

“However, there needs to be something in place to ensure that these funds are then spent wisely and, of course, the obvious choice here is to utilise the EIT as an intermediary. This will be fundamental to ensuring that a much more focused approach is taken than that which we see, for instance, within the SME Instrument.

“The EIT has the knowhow to achieve this; our accelerator programme has used its portfolio to raise over €400m in private investments which clearly demonstrates that we have developed something that works very well, and we would welcome the resources to make that even more powerful,” he concluded.

The policy level

At the policy level, work is also on-going in an effort to tackle the fragmentation that we see in Europe – such as the Digital Single Market and industrial strategies. For Jonker, the approach being taken by DG CONNECT (and in the following pages you can find an interview with the DG’s Director General for the Single Market, Geraard de Graaf), is where policy makers are increasingly being included. He said: “In the past, many programmes were targeted more towards the technology and R&D communities. Now, we are seeing an increased emphasis being placed on the policy level: big ICT events are attracting policy makers, and countries are signing declarations around the topic of high performance computing, digital intelligence, cyber security and so on, all of which demonstrate that policy makers are becoming much more involved.

“This may well be because the digital is now much more a part of everyday life than it has been in the past, and politicians are being confronted with the digital transformation and can see it becoming an integral part of almost every aspect of daily life. As a result, it becomes an increasing part of the political agenda.

“But this can also lead to unanticipated social questions which now also need to be answered. For instance, Uber has raised issues around employment rights, while the expansion of Airbnb means that the hotel capacity in some cities has effectively doubled in the last 12 months which is putting strain on infrastructures and services. As such, there are now many what may be termed ‘real world consequences’ of platform technologies being deployed which require a policy answer,” he said.

Technology hype

Within the current landscape of digital technologies, there are perhaps two which are currently receiving more attention than others – artificial intelligence (AI) and blockchain; these are two examples of technologies which are often mentioned in discussions of the digital sector and, Jonker said, technology areas which have been posited as solutions for many global challenges in one form or another. Yet there is a sense that, at least in part, their popularity is more to do with the fact that they demand a certain fascination on the part of the public, triggering people’s imaginations, than with their actual potential.

Of course, the field of AI has developed considerably in recent years thanks to a huge increase in computing power and the availability of data. However, while there have been clear advances in AI, which are also set to continue with algorithms getting better as machines get faster and even more data becomes available, at the same time, expectations for what AI can achieve can sometimes be unrealistic. And so while it is important for AI to continue to be a focal point of the digital future – which will also necessitate available funding – one has to be realistic about what can and cannot be achieved.

Autonomous vehicles and other applications of AI are demonstrating the technology’s potential across sectors, and while there will continue to be those who are concerned about machines becoming smarter than people and about how people will lose their jobs to robots (often thanks to sensational reporting), for Jonker this, again, is an unrealistic prediction of the future: “New technologies emerge all the time and are often met with resistance; but this resistance dissipates as the technology becomes more common and as people see that the threat is not real.

“We need to be a little more factual in our discussions of technologies such as AI; rather than bemoaning that in some sectors people will become unemployed as new technologies come into play – and that is something that will indeed happen in some areas, although not to the extent argued by some – we should look at the facts and see what new jobs can emerge in that space and what talent already exists there (or where the gaps are). If we look at the overall landscape, and if we focus on the facts rather than on emotional responses, then it is clear that the digital future is far less threatening than some people may want you to believe.”

Blockchain

For Jonker, the situation with blockchain is somewhat different. He explained: “Blockchain became popular due to bitcoin; and I personally feel that this is very over-hyped. The concept of distributed, decentralised data management is not a new one, but blockchain (being the machine underneath bitcoin, which, like AI, captures the public imagination) is now often held up as a solution to many problems and challenges, which is unrealistic. Time will tell, and the hype around blockchain may fade away as fast as the ups and downs of bitcoin itself.”

He added: “In many instances, many solutions that use some kind of distributed data management are being incorrectly labelled as blockchain because people know that this is where the attention lies and thus where the finances are.”

Of course, as secure distributed data management becomes increasingly important moving forwards, with security issues coming to the fore and the need to ensure that data cannot be tampered with, distributed ledger technologies will have an important role to play. Yet, as Jonker said, this is in a general sense, and while blockchain is a label which perhaps helps to catalyse the efforts needed to develop these technologies further, caution should be taken when considering just how realistic expectations around blockchain are.

The digital future

The areas that SEQ discussed with EIT Digital’s CEO are by no means meant to present a comprehensive overview of the issues inherent in Europe’s progress towards its digital future. However, they do provide an insight into how the landscape is shifting and how EIT Digital is continuing to help this evolution.

Moving forwards, the organisation will continue to focus on the five key points highlighted by Jonker (bringing European values to the digital world, better addressing the fragmentation of the sector, raising R&D investment in digital technologies, increasing innovation investments, and adapting the education system to the digital reality). “Our work,” Jonker added, “is focussed on innovation and entrepreneurship, which means selecting the right technologies and building companies around them, as well as really focusing on bringing together the actors in the digital domain and building strong global companies. We will also work around this to mobilise capital and develop talent, and will talk with policy makers to better facilitate things.”

Ecosystem creation is at the core of these ambitions; and for Jonker this must be achieved at the European level. He told SEQ: “We need to make sure that the different actors are able to find each other at the pan European level. We need to look at the national ecosystems and identify areas which have a broader scope, for instance, and open that up.

“By doing that I am sure that we will also be able to enter areas of the policy debate where we are advising on how they can facilitate the discussion and exploration of issues pertaining to Europe’s digital future.”

Willem Jonker

CEO

EIT Digital

Tweet @EIT_Digital

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