Professor Willem Jonker, CEO of EIT Digital, speaks to SciTech Europa about how the organisation is supporting digital innovation and helping to ensure the commercialisation of European research.
EIT Digital is a leading European digital innovation and entrepreneurial education organisation driving Europe’s digital transformation. It delivers breakthrough digital innovations to the market and breeds entrepreneurial talent for economic growth and improved quality of life in Europe. It does this by mobilising a pan-European ecosystem of over 156 top European corporations, SMEs, start-ups, universities and research institutes.
These activities are increasingly important as Europe strives to ensure that the excellent research that takes place within its borders is able to cross the ‘valley of death’ and arrive at the marketplace.
SciTech Europa asked EIT Digital’s Chief Executive Officer, Professor Willem Jonker, about some of the ways it supports the commercialisation of innovative products and services in Europe.
How does EIT Digital work to boost the commercialisation of European innovation?
Can you also play a role in ensuring that European innovation is commercialised in the region, rather than elsewhere?
The commercialisation of European innovation within Europe is at the heart of what we do, with our focus being on digital innovation, which we define as taking research results to the market. We do that by creating ventures and nurturing them, and by trying to keep them in Europe.
In order to achieve that, you first of all need good ideas, good technology, and good talent. Europe has great ideas and technology in abundance, but attracting good talent can sometimes be a challenge. This is also true of scaling up, which is essentially problematic for two reasons.
First, many companies in Europe have a limited home market, which puts them at an immediate disadvantage compared to those who start in a larger one – such as those in China or the USA. As such, the European single market is very important here.
Then, you need money, and that can be obtained through venture capital investment, more of which is available in the USA than in Europe. Eventually, however, this type of financing has to be returned to the investor. And because there is less of this type of funding in Europe than there is elsewhere, there is perhaps the argument that we should focus more on companies that can generate a profit early on, rather than making huge investments. Of course, however, there is a trade-off, because if you can take a product or service to market quickly, then you are able to go for a global market share faster by pushing others out of the market (which is what we see American companies like Facebook, Google and Apple doing).
It is also possible to attract foreign money to Europe, and there are already many Chinese (and, to a lesser degree, American) investors here because there is a lot of opportunities to be exploited. But the risk of attracting foreign investment is that, at some point, the influence centres of these ventures could go outside of Europe, as companies may relocate.
Making sure that the talent pool remains in Europe can be achieved be ensuring that the economy is doing well and that there is a vibrant ecosystem for them to be a part of and for them to focus on. But these are things which cannot be achieved overnight.
How would you describe the current appetite for the commercialisation of innovative products and services in Europe? Is it well-enough supported from a policy and funding point of view?
The appetite is now starting to grow in Europe, and governments have also come to recognise the importance of entrepreneurship. Indeed, this is visible at both the national and European level, where the focus is on digital innovation next to doing research, and not instead of it.
At both levels it is also clear that governments are supporting the commercialisation of research by providing funding for various areas – such as the announcement of €1.5b over five years in France to address AI, while the EU has a large investment fund, for instance. Governments do what they can, but, of course, there is also the need for significant private investment as well, and the vital landscape of venture capital is now recovering in Europe, although relatively slowly.
In the digital arena, a lot of money has been drawn out of Europe into American companies, with some of the big corporations – such as Apple, for example – having a huge amount of capital which remains unavailable for investing, which means that it is essentially useless.
It is therefore important to try to mobilise that capital, and if the companies are unwilling to do that voluntarily, then we are now seeing national governments looking at different forms of taxation so that they can access at least a part of this stored capital and invest it into the economy.
What role do you feel programmes such as Horizon 2020 and its successor, Horizon Europe – and perhaps the new European Innovation Council (EIC) – can play?
The European Innovation Council puts a significant focus on innovation, as the name suggests, while, from the digital perspective, Horizon Europe is a much better programme than H2020 because it has much more emphasis on digitisation and a much more prominent focus on digital innovation.
Of course, the EIT is a very strong element in the Open Innovation pillar here, and the European Commission is trying to broaden that with the EIC. However, there is a sense that building on what the EIT has already achieved would make things go much faster, rather than beginning again from the start and going over ground we have already covered.
H2020 was criticised by some parties as having too much of a focus on commercialisation and perhaps too little a focus on the research itself. What are your thoughts on that?
Within Horizon Europe there is an effort to strengthen the European Research Council (ERC) which, of course, focuses on basic research, while a similar strengthening of the Marie Curie instrument, which focuses on talent, is also working to bolster this area of the R&D&I landscape by strengthening the research capabilities of our universities. This is an extremely positive thing, and it demonstrates that all areas of research are being supported at the European level via the Framework Programmes.
While it is important to develop new technology, it is also crucial for this technology to be made profitable by bringing it to the market, so that the innovations can continue to happen. As such, an emphasis on commercialisation at the European level continues to be fundamental.
However, it is not only about private commercialisation; it is also about public procurement, and it is important to note that government spends huge sums on technology across the board, and they can therefore act to drive digital innovation forwards; indeed, next to markets, governments will play an important role in driving social innovation, too.
Would you agree that there is perhaps too much focus being placed on publishing and subsequent citations on the part of academics, rather than on the commercialisation of promising research results? Is this changing?
I think academia should reflect on their incentive system. If it is only possible to become a full professor if they have reached a certain publication level, then of course that is what people will work towards.
The question, therefore, is what the role of the university should be? Should it be based on the model of the traditional university, which combines education with research? Or should it be based on what might be seen as a more ‘modern’ model, whereby a knowledge triangle is used (which the EIT also follows) which also brings a business component into the equation?
But, this certainly goes back to the incentives system – typically, research within a university is seen by many as being more important than the education element; if a faculty member is a great educator but has a relatively low publication or citation rate, then they are less likely to be able to attain a full professorship than a counterpart who has concentrated on the opposite. Education should at least be on an equal level to research; and commercialisation should also be a part of this.
In the USA, this is already evident: successful researchers in the United States will tend to have both a very good publication list and a very good patent list as well. In Europe, we don’t see many patents by academics on their publication list websites. So perhaps a positive development would be for academics to be judged on both their h-index and their patent list.
In certain sectors, venture capital funding needs to be long term. Is that is something which puts investors off?
No, because there are areas which have a shorter return, there are those which have a long return, and there are those that will never have a return but which are nevertheless important, and there are actors in all those domains. As such, there is a need for investors with a shorter interest to drive things forward and to ensure that the speed is maintained; there is a need for investors who have more patience and who can enable systems changes; and there is a need for investors who don’t care about returns, such as governments.
While there is no real need for any of these stakeholders to stray into any of the other areas, there is a need for the system as a whole to be looked at to see whether the total investment by the different players is well balanced. And, at the moment, there may be too much of a focus on short term digital innovation. This is certainly true in the digital sector, where much of the innovation focuses on apps despite there being too many on the market already, at the cost of a faster deployment of high performance reliable ICT infrastructure. Here, I am a little concerned that sometimes those areas receiving the hype – such as AI, ML, Blockchain – get so much attention that more fundamental innovations become underfinanced.
When it comes to smart specialisation and technology transfer as innovation drivers for regional growth, what more can be done? How can EIT Digital help?
Regions need to think about how they want to invest when it comes to digital innovation. Many regions tend to go, again, for the areas receiving the hype – such as 5G, the Internet of Things (IoT), artificial intelligence (AI), blockchain, and so on. But what they fail to understand is that these are things being done all over the world, and they need to ask themselves whether they, as a region, are in a position where they can not only compete, but can win.
They need to understand what their unique selling points are. In the digital innovation world especially, it is crucial to be aware that it is a global marketplace and that a lot of software moves around very quickly, so they need to see what it is that makes their own region special: do they have a special talent base that is difficult to move? Do they have knowledge and innovation constellations which allow them to create a strong position? When thinking about smart specialisation, the focus of the ‘smart’ element should be on identifying these strengths and then seeing whether they can be competitive by investing in digital innovation.
EIT Digital can help by comparing what other regions are doing; we can offer an outside view into a region and perhaps explain why they won’t be competitive in an area they had originally thought they were competent in. Whether they take our advice to look at another area is, of course, finally up to them.
Moving forwards, how will EIT Digital continue to support European entrepreneurship?
Our main focus on entrepreneurship is taken via three different angles:
- We are attracting talent into our education programme on a daily basis, and this has a core focus on entrepreneurship;
- We run a pan-European accelerator which focuses on growth – here we support our scale ups and grow them, and over the past five years we have been able to raise over €400m of private investment for our portfolio; and
- We are in continuous dialogue with our innovation, research and business partners to do what is termed ‘pre-incubation’. This ensures that we extract the technology from the knowledge and build teams around it, creating ventures that we can then push into local incubators to pick up later when they have the potential to be scaled up in the accelerator.
This article will appear in SciTech Europa Quarterly issue 28, which will be published in September, 2018.