Innovation Europe > News > Innovation EU Vol2-1 > Building the European innovation society

European innovation is crucial to European society and the cornerstone of its future development. Not surprisingly, then, the Commission has made innovation a central theme in its Europe 2020 strategy, its new agenda for smart, sustainable and inclusive growth. The strategy identifies a need to create an “Innovation Union” so as to ensure that innovative ideas can be turned into products and services that create growth and jobs.

The strategy places European innovation as being key to Europe’s future. It is the only means of tackling the major societal challenges facing Europe, such as climate change, scarce natural resources, the ageing population and better healthcare. European innovation can soften the impact of demographic change and help us to tackle the problems of broken communities. At a time when consolidation of public finances will be necessary, European innovation can help us to get more for less in the public sector. It can cut our dependence on foreign energy and help us to meet our growing energy needs in sustainable ways. Above all, European innovation will help us to build a strong and sustainable model of growth.

So, if we need more European innovation, how can we make it happen? In many ways, this question makes little sense. Innovation is something we do with people, not to people; it cannot be organised by decree. Scientists, researchers, entrepreneurs and their employees, investors, consumers, public authorities and ordinary citizens will make Europe more innovative.

Some would argue that the best thing policy-makers could do would be to keep out of the way. But people do not act in a vacuum. They act with a mindset and in a framework that either discourages or incites them to try new things. Carefully conceived policies can help by nurturing that mindset, and creating the right conditions for European innovation to thrive.

Recognition of European innovation as a policy enabler has put it centre stage in the EU’s future planning. Not only is European innovation a key plank of Europe 2020, but heads of government, meeting in the European Council, have also called for a European Plan for Innovation. The two now run together, with the Plan – due later this year – expected to provide detail on Europe 2020’s ambitions.

Doing well, could do better

Guided by the Lisbon Agenda for Growth and Jobs, since 2005 the EU has developed an ambitious European innovation policy. The so-called Broad Based Innovation Strategy set out a wide-ranging programme, including identifying new areas for action and introducing a strategy to enable the creation and marketing of innovative products through Lead Markets. At Community level, the Small Business Act was agreed, aiming to make the EU a breeding ground for entrepreneurs and SMEs. EU states and their regions were encouraged and helped (in particular through Cohesion Policy) to improve their innovation policies by implementing national and regional innovation strategies and developing evaluation.

Almost all member states have improved their innovation performance as a result. The innovation gap between the EU and its key competitors, the US and Japan, has narrowed over recent years. Nevertheless, significant gaps remain in terms of business R&D expenditure, international patents and numbers of researchers. Surveys such as the European Innovation Scoreboard show a mixed picture, with wide variations between EU countries and between sectors. Thus, there is still room for improvements, both at European and at member states level.

Reinventing innovation

To identify the gaps and help inform reflection on future European innovation policy under Europe 2020, the Commission has undertaken a series of consultations and reviews. One of the key stakeholders consulted was, of course, the business community. The Business Panel on Future European Innovation Policy was set up in 2009. It drew together respected business leaders to give their views on future priorities and also involved external thought leaders as well as an online consultation .

The Panel’s report, entitled “Reinvent Europe Through Innovation”, offered a detailed and perceptive critique of European innovation policy. While acknowledging that innovation has been central for the EU over the last decade, the priority has been in “investing in knowledge rather than utilising it rapidly and powerfully for societal benefit and development”. The Panel continued: “Innovation is global, with increasing competition for best ideas and applications, and Europe must stand out. More technology is not the solution.”

Current European innovation policy has a number of weaknesses, the Panel points out. It fails to leverage the power of networks and social innovation; community-level actions are not orchestrated around major societal challenges; investment is not sufficiently ambitious or strategic; European innovation is not open to the creativity of a broad range of people and ideas; and policy does not anticipate the new institutions and processes that will drive future innovation.

The experts urge the EU to broaden the concept of European innovation, basing future action around compelling social challenges. Policy-makers should set clear innovation targets, and launch ambitious European innovation initiatives around major challenges with actions synchronised between countries. The Panel also calls for innovative financing models; investment in future infrastructure to unlock its potential; and open innovation environments that foster new collaborations and partnerships.

Towards a european innovation plan

The Commission responded to this and other inputs through a Communication issued in September 2009. The Communication foresees action in four areas.

The first is financial support for European innovation. Between 2007 and 2013, E86bn is earmarked for research and innovation under the Structural Funds, while further funds are available under the Seventh Framework Programme (FP7) and Competitiveness and Innovation Programme (CIP). Access to this EU funding needs to be speeded up and the rules for participating in projects simplified, the Communication says.

The provision of venture capital is still an issue. So, the Commission will look at how to develop innovative financing models, based on existing instruments and building on partnerships with other financial institutions, such as the European Investment Bank (EIB). We also have to upgrade our vital infrastructures to build a sustainable knowledge economy.

The market conditions needed to facilitate and stimulate European innovation is the second focus area. Europe has achieved a lot here, notably the Small Business Act and the Services Directive. We have to make sure that any new regulations support European innovation. And we need a new approach to intellectual property. For patents, in particular, the EU’s current regime is costly and fragmented and we cannot afford this any longer.

In addition, the new EU state aid rules for research and innovation are due for review soon. This may be an opportunity to introduce further changes, for example higher ceilings for aid in areas related to the major societal challenges.

The Communication’s third priority concerns more and quicker market uptake of innovative products and services. The Community will continue to develop and improve the “lead market” approach in sectors such as e-health, internal security, eco-innovation and eco-construction. This requires a serious look at standardisation, which can help European innovation.

But with product lifecycles growing ever shorter, standards are often too slow. There are opportunities to harness the full potential of public procurement for innovation purposes. We need to make it easier for public authorities to act jointly to procure new technologies and innovations, which would be too expensive or risky for them to purchase individually. Also, there should be a bigger slice of the action for Europe’s small, innovative firms. The Commission is proposing a new EU programme aimed at them.

The final area is people. Innovation is now needed in all walks of life. So, we need to re-think education. There must be less focus on knowledge, and more on the “soft” skills – creativity, organising work independently and working in teams. People need to “learn to learn”. EU competences are limited in this area, the Communication notes, but it should add value where possible, for example through experience-sharing between member states.

A subsequent public consultation showed broad agreement with the Commission’s analysis and active support for the initiatives and actions proposed. Respondents stressed the need to simplify and streamline EU funding programmes to make them more user-friendly. The European innovation programme landscape was thought to have rules too complex rules and be too bureaucratic.

Better co-operation, co-ordination and complementarities among regional, national and European innovation programmes was another area identified. Stakeholders emphasised that implementation of the European Innovation Plan should be synchronised at EU, national and regional level to unlock innovation potential. Research, innovation and education policies should be better aligned around the knowledge triangle to improve synergies and better nurture the EU’s knowledge base.

Respondents pointed out the role that innovative SMEs play in the growth of the European economy. They called for the European Innovation Plan to pay specific attention to SMEs and facilitate their participation in funding programmes. Specific suggestions included: giving a more pro-active role to EIB in support mechanisms; improving European venture capital markets; stimulating new and more effective innovation processes; facilitating access to innovation support schemes; and enhancing SMEs’ participation in public procurement.

In addition, there was strong support to orientate European innovation policy around major societal challenges. Education and training were also explicitly mentioned as fundamental drivers of innovation and as key elements of the knowledge economy. In contrast, there were divergent views on whether European innovation policy should have a sectoral focus. In addition, stakeholders highlighted the substantial potential for innovation in public services, and that new ways to foster innovation in the public sector and exchange best practice should be exploited.

A complete re-focusing

The Commission expects to publish the European Innovation Plan in autumn 2010, once it has had time to consolidate the results of the public consultation, the Business Panel report, and other developments around the Europe 2020 agenda.

What is promised is nothing less than a complete re-focusing of R&D and innovation policy on the challenges facing European society. Every link in the European innovation chain needs to be strengthened, from “blue sky” research to commercialisation. In addition to the measures highlighted above, one of the actions foreseen under Europe 2020 is to launch “European Innovation Partnerships”. These will bring together actors from both the supply and demand sides, at both EU and national levels, to speed up the development and deployment of technologies needed to meet the societal challenges. The first such partnerships will be in areas such as: “Building the bio-economy by 2020”;“The key enabling technologies to shape Europe’s industrial future”; and “Technologies to allow older people to live independently and be active in society”.

Commission President José Manuel Barroso is taking a close personal interest in the European innovation agenda. Indeed, he is on record as saying that he sees building the Innovation Society as “an important part of my legacy. Because I am convinced that nothing is more important for Europe’s future.” With such a high-level champion, it is clear that the future is bright for Europe’s innovators.