Eurostat published figures for EU annual R&D and innovation spend. For some countries (Italy, Netherlands, and Luxemburg) there is good news: innovation efforts have soared compared with the EU average. Others, on the other hand, need to worry.The Eurozone invests around 2.5-3% in innovation and R&D, which might not be enough for changing scope/scale and evolving business to compete in the international arena. Unfortunately, spending on its own doesn’t guarantee market evolution, unless the right mindset affects whole sectors. Furthermore, we know that innovation is not what it used to be, in research labs where a company was designing the next big market hit. Today it entails co-creation platforms, to accelerate practical solutions and empower larger society segments (education, transport, health care, products of origin, e-commerce and exports).

The EU member states have become more innovative in recent years (the EU closed half of the innovation gap with the US), but the innovation performance gap is widening between countries. Innovation performance has worsened in almost one-fifth of European regions according to the Regional Innovation Scoreboard 2014. The overall ranking within the EU remains stable, with Sweden at the top, followed by Denmark, Germany and Finland. Portugal, Estonia and Latvia are the countries that have improved most in recent years. However, growth in public R&D expenditure over the past few years was offset by a continuous decline in venture capital investments and R&D innovation investments in companies.

Innovation and R&D are means to empowerment, sustainable change and inspire people to act

On the other hand, we know that R&D usually takes place at larger companies, while the reality is that small enterprises make up the vast majority of the European market (they also account for about 50 percent of the employment market). So how will the small enterprises survive without R&D? Today in Europe only one in five small enterprises is involved in the innovation cycle, while this is the segment where the transformation and innovation change mindset must be applied. This is the segment that needs contemporary education, references, competence shift and digital agenda support from governments to thrive again.

Long list of barriers
We also know that R&D should be closely linked to practical, commercialized solutions to empower markets, societies, people and business. If NFC is to help a device manufacturer, imagine the benefits for a retailer. Along these lines, the OECD reports barriers to innovation and entrepreneurship (the list is long): bureaucracy, protected markets, low exploitation of broadband, and too many regulations that deter talent from taking risks and implementing business ideas (just in Greece they reported in 2013 having 555 legislative barriers to business). European countries need to work harder on the openness and attractiveness of EU research system, as well as on business innovation collaborations and the commercialization of knowledge, as measured by license and patent revenues from abroad.

Innovation is not a policy. In some European countries there are Innovation Officers, the government’s execution arm in planning innovation, to coordinate some EU funds and programs. But this is disconnected from market realities, forums, professional associations, and communities that could all have been part of a wider plan in each country to bring entrepreneurship to the forefront. Adding to this, many countries miss out on having a government CTO who would implement a long-term ICT plan for all public authorities and market segments (such as healthcare solutions offered as web and app platforms).

Innovation and R&D are a means to empowerment, to sustainable change and to inspiring people to act. They are about seeing the world as an open space to perform and introduce beneficial services and products. About bringing together the experienced “gray hairs” with the fresh, creative talent, to co-create what the world needs to restart. This is not going to happen simply through government legislation, but through governments pitching to their national audiences, showing that they must change their models and renew their ways. We need corporate incubators, large mentor networks, open universities for society and businesses, new mindset politicians, much more export-oriented start-ups. And we need passion.

Innovation still scores low in Europe overall because, in my view, we still look at our national turf, in our company territories and for a routine that we have been used to for years. Change runs faster than ever in the Networked Society. Will we embrace it? That remains to be seen…

Note: This post first appeared on the Networked Society Blog, 24 August 2015