Innovation: What makes this race worthwhile - EU monitor

EU monitor
Wednesday, February 26, 2020
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Source: M. (Maroš) Sefčovič i, published on Thursday, July 7 2016.

Steve Jobs famously stated that innovation "distinguishes between a leader and follower". I would argue that it also applies in the macro level; it is also what distinguishes between markets which lead the global economy, and those which follow behind. Why? Because it embodies a transition from the old economic model to the Fourth Industrial Revolution; and more importantly: from the linear growth rate to an exponential one. Let me explain.

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"The economy, stupid" (James Carville)

The Digital Revolution has transformed practically every aspect of our lives but in economic terms, perhaps the most radical change is the drop of production and consumption costs. This article, for example, does not 'exist' in the physical world; I did not write it on paper and its dissemination is solely digital.

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My costs of producing this article and yours for reading it are therefore near zero. With no printing, transporting, advertising, stocking or selling - the only associated expenses are our appliances' electricity (which might be free if you're producing your own) and our connection to the Internet. If you choose to share this article, your costs will be near zero; contrary to the time when sharing meant having less for yourself or investing in more material to produce more.

This might seem obvious as we are now so used to consuming online content. But this new logic has given rise to a whole new way of doing business: direct client to client retail (such as Uber and Airbnb), sharing of goods and services (such as car sharing or alternative currencies), etc. Some of the new business models are controversial, most of them highly disruptive, but none of them are ones we can ignore. Even energy production or financial services, which traditionally required large centralised resources and were therefore only possible at national level, are suddenly crowdsourced, with the distinction between consumers and service providers consequently blurring out.

Exponential potential

This brings me to the second change I've mentioned above which is the pace of growth. In the physical world, there was a correlation between increase in industrial input (raw materials, machinery, human resources) and output (final products). Growth was therefore linear. With near-zero marginal costs in the digital world we are witnessing exponential growth in a wide range of fields. Producing an online platform for 10 thousand or 10 billion users costs almost the same (the difference would be mainly in the necessary processing power).

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We have seen this new growth rate across many fields and over several decades now. In fact, researchers at the Singularity University have shown that any field that becomes digital, follows Moore’s law and starts seeing exponential, rather than linear growth. They argue that their price performance would start doubling every 12-24 months (hence, in exponential pace); whether in robotics, nano-computing, digital medicine, biotechnology, solar energy etc.

This new business model has brought some theorists to believe that extreme poverty can soon be eradicated, that we will be able to work less and have (access to) more; that we will switch from producing goods to producing social services. It paints a rather positive picture of an emerging societal structure which is more sustainable, enjoyable, and just.

Exponential Organizations - Salim Ismail, at USI

Video of Exponential Organizations - Salim Ismail, at USI

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In the global race for leading this change, Europe is a front-runner. This is especially true when it comes to the energy transition to a low-carbon economy. I am astonished every year by the level of advancement and creativity when visiting Germany's international Hannover Messe industrial fair, in regions like Vaasa, Finland which I visited along the Energy Union Tour, or in Dutch city of Eindhoven which has positioned itself as the world's most inventive city with more patents per capita than anywhere else in the world! Even the table at the top of this post manifests that Europe is well ranked on a global scale (half the world's 10 most innovative countries are EU Member States, showing the strength of Europe's entire common market).

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Does that mean we can now sit back and enjoy the results? Absolutely not. Our commitment to steer, promote, and accelerate innovation in general and greentech in particular - has never been higher.

At a European level, a great deal has been achieved through the Strategic Energy Technologies (SET) Plan. Since it was launched in 2007, annual total R&D investment in the EU for low-carbon technologies increased from €2.8 billion to €7.1 billion in 2011. That's over 250%! The Commission will build on and complement the work in the forthcoming Integrated Strategy for Research, Innovation and Competitiveness.

The Dutch EU Presidency, which ended last week, also created a range of opportunities to showcase, and promote best practices. I have personally met with numerous European entrepreneurs, researchers, and startupists who dedicate their energy to improve our energy - in a sustainable way.

Aftermovie Startup Fest Europe week 2016

Video of Aftermovie Startup Fest Europe week 2016

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But Europe cannot solve climate change alone. This was the reason for our great efforts to reach a global agreement in Paris last year. Now comes the time to deliver on the historic deal.

I was therefore delighted to announce that the EU joined President Obama's global Mission Innovation initiative, which brings together all major economies which are willing to double their research and development spending on clean energy - over the next five years.

Mission Innovation

Video of Mission Innovation

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Finally, civil society and research organisations have also been playing an important role in steering European innovation forward. One very good example is the i24c Report, which provides excellent food for thought on how we can steer this change. Another inspiring project of two very brave men, is the Solar Impulse plane which is about to conclude its flight around the world without one drop of fuel. They are an excellent proof that, indeed, the #FutureIsClean, that it depends on our ability to drive innovation.

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As you can see, innovation is a "relay race", made up of many sprints. It requires the support of governments and international organisations, civil society and activists, academia and researchers. It needs the best of our imagination in order to turn 0s into 1s, and 1s into 100s. It needs you.

Will you be next to take the baton?