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With the internet of things, the US-dominated internet is becoming a competitive factor in the EU-dominated production industry. How can the “old continent” boost its competitiveness and support digital champions?  Would PayPal and Tesla Motors founder Elon Musk also have been able to grow his business in a European garage?  Or would the safe smallness of his environment have prevented him from it?
Questions like this were discussed by Prof. Dr. Elgar Fleisch (University of St.Gallen/ETH Zurich) and researchers from the Center for Digital Strategies at the Tuck School of Business, Dartmouth College, USA. Together with business experts from major corporations and venture capital companies, as well as start-up investors and corporate founders, they worked out a “5-point plan” to boost the global competitiveness of European high-tech start-ups. The center was lucky enough to host Elgar here at Tuck as he was working on this paper.
This graphic (included in the whitepaper) explaines the findings visually:

5-point plan to balance out the risk-averse European culture, in summary:
“Prosperity, political stability and social security encourage a risk-averse culture in Europe. This frequently acts as a brake on entrepreneurial ideas and economic stimuli.” This is how Elgar Fleisch explains the basic idea of the action plan which he has drawn up with the team of experts from business and academia. “Innovations require the courage of entrepreneurial freedom. This is why our 5-point plan is entitled ‘The Revaluation of Risk-Taking’”. Below, an excerpt from the package of measures, which are described in more detail in the white paper:

• Overcoming the “not-invented-here” phenomenon: (big) European companies should open up to newly founded firms. Conducting research and developing new business fields with start-ups will help both established and new companies to move forward. (Big) companies should also consider the takeover of start-ups in their strategies.
• Not punishing the venture capital industry: in Europe, the venture capital industry is strongly underdeveloped in the middle sector. Investors are called upon to invest in professionally managed venture capital funds in order to counteract the sobering performance statistics of the industry. Regulators are requested at least to refrain from punishing the urgently needed “risk-taking capital” in comparison with other capital investments.
• Welcoming international talents: since a majority of successful founders are immigrants, the third package of measures calls for simple and lean immigration procedures for international talents – but also simple cross-border employment conditions for employees within Europe.
• Encouraging the founding spirit in the education sector: the fourth package of measures is aimed at those who produce “risk-taking talents”. Start-ups at universities and other institutions of tertiary education should receive more encouragement. In many places, teaching staff still have to defend themselves when they support start-ups. A further measure suggests that teachers and children should learn the subject of “handicrafts” in the sense of “making” and programming skills.
• “One digital Europe”: the fifth package of measures advocates “one digital Europe”, i.e. a minimal harmonization of digital framework conditions in the most important markets in order to be able to reach an often absolutely necessary critical size in the home market more quickly and more economically.

We invite you to read the full paper and explore these five points in their entirety. Do you agree that the VC industry could be key in Europe’s success, that the makers movement is a vital tool and that the idea of One Digital Europe is possible? Please share your thoughts.
University of St. Gallen