SPECIAL REPORT/ The European Union’s “digital champions”, an industry coalition, wrote an open letter Monday (5 May) to the lead candidates vying to become the next European Commission President.
The 19 leading industry figures, advisors to the Commission, called on the presidential candidates to “present a digital strategy fit for the 21st Century.”
“There can be no convincing strategy for delivering growth and creating jobs without significantly accelerating Europe’s performance on digital advancement,” the letter read. The digital sector is expected to grow seven times faster than overall European Union gross domestic product in the coming years, it added.
Commission Vice-President Neelie Kroes is in charge of the executive’s wide ranging digital agenda, which is held by supporters to be an integral part of Europe’s economic recovery. Digital entrepreneurship is an important part of this effort.
The letter stated that tech entrepreneurship will power the economic recovery. The app economy workforce is predicted to triple its revenues from €17.5 billion to €63 billion from 2013 to 2018. That translates to 4.8 million jobs by 2018, according to the EU executive.
The strategy also aims to “digitise” existing traditional businesses. For example, an Italian furniture-maker can transform itself into a business creating custom-made furniture for online clients across Europe and the globe.
Irène Braam is Vice-President for Government Relations at Bertelsmann, a worldwide publishing group. She’s seen a large switch to digital publication in recent years.
“Digitalisation is very clearly the main focus of the company,” she said.
But European policymakers face considerable challenges in delivering a unified approach across the EU.
The digital agenda already cuts across a number of different Commission directorate-generals, with responsibility for employment, industry and education.
Entrepreneurs met recently in Brussels at a conference, New Frontiers for European Entrepreneurs. Varying national rules on taxation and data protection ran the risk of stifling the growth these tech businesses can create, they said.
Mike Sikorski is CEO of Huggity, a company that takes giant photos at events like football matches. Fans are able to find themselves in the crowd at the match and share the pictures with their friends.
“Take data protection,” he said, “there is one EU data commissioner but the legislation in countries is still different.
“When we go to Germany, the legislation is completely different. So why do you have the European one? Either you have it or you don’t.”
Mario Campolargo is the Director of Net Futures at the commission’s DG Connect. He said, “Entrepreneurship in the EU is a very large challenge. That comes from education, taxation, innovation […] unlike the US, we are a multi-national integrated market that is not yet perfect.
“We have to have a look at the regulatory framework we have in place.”
Taxation is an area which poses particular difficulties when it comes to harmonisation, as any EU tax law requires unanimity from all member states to become law. That has historically proved very difficult to achieve.
Campolargo added the EU was trying to identify the different elements that needed to be harmonised to promote entrepreneurship.
“We support entrepreneurship but we also have to create conditions of the wealth of all of society in general. We can’t boil the whole ocean,” he said.
Finance and training
Start-up companies can’t begin without investment. Access to finance for business is another policy area that requires serious attention. European business has traditionally relied on bank financing but, since the financial crisis, banks are not lending as they used to.
“The only difference between us and the US,” Sikorski said, “is about five times less money.”
Barriers created through different languages was another reason cited for Europe’s relative lack of success compared to the US.
There is also a knowledge gap between the number of people who could be employed by digital ventures and those who have the skills to actually do those jobs.
Campolargo said, “Even though we now have huge youth unemployment, there is not quite yet a perfect match between skills and workforce.”
The commission yesterday launched an eSkills campaign under the umbrella of the EU’s Grand Coalition for Digital Jobs (read more here). DG Employment is also running an initiative called New Skills for New Jobs to develop better matching-up of skills and labour market needs. The commission already runs a series of initiatives across different departments, aimed at promoting innovation and fostering a culture of European entrepreneurship.
Startup Europe introduced a commission one-stop website for entrepreneurs. Other forums include the Web Investors Forum, a crowdfunding network and Tech Allstars group run by DG Connect.
The conference was chosen to launch Watify, a new platform to address doubts entrepreneurs may be having about setting up their own company. An Erasmus exchange program for young entrepreneurs is also underway.
Since 2010 the European Institute of Technology has provided entrepreneurship training for more than 1,000 students and contributed to the creation of more than 100 start-ups.
In March, The European Commission created a new forum dedicated to enhancing digital entrepreneurship in Europe, and picked John Higgins, director general of trade association DigitalEurope as its president. The forum brings together large corporations, SMEs, trade unions, civil society, policy makers, academia, as well as digital entrepreneurs.
The Commission also needs to bring member states on board if it is to be successful.
Campolargo told delegates, “We are talking about the more significant instruments to work with member states and the council and define a playground where innovation can emerge.”
Successful entrepreneurs have written the Startup Europe manifesto of 22 recommendations to encourage innovative new business.
That has already had an influence in countries such as Greece, Campolargo said. Business leaders have taken aspects of the manifesto to their government like a tax break for the first four months of business.
Digital entrepreneurship cuts across a huge amount of policy areas and national and European responsibilities. This leads to the risk of digital issues falling through the cracks, while politicians such as Kroes argue it should be hardwired into all policymaking.
Her digital champions have called for the next president of the commission to streamline the digital portfolio across all policy dossiers. They want the successful candidate to take personal responsibility for success in this “crucial area”.
Shortly after the letter was published European People’s Party candidate Jean-Claude Juncker said he would become the commission’s first “digital president”. The other leading candidates soon made similar comments.
A president taking personal responsibility would be an important advantage for those trying to create a new culture of European digital entrepreneurship. It’s a driving force that will be needed to overcome the obstacles that exist at national and European level.
The EU's strategy to help digital technologies, including the internet, to deliver sustainable economic growth is called the digital agenda. Despite widespread recognition of its importance, there remain difficulties in overcoming national barriers to developing a culture of digital entrepreneurship.