From Cultural Mecca to Technology Powerhouse: How Europe is Redefining Itself

Paris – home of the Eifel Tower, the artist’s village of Montmartre, and the Mona Lisa, possibly the most famous painting in the world. In 2018, the French capital was also the focus of about $2bn in VC funding for tech startups. Berlin, once considered a magnet for composers, actors, painters and performers, has emerged as one of the fastest growing tech cities in the world. And the Scottish capital of Edinburgh, known for its historic castle and the Royal Mile, is now home to the third largest global congregation of unicorn companies.

These are but a few of the instances that point to the digital resurgence that is taking place across the continent. While tourists continue to flock to its countless museums, fortresses, and other places of historical and cultural significance – Europe, the birthplace of the first Industrial Revolution – is in the process of reclaiming its throne as the world’s technology powerhouse. And thanks to its impeccable infrastructure, high standard of living, and equitable access to education and opportunities, the continent and its people are well poised to drive innovation and progress.

As an EU resident for nearly two decades, it has been my privilege to watch Europe strengthen its technology leadership, especially against the recent developments around Industry 4.0. I feel that Europe is committed to a sustainable and secure technology-led, people-oriented growth paradigm. My belief was reinforced when, at the peak of the global digital transformation, in May 2018, the Europeans introduced General Data Protection Regulation (GDPR).

Human-centered Innovation in the age of Data-Democratization

GDPR is just one instance of the European Union’s active role in defining how technology impacts people’s lives. The pioneering legislation has not only set the stage for emulation in the US and China but is also a global landmark in the move towards data democratization and the creation of reasonable protections for reestablishing the primacy of the individual in the face of all-powerful corporations in this increasingly faceless, digital world.

Most EU governments today are proactive and exhibit a great deal of foresight in nurturing the growth of technology in ways that augment, rather than disrupt the lives of its citizens. As a result, it is no surprise that Europe has emerged as one of the most active technology adopters globally and while doing so has ensured that an individual’s right to data privacy is not lost.

To cite an instance, let’s look at smart mobility. Outpacing Asia and the US, Europe currently stands as the leader in embracing next gen automotive solutions. BMW & Daimler have come together to create a seamlessly integrated, sustainable ecosystem of car-sharing, ride-hailing, parking, charging and multimodal transport services.

Similarly, European airports stand unparalleled when it comes to overhauling air traffic controlling systems. The SESAR (Single European Sky Air Traffic Management Research) programme, undertaken across the region, offers new ways of managing flights between different sky sectors, and even digital control towers that are capable of handling traffic remotely. The initiative is further expected to have a series of direct impacts on the air transportation industry and environment, ranging from reducing management costs to cutting CO2 emissions by up to 10%.

We can also look at Industrie 4.0, the strategic initiative by the German government to position the country as a leading market and provider of advanced manufacturing solutions. Seen as the primary mover for the fourth industrial revolution by leveraging smart, digital technologies, the initiative constitutes a major paradigm shift from ‘centralized’ to a ‘decentralized’ smart manufacturing and production model. The momentum of this shift can be understood from the growth in Germany’s market for Industrie 4.0 solutions – spanning software, hardware and IT services – from €4 billion in 2015 to €6 billion in 2017, a 50% rise. We can expect this trend to strengthen even further, with a projected market size of €7 billion in 2018, and no sign of a slack in the demand.

Europe’s enhanced focus on innovation is also validated by a recent Deloitte Survey, which reports that companies across the continent are investing significantly in people, technologies and systems to retain the innovation momentum. Figure 1 below illustrates the scenario, with Analytics, Cloud and IoT leading the pack as the preferred area of investment for the companies in the region. The growth of Industry 4.0, in alignment with the other initiatives undertaken by the Europeans to foster a culture of technological innovation and adoption, can only be expected to strengthen this trend.

The Rise of Smart, Tech-Friendly Cities

European cities are not willing to fall behind this trend and are rapidly reinventing themselves as the smart equivalents of their global counterparts. Earlier this year, Vienna, the city of the waltz and the ‘Blue Danube’, emerged at the top of the Smart City Strategy Index for the second year running, while London came in second. This achievement bears testimony to the opportunities that Government-led initiatives such as the European Innovation Partnership on Smart Cities and Communities (EIP-SCC) have provided. Berlin, dubbed by some as the Silicon Allee, has emerged as one of the fastest growing tech cities in Europe with steady support from the local and central authorities. A significant fact to notice though in Berlin’s growth story is the contribution of its citizens, with surveys pointing out that 59% of Berliners were willing to actively contribute towards technological progress by starting their own companies.

I feel that the stage has already been set for an intense competition among European cities for skills and investments, and it is not just restricted to Vienna, Berlin, Paris or London. This rivalry includes Manchester, home of two world famous football clubs; to Gothenburg, the picturesque Western Swedish town on the Göta älv river, besides others like Zurich, Amsterdam, The Hague and Hamburg – with each city trying to position itself as the preferred destination. A common thread seems to unite these cities in their quest for progress and digital leadership – much like the famed pilgrim trails of old, where the leading cathedral towns vied for the attention of the faithful. It seems that this new age rivalry will only intensify with every passing day.

Again, Europe is fast emerging as the home to an exciting pool of researchers and institutions driving AI and robotics innovation. While the European Commission has already called for a €20 billion investment in AI to be reached by the end of 2020, leading universities like Cambridge, ETH Zurich, and the Technical University of Berlin are partnering with leading tech firms to drive innovation and adoption.

The continent also leads in the area of technology adoption, with various leading firms choosing Europe as their preferred destination for incubators and accelerators. Between 2008 and 2013, the ecosystem grew at about 29% CAGR, more than double of the 14% registered during the previous seven years. While the Silicon Valley still continues to lead the space, there is a marked shift that is taking place here, so much so that we are already talking about the European Silicon Valley.

These transitions are opening up newer vistas for the global tech services industry, who must now contend with the renewed European focus on attracting new investments and talent, rather than staying content as a consumer. Global companies have to rethink their strategy and align resources to make the most of the new opportunities presented by this scenario. Again, the looming specter of Brexit poses a major hurdle for both the Europeans and the global community alike, for they must now plan ahead for the challenges of labor, capital and technology mobility that is sure to arise as an aftermath.

Planning for the Future

I am confident that the continued support of tech-friendly public initiatives and a technologically-proficient population will help Europe break ahead of the competition. The EU’s focus on data safety, and the growing emphasis on smart living, are two key developments that I feel will be instrumental in positioning the continent as the next big destination on the global digital technology landscape.

While the US has been the leading innovator so far and continues to lead the field, the Europeans seem set to catch up with and overtake the Americans when it comes to the widespread adoption and implementation of new technologies. A combination of factors, including good infrastructure availability, tech-friendly consumers, relatively easier immigration procedures driven by open borders, and an existing comparative cost advantage vis-à-vis the US, is driving this transformation, and we can look forward to a revolution in the near future.

The change, however, can be expected to be constructive and peaceful, since some revolutions occur without a single bullet being fired.