The U.S. is the world leader in software, and Asia Pacific leads in hardware. So where does Europe – which lacks an Amazon, Google or Samsung – stand in the digital landscape? In a new study, Europe—Digital Superpower or Second-rate Peripheral Player, Cognizant investigated where work of the future was scaling and how Europe fares in terms of digital leadership.
Start-ups are the lifeblood of digital innovation, and despite the increase in start-up activity in Europe, it has some way to travel before we match the start-up firepower of the US. For example, the ratio of start-ups between the US and Europe is 4:1; US start-ups raise eight times more funding than their European counterparts, meaning it is easier to find VC money for good ideas.
On the other side of the world, the Chinese model for digital innovation is moving at an astonishing rate (warp speed) copying and augmenting good ideas. China is the country to watch. eCommerce, autonomous cars, ehealth, smart cities, agri-tech, etc.: it’s all there and it’s developing fast.
Take Shenzen, for instance: home to just 200,000 people a mere 30 years ago, it is now a tech metropolis with a whopping 15 million residents. Shenzhen is where Chinese tech superstar Tencent is based; Tencent is like Amazon on steroids and now sells web services faster than Amazon. And it’s worth remembering that 10 years ago Shenzhen was the place to build and ship cheap, low-quality products; today it’s a high-quality, fast-prototyping hub for makers and start-ups all over China.
What research uncovered in Europe is a haphazard landscape of rapidly percolating pockets of digital activity scaling at different trajectories. If we can figure out how to coordinate and orchestrate them, then business leaders can adapt to the ever-evolving consumer expectations and the radical new technologies that appear seemingly instantly on the digital landscape. Europe needs a compelling unifying vision for work in the future and digital leadership. Because until it gets one, its digital firepower will be left fragmented and scattered.
Some good work has been done under the auspices of the digital single market, but the raft of regulations mostly focus on copyright issues around music streaming services like Spotify, video-on-demand platforms like Netflix, news aggregators such as Facebook, and user-uploaded-content platforms found on YouTube. Business leaders and European firms now need an activist approach to shaping markets and regulations and channeling stimulus downwards through cross-regional funding. This is what Europe does so well (check out Horizon 2020) and it could be a third way for Europe to thrive between the entrepreneurial firepower of the US and a rapidly emerging China that is throwing everything at the Digital wall.
The study found a rich mix of factors in play in Europe—not least the growing presence of an ambitious entrepreneurial class, talented workers and dense support networks that enable people to thrive. Together, they represent a growing Europe-wide digital ecology that could encourage companies to look inward into Europe for digital leadership, rather than turning toward the U.S by default.