Eurozone: A Horizon Too Far

Nothing quite sums up the opinion of Horizon 2020, an extensive new European government program for innovation, better than a plea from its most powerful member state for me to get involved. I would – under certain conditions – if the European Union as a sign of uncharacteristic self-awareness would put in the call.

For the uninitiated, the European Union government just earmarked €79 Billion over the next six years for research and innovation. On the surface a beautiful testament, amidst much fiscal conservatism, of the unwavering faith in a brighter future for Europe.

The leaders in Brussels are beating the drum in excitement, and the stampede for a piece of that tax payer’s money has begun.

But Horizon 2020 is fraught with problems, not uncommon for a government controlled program deployed to stimulate a competency (innovation) that could not be farther removed from theirs (governance). The specificity of the program deliverables is lacking, the method of change undefined, with too many moving parts and dependencies, and all-too-many places for the cunning purveyors of the past to nestle and hide.

 

The blend

The inexperience with the full value chain of the business of innovation shines through every part of the EU communication around this new program, the same cluelessness by which wannabe entrepreneurs often present their concoctions to investors.

I refer to the continuous downstream optimization of either, leading to the association with the blend theory. A culinary, and thus more universal way of describing the fallacies of a thesis.

The simple explanation and gist of the blend theory are that even a mix of the best ingredients does not necessarily yield a dish worthy of consumption. One needs the experience of a cook to understand which element goes in at what point in time and what portion. A recipe invented by a chef spelling out the specifics, executed on by an experienced cook who knows how to deviate from the formula when the inevitable circumstances warrant an immediate response.

Relating to Horizon 2020, there is no proverbial chef, a leader in the EU kitchen with the ability to deliver a viable recipe using the individual disciplines of science, research, industrial leadership, societal change, innovation, small and medium-sized businesses, and modern economics.  Nor is there a cook who knows how to deal with trials and tribulations in each to yield an outcome worthy of support.

The governing body of Europe still has not figured out a startup is not anything like an SME (small to medium enterprise), venture capital is not private equity (utterly different risk profiles), research is not innovation, industrial leadership does not necessarily equate to socioeconomic value, and sustainability is predicated on renewability.

Having focused on the economics of innovation for a long time now, I can tell the recipe of Horizon 2020 confounds the consequence with the cause of economic development, and worse contains the improper ingredients to satisfy the economic digestif.

 

Discombobulated

Here are my concerns from the top (notwithstanding hundreds of red flags and misaligned bottom-up):

First: Research converts poorly to marketable end-products (way less than 1:50). The long to develop meaningful research is incompatible with the short term milestones of creating a business around it. Hence one should not use research and innovation in the same context or sentence, nor have singular metrics to determine their viability. Research is a consequence, not a cause of economic development.

Second: The role of government is to spawn the development of free-market mechanisms (which do not exist today), not to actively partake in the creation of artificial constructs as a participant or artificial sponsor of a marketplace. Government is just not equipped to deal with the dynamics of the private sector as a participant, and for this investment to create traction the private sector needed to be spurred on and held accountable to materialize a meaningful outcome.

Third: I believe in an independent instrument (government-sponsored if you must) to support the development of research in areas where that research can promise to reach tangible and renewable socioeconomic value. I don’t agree with Neelie Kroes’ projects to cure the ill (brain damage recovery) fit that category, as the longevity of our evolution is predicated on its robustness, and I am sorry: not on extending our weaknesses. Again, projects of importance are those that yield renewable value (aplenty), rather than sustainable value (the inverse). For nothing in life is sustainable, and everything is – at best – renewable.

 

More good money after bad

Projects like Horizon 2020, announced by the government with big fanfare often die on the vine with limited or vague results to show for. Because they end up being managed (not unlike the failings of a now silent Startup America) by “the experts” who perpetuated the lagging performance of the past.

So, unless the EU picks a great new leader, ready to ruffle some feathers, with a macro-view that serves a tightly managed holistic purpose to run this program, I am convinced much of this money will not help the evolution of Europe. As indicated by people who contacted me from the member states.

Economic development, the assumed yet unstated goal of this program, is best achieved by the adherence to the new economics to secure a more egalitarian exploration of merit. Not by yet another government-run program that accelerates more consequences of a dire past.

 

 

Let’s lead the world by example with new rigors of excellence we first and successfully apply to ourselves.

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