World War for Entrepreneurship: The Great European Defeat
I’m on the Aegean Airlines flight taking me from Milan to Athens. Yesterday morning I was going the opposite direction, arrived in Milan and then took a bus to Turin. It was kinda weird, felt like a student going to the university at a different city. The reason for my visit was to participate to the grand closing of the “last-of-the-projects” for me.
The “last-of-the-projects” is the name I’ve given to an EU funded research & development project called “Lean In EU Women Business Angels”, simply because it’s the last one of this kind that I’ll be ever involved (after 10+of them). The purpose of that project is the promotion of female-lead early stage investments into female-led startups. I feel defeated.
Unfortunately, this war was lost long before was it fought. A little bit like the Native American had no luck in successfully confronting the invading European, or like the 18th and 19th century Empire of Chine had zero chances to defend themselves against the invading Britons. Simply, there have never been any chances to win.
Why is that?
Well, like most of the times, for a plethora of different reasons. First of all, the very concept of “female entrepreneurship” or “female-led investing” is fundamentally flawed. While in various times and societies dominant stereotypes have much to do with the equal access of both genders to the world of investing and entrepreneurship, as long as the universe of discourse concerns the EU into the 21st century, this approach is completely off. No, women don’t need special projects for starting more businesses or investing more aggressively.
If women, like almost everyone else, need something is some more care in education at all levels — where still much relevant work is left to be done. But when one starts thinking about special initiatives for promoting entrepreneurship within certain groups — let it be women, immigrants, people with disabilities a.s.o. — IMHO this act alone is a discriminatory one.
Let me make myself clear: It is perfectly fine and much needed to actively promote the concept of entrepreneurship to groups like the ones described above; this however has to be done in an open, barrier-free, inclusive way with a clear air of equality. Otherwise, if you start saying something like “I want women investors to invest in women-founded startups”, you are basically further enhancing the perception that this is a “special” and/or “different” group than the mainstream. This leads to a “silo” or “ghetto” approach which at the end does not let the group members to freely navigate around the open seas of entrepreneurship and creativity.
But there’s something much worse than that, which actually concerns all of the EU-funded projects and of course their numerous national, regional, municipal or even international equivalents: The structure and the process are wrong as hell!
Without wanting to enter into details, the process works more or less like that:
1. A political body (i.e. the European Commission) decides on a set of priorities for a programmatic period (say 8 years), drafts a plan of actions to promote these priorities and reserves the budget seemingly necessary to do that — For example, the European Commission few years ago came up with the so called framework program 8 (yes, there were seven other framework programs before that), later gave it the very inspired name “Horizon 2020”, reserved a huge budget in the order or €80B or so and the game was let to begin.
2. Then, a number of European bodies started to be allocated parts of this budget which then, under the supervision of the respective body, lead to the famous “call for proposals” which is a competitive process for consortia around Europe and beyond to do ambitious projects which are supposed to realize the overall program’s priorities.
3. Consortia are formed, proposals are submitted, negotiations are held, grant agreements are signed, projects are started, being coordinated and supervised, deliverables are submitted, reviewed, eventually accepted or rejected and eventually projects get finished, most of the times fruitfully and some others not.
As you can imagine, we are truly talking about an immense amount of works by numerous people in so many different organizations. That fact makes it so incredibly sad and bitter to accept that the vast part of this work is eventually useless and most of the respected deliverables will never find any other use other than possibly been delivered to the next EU project following some surface-modifications.
A pan-European tribe of the “EU projects people” has been created all around the Union. The can be found everywhere, from the UK to Cyprus, from Malta to the Netherlands and from Finland to Portugal. Tens of thousands of usually very smart and hard-working people, putting their intellectual capacity to work to do something that has absolutely no use outside the EU projects universe. If this is not a true tragedy, then what is it?
Somehow, it reminds me of a well-known policy across the continent which calls for massively hiring people into the public sector for reducing unemployment — and forgetting that in the mid- to long-term, this is absolutely unsustainable. Yes, EU projects do keep researchers, professors, academics and a very special type of entrepreneurs and professionals busy in doing them.
But at what cost are we doing all that?
Can we really afford the pertinent opportunity cost? Can we afford not enjoying the results of the work of these people should they be involved in truly useful, competitive work addressing the true needs of the society and the economy? I say we can’t and I say that we shall pay a very high price of turning our eyes away of this situation for more than 30 years. The time to stop this insanity in now — and it might be too late already.
It does not take it to be an expert to understand that an innovative product will not ever be described into a grant agreement. Never! It simply can’t, because at the time when the agreement is written no man on earth actually knows what the product is! So, in the unlikely event that the project team will create the right product at the right time, the pertinent deliverable will simply be rejected by the Project Officer.
Modern entrepreneurship is built around the concept of agility. Welcoming change in any part of the process is the cornerstone of product development teams. A number of methodologies such as agile, lean, customer development and many others have been developed to help teams create innovative products taking the right action at the right time.
Very unfortunately, the whole subsidies framework described above, simply cannot support this process. New approaches are necessary (perhaps the very concept of subsidy, of financial contribution, is to be questioned in most of the cases).
I’ve tried to explain above why Europe has lost the war of entrepreneurship against the US and possibly against China. The framework is just so bureaucratic, so slow moving, that has absolutely nothing to do with modern entrepreneurship. Put simply, the EU funded projects universe is all so 20th century, but we’ve already run almost 20% of the 21st one.
So, what should be done?
Basically I suggest that we have to re-think the role of State into the entrepreneurship development play. IMHO, this role is about making sure of the right conditions and of the equal rights and opportunities for all members of the society to take advantage of the conditions and try to grow themselves.
Education at all levels and research institutions should be much better funded by the State. This is crucial! Basic research should have access to the pertinent funding without having to be clowned as ‘applied’ or ‘industrial research’ — simply because no other source is available for numerous research groups and laboratories.
To me, this is a very important and largely overlooked aspect of the EU-funded projects structural problem: The fact that a very large number of researchers who who do basic research are not well funded by the State (yes, funding of basic research IS a job for the State) and then they simply pretend of doing applied/industrial research so they can get access to the pertinent funds — only for securing their survival.
After addressing the situation above it needs to be made sure that individuals and businesses are incentivized to take the risk of investing into early-stage, ‘applied research’ projects. Pure private funding with the sole purpose to develop technologies and products which will thrive into the market. No need for long proposals, no need for bureaucratic grant agreements, no need for lengthy project review meetings. Just a framework that single-mindedly need to get the work done.
Someone once said that “A camel is a horse designed by a committee”. Well, no offense to this beautiful animal, but this is exactly what’s happening in Europe and this is why we are losing the World War for Entrepreneurship: We are trying to develop creativity and competitiveness with schemes and instruments which are simply incompatible with these concepts.
Trying to conclude with a glimpse of optimism, while Europe has lost many and significant battles already in the World War for Entrepreneurship, the war itself is not over yet. We still can take action and make sure that our great country does not get economically and politically irrelevant in the near future.
Europe still is home to some of the World’s best universities and research institution. European culture still dominates the World. European societies still are the more open, free and fair society that mankind has ever lived in. The fundamental ingredients are there. We just need to wake up and get ourselves move! In the world of entrepreneurship there’s no entitlement to success. Quality and value have to be proven each and every day.
The European Union, National, Regional and Municipal authorities do have to understand one key thing: Entrepreneurship cannot be planned.
Their job is to create a fertile environment (primarily through investing in education and generally in a fair, safe and inclusive society of equal opportunities for All Europeans) and then let people make entrepreneurship flourish.
This will lead to the generation of a new wave of ambitious European entrepreneurs who, hopefully, will change the fate of our country in the World War for Entrepreneurship.