The European Approach to Universities supporting Innovation
European Institute in Washington, The Metropole Club
01 June 2015
Thank you for inviting me here today. It’s a privilege to address this audience in my capacity as President - or Provost as we call it - of Trinity College Dublin, the University of Dublin, and as board member of the European Institute of Innovation and Technology, the EIT - an organisation with a 3 billion euro budget and a mission to spur on European technological innovation.
I’d like to talk to you today about what the EIT is doing. And, as an example of universities and ecosystems in Europe, I’ll be talking about Trinity College Dublin and the city of Dublin.
The EIT’s approach to supporting innovation is new and radical, but before getting onto the ‘what’, let’s look at the ‘why’. Why has the European Union established an institute for innovation and technology? To answer this, let’s take a look at the current state of innovation in Europe.
This chart shows the EU’s global innovation performance – not bad, but distinctly below the South Korea, the United States, and Japan.
This next chart breaks down innovators within the EU. At the top are countries like Sweden, Denmark, Finland, and Germany. These countries compare with the US, Japan, and South Korea. The dark blue column shows the EU average – my home country – Ireland, the ‘IE’ here – performs somewhat above the average; the majority of EU states are underperforming.
So, is the problem with the under-performers? Partly of course, but not solely because take a look at this which shows patents filed worldwide between 2005 and 2014. In red are European countries – this is Germany [DE], and France [FR] – in dark grey is the US, in light grey is Japan, in pale blue is China. In the past decade Europe filed about a third of the world’s patents.
And this shows patents granted in 2014. Europe is doing very well indeed – half of all patents granted last year were filed in the EU. The EU is only about two-fifths the size of the US, but it has a third more people. With 500 million people, it’s the world’s biggest single market, so it should perform strongly.
In terms of patenting Europe is on a par with, and even ahead of the US and Japan. So why is it underperforming in the translation of ideas into technologies successful in the market? Well, take a look at this as one example:
This map shows bioethanol patenting and production. The ‘triangle’ shows world patent share in percent, and the ‘circle’ shows manufacturing share. Europe generates over a third – 36% - of patents but manages only 5% of production, which is carried out mostly in the US – 54% - and also strongly in Brazil – 34%.
Studies of other products show a similar disconnect between Europe’s ability to patent and our ability to produce, manufacture, and bring to market. Now this is not the case in every sector, but it is so much the dominant trend that people have long talked about a European Innovation Paradox. The term ‘European Paradox’ was first coined in this context in a European Commission Green Paper in 19951
Some people have gone beyond ‘paradox’ – they now talk about a European ‘Valley of Death’! in the translation of knowledge into market success.
This is all rather dramatic!
And this shows data which is surely not unrelated: the number of people owning their own businesses. Europeans are much more nervous than Americans about going into business for themselves. So there are issues hampering European innovation. This is where the EIT comes in.
* * *EIT* * *
The EIT is a relatively new body, founded seven years ago in 2008, with an ambitious mandate to bring about a step change in innovation in Europe and a correspondingly ambitious budget. I’m on the governing board of the EIT – and will remain in this position another five years.
The EIT’s starting point is that the so-called European ‘Innovation Paradox’ is not going to suddenly right itself. Entrepreneurs are not just going to appear and start leveraging Europe’s research capacity to create the markers of the contemporary age - laptops, tablets, smartphones, social networking. For this to happen, favourable conditions have to be created.
As a starting point, innovation done at national level by national governments alone will only be successful up to a point. For Europe to release its innovation potential, we need to be thinking without borders.
The three sectors necessary for innovation are:
- the business community, obviously;
- globally-competitive research and technology; and
- higher education – because our students have to be educated with an entrepreneurial mindset. They are the next generation of entrepreneurs.
Together these three sectors are conceptualized by the EIT as forming a ‘Knowledge Triangle’. The triangle image is important because the EIT sees the three sectors as indivisible and mutually supportive.
I’m particularly interested in the education side of the triangle. Without synergy between skilled graduates, excellent R&D, and strong industry, you don’t get innovation. Since Europeans are risk-averse and cautious about starting their own businesses, a failure in educating with an entrepreneurial mindset is a strong factor in the European Paradox.
To achieve synergy between the three sides of the triangle, the EIT has created pan-European entities called Knowledge Innovation Communities – or KICs for short.
A KIC is funded by the EIT to bring together partners to create groups to be ‘innovation factories’ or ecosystems. The European Parliament chooses the areas in which to create KICs, and the EIT Board issues call for proposals, selects the winning consortia, and monitors and incentivises performance, together with the individual KICs’ supervisory Boards.
There are five KICs currently underway: the first three, launched in 2009, are in climate change, ICT, and Energy innovation; the next two, launched just five months ago, are in Raw Materials and Healthy Living and Active Ageing. These are multidisciplinary areas important to the future of humankind, and areas where Europe has an impressive R&D record.
The first three KICs have now been underway for five years. Cumulatively, they’ve brought together 490 partners from across Europe. You can see the breakdown here: green shows business partners, dark blue is research and technology, light blue is universities, and here in grey-blue are the cities and regions involved.
And here we show some of the achievements of the KICs. We measure numbers of start-ups, and numbers of new or improved products and services; but also numbers of graduates, and the attractiveness of the education programmes offered (evaluated in terms of competition for places).
* * *Using Public money to innovate* * *
Nothing quite like the KICs exist elsewhere, but the philosophy behind the EIT – that public money should be used to incentivise innovation isn’t new, although governments don’t always broadcast their spending, perhaps because of the orthodoxy, strong in some quarters, that public money should not be put at risk.
Two distinguished economists recently challenged that orthodoxy. You may have heard of Mariana Mazzucato’s book, The Entrepreneurial State, and Ha-Joon Chang’s Bad Samaritans. Both books have ‘myth’ in their subtitles and both set about debunking the orthodoxy of an entrepreneurial, risk-taking private sector and a cautious, conservative public sector.
Mazzucato unpicks the Apple iPhone and shows that the technologies behind it were originally state-sponsored: the US armed forces pioneered the internet, GPS positioning, and voice-activated “virtual assistants”, while academic scientists in publicly-funded US universities and labs developed the touch-screen and HTML language.
Likewise, the research that produced Google’s search algorithm, the fount of its wealth, was financed by a grant from the National Science Foundation.
Steve Jobs, Larry Page and Sergey Brin had the entrepreneurial genius to harness these technologies into products and services, but US federal funding of R&D enabled the consumer-electronics revolution.
As for pharmaceutical companies, they are even bigger beneficiaries of state research: the UK’s Medical Research Council discovered monoclonal antibodies, which are the foundation of biotechnology.
Ha-Joon Chang has done similar studies on the Asian Tiger economies.
The EIT is pioneering, on a supranational scale, what governments have been doing for decades. Where governments tend to focus on frontier research, the EIT, through the KICs, is investing at a later stage of the innovation process and focusing on entrepreneurship training. Europe’s problem isn’t with early-stage research, it’s with producing entrepreneurs who can spot potential, synthesize different research, and commercialise.
It’s right, I think, that the EIT is going public about how it’s spending public money. The Financial Times review of Mazzucato’s book ended: “The failure to recognise the role of the government in driving innovation may well be the greatest threat to rising prosperity.”2
* * *Innovation ecosystem: Dublin* * *
If the EIT is successful, we will start to see more innovation ecosystems in the EU – regions emulating the success of the great European innovation centres, like Helsinki, Copenhagen, London, and Berlin. I want to look at one such growing ecosystem, the one that I know best: Dublin.
Dublin has a relatively small population of 1.5 million people, but in terms of Ireland it’s densely populated – a third of all people living in the Republic of Ireland live in the capital. It’s a city with a long proud tradition of creative arts – everything from James Joyce to Riverdance –, and also increasing strengths in technology.
Dublin isn’t yet a London or a Berlin, but it is a growing ecosystem. As you know, Ireland was hit badly in the recent recession and was subject to tough austerity measures, but last year we emerged from recession. We currently enjoy the fastest growth rate in the European Union and the fastest employment growth rate in the OECD; and Ireland is European headquarters to 9 of the top 10 global software companies, and 9 of the top 10 US technology companies. The number of people employed in this sector has increased by 40 percent since 2010, and Ireland is also a base for the pharmaceutical industry.
Of course Irish tax policies supporting FDI play a part in this. But they’re by no means the whole story. We’re now seeing local start-ups and spin-outs contributing to growth. Here’s an example. Just two weeks ago Google acquired Thrive, a 3-D audio technology which will change users’ experience of virtual reality and gaming headsets. This technology was developed by Trinity College engineers who have now been recruited into Google.
This is just one among a number of exciting link ups between Google and Trinity College. Google is a patron of Trinity’s access programmes to further ‘technology literacy’ among disadvantaged young people in Ireland, and Google is an important benefactor of Trinity’s Science Gallery, a pioneering initiative where science experiments are ‘exhibited’ like art installations. Trinity is now helping other universities, including King’s College London, to develop their own Science Galleries using the Trinity Dublin model.
Trinity is well-placed to link up global companies. This map shows the creative and tech industries clustered around Dublin city centre. Here, in red, is Trinity, surrounded by creative industries, in yellow, which include leading artist-run spaces, galleries, and theatres. The blue dots are the tech companies – Google is located here, alongside Twitter and Facebook. The green dots are the start-ups. This map is about a year old, and needs to be updated but it gives an idea of Trinity’s centrality to the innovation hub.
In small countries, universities can hold positions of pivotal importance, particularly when the country’s economy is based on delivering quality higher education, as Ireland’s is.
All Irish universities contribute to growing the ecosystem, but Trinity has a particular role because we’re the country’s highest-ranked university - in the Top 25 in Europe and the Top 100 worldwide - and we’re located at the heart of Dublin city centre.
***Trinity: research, education, innovation***
Trinity’s goals align with the EIT’s: to keep on producing world-beating research, to link up with industry, and to educate students in critical and independent thinking and in innovation and entrepreneurship. These goals are inter-related.
Last year, as part of our Strategic Plan, we announced a new Trinity Business School, to be co-located with an Innovation and Entrepreneurship hub. This ambitious project will include space for prototyping and company incubation projects; and including our undergraduate incubator LaunchBox. Because it remains difficult in Ireland to get public funding for large-scale academic projects, the money for the Business School is being raised privately, but we recently received confirmation of support from twenty founding patrons - alumni and friends of Trinity.
The new Trinity Business School will support our existing educational initiatives in innovation and entrepreneurship, which include our Innovation Academy for PhD students and ‘LaunchBox’. LaunchBox is just three years old but has already enjoyed significant success – the social enterprise spin-out, FoodCloud, emerging from the scheme, has won numerous awards and last year its co-founder, Trinity student Iseult Ward was named one of TIME magazine’s Next Generation Leaders.
The Business School will support industry link-ups and the creation of spin-outs. Trinity currently generates a fifth of all Irish spin-out companies, and some of these have been markedly successful, like the games company Havok, whose technologies are used in major video games like Halo 4 and Call of Duty and in top-grossing films like The Matrix and Harry Potter series.
And the Business School will contribute to our interdisciplinary research institutes. We are planning a new Engineering, Energy and Environment Institute, which we’re calling E3. It will be a major engagement between the Schools of Engineering, Computer Science, and Natural Sciences, and will leverage the expertise of the new Business School and the existing Nanoscience and Biomedical Sciences Institutes.
E3 will be an industry-academic collaboration space, and one of the first institutes internationally to integrate engineering, technology and the natural sciences, at scale, to address challenges of a liveable planet. Technologies should sustain, rather than deplete, our natural capital.
With these initiatives, Trinity will further contribute to growing the Irish innovation ecosystem. At the end of last year, Trinity received excellent news on two fronts: in the European Research Council grants, which reward frontier research, Ireland jumped from second-lowest performer to second-highest. Only Israel performed more strongly in per capita terms. Many Irish universities contributed to this success but Trinity won the highest number of grants.
And Trinity was successful as a key partner in the two newest KICs, in Raw Materials and Health. Trinity researchers worked for over two years on securing the two KIC bids. Trinity will play a key part in these consortia of over 150 partners from 20 EU states.
Success in both the European Research Council grants and the KICs came about through universities and governmental agencies adopting a partnership approach. In pursuit of the goal of funding, all partners worked cohesively together, sharing knowledge and pooling expertise.
This cohesion is an endorsement, in itself, of the EIT’s approach. The incentive of significant funding and significant collaborations helped focus partners and get them working together.
That Ireland achieved this success following six difficult years of recession is extremely encouraging, and suggests that we have grounds for optimism. We’ve identified the innovation paradox and taken concrete steps to overcome it.
But, at risk of ending on a warning note, the Innovation Paradox will only be resolved when the European entrepreneurial talent matches European research, which means investing heavily in education. The EIT’s funding is significant but is not enough in itself to safeguard quality higher education in Europe.
We know from the rankings that Europe’s universities are suffering from increased competition form well-funded universities in Asia in particular. I include Trinity College in this. Trinity is still in the world’s top 75 but six years ago we were in the top 50. That’s significant slippage. It’s happening across Europe and not from lack of ambition or lack of talent or lack of hard work. It’s due to a lack of resources and probably an over-regulation.
In the EU – the UK excepted – students do not tend to pay significant tuition fees. Most EU countries take the view that higher education being a public good the state should bear the cost. There is much that is admirable in that philosophy, although I take the view that since higher education confers both a public and a private benefit, then the state and the student should share the burden. But I’m no idealogue. My position is simply that universities need investment. In some EU countries they are getting it through the public purse – I think of Germany and Denmark.
But in many others they aren’t. In Ireland for example, public investment is shrinking as enrolments are increasing and the shortfall is not being met by students. No political party seeking election wants to raise the spectre of tuition fees.
This is a huge problem. The success, thus far, of the EIT suggest a possible solution, a radial one: The EIT is possible because innovation is recognised as a borderless activity; it places innovation policy at Union, not national, level. Is it time to say that educating for innovation and entrepreneurship is too important for Europe’s competitiveness to be left solely in the hands of national governments? It is time for national governments to allow the EU for an even greater role in driving innovation at a European level.
This would inevitably mean the EU paying more of the costs of higher education in individual member countries. But it might well suit governments by removing the contentious issue of funding higher education as an electoral issue.
Trinity has an historic mission which, stated in today’s language, is: “to play for Ireland on the world stage”. As the country’s leading university, we recognise our responsibility to contribute to growth and competitiveness, to enhance creativity and innovation, and to promote Ireland’s global reputation. I’m sure that other European universities feel the same.
Recognising this responsibility we want to be allowed to fulfil it. If this requires a radical solution, let’s at least debate it. I’m delighted at the work of the EIT and at the growth of the ecosystem in Ireland. Let’s learn from the things we get right – and do more of that.
* * *