World War for Entrepreneurship. A grand title I know. Perhaps I even risk exaggerating a little. But please, hear me out first.
It’s mid-December. Christmas is coming and it’s a time for reflecting. The topics weighing heavily on my mind are “minority” entrepreneurship and the bureaucracy holding us back in Europe. Versus the United States and beyond.
Before I get into what I mean by that, let me set the scene. It’s December 13 and I’m on an Aegean Airlines flight taking me from Milan to Athens. The previous day I was going in the opposite direction, arriving in Milan and then taking a bus to Turin. It was kind of strange, like I was a student going to university at a different city. The reason for my visit was to participate in the grand closing of the “last-of-the-projects” for me. A kind of end of days scenario if you will.
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”. I give it this name simply because it’s the last one of this kind that I’ll be doing. That’s after 10+ of them. The purpose of that project is the promotion of female-lead early stage investments into female-led startups. And I hate to say it but I feel defeated.
Good intentions, wrong entrepreneurship concept
Unfortunately, this war was lost long before it was fought. A little bit like the Native Americans had no luck in confronting the invading European. Or like the 18th and 19th century Empire of China had zero chances of defending themselves against the invading Britons. Simply, there was never a chance to win.
Why is that?
Well, like most of the time, for a plethora of different reasons. Firstly, the very concept of “female entrepreneurship” or “female-led investing” is fundamentally flawed. Because 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 do not need special projects for starting more businesses or investing more aggressively.
If women, like almost everyone else, need something, it is some more care in education at all levels. Here there is still much relevant work to be done. But when one starts thinking about special initiatives for promoting entrepreneurship within certain groups — be it women, immigrants, people with disabilities and so on — IMHO this act alone is a discriminatory one.
The “silo” mentality
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, must 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. And what happens? You get the “silo” or “ghetto” mentality. Which in 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. It actually concerns all of the EU-funded projects. And of course their numerous national, regional, municipal, or even international equivalents. The structure and the processes are simply wrong!
And what is the structure and those processes?
To keep a long story relatively short, the process works more or less like this:
- A political body (i.e. the European Commission) decides on a set of priorities for a programmatic period (say 8 years). They draft 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. They later gave it the very inspired name “Horizon 2020”. They reserved a huge budget in the order or €80 billion or so and the game was let to begin.
- 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”. This is a competitive process for consortia around Europe and beyond to do ambitious projects. Which are supposed to realize the overall program’s priorities.
- Consortia are formed, proposals are submitted, negotiations are held and grant agreements are signed. Projects are started, 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 work from 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. At least, not other than possibly been delivered to the next EU project following some surface-modifications.
A tragedy of waste
A pan-European tribe of the “EU projects people” has been created all around the Union. They 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?
Time to stop!
Can we really afford the pertinent opportunity cost? Can we afford not enjoying the results of the work of these people. Imagine if their talent was put to proper use. Like 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 from this situation. For more than 30 years. The time to stop this insanity (because there’s no other word to describe it) is now. And it might be too late already.
You do not have to be an expert to understand that an innovative product will never be described into a grant agreement. Never! It simply can’t! Why? Because at the time when the agreement is written, no man (or woman) 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.
The opposite of agile
This is the opposite of agile, the concept that is driving real innovation around the world. 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 have described this process in the past as sleeping with the enemy.
Losing the entrepreneurship “war”
What I’m trying to explain above is how and why Europe is losing the war of entrepreneurship against the US. And possibly against China. The framework is just so bureaucratic, so slow moving, that it has absolutely nothing to do with modern entrepreneurship. Put simply, the EU funded projects universe is all so 20th century. Βut 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 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 society. That is, 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 the crucial point. Basic research should have access to the pertinent funding without having to be clowned as ‘applied’ or ‘industrial research’ . At least, not simply because no other source is available for numerous research groups and laboratories.
A structural problem
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. At the same time, they simply pretend that they are doing applied/industrial research so they can get access to the pertinent funds . Only to secure their survival. How crazy is that?
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 of developing technologies and products which will thrive in the market.
There’s no need for long proposals, no need for bureaucratic grant agreements, no need for lengthy project review meetings. Just a framework that single-mindedly needs 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.
But the war is not over…
I’ll try to conclude with a glimpse of optimism. Because 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 Union does not become economically and politically irrelevant in the near future.
Europe still is home to some of the world’s best universities and research institutions. European culture still dominates the world. European societies still are the more open, free and fair societies that mankind has ever lived in. The fundamental ingredients are there. We just need to wake up and get ourselves moving.
In the world of entrepreneurship there’s no entitlement to success. Quality and value have to be proven day in and day out. The European Union, national, regional and municipal authorities 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.
Only this approach will lead to the generation of a new wave of ambitious European contemporary entrepreneurs who, hopefully, will change the fate of our country in what I call the World War for Entrepreneurship.
