‘He that will not apply new remedies must expect new evils;for time is the greatest innovator.’ Sir Francis Bacon
With the Lisbon Treaty finally in the end game after the IrishYes vote on 2 October, and José Manuel Barroso embarking on asecond term as European Commission president, it will be moreimportant than ever before to position the EU’s executive arm as anagent of change, a driver of innovation, and a catalyst for a moresuccessful, sustainable and entrepreneurial future.
In an effort to contend with the office of President of theEuropean Council, due to be established as soon as the LisbonTreaty will be ratified in Poland and the Czech Republic, it willbe crucial to give more identity to the European Commission, andembed it firmly as a body that works at the leading-edge ofeconomic and social developments and in the interest of the largerEuropean common good.
Against this backdrop – and in view of mastering the deepestrecession in decades – this moment is ripe with opportunity tobreak with “business as usual” and muster the courage to bringabout promising modernisation and stimulating innovation. While onoccasion these must be comprehensive, bold reforms, other areas mayonly need minor changes of nuance, of positioning, of communicatingor of internal organisation. One of the lessons learned fromBarroso I is that how something is done is as important as what isbeing done or why something is being done. That is why PresidentBarroso and the new European Commission should consider thefollowing 10 priorities and issue areas:
I. Position the Internal Market Firmly inCitizen-Centric, Consumer-Oriented Policies andPolitics
In the wake of the economic crisis and deep recession, theinternal market is bound to come under severe strain as governmentsseek to shield some domestic companies from competition and prop upnational champions. Traditionally, moves of this type have beenattacked from the position that closing markets and subsidisingnational champions harm Europe’s overall competitiveness and aregenerally “bad for business,” which is certainly true. But this wayof arguing rings hollow in the current environment of deep distrustvis-à-vis the private sector and managers, where defending theinternal market for businesses’ sake could easily backfire.
A better, more fruitful and more valid way of making the casefor the internal market is to point out that violations harmconsumers first and foremost. Protectionism and distortion ofcompetition drive up prices, lead to lower-quality products andservices and reduce choice.
In the current European Commission (2004-2009), CommissionersViviane Reding (information society and media) and Neelie Kroes(competition) arguably did more to defend the internal market thanthe internal market commissioner himself. And they did so wisely,arguing forcibly and with much moral command on the behalf ofEurope’s consumers – to much popular acclaim.
Against this backdrop, the internal market portfolio needs to bereevaluated and re-thought because neither the traditionalarguments in its defense nor the organisational positioning withinthe Commission have worked terribly well of late. President Barrososhould draw lessons from this shortcoming and think of smart waysto relate the inherent benefits of the internal market to societyand the media, and position this important dossier institutionallyso that it is set up for success and occupies firmly the moral highground.
II. Ignore at Your Peril: Service Sector Key Driverof Growth, High-Quality Jobs and Innovation
The service sector, which accounts for more than 70% of theeconomy and virtually all new jobs in the EU, can at best bedescribed as an “orphan” of the current Commission, with no onefeeling entirely responsible or in charge. Nominally under thestewardship of DG Internal Market and Services, that directorateand the commissioner have interpreted their mandate extremelynarrowly, i.e. focusing primarily on the completion of the internalmarket in services or devising cross-border regulations forfinancial services. That is not a bad place
to start but it is hardly enough to provide a holistic policyenvironment that will allow new, innovative, high value-addedservices to flourish and thrive. Of course, bits and pieces of theservice sector are handled by other DGs, such as Research, whichhas commissioned reports on innovation in services, or DGEnterprise.
But overall, the set-up of the current Commission is like abulwark for manufacturing and agriculture, with services theunloved child that no one feels responsible for – and that despitethe fact that many top manufacturing companies themselves rely moreand more on advanced services to compete in European and globalmarkets. Clever combinations of services and manufacturing are partof what makes the successful ones flourish.
Many, if not most, of the well-paid, high value-added green andwhite jobs that policy makers say they want to create in comingyears will be in the service sector. It’s time that these realitiesare sufficiently reflected in EU policies, and that we pay theservice sector the attention – and political space – itdeserves.
III. A Process as Much as an Outcome: Broaden theConcept and Understanding of Innovation
A lot has been achieved in the first Barroso term with regardsto innovation. It has now been put squarely on the policy map as atop priority and political necessity. But despite the rhetoric,Europe falls short of being truly an innovative society, a placethat pushes the boundaries of what’s possible, a global hub for themost creative and entrepreneurial people, or a place where newideas can fly and are not only accepted but actively welcome.
Stuck in a corporatist paradigm and the incremental innovationmodel of the last century, we have fallen short of our potential.Too squarely focused on research, scientists and the development ofnew products in the private sector, we have failed to build thelarger infrastructure and innovation eco-system that are necessaryto turn Europe into a “dynamic, knowledge-based society,” as weonce set out to do.
So what needs to be done? For starters, there should be adedicated innovation commissioner whose job it would be to raisethe profile of innovation and lend a face and a name to the cause.This person should not only focus on the private sector, researchand products, but also on the public and the so-called “thirdsector,” where NGOs and civil society work, not because theCommission has competencies in these areas but because it can serveas a bully pulpit for raising key issues, for facilitating anexchange of best practices and becoming a driving force forpositive change.
Last but not least, this person should hold the Commissionaccountable to its own standards, i.e. ensure that innovation canthrive within the Commission and that bureaucratic hurdles andinstitutional structures which stifle incentives to put forward newideas or be more creative are tackled. Imagine if you had someonewithin the Commission or College whose job it was to shake thingsup, challenge the common wisdom or question the status quo.
IV. Entering the Age of Austerity: State of PublicFinances Take Centre Stage
In principle, the Commission can press legal charges if memberstates violate the Stability and Growth Pact. In practice, nothingprevented the softening of the Stability and Growth Pact rules in2005, or the recent dramatic deterioration of public finances inthe wake of the financial and economic crisis. Going forward, theissue of sustainability of public finances will, also due to theincreased costs associated with ageing societies, be significantlymore important than ever before; so much so that it can threatenthe viability of individual countries or even the integrity of theeurozone.
While there will undoubtedly be a lot of academic conferencesand papers on this issue, signaling increased activity, the keyquestion for the Commission is how well it is positioned toactually bring about desired change in the member states – which isthe ultimate and only measure of success. Just issuing more reportswith dramatic forecasts and pointing the blame unilaterally on themember states will not do the trick.
So while a vigilant stewardship of the Stability and Growth Pactwill be more necessary than ever, it will also be important toactively accompany member states in their quest to restore order totheir public finances. As such, the Commission’s role should be notonly that of a watchdog but also one of facilitator, educator andcollaborator.
For instance, educating stakeholders outside of its traditionalremit of finance ministries and economic think tanks, could go along way. Interacting with people and organisations from all walksof life who could benefit from a greater awareness of how the stateof public finances will impact their future prospects, would bebeneficial.
Think of public health associations (who would care aboutfinancing being in place for the future delivery of services),youth groups (who should naturally be interested as theirgeneration will have to shoulder the burden of the debt) or socialinnovators (who might be able to provide better, morecost-effective solutions to social problems than traditionalstakeholders). In addition to raising awareness, DG Economic andFinancial Affairs should champion innovation in the public sector,as it will be a key way to sustain a high level of public serviceswhile keeping costs in check and thereby assisting with fiscaldiscipline.
V. Close the Gap Between Substance andCommunication
With the benefit of hindsight, it is clear that the bolddecision of President Barroso to appoint a Vice-President forCommunication Strategy has been a modest success. This is notnecessarily because the idea per se was bad but without the rightperson at the helm of such an important portfolio, success andimpact were inevitably limited. To be more precise, the personappointed to communicate on behalf of the Commission should reflect- and be able to relate – the values, priorities and organisationalwork programme of the institution he or she serves.
A communications commissioner who has nothing to say about keyCommission competencies, from competition and the internal marketto Lisbon Agenda and trade, is at best of limited value and atworse, downright harmful. It leaves the impression that thecommunications unit is used to produce feel-good, flowerydeliverables for “citizens,” while the rest of the Commission getson with the real work.
This approach is not only overly paternalistic and almostdemeaning to citizens as it would appear not to treat them asmature and intelligent adults, it is also not working. Plan D,which was enacted to bring the EU closer to its citizens after thefailed constitutional referenda in France and the Netherlands,certainly did not prevent the subsequent “no-vote” in Ireland orthe historically low turnout in the European Parliamentelections.
One of the lessons learned from the Barroso I Commission is thatit must never happen again that flagship Commission programmes,such as the Lisbon Agenda, are literally ignored by theCommunicator-in-Chief. Good communication and information servicesabout all of the Commission’s activities are a sign of respect forcitizens and stakeholders. A person who communicates the Commissionà la carte is not suitable for this job, and can do more damagethan good to the institution he or she serves.
VI. Get to the Bottom of It: Increase Use of Surveysand Polls, Encourage Outreach via Web 2.0 and Pay Attention toElection Results
Inside the Brussels beltway, policy making is often caughtbetween lobbying and advocacy, and a stakeholder dialogue that cannever be 100% representative of the diversity and complexity ofsociety at large. While the official stakeholder dialogue is ofcourse an important feature of the EU arena, ensuring that avariety of views are heard, there are opportunities to complementthis institutional structure by bringing in the voice of citizensin a more direct and audible manner.
For one, that can occur through the use of surveys, which cangive the European Commission an important mandate for action. Forinstance, surveys have demonstrated that citizens want strong EUleadership on climate change and the environment. And whentelecommunications companies were up in arms over the Commission’splans to reign in roaming charges, it helped to prove that it hadthe support of 70% of the population.
A second, obvious way to gauge what citizens want is to paygreater attention to how they vote. It is often the only way that acitizen can make him- or herself heard in the policy process, andit can be very discerning when a strong public mandate for a givenset of policies is subsequently made impossible by politicking andlobbying.
Irrespective of whether one agrees with the trend or not, thecurrent mood in most countries in Europe tends towards centre-rightsentiments. As such, it is only natural that this be reflected tosome extent at the European level. And when the pendulum swingsback in the other direction, as it undoubtedly will some day,citizens would of course rightly expect that to be reflected aswell. For now, it will be important to remind persistent nay-sayersof electoral outcomes, and appeal to their democratic sense.
A third promising way to connect with citizens is through Web2.0 and social networking. These new technologies have givenunprecedented tools to policy makers that allow them to connect,interact and relate to individual citizens.
No one has used these tactics more effectively than Barack Obamain last year’s presidential campaign in the United States. Andwhile it would be difficult to replicate such an endeavour at theEuropean level, it is at least worth a try. And needless to say, itshould not be an exercise in bureaucracy and innuendo, but asincere and honest effort to make governance more transparent, moreunderstandable and more accountable.
To be sure: a Web 2.0 outreach should not be confused with anInternet consultation. There is a world of difference betweenputting out a questionnaire on a given policy issue and trulyengaging with citizens, using the latest, modern technologies toreach out and bring people closer to Brussels.
VII. Overcome the Divides: Mastering HorizontalIssues in an Institution Built on Silos
There are key issues that are of paramount importance but thatdo not have an institutional home in the form of a dedicateddirectorate general (DG), such as innovation, skills or the LisbonAgenda. To date, they have been handled by a myriad of DGs, such asenterprise, employment, economic and financial affairs, education,etc. While there is nothing in itself wrong with this approachbecause it disperses ownership, one of the definite downsides hasbeen that no single person is ultimately responsible or feelscompletely in charge.
There are two solutions to this dilemma. One is a stronger, morevisible coordination and facilitation between the responsible DGs,with initiatives that can culminate in projects that involve two ormore DGs, with shared ownership and governance structure. A goodcase in point is the Commission’s New Skills for New Jobsprogramme, which is a joint initiative with shared ownershipbetween DG Employment and Social Affairs and DG Education, Trainingand Culture. The responsible commissioners, Vladimir Špidla and JánFigel’ respectively, got on well personally and jointly moved theinitiative forward, both committed to making it a success.
A second option is to create a new, dedicated dossier for agiven policy issue, ideally one that is rising in importance andneeds urgent, consolidated policy attention.
A case in point is the consumer dossier, which for the firsttime received a dedicated commissioner in January 2007, whenBulgaria and Romania joined the EU. Previously, the consumercommissioner also served as the point person for health. TheBulgarian national Meglena Kuneva, who received the mandate to bethe first European commissioner solely in charge of consumeraffairs, has had tremendous impact on the dossier in the less thanthree years of her tenure. Not only has the sole focus on the issueraised its profile and importance, but having a charismatic,dedicated and capable point person for the dossier, has made a hugedifference.
In addition, Commissioner Kuneva actively sought to liaise withother key departments, such as competition, information society andinternal market, facilitating an interdisciplinary approach to herdossier and spreading ownership. As previously mentioned, adedicated innovation commissioner could have a similar effect -from visibly raising the importance of the issue to giving it a”face” and “voice” in the form of a dedicated point person. This isone of the options that should definitely be considered by the newCommission.
But one of the two – either more aggressive interdepartmentalcoordination on key issues, or the establishment of a dedicatedunit and commissioner – should be applied. In its absence, theCommission runs the danger of what can be described as the “LisbonAgenda syndrome” – where everyone is nominally working on a policybut the overall impact is limited because the substance too oftengets lost in the process or is hampered by too many isolatedactions that somehow don’t add up – not to mention the fact thatthere is no one ultimately to hold responsible because there isn’ta dedicated commissioner.
For a policy agenda to be all that it can be, the institutionalset-up can determine success or failure – a key point to keep inmind. And as the world becomes more and more complex and new issuesemerge or gain in importance, it is likely that there will be morecross-cutting policy agendas on the horizon, requiring specificmanagements skills and organisational positioning.
A case in point is that going forward we need much deeperintegration between the climate change and innovation agenda, if wehope to produce the societal and technological solutions fortackling global warming.
It was presumably with that in mind that President Barrosorecently announced that there will be a dedicated, new portfoliofor a climate change commissioner in his next team – a person whocan overcome the current divides between environment and energy,innovation and enterprise; a person who can lend a voice and faceto the cause and a person who will undoubtedly be one of the keyplayers of the new Commission. One of the positive externalities offacilitating cross-cutting issues is that innovation is more likelyto occur at the intersection of different disciplines than in thetraditional silo approach to policy agendas.
VIII. Create New Institutions to OvercomeBureaucratic Legacies and Kick-Start Innovation
Given Europe’s persistent difficulties of coping with change orcoming to grips with new economic and social realities, a promisingway to overcome resistance and focus attention on the issue at handis to create new institutions.
The key example of the first Barroso tenure is the creation ofthe European Institute of Innovation and Technology (EIT). While itinitially met with some resistance from existing stakeholders, suchas universities, in the end there was a lot of momentum for thecreation of such an institution. There was not only a fiercecompetition among cities to house the EIT but also a lot of genuineinterest and curiosity about the endeavour itself. Institutionally,the EIT has no legacies – it has no existing bureaucracy, it cannotnot do things because they have never been done, and it has anexplicit mandate to be ambitious, experimental and new.
It is certainly not a coincidence that in most member statesbodies that have a mandate to drive forward innovation are set upoutside of existing institutional structures. That is done toovercome the bureaucratic legacies, the institutional inertia andpolitical infighting over key portfolios – all of which areanathema to the pursuit of innovation and creativity.
Examples of such new institutions charged with fosteringinnovation are Innova (Sweden), Sitra and Tekes (Finland), NESTA(United Kingdom) and the Innovation Platform (Netherlands). Thesebodies have the benefit of being on the one hand embedded in thecountries they serve, while being sufficiently independent to actas a knowledgeable, honest and trustworthy broker.
Going forward, not only the European level but also memberstates should contemplate either supporting or creating newinstitutions to deal with burning issues that are not efficientlytackled due to not fitting neatly in existing organisationalstructures or bureaucratic responsibilities. Areas that need urgenttackling are skills, human capital, entrepreneurship andinnovation, which are all currently caught somewhere between thecompeting responsibilities of education, employment, enterprise,finance, research and economic affairs.
IX. Measures for Success: Choose Benchmarks Wiselyand Develop European Indicators
Targets are important tools for measuring progress and success.One of the EU’s most known, ambitious and popular goals is the20-20-20 target by 2020: cutting greenhouse gases by 20%; reducingenergy consumption by 20% through increased energy efficiency; andmeeting 20% of energy needs from renewable sources.
Two things have worked about this goalpost: firstly, it is verypopular; the targets are clearly understandable to a broad numberof people, and they are patriotic and bold, demonstratingfirst-mover advantage vis-à-vis other parts of the world.
Secondly, they are European targets, meaning that there is not auniform indicator that applies to all 27 member states, but rathera Europe-wide commitment of 20% in total, with individual memberstates contributing according to their state of development andability. For instance, the renewables target for the UK is 15% by2020, but 30% in Denmark, where already 20% of the electricityneeds are met by wind power, and reaches a high of 49% in Sweden, acountry that is a global leader in renewables.
One can envision a huge amount of peer pressure in delivering onthese goals as a country would not want to fall foul of causingfailure for the entire EU because it falls short of meeting itstarget. This new approach to EU-wide targets with individualisedcommitments perhaps presents the holy grail to compliance, withouthaving to resort to the use of the “naming and shaming” to whichmany member states object.
In general, if one compares the 20-20-20 goals by 2020 with twoother key EU indicators, the 70% employment rate and 3% R&Dtarget contained in the Lisbon Agenda, one immediately sees adifference. While few people would dispute the merit of spendingmore on research, the 3% goal seems abstract. Most observers wouldsee no inherent benefit of spending 3% over, say, 4%. It’s quitemeaningless, because the figure that matters most is theprivate-sector R&D component, which is not separated from thisoverall target.
Secondly, these targets have been applied uniformly to all EUmember states, not taking account of their state of development.While a 3% R&D target is overly ambitious and not reachable (orperhaps even desirable) for a country like Malta or Bulgaria, it isnot sufficiently challenging to a country like Sweden, whichalready spends over 4% of GDP on R&D.
Not surprisingly, the vast majority of countries have not mettheir Lisbon Agenda goals, which in turn has led most observers,particularly the media, to conclude that the entire process hasbeen a stunning failure. In order to avoid such shortcomings in thefuture, targets not only need to be carefully chosen but they mustalso be realistic enough to ultimately be reached, otherwisecountries can feel overwhelmed and lack the incentive to seteverything in motion to deliver on a given goal.
X. Put your Money where Your Mouth Is: Modernisingthe EU Budget Is a Matter of Credibility and GenerationalJustice
One issue that has certainly helped to undermine the credibilityof the Barroso I Commission is the way the institution he leads isforced to spend its budget. While on the surface, his team isaligned behind the priority issues of innovation, employment,skills, human capital, the pursuit of new, emerging technologies,and investing in the future, the sad reality is that the lion’sshare of the annual €110 billion budget is spent on agriculturalsubsidies and a sector that employs some 5% of Europe’sworkforce.
Going forward, there is no argument that could justify orpossibly help to overcome this discrepancy. It is the root cause ofa perennial and deep division between rhetoric and budgetarypriorities that cannot be reconciled intellectually.
If member states do not agree to a radical re-adjustment ofbudget priorities, we should not expect the Commission to be adriver of change, a beacon of innovation and a transformativeagent, able to strategically invest in the future rather thansubsidising the past. As long as the Commission does not have thefinancial firepower that is necessary, a lot of the good rhetoricwill remain exactly that – rhetoric.
Europe needs a thorough, honest and frank discussion about whatthe role of the European Commission is. Is it to subsidiseagriculture – a goal that more than once has run counter to ourenvironmental and climate change ambitions – or does it want toembody and empower the innovation it so routinely preaches?
To be sure, the Commission is not the problem. To the extentthat it has been possible, the Barroso I Commission has tried touse money differently, which inter alia, has led to the”Lisbonisation” of the structural and cohesion funds. But more mustbe done. Even if the Commission itself does not have the authorityto change the current regime, it must use the publication of thewhite paper on financial reform to be launched in December 2009 togive its best shot at convincing member states to change the EU’sbudgetary priorities.
It must seize the moral high ground, enter eclectic and broadalliances, and really fight its corner. The opportunity presentedby the launch of the white paper and subsequent policy processes tointroduce a better, more future-oriented budget for the period2014-2020 cannot, must not, be missed.
President Barroso has even more on his plate in 2009 than backin 2004, when he first entered office. The current crisis, and thegreat expectations vis-à-vis the organisation he leads, call forstrategic changes. Also, as soon as the Lisbon Treaty comes intoforce, he will have to contend with another big player in the formof the president of the European Council.
In order to secure a lasting legacy and make his next tenure thesuccess it deserves to be, it will be vital to think out of thebox, to take new approaches and use persuasion and clever tacticsto convince or, if necessary, outsmart member states and otherforces that stand in the way of Europe becoming all that it can be- a beacon of sustainability, innovation and entrepreneurship,built on leadership that lays the foundation for the nextgeneration to reap the fruits of actions taken today.
Ann Mettler, executive director of the