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TheNTWKSummit22 | Learning from European Digital Business Success Stories

Speakers: Vicente Quesada, Oliver Birk, Lucía Hernández, Andreu Bové

Round Table focused on lessons learned, key insights, and the dos and don’ts that any European company should take into account in order to position their current businesses under the digital innovation ecosystem.

Why is Europe behind on digital business models?

From the point of view of a venture capital, Vicente Quesada estimates from their research that there are three important phases to innovation:

- Startups and digital assets - to test product and technology -. Now is fast and cheap.

- To grow - financed by venture capital -. Now exponential growth is thanks to platforms business models.

- To reduce costs and make the company profitable.

The problem comes when we realize that the biggest fund in Europe is the European Investment Fund. Who wants to work with a VC that is putting a lot of pressure instead of working with a government? (...)That’s the difference between Europe and the rest of the world, states Quesada.

The risk-adversity and regulation shape incentives for innovation. On top of that, Oliver Birk - from a corporate perspective - pointed out that people like to work on innovation and to freely operate with the safety net of a corporate employer behind. When these people are asked to become founders of such a startup and put their skin into the game, many fall back and don’t want to go into it.

It’s also a matter of mentality and maybe culture. This is part of the innovation, intrapreneurial spirit, that we need to get more of and incorporate (...) It’s about the people who need to be willing to take that risk.

Other problems that need to be addressed are “better education, make financial regulation easier in regulated markets, employment law, and taxes; create a better tax system”, stated Andreu Bové. International rules are based on taxing where the physical company is, but not where the company is creating its value. In network effects and digital business models, the value is created by users. So, the whole European harmonization process needs to go one step further in terms of integrating the market.

How can we get through those problems to accomplish success?

The overall environment is pretty manifold also in Europe, which is giving lots of opportunities as well.

If you really have a promising business idea, then work on these obstacles and don’t give up too early, just prove whether your business idea is bulletproof. The sooner you learn that it’s not, the better it is (...) fail fast and cheap, states Birk.

As a matter of fact, some of the ideas will progress properly, but others will be early identified as non-working: this should be considered a success story too. As Birk said, “we close them, stop them, which is a success in itself as well because it’s learning. So, I also would encourage you to rethink the traditional concept of what is a failure and what is a success.

On the other hand, the success of innovation is a function of three factors, according to Quesada. “The value of the idea goes from 0% to 1%, the process or execution is 40%, and the urgency takes the rest.” Taking the example of Zoom, they grew so much in the past two years because of the urgency of the COVID19. Many of the key points are about changing management basics. We still need to make people aware of this and give them a sense of urgency to change.

Apart from the company culture, there are other elements that need to be present in order to spur innovation. Quesada says that “the key people that have to begin this process are talented entrepreneurs, in order to take risks; and developers too,” considering them as a bottleneck. According to Bové, “foreign companies are hiring European developers and professionals (...) Europe has that huge potential in terms of skills, and probably they are behind of the foreign success stories.”

In summary, Quesada pointed out that “passion, talent, and experience” are the key to accomplishing and the most relevant qualities. From a corporate experience, Birk concluded that any new ideas that are going to be developed, in particular platforms or building ecosystems with all the different new business models behind, can’t be occupied by corporate mindset, structure, and organizational rules and governance. “We call it maximum arm’s length, the idea doesn’t get fully integrated into the corporate structure. Give them independence and not limit them by all the administrative bureaucracy”, states Birk. Finally, Bové aggregates that it requires a committed team too: “have the right people, internal or external team, advisors, providers, trusted partners (...) and every idea will be a success.”

Written by: Bety Soca

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