The digital age has opened up all sorts of new possibilities for innovators. With unprecedented amounts of data and constantly evolving means to make sense of it, the search for the next big thing becomes more and more intense.

Sometimes, though, the key to the future lies in the past. Europe’s industrial base, a historical strength of the continent, is taking a huge leap forward through digitization. The transformation has spectacular promise for industry and its customers. For example, IBM is working with a client on data-based predictive maintenance of production equipment to prevent breakdowns. This drastically reduces production down-time, saving time and money. We’re working with Siemens to develop 300,000 intelligent buildings worldwide, leveraging data analytics to improve energy efficiency and productivity, while reducing CO2 emissions by around 10 million tons per year.

Europe’s big industrial players are already forging ahead with digitization. The challenge now is to ensure that Europe’s stronghold of SMEs can ride the wave by getting access to the smartest technologies. Reflecting the diversity and spread of SMEs across Europe, a decentralized approach is needed. Not just one Silicon Valley, but rather, a network of silicon villages.

In a strategy paper issued today on ‘Digitizing European Industry‘, the European Commission calls for the development of Digital Innovation Hubs. The Commission’s strategy here is spot on.

A research paper by Mark Muro and Bruce Katz from the Brookings Institute: ‘The New “Cluster Moment: How Regional Innovation Clusters Can Foster the Next Economy‘ states that such hubs are: “Hot spots of productivity and collaboration as well as competition,” creating locations “most likely to deliver a new economy that is export-oriented, lower carbon, innovation-driven and so opportunity and prosperity rich”.

IBM’s experience shows that Digital Innovation Hubs are hugely effective catalysts for regional economic development. These shared innovation platforms generate increased inward investment, improve alignment of education with market needs, and create an exciting environment of creativity.

Developing Digital Innovation Hubs requires an ambitious government vision infused with a healthy dose of pragmatism. Some recommendations:

• Build on small existing hubs rather than starting something from scratch.
• Roll in multiple partners from the wider community – with education institutions playing a key role as a provider of skilled workers.
• Be completely open to the private sector as a co-pilot – and sometimes captain. And, let competition flourish.

Public policy plays its part too. Accompanying the European Commission’s digitizing industry paper are policy measures that are all part of the EU’s Digital Single Market strategy.

Importantly these policy measures address standards. Governments continue to grapple with how to deal with technical standards. The solution could not be clearer: harmonized technical standards across Europe, based on international standards, are an absolute “must” for a successful digital transformation of industry. This is essential so that services, software and hardware all are interoperable across the board. Openness is crucial, from infrastructure to platform services.

Laying the foundation for what we hope will be a new Digital Innovation Hub is IBM’s recent Munich investment to create a global IBM Watson Internet of Things headquarters. The Center will bring together 1,000 developers, consultants, researchers and designers to drive collaborative innovation with SMEs and start-ups, government, schools and universities and investors. Sectors that are at the forefront of the region’s efforts to go digital – automotive, electronics, healthcare, insurance and industrial manufacturers – are among those best positioned to benefit.

Thinking ahead: digitization on its own may not be enough for industry players to get, and stay, ahead. Industry needs to become cognitive if it is to ingest huge volumes of unstructured data, understand its meaning through sensing and interaction and turn insights from that data into competitive advantage.

Creative thinking and innovation will help industries go cognitive – yet another reason to push forward with nurturing hubs of creativity throughout Europe.

By Erich Clementi, Senior Vice President, IBM Europe

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Media Contacts:

Tineke Dullaart-Mertens
+31 6 200 150 92
tineke.mertens@nl.ibm.com

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Anita Kelly
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anita.kelly@ketchum.com