Europe's Real Competitiveness Challenge

The European Commission's latest competitiveness report makes for interesting reading, with some good ideas about making it easier for startups to scale across the continent. What's sorely missing is an ambitious agenda to make Europe's largest companies more dynamic.

Consider this: nearly six in ten of Europe's 100 biggest firms by sales, with cumulative revenues of nearly 6 trillion euros in 2023, couldn't match the region's anemic 1.9% GDP annual growth rate between 2013 and 2023. Here's how a sample of them performed.

ASML, whose lithography machines power the global semiconductor industry, and Novo Nordisk, whose pioneering GLP-1 drugs are transforming metabolic health, are the exceptions - most European giants have either shrunk or stagnated.

That's not because they lacked resources - it's because they weren't sufficiently resourceful. Corporate inertia and incrementalism is largely the product of industrial-era management practices that deprive employees of autonomy and upside, forfeit vast quantities of ingenuity, and curtail the scope of accomplishment of millions of employees.Yes, a more vibrant startup scene can help, but there's no substitute for making our largest institutions more entrepreneurial. Thankfully, there are examples to learn from, such as Vinci. And it's heartening to see leaders like Bill Anderson take this on at Bayer. These pioneering models need to scale as vigorously as startup ecosystems in Paris, Berlin, or Milan.

What's needed is a concerted effort to revitalize our most prominent companies. Japan's quality movement after World War II is one of the examples we should learn from. At the time, companies like Toyota, Hitachi, NEC, Toshiba, Sony, and Panasonic, with the collaboration of JUSE (the Japanese Union of Scientists and Engineers, a powerful consortium of industry, government and academic leaders founded in 1946), trained tens of thousands of people in statistical quality control, and introduced management innovations like quality circles, kaizen events and visual management systems to give frontline employees the skills and tools to drive continuous improvement. These actions cemented Japan's industrial leadership for decades to come.

Europe needs its own management revolution - one that unleashes the entrepreneurial capabilities of every employee, whether they work in today's corporate giants or tomorrow's challengers.