Competitiveness as a challenge for European business is not new. It did not suddenly arrive with the coronavirus. A 2014 paper published by the World Economic Forum, for example, pointed both to Europe’s relative strengths and weaknesses in comparison with American and Chinese competitors.1 That paper aimed at change by 2020. We have arrived at that date, and the need for action is, to understate the case, even more urgent.
Solutions are not immediately obvious. Business leaders everywhere are under enormous pressure due to the pandemic just to guide their companies through the day, the week, the month. The future looks cloudy, if not opaque. As Unilever CEO Alan Jope recently put it, “There is no such thing yet as a new normal. Nobody has the faintest idea of what the new normal looks like.”2
In this state of uncertainty, the biggest risk is that European business leaders will be tempted to stay on defense for too long. They won’t just conserve cash in
the short run; they’ll underinvest for growth in the long run. They won’t give up on R&D—but neither will they push for bold, game-changing innovations.
In addition, as economies reopen, there is continued uncertainty about the shape of the recovery—which will vary widely by industry—and to what degree government stimulus will shore up the business environment. This too may be an impediment to daring action.
Europe was slow to capitalise on the opportunity to change after the 2008 downturn. Today, it needs bold leadership—to develop innovative approaches to new customer value and to create a strategy for long-term competitiveness and growth.
We believe Europe—and its leading businesses—have unique strengths. It’s time to build on those strengths. The good news is that European business leaders agree.
Drawing on our global survey of 478 C-level executives and extensive client experience, we examine six critical areas of business change that Europe needs to focus on to close the competitiveness gap with North America and Asia Pacific.
It’s been a difficult start to 2020. Now is the time to focus on renewal and rebirth.