MAKE THE HUMAN SHIFT

Category: European Industry & Strategy

Strategic perspectives on Europe’s industrial landscape: sovereignty, competitive pressure, regulation, and the unique constraints shaping transformation in Europe.

  • Industrial Decarbonization: We’re Running Out of Time and Illusions

    Europe still speaks about decarbonization as if it were a policy journey, a transition we could pace gently, with milestones, debates, comfort. But inside factories, no one calls it a transition. They call it something else: survival.

    Because the truth is simple: companies are not in an energy transition — they are in an energy competition. A global race for access to stable, affordable, decarbonized energy. A race that is reshaping the industrial map of the world while Europe negotiates definitions.

    Walk into any European plant today and you see the same story. A steam network installed in the 1980s, patched for years, losing heat at every elbow. A compressor room where leaks are so widespread that no one remembers when the load fell below 70%. A SCADA workstation blinking again because the boiler oscillates each time the electricity spot price jumps. Teams trying to stabilize a process in real time, hands on the PLC, eyes on the meters, knowing that every kilowatt counts.

    And behind every one of these improvised solutions, there is an engineer who stayed late, a technician who rewired a panel in the middle of a shutdown, a manager who defended a CAPEX request three times before it finally passed. This is not innovation. This is industrial triage.

    Meanwhile, the rest of the world moves with a clarity Europe no longer has. The United States signs long-term PPAs in a matter of weeks. China builds industrial clusters plugged into massive hydro and solar baseloads. The Middle East creates entire low-carbon production zones powered by ultra-cheap renewables and hydrogen.

    These regions do not talk about transition. They talk about advantage.

    And Europe, for all its ambition, struggles with the one thing industry cannot live without: stability. You cannot decarbonize competitively without predictable energy conditions. But today, unpredictability is the only constant.

    Factories are not abstractions. They are thermal cycles, pressure systems, conveyors, PID loops, furnaces, dryers, automation architectures built layer upon layer over decades. You don’t electrify a line by changing a paragraph in a regulation. You do it with CAPEX, downtime, engineering, risk — and a level of energy visibility that has become almost impossible to obtain.

    So teams improvise rationally. They instrument steam lines never monitored. They deploy edge computing to extract signals buried in old PLCs. They reverse-engineer code written in the 1990s. They patch SCADA systems that should have been replaced ten years ago. They build temporary dashboards because the ERP can’t track energy flows. They keep the factory alive one workaround at a time.

    But they cannot fight uncertainty alone. When a plant cannot predict its energy cost six months ahead, every investment becomes a bet. When regulatory frameworks shift faster than machines can be retrofitted, every roadmap becomes obsolete. When the rest of the world accelerates while Europe hesitates, the gap grows silently — and dangerously.

    Europe is not losing the race because it lacks ambition. It is losing ground because it lacks visibility.

    Industry doesn’t ask for miracles. It asks for long-term contracts that don’t shift overnight. A grid capable of absorbing electrification. Regulatory consistency. Access to capital. And the recognition that decarbonization is not a CSR exercise but an industrial redesign.

    Give European plants stable conditions, and they will do the rest. They always have.

    But today, we are running out of time. And even faster out of illusions.

    Europe can still win this race. But it won’t win it with narratives. It will win it with clarity, stability, and courage — the courage to align ambition with the reality of factories and the people who keep them alive.

    Or it won’t win at all.

    The rest is noise.

  • The Substrate of Failure

    Why Europe’s Industrial Transformations Succeed or Fail Before They Begin

    Europe speaks the language of transformation fluently. It funds transformation. It creates committees, drafts roadmaps, launches alliances, and names programs with theatrical ambition.

    And yet nothing fundamental has changed.

    Seventy percent of large-scale transformations still fail — the exact same figure reported by Kotter in 1995. Meanwhile, 21 percent of European industrial companies now face acute strategic stress, a 50 percent increase in two years.

    The paradox isn’t mysterious. It is simply misunderstood.

    We blame leadership. Or communication. Or resources. Or methodology. We rotate through new frameworks — agile, OKRs, design thinking, product operating models — as if better choreography could fix structural gravity.

    We keep refining the method.
    We keep ignoring the soil.

    Transformation rarely fails because the plan was wrong.
    It fails because the substrate makes execution impossible.

    The substrate is the organization’s relationship with risk, truth, iteration, disagreement, and failure.
    European industry was built in a world where failure meant bankruptcy, injury, or operational collapse. Today, failure means data. But the reflexes haven’t changed.

    When the substrate punishes experimentation, transformation becomes theatre:
    agile rituals without agility, innovation boards without innovation, cultural programs without cultural movement.

    A perfect methodology on a hostile substrate produces nothing.

    The real divide isn’t technological — it’s civilizational

    Look globally and the contrast is blunt.

    • In Silicon Valley, failure carries social currency. A founder who crashes a startup raises money for the next one.
    • In China, entire industries pivot in a single quarter. Velocity is systemic.
    • In Europe, committees multiply while decisions evaporate.

    Our industrial memory was shaped by decades of stability: optimize, standardize, eliminate variance. Those instincts were rational when a poor automation choice could shut down a factory.

    But today, when business models depend on rapid iteration under uncertainty, the same instincts become an anchor.
    And anchors don’t transform.

    This substrate determines why identical methodologies produce opposite outcomes in organizations that look identical on paper. It determines why some European companies accelerate while others stall. It explains why capital, consultants, and pilots accumulate — but little actually changes.

    A Tale of Two Giants

    Siemens: engineering failure tolerance into the operating system

    During COVID, Siemens shifted 300,000 employees in 190 countries to remote work in two weeks. Not because of technology — because of culture.

    Siemens practices Customer Zero: every new tool, product, or module is deployed internally first, at scale, with real consequences.

    Bugs are not shameful; they are expected.
    Engineers surface issues early.
    Iteration is rewarded, not penalized.

    Transformation isn’t a program.
    It is a physiological function.
    The substrate supports adaptation.

    Volkswagen CARIAD: when political survival destroys technical truth

    CARIAD, launched in 2020, was meant to unify software across Volkswagen’s brands.
    6,000 engineers. Billions invested.

    Four years later: layoffs, restructuring, and a $5.8B partnership with Rivian that bypasses CARIAD entirely.

    The issue was not technological — Rivian proves the technology works.
    The substrate failed.

    At Volkswagen, brand sovereignty outweighs software unification.
    Audi engineers answer to Audi.
    Porsche engineers answer to Porsche.

    Six teams reportedly built the same feature six times because no brand would adopt another brand’s work.

    When failure becomes political ammunition, engineers stop iterating.
    And once iteration stops, transformation is dead.

    CARIAD didn’t fail in execution.
    It failed in conception.
    A centralized software substrate was incompatible with Volkswagen’s political substrate.

    Three questions that predict transformation outcomes

    Executives often ask: “Which method should we choose?”
    The wrong question.

    These three reveal the truth with brutal precision:

    1. When was the last major failure discussed openly in an all-hands meeting?

    If leadership can cite one — and what was learned — the substrate tolerates reality.

    2. Who received the last three major promotions — risk-takers or risk-avoiders?

    This reveals the real incentive system. It is the operating truth behind the PowerPoint.

    3. How many days between “we have an idea” and “we test it in real conditions”?

    Under 90 days → experimentation is possible.
    Over 180 days → bureaucracy suffocates innovation.

    The decision matrix writes itself:

    • 3 positives → transform boldly.
    • 2 positives → transform selectively.
    • 1 positive → fix the substrate before scaling.
    • 0 → do not transform internally. Partner or rethink strategy.

    Volkswagen’s partnership with Rivian was not a failure.
    It was substrate honesty.

    The truth Europe avoids

    Europe does not lack capital.
    It does not lack engineering talent.
    It does not lack ambition.

    It lacks a healthy relationship with failure.

    Our industrial DNA rewards consistency over curiosity, predictability over iteration, political safety over technical truth. As long as this substrate remains intact, the 70% failure rate will remain intact.

    Siemens succeeds because it aligned its substrate with today’s world.
    Volkswagen struggles because it defends a substrate built for yesterday’s world.

    Methodology is irrelevant in both cases.

    The only question that matters

    Before the next €50M transformation program, leaders should stop asking:

    “Which methodology should we use?”

    and instead ask:

    “Does our organization tolerate the failure rate this transformation requires?”

    If the answer is yes, the transformation has a chance.
    If the answer is no, the transformation is already over.

    → Read more about our approach to industrial transformation in the About page.

    → Discover the mission behind Make The Human Shift on the Home page.

  • Europe’s Impossible Mandate: Why Sustainability Became the Hardest Strategic Puzzle for European Companies

    Europe is asking its companies to do something no other region demands: to be simultaneously transparent, responsible and competitive in a world that rewards none of these qualities. This is the paradox at the centre of the European project today, and it is hitting the industrial world with a violence that many underestimated. Not because sustainability is misguided—far from it—but because Europe has built a regulatory architecture that exposes industrial reality faster than Europe can change it. And in the global race for industrial power, timing matters more than virtue.

    Something profound has shifted over the past three years. The sustainability movement that once looked like a moral horizon has become a geopolitical pressure cooker. CSRD, due diligence, taxonomy, CBAM: each of these tools was designed to make European companies confront their impact on the world. Each had the ambition to transform capital allocation, business models, and value chains. But taken together, and placed within the unforgiving reality of global competition, they now form a mandate that appears both admirable and impossible. Europe built the world’s most advanced mirror at exactly the moment it became the hardest place to run an industrial business.

    Behind the façade of regulatory elegance lies a more brutal story. European executives are not dealing with sustainability. They are navigating contradictions. They must comply with the deepest reporting framework ever designed while their competitors in the United States receive massive subsidies, face fewer disclosure requirements, and operate with energy costs that Europe cannot match. They must decarbonise faster than China while China continues to scale production, secure raw materials globally, and drive down the cost of clean technologies through sheer industrial volume. And they must align with societal expectations on sustainability while shareholders, markets and remuneration systems still reward short-term metrics shaped in the 1990s.

    It would be easy to accuse companies of resistance. The reality is the opposite: they are cooperating in a system that gives them contradictory signals. They are told to invest heavily in transparency, traceability, ESG data, double materiality assessments—yet their industrial environment remains structurally misaligned with the very transformation this transparency reveals. They are asked to make credible net-zero commitments while operating in value chains where Europe controls neither the energy mix nor the critical materials nor the geopolitical environment. They are required to publish transition plans that presume clarity on technologies, infrastructures and costs that do not yet exist. And they must do all of this under political messages that oscillate between ambition and rollback, depending on electoral cycles, energy prices and public opinion.

    This is the European dilemma: regulation has moved faster than strategy, and transparency now reveals what strategy is still unable to solve.

    In the boardrooms of industrial Europe, this tension is not theoretical. It is the daily substance of leadership. Decisions that once seemed unthinkable are now routine. Do we invest millions into CSRD-grade reporting systems while our competitors invest in production capacity? Do we extend European sustainability standards to global subsidiaries, knowing it could create cost asymmetries and legal exposure in jurisdictions with weaker norms? Do we exit profitable legacy businesses because their carbon profiles make long-term alignment impossible? Should the next gigafactory, datacentre or R&D hub be built in Europe out of loyalty, or in the US where the incentives are overwhelming? How long can we operate plants exposed to volatile energy prices when other regions stabilise industrial costs through state intervention?

    None of these decisions are easy. None are addressed in the directives. And none fall on regulators; they fall on the executives who must reconcile principles, politics and survival.

    What makes the European situation unique is not the regulation itself but its geopolitical solitude. The United States talks about sustainability but scales subsidies. China talks about climate neutrality in 2060 but scales production and secures minerals. Emerging economies talk about development—and they are right to. Europe, meanwhile, built its transformation narrative on transparency. Not on industrial policy. Not on energy sovereignty. Not on strategic autonomy. On transparency alone.

    But transparency is not a strategy. It is an exposure.

    What makes this exposure dangerous is that Europe has not yet answered the only questions that matter: What kind of industrial base does it want to keep? What sectors justify public investment? Which value chains must be secured regardless of cost? How much resilience is Europe ready to pay for? And what sacrifices—social, financial, political—is it willing to make to preserve industrial sovereignty?

    Without these answers, CSRD becomes a paradoxical instrument. Not a lever of transformation, but an X-ray of structural fragility. It forces companies to make visible the vulnerabilities of a continent that has not decided whether it wants to compete on cost, innovation, resilience or moral leadership. It pushes leaders to articulate transition plans while Europe still hesitates on its own energy and industrial doctrine. And it confronts companies with truths that political systems prefer to treat as technicalities.

    There are, of course, leaders trying to turn this burden into an operating system. Companies that redesign products for durability rather than replacement. That bring parts of their supply chain closer to home. That invest in circularity, industrial symbiosis, lifetime extension, traceability. That take resilience seriously, not as a communication theme but as a design constraint. They are not the loudest but they may be the most strategic. Their bet is simple: Europe’s regulatory discomfort is temporary, but the need for credibility is permanent. If Europe ever aligns its industrial and geopolitical strategy with its transparency regime, these companies will be the first to benefit.

    But the truth remains: this is not yet Europe’s collective trajectory. Today, sustainability in Europe is a question of individual courage inside a system that still rewards the old equilibrium. And courage has limits when the environment punishes those who move first.

    The sustainability debate in Europe will not be resolved by refining ESRS indicators or adjusting thresholds through Omnibus packages. It will be resolved by answering a geopolitical question that has nothing to do with reporting: What does Europe want to be in the next industrial cycle? A museum of past excellence? A regulatory island? A high-trust, high-resilience industrial bloc? Or a region that imposes constraints on itself while depending on others for energy, materials and technology?

    European companies cannot answer this question alone. But they are forced to act before Europe has answered it for itself.

    That is the heart of the impossible mandate. Europe built the most demanding sustainability mirror in the world without building the political, industrial and geopolitical structures necessary to act on what the mirror reveals. And until this gap closes, European companies will continue to carry a burden that is not of their making: the expectation to reconcile moral ambition with global competition, without the tools that make such reconciliation possible.

    If this reflection resonates, explore the other essays in the laboratory.