Europe seems to have lost the innovation race to the US and China. At least for now.
But Europe may still hold an advantage that the US technology system underestimates: values that can become a competitive strategy.
Look at talent: In its early days, OpenAI could not match Google's salaries, yet it attracted exceptional people. The mission (to build a more ethical AI) mattered, and today we see the result. The best people wanted to work on something they believed was right.
When confidence in that mission weakened, talent moved. Anthropic and other spin-offs are a reminder that top people follow purpose and trust, not compensation alone.
There is an economic rationale here (utility theory): as income rises, the marginal utility of another salary increase tends to fall. Autonomy and the feeling of contributing to something worthwhile can matter more than another raise.
The same pattern sometimes shows up with users:
Patagonia built a powerful brand around durable products, repair and reuse not genuinely better products – and drew away some of the customers of other outdoor brands. The growing search engine DuckDuckGo makes privacy the reason people choose it over Google. Fairphone, in a small but loyal niche, challenges a smartphone industry built on short replacement cycles, difficult repairs and opaque supply chains.
None of these companies succeed because values replace product quality, capital or scale. They succeed because values give customers and employees a reason to stay when established players start extracting more while giving less.
And that is the investor angle: On the long run Enshittification¹ is a business risk. The short-term numbers may look attractive. Over time, trust, loyalty and enterprise value take the hit.
A values-led company can protect against that decline, but only if its values shape the product, the incentives and the governance, not just the marketing. It earns retention instead of engineering lock-in.
Values are not Europe's only lever. Capital, speed, scaling, research transfer and risk appetite matter enormously, and values alone will not fix those gaps.
But they may be the foundation for a different model of innovation. One people want to work for, buy from and invest in.
Europe should stop trying to become a smaller Silicon Valley. We should get more confident about what we can actually contribute.
At SCHUMACHER, this is partly why we became a B Corp ourselves, and why we love working with clients who make the world a bit better along the way.
What does your business work towards?
¹Enshittification: A platform attracts users with a genuinely useful experience, builds dependency, then gradually shifts value away from them, fees rise, privacy shrinks, quality declines, switching gets harder. Coined by Cory Doctorow, 2022
FAQ
Can European values become a competitive advantage for businesses?
Yes, if they show up in the business itself. Companies can turn values such as privacy, fair supply chains, repairability and responsible governance into an advantage when they improve the product, earn trust and make customers and talented employees want to stay. Values without product quality or commercial discipline are just marketing.
Why might top talent choose a values-led company over a higher salary?
Once a salary covers a good standard of living, another pay increase often carries less weight than autonomy, meaningful work and trust in the company’s mission. The early growth of OpenAI, and later the movement of talent toward Anthropic, show how strongly purpose and credibility can influence where exceptional people choose to work.
What does enshittification mean for companies and investors?
Enshittification describes a familiar pattern: a company first attracts users with a useful product, then shifts more value away from them as it becomes harder to leave. Fees increase, privacy shrinks, quality falls or lock-in grows. That can lift short-term metrics, but it weakens loyalty, trust and long-term company value.
Which companies show that values can influence customer choice?
Patagonia has built loyalty around durable products, repair and reuse. DuckDuckGo gives people a privacy-focused alternative to Google. Fairphone appeals to customers who want a smartphone designed for longer use and easier repair. Their values work because they connect to a clear customer benefit, not because they are a slogan.
How can European companies compete with US and Chinese technology firms?
Europe still needs more capital, speed, stronger research transfer and greater appetite for scaling. Its opportunity is to combine those capabilities with a model that treats people, privacy and long-term trust as product decisions. Trying to recreate Silicon Valley on a smaller scale is less convincing than building companies with a distinct European offer.
What makes a values-led business credible?
Credibility starts where marketing ends. Values need to affect product choices, pricing, data practices, incentives, supply chains and governance. If a company says it respects users but relies on dark patterns or makes leaving difficult, customers will eventually notice. Retention should be earned through value, not engineered through dependency.
Are values enough to build a successful company?
No. A values-led company still needs a useful product, strong execution, funding and a viable business model. Values become commercially relevant when they help the company attract people, protect trust and avoid the slow decline that follows when businesses extract more while giving customers less.
Why is privacy a competitive advantage in Europe?
Privacy can be a reason to choose one product over another, especially when people feel they have lost control over their data. For European businesses, privacy is strongest when it is built into the service experience: collect less data, explain choices clearly and avoid turning users into the product. That makes trust tangible.