Addressing future opportunities ‘with our eyes wide-open’
Interview with Ann Mettler, Vice President Europe at Breakthrough Energy.
The current age of technology is characterised by complexity but also by volatility. Policymakers have to take account of both these aspects. For Ann Mettler it is clear that the impact of technology spills over into many more areas than you may initially realise. Ann Mettler has more than two decades of experience in high-level public policy and strategy, operating at the intersection of technology, innovation, foresight and strategy. Until 2019, she served as Director-General at the European Commission’s internal strategy department, now she works at Breakthrough Energy, an organization
established by Bill Gates to help the development and deployment of the clean technologies needed to achieve a net-zero emissions future. In this interview (1) she pleads for strategy-driven public sector organisations, for the EU and its Member States to be frontrunners in their capacity to deliver sound public services, and for an increasing need to preserve trust in the EU’s democratic processes.
By Gaston Moonen
Strategy development to remain fit for purpose
Until 2019, you worked as Director-General and head of the European Commission’s internal think tank, the European Political Strategy Centre (EPSC), for President Jean-Claude Juncker. Can you briefly explain what this work entailed and how strategy development and foresight influenced the work of the European Commission?
Ann Mettler: The European Commission is traditionally an institution that makes legislative proposals which then undergo a negotiation process with co-legislators that can take several years till implementation. But policy makers today operate in a very volatile world. They need to react quickly to developments and new trends, be it in foreign policy, technology, security or public health.
The role of the European Political Strategy Centre was to identify trends and stimulate interdisciplinary discussions across Commission services to develop strategies to address them at an early stage. In essence, it was about making the Commission and the EU more resilient against crises and disruptions. But at the same time, it was also about reaping opportunities. Many changes on the horizon — for example the energy transition — can be very promising if Europe were to reap first-mover advantage in the development of clean technologies.
To illustrate, the EPSC flagged early on the growing importance of battery technology to achieve the EU’s climate goals and also the massive market potential of this technology. This inspired the creation of a new initiative, the European Battery Alliance EBA. The EBA helped spark battery development in the EU, which has now in a short period of time become a global player in this growing industry.
Public sector organisations have statutory tasks and specific mandates, and this is also the case for public audit institutions. How important is it then to develop long-term strategies for public sector organisations if their tasks and responsibilities have already been laid out?
Ann Mettler: It is important because the world around us is changing. Organisations are created at a specific time and their mandates and internal organisation reflect the challenges of that specific time. As new trends arise, these organisations need to develop strategies on how to deal with these challenges — otherwise they are not fit for purpose and this can lead to an erosion of trust, which is particularly corrosive in democracies.
Imagine an agency dealing with security not developing strategies on how to tackle cyberattacks, simply because there were no cyberattacks when the agency was created. Imagine an agency dealing with transport not taking into account climate change or the move towards electro mobility, or economics ministries, which could not anticipate what seismic changes digital technologies would unleash on global markets, and so on.
From your personal experience, which public sector strategy would you consider particularly successful? And what would you say are the main conditions to set the ground for a good and successful strategy?
Ann Mettler: The EU presented a very successful long-term climate strategy in 2018. Europe was the first continent to pledge net-zero emissions by 2050. And since then, this net-zero pledge has become the cornerstone of the current Commission’s Green Deal and is being mainstreamed in all sectoral policies. The strategy was successful because it did not treat climate only as an environmental issue but articulated it as an economic issue — global competitiveness in clean tech — and as a social issue as well. Think of the hardship decarbonisation is causing in coal regions, which is one of the reasons why the current Commission initiated a Just Transition Fund . This comprehensive and inclusive approach helped to rally all Member States and all relevant political parties behind this goal. And it inspired other geographies to follow suit. Eight out of the ten largest economies today have net-zero pledges, so in this area Europe was definitely an early leader and trend-setter.
Towards a whole-of-government approach
You have also served for several years as chair of the European Policy and Strategy System (ESPAS), an informal network of EU institutions, which monitors global trends and offers strategic foresight to the EU’s decision-makers. What are in your view key issues EU institutions need to address to improve their long-term strategy development?
Ann Mettler: The European Commission has some of the world’s best technical experts among its staff. But it needs to get better at looking at trends and challenges from a multi-disciplinary and cross-departmental perspective. We called that a whole-of-government approach.
Most challenges do not fall neatly into the responsibility of one department. Take for instance industrial policy, where value chains do not necessarily represent the sectoral organisation of the Commission’s departments anymore, whether they be energy, transport, digital, etc. I am not calling for a reorganisation, but it is important to start with a holistic analysis of trends and challenges and then develop a cross-sectoral strategy. So, a lot of the important work is done at the very beginning of the policy process.
It was precisely the reason why I repeatedly called for the creation of a Policy Design Board. To date, there is only a Regulatory Scrutiny Board but — in many ways — it is starting its work too late, namely when a lot of policy formulation has already taken place. Why not start with a Policy Design Board, which could design policy outside of the usual silos, be inspired by global best practices and a rigorous, evidence-based trend and foresight analysis?
In earlier interviews and presentations, you highlighted the need to think interdisciplinary, to challenge the intellectual status quo, to really have an open mind and see the world through others’ eyes, and to create safe-spaces for open debate. Do you consider these as key ingredients to link private sector developments to public sector strategy development?
Ann Mettler: I think these are key ingredients for running any type of organisation, be it public or private. The private sector has an advantage here because competition forces businesses to always stay alert and watch out for new trends and try new ideas. If a company becomes lethargic, it will not be able to remain at the cutting-edge and can go out of business. But to be honest, the private sector also often faces difficulties with disrupting itself from within. It is called the ‘Innovators Dilemma’ — how to come up with innovations which challenge a company’s successful, current business model. But if a company cannot do it to itself, others surely will, and many companies have fallen prey to their own acquiescence and lethargy.
In that sense, the public sector is a bit different because it does not face competition to the same extent, and many expect public services to be prudent and cautious rather than experimental and risk-taking. That being said, I think in democracies, a, modern and responsive state that functions well is an absolute precondition. Otherwise, the trend towards politically authoritarian states — but often with efficient and technocratic public administrations — — may well accelerate.
Assessing public expenditure in addressing long-term challenges
Public audit institutions are often affiliated with the past, assessing what has been realised, whether rules have been complied with and money spent well. Why then should long-term strategy development still be important for them?
Ann Mettler: It is for precisely this reason that I often sought the active engagement of public audit institutions, and why the ECA became a member of ESPAS during my mandate. But coming back to your question, whether or not money has been spent well is not only a checkbox exercise, i.e. whether all formal requirements have been met, but also a question of benchmarks. What do we measure against? What are the long-term trends and challenges that public expenditure is supposed to address? And is a Europe-only focus the right benchmark or should we compare ourselves with the best in the world? As I often used to say, ‘if we want to live better than the rest of the world, we also have to be better’.
So it is about setting the right criteria and measurements. If we analyse that for instance climate change and population ageing are going to be key challenges in the decades ahead, public budgets should be assessed by whether or not they are adequately addressing these challenges and preparing for the future. I know that this is easier said than done but it is the only way to future-proof policy and prepare society for what is to come. Because the truth is we already know a lot about what awaits us in coming years and decades.
By assessing policy delivery and impact, external public auditors can provide information that can form a critical component of evidence-based and evidence-informed policy-making, which normally underpins democracies. How could audit institutions provide most added value for the strategy development of public sector organisations? And how do you see the role external public auditors can play in the context of the response to the COVID-19 pandemic?
Ann Mettler: Public auditors should not only check in retrospect whether money has been spent effectively and efficiently to implement the priorities a specific government has set for itself. Governments take many factors into account when determining their political priorities, including specific stakeholder interests, and tend to have a short time horizon, usually one political mandate.
Audit institutions could run foresight exercises to better understand the trends that will underpin future policy development. It is important that audit really focuses on the underlying trends, as well as global benchmarks.
I know that the ECA has worked to strengthen its foresight capabilities, which I recognise and applaud.
What will be very important, also in the context of the COVID-19 recovery, is that public auditors gain a better understanding of the dynamics of innovation. Why? Because we live in an age that is defined by global competition for technological supremacy — technology leadership has always been closely linked to economic wellbeing but is now also a matter of security, geopolitics, and strategic autonomy.
But it is important to understand that successful, breakthrough discoveries are rarely the result of linear — if you want budgetary — processes where one feeds R&D spending at the beginning and out comes a successful innovation. Innovation is almost always the result of risk-taking, repeated failures, pivots in the business model, and so on. Not exactly the kind of stuff that auditors like or understand. It explains to a large extent why Europe tends to be better at incremental innovation, but much less so at disruptive, breakthrough innovations. It is not a stretch to at least partly attribute this to the way public finances are managed and audited.
As an anecdote, I remember well when the EPSC organised a conference on the future multiannual financial framework. Instead of starting with the current budget priorities, our opening panel was about the grand challenges Europe was confronted with: climate change, lagging behind in digital tech and innovation, a declining share of global GDP, a volatile neighbourhood in its immediate geography, the rise of China, formidable and hitherto unknown security challenges — from online radicalisation and human trafficking to hybrid warfare. The audience was largely made up of national budget authorities. I think they learned a thing or two about how the world is changing. In hindsight, I am not sure it made a huge difference but it is important to have spaces within public administrations where these issues can come to the fore and be openly discussed.
Technological expertise opens up new perspectives
Even before the COVID-19 pandemic the past decade has often been characterised as the age of disruption, with digitalisation, climate change and the influence of media and social media on public opinion and trust in society. What is for you the keyway forward to better connect technological knowledge to policy areas, for public sector organisations to be abreast with innovation, to get a better idea of what big and smaller companies might come up with in the future and with what societal impact?
Ann Mettler: In my time at the Commission, I always spoke about the need for more technologists to be embedded in all policy processes. One would never contemplate regulation in the economic sphere without economists around the table, the same for any legal matters, which would never be discussed without lawyers on hand. But in my experience, technologists were sorely missing in many discussions, and they were particularly needed in areas that ostensibly had nothing to do with technology, such as foreign affairs, competition, development, or social policy. All these areas have been upended by technology and it would have been critical to have technologists embedded in these policy teams to better understand and anticipate trends.
Seeing now first-hand the enormous technological expertise that exists outside of the public sector, I really feel a need to bring both sides closer together — of course with all the ethical guidelines and precautions that rightfully exist. But, honestly, it is difficult to be ahead of the curve when it comes to technology and innovation when there is so little cross-fertilisation between the public and private sector. I cannot see how the magnitude of contemporary challenges can be met by the public or the private sector alone. This is why I consistently advocate for a new generation of Public-Private Partnerships that really deliver value for society and planet.
In 2019, you changed jobs and started to work as Director Europe at Gates Ventures, the private office of Bill Gates that supports initiatives in clean energy innovation, education, healthcare, and other areas, seeking for global policy solutions, issues you are working on now in ‘Breakthrough Energy.’ One of the issues you highlighted is the role green hydrogen can play in the energy transition. What kind of strategic steps should the EU undertake to make this energy transition really happen and remain at the forefront? And has your work at Gates Ventures changed your perspective on strategy development in public organisations, and if so, in what sense?
Ann Mettler: Firstly, Bill’s climate work has really taken off, which is why it was spun out of the private office and is now a standalone organisation called ‘Breakthrough Energy.’ Secondly, let me start with your last question: yes, my new remit has shown me how well-designed public sector strategies can move entire markets. Take, for example, the Commission’s strategies on offshore renewable energy and on hydrogen. The Commission has given investors and corporates the confidence to invest massively in these sectors — and the Commission has not even presented a legislative proposal yet. But I will also say: regulation alone will not suffice. This is why President von der Leyen was absolutely correct when she introduced the European Green Deal as ‘Europe’s man on the moon’ moment. Without a step change in research, innovation, breakthrough clean tech and bold investment decisions, climate neutrality will not materialise.
Coming back to hydrogen, it is again about implementing a whole-of-government approach. We need support for R&D, dedicated funding for demonstration projects and a number of legislative reforms to create markets for green hydrogen. I emphasise ‘creating a market,’ which means generating actual demand and using the technology, rather than just developing it. That is why we always look at the entirety of the innovation cycle — from early-stage R&D to late-stage deployment and scale-up — because invention is not innovation. We are good at research and R&D in Europe, less so in creating new, sizable companies that can scale globally.
Crisis situations show: EU joining up makes us better off
To end on a clearly positive note: do you believe that the current crisis and the response of the EU and its Member States to the pandemic and its economic fallout has the potential to change the way we work together in Europe for the better?
Ann Mettler: I think it does. While the EU has certainly received its share of criticism, so have national governments and certain companies. If we learned one thing from this entire ordeal it is that we are all in this together. An instrument like the ‘Next Generation EU’ would have been unthinkable only two years ago. EU-wide procurement has, despite some initial hiccups, proven its worth. It is important to always think of the counter factual. Would EU Member States be better off had they all negotiated on their own? I have my strong doubts. So, despite the volatility of the moment, I am very confident that the EU and its Member States have learned a lesson on why speed, better anticipation, and more joint-up policy matter. And another important insight has been that research excellence alone does not suffice in the absence of production and rapid scale-up capabilities. This goes back to my earlier point about invention versus innovation.
The bottom line is: we already sensed in the Juncker Commission that public administrations need to become much more operational, delivering solutions in real time under enormous duress and maximum complexity. This is the new world we live in and I have no doubt that it is here to stay. So, we better get in the game with our eyes wide open to the challenges but especially the many opportunities that continue to abound.
(1) Ann Mettler gave this interview in a private capacity. Her answers are not attributable in any way to Gates Ventures or Breakthrough Energy
This article was first published on the 1/2021 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.
