Paperjam: Taking over as head of Luxinnovation was a bit of a surprise, wasn’t it?

: I've been at the economy ministry for 24 years. I started my career at the Chamber of Commerce and the Chamber of Trades, advising businesses. I’ve been involved in a number of different areas, from strategy development to the development of industrial zonings and different sectors, right through to finalising the strategy on artificial intelligence (AI) and around data. I thought it would be interesting for me to get back out in the field a bit more and to re-engage with companies a lot more. The opportunity arose with the departure of Sasha Baillie. Luxinnovation is an organisation that I have known well for many years, and of which I am board chair.

Being a civil servant at the economy ministry and preparing the work of politicians is not the same thing as being on the front line at the public innovation agency.

Well, Luxinnovation is the economy ministry’s arm in implementing its policy on the ground. There is a certain logic and it’s important that we maintain this logic between the ministry and the agency. But yes, we are much more visible than Luxinnovation!

It’s easy to imagine that Luxinnovation is an innovation agency, but it has a lot of tasks to do with implementing public policy, such as accessing national or European funding.

No, the agency is almost always involved in technological projects or innovation. Luxinnovation is not responsible for implementing the SME law, where companies can apply for aid for more traditional investments, for example. But Luxinnovation’s role is to guide companies in all matters relating to innovation, research or the decarbonisation of industry or SMEs. Companies will be using innovative technologies to reduce their carbon footprint.

At CES in Las Vegas, Luxembourg was recognised as one of the world leaders in innovation. When you’re part of Luxembourg’s small ecosystem, you always get the impression that things aren’t moving fast enough. Where are we now?

We are in a world that is progressing very rapidly. We are seeing this particularly with AI. We’ve been talking about it for 20 or 30 years and it took the arrival of ChatGPT for everyone to test these technologies and want to integrate them into their processes. Luxembourg has its cards to play in certain areas, but above all it needs to choose its niches carefully and not invest in a large number of areas. In fact, we’re not really talking about niches any more, but about developing skills in certain key technologies. If Luxembourg is really positioning itself in the data economy today, it’s because the data economy will play an important role in all sectors.

It is in this context that the ministry has developed its data strategy, now combined with an AI strategy. The quantum strategy will follow. All of this will help the development of all sectors of activity. It is also Luxinnovation’s role to help the ministry implement this strategy, just as it is its role to help businesses understand this strategy and benefit from the developments financed by the state.

Isn’t it a bit complicated, in a small country like Luxembourg, to identify technologies or investments that should be made at a much later stage in a rapidly evolving world?

It’s a European problem with the fragmentation of the European market. Let’s take the example of our investments in supercomputers. In the United States, they give a lot of money to two centres and we build up the skills of these two centres. In Europe, there are 27 countries and all these countries are trying to acquire their own computer. In this context, we will never be able to compete with the United States, because we will end up with a network of a dozen or 15 centres that will never have the same scope or the same skills as the American centres. We have tried, at least at European level, to limit investment in supercomputers. We now have seven different sites developing skills, including Luxembourg. The Draghi report illustrates the whole issue very well.

Apart from artificial intelligence, the government says it wants to play a role in the health sector and in military technologies. What trends can we expect to see Luxinnovation working on?

The sectors always remain the same. Logistics, health, space, mobility… We have made much faster progress in certain sectors, but in health, for example, we have not progressed as quickly as we would have liked. But, once again, Luxembourg’s advantage is certainly not in the development of medicines, certain procedures or ecosystems. It’s probably more in the area of data, access to data, infrastructure, secure data processing… This means, first of all, that we need to have a clear strategy for national data. Enormous efforts are being made by the health ministry to create this healthtech hub.

Next, we need to combine this data with European and even international data. And I’m convinced that we can play this role to a greater extent in the future. There are some initial projects in which Luxinnovation is involved, such as one between South Korea and Luxembourg. Here again, we are faced in Europe with this fragmentation of the market that does not exist in other major markets such as China or the United States. But if we want to succeed, this is the only way to do it. The automotive industry is also a key sector where we can be much faster than other European countries, but the same questions arise when we talk about mobility. If we are talking about autonomous driving, we are once again talking about data and how to use this data to develop services. Luxembourg has a card to play in all these areas, in Europe at any rate.

When it comes to health, we need to get people to accept that European citizens should share their health data at some point in order to advance pure research and research by laboratories.

The biggest problem today is that we have four hospitals and different institutions that have patient data. We first need to be able to structure the data from these different players so that it can be used together. Negotiations are underway with various players and I have far fewer concerns today than I did a few years ago. But if Luxembourg doesn’t have enough patient data and we don’t manage to pool our data for use in research projects, it will be difficult to demonstrate to others, at international level, that we are capable of doing this. That’s the first thing we have to do! If we structure the data well, make it interoperable and can demonstrate to patients the added value of these studies, it is very rare for patients not to agree to take part.

In a small country like Luxembourg, wouldn’t it be in the state’s interest to create a model and impose it on its players?

We need to leave freedom to the different players, but also to develop the different standards and promote these standards so that everyone uses them to facilitate interoperability between the different systems. In the past, there was a lot of talk about these big data lakes. Most players no longer really believe in them. On the other hand, through concrete projects and use cases, developing common standards and promoting interoperability now seems to be a path advocated not only by all the players, but also in different sectors. Luxinnovation also has a role to play here.

As far as the autonomous car is concerned, the only thing that matters in the end is to put autonomous cars on Luxembourg’s roads while controlling the risks, right?

Yes, there is a working group at government level, involving various ministries, which is looking at very concrete ways of developing an action plan with Luxinnovation. This action plan will have to act in several areas. Legislation, to enable cars to circulate. But also in terms of insurance, technology and data, and we need to have a coherent approach between the different players, whether it’s the government, the players on the ground or agencies like Luxinnovation. Only if all the players work together to devise an action plan and implement it will we have a chance of succeeding.

After all, there are a huge number of cars on the road in San Francisco, in other cities in the United States and in China. The technology is already fairly well mastered. That’s not to say that there won’t be accidents in the future, but accidents do happen without this technology. At certain points, there is also a political risk to be taken in continuing to develop this approach. If we act as a forerunner or pioneer in Europe, we still have a good chance of creating opportunities to position Luxembourg further in the field of motoring.

Does this also involve investment in road and motorway infrastructure? There was a time when people talked about a connected infrastructure, and then only about the need for cars to be connected to each other.

Indeed, the trend among the major car manufacturers is for cars to communicate with each other. They need to be able to deal with different situations without needing the intelligence of the infrastructure. But in terms of infrastructure, it is still important to become more intelligent, because there are all the aspects of congestion and safety. The more information we have, the more we can offer other services that are not just linked to driving the car, but that go hand in hand with mobility. In this context, investment in intelligent infrastructure remains an important issue.

We haven’t talked about defence, but between Luxembourg’s commitments to respect NATO funding levels and Donald Trump’s return to the presidency of the United States--with his desire to further increase the contributions of his NATO allies--it seems clear that we’re going to have to find investments to make or a piece of the economy to develop, no?

I’m not a defence expert, but there are two aspects that are very closely linked to economic development: cybersecurity--and defence is already investing in a sovereign cloud, with skills that have been built up in Luxembourg over the years--and space, probably the area where we can expect the greatest economic returns.

Over the years, we have noticed that space requires considerable investment and that it’s a cash-burning sector, i.e. one where the cost of transforming an idea into a solution is extremely high. Even the future of those who were presented as one-day champions seems complicated.

It’s not Luxinnovation’s role to develop the defence sector, but that of the space agency. Thanks to our initiative, we have increased the number of companies in Luxembourg from 25 to over 80. We’ve more than doubled the number of jobs in the sector. The main objective was to give a chance to a new sector that will grow exponentially in the future.

All the studies show that the space sector will be one of the key sectors of the future. Clearly, this is a long-term sector. We can’t get to the moon in a fortnight. We need a commitment of at least 10 years. We’re only halfway through and the spinoffs are already enormous, and if someone had said to me at the time “you’re capable of attracting companies, of increasing the number of companies very significantly, and there’s a constant interest from companies to come to Luxembourg because they want to be part of this ecosystem”--I wouldn’t have believed them. The next five years will be key.

Luxinnovation also plays a very important role with Luxembourg companies, especially SMEs, which make up the vast majority of the economic fabric. They do not always have the human and financial resources to cope with digitalisation and the environmental transition. What can Luxinnovation do to help?

There are three categories of company.

Firstly, Luxembourg SMEs, which are still in the hands of Luxembourg shareholders. They are well aware that they face international competition and they are well ahead of the game. They integrate technologies well and are obliged to do so to remain competitive.

Secondly, the subsidiaries of large companies in Luxembourg, medium-sized subsidiaries with 200-300 people in Luxembourg, but which are clearly dependent on their parent company. We need to do more to show parent companies that Luxembourg can play a pioneering role in their companies too. There are two or three very concrete examples, such as Avery Dennison or the Goodyear project in Dudelange, where a new technology has been developed. We need to encourage these initiatives much more on our side, otherwise it will be difficult to obtain new funding from parent companies to remain competitive.

Thirdly, there are the more traditional companies, where perhaps Luxinnovation hasn’t been out in the field enough so far. We need to do a lot more. And here, our objective is not to help companies to digitise, but really to innovate. And we need to find those who want to innovate. Now, developing new software or integrating software is no longer Luxinnovation’s job. It was, 20 years ago--but today Luxinnovation must help those who want to automate their production or use AI. Luxinnovation needs to increase its skills in order to help family-run craft businesses to develop further.

Would it be in the interests of the state or Luxinnovation to have a catalogue of more or less turnkey solutions to offer these small players?

This is the aspect that Luxinnovation has been working on for the past two years. The current management team has done a lot of work to restructure Luxinnovation internally on the basis of what has happened over the past 20 years. We’ve always added activities to Luxinnovation: first supporting the craft industry, then the Digital Innovation Hub, right up to creating silos ourselves. For the past two years, however, the whole Luxinnovation team has been working on a different approach, one that is more “Salesforce,” that (on one hand) knows all the tools and will approach companies to show them how these tools can help them, and (on the other) can show them that Luxinnovation has all the people who can implement these solutions.

These are not salespeople, but people with much more specific skills, who know exactly how to draw up projects, structure projects or mobilise the instruments available. Then there’s another part, business intelligence, to really develop know-how internally. This is work that has been done, but which has not yet been finalised, and which needs to be developed further this year. But this catalogue is now on the table, it’s not yet completely digestible, but it’s a work in progress.

I’d like to say a few more words about startups, because this is also within the scope of Luxinnovation: what do you want to do with this ecosystem?

We’ve made clear progress in terms of the number of companies, but to really achieve what we call the startup nation, I think we need to continue to increase the deal flow in Luxembourg. I think that 60 or 70 companies were created last year, but this number needs to be increased. We’re still too small to develop an ecosystem that could be attractive to VCs and other players to really look at the Luxembourg market in detail. So Luxinnovation’s role will be to continue to create, to try to create more with the Fit4Start programmes, among others, to continue to increase the number of startups in Luxembourg, even if some of them don’t succeed. The second aspect is scale-up: today, the first projects are enjoying great success, thanks to the investment we made in the ecosystem five to 10 years ago. Examples include Talkwalker and Salonkee.

But there isn’t the critical mass for scale-up, which, in any case, is a problem throughout Europe, not just in Luxembourg, but even more so for Luxembourg because we don’t have enough deal flow. This will only happen through international collaborations. Even in five-to-ten years’ time, Luxembourg will never have a large number of scale-ups, but we will still need to have international partners on whom we can rely, and it’s the development of these partnerships that will be one of our priorities. Developing a programme to really support startups, give them credibility and then develop an international network of players who can step in to complement the Luxembourg ecosystem.

There are also companies like Goodyear that have their own venture capital funds, as in Japan and elsewhere, and in my opinion we need to work much more with these companies too, because in fact they already have a deal flow and they also have a natural link with Luxembourg. We’ve made the first contacts, but it’s quite clear that it’s more a case of low-hanging fruit to attract these companies--or in any case their branches or subsidiaries--to Luxembourg, in order to integrate the Luxembourg ecosystem in the various target areas we’ve identified for startups.

What is your position on issues such as tax shelter, the status of digital nomad or European entrepreneur, and bank accounts? What do we need or want to make Luxembourg more attractive to startups?

The discussions and projects that are currently being developed are indeed those aimed at improving taxation for startups. If you compare us with other European countries, you can see that we don’t have conditions that are as favourable as others. We will have to work on this and I am convinced that the government will come up with solutions very soon. Luxinnovation’s role is to make proposals… We look at what is happening in other European countries and submit proposals to the government. It’s up to the government to make its own decisions. The second subject is talent. Once again, one element of attraction is the tax regime for people who go to work in Luxembourg, and I hope that there will be changes in the future.

The most difficult problem is probably housing. And not just for startups, but for all companies. We need specific skills and we need a solution to attract these people. I know that there are pilot projects under discussion, but it’s always a very delicate subject. I’ll be both following on from Sasha Baillie and proposing a number of projects to the government to improve the national innovation ecosystem.

The right scale

“In the past, we always tried to play the territorial card, but in the end companies are going to choose where they locate themselves,” says Grotz. “On the other hand, the development of skills and the complementarity between skills is very important today. For example, Luxinnovation has been in close contact with Saarland to define what we can offer the manufacturing sector so that it can continue to develop. Luxembourg will never have all the skills in-house to help these manufacturing companies develop. Nor will Saarland. On the other hand, if, at the level of the Digital Innovation Hub, we really create this network by saying ‘we’re going to work together in this area,’ then I have a lot of faith in it.”

The EU-Musk paradox

“Elon Musk criticises Europe, which criticises Elon Musk. After mocking SpaceX for years, Europeans are no closer to having launch sovereignty,” says Grotz. “It’s clear. We need SpaceX to launch all our constellations… which we launch to compete with Musk. This great dependence is not very beneficial for Europe. If all goes well with Arianespace, we’ll have one launch a month, while SpaceX launches every three days. Musk may be a visionary entrepreneur, but everything was funded by NASA. In Europe, for every euro invested by ESA, one euro must be returned to the country. It will always be difficult to compete with NASA, which identifies an entrepreneur and puts its money where its mouth is. If we develop a mission in Europe, we need to bring together 10 or so companies from different countries.”

Mapping, an invaluable tool

“At the time, defence knew very well what SES was doing, but didn’t know that there were still 100 companies in different sectors that could also contribute to this sector,” says Grotz. “Mapping really enabled us to get in touch with these companies, to identify those that were interested, that already had technologies and that were interested in joining this whole process, also to be accredited to participate in this ecosystem.” Today, adds the new CEO of Luxinnovation, “we know very well that there is a great need for consultancy for all the big companies” in the cybersecurity sector. “With mapping, we can see that we won’t be able to develop all the value chains here, and that we’ll have to act within the framework of the Greater Region.”

Space, of course

“I love space because it integrates all aspects,” says Grotz, asked which technologies fascinate him. “You have to have a vision and, with space, clearly, you can develop different visions: going to the moon, going to Mars… then, it’s not Luxembourg’s job to be the first country on Mars. But we can still play our part in developing these visions.” He goes on to talk about the importance of developing a coherent system between the other different technologies which, combined, will have a far greater impact.

This article, , was written for the  issue of Paperjam magazine, published on 29 January. The content is produced exclusively for the magazine. It is published on the website as a contribution to the complete Paperjam archive.

Is your company a member of Paperjam Club? You can request a subscription in your name. Let us know via .