Digitization in Germany: „We Don’t See the Urgency for Change“

Top in research, flop in technical infrastructure. Germany must be careful not to miss the boat when it comes to digitization, says Britta Daffner, Department Head AI & Data Science at IBM. What Saudi Arabia and Israel have ahead of us and why the moon landing is a great example of successful storytelling

by Natascha Zeljko | 06 Jan, 2021
Digitization in Germany: „We Don’t See the Urgency for Change“

Germany is at a turning point. The course must be set anew, from old economy to digitization. Where do we stand?

In Germany, the automotive industry continues to dominate – that has been our great strength so far – but we have to be careful for this strength not to turn into weakness. We're not really getting anywhere, because we're still doing too well. The feeling of "urgency" is missing. We are still an industry of mechanical innovations and extremely vertically oriented. What it means is that we have very deep expertise, but what we lack is the horizontal line, in other words, something that many disruptors master, which primarily observe and optimize processes.

Are there any figures on this?

The annual ‘IMD World Competitiveness Ranking’ is interesting in this context. It compares the 60 most competitive countries in the world. Germany is currently in 17th place, in 2018 we were still in 15th place, in 2016 we were even in 12th place. This means that there is a descending trend. Four areas are particularly exciting: We are in fourth place in research, which is very far ahead and it shows that we are excellently positioned in this area and also have very good universities. But when it comes to promoting talent we are only in 25th place, in 27th place for the topic of ‘regulatory frameworks’ and even in 40th place for technical infrastructure.

This already shows the problem areas very well...

That's right. In my opinion, these are the key points to work on in the coming years. Improving the infrastructure by expanding the networks and optimizing regulatory frameworks accordingly, for example in data protection, which could be our greatest strength – but the way things are currently being handled is more of a putting a brake on innovation. Talent management and training are very important. Other countries are far ahead of us in this respect. They introduce children and teenagers to the issues of the future and they provide touchpoints with companies and universities at an early stage. In Israel, for example, the universities have the task of giving back to society. School classes are already allowed to experiment, in the universities, for example, they learn how to analyze their DNA sequences. We are a long way from that. Our schools should also focus much more on the topic of computer science, because far too little is done in this aspect. These are all missed opportunities. What I would like to see in Germany is a real, sustainable digital strategy. It's a pity that everything is geared towards just one legislative period; that needs to be considered in the longer term. To come back to the IMD ranking again: One of the most exciting chart breakers is Saudi Arabia, for example, which has shot up in recent years. The country is pursuing its digital plans with great discipline, because the oil business is increasingly breaking away in this region. Basically, the same laws apply to companies as to countries. You have to ask yourself: Where do I want to go and what is the strategy?

How do you manage a shift from old to new economy? What still has to change?

First of all, one should start with culture. And this must be implemented at the very top, at the board level. You need a management team that applies relevance to the topic, that is willing to initiate change and that brings this spirit into the company. A cultural change will not work if there is no support from above. And in terms of employees, that means investing in re-skilling and upskilling. Therefore creating a framework where people are encouraged to approach new things, to become more open, bring in innovations and to experiment with them. But such change takes time, of course.

First of all, one should start with culture. And this must be implemented at the very top, at the board level

What else would companies have to change?

It depends on the company, of course. There is no one-size-fits-all strategy. Just chasing after trends doesn't make sense either. But you have to ask yourself the uncomfortable question: How can I destroy myself? That brings us to the keyword – disruption. Many people, understandably, back away from it and tend to resort to an emergency plan: How can I defend myself? Of course this is a schizophrenic situation. A company can never completely disrupt itself, because you are too close and emotionally attached to the current business model. That's why it makes sense to outsource this area to an extra unit that deals exactly with such issues.

A lot has happened in this area in recent years with all the Digi-Labs and digital factories...

Yes, there are and have been many variations. Unfortunately, also such that did not work, because it was not possible to bring the topics back to the companies and implement them. In the parent companies, digital labs were sometimes not treated with seriousness and rather as ‘playgrounds’ where people did a bit of research and experimentation, but had nothing to do with the actual business. The challenge is to create proximity between the two areas despite the distance, in terms of space and content. It's about getting all the teams involved in these flagship projects. Of course, this works best if the employees themselves recognize the benefits of such implementation. That is always the best reason.

We are surrounded by so much technology. Everyone uses an iPhone, but no one is interested in what's actually inside it anymore. We have to rekindle this enthusiasm

The topic of mediation is an interesting point in general, especially with complex topics like AI this can be sometimes difficult. How do you deal with it? 

I don't see it so critically. Basically you need a good narrative, keyword storytelling. I find it interesting that it worked better in the past, as an example let’s take the moon landing. There was a fascination for technology, for new applications, but we’re missing this today. We are surrounded by much more technology. Everyone uses an iPhone, but no one is interested in what's actually inside it anymore. We have to rekindle this enthusiasm. Talk about exciting applications and explain in concrete terms what you can do with data. I think it's a shame that 80 percent of the conversations I have are in the direction of ‘Will AI take away our jobs?’, instead of talking about opportunities. That says a lot about our mindset. We tend to see everything negative first.

To what extent will the corona crisis accelerate transformation and overdue changes?

Corona is definitely an accelerator. Within few weeks, things have been accelerated that would otherwise have taken years. So despite all the tragedy, I see this as a great opportunity. At the moment, three developments are emerging in the companies. Firstly, it's all about achieving business continuity. This was the overriding goal, especially in the first phase. The second mega-topic was the question of how to digitize business model even faster and more efficiently. And finally, number three, cost reduction. That is the crucial point. Of course, you can use technologies, such as automation to cut costs. I very much hope that we don't stop at this level. That we don't use innovations to automate bad processes just for the sake of saving money. But rather to redesign and to rethink: How can we use resources to build platforms or new models or launch new digital products? And – now I have to be careful not to give the wrong message – of course it was good that the government supports many people and companies with loans. At the same time, my concern is that a lot of things are kept alive in the process that were not in good shape even before the crisis. That we are all getting a little too comfortable, because at the end of the day there is someone there to ensure continuity. And that changes are not perceived as urgent, and that we miss the opportunity to bring about the necessary disruptive changes.



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