Why is Germany still lagging behind with digitalisation?

It is no secret that Germany has not been considered the most innovative country in recent years. One could even say that Germany overslept digitalisation. Why is that? And is it still possible to catch up with countries like the USA or China at all?

These questions and challenges were addressed by politicians and experts at the WELT Economic Summit, which took place earlier this year (Jan. 2019). So, how did it happen that we as a country lag so far behind? One approach: while tech giants are concentrating on all sectors worldwide, Germany is still dealing with it's classic industries such as automotive and mechanical engineering. Despite this, Thomas Buberl, German head of the insurance company Axa, says: 'We should focus on our need to develop innovative champions in areas where we have strengths.' Or as Frank Riemensberger of Accenture puts it: 'In Germany, we have the automotive industry, and then we have nothing for a long time.' If we concentrate on our strengths, as Mr. Buberl says, in the end it will be decided whether traditional carmakers or autonomous vehicles will win. Still, the digital gap in the area of AI must be reduced.


Infrastructural challenges

Concentrating as an economy on a few fields would not be a problem if our infrastructure provided a breeding ground for startups from all industries. After all, there is a lack of funding for start-ups - while in Germany you can expect tens of thousands of euros, in China AI projects are supported with billions. As the investment regulations for insurance companies in Germany are stricter, for example, many IT start-ups will also migrate. An enormous loss.

It's not for nothing that we've been the paper-wasting world champion for years: hardly any other country knows such a bureaucratic system. For many (newly founded) companies, our tedious processes, which can certainly be described as obstructing innovation, are too time-consuming, complex and unnecessary to deal with in the long term. In addition, there is the strong German political urge to regulate, which stands in the way of itself and digitalisation. Anyone who deals with German authorities for a longer period of time will at some point no longer enjoy working with them: another reason why many companies go abroad.


The education system must take the first step

The German education system has also missed the mark: there is still a huge shortage of trainee positions for digital specialists. But this is not where the problem starts - although infrastructural issues in schools such as Wi-Fi are being discussed, digital learning skills such as the 'Flipped Classroom' are still lacking. This creates a structural challenge for society as a whole in the question of doing justice to digital transformation. The aim must therefore be to promote attractive career paths and role models, because we still have about two years until it is too late to catch up.


Trust in one's own specialists

And just as the industries in this country insist too much on tradition, the German economy is too focused on its own market. At the same time, however, managers do not trust in the country's own employees: '76 percent of the decision-makers surveyed from 2,000 large companies named the lack of qualified employees with digital know-how as the most important hurdle to digitalisation,' according to Manager Magazin. Conversely, this means that only a quarter of companies consider their employees to be qualified - two years ago it was still nearly half of the companies. Priorities have also changed: 'only 50% still consider digitalisation to be a top 3 priority in company management compared to 60% in the previous year'.


As you can see, there are still a number of changes that need to be made, both structurally and mentally. After all, Germany's biggest problem is its stubbornness, its unwillingness to allow changes and to rethink - something that has to happen in society and be driven forward.


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