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Digitization – What Germany can learn from other countries

If Germany is known for something other than beer, it is its strong economy and its leadership in different sectors, such as automotive, machinery and engineering in general. Still, lots of experts in the field and frustrated citizens know that Germany has not fully reached the digital age yet. The once industrialized country, which managed to prosper and regenerate after the destruction during World War II, is struggling to enable innovation in digitization.

For years, the most obvious example for this lack of investments into the digital age has been noticeable for most of the population: Internet speeds are abysmal, even more for mobile users. Not only was bandwidth limited and really expensive, the coverage of cellular networks is focused on urban areas, while people living in more rural regions had no or very limited access to mobile networks.

The worst part: This causes a chain reaction that effects thousands of people in the country. The lack of investment into digital infrastructure not only affects individuals and their Internet usage, but also companies that depend on fast connections to compete on a global market. Therefore, while companies move away from rural areas, people living there have a bigger competition on the market due to a smaller pool of employers. And in some cases, a whole generation leaves the region to try their luck in the cities. And when more and more people leave their home, it becomes unprofitable for companies to cover these regions, such that groceries, health facilities and potential investors also leave these regions. For Germany, this vicious cycle caused high unemployment and even higher discontent in the East, which also contributed to an unforeseen support for nationalist and extremist political ideas.

When talking about the digital age, a lot of countries seem to be doing better. The US is one of these countries, with the Silicon Valley as one of the most innovating regions of the world. While it may be obvious to seek advice in the Bay Area, one does not have to leave Europe to find a good model to follow. There is a smaller, nearly unknown country in Europe that, over the years, has become the digital leader of the continent. With over 80 million fewer inhabitants compared to Germany, a former Soviet country has demonstrated how a government can invest in digital infrastructure, starting from its own institutions. With its focus on tech, Estonia not only is leading the European market, it is also attracting highly specialized professionals, companies and investors that further improves the exchange of ideas, research and innovations.

When politics will decide to invest in digital products and services, there is still the German population that might pose an impediment to the process of change. This has to do with how the current population has grown up and what experiences it has made. While the younger generations can be considered “digital natives”, the majority of voters in the country consist of people over 50, which is one of the reasons that Germany has had a conservative government for over a decade. Different age groups have had different exposure to technology, such that the preconditions for introducing new societal concepts are rather diverse. While it is difficult to get progressive and future-oriented politicians in powerful positions, a much bigger challenge is leading less tech-savvy people into a digital future. Introducing digital health products, such as smart wristbands, might deteriorate the health care for people that reject the use of such products. Thus, it is especially important to educate the population on developments and support them through the change. This requires even more investments, which future governments may be willing to do.

Of course, not only the politics is decisive. In other countries, the tech companies are the driver for technological advancement. For solving the missing Internet infrastructure, the big telecommunication companies like Telekom, Vodafone and Telefonica need to invest. Also, smaller competitors need to be supported in order to allow and foster competition, which is again important for advancement. For this reason, it should be a priority to support small businesses and startups, both professionally and financially. As one can look into regions like San Francisco (or even Berlin), startup culture is here to stay and is directly or indirectly responsible for progress in the digital industry. From what is heard from failed startups in the US, failing and declaring bankruptcy is not unusual, and there is less personal risk involved, as the opportunities to start a new attempt are huge. This is something that Germany could adopt, by lowering the bar for startups and reducing the bureaucracy with the registration and operation of a business. This would spawn many new businesses that, again, foster the competition and may lead to new technical hubs inside the country. Also, it would most probably attract talents that may never be willing to relocate to Germany, which is a phenomenon that can be seen with the tech scene in Israel.

Ultimately, Germany is currently still profiting from maintaining the status quo in the economy, which is why car manufacturers are getting more attention and more indulgence than other industries. But the world economy has been changing for years, and in order to compete, Germany will be forced to rethink their digital strategy and allow for new industries to settle down. While there already are some attempts for this, such as opening the market for electric scooters, the companies profiting from this are mostly the same car manufacturers. There is little incentive for foreign companies to expand their business to Germany, if the market is already dominated by local companies from the beginning. What Germany needs is an “immigration” plan for companies coming from Europe or overseas, which helps to enter the European market and enriches both the country and the population. The hope for the future is that the current measures, such as creating hubs for “artificial intelligence”, will be so successful that the country will enter its own digital age and thrive again.

Note: This is an essay submitted as part of an application for a university program about founding businesses and learning the process for building successful startups.

Published inGlobalTechnology

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