Increasing Germany’s digital competitiveness

Marjorie Buchser

Good afternoon. Thank you very much for joining today’s webinar on Germany’s Digital Competitiveness. My name is Marjorie Buchser. I’m the Executive Director of Chatham House Digital Society Initiative, and it’s my great pleasure to be your moderator this afternoon. So, I shall start this conversation by saying that this event is on the record. It’s fully virtual, with most of our speakers joining live from Germany, Berlin. Yourself, our audience, of course, are joining from about everywhere in the world, and you will have the opportunities to submit your questions to our speakers via the Q&A function. We’ll keep about 20 to 30 minutes after the introductory remark to address your comments and concerns.

So, the topic we want to explore with you this afternoon is how the digital transformation is affecting companies and citizen in Germany, and how the country can shape this process to better meet the societal and economic needs. The digital revolution, of course, is not only a national process, but it’s also a global transformation, and we also consider Germany position on the global stage, and how – its competitiveness compared to other countries.

And finally, we also want to discuss a little bit the European effort, and a co-ordinated response to the digital disruption of European member state, and the ongoing effort to build Europe digital sovereignty. So, with me today I have a particularly knowledgeable panel of experts, starting with Dr Frank Fehler, who’s Senior Vice-President and Country Head for Germany with HLC. I should also mention that we’re very grateful for HLC’s support, who really made this event possible.

I’m also pleased to introduce Professor Kristina Sinemus, who is Hessen’s first Minister for Digital Strategy and Development, Stefan Heumann, which is a member of the Managing Board with the Stiftung Neue Verantwortung, which is a leading Berlin think tank and, last but not least, Iris Plöger, a Member of the Board of Directors for the Federation of German Industries.

Right, so, Professor Sinemus, I want to start with you first and give you the difficult task of starting this conversation, but in short, the digital transformation is really often presented as a business imperative. Yes, of course, it will have and has a profound effect on society, and is affecting most, if not all, German citizens.

So, in Hessen you’re really at the forefront of this issue of digital literacy, and the digitalisation of maybe marginalised areas and rural areas, and really, I guess, the question is, how can digital transformation works for everyone? So, I’m sure our audience would really like to hear a little bit more about the good work you’ve been doing in Hessen, in how the digital transformation can be inclusive, and how it’s implemented at a state level. So, Professor Sinemus, over to you.

Kristina Sinemus

Yes, thank you very much. First of all, I would say hello to all the ladies and gentle – the speakers and the guests, and I thank you for the opportunity to be here and to give my remarks from a federal state perspective and, as you already pointed out, Hessen is one of the first Bundesländer who has a Ministry of Digitalisation, and we have – this is only the small version of our digital strategy. And that is something we involve as a digital transformation of everything, of the daily part of everybody of the citizens that we see in the future. And let me raise two issues and then answer your first questions. If you look on the support of preconditions at the level of the federal states, they are key for Germany and Germany is a key for the European country – competitive – competitiveness, and I think we have to look as the Government on a more holistic approach towards this digital competitiveness, and this includes, first of all, digital infrastructure.

We see that the digital infrastructure is as well, maybe in quite a situation, really a key. We have to look therefore on the question of cybersecurity. We have to look on the digital innovation and transformation of the economy, and if we want to have the skills in the eGovernment, we have to educate the people. And these are, from my point of view, really the areas we have to work on, and we do our digital transformation in having the digital strategy all over all activities in Hessen.

What do we want to do? First of all, we expand the digital infrastructure, we connect all houses and institutions with a gigabit capability, and we introduce 5G mobile communication standards. Secondly, we support a programme, which is called Smart Region and Smart City, and the countryside. That means we want to bring forward the co-operation in the region and the countryside to really digitalise the progress, the processes and therefore, at the end of the day, the economy and the education.

Third, we strengthened basic and innovation research, and this especially regarding AI. That means artificial intelligence via the state-funded programme, and established various initiatives and institutions, because, from my point of view, AI is really, one technical tool, which can help us in the future to foresee some activities, for instance, in the cybersecurity area, and to be more effective and straightforward in future in the digital transformation.

And the fourth point I want to make is, I put it in the beginning of my statement that we need a more holistic view. That means we have to think, the digitalisation and the digital transformation more in an overall perspective, and in this overall perspective, you have to see that diversity and strengthened competitiveness in Germany and Europe has to include all the viewpoints of the local and regional governments, the economic and social partners, the relevant NGOs and private stakeholders. And therefore we really have to go and dialogue, and to have sandboxes, for instance, testing labs to do and to try something in the government. We have to invest in small and medium-sized enterprises, especially in rural areas. We have to support internet hubs, like we have the DE-CIX in Frankfurt, the largest internet node worldwide.

And we have to invest in the knowledge, in the technical university, as well as in quantum computing or blockchain, but in this holistic view, at the end of the day, we do not have to forget the view of the ones who have to use it, the digital transformation, the citizens, and this perspective is the key of our digital strategy. We try to build the strategy in looking with the eyes of the citizens on the digitalisation and the future, and this is what I mean, “Take all the perspectives into consideration and have the holistic view, because digital transformation in the future can only take part if the users are part of the transformation.” Thank you.

Marjorie Buchser

I still have problem unmuting myself, after all this time, but I have to say, Professor Sinemus, your remarks are really music to my ears, because I think in Chatham House, the recommendation we keep mentioning about the digital transformation is a multistakeholder process, the notion of experimentation within the government, and you mentioned sandboxes, but also trying to be more anticipatory and consider the technology that are coming up, like quantum. So, I very much appreciate that and I think that it’s clearly, sort of, also the key insight we got from multiple partners. So, thank you for that.

Frank Fehler, I want to turn to you, and because we did mention that, you know, the digital transformation is a business imperative, and is of course the question of who is shaping this transformation? And you come from a – you have a very interesting perspective, because German and cars, but from a company where the headquarters obviously are in India, and so it’s a really interesting perspective it can bring. And essentially, what is the role of foreign businesses in the German digital transformation? Frank, over to you. Thank you for joining this conversation.

Frank Fehler

Yeah, thank you so much for being invited. So, first of all, let me put a little context about the company with – I’m working with, to give a little perspective. HCL is one of the largest global technology companies and is, of all of them, the youngest, as minimum where the service part concerns. Yeah, we are doing IT services and digital services, since the beginning of the century, and in this time of 20 years approximately the company has grown from zero to 200,000 employees. Yeah, so, we have 200,000 employees globally doing digital transformation and digital services, yeah.

And first of all, I would like to thank Professor Sinemus and the entire state of Hessen, because there’s one thing, which is very important for us to understand. All these global technology companies who are settled in Germany, all of them, us as well, are settled first in Hessen, yeah, in the Frankfurt area, yeah, all our competitors are there, yeah. The first Innovation Centre that we opened in Continental Europe, before we had one in London, but the first one we opened in Continental Europe we opened in Hessen, in Eschborn, yeah, where we are doing digital transformation innovations for German banks, yeah.

Now we are also opening a second Innovation Centre in Berlin, but we always started – we started, like all our competitors, in Hessen and therefore we are very thankful for that, and this has two reasons. Number one, because Hessen has two important things. Hessen has a strong industry, a customer base, and a very strong – what is even more important for us, a supply of talent, yeah, because at the end of the day, the limiting factor for us to do business and for us to grow our business is the availability of talent, as simple as that, yeah.

We are growing in Germany this year highly double-digit, yeah, close to 50% year-on-year growth, yeah, and the only limiting factor that we have at the moment is the availability of talent locally and globally, yeah, and there we are looking where we have the best talent. At the moment, it is in Hessen, it was traditionally in Hessen, and I hope this will continue.

Beside all this and all this supply education, etc., there’s one limiting factor that I feel at the moment in Germany across the board, is that the digital transformation – we’re thinking more from a slower part of the society than from the faster part of the society, and this you can see, for example, in other countries of the European Union. Take for example the Baltic states, yeah. They’re driving – or traditionally digitalisation from a younger people, yeah, and at the end of the day, yeah, we believe you need to be as slow as people are.

I think people are – can be much faster, even my generation can be much faster than people are expecting me to do. So, what are we doing? I mean, we – despite the fact that we have there an Innovation Centre, where we apply innovation to customer needs, this is our business at the end of the day, yeah. Apply innovation to customer needs, turn those innovations into tangible results for the customers, at the end of the day, optimising processes, saving cost, saving energy, making processes more secure, yeah, so, this is for what we are working, for what our customers are paying, yeah, to make this applicable. And the speed can be faster, yeah, but nevertheless, it’s a fantastic environment in Germany, and I can also claim here that we are now more than 2,000 local people in the geography, so – and we can claim that we are the largest – the inter – from the international companies, the largest local staff because there’s the talent available.

Marjorie Buchser

Thank you very much, Frank, and maybe, because we still have a little bit of time, and I think you, sort of, flagged that already a little bit, but with, you know, referring to Germany’s talent, but do you see other leadership opportunity in Germany or, sort of, aspect where you really think that Germany has a competitive advantage to be the centre of the digital transformation in Europe?

Frank Fehler

Yes, and this is the – that is the application of digital technologies. I think we are not the leaders in manufacturing digital hardware. We are not the leaders maybe in digital innovations, per se, yeah, building the base for, let’s say, digital twins, but we are excellent engineers and our strength is to make it applicable, yeah, to use smart chips and to use smart base technology and help companies to save energy, for example.

We are running with one of the large German automotive companies, we are running at the moment an energy-save programme where we’re using digital twin technology to help them to save in their manufacturing area up to 10% of their energy, so, a topic which is today even more important than it ever was, yeah. We started at that, let’s say, a year ago, this project, under totally different circumstances, yeah, but nevertheless, this is companies like large automakers. They have an energy bill of more than €1 billion every year, yeah. Imagine if we can help them to save 10% of their energy bill, what that would mean for the entire society and for them, and also for the ecology.

There’s another automaker. We’re helping them to make their cars more fuel-efficient, yeah. There is, let’s say, a large fast food and a large logistic chain where we’re using blockchain technology to connect the burger that you eat at the fast food restaurant to the cow called Elsa who was born and grown up in the North of Hessen, yeah, and the potato from the fries back to the field in Baden-Württemberg, where the potatoes were harvested. So, all those things are – which – where Germany is an excellent field to connect technology with its application. Yeah, this is our strengths.

Marjorie Buchser

Fantastic, thank you, Frank, and I think that is a really good reminder of the benefits of the digital transformation and the energy-efficiency that it can lead to, and of course, in the face of the current climate crisis, there’s a clear need to super-charge it, which is a good segue for me to turn now to Iris. Iris, do you – obviously you’re the voice of the German industry, if I can say so, and you, sort of, clearly understand their concern and their needs. So, what, you know, in your representation of the German industry, what should be the priorities of the German Government really to supercharge this transformation in Germany?

Iris Plöger

Well, first of all, thank you for the invitation and for this. This is a discussion we already had. I felt I could jump into a couple of remarks already and since I had the pleasure to listen to Professor Sinemus before, it feels like we’ve talked prior to this panel discussion because, it seems to be, there are a lot of items on my shortlist, which is pretty much – that are aligned with what she already mentioned. Because I would like to put really the focus on the role of the government for this issue, of course, since we just got a new government at the end of last year and they had quite a lot of space and – for digital issues in their coalition agreement, and now, of course, we are curious to see what will be the outcome of this addition.

But let me just outline maybe a couple of issues that we heard before. First of all, for sure, is the topic of digital infrastructure, and we’ve heard measurements we – in Hessen that are already taken, but of course we have to see it all over the country, and we still see that we are lagging behind, every survey says that, and that we have roughly 90% of the households in Germany that have access to a fast internet with a bandwidth of at least 100Mbit per seconds, and that is really still a problem, and if you look at the rural areas it’s even worse, that we are under 70%. So, therefore all these initiatives for smart areas, not only smart cities, but smart areas is really important because in Germany, we are all over the country, and especially our Deutsche Mittelstand, the German Mittelstand, and the hidden champions are pretty much everywhere, and their really lack of good digital infrastructure, so that still remains one of our top priorities. I mean, we’ve been talking about it for a long time, so sometimes I feel a bit exhausted, still mentioning that.

Another point was already taken. That is really strengthening the key technologies in Germany, and I think AI is probably the prominent – the most prominent example of the last couple of years, and we see that the government really has to put some more efforts on this topic. We have already an AI Act, we have an AI strategy, but we have to become much better in the development and the application and implementation of AI. So, therefore I don’t know whether really it was Frank saying that we’re so good at being the early adopter. And we see a lot of figures that the implementation of these technologies and the use of the so-called low-hanging fruits are pretty – still very poor, but I understand, Frank, that he rather came from the industrial basis of our knowledge, and that we should make that clear, and I totally – I’m totally in line with that.

The third point I would like to mention is really implementing a smart data policy, since we’ve just had the Data Act, the draft of the Data Act being published. The access and the use of data is really – they are key factors by exploring the innovation potentials of an industrial data economy, and we really need a more innovative data policy where we feel, of course, that the data share should be on a voluntary basis and not a statutory one, and that it should be a fair and controlled use of data. And therefore we need really economic incentives and an improved legal and technical framework. We’ve been working on that for a couple of years now, but we’re – really with little progress, so I think we have to – we already mentioned the word ‘speed’. We have to speed up because we are really way too slow compared to other areas.

And then Kristina Sinemus also mentioned the public sector. We believe the public sector is key and also there we are lagging behind in Germany, to have really what we call eGovernment, the digital administration, and govern – the companies really, really depend on an efficient and digital public administration. We have seen that not only with COVID, but with every other crisis, we see, we really have to improve in that. And besides these topics, of course, we have a changed situation, since the end of February, I guess, and so, therefore, I would like to put a spotlight also on the well-known topic of cybersecurity, because we see that we still have to improve our cyber-resilience, especially looking at not only digital, but all kinds of infrastructure, that we have to be more competent, and that we have to put up even higher walls of security, and to raise the awareness also with certain companies and the information flow between public administration and companies, so that we can survive the next couple of months, I’d say. Thank you. That would be my starting point for the discussion.

Marjorie Buchser

Thank you. Thank you very much, Iris, and touching on the current concepts and the fact that digital infrastructure are very much critical infrastructure today and need to be protected as such. I want to now turn to Stefan, and we talked about, I think, Hessen great work, but I think that Frank also flagged that that’s not necessarily the case for all federal state in Germany. And while there are call for greater policy intervention in shaping the digital space, I think it also begs the question whether the German public administration is ready to take on that challenge and has the competence needed to really intervene at that level. So, Stefan, over to you on what you see is the, you know, the capacity, I would say, of German Government to really implement this transformation.

Stefan Heumann

Thank you, Marjorie, for this question, and hello from Berlin. I really want to take this opportunity to reflect on the title, Increasing Germany’s Digital Competitiveness, because it is actually quite remarkable that we see it now as the role of government to increase digital competitiveness, and I want to highlight that this is actually quite a drastic shift for Germany to take a much more proactive role in shaping the digital economy, because traditionally, Germany has been very reluctant to take a very active industrial policy.

You know, Germany has been very much shaped by the success of, you know, free trade and free markets, particularly also after the end of the Cold War, you know, Germany was one of the big bene – you know, benefited in a great way from globalisations and liberalisations of market access globally. And I think that many policymakers and also top management in Germany for a long time didn’t see that it was the role of government, you know, to interfere in markets, and they also didn’t see that in the digital place for a long time.

They didn’t see that the internet was something that they really had to take seriously, and that it would affect Germany’s industry’s core economic interests. I think this is really a development of the past ten years, and we can speak about some of the events, you know, that have led to, you know, a shift in policymaking, but it’s a rather new approach and one that especially also German Economists who advise the government have opposed for a long time, because they view, you know, in terms of, you know, innovation comes out of free markets and free enterprise, and it’s not really the role of government to be very active in this space. And so, I think this is one of the key challenges we are facing at this moment. We have the – seen the pendulum swing, you know, back from, sort of, the neoliberal, really small state to one that’s supposed to be very proactive and shaping markets through regulation and strategic public investments.

But of course this can only work if governments are really well-attuned to technological changes, if they really understand the strategic implications, and this requires a really capable administration in Germany. And I think if we talk about the modernisation agenda for Germany, we have not paid enough attention to the modernisation of our public service, in order to make it capable to support the government, you know, in this challenge of increasing Germany’s competitiveness and also what Professor Sinemus said at the beginning, in really being an – a state that also takes the citizens into account, provides good digital services to its citizens.

We have seen during the COVID pandemic really awful – how really awful our education system is, or how ill-prepared it is, you know, to go digital, to use digital tools, that, you know, digital competencies are not well integrated enough either on the education of our Teachers, nor on the educations of our students and pupils. So, these are really huge challenges, and so, I believe that in order to achieve the vision for – that Professor Sinemus provided and also the points that Iris made and that Frank made, we need to talk about increasing government capacity to improve German digital competitiveness and delivery of services.

And three really short points on this where I think it really matters: the first one for me is – would be in Germany Civil Service reform. The service – Civil Service in Germany has been traditionally very siloed and closed-off from the private sector and from civil society and we see that we need more, you know, exchange of perspectives and also of expertise into the Civil Service. And that means opening it up, and also, you know, positions on the senior level, and also on the mid-level for people to shift careers and provide, you know, their skills and expertise to the Civil Service, because we won’t be able to just, you know, retrain that or build this up in a really short – in a short time. And so we need to thinking about opening up the Civil Service and increasing its capacity to inflow of talent.

The second one is digital literacy and evidence-based policymaking in the Civil Service. I mean, Professor Sinemus mentioned the role of sandboxes. We need much more experimentation in government with approaches, and this also requires that we regularly evaluate our policies and adjust those policies, and I think we have a way too legalistic approach to policymaking in Germany, also if we compare this internationally, and we need a much more flexible and evidence-based making approach to policymaking, and that’s a huge culture shift within our government and administration.

And then the third one builds on the last point that Iris Plöger made, that we need new areas of expertise in governments, specialised expertise that we need to build up. I think cybersecurity is one of them. Understanding the digital economy and digital markets is another one, especially if we think – we’re talking about competition policy, for example. There you really need to understand the new business models, the data economy, how that works in order to provide good regulation, and we need to improve education policies, really think about how we can use digital technologies in the educational sector and how we integrate that well.

And so I think if we focus on those three areas: civil service reform, digital literacy and evidence-based policymaking and building up specialised expertise, we build the foundation for a capable government that can increase digital competitiveness. And this is really – you know, and this – I would be interested also in the views of Professor Sinemus on this, because I think this is a really hard challenge, because the pay-offs are more long-term. You know, we’ve seen it, you know, in – when Chancellor Schröder 20 years ago introduced labour market reforms, he didn’t benefit from that politically. In the end he was voted out of office. You could say – many argue that these labour reforms provided the foundation for much of the economic success, for his successlor – successor, Chancellor Merkel. And I think we have a similar challenge here. Civil Service reform is something that is usually opposed by many interest groups, that’s hard politically and that – but that’s really important for us in the long term, and so one of the key challenges is how do we provide incentives and focus our government officials away from short-term fixes to really building the long-term foundations for sustainable solutions, and I’ll end with this. Thank you.

Marjorie Buchser

Thank you. Thank you very much, Stefan, and before I end, we have quite a few question in the Q&A. Before I turn to our audience, I know, Stefan, you addressed directly Professor Sinemus, and she may want to react to your very direct suggestion of intervention for the public sector, so, Professor Sinemus, I’ll turn back to you.

Kristina Sinemus

I make it very shortly. I totally agree in what Stefan and Au– and Iris and Frank already said. We need a cultural shift, especially in the ones who are working in the civil jobs, and we only get this cultural shift when we increase the [inaudible – 35:22] between government, politics, economy. So we need to try to have careers that maybe start in the economy and then go further on in the government. So, we have to attract people, even young people that government and Civil Service is a future for them. ‘Til now it’s more old-school, nobody would like to enter, but we have to make skills, we have to open the [inaudible – 36:01] of this attractiveness. Only if this takes part you will have this cultural shift. That is one end.

And the other one is really to understand that a Civil Service has to be a kind of a sandbox for future adaptions and technology as well, and this has to be integrated in this cultural shift as well. Maybe this as a reflection to what Stefan has asked, and we do this in working together with universities, in working together with initiatives where we build up these careers and, for instance, my Ministry has one training and empowerment for women, especially the empowerment of women in this areas of IT and MINT, where we want to attract them for the future, to be part of this kind of innovative and cultural shift and the digital transformation.

Marjorie Buchser

Thank you, Professor Sinemus. I’m now going to go back to our – turn to our audience, and I think our first question, Stefan, I’ll direct to you, ‘cause I believe it’s directly linked to what we just discussed, and it’s essentially, “How does the current government compare to the previous administration?” And so, it’s a question from Leslie McKenna that ask, “Why do you think previous German Government effort to digitalise the economy have faced challenge, and do you think the ongoing effort of the current government will prove different?”

Stefan Heumann

It’s a – that’s a great question and I’m sure the other co-panellists will also have to say something on it. I’ll share my perspective. I do think that we have seen political decision-makers understand the importance of some of these policy areas that we have discussed. And why I have come back to public sector reform and public administration as key to Germany’s future competitiveness is, I’ve seen the Government struggle to implement these high-level goals into really action or policy.

We have been – we’ve been riding in bureaucratic progresses, long strategy documents instead of really trying out different approaches, seeing what works and adjusting accordingly. And you see that in the digital economy the organisations, the companies that are doing well are the ones that, you know, quickly take an understanding, try things out and adapt, and this is not the way the German Government works.

You know, take the digital agenda that the German Government adopted in – from 2014 to 2017, you know, inter-agency process to come up with a very high-level strategy and collecting all kinds of ideas and – but they never really evaluated what was done there, what was working well and adjust it. And this is not really the nature of how our government works, and that’s just my perspective from observing what’s going on and from my exchanges with government officials, many internally being very frustrated also with this kind of approach. And I think the countries that have done well in Europe have been smaller countries that don’t bring that much bureaucratic legacy and that have a more, you know, hands-on, “Now let’s try things and do things,” mentality, and that’s why I also mentioned this shift that we need from a legalistic approach.

Our German Government is very much dominated by legal expertise, you know, which is always about, you know, all kinds of risks and looking at all kinds of regulations and what we’re doing, and not by professions that are, “Let’s try things, let’s learn from that and adjust.” And I think this is just my personal analysis of what – what’s – how things have gone during the past years and what we need to change to build the foundation for future effective policymaking, especially digital policymaking in Germany.

Marjorie Buchser

Thank you, Stefan, and I think it’s also a good segue to our next question, which are – which is essentially, “What are the good examples that Germany can learn from?” And it’s a question from Ami, that ask, “Are there other country than Germany can use as strong example of digitalisation, and how much is Germany a unique experience compared to other region?” And I think, Frank, you’re best placed to maybe answer that question as a comparison. I know you mentioned Hessen as a shining light of German transformation, but are there other example that you can point to as places where they could be some inspiration for, for Germany?

Frank Fehler

Yeah, and this goes a little bit on what Stefan said. Many, many years ago, it’s nearly 20 years ago, I was riding on a ferry between small Philippine Islands. I was there for holidays, I was there for scuba diving, and I met there on a ferry – I met some other scuba divers, and these were some guys from [inaudible – 41:37], at that time. Yeah, I said, “What are you doing here?” They said, “Yeah, we are connecting the different islands with underwater cables.” I said, “What are you doing?” And then he explained to me and said, “You know, this is about telephony, but the Philippine Government at that time decided not to implement fixed-line telephony. They decided to build underwater cable between the different islands, and then do the entire telephone communications through mobile phones,” yeah, 20 years ago. Yeah, I was owning at that time, I think, one or two years, my first mobile phone, yeah. And this is a little bit the disadvantage that we have in Germany. We have a lot of legacy. We have a lot of legacy in administration, especially in administration. We have a lot of legacy on how we are doing things, and we are doing difficult in doing things differently, fundamental differently, yeah, while Philippines at that time were not running behind us or running behind the rest of the world and implementing fixed-line telephony. This – they went immediately with mobile phone, digital telephone, yeah, so, left 50 years of the history behind them, yeah.

The same with the small states we discussed, for example, the Baltic states regarding digitalisation, which are also light-years ahead of us, yeah, so the trick will be, and there are many, many other examples, yeah. When you look, for example, in IT in Africa, IT in Africa is today simplified IT, all accessible through mobile phones, yeah, because the mobile phone is the computer device in Africa, and the entire digitalisation of Africa, the entire IT of Africa is all built around the mobile phone, yeah, while we are carrying, let’s say, 50 years of IT legacy with us. So, what I think, what we can learn from these examples – I do not want us the same IT like in Africa, yeah, but what I can – what we should learn from all these examples is to leave legacy behind us and to be open, and to be strong enough to really do things differently than we did in the past. I think this we can learn from many, many other countries and this is where we are lagging. We are good in applying technology in areas where we are, but we are so bad and doing so hard in going two steps or three steps ahead.

Marjorie Buchser

Thank you very much, Frank, for your thoughts on where to look, and it’s essentially, “Look at the rest of the world because even, you know, in different part – countries, including in the African Continent, there’s leapfrogging and a lot of dynamism there.” I want to move a little bit to the question around – that we, sort of, touched on about cybersecurity, and look at the question from Tom Chappell regarding, “Do you think recent events in Ukraine will distract from digitalisation effort in Germany or actually catalyse it?” And I think I will direct this question to Iris, and whether you think that the cyberthreat is actually going to act as an obstacle for digitalisation or a catalyst. Iris, over to you.

Iris Plöger

Thank you for the question. I’m looking at the discussion we just had in the last five to ten minutes, I would – I’m afraid it’s rather an obstacle than it’s a catalyst out there, ‘cause, I mean, coming from this legacy, we learnt, where we are, kind of, always keen on having the best legal certainty and security, of course, going into these digital processes means the risk of being attacked and lacking of cybersecurity, and I think that has been one of the major hinders in the past, and the major obstacles, so – But still we, of course, we have learned, in the last years, looking at COVID, that being digital was key, yeah, and that other countries – we heard the topic of schools, for example, the – we’re lagging behind there, looking at online schooling, and that we have to improve. And that it’s just a question of doing the homework to have the right standard of cybersecurity.

I think we have a lot of competencies in that field because that comes originally from the German heart being secure, and so there is a lot of knowledge about cybersecurity technologies in place. We have a public authority, the DSI, which has grown quite a lot, the last couple of years, and sometimes I wish the European security, cybersecurity authority, the ENISA, would grow as fast as the German one does, because of course, at the end of the day, it’s always a question of having a digital market within Europe and not only in Germany, because we’ve just been focussing on Germany.

But let me just come back to the point of Stefan, and I totally agree. We really lack of doing things like trial-and-error processes, yeah. We always want to make everything safe and then we’ve really – haven’t spent enough time on evaluating things. For example, our flagship was Industry 4.0 at the very beginning. We were the first ones to offer that to the world, and that has been, like, ten years ago, and that comes also from our industrial competence. But we haven’t really made a marketing coup out of that, we haven’t really put that in an international strategy to sell that to the world, even though it was a core competence of us, and we – looking at the implementation of Industry 4.0 with the technologies in the German Mittelstand, we have all these competent centrist, but still the figures are not right and the service tell us that still there needs to be improvement at the German Mittelstand. And we never really come to the point of really evaluating these processes, because we always come from this feeling that we are – that we have to be good at certain things, and that maybe sometimes we don’t want to figure out why things haven’t worked out. But there’s, kind of – we always try to do it, like, in the sketchbook and from the skretch, but I think we have to change the process. That is really the shift we’ve been talking before.

Marjorie Buchser

Thank you, Iris, and we have an immediate reaction from Frank. Frank, and also at the same time I’m going to jam a question for you in addition to your comment, if it’s possible to answer Isla Fisher question, which is, “If you were to name one key barriers when it comes to implementing digital transformation for German businesses, what would you say, what would it be?” Frank, so, your comments and maybe the answer to the question. Frank, I think you’re still muted.

Frank Fehler

Yes. The mute button. So, at the end of the day, it is the fear that we have to make something wrong, and not the proud to try something out, what Stefan said, yeah. A historical example: there are a lot of technologies, which have been invented originally in Germany, historical technologies, yeah, technologies like the fax machine, which was invented in Germany, but made popular by Panasonic at that time, yeah. Or there was also something – I wrote my Master’s thesis about that in the 80s, yeah, which called ‘fuzzy technology’, a certain technology to describe something between – which is between one and zero, stages in-between, yeah, and to take better decisions. And the interesting thing, it was invented in the 60s and there were no scientific discussions in scientific journals over 35 years, yeah, and in the mid-80s Sharp brought the first rice cooker to the market, and then the entire German scientific society was crying, saying, “It cannot be that this fantastic technology will be used to just manufacture a rice cooker.”

The next year they brought out a washing machine with fuzzy technology, yeah, and then people start becoming quiet. Today this fuzzy technology is in each and every device to make its controls, yeah. What can we learn from this? We want to – number one, we are talking and talking and talking in circles, yeah, and we want to do things super-perfect before we bring this to the market. And then we are completely surprised when other people are doing that, yeah, and sometimes you’re missing the train. By the way, do you know that Porsche’s first car, the first car that Ferdinand Porsche and his father manufactured, was an electrical car? Interesting, huh? Interesting, and they were then surprised by a South African American guy, yeah, who is now the market leader in this space globally, yeah. And this is also this – I think we need to be more able and more willing to go with risk and try to – things out, and not to hinder ourself.

The administration is a hindering, but this should not stop us, yeah. The administration public sector need to make their homeworks, yeah, but nobody is waiting for them, to be honest, yeah, we are not waiting for them, yeah. It’s too long processes, we also not – do not any business – nearly no business with public authorisation, yeah, we have only one public customer and – but I can only ask everybody to be more open to more – more forward-looking. I think this is the most hindering factor that we have.

Marjorie Buchser

Thank you. Thank you very much, Frank. Yeah, I mean, there are the ideas, there is the strategy, as Iris mentioned, and digital transformation, I think, is clearly a notion that has been talked about a long time in Germany, but it’s about, “Okay, what’s the follow-up and how is it implemented?” that is core to that question.

We have – okay, we have one more question and then I’ll go to the conclusion, which is, “What’s” – from Antonia Vinalish, “What are some of the challenges Germany face in securing talent for the digital transformation?” So, what I’m going to do is basically highlight this question to our speakers, and as way of conclusion and closing this discussion, I’d like to actually return the closing remark to my speakers, and ask them to give us back maybe one or two highlights and key takeaway from this conversation that they would like our audience to – maybe to keep as a core idea of what was presented today. I will do so in the reverse order. Also just flagging the question of talent, if you also want to quickly comment on it, that would be most welcome. So, I’ll start with Stefan and go then, Frank, Iris and Professor Sinemus, but, Stefan, what’s your key highlight of this discussion?

Stefan Heumann

I will link it with the question because I think it actually – it’s actually linked. I think that public sector reform is key for securing the best digital talent for the public sector. You can see that companies – it’s not just about compensation, but that in the corporate sector you have a lot of discussion about new work, about, you know, breaking up silence, silos, about giving people more meaning and more control over projects and being more agile, being, like – having more of a learning culture. And this is not something that’s also important for the success of the company, but this is also something that’s critical for acquiring the best talent, because that’s how people want to work and evolve. And so, I think public sector reform, often it’s talked about that we can’t pay IT security officials or cybersecurity experts enough in government. We will never be able to compete just on the dollars, you know, in government with the private sector, but giving a really attractive work environment is something that’s crucial for that mission forward.

So, it is really a larger transformation, it’s not just about, you know, tech as tools, really about the transformation of our culture and how we work together, and that’s also – that’s really my key takeaway from today. Thank you.

Marjorie Buchser

Thank you, Stefan, and as you say, it’s not only about money, it’s also about the vision and how we want the digital space to look like, ultimately. Iris, I’ll turn to you and, sort of, your key takeaways and any comments, if you have any, on the talent question.

Iris Plöger

Oh, yeah. Well, I mean – and I don’t want to repeat the public services, because I think we’ve already stressed that a lot in the last hour. I think my key takeaway is this, is that we do not have a, really a lack of competence, but we have a – because the competence is, kind of, lying on the streets, I would say. We really have a lack of doing, of getting into the making in all different fields. So, that would be my takeaway, that we, kind of, have the same analysis on Germany, but that we really have to make the shift of not analysing it throughout the day, but rather to have the quick steps and quick wins we need to convince people to get more into this digital transformation process, and that it’s more challenges than risk in the end.

Marjorie Buchser

Thank you, Iris. Frank, over to you, what’s the key message that you want to stay with our audience today?

Frank Fehler

Digital is sexy, yeah. I think it is, yeah, because there are not many areas where you can really make an impact. You can make an impact as a Doctor, because you can help people. You can make an impact as a Teacher, because you can train and develop young people and educate them, yeah, but if you want to make in the business world really an impact, it’s a digital transformation, and this digital transformation make an impact, this is fun. This is excitement, yeah. This requires sometimes some crush, yeah, but it also pays back because, at the end of the day, you can see results. So, therefore I’m saying, “Digital is sexy,” and this is something that we should convey.

Marjorie Buchser

Thank you, Frank. “Digital is sexy, hop on the train.” That sounds good. Professor Sinemus, you really started this conversation, so I’m going to ask you to close it and provide your takeaway and key insight of today’s conversation.

Kristina Sinemus

I would put it in one sentence. That is, “Digital transformation is co-operation and co-ordination and less silos.”

Marjorie Buchser

Fantastic, so, “Digital transformation is sexy, and it’s co-operation,” so, I think that’s a very catchy and sensible way of closing this discussion. It’s one minute before two GMT. Thank you very much for this brilliant conversation and really, sort of, highlighting not only the, you know, sort of, the reality of what’s happening on the plan in Germany, but also, providing a vision and inspiration about what the digital transformation can do for industry and citizen.

So, thank you very much for joining this conversation, and thank you particularly to our speaker today, Professor Sinemus, Iris Plöger, Stefan Heumann and Frank Fehler from HALC Technology. Thank you very much, and I’m going to clap, because normally we have a full audience clapping, so, I’m clapping for you, and…

Kristina Sinemus

Thank you for moderation.

Marjorie Buchser

Oh, thank you, Professor Sinemus.

Frank Fehler

Thank you so much. Thank you so much for the interesting discussions and fantastic moderation. Thank you so much.