Economic Summit Germany 2018 – a day of critical self-reflection

The “Economic Summit Germany 2018” on 22 September in Frankfurt am Main was a day of critical self-reflection. He was under the provocative question: “Germany at a standstill?” What catching-up needs Germany in the global comparison in the field of digitization? Representatives from business, research and politics, but also young startup entrepreneurs, such as Christoph Bornschein, CEO of Torben, Lucie and the yellow danger, or André Schwämmlein, co-founder and CEO of Flixbus, made a rendezvous and were quite unanimous: Germany has to catch up in order not to be controlled from the outside someday!

The question of whether Germany is also at a standstill in the field of research and development, Prof. Dr. Pascale Ehrenfreund (picture above), CEO of the German Aerospace Center (DLR), answered: “In research, we need to look and reach for the stars in order to catch up.” Germany has globally recognized traditional companies, but is too careful and reserved in taking risks sponsering and promoting new founders, business models, start-ups, especially in tech areas. Outside Europe, people are very “busy” in the field of digital transformation and there are numerous large projects. Especially in parts of Asia and North America measures would be taken and trends set. There are massive state subsidies in countries such as China. There are billions of dollars invested in the research artificial intelligence. There is a $ 500 billion investment in Saudi Arabia. One project, which will begin in the next few years, is the Future Tech city NEOM with emission-free and fully automated traffic. NEOM will also become a research location for biotechnology, nanotechnology, robotic and e-mobility. All this happens outside of Europe, especially in the USA and in China.

We can not keep up

There are great research facilities in Germany and Europe. The DLR is a part of the Helmholtz Association, the largest European research community with 38 000 researchers, with good research funding, Germany has excellent universities and yet is not able to keep up with this global pace, says Professor Ehrenfreund. The big American tech corporations like Apple, Amazon or Microsoft have six to twelve times higher market valuations than German companies. Apple is the first company in history to break that $ 1 billion market capitalization market. SAP is certainly an innovative, innovative technology company in this country, but it remains an exception.

The high innovative ability in the US, the recruitment of young people from top universities and a lot of flexibility distinguish these companies. Of course, there is good thinking and stability in Germany, but Germany needs a faster, more flexible, more risk-sensitive way and an unconventional approach, such as US or China have, Free space would have to be created to build new digital business models. These must be promoted accordingly. One must overcome the risk aversion, which is widespread in Germany and also in Europe. But above all, we need specialists from the MINT (mathematics, computer science, natural sciences and technology) subjects. Germany lacked over 300,000 specialists in the MINT subjects. Only 1.4 percent of MINT graduates would come from Germany in 2030 according to the OECD study, but 40 percent from China. For the students here, these subjects, these fields of study should be made tasty again. Everybody in business and research should be encouraged to close this gap. So the appeal of Professor Ehrenfreund. China is also developing enormously in the field of scientific publications on artificial intelligence. Here, too, Germany must move forward, because the publication rate has been consistent for several years.

Controlled from the outside? A bad vision of the future?

The pioneering roles of the US and China can no longer be overlooked. China has invested mainly in UNICORNS, in companies that quickly reach the $ 1 billion sales limit. There are about 15 UNICORNS, 6 of them in the US and 9 in China, most in the High Tech and Big Tec sectors. If Europe and Germany do not catch up here, it could happen that our lifestyle, our technologies are controlled from the outside. How to handle it, one would have to think about.

Digitalisation, demographic development and globalization, however, require a European approach and international cooperation. This means finding interdisciplinary research in climate protection, demographic change, urbanization and new solutions. This is no longer done just with one research direction, one must work together globally. DLR, focuses on global challenges such as  sustainability. Low-emission mobility is in the foreground, not only on the road, even in the air. The DLR operates Europe’s largest civilian research fleet to measure in the atmosphere and test alternative fuels together with NASA. Robotic is a very important topic too. However, one must venture even more research and work at a higher risk along the social and global challenges.

New business and promotion models are necessary to oppose the horror image standstill. The Germans are pioneers in the field of Earth observation via satellite, pioneers in nanotechnology and can contribute significantly to limit further global warming. Earth observation provides valuable data for environmental protection, for security and civil protection, for agriculture, for atmospheric research as well as for coastal and marine research.

Who ever does not answer the question of power can not solve the substantive questions

Politics is in any case required to create framework conditions at national and European level. That this is not always easy, Roland Koch, former Hessian Prime Minister, currently Chairman of the Supervisory Board of UBS-Europe SE and Supervisory Board member of Vodafone Germany, tried to explain to the RTL moderator and the audience. “Whoever does not answer the question of power can not solve the substantive questions”.

In politics first the question of power must be clarified, only then one can take care of the matter. Germany is in a state of flux. A large part of the population does not want this government, Koch saie. In addition, he says, “We are cautious people,” and adds provocatively that the courageous Europeans emigrated long ago to try their luck in the New World. The descendants of many emigrants would be in Silicon Valley now. The social system in Germany was designed to give companies an idea of whether they are doing well and what the risks are. That definitely has advantages. But Europe and Germany have reached a dangerous point. Because nowadays it’s not so much about the hardware, but about software technology. The great danger would also be the economic success of Germany. The order books are full, especially in the economic middle class. Compagnies there are more worried to work off the orders, than to take care of IT and developments, specially in digital transformation. These develpements happen currently largely outside Germany and Europe, and that is a fire hazard. To convey this to the public would currently be the very big and important task.

A Steve Jobs would do well

Whether politics lacks stars that vociferously proclaim the importance of digital transformation and the need to catch up, and whether a Steve Jobs would do well in politics was a public question. “Yes,” says Koch, “it would.” But one must ask oneself the question how much provocation a democratic society tolerates. The statement by Dr. Dietmar Bartsch, group leader of the LINKE was amazing: In 90 percent of the things that are voted on in the Bundestag, the MEPs would have no expertise to decide about it. That’s normal, he said. You can rely on what the experts advise you.

Which experts advise the polititions in the field of digitization?? Achim Berg, President Bitcom e.V., says there are three key issues to tackle: digital education, digital administration and digital infrastructure. For example, 70 to 100 billion euros would have to be invested in order to have 5 G throughout Germany. This would require 200 000 mobile sites. At present there are 25 000. One needs glass fiber and broadband everywhere in Germany.

The Handelsblatt once called him  ‘digitization whisperer’. He runs an agency for digital business models, advises DAX companies and ministries, and was involved in the development of the Lufthansa Innovation Hub in Berlin: Christoph Bornschein (center of photo). He and André Schwämmlein, co-founder and managing director of FlixBus, which has been conquering Germany with its long-distance coaches since 2012, wants to put German railways under pressure with Flix Mobility and is on course for expansion in the US, came up in their answers to questions from the moderator Caroline Rudelt, with interesting theses. Germany ranks 9th out of 26 countries on the innovation index. That is not so bad, but it feels like very much currently would happen outside German and Europa.

Far to little action

There is far too little action, complains Christoph Bornschein. Each of the 30 DAX companies only means  additional investment for an international investor. We need a much broader economic discussion of what happens when the Chinese understand European culture and see Europe as an enlarged internal market. “We have to build platforms with our own values”, Bornschein says. The moment we use American or Chinese platforms, we decide to accept their values as well. If one believes in European values and in their competitiveness, one must promote national and European startups. The state, said Schwämmlein, could and should create regulation. If something goes wrong, we can correct it, that’s perfectly ok. In any case, it would be easier to transfer medium-sized companies into the next wave, than large corporations. Bornschein laments the loss of progress optimism in Germany. There are problems to bring doctors to the countryside and at the same time telemedicine is banned. It’s too damned if someone does not want the future to come. It has to be said that progress is good for us and will be good for us.

As for the future, Bornschein says, Germans would have to invest in innovative companies as soon as possible, capital gains tax would have to be lowered and the education system adjusted as quickly as possible.If that happened within a legislature, it might work. If not, it’ll be bleak. Then clever minds and innovative companies will leave Germany and Europe. Schwämmlein looks partly pessimistic, partly optimistic into the future. He believes that we will experience incredibly exciting times and a better future than we can imagine. FlixBus would currently be writing part of the future of mobility. He is pessimistic because he currently sees little unity and cohesion in Europe and the focus on many other things, not on digital transformation. Above all else – and that is the most important thing: “We Europeans can only be strong if we stick together.”Text and pictures: Johanna Wenninger-Muhr

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