Looking Within

Finding Germany's Role in the Digital Revolution

  • Why it matters

    Why it matters

    For Germany, digitalization poses the challenge of a difficult cultural shift. The country must also take action against cyber terrorism, “information operations” and corporate corruption.

  • Facts

    Facts

    • German industry is geared toward incremental design and struggles with the pace of digital business, meaning it is struggling to adapt to the digital world.
    • The government has promised hundreds of public sector jobs in cyber security, but may struggle to find qualified candidates.
    • The IT industry has is increasingly its lobbying activities and funding for research.
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    Audio

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Urban superhighway
Germany might do better forging its own path to digital solutions for business and engineering, than competing with Silicon Valley, the author argues. Source: Getty

Technology usually needs a generation to reach the masses. But while we are wonderfully close to marking 25 years since the invention of the commercial internet, 2016 didn’t prove to be digitalization’s big moment.

Politicians and industry players were full of noble intentions. And not a day passed without someone announcing that digitalization had arrived. But we are only just beginning to understand how to formulate digital structures.

Our mechanisms, patterns of reaction to innovation and technology, and design processes are geared to large-scale technologies, DAX companies, nuclear wars and fighter jets, where every screw and every formulation must go through a series of refinements. This hasn’t prepared us well for the demands of digitalization: flexible and dynamic business models, high burn rates and systematic failure as a lauded business practice, a high degree of self-organization and decentralization. These are precisely the virtues classic that German engineering and industry lack.

 

Diving deeper into our own depths, rather than attempting to copy the United States, might be a good guiding principle.

 

But fortunately the gap is closing. In 2016, policymakers and corporations were already trying to be faster, more intensive and more flexible. Co-working spaces, incubators and labs, startup financing, and cooperative models are all multiplying with positive results.

An ecosystem is emerging, but the major investors aren’t really playing ball. Family offices and conservative savings banks and insurance funds still have too much power in Germany. They love making money, but simply don’t like risk. Germany has much to do here. But it is beginning to tackle the problem. The federal government plans to set up programs to make the “valley of death” for startups more manageable. And industry is already making an effort to gain the expertise it needs to better evaluate investments.

Figuring out what we actually expect from digitalization appears a more a fundamental problem. The CEOs of major corporations want to make tons of money with fantastic, disruptive ideas. But that’s precisely where their engineers struggle, having been raised on incremental innovation. So they are trying for more self-disruption. Labs and management teams with a completely new corporate culture were already more widespread in 2016. Of course, this was limited to select circles of a maximum of a few hundred employees, so as not to interfere with the system as a whole. Some corporations even brought in chief technology officers from Silicon Valley – radical innovators to shake their divisions into action. But things still appear to be going wrong. The cultures are too disparate, the shock too great. In this regard, much will happen in 2017 – presumably a lot of experimentation.

One predicted outcome of this is that German digitalization won’t strike gold with popular smartphone apps, but hidden deep in the complexity of German technology and business models. And, that startups and traditional engineers will have to work together much more closely. Diving deeper into our own depths, rather than attempting to copy the United States, might be a good guiding principle.

 

German digitalization won’t strike gold with popular smartphone apps for cars, but hidden deep in the complexity of German technology and business models.

 

A lot will also happen internationally in 2017. Long-predicted “information operations” attacks – such as tactical leaks or fake news – have now proven impressively efficient. Military and criminal hacking units will have reached operative maturity and will be trying things out. The first experimental infrastructure attacks, expansion of international industrial espionage and strategic spying, manipulation of banks and stock exchanges, internet fraud, allegations and escalations are all on the agenda. The German political establishment, governmental institutions and authorities must be informed and able to take action. But so far, they’re poorly prepared. Cyber diplomacy is underfinanced and understaffed in both the German Foreign Ministry and the Chancellery. The operational competence of the intelligence services, police, and military needs less paper and more substance.

And substance doesn’t mean bulk. 2016 was the year the government promised public institutions hundreds upon hundreds of job positions in cyber security, which will have to be filled in 2017. In the process, they’ll discover what has already been clear for the last decade. Government salaries will get you a couple of handfuls of very good people of conviction – but the rest will be unqualified. That slows things down and adds bureaucracy. In any case, the staffing problem will become one of the biggest areas of concern for government agencies, as well as for industry, in 2017. There simply aren’t enough qualified personnel and “fast track” training isn’t of sufficiently high caliber.

Finally, 2017 is haunted by one more major menace: The IT companies’ aggressive, reality-distorting lobbying. Targeted corruption of the purveyors of knowledge is a particular problem that had drastically intensified in 2016, and will continue to do so this year. The corporations have built themselves a propaganda ecosystem. Foundations, think tanks and institutes receive ever more funding on the condition they sign non-disclosure agreements and disseminate unadulterated company doctrine on matters of privacy, cyber security and industrial policy, through expert opinions and reports, at conferences and in newspaper articles. Parallel to this, sponsorship of major international economic and security conferences means speakers, topics, guests and side events can be populated from the same ecosystem.

This has taken on absurd proportions. There was a big conference in 2016 at which, in six events, more than 25 IT experts of diverse backgrounds were all paid for by five IT groups with the same predatory interests in data and IT security. This trend will only rise in 2017. On occasion, renowned researchers are also directly bought. Last year, a German-British colleague accepted £5 million (€5.9 million, $6.2 million) from an American data company for claiming in every interview and at diverse scientific opportunities that their data was not suitable for the global fight against terrorism. A shameful betrayal. And a dangerous one.

 

Foundations, think tanks and institutes receive ever more funding on the condition they sign non-disclosure agreements and disseminate unadulterated company doctrine.

 

The IT world cannot be allowed to be explained by those who are the cause of its problems. We urgently need more independence and transparency. Why are major IT companies suddenly stepping into the production and dissemination of political and scientific knowledge to such a degree? Naturally, not out of goodness of their hearts. The reason is the fear that IT will soon be subject to the same legal and economic rules that apply to other technologies.

Digitalization will continue to bring much change in 2017. Perpetrators, as well as victims will have free rein. No one can escape. These currents will engulf us all in 2017. Here’s hoping for a couple of wise and independent thinkers and leaders.

 

To contact the author: gastautor@handelsblatt.com.

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