Speed up! How German and European policy can foster the digitization of industry

 First of a three-part series on policy recommendations for the digital agenda

Who invented the iPad? Was it Steve Jobs, or was it George W. Bush? According to Bloomberg columnist Mark Buchanan, the question is perhaps not as easy to answer as you might think. As his critical appraisal of the innovations by US computer giant Apple concludes, "Every one of the most important technologies in Apple's smart products, including the iPhone and iPad, were developed elsewhere and largely thanks to state funding."

You don't need to belittle the accomplishments of Steve Jobs to be able to agree with Buchanan on one thing: From the internet through to satellite communications, some of the essential enabling technologies for digitization would never have come into being without government funding. But the direct subsidization of technological projects is not the only way for the state to seed innovation. The way governments set up a regulatory framework gives them a huge amount of influence on what future technologies will be developed where and how fast they will become established. Look no further than the energy transition for proof of that.

The same goes for the digital transformation: Governments and policymakers can be instrumental in pushing the development of enabling technologies and enhancing the innovation capacity of companies. Owing to the substantially more favorable financial, legal and institutional conditions in the US and also in China, Europe's firms are at risk of falling behind in the digital race of the regions, in spite of the strength of the continent's industrial base. For the moment, at least, not one European internet firm has made it into the global top 20.

To these ends, governments should help Europe to pool its strengths and resources, improve the digital maturity of its companies, prevent a form of standardization that undermines manufacturing skills, encourage investment in the digital economy, and create points of access and platforms that can be shared by companies, research institutions and other organizations.

Pooling strengths and resources. Germany and Europe have no lack of associations and platforms to discuss the digital transformation. The Federal Government of Germany, for example, has come up with several industry-wide strategies to promote digitization. A Smart Networking Strategy is currently being drawn up for the Digital Agenda, the focal point of these efforts. The aim is to integrate cross-industry activities in an overall concept, the cornerstones of which were unveiled at the CeBIT trade show in spring 2014. Further projects and initiatives encompass Die neue Hightech-Strategie (The New High-Tech Strategy), Zukunftsprojekt Industrie 4.0 (Future Project Industry 4.0) or IKT 2020 (ICT 2020).

At the EU level, a whole range of additional strategies and actions can be listed – first and foremost Horizon 2020, but also programs focused on specific areas. The latter include ITEA for software innovations and Artemis for cyber-physical systems.

Systematically bundling these initiatives and focusing them on a series of cross-industry objectives would appear necessary to make them more efficient and effective. Two important steps would be: 

- To define a shared vision, common objectives and the most important areas of action in a digital transformation charter for industry

- To coordinate all ongoing and planned initiatives via a single project office

The National IT Summit that the German government is currently developing and refocusing in line with the seven areas of action laid out in its Digital Agenda could play a pioneering role in bundling the country's digital activities. Current efforts by the Fraunhofer Society, industry and the German government to create an Industrial Data Consortium are an important and proper approach to bundling and coordinating efforts and resources at least at the national level. Further steps must nevertheless follow.

Stay tuned for two more posts on policy recommendations for the digital agenda.

To learn more about the digital transformation of industry, click here.