"If you don't want to make a dent, you won't".

When it comes to digitization, many countries are in a much better position than Germany. Professors Steffen Jäckle and Andreas Pufall, both experts in digital transformation at Ravensburg-Weingarten University, explain why this is so, what needs to be done, what vacuum cleaners have to do with it and whether the fully digital Generation Z will be our salvation.

Where does Germany stand in terms of digitization - in the Champions League or in the relegation zone?

Pufall: In Europe, we are in the middle of the pack. We are incredibly well positioned in research - thanks to the Fraunhofer Institutes, many universities and now also the universities of applied sciences. The problem, however, is the transfer into practice. This happens relatively slowly in Germany.

Why is that?

Pufall: That has to do with various factors: One is that companies often have other problems - at the moment it's the supply chains, before that it was Corona. Or they have such a high order backlog that they can hardly deal with topics like digitization due to time constraints.

It is not uncommon for important things to be researched or discovered in Germany, but the resulting business models are then created in the USA or elsewhere. Why is that? Is that typically German - just tinkering without thinking about business?

Pufall: It's a problem of implementation. It has to do with the fact that in Germany the focus is often on technology - and not so much on customer needs. But that is very important for market success. You have to start with the customer's needs and then select the right technology. There are good, tried-and-tested methods for this, such as our DTXN Navigator.

What is the biggest obstacle to digital transformation?

Jäckle: We in Germany are very good at inventing new business models, but not at developing them. We clearly lack entrepreneurship and capital. Startups in the U.S. have much more capital than in Europe. That's why the new big digital business models are coming from the USA.

What needs to be done?

Jäckle: A lot is already being done on the government side. But whether you can really promote entrepreneurship through the state is questionable. It also has a lot to do with mentality. In Germany, there is too little enthusiasm for technology and too little entrepreneurial courage. Apple founder Steve Jobs once said, "I want to make a dent in the universe." He succeeded several times. But if you don't want to make a dent at all, then you won't do it. We lack that will. We tend to want to preserve and also tend to see growth as something negative.

Do we have the fundamental ability to develop digital business models? Or is that something that is already lacking?

Jäckle: In terms of expertise, the USA and China are certainly superior to us. The question is also: Are we allowed to develop such business models at all? For example, our strict data protection stands in the way of many things. You can see that with artificial intelligence, for example. In the U.S., everyone is enthusiastic, and here, concerns are first expressed - if in doubt, we pull the plug.

It's hard to change that mentality. Is it?

Jäckle: At the very least, it's very, very difficult. It certainly won't work with a crowbar. The urgency and necessity for change are still far from being seen in many places. As a university, we see it as our task to keep pointing out how important change is for competitiveness.

The figures speak for themselves: not a single German company is now among the top 100 most valuable companies in the world. Apple alone is worth more than the entire Dax combined. The most valuable German company, SAP, is a dwarf in global terms. The key factor in being competitive these days is digital technology - no longer chemistry or mechanical engineering. And when it comes to digital technologies, we are simply not good enough.

Why?

Pufall: Many German companies still think too much from the hardware side - from vehicle, plant or mechanical engineering. But the successful U.S. companies come entirely from the software side - Tesla, for example, or Chinese electric car providers: They have basically developed a smartphone on wheels. German manufacturers tend to look at the gaps and then try to add a bit of digitization.

What could help?

Pufall: What helps is if companies network better - with each other, with startups and also with research institutions. That often creates the necessary spirit of optimism.

What specific advantages does digitization offer companies?

Jäckle: Digital technology creates two decisive advantages: The first is that it can be used to increase customer benefits. The second is that everything I do can be made more efficient with digital technologies. Both - customer benefit and efficiency - then result in a competitive advantage.

Is it primarily a matter of reducing costs?

Pufall: When it comes to efficiency, the focus is not so much on cost savings. Digital solutions make it possible to perform tasks for which you would often no longer be able to find a workforce.

Do you have an example of better customer benefits?

Jäckle: Vacuum cleaners are a good example of customer benefit. Ten years ago, it was perfectly clear: You run after the vacuum cleaner - no matter how good and modern it is. In reality, however, people think vacuuming is stupid and don't want to vacuum at all, they just want the dust out of the place. Then there was a company that came up with the idea of offering autonomous vacuum cleaners. Today, the apartment is vacuumed automatically while the occupant is drinking coffee or playing soccer. That's a huge leap forward in terms of customer benefit - and, of course, a huge problem for manufacturers of traditional vacuum cleaners, who still think in terms of suction pipes, watts and dust bags.

Why is digital transformation so important for companies?

Jäckle: Without digital technology, a company is simply no longer competitive and is left behind. That's where the very existence of the company is at stake. This affects all companies in all industries. Digital technologies are the game changer. Unfortunately, German companies are far too seldom at the forefront.

What exactly are the Americans and Chinese doing better?

Jäckle: The big tech companies - above all Apple - think obsessively in terms of customer benefit. That's exactly what makes them so successful.

Are there also German companies that are really good at digitization - perhaps even in our region?

Pufall: One company in the region that is doing very well is IFM in Tettnang. It's a beacon company that does many, many things right. The crowning glory was the "Factory of the Year" award.

Jäckle: In retail, Zalando is a company that does a lot of things right - especially compared to its traditional competitors. Zalando is much better than its competitors in terms of customer value. It is one of the most successful start-ups we have had in Germany in recent years. And it would not have been possible in this form without digital technologies.

What are the main mistakes made by the other companies?

Jäckle: One of the main mistakes many established companies make is that they don't even really look at the new, digital and successful competitors. They are satisfied with themselves and talk themselves into a better world instead of taking action.

When it comes to digital transformation, are there any differences between medium-sized, family-owned companies, which we in particular often have, and large corporations?

Jäckle: There is no reliable study that says that owner-managed companies perform better or worse than corporations. What is important is that the need and urgency is the same for all companies, regardless of their ownership structure. We have excellently positioned family businesses. IFM has already been mentioned, as has Würth. Craftsmen can get their materials from the stores 24 hours a day, seven days a week - outstanding from the customer's point of view. A successful company has to be obsessed with customer value - and the best way to do that is with digital technologies.

Is change easier when you're already big?

Pufall: Not necessarily. The larger companies have the advantage that they simply have more human resources - more manpower to set up innovation and technology departments and cooperate with research institutions. In return, small entrepreneurs are often much faster and more flexible in their decision-making than large corporations - they are often more agile.

Do German companies still have a chance or has the topic of digitization already been completely "slept through"?

Jäckle: It's a typically German trait to always think in linear terms. We think that the Googles, Apples, Facebooks and Amazons will continue to rule the world for the next 100 years. But the majority of today's most valuable companies didn't even exist ten, 20, 30 years ago. Tomorrow, another company may come around the corner that completely displaces the existing top dogs - as we are seeing right now in electric mobility. The fact is, the book for the next 30 years has not yet been written. We're helping to write it, and we're determining what's in it.

So is that also a reason for optimism?

Jäckle: It's definitely not too late for German companies - but we're not exactly too early either. (laughs) But we certainly won't be flushed to the top by ourselves; we have to do something about it. In China, for example, people are extremely hungry for success. We have to develop this mentality again.

Generation Z, which is now sitting in the lecture halls, is considered extremely digital. Are the under-25s our salvation? Will they lead us into a better digital future?

Jäckle: (long silence) Let me put it this way: The ability to record Tik-Tok videos will certainly not lead us to the promised land of digitization. (laughs) But members of Generation Z are the first and most intensive users of these new technologies in all countries, because they are the first to realize: Wow, this has excellent benefits for me. But just using digital devices and services doesn't do us any good at all in developing digital business models. The skills needed for this lie in the familiar STEM subjects and also in business administration. Unfortunately, Generation Z is less interested in these subjects.

Is that true?

Pufall: Yes, I can only agree with that. If we want to increase efficiency in the digital production of tomorrow, we need absolute experts - data scientists, for example. For this, we urgently need people who are very well educated mathematically and technically.

How can young people be inspired to take the necessary subjects?

Jäckle: We have to ensure that technology has a positive connotation in society. It must become clear that technology is the basis of our prosperity - ever since the beginning of industrialization. In Germany, technology is unfortunately too often viewed negatively. The fact that Generation Z is the way it is is a consequence of our prosperity. But if we really feel that we are in a crisis, Generation Z - just like everyone else - will change. Generation Z will go its own way.

What will be the next really big thing?

Pufall: There are two very exciting developments: Everything to do with artificial intelligence, and the medical field - keyword: "genome editing." Germany is also doing very well in the second. We have excellent companies there. During Corona, we showed that we can be the fastest if we want to be - even in very modern areas.

Jäckle: Yes, we certainly don't need to bury our heads in the sand. Crises are always opportunities.