Entrepreneurs must act now.
Many companies in Germany are facing huge challenges. "Our scenario analysis shows how decision-makers must act now so that 'made in Germany' remains a leader," informs Florian Klein, Deloitte.
Technical innovations such as artificial intelligence and robotics, increasingly comprehensive networking and digitisation, the development of global markets and social change are fundamentally changing the world of business. Will German companies be able to compete internationally in 2030? Or will they slip into economic second-class status?
We have developed four plausible scenarios that show how German companies will operate in 2030. In the first scenario, German companies are increasingly acting as integrated solution providers for modern technology and engineering products with customer-oriented services along the entire value chain. They offer them worldwide on their platforms. Since their construction is very cost-intensive, large organizations displace smaller market participants. At the end of the day, German companies are optimally positioned and, as innovative market leaders, set global standards in technology and service. In scenario two, German companies offer new products or services as manufacturers, developers or service providers. Because building integrated solution platforms is too costly and complex for them, they have formed far-reaching alliances. This is an important competitive advantage in the global market. At the same time, however, it causes high costs to ensure the compatibility of the different standards. This slows down innovations in research and development. Although companies are globally competitive on a broad basis, growth opportunities are rather limited.
In scenario three, the companies rely on integrated solutions with a "fast follower" approach. They combine existing technologies with proven, customer-oriented services. However, the introduction of new technologies is slow. In the area of research and development, the focus is on evolution instead of revolution. Investments in automation primarily serve to achieve efficiency goals. Jobs will be lost. Smaller companies can compete in the market if they quickly adapt new technologies and service concepts. But creating comprehensive integrated solutions is a major challenge.
In scenario four, German entrepreneurs concentrate on goods or services that have already been imported by others. They will therefore only act as extended workbenches for leading market players. The market share of these 'imitators' is dwindling. Soon they will have only reduced resources for research and development and will invest primarily in efficiency measures to replace manpower with technology and automation. This results in the loss of many jobs. Although smaller, agile market participants are still competitive, their focus remains limited to the domestic market and a few emerging countries.
As you can see, scenario one and two are still rather positive, but in scenario three and four it becomes difficult. Business leaders and politicians must therefore set the course in such a way that German companies can defend their innovation leadership.
There are three topic areas in each scenario: Firstly, German companies have to deal much more with the strategic effects of digitisation. It's about how big data and artificial intelligence will change processes, products and services. The ability to question business models that you have become fond of is vital for survival.
Secondly, an important element of our competitiveness over the last 150 years is breaking away. We are world champions in the development of special technologies, but the trend is towards complex, customer-centric solutions. We need to refocus.
And thirdly, the backbone of the German economy, the automotive sector, is in an existential crisis with an uncertain outcome. One thing's for sure, it'll be painful. But shock stiffness would be the wrong reaction. In stormy seas, farsightedness and the sure hand of the helmsman count. The challenges have been recognised. Who's it for?