“Made in Germany” must be set up again. We must transform every industry towards climate neutrality over the next two decades. Germany can do that. We have great visionaries, doers and doers. I am absolutely convinced that Germany and Europe can become the global lead market for climate technology.
Historically, we have distinguished ourselves in Germany through our ability to innovate. We have to be aware of what makes us special and differentiates us from the innovation system of the USA and China.
A classic Darwinian system prevails in the USA: innovation through displacement. The government there encourages change.
China, on the other hand, coordinates an innovation model in which, for example, technology companies act as a link between tech giants and established companies. They drive the issues and are not considered competitors in China. That is highly efficient.
In Germany there is a third way. We live an integrated innovation model with established companies at the center, each promoting their own ecosystem. The government protects and orchestrates this system.
We must promote the ecosystems for key technologies such as artificial intelligence
Most recently we were driven by the principle “faster, better, cheaper”. We were world champions in ramping up the S-curve, which indicates when an innovation no longer offers meaningful advances. The result: Top products at highly competitive prices have made us the world export champion.
But that is no longer enough to be an innovation leader. Today it is about making progress in key technologies – often combined with leap innovations.
And as well as we did when ramping up, it was just as difficult for us to jump onto the next S-curve. But now it is important to push new key technologies in Germany in order to survive in the global innovation system. Climate change is an opportunity for new business models.
Speaking of the innovation system in Germany, we need the ecosystems for key technologies such as biotech or e-mobility support financially. A leading player is our government. The Alliance for Transformation, which Federal Chancellor Olaf Scholz brought into being, should set the pace and set the pace and develop a transformation agenda for Germany.
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Above all, it is important to promote those technologies in which Germany still has some catching up to do, such as in artificial intelligence. To do this, it is necessary to define a clear mission with an ambitious target image and to accelerate decision-making processes.
We should close the existing gaps in state funding for basic and applied research, as well as the gaps in the transition from research to commercial implementation. We need a dialogue between politics and business, associations, science and civil society that creates a vision for Germany and creates a broad social consensus.
Germany needs more financial investors in the climate technology market
Keyword financing: We need more financial investors who are involved in the climate technology market. Only 3.5 percent of the capital invested worldwide in start-ups for climate and clean tech went to Germany.
That’s shockingly little. For comparison: In the USA it is 56 percent, in China 23 percent. This disparity must not remain as it is.
Finally, digitization: a cross-cutting issue that is of great importance for climate protection. In 2020, almost 90 research reports from Germany on the topic of artificial intelligence (AI) were published in the top scientific journals, in the USA there were more than 17 times as many: 1600. China has 280 reports. The know-how from the German laboratories has to be on the road.
Our analyzes show that while innovation leaders invest 1.4 times as much, innovation laggards outperform by about four times when it comes to economic success. Especially in economically uncertain times, top performers expand their competitive advantages.
We need an industrial policy agenda that strongly promotes the use of innovative technologies from the areas of decarbonization or green tech. A European and German funding program is the right answer to the Inflation Reduction Act, with which the USA is promoting investments in climate technologies.
In the future, there may be a climate technology lead market in Europe. For this we need a competitive innovation system, a new industrial policy agenda and an ecosystem in which our thought leaders are networked. So: Let’s group up for climate.
The author:
Michael Brigl is Germany head of the management consultancy Boston Consulting Group and is also responsible for business in Switzerland, Austria and Eastern Europe.
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