How Can Germany Make the Digital Transformation Work?

The new German government faces major challenges in digital policy. Over the past decade, Germany has fallen behind European digital pioneers such as Denmark, Finland, and Estonia. Whether it's digital education, the ability to conduct official business online, or the availability of powerful broadband connections – the Covid-19 pandemic has vividly demonstrated the failures of digital policy.

The business community and society as a whole hope that the new federal government will finally bring about a transition in digital policy. Indeed, the gap between digital policy promises and what has actually been achieved is not new. Back in 2014, the German government wanted to make Germany a digital pioneer in Europe with its "Digital Agenda." Since then, the number of unfulfilled promises has piled up, while confidence in the ability of our political institutions to make good on its promises has fallen further.

Lack of adaptation in government and public administration at the heart of the problem

There are many reasons for the poor record in digital policy making. There's been a lot of talk about people and programs. But too little attention has been paid to the serious structural problems that stand in the way of a successful digital policy. Therefore, in order to regain the ability to take decisive measures, far-reaching and thus painful reforms are necessary.

The transformation to an information society has led to fundamental changes in our economy and society. The dynamics and complexity of the technological, economic, and social changes that accompany this transformation require new organizational forms and cultures. While companies are experimenting with new forms of knowledge exchange, networking, and work organization, work practices and processes in government and public administration have hardly changed at all. This is the core of the problem of why there has been so little progress in digital policy in Germany over the past decade. Institutions and processes in governance and administration have not been adapted to meet the new challenges of the information society.

A new digital Agenda

What must happen? Policymakers must view government and public administration as learning organizations and develop them accordingly. Only in this way will they be able to deal productively with the dynamics of change brought about by digital technologies. The ability to learn is the basis for regaining the ability to make meaningful progress in digital policy. The coalition agreement between Social Democrats, Greens and the Liberal Party rightly links the digital transformation with a shift toward a learning state.

But what does that mean in concretely? In my view, three challenges must be urgently addressed: building and expanding expertise on digital transformation, opening up for exchange and collaboration, and simplifying competencies. These three areas must be at the center of a comprehensive reform agenda to make government and administration fit for the digital transformation.

Building internal expertise

Government and public administration have become dependent on external consultants for digitization projects. They urgently need to build up and expand their own expertise. For this, they need to compete with industry for the brightest minds and the most promising talent. This will require serious reforms of the public sector. Senior leadership positions need to be opened for outsiders with relevant expertise and management experience from companies, academia and civil society. In addition, the public sector has to identify and empower its own innovators and provide training across all levels of staff.

Opening up for exchange and collaboration

Opening up its organization for knowledge exchange and collaboration is based on the insight that no organization, no matter how large and resource-rich it may be, can master the challenges of digital transformation on its own. While social and economic actors are breaking down knowledge silos and embracing collaboration, ministries and government apparatuses often act like fortresses that need to be defended against a hostile outside world. Seclusion and information control prevent state institutions from taking up important impulses from outside and dealing with them productively.

Openness must be recognized and practiced as a strategic approach to good governance. This requires support at the political management level and the development of corresponding competencies for cross-organizational networking, exchange, and collaboration.

Simplifying governance

German digital policy must escape the complexity trap. The federal states have important competencies in central issues such as data protection and media regulation. In addition, there is the increased importance of the EU as a regulator of the digital economy. German federalism combined with the growing influence of Brussels are creating enormous needs for coordination. The constant consultations between different levels of government and overlapping competencies tie up important resources and costs a lot of time. It makes little sense to let sixteen federal states have a say in the regulation of global tech companies. After all, the Internet looks the same everywhere in Germany.

Only by simplifying competencies and bundling resources can policymakers regain their focus on dealing with the actual problems. And only this will create the preconditions for efficient decision-making processes. This will only succeed if we dare to tackle central structural issues. Instead of constantly emphasizing the importance of the EU as a regulator of the digital economy, we should finally act accordingly. In addition, we need to further adapt federalism as part of an overarching effort to simplify competencies in digital policy making in Germany and bundle them.

The top priority of the new German government must be to initiate the reform agenda outlined here and to breathe life into the concept of the "learning state." Only this way, we will create the conditions for effective effective management of the digital transformation, one of the key political challenges of the 21^st century.