Germany's thinking errors in digitization

According to the survey, the proportion of innovators in SMEs has fallen significantly by almost seven percentage points compared with the previous period to 22 percent (2013/2015) and has thus reached its lowest level since the KfW SME Panel was launched.

So is this cause for concern?

The picture is mixed. The long-term trend shows that innovations are concentrated in fewer and fewer companies, especially larger ones. Smaller companies have become weary of innovation.

The reasons are manifold. In addition to low start-up activity and too few courageous founders, increasing price competition and general economic uncertainty, major difficulties in financing innovation and a lack of skills and resources are still cited.

However, Germany as a strong business location certainly does not have a financing problem; rather, we have a planning problem in our country. On the one hand on the administrative side, on the other hand also in the companies.

In many cases, innovation projects are tailored too large and thus too expensive. Today, innovations are usually driven by digitization measures. Companies often think too big about such projects and approach them in the wrong way.

This makes new developments slow and expensive. Investors are reluctant to support these thinking errors.

It is therefore wrong to plan the great digital throwdown perfectionistically like an R&D project according to all the rules of German engineering. The digital dream of the "eierlegende Wollmilchsau" (the "egg-laying willow sow") is shattered when the focus is on the unique beauty of the technical solution. Instead, it's about the benefits that convince the employee and the customer.

These challenges can only be mastered by those who develop in an agile manner, take a pragmatic approach, continuously adapt their strategy and learn from start-ups. "Learning by doing" or "trial and error" are the recommended methods for overcoming uncertainty in new digital terrain.

For example, it pays to quickly develop five prototypes in small teams for an identified need, refine three of them in the next step, and ultimately make two applications successful.

A huge project with a large team working on it takes too long, eats up a lot of budget and often leads to expensive failure. Digital transformation brings with it immense dynamism, and anyone who spends too much time developing a design risks having it obsolete by the time it is completed. The consequence of such lengthy and resource-intensive planning is stagnation and innovation fatigue.

Medium-sized companies in particular are advised to start simple and proceed in stages. Digitization is less of a threat from the outside and more of an opportunity - especially for smaller and mid-sized companies. They have the agility to test something out quickly and then implement it.

Just start, have the courage to simply implement a digital project - where the need is and the opportunity for added value and market potential exists.