“Made in Germany” Meets “Be Berlin” — Why We Need Tech Federalism

The race for global platforms has been run. The win goes to Silicon Valley. However, the next digital wave is rolling in with the Internet of Things. And this time the start line has radically changed. In order for Digital Base Germany to survive this race, there needs to be a bridge between Berlin and the country’s industrial regions.

We need a firm alliance between Berlin and Germany’s industrial heart chambers

Stanford graduates, ingenuity coming out of their ears, Teslas on every street corner, and smoothie bars pumping nourishment into all those brainiacs — Silicon Valley is the epitome of a hub. This cradle of great platform economies has been the fixed star of the global tech elite for over 20 years. There is a concentration of capital and brains like no other place on the planet.

Accordingly, many on this side of the Atlantic enviously eyeball this magnifying glass of civilizational progress seizing multibillion-dollar markets with a snap of the fingers. And doubt quickly gnaws at the fleshy brainpower of the local tech scene. How do we intend to keep up? The answer is simple: we don’t. The global platform market has been closed off by the pupils of garage legend. Google, Facebook and Uber reign over global markets from Palo Alto. There is little point in debating — check, and move forward. Instead, the hubs in Berlin, Tel Avid and London, which have risen up in the shadows of the valley, have to carefully cultivate themselves, arm themselves with the politically fertilized soil of the global economy in order to stand up to Silicon Valley with future innovations.

“Made in Germany” meets “be Berlin”

So instead of bemoaning the FC Bayern Munich-like advantage of Facebook, Google and Amazon, it would behoove us to focus on the next great digitalization wave: the Internet of Things. The start line is completely different this time around. Whereas their immaterial value made it possible for platform economies to exist in theoretically every corner of the world with enough capital and smarts, the Internet of Things demands a mature industrial infrastructure on top of all that technological competency. It is set to become the supreme discipline of the decades ahead, one that challenges the foundations of industrial value. And Germany is primed to swing into a leading global position since there is hardly any country in the world with so much high-tech industry on the one hand, and such a powerful hub like Berlin on the other. Made in Germany meets be Berlin.

The Internet of Things is not operating in a vacuum

In order for this to work, we need fewer upturned noses and more mutual openness. The essential core of the Federal Republic, unity in diversity, might be the key to deciding the race for the Internet of Things for Germany. Because IoT operating systems and applications can not exist in a digital vacuum. They need to be tightly interconnected with the industrial net product, namely things that can be grasped. This is precisely the critical point where Germany Inc. needs to strike. We need tech federalism, a lively exchage on equal footing between Berlin and the industrial heart chambers, whether they be in Stuttgart, Munich or the Ruhr Valley. Because one thing is clear: the fight for domination in the Internet of Things will neither be won by Berlin, Munich or Stuttgart alone.

Solidarity with Berlin is not least of all important for the industrial clusters since the war for talent is getting ever harder for the largest names in German industry. Soon, no amount of money will do to entice the necessary masses of coding geniuses to move to the prairie. On the other side, the accessibility to industrial know-how offers startup city Berlin, least of all mid-sized companies, the possibility to fuse their ingenuity with established networks, decades of experience and capital in order to maximally scale innovations.

Berlin is more than a mere showroom

The bridge will not simply flourish given the capital that ideas need to become reality. Corporations must become stronger venture capitalists than thus far. They have to be a greater part of the solution for innovators rather than a part of the problem. And Berlin, in its capacity as a hub, must be more than a mere showroom. We need companies that really want to work in Berlin and burrow into the depths of the Berlin tech scene in order to learn and profit from it, and not least of all, to become more attractive to the desperately needed brilliant minds. The VW Ideation Hub and the Berlin office of kloeckner.i are good examples of how established companies can find their place in the heart of the startup economy. They highlight how VW and Kloeckner have long recognized the importance of having a vanguard on Berlin ground to prepare their business models for the digital age.

BMWi is setting the tone

The Federal Ministry of Economics and Technology (BMWi) has also recognized the signs of our times and is heading in exactly the right direction with the hub initiative. Starting with five cities, topical hubs of digital transformation have emerged — Hamburg and Dortmund are somewhat specialized in the logistics of the future, while Munich is the anchor for new mobility concepts. According to statements made by Minister Zypries at the end of April, seven more industry specific hubs are coming soon. She emphasized that the hubs would give innovators and the innovation bases a broad foundation. This approach is absolutely correct as is evidenced by examples like London and Paris, which showcase how economic centralism can have a negative impact over time.

We need a firm alliance

In order to survive the race for the Internet of Things and the next digitalization shift, we need a firm alliance between Berlin and industry. We need industry specific hubs beyond Berlin that unite innovators, startups, technology companies and science and, in so doing, create an international draw in their industries. We must capitalize on the regional consolidation effects of federalism and merge them with the pulling power of Berlin. Only then can the Federal Republic actually win the race for the Internet of Things.