Devising an operating system is fundamentally different from designing a new engine. Germany must finally understand that. A guest post.

Tesla is essentially a software company.

5000 new IT positions for the first, 11,000 for the second and 17,000 for the third. Sometimes you rub your eyes in amazement. The new software houses in German industry don’t mess up, they mess up. After all, it’s about Germany’s economic future.

Don’t get me wrong, the strategy of digitizing a very hardware-oriented German industry is absolutely logical and of course long overdue. And if this succeeds, it would also be a great success.

But sheer size does not mean success, because: “Software sells hardware” – the competition from abroad has long since understood this.

Tesla got that

So it’s not surprising that the hottest competitor for the German automotive industry, Tesla, is essentially a software company. Tesla internalized early on that the business models of the future would no longer be “just” selling the automobile with subsequent maintenance and a few floor mats.

Rather, it is the infinite number of digital solutions that bring in the profit. As a customer, booking a few more horsepower in a completely uncomplicated manner is already just one of many ways to earn money.

It was clear to the automobile managers very early on that they would no longer be able to avoid the subject of digitization, which is tolerable for many. The fact that in the future data should be the currency that washes profits into the corporate coffers has been noted with interest at Google and Co.

Long too comfortable

However, the fact that this will also affect German industry with its icons of business has so far only been able to elicit a weary frown from any industrial manager used to success. Instead, you made yourself comfortable again, left it with a few manageable initiatives – and let the right engineers do their job. It went very well for a long time, one record chased the next, the coffers were full, and these few digital exotics were allowed to play around a bit.

Of course, regular, compulsory trips to Silicon Valley for top management were also on the agenda. You looked, listened, nodded knowingly, flew home again – and even had a few anecdotes for the townhalls and area meetings in your luggage.

According to a study by the Federal Ministry for Economic Affairs and Energy in 2018, 28 percent of the commercial economy in Germany strategically integrated digitization into their planning. According to their self-assessment, around 39 percent even use the Internet of Things (IoT). This is a very good start, but nothing more.

Different cultures

Here an office in Berlin, there one in Lisbon and Tel Aviv should also be very digital. With above-average salaries, a free fruit basket and a few table tennis tables, young software developers were attracted. Many German companies, whether large or medium-sized, jumped on the bandwagon of zeros and ones. But it quickly became clear that there was a sharp crunch in operational cooperation.

This was due to the fact that most of these new, digital units were reflexively docked to the respective research and development areas of the companies. These consist, to this day, in the core positions of vehicle developers, mechanical engineers and electrical engineers.

Developing an operating system, however, requires a completely different way of working and thinking and, for example, is fundamentally different from developing a new engine. You simply spoke a different language and the young IT experts quickly realized who had the last word in the development process.

The frustration grew steadily. At some point the good salary and the fruit basket didn’t help anymore.