Blogpost
For a European "Digital valley"

For a European "Digital valley"

Portrait of Stefan Schaible
Senior Partner, CEO Germany and Central Europe
Frankfurt Office, Central Europe
+49 69 29924-6321
September 26, 2016

One of our firm's key messages these days is that for the European digital transformation to take off, the continent needs to move closer together, connect its many startup hubs and form a strong cross-border digital ecosystem.

Earlier this year, within a month, two events in Paris and Berlin managed to bring this message home to a high-caliber group of startups, investors, corporate partners and digital influencers: The French-German Digital Workshop in Paris, and the French-German EUnicorns Day in Berlin.

Roland Berger regularly bonds with influential partners.
Roland Berger regularly bonds with influential partners.

To lend additional muscle to the initiative, our firm bonded with influential co-hosts – the French and German embassies in Paris and Berlin, France's no. 1 incubator NUMA, our Spielfeld business Partner VISA, and media partners.

Our Paris colleagues hosted a French-German digital workshop, followed by a startup techtour and a reception at the German embassy in Paris. In our digital hub Spielfeld in Berlin we brought together innovative startups, investors, corporate partners and digital influencers from the two countries.

European cities like Paris and Berlin are fast becoming integral parts of the global startup culture. But in order to identify and secure innovative funding methods and exchange experiences and competencies, we must push the cooperation between our many different digital startup centers.

Our cooperation is vital. Digitization means radical change for business models through technology - with consequences and changes extending beyond the purely technological. Top managers need to promote a new culture across all levels - moving away from technology-fixated engineering-based thinking, incremental improvements and departmental silos, to embrace maximum agility, willingness to experiment and self-organization. This means aligning the entire organization to the needs of the client. By doing so, companies will be able to secure key positions within digital ecosystems in the future.

For this reason, Europe must go on the offensive. Our companies run the risk of further marginalization at the entrance gates of the digital world. In order to create a powerful digital European economy, we need to make it our goal by 2020 to reach at least 15 percent of the market value of all the top 20 internet companies. This is an ambitious target. Currently, 79 percent is held by America and 21 percent by Asia. In this context, Europe is a small fish in a big pond.

Digitization means aligning the entire organization to the needs of the client.
Digitization means aligning the entire organization to the needs of the client.

The areas where business and politics need to lift their game are clear:

Infrastructure

We need ambitious broadband targets, if we are to successfully navigate the jump into gigabit society. Stable and secure data traffic within Europe and the domestic market are the minimum requirements for increased competitiveness and the cornerstones for many business models.

Competition

We need to resist the large US platforms. It might be true that they possess important filter functions, by personalizing the internet and constantly offering attractive new products and packages, however, these fast-growing innovators tend towards monopolization. European regulators need to ensure that platforms are compatible with networks and products from other providers. After all, freedom of choice is the basis of a free market economy.

Venture capital

In particular, finding investors that fit their business models is a major problem for startups in Europe. Lack of financial resources reduces the market opportunities for even the most promising business models dramatically. The US GDP is almost five times that of Germany's. In comparison, venture capital investment is 17 times higher. Therefore, we provide backing from investors and established corporations from multiple countries.

Data protection

The importance of business models based on the processing and analysis of large quantities of data is increasing. All too often the civil and copyright laws concerning data traffic between machines is missing. Who does the data in the network belong to? Who is allowed to use it and what for? These questions remain in a legal vacuum. Data protection should enable business innovation, but companies and consumers need to be able to decide for themselves what data they want to share and what they want to keep private.

Governance

Outside of Belgium, Poland and Romania, government departments for digital topics do not exist. However, it is necessary to limit market power, promote competition, organize and concentrate digital competencies, and, as in the US, regulate retrospectively. A digital domestic market for networks, services and consumers will mobilize additional growth.

Digital competence

Programming has become an important cultural skill, for which adequate training and education often falls short. The success of Silicon Valley is based on the tradition of free thinking, interdisciplinary knowledge, creativity and analytical thinking. It is important to establish relationships that can lead to innovative business models.

Business culture

Think big! If Europe is able to unite its forces, a counterweight to Silicon Valley – a European "Digital Valley" is possible. We are missing a culture of experimentation and desire to try. There is a lack of entrepreneurial courage and readiness to fail. We need entrepreneurs who design their businesses on a global scale according to global dimensions, carrying out their plans quickly and persistently and continuously offering new products and services with a focus on the client.

In concrete terms, we need to create new European standards and promote a European cloud initiative. Promising opportunities are available in the fields of e-health, payment systems, cyber security, smart grids and logistics. Unoccupied territories remain, including those opened up by the digitization of the financial sector – FinTechs, mobile payments systems and blockchain technology, as well as the transformation of mobility by automated driving and shared mobility.

We must act quickly and think on a large scale, or risk missing out. There is no longer a digital strategy. We need offensive strategies for the digital world.

The French-German Business Forum in Paris could lay the basis for yet another playing field for digital start-ups, corporates and masterminds. Here, we hope to build on the positive experiences of the past.

  • Photo credits Jasmina007 / iStockphoto ; Egon69 / iStockphoto; SergeOstroverhoff / Getty Images / Thinkstock; Eva Katalin Kondoros / iStockphoto; John Lund / Getty Images

  • Photos Jasmina007 / iStockphoto