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Digitization and Recovery as well as Technology – Hartmut Hirsch-Kreinsen




For a country’s resilience and resilience plans to be effective, digitization must be aligned with Social Innovation.

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In many European Union countries, digital transformation is slowly progressing. The digital technologies available are not implemented and utilized to improve government control, medical care, or many corporate processes.

This deficit was especially apparent during the Covid-19 crisis. For example, in Germany, perhaps a high-tech country, old equipment often prevented the federal government and medical systems from properly tracking the infection chain and ensuring rapid quarantine.

The EU’s National Reconstruction and Resilience Program (NRRP) aims to significantly improve this situation through large-scale fiscal stimulus measures in member countries. Of the total of just under 724 billion available from the Recovery and Resilience Facility, at least 20% is aimed at facilitating digital transformation. Digital technology financing consists of three pillars: modernization of government, expansion of digital infrastructure, and education and training to support digital skills.

Undoubtedly, this plan will accelerate the digitization of the EU. It will especially benefit the countries most hit by the pandemic with limited investment resources. However, NRRP can also enhance the digitization of more developed Western and Northern European countries.

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General purpose technology

But the question is how much this financial injection can actually overcome the previous deficit. Despite investment in new technologies, there is a risk that the goal of increasing social resilience can only be achieved by the next best thing. The introduction of digital technology alone does not automatically bring about the desired structural changes for an institution, organization, or company.

This is because digital technology is a general purpose technology. They can be flexibly integrated into existing institutional and organizational structures and do not themselves create significant pressure on change. For example, according to a survey by the corporate sector, the adoption of digital technology is highly hesitant in many companies and rarely undergoes radical structural changes. A similar situation is even more pronounced in bureaucratized and established areas of state government.

The motive for this hesitation is clear and seemingly very rational. This approach allows decision makers to avoid the costs and risks of a wide range of digital innovations. Above all, avoid conflicts of interest with employees who may be affected by the change process.

However, upon closer inspection, this means that efficiency gains are limited and suboptimal structures are stable. In a nutshell, the flaws of existing organizations, established routines, and overly bureaucratic regulation cannot be eliminated by the introduction of digital systems alone.

Not enough

Crisis-free, normal situations can usually be managed with such worn-out, partially digitally supported routines. However, in the context of a pandemic, it becomes clear that aiming for a recovery that establishes a new normality is not enough in a gradual and cautious step of innovation.

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This is clearly demonstrated by an analysis of the often inadequate as well as unfortunate and inefficient government measures to address the Covid-19 crisis in Germany. Mere digitization of established processes can not only increase resilience, but also fail to maintain inertia.

It may work for a while. However, given the future challenges to corporate and state behavioral capabilities, ordinary digitized businesses are extremely risky. This is especially true for the impending climate crisis, but it also predicts further pandemics.

Following the British sociologist Anthony Giddens, there could be a situation that could be called the Giddens paradox. The willingness to take effective measures to increase resilience only occurs when pressure on action is inevitably increased as a result of the crisis. The imminent crisis has not been considered in practice for a long time, followed by well-trodden paths and routines. When countermeasures are introduced, countermeasures are too late because the crisis cannot be mastered and there is still less evasion.

Social conditions

How can we avoid this risk and use funding from NRRP to build a long-term, effective, resilient and socially active structure? Research and hands-on experience have shown that successful digitalization must not only be technology-centric, but also systematically take into account the social conditions of innovation. On the one hand, there is a close relationship between the potential effectiveness of new technologies and, on the other hand, their institutional, organizational and human embedding.

However, it is often overlooked that the efficient use of digital technology requires constant innovation in organizations and their environments. As early as 2014, world-renowned figures in digitization and artificial intelligence, Eric Brynjolfson and Andrew McAfee, emphasized the imperative of complementary innovation in the best-selling Second Machine Age.

The Recovery and Resilience Facility addresses this aspect, at least indirectly, by funding education and training to support digital skills. It deals with the human side of digitalization, but does not have a broader perspective on the social prerequisites for successful implementation and use of digital technology. From the perspective of a compelling political program, it would have been appropriate to identify Social Innovation as an essential focus to complement the adoption of digital technology.

In other words, this is not just the introduction of new technology. Digitization, regardless of its purpose, affects interdependence between technology, humans, and the entire organization. Therefore, it is necessary to investigate the overall sociotechnical system. The key to this approach is the co-optimization formula. Desirable goals can only be achieved if the social and technical elements of the entire sociotechnical system are coordinated with each other.

Special considerations

A systematic and socio-technical perspective for truly crisis-resistant digitization can only be a problem for individual Member States. Each has specific social conditions. These peculiarities require special consideration in each case through the implementation strategy of the adapted country.

For example, the purpose of Germany’s reconstruction program is to increase social participation in the process of digitization. Undoubtedly, this refers to the tradition of the German co-determination system and can be seen as a positive example of other areas of society.

The specific challenges of individual Member States are also clearly demonstrated by the ongoing suspension affecting NRRP submitted by Hungary and Poland. This is an extreme indication that it makes little sense to introduce digital technology without addressing social challenges at the same time.

This is part of a series on NRRP supported by Hans Bckler Stiftung.

Hartmut Hirsch-Kreinsen is a former professor of economics, industry and sociology at the Technical University Dortmund and is currently a senior research professor working closely with the Center for Social Research Dortmund to digitize work and industry 4.0.




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