Digitalisation and recovery—it’s not just about the technology – Hartmut Hirsch-Kreinsen

Digitization must go hand in hand with social innovation if national recovery and resilience plans are to be effective.

Digitization, social innovation, socio-technical context
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The digital transformation is progressing slowly in many countries of the European Union. Available digital technologies are not implemented and used to improve processes in public administration, healthcare or in many companies.

This deficit became particularly evident with the Covid-19 crisis. In the supposedly high-tech country of Germany, for example, the federal administration and the healthcare system were often unable to adequately track infection chains due to outdated devices and thus could not guarantee a prompt quarantine.

the EU National recovery and resilience plans (NRRPs) aim to significantly improve this situation through massive financial incentives in the member states. At least 20 percent of the total of almost 724 billion euros available from the Reconstruction and Resilience Facility are should promote digital transformation. The financing of digital technologies comprises three pillars: the modernization of public administration, the expansion of the digital infrastructure and training and further education to promote digital skills.

There is no question that this plan will accelerate digitization in the EU. The countries most affected by the pandemic with only limited investment funds will benefit from this in particular. But the NRRPs can also promote digitization in some Western and Northern European countries that are more advanced in terms of technological development.

‘General Purpose Technologies’

The question, however, is to what extent the previous deficits can actually be overcome with this injection of funds. There is a risk that although investments are made in new technologies, the goal of increasing social resilience will not be optimally achieved. The introduction of digital technologies alone does not automatically lead to the desired structural change in institutions, organizations or companies.

This is because digital technologies are “general purpose technologies”. They can be flexibly integrated into existing institutional and organizational structures and do not in themselves generate any increased pressure to change. research in the corporate sector, for example has shown that the introduction of digital technologies in many companies is characterized by a high degree of reluctance and fundamental structural changes are seldom made. Similar situations can be found – even more pronounced – in the bureaucratized, established areas of state administration.

The motives for this reluctance are obvious and at first glance very rational: With such an approach, decision-makers avoid the costs and risks of far-reaching digital innovation. Above all, you avoid conflicts of interest with the employees who are likely to be affected by the change process.

On closer inspection, however, this only means a limited increase in efficiency and suboptimal structures are stabilized. In summary, it can be said that existing organizational deficits, well-established routines and excessively bureaucratic regulations cannot be eliminated through the introduction of digital systems alone.

Far from being sufficient

Crisis-free, “normal” situations can usually be mastered with such well-worn routines that are only partially digitally supported. Against the background of the pandemic – and with the aim of a recovery that establishes a new “normal” – it becomes clear, however, that incremental and cautious innovation steps are by no means sufficient.

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This is shown by analyzes of the often not only inadequate, but even unhappy and inefficient Government measures to deal with the Covid-19 crisis in Germany. The mere digitization of established processes can not only increase resilience, but also maintain inertia.

That can go well for a while. But in view of the future challenges to the ability of companies and states to act, digitized “business as usual” is extremely risky. This applies in particular to the impending climate crisis, but also predicts further pandemics.

A situation looms that, according to the British sociologist Anthony Giddens can be designated “Giddens” paradox: The willingness to take effective measures to increase resilience only arises when the pressure to act has inevitably become high as a result of a crisis. Impending crises are not really expected for a long time and well-trodden paths and routines are pursued. If measures are introduced, they are too late – because the crisis can no longer be mastered, even less averted.

Social circumstances

How can this risk be avoided and how can long-term effective structures of high resilience and the ability to act socially be created with the resources of the NRRP? Research and practice show that a successful digitization push must by no means be only technology-centric, but must also systematically take into account the social framework conditions for innovation. There is a close connection between the effectiveness potential of the new technologies on the one hand and their institutional, organizational and personal embedding on the other.

However, it is often overlooked that the efficient use of digital technologies always requires innovations in the institutional and organizational environment. Back in 2014, Erik Brynjolfsson and Andrew McAfee – world leaders in digitization and artificial intelligence – got strong stressed the indispensability of “complementary innovations” in The second machine age, A bestseller.

The Recovery and Resilience Facility addresses this aspect, at least indirectly, by funding education and training to promote digital skills. This would deal with the personnel side of digitization, but there is no broader perspective on the social requirements for the successful introduction and use of digital technologies. In terms of a convincing political program, it would have been appropriate to identify “social innovation” as a key focus to complement the introduction of digital technologies.

So it can’t just be about the introduction of new technologies. Digitization, regardless of its purposes, influences the interdependencies between technology, people and the organization as a whole. So in total ‘socio-technical system“Needs to be explored. The core of this approach is the formula of joint optimization: The desired goals can only be achieved if the social and technological elements of the overall socio-technical system are coordinated with one another.

Special consideration

A systematic, socio-technical perspective for truly crisis-resistant digitization can only be a matter for the individual member states: They each have specific social framework conditions. These particularities require special consideration through adapted national implementation strategies.

A goal of the Germans Recovery plan is to strengthen social participation in the process of digitization. This undoubtedly refers to the tradition of German corporate co-determination, which can be seen as a positive example for other areas of society.

The specific challenges of individual member states are also due to the ongoing Break concerning the NRRPs submitted by Hungary and Poland. this shows in extreme cases that the introduction of digital technologies without simultaneously coping with societal challenges makes little sense.

This is part of a series to the NRRPs, supported by the Hans Böckler Foundation

Hartmut Hirsch-Kreinsen is a former professor of economic and industrial sociology at TU Dortmund University and currently Senior Research Professor in the field of digitization of work and Industry 4.0 in close cooperation with the Dortmund Social Research Center.