Business 5.0: How to face the turning point properly now

Artificial intelligence (AI) is polarizing: Some are already fed up with the hype and are turning away. Others focus exclusively on the available tools, (often even) without realistically assessing their benefits for the company in advance. True to the motto “No matter what and how, the main thing is to use AI!”.

Neither one nor the other makes sense. Instead, AI must be seen for what it really is: a progressive technology that is (helping to) usher in a new information age: Business 5.0. This will affect everyone – the manager in the DAX company and the student in third grade alike. But let’s start from the beginning:

Business 5.0 explained

What is Business 5.0 anyway? In short, so-called large AI language models such as ChatGPT are replacing a considerable amount of human mental work. In many areas, they deliver faster results than we do without sacrificing quality. They significantly increase efficiency, allowing us to rethink work in a completely new way.

Explained in more detail: The term is based on the development phases of the industrial revolution(s). The machines developed in the course of the first (Industry 1.0) largely freed people from heavy physical labor. Industry 2.0 finally made mass production possible. From the end of the 1970s, industry was then characterized by electronics and IT (Industry 3.0). And Industry 4.0 is what we now call networked production and the Internet of Things (IoT).

Industry 5.0 is now taking off through the use of large language models (generative AI). In many respects, however, this term falls short: the revolution will not only affect industry, but the entire (economic) world. The first signs of the potential that can be leveraged are already there: these include new employees hired via AI as well as the first AI-generated diagnoses at the doctor.

Effects on the (economic) world

Countries such as China and the USA have done pioneering work in this area and will know how to use it for their companies. Efficiency, innovation and competitiveness are the keywords here. This is because the use of AI enables an unprecedented level of automation combined with a very high degree of individualization. Numerous sectors and areas will benefit from this – and in turn attract a correspondingly large number of young talents who understandably no longer want to work “in the Stone Age”. In short, it is only a matter of time before new innovative products revolutionize the global market.

Germany should wake up to the fact that, after the internet and smartphones, the next technological breakthroughs are now coming from other countries – not least because this poses serious challenges:

1. The new applications will be so immersive that we will be left behind as an economic power if we do not position ourselves on an equal footing in the global market.
2. AI draws on data from German private individuals, companies, administrations etc. that countries such as China or the USA (commercially) process – without knowing how it will be used today, in ten or fifty years’ time.
3. AI is also always based on the developers’ world view, which is why it is important that our European understanding of equality and freedom is anchored in this soon-to-be all-encompassing technology.

The list demonstrates this: Germany should fully embrace AI as soon as possible and know how to use it.

What the economy should do now

Consequently, the economy is called upon to act. Regardless of the size of the company, it is now time to rethink. Too many decision-makers are still focusing on business processes and increasing efficiency without taking the range of (potential) data into account. As a result, many development opportunities and the ingenuity of those who work in the company instead of on it fall by the wayside – often also because there is no proper data strategy in the company. Most AI projects still fail due to data quality.

However, it is essential in order to benefit from the rapidly growing number of groundbreaking applications and remain competitive. At the same time, existing specialists must be continuously developed, creativity and new processes encouraged and attractive working conditions offered to new applicants. Management clearly has a responsibility here to initiate appropriate processes.

Fressnapf Holding SE, for example, shows how this can work: last year, the company generated sales of around 4 billion euros – through expansion and the restructuring of stores, but above all due to new digital services. The company thus provides an excellent example of how much sense it makes to open up to technological change and corresponding new business models.

Microsoft’s decision to build two data centers in the Cologne region also confirms that we should trust our (tech) skills despite the slow pace of digitalization. This “Hyperscale Data Center Campus” is intended to help with the development of AI and will have a knock-on effect on other (technology) companies. This could catapult German innovative strength far ahead.

Rethinking education at last

However, it is not enough to leave Business 5.0 and the responsibility that comes with it to companies alone. We need to start much earlier: In order to learn how to use the new technologies confidently, comprehensive education is essential from “early childhood”. This should therefore begin in elementary school. For example, it would make sense to introduce a subject called “data science”, in which children learn as early as possible how to handle information about themselves responsibly.

In addition, trainees and students in all subjects must also be able to process data in a meaningful way and derive options for action from it. This also applies to people who do not work in technical professions. They too must not lose touch with digitalization. This is the only way to ensure a holistic, confident approach to the new technological possibilities and at the same time lay the foundations for a broad innovation landscape.

Why politics must support the process

Politicians must provide support in all of this. Baden-Württemberg is setting a committed example. The state government is striving for a comprehensive innovation agenda on the topic of artificial intelligence. It has also set itself the declared goal of reducing bureaucracy and digitalization.

At the same time, the state has a network of outstanding universities, institutes and colleges that are supported by politicians. This contributes to the fact that Baden-Württemberg has the highest density of global market leaders in the world and has so far been successful in the international competition for highly qualified workers and an industrial base.

What is happening here on an area of around 36,000 km2 is something we urgently need in this form throughout Europe. We need to pull together and transform Europe into a central market that creates the best conditions for innovative strength with a uniform openness to technology and legal certainty.

Failed attempt: the AI Act

The so-called AI Act, which aims to create such European legal certainty for AI for the first time, unfortunately does not fulfill this purpose: on the one hand, it overshoots the mark by over-regulating. On the other hand, it does not regulate the issues that are really important. One example: so-called platform work, where companies rely on external specialists to solve problems or provide services. Well-known representatives of this type include Fiverr and Clickworker. Instead of creating a uniform legal basis here, the EU Parliament and Council prefer to leave this to the individual member states. The internal market is thus fragmented by national legislation; unequal legal and competitive conditions are the result, which inhibits innovation.

Conclusion

Technologies have always changed society and the way we deal with work. Led by artificial intelligence, the new Business 5.0 era will now do the same – only much faster than before and on a global scale. Germany must now act consistently if it wants to remain internationally competitive. Companies need support here. And this needs to come from the workforce as well as from education and politics, all of which need to open up to new technologies and processes consistently and as quickly as possible. Only in this way can the urgently needed (cultural) change take place in a holistic manner.

Marcel Kappestein

Marcel Kappestein is Managing Director of Avenga Germany, the German subsidiary of the global Avenga Group, which was created in 2019 through the merger of several established IT companies. Internationally, more than 4,300 professionals work for Avenga at 32 locations in Europe, Asia, LATAM and the USA. In his position, he is responsible for the German business as well as Avenga's growth activities and business development in the DACH region. The focus is on digital transformation for corporations and large mid-sized companies. He stands for strong and modern leadership and empowers teams to realize tangible benefits for their business through full customer focus. Marcel Kappestein is a visionary and doer who, among other things, connects companies as well as people through his distinctive network and thereby enables inspiration for the challenges of companies.