Technological sovereignty: Innovation capability is no accident

Technological sovereignty does not mean producing everything yourself. Rather, it means remaining capable of acting in key technologies: understanding them, applying them, advancing them further, and translating them into new products, processes, and business models. These capabilities will play a decisive role in determining whether Germany can carry its industrial competitiveness into the coming era.

In this context, our study “Innovative Milieus 2026” should be understood as a warning signal. The innovation-driven avant-garde of the business landscape is becoming increasingly small. In 2019, around one quarter of companies belonged to the particularly innovation-intensive segments; by 2026, that figure will have fallen to just 13 percent. At the same time, the share of companies that are distant from innovation has risen to almost 40 percent. The innovation base is shrinking in very concrete terms among the companies that should actually be developing, testing, and scaling new ideas.

At the same time, a technological two-tier society is emerging. Only 31 percent of the companies surveyed state that their portfolio or business model is based on at least one deep-tech or green-tech technology. Among the (few) technology leaders, by contrast, the figure is 53 percent.

Three tasks follow from this. First, innovation policy must take the broader business landscape seriously. The high-tech agenda for Germany must not focus solely on flagship projects, important as cutting-edge research may be. It must also ensure that small and medium-sized enterprises gain access to technological expertise, testing environments, data, standards, and skilled professionals.

Second, key technologies must be brought into practical application more quickly. Precisely because digital technologies are already being used by many companies, they can serve as a gateway to more advanced innovations – for example in industrial AI, connected systems, energy efficiency, or the circular economy. This requires practical support instruments, low-threshold experimentation environments, and greater support for building technological capabilities.

Third, Germany needs demand for new solutions. Public procurement, regulatory sandboxes, and lead markets can accelerate innovation if they are consistently geared toward digital and sustainable technologies. Anyone who wants technological sovereignty must provide innovative solutions with an initial market.

The good news is that innovation capability is not a matter of chance. Even companies that are not among the frontrunners can improve their innovation performance by strengthening their strategy, capabilities, and networks. The leaders must remain strong, but the broader business landscape must move closer to them. Only then can technological excellence be transformed into technological sovereignty.