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Decision-timid

Enscheidungsscheu – literally decision timid. In simple English: afraid to make a decision.

„Mit dem Kopf durch die Wand” – trying to go through the wall with their head. Impatience. „Die Hausaufgaben nicht gemacht” – haven’t done their homework. Aktionismus. Actionism. Cowboy mentality.

Germans see these as American tendancies, and believe that they are based on a lack of training, technical competence and methodology. “They simply have not learned these things,” is their explanation.

On the other hand, Americans view the German approach as time-consuming and academich-philosophical. German decision making can come across as decoupled from the goal which is to take. Germans, from the American perspective, take subjective factors too little into consideration. Their analysis is too complex, going well beyond the needs for making a decision.

Americans see their German colleagues as overly careful, far too scientific and schematic-tool oriented. They are reluctant to consider input based on experience and common sense.

Germans give the impression of striving to complete the perfect analysis, which in turn should be some kind of guaranty for the perfect, and therefore risk-free, decision. All of these are signs to Americans that their German colleagues in the end are simply afraid to make the tough decisions.

Frederick August the Procrastinator

Frederick August, the King of Saxony, was one of history’s great procrastinators. While he began as one of Napoleon’s greatest foes, he soon became his greatest ally. In return, Napoleon elevated him from prince elector to king.

But by 1813, his alliance with Napoleon would cause him to lose the Battle of Leipzig. Though Frederick August was careful in attempting to side himself with the great forces who opposed him, a treaty that he had made with Austria eventually dissolved. Taken into captivity by the Prussians, Frederick August was forced to turn more than half of his territory over to his archrivals.

But why was Frederick August on the losing side of the Battle of Leipzig? Historians consider him to have been incapable of making decisions. He is credited with coining the phrase “no decision is better than a bad decision.”

During the revolt he spent his time sitting almost apathetically in the basement in the city hall of Leipzig. To add to the confusion, Frederick August was an exceptionally unpredictable monarch; very few rulers changed their mind so often.

Not only was he incapable of making decisions, but as soon as a decision was made it essentially would have lost all meaning in the moment of its creation, having already been undermined in significance and seriousness by the probability that Frederick August would again change direction.

Short. Mid. Long.

Germans think mid- to long-term. Short-term thinking and action is almost always viewed negatively. Germans associate short-term with ungrounded, fleeting, incomplete. When they make decisions they want to know, at least anticipate, what the effect (Auswirkungen) will be in other areas, on other processes, on other colleagues. They strive to understand the mid to long term effects.

Middle High German vrist. Old High German frist: what is current, about to occur; time period in which something should happen; to postpone briefly. Kurz- , mittel- , langfristig means short- , mid- , long-term.

Founderland

A willingness to take risks and a desire to make decisions are the basic requirements for starting a business. Germany is not a land of entrepreneurs.

According to Global Entrepreneurship Monitor (GEM), an annual joint publication of the University of Hannover and the Institute for Jobmarket and Career Research of the German Federal Agency for Employment, only 2.5% of adults in Germany started a business which they could live from. This placed Germany in spot 10 of the 22 compared.

Rolf Sternberg, an economist, considers one reason for the weak culture of entrepreneurship to be the widespread desire toward security:

“The tendency to strive towards security is much more prevalent in Germany than in Anglo-American countries”. This is the flipside of having a well-developed social security system.

Yvonne Stolpmann of Chamber of Commerce in Nürnberg summarizes the situation as such: “Those who give up a permanent position here stand to lose a lot of security. It’s different in the USA”.

Every fifth DAX share

German investors have a safety first mentality when it comes to money. Their aversion to risk is often attributed to the economic turmoil of the 20th century. The hyperinflation of the 1920s and the devastation of two world wars have burned themselves into the nation’s psyche.

Since early 2009, the share prices of DAX-listed companies have tripled on average — an increase of €800 billion, or $860 billion. Germans park their money in safe investments like savings deposits or life insurance policies.

54.3 percent of shares in the DAX are held by foreign investors — more than ever before. U.S. investors are the biggest single group of foreign investors. Every fifth DAX share is owned by North American investors.

Business failure is Personal Failure

The Handelsblatt Global Edition from April 23, 2015 reported: Philipp Gloeckler’s business idea was a failure, and he doesn’t mind admitting it. He had what he thought was the perfect concept, an impeccable business plan and great press coverage. Yet, his app, Whyownit, was a disaster.

This is how he found himself at the F***UpNight event in Berlin, a get-together where failed start-up entrepreneurs pick through the bones of their mistakes in the hope that they can do better next time.

“Business failure is often equated to personal failure in this country,” said Rolf Sternberg, a researcher at Leibniz University in Hanover, who recently co-authored a study on young entrepreneurs. “We would win a lot if we would accept failure as a new chance,” he added.

Other than SAP, the software giant founded in 1972, no German tech company has made it onto the global stage. Instead German entrepreneurs are better known for their pursuit of perfection, and finding success within established structures, such as the car industry.

“I am convinced we need to talk about mistakes,” said Béa Beste, whose toy app, which allowed users to subscribe to a toy delivery service for kids, collapsed with the loss of all her investor’s capital as well as her own €300,000 ($322,000). “The worst mistake is being afraid of mistakes,” Ms. Beste said.

Venture capital is scarce in Germany’s risk-averse, conservative economy, so entrepreneurs usually turn to bank loans for funding. But if their business fails and debts are called in, they must go through a lengthy insolvency process which can demand up to six years of “good conduct” before the slate is wiped clean.

“Sitting out“

Former German Chancellor Helmut Kohl was often innaccurately portrayed as the master of Aussitzen (sitting out) by journalists and political elites alike. Instead of approaching a problem directly, it was said that he would wait until it would either resolve itself or people would lose interest in it.

But even with Kohl’s retirement from politics,“sitting out“ political issues supposedly has not gone out of style. At least according to Stern maganzine, which claims that Angela Merkel has become the new representative of this style of governing. As Wochenmagazin wrote in March 2010: “Angela Kohl – wait it out, weigh it out, sit it out. Chancellor Merkel reveals herself ever more strongly to be an adept pupil of the greatest sitter-outer Helmut Kohl”.

More accurate is that Kohl was and Merkel is a master of thinking things through, patience, and building consensus.

74 Billion Dollars

On May 7th, 1998 Jürgen Schrempp, CEO of Daimler, and Bob Eaton, CEO of Chrysler appeared together at a press conference in London to announce a merger between the two companies. It was emphasized that this was not a takeover by one company of the other, but rather a fusion between equal parties. Schrempp deemed the merger of Daimler and Chrysler “a match made in heaven”.

After two years, Co-chairman Eaton announced his resignation, leaving Schrempp to be the sole head. In 2006 Schrempp passed this position on to Dieter Zetsche. By March 2007 the first speculations began to emerge that DaimlerChrysler would sell the ChryslerGroup.

Since the merger, Chrysler had reduced its net worth by 35 billion Euros, while the net worth of DaimlerChrysler has been reduced by another 50 billion by the end of Schrempp’s resignation in 2005. On May 14th, 2007 the sale of ChryslerGroup to Cerberus was announced. During a special general assembly on October 4th, 2007 it was officially decided to rename the company Daimler AG.

For Mercedes-Benz this merger to DaimlerChrysler AG seriously damaged the company’s image, which many attribute to quality issues and cost-cutting. The leading role which Daimler-Benz AG once had in the auto industry has still not been completely restored.

A study conducted by the consulting firm McKinsey estimated that the company’s value had dropped during Schrempp’s reign by 74 billion dollars.

Better a bird in the hand

“Besser den Spatz in der Hand als die Taube auf dem Dach” – better a sparrow in the hand than a dove on the roof – is a popular German saying expressing the German aversion to risk.

Aversion to risk and conservativeness go hand-in-hand. Never want too much, be satisfied with what you have.“ Den Mund nicht voll nehmen.” – Don’t bite off more than you can chew.

Only 13 percent of Germans invested in stocks and shares during 2014. Despite rock-bottom interest rates, the majority of savers continued putting their money into trusted bank savings accounts and fixed-return financial products.

Think first. Then act.

Germans often have the impression that their American colleagues gather too little information before making a decision. Valuable information sources are not tapped into. Comparisons are made “on thin ice.” Early indications based on subjective sources are not questioned critically.

All these reservations go against the German belief in erst denken, dann handeln – think first, then act. For richtig denken – literally right or correct thinking, in the German context means holding down (controlling) the natural impulse to act until the situation has been analyzed and the consequences of actions thought through.

It should be of no surprise, therefore, that Germans often see American analysis as insuffiently stringent. They see a narrow and incomplete focus on only certain aspects of the decision to be made. They fear that the Americans overestimate their ability to do a sauber – clean analysis.

This is underlined by what the Germans believe is an American tendancy to take subjective information too strongly into consideration. They are surprised when their counterparts do not use those tools and standards which have proven to be successful.

In the end Germans see their Americans colleagues as too pragmatic, too inaxact. Insufficient results are accepted too quickly. This is very difficult for Germans to accept as a people which places so much emphasis on avoiding errors via accepted tools and standards, errors which could be the source of a Systemzusammenbruch – literally system collapse. Germans see themselves sliding into danger which can only be stopped through analysis performed twice or even three times over.