Decision-Making – Page 12 – understand-culture

More with Less

“Get more done with less.” An intelligent use of resources also aims to maintain balance. Germans try to avoid ‘heading down the wrong path’, especially ‘betting everything on one hand’. Instead, they try to view an individual decision in the broader context of factors and resources. Achieving more with less is a defensive approach.

Decision making latitude. Germans do their best to maintain broad latitude in their decision making, whether it be in companies, families or the government at all levels. They want to make decisions freely, not be forced to make them.

Germans strive to keep as many options open as possible, knowing well that every decision leads to action, which in turn draws on valuable resources: time, budgets, material, manpower. And because revising decisions further depletes resources, Germans try to make the right decision from the start.

Thrifty. The German people are thrifty. The national debt per person is far lower than in Europe’s southern countries and clearly lower than in the U.S.. Private household debt is considered to be a character weakness, of poor planning, an inability to manage a budget. State agencies stand ready at any time to advise German citizens on how to get their personal finances in order.

Exact calculation. Germans are known to calculate ‘with a sharp pencil’. Whether it be the mother of a family, the Chief Financial Officer of a German small-to-medium sized company or a civil servant in the local tax office, the Germans calculate precisely what costs how much, when, with what affect on the overall budget.

Germans speak of the schwäbische Hausfrau, the Swabian mother and head of the household. Swabians are known within German for being especially thrifty. They are the model for financial conservatism, for avoiding non-essentials, for holding on to their money, for saving.

Root Cause Analysis

Root cause analysis is a problem solving method which identifies the original cause of error, as opposed to simply addressing the symptoms.

Root cause analysis is critical in those areas in Germany where sustainability is important, where seemingly minor mistakes can lead to major damage, where error occurs time and again, especially in technical areas. Every type of quality analysis relies on root cause analysis.

If products are returned as defective, roots cause analysis is employed immediately. Each and every form of research and development works at the root level. Where more is required than treating symptoms, root cause analysis comes into play.

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.

Rational / Personal

On the one side, the Germans strive hard to be objective, to reduce, even eliminate the subjective.

Rational, logical, scientific. Filtering, screening, separating fact from gut feel, from intuition.

Communication: Say what you mean, mean what you say. Honest. Not meant personally. Persuasion: Separate message and messenger. Take yourself out of the equation. Decision making: Sober, scientific, self-skeptical. Feedback: The focus on weaknesses as authentically constructive input. Processes: Stripping down, compressing to the core, machine-like.

Yet, the Germans are personal, emotional, subjective.

Agreements: Think it through carefully. Your word is your bond.

Leadership: Hire talent. Train and equip. State mission. Then get out of the way. Product: Deep curiosity and concern for the user. Do it right. Customer: Do what is best for the customer, even if it jeopardizes the relationship.

Germans. Objective subjective. Rational personal. Perhaps a false dichotomy.

Stringency

Analysis. Latin analysis, Greek análysis: to pull apart, dissolve into parts; to study something by taking it apart and considering its individual components; investigation into the particulars of a whole.

Analytical thinking is in those professions critical where a system is understood via its parts. A psychoanalyst pulls apart the patient’s past experiences. The financial analyst considers the entire spectrum of transactions in order to get into the details of specific market movements. Police investigative work, all approaches in medicine, every type of research and development must employ sophisticated methods of analysis.

Stringent. Latin stringens: strict; convincing based on logical arguments; logical, clear, without internal contradiction.

Stringent analytical methods are particularly important in the academic fields, whether the natural sciences, engineering sciences, economics or the humanities. Master’s or Ph.D. theses in Germany are not accepted without meeting high standards of analytical stringency. All professions based on deep analysis depend on stringent methods.

Penetranz. Penetration: Latin penetrare: to place into; to enter into, get into, to move in a certain direction.

To be penetrating has a negative connotation in Germany: overly direct, bearing in on a point, intense. A certain perfume can be too penetrant. A person who dominates a conversation, making long speeches and moralizing is penetrant.

In the positive sense penetrant means dogged, focused, determined, working to understand something at as deep a level as possible. Like an archeologist who digs deeper, forever searching for evidence, for insight into the lives of our human ancestors. The same goes for analysts of any kind, for the medical profession, for linguists, historians and research in all of its forms.

Heinrich Schliemann (1822-1890) comes to mind, the German archeologist who discovered the ancient cities of Troja and Mykenes. Many years of painstaking research led to archeological and historical proof that these two cities had in fact existed.

External Expertise

Germans often involve external experts, who have a broader Überblick, in a critical decision making process. As a neutral party they can ensure that the most current analytical techniques are employed, thus minimizing the risk of errors causing serious harm. Even those Germans confident in their ability to execute a critical decision making process will refer time and again to the highest standards in their industry.

Expertise. Analysis performed by a neutral expert. Deep subject area knowledge. “She is considered one of the finest experts her field.”

The Germans believe that truly objective criteria and analytical approaches exist, that they can be identified and used. Germans constantly work towards objectivity. For them analysis can only be of value if objective.

Standards. English standard: something which is considered to be the best in its kind, a model, an example; the quality against which all is compared, measured; norm, measure, a plumb line.

Some of the highest standards for hygiene, for example, are found in German hospitals, restaurants and hotels. To receive several stars requires meeting those standards.

There are labels and awards for almost all products in Germany: Fair trade labels for products from the southern hemisphere; ecology labels for organic foods; safety labels for mechanical and electrical products used in the home or the workplace. All are based on norms and guidelines.

Pride comes before the fall

Deutsche Telekom – German Telecom – has had several stock offerings. Its first in 1996 was accompanied by a carefully orchestrated marketing campaign which was a huge success.

People who had never owned stocks flocked to the T-Aktie, to T-Shares. The Aktieneuphorie – stock market euphoria – in Germany lasted for several years.

The share price at the first offering was 28.50 DM (14.57 Euros), at the second 39.50 Euros, then 66.50 Euros. On March 6, 2000 the T-Aktie hit its highpoint of 103.50 Euros.

From there it was all downhill. On September 30, 2002 it was at 8.42 Euros. At the beginning of 2015 it just about at 16 Euros.

Shareholders sued Deutsche Telekom in 2008 in Frankfurt. Their claim was that Deutsche Telekom misinformed them about the true value of the company’s real estate holdings, as well as other incorrect statements in their financial statements.

Over 17,000 shareholders demanded roughly 80 million Euros in damages. The court case focused on whether the shareholders were sufficiently informed about the level of risk.

The marketing hype of the T-Aktie was criticized by the shareholders after the fact. “Such marketing campaigns are not appropriate for selling stocks. This isn’t laundry detergent, not toothpaste,” said Jürgen Kurz, head of the German Society for the Protection of Securities Holders. “People should buy stocks in companies, but they should be informed about the risk they are taking.”

The Süddeutsche Zeitung – one of Germany’s leading newspapers located in Munich – wrote at the end of 2014: “The T-Aktie is not just any old stock. It’s a symbol. It made Germans hungry to invest in stocks, and then killed that appetite for years to come. The investors felt cheated, tricked. Unrequited love. Today only half as many Germans hold stocks as in 2000.”

Insurance protection

Germans love insurance policies. According to the magazine Stern, the average German household paid an average of 2,771 EUR annually for private insurances in 2002, 106 EUR more than in the previous year. They are clearly willing to spend on their security.

However, the avoidance of risks in this way is often not rational. According to Stern, every other German is insured for legal representation, yet only one in ten have disability insurance. Statistically, however, one out of four people will be unable to work for an extended period of time during their lifetime due to illness or an accident.

The investment counseling agency KSK-Südholstein makes a similar attest: “Germans love to be rooted and secure. That is why they are so keen on insurances. For this reason, there is an incredible variety of insurances available on the German insurance market.

Amongst these policies you will find some which are sensible, and others which really are not, because not every value must be insured. Much to the dismay of experts, there is a tendency in Germany to insure small amounts of damage with high initial ventures.”

“There you have it!”

In February 2015 Christian Lindner, the head of the Free Democatic Party (FDP), gave a speech in Dusseldorf, the capital of the German state Northrhine Westphalia.

“Entrepreneurship is a signal of confidence in a culture’s future. When people start new companies, they are not only creating a better future for themselves, they’re creating jobs for others.”

Hardly into his speech a state representative from the ruling Social Democrats (SPD) called out smugly that Lindner, indeed, had had personal experience with startups.

Lindner pounced on the opportunity. “Aha, look here. You say that I have experience. It is true, dear colleague. During the highpoint of the new economy I founded a company. It was not successful. But the leader of your party, the premier of this great state, in her speech today stated clearly that Germans should not stigmatize those whose startups fail.”

Lindner continued: “There you have it, in your own caucaus, Madame Premier, a colleague who doesn’t listen to you. This is exactly one of the reasons why so many people prefer to work as civil servants, instead of starting a company. For if they are successful then you Social Democrats want to tax and reallocate their profits. And if they are not successful, then they are derided.”

Auf YouTube wurde die Rede bereits millionenfach angeklickt. In DIE ZEIT vom 19. Februar 2015 schreibt Feliks Eyser, ein Gründer, der im zweiten Anlauf erfolgreich war, in einem Artikel mit dem Titel „Wer wagt, verliert“:

Within hours the speech was uploaded to YouTube and clicked on over a million times. A week later DIE ZEIT, a respected political weekly, published an article by Feliks Eyser, whose first startup failed but whose second succeeded.

The article’s title was „Wer wagt, verliert“ – those who risk, fail. This is the opposite of the well-known German figure of speech “Wer wagt, gewinnt” – those who risk, win.

“Failure is a part of entrepreneurship just like sore muscles are a part of sports. Those who start a company run the risk of failure. Courage is essential. Perhaps more people in this country would have that courage if a busines failure were not seen as human failure.”

Interestingly, Eyser wrote scheitern not seen as versagen. Both terms translate into failure. Could this mean that Germans see in failure human or personal failure?

Efficient products

Automobiles: Germans like to drive powerful, fast cars and are proud of their Autobahn with its lack of speed limits. At the same time they like to save money. This is reflected in their cars. Over the last twenty years the fuel efficiency of German cars has increased by 20%, while doubling their horsepower.

The VW Lupo 3L TDI is a case in point. It is the first mass produced car which can go 100 kilometers on 3 liters or less fuel, while maintaining the power of others compact cars.

The entire German car industry is constantly increasing the efficiency of its production methods. Most produce only 30-40% of the final product. The rest is developed and manufactured by a complex, sophisticated network of specialized suppliers, many of whom are located right next to their German customers.

Residential homes: Germans focus on building homes which maximize space. German houses tend to be small, certainly in comparison to homes in the U.S., which are twice the size.

German homes are built, and renovated, with an eye on energy conservation. Insulation and electricity efficiency are two of the key goals. And the German government supports these with generous subsidies via the KfW, Kreditanstalt für Wiederaufbau, the Bank for Reconstruction, founded in 1948.

This is especially the case with new construction and renovations, with the KfW offering ten different types of financial support linked to new efficiency technologies. All loans have borrowing rates guaranteed to be lower than the rate of inflation. In some situations, families receive cash payouts as subsidies.

Particularly popular, and subsidized by the government, are solar panels, which save electricity and reduce Germany‘s dependence on electricity produced by fossil fuels.

Water consumption: Since the 1980s ecological groups have been campaigning for less water use, in order to protect the environment and save money. Since then water conservation has become common in Germany. The manufacturers of showers, faucets, toilets, washers, dishwashers and other household appliances have developed and brought to market highly efficient products.

German households save so much water that waste water systems have difficulty keeping themselves clean due to too little waste water moving through the system. Local water works often need to flush through extra amounts of water in order to keep the system clean.