The New York Times online. May 3, 2015. An interview with Diane von Fürstenberg, Belgian-born American fashion designer best known for her iconic wrap dress.
Interviewer: You’ve had such a roller coaster life of great successes, as well as some pretty dark times. How did you manage through all that?
von Fürstenberg: I’m still managing through it. First of all, let’s talk about success. I lived an American dream. I was very lucky because I was very successful at 25 years old. Now it’s very common for that to happen in Silicon Valley. But at the time, it was not so common, and I was a woman and I was very young.
Now we go to failure. What does failure mean? You didn’t make it? So you didn’t make it. But by not making it, maybe you learned something else. America is a society where you always have a chance and where you can always make a comeback. So I would say that failure sometimes could be your biggest asset.
Isolate: To cause a person or place to be or remain alone or apart from others; to identify something and examine or deal with it separately.
Simplicity: The quality or condition of being easy to understand or do; the quality or condition of being plain or natural; a thing that is plain, natural, or easy to understand. Late Middle English. From Old French simplicite or Latin simplicitas, from simplex.
Sophistication: The quality of being sophisticated; development to a high degree of complexity; the quality of being aware or and able to interpret complex issues; the characteristic of having, revealing, or proceeding from a great deal or worldly experience and knowledge of fashion and culture. From medieval Latin sophisticatus, “tampered with”.
Elegance: The quality of being graceful and stylish in appearance or manner; the quality of being pleasingly ingenious and simple; neatness.
KISS: The acronym for “keep it simple, stupid” is attributed to Kelly Johnson, an engineer at the U.S. weapons company Lockheed. Although there are several other variations, the principle states that systems work best if they are kept simple. Complexity should be avoided. Johnson had given a team of design engineers a set of tools, then challenged them to design a jet aircraft which can be repaired by an average mechanic under war conditions with these tools only.
There is nothing original about KISS, however. To Leonardo da Vinci is attributed “simplicity is the ultimate sophistication”. Mies van der Rohe, widely regarded as one of the masters of modern architecture, stated time and again that “less is more”. Antoine de Saint Exupéry, the French aristocrat, poet, writer (The Little Prince) and pioneering aviator has been quoted: “It seems that perfection is reached not when there is nothing left to add, but when there is nothing left to take away.”
William of Ockham (1288-1348), an English Franciscan friar and one of the major figures of Medieval thought, wrote that “among competing hypotheses, the one that makes the fewest assumptions should be selected”.
The United States has enjoyed the most favorable margins of error. Risk-taking could flourish under such circumstances.
It is protected by two natural barriers, the Atlantic and Pacific Oceans. Its neighbor to the north – Canada – is culturally a cousin and has never been a threat. Its neighbor to the south – Mexico – was defeated in wars and lost large pieces of territory to the U.S. It, too, has never posed a threat to the security and stability of the U.S.
The indigenous population – the American Indians – were driven from their territorial homelands, killed in wars, placed on reservations. The nation has access to immense natural resources, chief among them land.
Margin of error: An amount (usually small) that is allowed for in case of miscalculation or change of circumstances.
Risk (noun): A situation involving exposure to danger, the possibility that something unpleasant or unwelcome will happen, a person or thing regarded as likely to turn out well or badly, as specified, in a particular context or respect; a person or thing regarded as a threat or likely source of danger; a possibility of harm or damage against which something is insured; the possibility of financial loss.
risk (verb): Expose (something or something valued) to danger, harm, or loss; act or fail to act in such a way as to bring about the possibility of (an unpleasant or unwelcome event); incur the chance of unfortunate consequences by engaging in (an action).
All Americans are descendants of immigrants. And the immigrant experience begins with risk-taking. All immigrants risk, to one degree or another, what they own and know. Taking that one great risk, that leap of faith, makes small most later decisions in life. Immigrants are, or have become, by their very nature risk-takers. Americans are risk-takers.
The American economic system encourages entrepreneurship. It pays in the U.S. to establish your own business. Businesses owners who enjoy high success do very well financially. Owners who enjoy medium success do well financially. Those, however, who enjoy low success do very poorly financially. “No risk, no reward.”
Small businesses – firms with fewer than 500 employees – drive the American economy by providing jobs for over half of the nation’s private sector workforce. Small businesses are job creators, representing 99.7% of all firms. They make up the following: 64% of net new private-sector jobs, 49.2% of private-sector employment, 46% of private-sector output, 43% of high-tech employment, 98% of firms exporting goods and 33% of exporting value.
Small businesses create more than half of the private non-farm gross domestic product and create 60-80% of net new jobs. 19.6 million Americans work for companies employing fewer than 20 workers, 18.4 million work for firms employing between 20 and 99 workers, and 14.6 million work for firms with 100 to 499 workers. 47.7 million Americans work for firms with 500 or more employees.
According to the Bureau of Labor Statistics small firms accounted for 64% of the net new jobs created or 11.8 million of the 18.5 million net new jobs between 1993 and 2011. Since the latest recession, from mid-2009 to 2011, small firms, led by the larger ones in the category (20-499) employees, accounted for 67% of the net new jobs.
Scottish-American Andrew Carnegie led the expansion of the American steel industry in the late 19th century with the Carnegie Steel Company. Carnegie established public libraries throughout the United States, the United Kingdom, and other English-speaking counties.
He funded approximately 3,000 libraries in 47 states in the United States, Canada, the United Kingdom, Ireland, Australia, New Zealand, the West Indies and Fiji. He donated 50,000 British pounds to help establish the University of Birmingham in 1899.
British- and Irish-American Henry Ford founded the Ford Motor Company and was sponsor of the development of the assembly line technique of mass production. His development of the assembly line allowed many middle class Americans to afford and buy automobiles. Ford left most of his wealth to the Ford Foundation.
William “Bill” Gates is the former chief executive and current chairman of Microsoft, the world’s largest personal-computer software company. He co-founded Microsoft with colleague, Paul Allen. He is one of the best-known entrepreneurs of the personal computer revolution. After studying the work of Andrew Carnegie and John D. Rockefeller, Gates sold some of his Microsoft stock in 1994 to create the William H. Gates Foundation.
In 2000, Gates and his wife combined three family foundations and founded the Bill & Melinda Gates Foundation, which is currently the largest transparently operated charitable foundation in the world.
The American culture admires risk-takers. They are considered to be courageous, ingenious, hard-working, forward thinking. The American experience is one of trial and error. It begins with how parents raise their children to try things, to attempt more than before, to experiment. A mistake is only one when one doesn‘t learn from it. Trial and error is moving forward, is getting better at something. It is synonymous with learning by doing.
Breaking down complexity into its component parts, a common theme in American thinking, is also at play in American decision making. Individual decisions are always a part of larger decisions. They can be either grouped or isolated. Because Americans value focus and execution, they tend towards isolating decisions.
The more clearly defined the decision to be made, the more limited its scope, the greater the chances that it will be made intelligently and implemented effectively. Limited scope decisions are also a form of risk management. Their results can be evaluated quickly. They allow for flexibility and rapid reaction to changing parameters.
And if human action influences the very context in which one is operating, there is a point beyond which grouping decisions increases risk. From the American perspective systems are inherently risky. For if just a few key elements of a system are wrong, the entire system is wrong.
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.
The appreciation that Germans have for individual competence and their aversion towards incalculable risks sometimes set the condition of a certain degree of caution used when working with innovations.
Therefore, it fits the bill that German companies always approach the execution of updates and improvements in a cautious and well thought-out manner. All of the pros and cons must be carefully weighed, and all influential factors taken into consideration before a critical decision is made.
In this case, a qualified expert will often be called in to assist. “Professional quality management is often the condition for the commissioning of tasks. This is often bound together with unnecessary effort, especially in the case of small businesses; often the incorporation of external consultants is better”, explained an expert from the Chamber of Crafts in an article.
And so there exist a plethora of external experts, consultants, institutions, and established norms for German business owners to turn to in case they should lose perspective in the tangle of modern innovation.
These exist to help to make well-founded and analytically grounded decisions. It has even developed into its own field of study at many technical and business colleges: studies to the systematic approach of solving problems and to the development of complete solutions have begun to fill textbooks and lesson plans.
These approaches help to calculate multiple types of risk in advance, thereby countering the deeply rooted nervousness that comes together with risks and unforeseen situations.
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.
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?
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