United States Archives - Page 64 of 68

Germany. Geography. Risk.

How a people understands risk is based on its experiences as a people, on the decisions it has made and on their ramifications. Decisions take place within a concrete context, within certain parameters, such as geography. Germany lies in the middle of Europe, has always had a number of neighbors, some friends, some foe, others neutral.

Germany’s topography offers little protection. In the East vast flatlands flow into the steppes of Russia. Never a maritime power, Germany to the north has only narrow access to the high seas. With the exception of the Rhine River, there are also no natural barriers in the West offering protection.The Alps to the south offer protection, however.

Compared to such countries as the U.S., China, Russia, Germany has limited natural resources. The U.S. is a continental nation, defended by oceans to the East and West. Great Britain, once a great power, has forever enjoyed the protection of the seas as an island nation.

Any mistakes Germany made in its relations with its neighbors and the powers beyond was felt directly by its people. Time and again in its history devastating wars were fought on German territory, decimating its population and ravaging its economy. For some of the wars the German people have themselves to blame. For others they were victims.

Risiko or risk from Italian risico: to do something involving a certain degree of chance, with possible negative effects; possibility of significant loss, failure.

Germans often say auf Nummer sicher gehen, literally to play the safe number, when they want to avoid unnecessary risk. Germans prefer to “check twice and be sure”. They check, test, question, analyze. They’re often considered to be overly detailed, risk averse, even pedantic in their approach. Being particularly careful may test one’s patience, but the Germans would rather be safe than sorry.

Or lieber den Spatz in der Hand, als die Taube auf dem Dach, figuratively “better a bird in the hand than two in the bush“.

Nuclear energy? No thanks!

The German anti-nuclear-energy movement began as a social movement back in the 1970’s. It was directed against civilian consumption of nuclear energy. In comparison to other European countries, the movement has also received both the strongest and most continuous support in Germany. The anti-nuclear-energy movement is strongly connected to the environmentalist movement: Greenpeace, BUND and Robin Hood, for example, categorically reject the use of nuclear energy.

The accident on Three-Mile-Island in 1979 and the catastrophe at Chernobyl in 1986 provided the movement with new fuel. In 2000, the Schroeder-Fischer government began the process of phasing out the use of nuclear energy throughout the country.

While in 2010 the Kohl-government was gearing up for an extension of the run-time of the remaining nuclear plants, the German reaction to the nuclear incident in Fukushima in 2011 forced Chancellor Merkel, an advocate of nuclear energy, to reconsider this decision. Germany now plans to phase out nuclear energy completely by May 30th, 2022.

Fukushima ultimately resulted in an acceleration of the phasing-out of nuclear facilities in Germany. One year after Fukushima Chancellor Merkel defended her decision: “As we have witnessed, risks emerged in a highly developed industrial country, which we never would have considered to be possible. That is what convinced me that we should accelerate the phase-out”.

Meanwhile, Japan continues to invest in the nuclear industry. Great Britain is planning the construction of a new atomic plant. Even in France Fukushima could not slow the success of the nuclear industry. And in the USA, Fukushima also had no significant impact on opinions on nuclear energy held by the President and other politicians.

The German anti-nuclear energy movement and the nation’s response to Fukushima demonstrate the unique understanding that Germans have of risk.

Citizens exposed

Towards the end of 2014, the German Postbank conducted a study with the goal of identifying the good policies which Germans enforce with regard to their financial matters. The results were summarized in article titled When it comes to money, Germans are bureaucrats who are afraid to take risks:

“Like a pillar of economic wisdom, the desire to have a higher income looms above all other factors. The remaining results are actually more reflective of the ‘financial illiteracy’, which the Germans are already often credited with.

In this way, the study exposed the citizens as being fearful bureaucrats, who above all just want to increase their personal wealth through taxation, saving, and maintaining better control of their finances, rather than earn money through smart investing, or saving for retirement.”

Risikoscheu – A fear of risks: The attribute of a decision-maker to prefer the path of lesser risk – and thereby most minimal loss – when confronted with several alternatives which have an equal anticipated gain. This may mean waiting longer for the same reward, or even settling for a lesser gain, if the chances are greater that it will be received.

“If worse comes to worst . . .”

There are several key phrases that Americans use when making quick, suboptimal decisions. Some of these include:

At the drop of a hat – without any hesitation, instantly; with the slightest provocation.

Back to the drawing board – when a decision fails and a new one needs to be made. First known use: 1941 in a cartoon in the New Yorker magazine.

Back to square one – when a decisions fails so completely that you have to go back to the beginning and start over.

Cross that bridge when you come to it – deal with a problem when it arises, not before. First known use: 1851 in Henry Wadsworth Longfellow’s The Golden Legend.

If worse comes to worst . . . – if the worst possible outcome of the bad decision occurs, the person saying it will do whatever he/she says next. First known use: 1596. Example: We’ll put this to market now, and if worse comes to worst we’ll refund our customers’ money.

Rash decision – a decision made without considering all of the details.

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.

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.