I have a few reflections on the following key difference between how Germans and Americans make decisions. It has to do with scope.
“Germans think in terms of systems. They view a decision in its broader, interconnected context. The scope of the decision is, therefore, wide. German decision-making means making several decisions at the same time.”
“Americans think in terms of particulars. They consciously break down complexity into its component parts in order to focus on what is essential. Because of that the scope of their decisions is narrow. Americans avoid interconnecting too many decisions.”
Because the two statements are so terse, please allow me to spell them out a bit.
Germans often criticize their American colleagues for nicht über den Tellerrand hinausschauen, for not looking beyond the rim of their plate, or, to use a figure of speech in English, to not see the bigger picture.
Americans, in contrast, criticize their German colleagues for paralysis by analysis. The scope of the decision to be made is too broad, the analysis too deep, the actors involved too many, leading to over-analysis, under-action, under-forward movement.
American impatience with their German colleagues should not be a surprise. A larger-scoped understanding of a decision to be made requires per definition the collection of more information, the involvement of more parties, the application of various tools of analysis, more stringent and precise analysis, a heightened sense of risk, longer and deeper deliberation, a higher number of iterations.
Nor should the German impatience with their American colleagues be a surprise. From the German perspective Americans can come across as making decisions far too hastily, as not understanding the broader context in which a discreet decision is made, as not taking into consideration the ramifications of that decision, as “shooting first then asking questions”, as invading a country militarily first then thinking about the inevitable exit strategy.
The systematic approach has its strengths and its weaknesses. If you get the system right, and if you execute on it well, you get everything, or nearly everything, right. You’ve made not one, but many, decisions right. Because the systematic approach means making many decisions at the same time. It means moving on many fronts at the same time. Yes, it can appear to be excruciatingly slow from the American perspective. So slow that it looks like a form of paralysis.
However, once the analysis has been done, once all of the involved parties are on board and ready to act, they do so in several different areas. Again, they are moving forward on more than one front. The movement is broader and deeper. And at the same time.
The advantages are obvious. Especially the competitive advantage. If you are better at taking a systematic approach than your competitors, if the nature of the business, of the market, of what customers expect, requires a systematic approach, well, then you beat your competitors.
But there are disadvantages. If the nature of the business, the nature of the market, is such that it does not require or want or value or pay for a systematic solution, you’re in trouble. Or what if it does require a system solution but you’re not good at it: unclear understanding of the situation, gathering of the wrong data, weak tools of analysis, lack of cooperation among the key parties, endless iterations, and then lousy execution?
On the flip side there are advantages to the American particularistic approach. The first is focus: clarity of purpose, clarity of mission. The second is speed: less data-gathering, quicker analysis, less consensus-building, an earlier execution start-date. The third is execution: less people involved, less complex playbook, tighter alignment. The fourth is flexibility: rapid reaction to changing parameters on the ground, rapid modification of tactical mistakes. The fifth is closer collaboration with the customer and orientation to their needs.
Now, many Germans will say: “Oh, John, all this talk about the American ability to ‘turn on a dime’ is really an excuse for poor planning. If you think things through carefully before you jump into action you won’t need to constantly reassess the situation, to constantly change direction, to constantly make adjustments. Instead you stay the course and not let yourself be distracted by inconsequential events which may or may not occur.”
Let’s get more specific.
When I was helping with the integration of Westinghouse into Siemens (the power generation business) beginning in early 2000 and ending roughly in 2008, with sporadic projects up until 2014, there was a clear difference in their fundamental business model.
The Germans were Anlagenbau, big projects, turnkey projects, from A-to-Z. That was their tradition, their history, what they did, what they were good at, where they saw the market, and what they were proud of. It was German. Big. Complex. Sophisticated. Systematic.
The Americans were components. Smaller-scoped projects. Equipment-oriented. Gas turbines. Steam turbines. Electrical generators. Focus on selling equipment. Be wary of the big projects. They’re risky. If you don’t get everything right you lose your shirt, or at a minimum your margins shrink by the week, sometimes by the day if penalties are involved. Back during the U.S. gas turbine boom in the early 2000s there were even Americans at Siemens-Westinghouse who advocated giving the turbines away in order to profit on the very high-margin service contracts.
I have often think of the contrast between SAP and Microsoft. Yes, I know that the comparison should be between SAP and Oracle. But Microsoft works better in order to make the point. SAP is German. Systematic, complex, addressing just about everything a company does, to the point where some customers have the impression that they have to orient how they work in order to accomodate the software. A case of the tail wagging the dog. Some Americans go so far as to say that SAP stands for stop all production.
Microsoft, on the other hand, is quintessentially American. Let me oversimplify. Write some code. Get it out on the market quickly. Generate revenues. Listen to customers. Add features. Fix bugs. Come out with new stuff. Continue generating revenues. Listen to customers. Add features. Fix bugs. And so on. Certainly it helps to become the de facto operating system for a first generation of personal computers. But the picture I am painting is accurate.
Microsoft. American. Particulars not system. Fast. Flexible. Rapid reaction. Features. Fixes. Margins. Profitability. No science projects. Software is a business. This is a business.
Back to my two statements on UC:
“Germans think in terms of systems. They view a decision in its broader, interconnected context. The scope of the decision is, therefore, wide. German decision-making means making several decisions at the same time.”
“Americans think in terms of particulars. They consciously break down complexity into its component parts in order to focus on what is essential. Because of that the scope of their decisions is narrow. Americans avoid interconnecting too many decisions.”
I’m a Roman Catholic. Our Lady Help of Christians parish in Abington, a suburb of Philadelphia. I can still recall today the nuns in elementary school teaching us how to compose sentences, then paragraphs. Keep the sentences short, simple, clear. Avoid so-called run-on sentences. Hemingway.
Here the Germans are different. It’s considered a sign of intelligence, of sophistication, to be able to formulate complex sentences. In fact, German grammar not only enables this, it invites one to do so. Germans respect highly the ability to deal with, to enter into, to grasp, complexity. Schachtelsätze. Thomas Mann.
One of my very best researchers, a Ph.d. candidate in Philosophy at the University of Bonn, once remarked to me many years ago:
“You know, John, more and more Germans use the verb herunterbrechen, to break down. That actually is a perversion of German thinking. It’s an importation of American thinking. It’s not German to break down complexity. The aim to do the opposite, to see particulars in their interrelationships, in their mutual influences. Germans look for patterns, strive to understand complexity as a whole, as a system. Germans don’t break down, instead they tie together.”
So, what’s the purpose of my reflections? Who is helped by my thoughts?
There are thousands of Germans and Americans making decisions together. On a daily basis. In multinational companies. Large, medium, and small. The decisions they make are the basis for action. Good decisions, good actions, good results. Bad decisions, the actions don’t matter, bad results.
If there are differences in how the two business cultures fundamentally approach decision-making, and if they are not aware of those differences, German and American colleagues most likely will run into problems making decisions together. And that, in turn, negatively affects their collaboration.
Let’s keep in mind that global companies are made up of multinational teams. Smooth collaboration within and between those teams determine the success of those companies. It can’t be any other way.
