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“.

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.

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.

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.

“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.

Fehlerkultur

Fehlerkultur – literally failure-culture – is defined by sociologists as the way in which societies react to failure (mistakes) and to those who commit them. A German psychologist took a closer look at Fehlerkultur within German companies.

In the past, innovation in Germany, he wrote, was the product of a long collective decision making process. The great inventions of the Industrial Revolution in Germany were very seldom the result of an individual genius, but instead the achievement of groups of men and women.

Problems (mistakes, errors, failures) were identified, analyzed and solved collectively, as a group. The final product was ausgereift – technically mature, well-engineered, sophisticated. American-styled “trial and error” does not exist in German thinking, which is why there is no accurate German translation for it.

The negative side of this German national-cultural strength is that a systematic, perfection-oriented group approach to solving problems (to innovation) requires patience and time. And time is not always offorded by today’s rapid market developments.

It is in such circumstances, according to the study, that the Germans inclination to blame those who take risks and inevitably make mistakes comes stronger into play.

Mistakes are deemed almost as a personal and professional transgression which demand being exposed, and the perpetrator punished. This heightens even more the innate German fear of commiting errors, which in turn stymies creative thinking.

“Good things need their time”

The German expression Gut Ding will Weile haben – good things need their time – states that things which are supposed to turn out good will need some time. This becomes clear especially when important decisions are to be addressed:

“Quality before speed: Merkel pulls the brakes at the introduction of new supervision of European banks.” (Handelsblatt 17.2.2015)

“The German Handball Federation President Bauer: “Quality comes before speed.“ (Lahner Zeitung 20.6.2014)

“NPD-Ban: Quality before speed.” (Hamburger Abendblatt 9.12.2011)

Personal liability

Germany is a country based on the rule of law. And there are many laws in Germany. The Germans abide by them. For Germans, rules and regulations are one way to reduce risk of personal liability. This can make working with Germans difficult for non-Germans. A conditional German yes might very well be based on the fear of being made personally responsible for the outcome of an agreement.

Working with Germans or setting foot on German soil immediately involves coming in contact with German laws. Why are escalators in Germany so slow? Because the store owner is liable for any accidents.

Bus drivers in Germany will only let passengers enter or exit at designated bus stops, even if it is only ten meters away. For legal reasons. When sending an email to a group of friends the other email addresses should not be visible. Personal email addresses are private and protected by Datenschutz, information privacy protection laws.

Computers often need repair. Employees of companies are not permitted to take action, unless they are in the IT department. If repairing leads to further damage, the employee is personally liable. For it is not their job, but the employer‘s, to repair company equipment.

The same goes for cleaning. Rolling up your sleeves and cleaning dirty windows in your office is a nice gesture, but not a good idea in Germany. The employee is liable for any injury incurred during the cleaning. The company‘s insurance company certainly will not pick up the costs. And the company can even charge the employee for not focusing on the work they are paid for.

German laws also prescribe clearly in which locations what kinds of commercial space can be used for. Many an organization has learned the hard way that the space they rented cannot be used for the purposes they intended.