business – Page 7 – understand-culture

All the way or not at all

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.

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.

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.”

Founderland

A willingness to take risks and a desire to make decisions are the basic requirements for starting a business. Germany is not a land of entrepreneurs.

According to Global Entrepreneurship Monitor (GEM), an annual joint publication of the University of Hannover and the Institute for Jobmarket and Career Research of the German Federal Agency for Employment, only 2.5% of adults in Germany started a business which they could live from. This placed Germany in spot 10 of the 22 compared.

Rolf Sternberg, an economist, considers one reason for the weak culture of entrepreneurship to be the widespread desire toward security:

“The tendency to strive towards security is much more prevalent in Germany than in Anglo-American countries”. This is the flipside of having a well-developed social security system.

Yvonne Stolpmann of Chamber of Commerce in Nürnberg summarizes the situation as such: “Those who give up a permanent position here stand to lose a lot of security. It’s different in the USA”.

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.

Limited, but Relevant

Americans prefer gathering limited, but highly relevant, information, and fast. Comprehensiveness costs time, and must be justified by its value. All information sources should be considered, provided that there is sufficient time. Americans also accept subjective (non-quantifiable) information sources, such as personal references. Their credibility, though, is judged based on experience (track record) and reputation.

For Americans, however, information gathering serves the pragmatic purpose of information analysis, which in turns serves decision making. Information gathering, thus, is seen early in direct connection with the end goal. If enough information has been collected in order to perform good analysis, there is no reason not to move on to the information analysis step in the decision-making process. Information gathering is not an academic exercise.

Because Americans also see the complexity inherent in many decisions, they prefer to break down decisions into sub-decisions, into particulars. This allows for more focus on key elements of the broader decision. The analysis of the information should then be quick and pragmatic. Objective tools are helpful and should be used, but also combined with experience and common sense. Americans are willing to trust their intuition.

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.

Three inches high

Horst Brandstätter, the founder of Playmobil, dies at 81.

“Although a billionaire by the end of his life, he was a world champion in economizing, the younger Mr. Brandstätter (son Conny) said, citing as an example his father’s insistence on using cheap packs of cards for his favorite card game.

Mindful of his cash flow as the world oil crisis drove up the cost of plastics in the 1970s, Mr. Brandstätter summoned his chief designer and asked him to come up with toys that would use less plastic.

Mr. Beck came up with Playmobil, whose miniature models and environments are said to have been inspired by children’s drawings and the figurines of traditional Christmas crèches. At about 3 inches high, the figures have round faces, movable arms and legs, and hands that can grasp a pirate’s sword, a carpenter’s saw or a firefighter’s hose.”

Source: New York Times, June 11, 2015. By Alison Smale

How fast?

The American tendency to work at a fast pace and aim for rapid results continues to confound Germans. They have difficulty identifying a logical and structured plan for action amongst their business dealings, and where Americans see hard work and flexibility in action, they suspect only chaos. When Germans feel overrun by American ‘decisionism’ and see their standards of quality and the rhythm of their own style of working as becoming endangered, this confusion can quickly transform into irritation.

“A bad decision is better than no decision.” There are few Americans likely to disagree with this popular saying. Germans, however, would tend towards saying the exact opposite. Sometimes even a good decision will find no supporters.

From the American perspective, it is the client who is the most significant factor in determining the deadline for a given decision. Americans value a client-oriented business model. Because Americans tend to operate under the assumption that this same dynamic exists in in Germany as well, they find it difficult to understand why their German colleagues would risk upsetting a customer over time wasted during the decision-making process.

Priorities and time factors can change during the process of making any decision. Americans prefer to divide this process up into multiple sub-processes or steps. The sequence of these steps must remain flexible – meaning that it should be possible to change their order, or even skip a step or two in between if necessary. From this point of view, the structured discipline of the German decision-making process can appear exceedingly rigid and in-flexible – occasionally appearing as though it would directly conflict with the purpose of the decision itself.

It is almost as though the decision-making process would be more important than the final decision. To Americans, the German approach of assigning so much importance to the process of making a decision as to possibly loose perspective of the final decision itself can seem rather paradoxical. For this reason, one might suspect that simple indecision is being masked by a seeming concern for ‘attention to detail’.

Of course the German understandings of process and customer relations play a role here (according to the motto: ‘The client wants a solution from us. Our processes guarantee a solution, so the client knows that he can wait.’) But surely there must be something more involved; Germans can see that during the process of making an important decision one must also make a series of decisions which are smaller, but not insignificant to the bigger picture. These decisions are key elements of a systematic (or self-perpetuating) approach, each de facto requiring more time for consideration.

Ultimately, whether or not the rebounding American approach – making quick decisions, then revising them just as quickly – is actually faster typically depends on the related events. ‘Wir haben mit Äpfeln und Birnen zu tun’ – you can’t compare apples and oranges (or pears). Nevertheless, there will always be those colleagues who will continue do do so, and continue to bicker.

Process Rhythm

All processes have a rhythm, made up of the individual process steps, their sequence and the time allotted to them. Processes do not exist in a vacuum, however. Every process and its rhythm is subject to external factors.

Germans do their best to prevent external factors from influencing the rhythm of their processes, however. They believe that if a given decision making process has proven to be effective, if it has led to good decisions, it should not be interrupted or distracted.

If the decision is an important one, if the decision making process has proven to be robust, Germans will do their best to shield it from external factors.