Is Germany loosing the connection to today’s speed of change? In his new book “Germany’s Innovation Jam – How we create a new generation of founders,” Author Jürgen Stäudtner looks at German innovation pitfalls and corresponding resolutions.

Innovation is top priority these days in many countries. One country is particularly keen to demonstrate its capabilities for innovation. German industry is generating the “Innovationsindikator“ on a yearly basis. It is an encomium of how good Innovation capabilities in this country are. In addition, there are many nationwide initiatives to foster and market new capabilities like “Industrie 4.0,” which focuses on digital manufacturing.

Everything is fine, or is it?

Formerly seen as the country’s biggest barrier to modern innovation, German systems of education changed dramatically during the last decade. Traditional university degrees evaporated. Today, everybody is completing a bachelor or a master degree – mostly with fancy names. The traditional “Duales System,” in which apprentices learn both theory in school and practice in companies, bleeds to death.

Neither German companies, nor politicians, nor citizens feel that things are so bad they should change even more. The country is not only world champion in football, it is the world’s largest exporter, according to German sources.

Innovation equals technical invention. There is no need to think about business models, service options or the promises of the Internet.

Germans have a different understanding of innovation than many other countries. Innovation equals technical invention. There is no need to think about business models, service options or the promises of the Internet. Other approaches are mostly ignored.

Take autonomous cars as an example. According to internal sources Audi is convinced they could have build it years ago – albeit, customers would not want it. Mercedes CEO Zetsche says in view of the assaults of Google, Apple or Tesla: “Apple is not causing me sleepless nights”.

Certainly, this is a dangerous misconception. Virtually every study, not produced by Germans tells a different story. Germany is loosing the connection to today’s speed of change. We are not leading in innovation or in digitization.

It looks like the Asian approach to innovation is long-term planning. Major political decisions influence the habits of whole countries for decades. Think of China’s opening after Deng Xiaoping, the rises of Singapore or South Korea. Or think of Dubai’s spending triggered by its sheik. Massive investments by the state enable the population to innovate more easily.

What do China, Vietnam, Nigeria or the Moldavian Republic have in common with the current world champion in innovation, Switzerland? They have great efficiency ratios. They make a lot of their input factors. Switzerland’s input factors are a little worse than those of the best prepared countries. But the Swiss are more effective, which makes them the best innovators.

America provides excellent input factors for innovation. But more than that, Americans still feel encouraged to bring ideas to life. Many entrepreneurs in the United States fail, but they feel less discouraged by failure. Also, great visions are the driving force behind American’s success in new business areas. To think the world must be changed and do so – that is a typical American approach. And it works. It works especially well in digital business models, because those oftentimes have a disruptive nature and can be spread virtually all over the world in days. Also, the USA has the best capital market in the world. Americans understand, that real assets matter and not just savings. For this reason they call capital invested in start-ups venture capital. Germans name it “risk capital”.

The book “Germany’s Innovation Jam – How we create a new generation of founders” explains some reasons for German innovation pitfalls, such as the myth of the perfect employee, and their corresponding resolutions. An excerpt:

Rule-breakers welcome

For many managers employees are only a production factor. Innovative firms have a different view. They build their organization around their people and build teams who make things hum. Cleary. Teams are seen as the correct solution. But how can it be explained that many lone wolves are successful when teams are fundamentally superior?

The world is full of innovators who are working on their own. All known visual artists are loners. They have muses and assistants in their orbit, but Dürer, Rembrandt, Nauman, Richter, Gursky or Schütte have created their works alone. Same with architects: Brunelleschi, Gehry and Libeskind have developed the most spectacular buildings behind closed doors. While there are also very successful design firms like IDEO or frog design, the star of the designers, Marcel Wanders, is a soloist.

In business you need both: Teams that are mutually beneficial and break-through individuals who do things nobody expected.

Seamless security?

It is pretty risky in most German companies to do something that no one expects. Those people get quickly pushed aside. It is less dangerous to become an expert. Specialist knowledge combined with a lot of experience counts. Such employees are so popular that they have to divide their time between daily business and new projects.

But in digital times expertise gets older faster: In some areas of medicine, the available knowledge changes so fast that even experienced physicians come to their limits. For practicing physicians, it is impossible to continue one´s education on top of the daily workload to stay on the cutting edge. The Leibniz award winners and leading internist Professor Dieter Häussinger oversees more than 100 physicians and scientists in Düsseldorf, who explore the human liver. His team radically changed the understanding of the organ and develops therapies that were previously impossible. What is the value of a diagnosis of a normal physicist not constantly researching? Can a patient still rely on his or her recommendations? When experts always do the same, their knowledge gets outdated.

Also the personality of the staff is interesting to managers. Therefore, many companies test applicants with obsolete tests. To find the right candidate applicants are grouped in grids using questionnaires such as the Myers-Briggs Type Indicator (MBTI), the Keirsey Temperament Sorter, or DiSC. These personality-profiles differ little, but they have one thing in common: They are not reliable, because people do not always act the same way. Depending on whether they got up on the wrong side of the bed, whether they feel comfortable or not, the results of these tests vary. Even more if they try to measure the creativity of a person. Only few people can be creative on demand.

Experienced experts with proven personality promise security – for supervisors and the human resources department.

The outsider

An innovator is the one who sees that a stoic behavior in turbulent situations causes problems. He does not remain calm and composed, but interferes so that the organization can learn to respond in time. Judgment, wit and ingenuity bring forth good ideas. This is how the Jesuit Balthasar Gracian has described it aptly in his “Art of wordly wisdom” in the 17th century. Strategists should remember the recommendations of Gracian: “An unbearable fool who wants to arrange everything according to his terms.”

Similar views has Bolko von Oetinger, Director of the Strategy Institute, Boston Consulting Group, in his book “Hänsel and Gretel and the Cuban Missile Crisis”: innovations could prevail in the history of science and markets only by outsiders. “The history of technology abounds with examples that show that the market leader is often not able to give up its solution in time. That is why so often an outsider brings the solution to the market. The PC was pushed by Apple and not by IBM, DEC, Wang, Bull or Nixdorf, the large data processors that time. In Germany, the mobile telephony began with the steel company Mannesmann. The major Internet applications do not come from Microsoft, ” wrote Oetinger.

The creativity and playfulness of ideation is at odds with the idleness of the incumbent management, which has grown up with the successes of the past.

The ground-breaking innovations often prevail against the rules of the market. The creativity and playfulness of ideation is at odds with the idleness of the incumbent management, which has grown up with the successes of the past.

The individual employee is important. We still believe that specialized and well trained teams are more effective in daily operations. But appearances are deceptive: Poor composed and managed teams are inferior to individuals: “A disturbing result is, that many groups do not make better decisions when they consult, and sometimes even lead to poorer conclusions than team members alone,” said the law scholar Cass Sunstein. Interpersonal relations and social pressure signals have a fatal effect on decision-making processes. Especially in large teams passive team members inhibit active ones and the effort of communication can make large teams look bad.

Members of homogeneous teams do not stimulate each other. In order to be innovative or creative exchange should take place more frequently. New members bring fresh air and more momentum. Especially interdisciplinary units exploit a much larger wealth of information in the company. Because they communicate differently, the pressure rises to mutual understanding. It is important to adopt new ways of thinking to evaluate one’s knowledge or see it in different contexts, explains the psychologist Thomas Ward.

Therefore, it is important to create free-space for oddballs, work in small teams, encourage the exchange of the employees and to experiment. Being innovative means to “be there, where no one has been before” said the mountaineering legend Reinhold Messner. It takes rule-breakers, to not suffocate in routine.

By Jürgen Stäudtner

About the author

Jürgen Stäudtner has over 20 years of experience working in leadership positions in companies or as a consultant. He studied Mechanical Engineering at TU Munich and ETSIA Madrid, Business Administration at FU Hagen and Painting and Conceptual Art at FAdbK in Essen. Hence, innovation and creativity are important subjects for him – in business and in private life. Jürgen Stäudtner ist Managing Director of cridon GmbH and a painter and conceptual artist. He is married and lives with his wife and his two children close to Düsseldorf in Germany.