Serhan Ili – Is Germany losing its entrepreneurs?

Germany is still known as the land of inventors and developers. Even though our ideas are respected everywhere, economic exploitation rarely happens in our own country. How can that be? Perhaps because it’s not only about possessing the ability, but more about execution. Or perhaps because the one who cultivates an idea is the innovator, not the one who had the idea in the first place. If we don’t lack innovators, then we lack something else: entrepreneurs.

Self-satisfaction – opium for management

The problem’s at the top – and I’m not the only one bearing this opinion. A new study done by IMD, the Swiss business school, found that Germany is no longer among the top ten competitive nations worldwide, having slipped from sixth place in 2014.

This survey of over 5,400 managers looked at 342 criteria and concluded that self-satisfaction poses the biggest risk for Germany. Who should we blame for this, if not management? It was hard for me to suppress this thought of blame, as I listened to the head of innovation at one of the big pharma corporations in Germany telling me that the latest innovation they had just patented would be a guaranteed cash cow for the next decade, and that they could now enjoy a hiatus in the development pipeline for a while.

“Because anyone who does not watch the market, will stop seeking out opportunities and new paths, and forget to pursue that which secures the future.”

That would be disastrous – because anyone who does not watch the market, will stop seeking out opportunities and new paths, and forget to pursue that which secures the future. Hence, the first priority of management is to incite ambitions in this arena.

Scarcity of ambition, where one should be driven

A side comment to start with about how risk-averse thinking is increasingly replacing entrepreneurship: when working for corporations and SMEs, we find that many start-ups seek security under the roof of big companies. They give up their agility, freedom of choice, and quite often their vision too by tying up with powerful, oppressive organizations. Start-ups in the U.S., especially in Silicon Valley, are different: they believe in their dynamism, and are convinced that only they can determine how to stay ahead of the pack. There’s no need to compare figures to realize where ambition and entrepreneurial spirit are greater.

I am forever excited by the major, particularly novel successes in the U.S., where the level of appreciation is disproportionately greater than in Germany. Do we envy or belittle this frequently courageous coup de main?

Not really!

Disastrous innovation management: play by the rules

In terms of revival, some have realized that storm clouds are gathering. Yet, many of the responses still reek of self-satisfied sedateness: German innovation is preferably incremental. This is simply playing by the rules! There’s nothing wrong with cutting consumption by 5% or boosting content by 2%. The problem is that this easily shifts the focus from what really counts: a big jump forward, or something really novel. As such, enterprises begin to feel they are active, whereas in reality they are simply at the stage preceding a full innovation coma. If at the end one recognizes the hopelessness of the path they treaded forever, the resources needed for starting anew will have practically vanished.

… and simply pass the buck

The concept of innovation doesn’t appear to have taken root in many parts of Germany. One often encounters signs of real physical rejection – justified psychologically: innovation departments pursue a fig leaf existence. They are isolated, short-staffed, on tight budgets, and lack a proper network with development departments, and especially with management. The efforts made here tend to wallow in open space. Yet, innovation is still called a top priority! But then why are there so few captains here at the helm?

Strive for innovation, rediscover enterprises

Anyone who seeks a sustained future must be ready to rediscover oneself: not even business models, organizations, and responsibilities should be taboo. It is precisely at this juncture between rules and territory that the German management culture has a core problem. It seems hard to break away from something long proven and properly organized, and it appears virtually impossible to give up power and alter areas of influence. And that too hand in hand with the possibility of failure, helpless and without protection against malice and condemnation of those entrenched and comfortable in their old systems.

“Entrepreneurs are never famous for managing a poor status quo – instead, they are known for enabling innovation to blossom.”

It’s never easy to be the captain. Yet, if pioneering enterprises prefer to manipulate software instead of innovating, even the last one should realize that time’s running out. Entrepreneurs are never famous for managing a poor status quo – instead, they are known for enabling innovation to blossom. We need entrepreneurs who can do that, entrepreneurs defined by three criteria: opportunity intelligence, selection certainty, and willpower.

Opportunity intelligence – recognize the signs

You either have it or you don’t – i.e., the ability to see the signs of blue oceans in our market economy. One could, of course, say that it doesn’t always have to be the big coup. Acting on opportunity intelligence means having an alert mind to sniff out potentially new developments. Such opportunities often lie at the crossroads of technologies and sectors. Looking beyond corporate boundaries and linking up with approaches, expertise, and technologies way past them opens up new markets and competitive advantages.

This was how Trumpf, the manufacturer of machine tools, lasers, and electronics, saw the opportunity early on in digitization and Industry 4.0. Now, Trumpf develops its own software to network and plan production processes and machines, and is looking into extending these to all kinds of other enterprises as cloud-based offers for smart factories of the 21st century.

Selection certainty – untie the knots

Innovation is a process that requires a wealth of ideas, and one needs to select promising projects from that pool.

Recently, we helped a big corporation select innovative ideas from among 700 it generated over an 18-month corporation-wide initiative. However, since then the ideas are gathering dust, employee enthusiasm is dwindling, and the innovation department is overstretched. Are we missing an entrepreneur? Innovation is a process that requires a wealth of ideas, and one needs to select promising projects from that pool.

Let’s take BMW as an example: management took the bold decision to kick-off ‘Project i’ early on to invest in electromobility – in spite of foreseeably modest sales figures. This wasn’t a mistake. The technological learning curve and the boost from a positive image will pay back with a sustained market value. Yet, we prefer to focus on certainty, rather than on daring, whenever enterprises actively choose new paths and shape the future.

Willpower – success follows passion

The Senior V.P. of innovation at one of the world’s largest consumer goods manufacturing corporations recently told me in a resigned tone that they will be twiddling their thumbs for the next nine months: no landmark innovation decisions until the new CEO is on board, and that too at all levels of hierarchy. In contrast, the CEO of an SME client of ours cut through red tape in his team, saying, “I quickly made a decision and approved product development. There was too much discussion and too little gusto.” Far too often, our leadership lacks such unconditional determination …

If management is right and really wants innovation, it can easily create the necessary forces to eliminate inflexible structures…

This completes the circle here, since willpower is not only in execution, but also in the search and selection of key driving forces for entrepreneurial actions to succeed along new roads. If management is right and really wants innovation, it can easily create the necessary forces to eliminate inflexible structures, cut through resistance, and marginalize the appeal of a comfort zone. Undoubtedly, being part of a successful innovation process means sparking more enthusiasm and loyalty, rather than something else!

Nevertheless, the decision can only come from the top. If German enterprises are able to establish the innovative culture elucidated above, this land of inventors will once again become the land of innovators and entrepreneurs. If not, our land of inventors will soon be history.

Hence: locate – focus – conquer!

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Dr. Serhan Ili

Dr. Serhan Ili is CEO of ILI CONSULTING AG. He works with leading companies from all industries in the fields of innovation and digitization. He regularly publishes articles, for example in the Harvard Business Manager, and books about various topics, such as Digital or Dead. He is a renowned expert for innovation as well as digital transformation, and he is often contacted for press interviews, for example by manager magazin, DIE ZEIT and Wirtschaftswoche. Dr. Ili studied Industrial Engineering at the Karlsruhe Institute of Technology (KIT), Germany. He went on to receive a doctoral degree in Engineering at the Dr. Ing. h.c. F. Porsche AG in the development center in Weissach and at the Institute of Product Engineering at the Karlsruhe Institute of Technology (KIT).