April 25, 2017 | German Valley

Just go for it!

Germany’s businesses are “zero digitalized” some consultants assert. That’s a massive misconception and mistake on their part! For people who bad-mouth their own abilities are not going to motivate their staff—and they’re the ones who’ll make the difference. In this digital age, it’s the workers who are much more important than smart algorithms

Article by Ulrich Schäfer published in the Süddeutsche Zeitung

When Henry Ford and his workers first introduced the assembly line in 1913, many in Europe thought, “There—and only there!—lies the future: in Detroit.” Entrepreneurs and engineers from Europe flocked in droves to the city in the U.S. state of Michigan and marveled at this simply amazing technology that changed everything.

Over a hundred years later, German entrepreneurs, managers and engineers are once again traveling in droves to the US, this time to Silicon Valley, in the belief that there—and only there!—they’ll find the key to the future. They’re wowed by the incredible pace of change and the constant talk of “the next big thing” that’s allegedly under development. But when these Valley tourists return to Germany, many of them make a huge mistake: They spread fear and trepidation among their personnel.

They say the Yanks across the pond are leaving us behind; they know how it’s done—and we need to change everything. The Valley faithful anticipate the impending crash of the German economy, a downward spiral to mediocrity, and the loss of lots and lots of jobs. The problem with this is that it’s most definitely not the way to bring about the changes necessary.

Those who try to convince their workers by instilling fear will lose them. Managers who keep telling their team they’re fighting a losing battle are not going to bring about the transformation. Employers and managers who bad-mouth their own abilities and talk up those of others to excess have not understood what leadership principles are required in such a rapidly changing world. One of these principles is to develop as positive a vision as possible in order to motivate one’s own employees. For despite all the smart algorithms, it’s the workers who are more important today than ever before.

The key resource in this digital age are not software and robots, but people who develop the new products and services or utilize them in clever ways. No better than these Valley tourists are those consultants, digital experts and associations that, in studies of varying validity, persistently demonstrate that Germany has been asleep when it comes to digitalization. Germany is losing ground. The ‘desire for doom’ within Germany is so widespread that it is hampering, putting the brakes on the changes that need to be made at companies.

As a result, digitalization is morphing into some kind of nightmare, a scenario like that being propagated by Frank Thelen, one of the ‘lions’ on Lions’ Den, Germany’s version of the reality TV show Shark Tank, aka Dragons’ Den. Thelen has invested in many, in some cases successful, startups, but a few months ago, in an interview with Wired magazine, he well and truly rubbished German business’ record on digitalization.

Thelen’s judgment on Germany’s carmakers and autoparts suppliers was damning: “They’re zero digitalized! Literally zero.” Not a word about the fact that Bosch or Continental have tens of thousands of software engineers in their employ and are busy working on the Internet of Things (IoT). Thelen’s view of German managers was thus: “None of them, not a single one of them has caught on to the war that’s approaching. But it is. And in every single industry there is.” This is sheer doom and gloom. And Thelen’s take on the digital revolution itself was this: “At some point it will all happen really quickly. And then it’ll be too late. What I’m not seeing is the panic that should really be evident given the situation.”

 You need both for a successful transformation: Disruption and tradition

Of course, we do have to concede that people like Thelen—and he’s being cited here simply as one of many—are in fact trying to further the transformation. But panic, or exaggerated bad-mouthing of one’s own abilities, is not the right approach to achieving this. For if there’s one thing we can learn from Silicon Valley (beyond all the things we’d be better off not adopting), then it’s the unwavering confidence, the “Yes-we-can mentality”.

If German companies want to master the digital transformation, then they need managers who on the one hand know that a lot must change but on the other hand refrain from frightening off their workforce by rashly throwing everything overboard. There are five points they need to observe.

Firstly: The know-how and values gained ‘in days of old’ still retain their validity, but they need to be transitioned to the new age. That is, you need both disruption and tradition.

Secondly: Digitalization doesn’t just happen overnight. According to Erik Brynjolfsson, a professor at Massachusetts Institute of Technology (MIT), it will take two to three decades for all of the processes involved to be installed, like it did when electricity was introduced.

Thirdly: Most business models don’t change at the drop of a hat, but need quite some time to do so. Just because Airbnb has turned up doesn’t mean all hotels in the world have shut down.

Fourthly: Companies need to adapt—those who stand still will lose; likewise, those who believe what the prophets of doom tell them will also lose.

Fifthly: Executives cannot simply decree the transformation from on high. More than ever, they need to rely on their workers and motivate them. To this end, they need to demonstrate the opportunities digitalization offers and not just the risks.

A good hundred years ago, when the assembly line was invented, businesspeople in Germany responded slowly at first. Fiat, Renault and Volvo were quick to pick up the new technology, but Germany’s automakers didn’t introduce the moving assembly line until the 1920s; and Daimler didn’t do so until the 1930s!

Today, however, the world’s most successful carmakers are no longer based in Detroit, but rather in Wolfsburg, Untertürkheim and Ingolstadt. So why shouldn’t the country succeed in embracing and effecting this latest transformation?