While a German approach to innovation might sound strange, the EU country is doing something right. Germany had a very impressive rebound from the 2008-2009 recession and continues to enjoy low unemployment rates. But what is the reason behind this stable economy and continuous growth? Well, partly it has to do with Germany’s approach to innovation and progress. Interestingly these values align with Ideanote’s values and what we try to give our customers.
The Hidden Champions
The source of much of Germany’s innovation is the so-called “Mittlestand”, companies that exist in relative obscurity, yet are considered leaders in their field. Specifically, “Mittlestand” companies, or Hidden Champions as they are also called, are defined by three criteria:
- Are among the top three in the world in their industry
- Generate revenue below €5 billion
- Is little know among the general public
The “Mittlestand” is of great interest to policymakers and economist everywhere, as these companies seemed to weather the 2008 economic crises without much loss.
The German manufacturing industry has become the backbone of the flourishing German economy.
As you can imagine, there are many factors that have created the “Mittlestand”, some of which are historical and difficult to replicate. But, luckily, some are easier. A large component to the German success is the combination of practical applications and science, with many German companies working closely with university departments. A second and large component to Germany’s success is the distinct German approach to innovation.
German Innovation Is A Marathon, Not A Sprint
Slow and steady wins the race. True when running and when innovating
This quote very neatly sums up the difference between German and American innovation. While America likes to think of themselves as the country of innovation, the truth is that Germany is a leader in both disruptive innovation and continuous innovation. This is because a lot of German innovation is aimed at adapting inventions to a specific industry and combining traditional products or processes with new ideas. This consistent focus on the long-term, and on improvement rather than creating everything from scratch, has made Germany better at sustaining employment growth and productivity.
A specific example of this is bringing people with programming skills or Ph.D’s in computer science into the manufacturing of cars, thereby breathing new life and energy into an old industry.
Destroying Silos, German Style
While the German approach to innovation, and historical factors are part of what makes Germany a global champion in innovation, there is also the way German companies internally work. Firstly many German companies make a concerted effort to abolish siloed thinking. Because of this, changes happen organically. Instead of having experts outside of the industry looking in and deciding what to change or optimise, you have people with the know-how inside the company, working together. By doing this, German industries have managed to democratize the idea and innovation process, creating great products in the process.
Secondly, German companies focus on innovating from within. Constant training in the newest processes and focus on in-service training equals a combination of the newest academic knowledge with practical knowledge.
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