During last month’s Event Build 0.10 (organized by HackFwd), the CEO of the German telecommunications giant Telekom, René Obermann, argued that a big corporation like his own must remain close to the pulse of the time and get to know the start-up industry. Telekom also invests in young start-ups and pursues cooperative ventures; big companies have money, start-ups have innovative ideas. Obermann acknowledged that Telekom’s success depends on the company’s ability to incorporate outside ideas.
The current edition of the weekly “Der Spiegel” also includes a report on the shopping giant Otto, which built its business and reputation on a mail order business. But now it must compete with Amazon and a growing number of online shops. The article concludes that Otto made many good decisions and pushed into the digital age, but that the behemoth is still struggling to keep the pace of online innovations.
When a company grows, distances grow and decision-making processes become more complex. Obermann knows this as well as Otto’s assistant CEO Rainer Hillebrand. Obermann’s solution: “I try to bring back a small business mentality.” In many regards, start-ups are not too dissimilar from the traditional German small-business culture, the so-called Mittelstand. Both are innovative, efficient, adaptive and driven by strong entrepreneurial personalities.
A look at postwar history reveals how big of a mark individual entrepreneurs have left on their country. In the media industry, we usually look to Axel Cäsar Springer, who would have celebrated his 100th birthday this year, and who built a small publishing house into a global media empire. The celebrations were designed to resemble an old revue performance, akin to the shows that were popular in Berlin in the twenties. But the lightness of the performance should not mask the fact that Springer faced many ups and downs.
In addition to a strong personality at the top, the success of start-ups and small businesses depends on the team that executes the ideas. Those budding entrepreneurs who hunt for seed capital (whether they approach Telekom or actors who grew out of the start-up scene themselves) are quickly asked about their team – “it’s the execution, stupid!” The managerial realization is what turns an idea into a successful business story. A good idea alone is insufficient. Every team member counts, everyone is part of decision-making and their own “little CEO” for a part of the company. Big companies will never be able to replicate that culture. But we can instead look at those who work for start-ups.
It’s an open secret that young people increasingly prefer to work for a start-up rather than for an established company after graduating from university. Because structures are less entrenched, they are able to take over significant responsibility fairly quickly. This also increases the rewards if the company is successful. A quick call to a recruiting company for online companies confirms this: “Start-ups are living through a sort of pop culture phase,” says Anna Ott from i-Potentials. “They have become viable alternatives to careers in consulting, banking, or big corporations.” Universities are increasingly focused on the start-up sector as well. The WHU, a small private university in Germany, now hosts an annual IdeaLab to bring start-up entrepreneurs in contact with motivated graduates and future entrepreneurs.
“But what kinds of jobs exist in start-ups,” one might ask. One sector is marketing, which follows very different rules online than it did during the age of print and offline advertising. While marketing departments used to focus on designing ad campaigns and plastering walls with posters, they are now focused on creating a visible web presence, on being present where potential customers browse the internet and where they might buy a company’s products. While traditional marketing accepts spreading losses, online marketing can tailor its message to specific groups and calculate budgets down to each cent spent on advertising.
Then there’s the product manager. They analyze how a new product performs in the market and could be developed further. He or she isn’t merely an observer, but also searches for ways to fold new innovations into operational and managerial processes as efficiently as possible. Both jobs – marketing and product management – cannot be studied at university because of a lack of relevant degree programs, according to Anna Ott. The ball is in the court of politicians, who must now rethink educational policy.
A country like Germany must not pursue a one-sided focus on engineering sciences if it wants to secure its economic prominence in the future. The team which an entrepreneur builds for the company is integral to its success, and our educational policies and university curricula must reflect that. To me, that means a continuation of established small-business traditions with new and innovative ideas and products “made in Germany” against a global competitive market.
Newconomy is the new weekly column for the start-up industry. It focuses on the intersection of classical and new economies and of politics and entrepreneurialism. Newconomy is sponsored by Factory, the new start-up hub in Berlin.
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