Dialog International

German Software Industry Too Provincial

Germany has the second largest market for software in the world, with $75 billion spent on sofware and related services in 2012.  So why, with the notable exception of SAP, are there so few German software brands with a global presence?  In fact, of the 250 largest software companies in the world, only 5 are from Germany.

The odd thing is, Germany is a global leader in exporting:  think automobiles, hardware, chemical products, etx. - consistently running huge trade surpluses.

But not in software. For software firms, export is a "Fremdwort".

The consulting group TBconsult looked into this and found the following:

• Lack of funding (capital) is not the issue (this is breaking news and we will return to this in a later post)
• Lack of qualified staff is not the issue (this is breaking news and we will return to this in a later post)
• The somewhat technical product focus»  of German software companies is not the issue
• The German software companies develop their product primarily for the German market and that is an issue.
• The German software companies do not even consider international markets and that is an issue.
• People in the German software industry have little personal network outside Germany and that is an issue. (Thank you XING!)
• Relationship to and/or location in a “cluster” ecosystem makes no difference (this is breaking news and we will return to this in a later post)

A recent conference on the German Software Industry in Berlin concluded that the German market was large enough to sustain software producers and they basically lacked the will to tackle international markets (conference proceedings can be downloaded here). Globalization, the confrerees concluded, must be built into the software in the design stage:

Die Expertendiskussion zeigte Kriterien für eine erfolgreiche Internationalisierung auf. Die
heimische Software- und Digitalwirtschaft konzentriert sich mit ihren Produkten und Diensten zu oft allein auf die Märkte des deutschen Sprachraums. Dagegen sollten die globalen Märkte von vornherein – also bereits bei der Planung und Gründung von Unternehmen und neuen Produkten – berücksichtigt werden.

(The expert participants came up with criteria for successful globalization. The domestic software and digitial economy focuses its products and services all too often just on the German-speaking region.  But global markets need to be considered from the very beginning - already in the start-up and planning of the firms and with the new products.)

 

As a first step, you might consider deleting your XING account and switching to LinkedIn. 

Why can't the US be more like Sweden?

As an American, I am used to social infrastructure that pretty much sucks.  The US has an expensive and dysfunctional health care system that leaves 50 million citizens without any insurance coverage.  Our public transportation system is spotty in the best case, and non-existent for much of the country.  Our public schools are underfunded and, except in affluent communities, deliver a substandard education.  I could go on and on... The outcome is greater disparity between rich and poor, and a middle class that is battered and on the decline. 

I have lived in and traveled extensively throughout Europe - including the Nordic countries - and have seen how countries provide for their citizens. I serve on the board of a Canadian technology company, and so have seen "socialized medicen" up close.  So I have often wondered: why can't we do better in the US in terms of social services?  Why can't the US be more like Sweden?

Eric T. Hansen is an American who writes a column for Die Zeit.  He is often quite funny as he tries to explain the "American point of view" to his German readers.  In this recent column, Hansen explains that social inequality in American drives innovation, and that creating a Sweden-like welfare state in the US would be disastrous for the global economy:

In Europa lohnt sich hingegen Risiko kaum: Erstens sind die Bürger so gut abgesichert, dass man die reiche Belohnung nicht unbedingt braucht. Zweitens muss man im Falle des Erfolges einen so großen Teil seines Reichtums abgeben, dass das Risiko sich kaum lohnt. Drittens kann keiner L'Ennui so feiern wie der europäische Jet-Set. Würde sich hingegen die ganze Welt dem Kuschelkapitalismus verschreiben, gäbe es kaum noch Innovation. Sprich: Alle würden ärmer werden.

(In Europe it doesn't pay to take any risk: for one thing, the citizens are quite secure, so there isn't much need for the big rewards. Secondly, you'd have to give up such a huge portion of your success {to taxes} that it's not worth taking the risk. Third, nobody can celebrate L'Ennui like the European jet set. Every every nation subscribe to "cuddly capitalism" there would hardly be any innovation. And we'd all be poorer.)

Hansen gets his dichotomy of the "cuddly capitalism" of the Nordic countries and the "cut-throat capitalism" of the US from the economists Daron Acemoglu and James A. Robinson, who studied the assymetric trends in technology innovation and adoption, and social egaliatarianism in capitalist countries: 

The fact that technological progress requires incentives for workers and entrepreneurs results in greater inequality and greater poverty (and a weaker safety net) for a society encouraging more intense innovation. Crucially, however in a world with technological interdependence, when one (or a small subset) of societies is at the technological frontier and contributing disproportionately to its advancement, the incentives for others to do so will be weaker. In particular, innovation incentives by economies at the world technology frontier will create higher growth by advancing the frontier, while strong innovation incentives by followers will only increase their incomes today since the world technology frontier is already being advanced by the economies at the frontier.

It's a neat theory, but I'm not convinced that social inequality drives innovation. I see plenty of innovative start-ups in Canada, but these entrepreneurs lack access to venture capital that would allow them to scale.  Also, the tax burden in the US is not that much less than in many European countries. It's just that we choose to spend the tax revenues on military adventures and weapons of mass destruction instead of investing in our schools, health care, public infrastructure, etc..

East Berlin - June 17 1953

Sixty years ago a group of construction workers in East Berlin  walked off the job to protest a mandatory increase in production norms imposed by the East German government.  Even without the Internet and social media, news of their action spread like wildfire throughout the German Democratic Republic. The next day, June 17, 1953 workers throughout the country engaged in wildcat strikes.  In East Berlin the crowd of disgruntled workers and other antigovernment dissidents had grown to between 30,000 and 50,000. Leaders of the protest issued a call for a general strike, the resignation of the communist East German government, and free elections. Soviet forces struck quickly and without warning. Troops, supported by tanks and other armored vehicles, crashed through the crowd of protesters. Some protesters tried to fight back, but most fled before the onslaught. Red Cross officials in West Berlin (where many of the wounded protesters fled) estimated the death toll at between 15 and 20, and the number of wounded at more than 100. The Soviet military commanders declared martial law, and by the evening of June 17, the protests had been shattered and relative calm was restored.

The myth of the democratic "Worker and Peasant State" (Arbeiter-und-Bauern-Staat) was shattered once and for all.

I found a site that has archived digital copies all the GDR newspapers.  Here is how the Stalinist propaganda organ Neues Deutschland reported the events of June 17, 1953:

Am Dienstag verursachten Gruppen von aus Westberlin eingeschleusten Provokateuren Zwischenfälle im demokratischen Sektor von Berlin. Das Ziel der Provokationen war. die durch die neuen großzügigen Maßnahmen unserer Regierung (Erleichterungen im Vorkehr zwischen Ost und West, Zulassung privater Industrie- und Handelsbetriebe usw.) angestrebte Verständigung zwischen den Deutschen zu torpedieren. Die Agenten bedienten sich dabei eines Teiles der Bauarbeiter, die sie zu einer Demonstration veranlaßten.

[...]Am Abend des Dienslag drangen große Gruppen faschistischer Jugendlicher aus Westberlin in den demokratischen Sektor ein und versuchten vor allem in der Stalinallee Zerstörungen anzurichten. Die Bevölkerung ging gemeinsam mit der Volkspolizei gegen die Banditen vor und zerstreute und vertrieb sie. Die Auffassung, daß man im demokratischen Sektor ungestraft randalieren koenne. erwies sich als irrig.

(On Tuesday a group of provocateurs who had been smuggled in from West Berlin instigated several incidens in Berlin's democratic sector. The goal of the provocation was to torpedo the attempts to increase understanding among all Germans - these generous attempts of our government include facilitating the traffic between east and west, allowing the establishment of private businesses, etc. The agents took advantage of a group of construction workers, engaging them in a demonstration.

Tuesday evening large groups of fascist youth from West Berlin forced their way into the democratic sector and attempted to wreak havoc and destruction in the Stalinallee. The population joined forces with the Peoples' Police and drove away the bandits. The idea that one could vandalize the democratic sector with impunity turned out to be false.)

Joachim Gauck, President of the Federal Republic, was 13 years old and living in Rostock when the events in Berlin unfolded.  In a speech before the Bundestag Gauck recalls listening to the radio reports from West Berlin in a state of euphoria.  He, along with millions of other East Germans, was convinced that things would be different - the people had spoken:

"Der 17. Juni war ein Volksaufstand für Demokratie und Recht." (June 17 was a popular uprising for democracy and justice).

President Gauck believes that the memory of June 17, 1952 should be celebrated much more robustly in German, that it is just as significant as the Prague Spring or the Polish Solidarnosc movement:

Aber die Tradition des 17. Juni zu würdigen, verlangt noch mehr. Es gilt, auch heute überall auf der Welt denen beizustehen, die sich, – obwohl diskriminiert und ausgegrenzt – mutig für Freiheit, Demokratie und Recht einsetzen. Mögen diese Verteidiger von Freiheits- und Menschenrechten auch zeitweilig unterliegen – so wie wir einst –, so sind wir ihnen, mit denen wir unsere Werte teilen, Beistand schuldig.

(But we should demand more in honoring the tradition of June 17.  We are called to stand with people anywhere in the world who - although marginalize and discriminated against - have the courage to fight for freedom, democracy and justice. And even though they may = for the time being - be defeated in their defense for freedom and human rights - just as we once were - they share our values and we owe them our fullest support. )

 

 

 

The Hochstapler from Bavaria

One of my favorite works by Thomas Mann is the ironic Bildungsroman Bekenntnisse des Hochstaplers Felix Krull.  Felix, whose ambition and talent for acting - and lying - , take him from a small town in Germany to aristocratic circles in Paris, is able to effortlessly deceive people about his true background and identity.  People - especially upper bourgeois and aristocratic variety - project on Felix their own fantasies, to which he gladly adapts. 

But Felix Krull was a rank amateur compared to Christian Karl Gerhartsreiter, who for years was able to fool people - including two wives - that he belonged to America's iconic aristocratic families - the Rockefellers.  Not bad for someone who grew up in rural Upper Bavaria: 

Am 21. Februar 1961 wird in Siegsdorf der kleine Christian geboren und wächst im benachbarten Bergen auf, nahe der österreichischen Grenze. Der Chiemgau muss eine kleine, enge Welt gewesen sein. Zu eng und zu klein für die großen Träume des jungen Gerhartsreiter. Der Vater ist Landschaftsmaler, die Mutter arbeitet als Näherin. In der Schule gibt Christian gern den Klassenclown. Er spielt Telefonstreiche und ordert gleich zwei Rolls-Royce. Das zeigt sein Talent.

(Little Christian was born on February 21, 1961 and grew up in the surrounding mountains, close to the Austrian border.  The Cheimgau must have seemed like a small, circumsribed world. Too small for the big dreams of young Gerhartsreiter.  The father paints landscapes, the mother works as a seamstress.  At school Christian plays the class clown.  He plays pranks on the telephone and orders two Rolls-Royces.  This shows his talent. )

Christian set out for America, where, to quote PT Barnum "There's a sucker born every minute." The rest is history, and stuff of made for TV movies.

It's hard to imagine being taken in by an utterly absurd Hochstapler like Gerhartsreiter, but the writer Walter Kirn ("Up in the Air") has a terrific piece in the New Yorker which describes in detail how it can happen. (unfortunately, the piece is behind the paywall) KIrn was friends with "Clark Rockefeller" for 15 years - you might even say he was a close friend, and, despite numerous signs that things were amiss, never questioned Clark's identity.  It was only at Gerhartsretier's murder trial did the magnitude of the deception sink in.  Kirn describes his total humiliation:

"Getting to know an old friend through his murder trial after failing to know him through normal means is a formula for humiliation.  As Balian falled his last few witnesses and reporters placed their bets, and reporters placed their bets, anticipating a hung jury, I started replaying scenes in my mind, imagining what would have happened had I been less eager to collaborate in Clark's fantasies and cover stories.  When fresh information discredits past perceptions, the underlying memories don't change; you're left to construct a new puzzle from the shaken-loose pieces of the old one.  It's infuriating. And the fury wants an object that's not yourself."

KIrn's piece is brutally honest, and shows in detail how easily we can fall for conmen like Gerhartsreiter or Bernie Madoff

DId the US Pilot Killer Drones from Germany?

Drones have become a contentious issue in Germany after German defense minister Thomas de Meiziere scrapped a plan to purchase Euro Hawk drones  - but not until over $800 million had been spent on the project. 

Now there are reports that drones piloted by US from bases in Germany were involved in targeted killings in Africa:

Ten deadly drone attacks killing up to 29 people have so far been carried out in Somalia by US forces. Most of those killed were believed to be members of the militant Al Shabab, which aims to create an Islamic state on the Horn of Africa.

Since 2011 an air mission control center in Ramstein has been guiding US Air Force attacks in Africa including Somalia. Up to 650 staff at the Ramstein control center monitor African air space, evaluate pictures taken by drone and satellite, and plan new missions. Without the special satellite relay station for unmanned flying objects in Ramstein the drone attacks in Africa "could not be carried out," according to a US Air Force internal memo.

If these reports are true, the actions represent a serious violation of German constitutional law.  Herbert Prantl, writing in the Sueddeutsche Zeitung, asks whether Germany is in fact a sovereign nation: 

Im Grundgesetz, Artikel 102, steht auch der eherne Satz: "Die Todesstrafe ist abgeschafft." Es ist verboten und verfassungswidrig, auf deutschem Boden oder von deutschem Boden aus eine Exekution zu vollziehen. Und es ist auch verboten und verfassungswidrig, Strafen ohne Gerichtsverfahren und ohne jedes rechtliche Gehör zu vollstrecken. Diese Verbote binden unmittelbar alle staatliche Gewalt in Deutschland. Und aus dieser Bindung ist kein deutsches Staatsorgan entlassen, wenn es US-Amerikaner sind, die diese Verbote verletzten. Es gibt keine Verträge mehr, die den USA quasistaatliche Reservatrechte in Deutschland verleihen.

(Article 102 of the German Basic Law contains the brazen sentence: "The death penalty is abolished." It violates the constitution to carry out or initiate an execution on German soil.  And it also violates the constitution to carry out punitive actions against individuals without due legal process. All state power in Germany must adhere to these prohibitions.  And the German state is not in any exonerated if the constitutional violations were carried out by Americans.  There are no longer any agreements that grant the US any reserve legal rights in Germany)

Deutschland schafft sich ab - What happened to 1.5 million Germans?

Thilo Sarrazin, the anti-immigration author of Deutschland schafft sich ab ("Germany abolishes itself"), must be especially alarmed at the 2011 census data released yesterday: 

It’s as if Leipzig, Hanover and Dresden had disappeared in the blink of an eye, statistically speaking.

Germany, which has been deeply concerned about its rapidly dwindling population, released the results of its first census in nearly a quarter of a century on Friday and found 1.5 million fewer inhabitants than previously assumed.

Chancellor Angela Merkel was already worried about the shrinking numbers of taxpayers and able-bodied workers. How future smaller generations will repay German debts, much less the mounting liabilities and guarantees meant to contain the euro-zone debt crisis, is a central question here.

But immigrants to Germany are not the danger to the gene pool that Sarrazin warned against.  If anything, the census data underscores the fact that immigrants are Germany's salvation:

Sie, die Einwanderer und ihre Nachkommen, gehören also längst zu Deutschland, und wie sehr das Land sie braucht, zeigt ein Blick auf die Altersstatistik: Fast jeder vierte Einwohner ohne, aber nur knapp jeder zehnte mit Migrationshintergrund ist bereits im Rentenalter. Umgekehrt stammt mehr als jedes vierte Kind von Einwanderern ab. Ohne die Migranten hat Deutschland keine Zukunft.

(The immigrants and their offspring are an established part of Germany.  And the age statistics only prove how much the country needs them: nearly one out of four German residents without any immigrant background is now in the retirement age.  On the other hand, more than one out of four children are immigrants.  WIthout immigrants Germany has no future.)

 

 

Augstein: Readers must pay for online content

Jakob Augstein, publisher of the left-learning Der Freitag, is not keen on the right-wing politics of Springer Verlag, but he is all in favor of the groups plans to charge for access to the online versions if its flagship papers Die Welt and Bild-Zeitung: 

Wenn Journalismus eine Zukunft haben soll, muss der Leser zahlen. Aber der Leser hat im Netz das Zahlen für Inhalte verlernt. Inhalte sind der freiverfügbare Rohstoff der Online-Welt. Ungeachtet ihrer Qualität. Das ist gefährlich. Die Verlage werden ihren Lesern den Unterschied zwischen Qualität und Quantität wieder beibringen müssen.
(If there is a future for journalism, the reader has topay. But on the Internet the reader is no longer accustomed to paying for content. Content is raw material of the online-world - irrespective of its quality.  That poses a danger. The publishers need to educate their readers on the difference between quality and quantiy.)

What is at stake here? Nothing less than the future of democracy:

Ohne Journalismus gibt es keine Demokratie. Vielleicht ist unser Journalismus nicht gut genug. Sicher ist unsere Demokratie nicht gut genug. Aber das eine braucht das andere, und das Netz untergräbt beides.

(Without journalism there is no democracy. It may well be that our journalism is not good enough. Our democracy is certainly not good enough. But they need each other, and the Internet undermines both.)

Meanwhile Arianna Huffington is setting up shop in Germany:

News website The Huffington Post will launch a German edition this year, the US-based company and its media partner Tomorrow Focus, part of the Burda publishing group, said on Monday.A newsroom staffed with German journalists will be set up in the southern city of Munich in the coming months, and the site for Germany, Austria and Switzerland is set to go live later this year, both companies said.

The free-access site, which offers a mix of news, blogs and gossip, was founded by Arianna Huffington, the editor-in-chief. It already has local versions in Britain, Canada, France, Italy and Spain and plans to launch a Japanese edition in May.

Arianna's model? Don't pay the bloggers a dime, and get rich off the advertising.