The secret has been revealed. After intellectual attention mostly turned the spotlight on all sorts of management guru sequences, the next big idea in the management world seems to be German’s ‘Mittelstand’.
Germany is the worlds greatest exporter after China and no European country has survived the financial crisis with such durable results. Herrmann Simon, from Simon-Kucher & Partners, dedicated his most recent sequel of ‘Hidden Champions’ Germany’s middle class.
According to the Economists Schumpeter article the ‘Mittelstand’s’ success is rooted in a fertile soil of “staid-sounding” industries, like mechanical engineering and leaving sexy ones to Silicon Valley.
The German middle class is very focused and has made it to their competitive advantage identifying niche areas. Once overcome the entry in difficult markets they manage to climb the ladder by constantly bringing up innovations and so staying ahead of the small percentage of competitors.
In the end, tiny niche markets can supply big global markets.
The graph below is a great visualizer of the ‘Mittelstand’s’ influence for Germany’s economy.
Further qualities listed in the article really seem to be what we as customers would expect from any successful operation, though are actually rare found: these include passionate salespeople as well as truly meant customer services. In fact, the majority of their revenue is made rather in service than products.
Yet nobody is perfect and so do management specialists warn the ‘Mittelstand’ not to miss the chances of turning their firms into giants to survive the globalisation. Further, they observed an increasing difficulties of attracting the world’s “brightest to make their career in rural backwaters“, as 70% are based in Germany’s countryside.
Finally, Theodor Levitt, doyen of the Harvard Business School, formulated a perfect statement: ” sustained success is largely a matter of focusing regularly on the right things and making a lot of uncelebrated little improvement every day”
Reading this one could get sentimental, though the recruitment problem of successors for future ‘Mittelstand’ innovations really could make them become extinct.
And are the strengths of the ‘Mittelstand’ really what made Germany overcome the financial crisis with less bruises than other developed countries?