Building a Startup Ecosystem for Germany

Executives “learn big time from small units” at IESE Munich

05/02/2016 Munich

IESE Business School

(L to R) Christoph Zott, Matthias Schanze, Thomas Schulz, Rolf Hoffmann, Thorsten Marquardt and Karl Reinhard Kolmsee / Photo: IESE

“We see the Germany of today – and tomorrow – with a hi-tech ecosystem to rival Silicon Valley.”

This was the vision shared by Matthias Schanze of Siemens at IESE Munich.

Schanze was one of five business leaders, startup accelerators and entrepreneurs who joined Professor Christoph Zott to debate “Learning Big Time From Small Units.”

The discussion, which drew an audience of executives and IESE alumni, focused on how corporations and startups might leverage each other’s expertise to drive innovation and productivity in Germany.

Schanze, who is senior director of venture technology at Siemens Technology To Business, is optimistic about Germany’s near-term ability to become a global hub for the hi-tech sector; provided corporations are as willing as venture capitalists to “nourish and support startups.”

“It’s a question of creating an ecosystem,” says Schanze. “Germany is very different from Silicon Valley, but it is changing. I see today’s university graduates, and they have the ambition to change the world and to save the world. We have this talent and this drive. What we need to build now are clusters of hi-tech companies, universities and money to drive the entire startup ecosystem.”

Siemens, he said, is “convinced” that much can be learnt from startups operating at the volatile forefront of digital disruption. “We want to find out what’s going on in the startup scene and understand technology very early.” A focus on design thinking and agile prototyping, he says, is driving innovation at Siemens.

“One sized doesn’t fit all, though,” he warns. Flexibility is essential in determining the project-product fit.

Fostering Entrepreneurial Mindsets at Enterprise-Level

Corporations don’t necessarily need to look very far to find new ideas and entrepreneurial talent to nurture, however. That talent can oftentimes be found in-house, says Thorsten Marquardt, managing director at startup accelerator, E.ON: agile accelerator.

“Most companies already have entrepreneurs working within them,” Marquardt told the panel. “Managers need to learn how to identify – and activate – them. To do this, CEOs have to develop an entrepreneurial mindset and create an ecosystem and space for these ideas to grow.”

E.ON are helping to drive this, says Marquardt, via their intrapreneurship program; a program that is geared to developing agility, entrepreneurship and flexibility across the enterprise.

He too sees the potential for Germany to become a global hi-tech hub, but cautions that more is needed in terms of changing mindsets.

“We see a lot of entrepreneurial energy in Germany and many business ideas coming from engineering. But corporations need to be careful not to focus too hard on efficiency alone –you can lose the entrepreneurial spirit. When you cut costs you harm creativity. Afterwards you need to nurture entrepreneurial courage and creativity again."

In the German startup scene, mindsets also need to evolve, said Marquardt.

“We need entrepreneurs and startup founders to get better at story-telling. You compare the situation in the U.S. where startups can convince a venture capitalist to fund them in three minutes. Here we need get much better at pitching the potential of new ventures.”

Opportunity in Times of Crisis

“Where there is crisis there is room for entrepreneurship,” said the moderator of the debate, Christoph Zott, professor of entrepreneurship at IESE and thought leader in entrepreneurial leadership and business model innovation.

Panelists Rolf Hoffmann, founder of vertical wind turbine maker, LuvSide, and Karl Reinhard Kolmsee of Smart Hydro Power agree.

“Travelling the planet inspired me to question what is normal,” says Kolmsee. “And as a born entrepreneur, with greater appetite for risk, I could see the potential for new ventures.”

Smart Hydro Power builds companies in non-subsidized international markets where risks are high and costs must be kept minimal – an “ideal entrepreneurial environment,” he says, “for bringing out the best ideas.”

In summing up, Tom Schulz, founder of AQAL Capital, called for a “triple bottom line of people, planet and profit.”