IST Institute

The Institute for Strategic Innovation and Technology Management is the competence center for innovation and strategy. Research focuses on Strategic Transformation, Corporate Entrepreneurship, Startups, Ambidextrie, Agility and Digitalization.

Thoughtful, Pointed, Opinion-Forming

Looking outside the box to new points of view, a change of perspective from current events to global contexts, facts in a refreshing mix with pointed opinions - in our blog posts you will find impulses for current discussions in order to place phenomena of our time in context. Have fun reading!

  • #1 The last Party is over... into the Boats

    Diesel driving bans in German cities potentially affect 13 million vehicles. But a conversion would be possible, approx. 2,000 € would make affected vehicles "fit for urban use", an investment of about 26 billion Eur. The only question is, who should pay?

    Why not the automotive industry, VW alone has posted a record profit of 11 billion euros in 2017.

    But the spectre that some 1.8 million jobs in Germany are directly or indirectly linked to the automotive industry seems to be keeping politicians from consistently holding those responsible for the damage accountable. But it will be of little help to preserve the ashes of politically protecting yesterday's technologies and business models in Germany as a high-tech location.

    On the contrary, policymakers should set clear regulatory signs for the future, forcing car manufacturers to be lucky and forcing them to invest in electric mobility and alternative mobility concepts. Then board members will also have better arguments against their shareholders to invest more in the future of their own company - and not to show record profits one after the other.

    A look back helps:
    At the end of the 19th century, a large number of jobs were already being created in the mobility industry. 6 million hectares of agriculture alone were used to feed the horses of inner-city mobility in the USA. Horse droppings collectors did what the name suggests and sold their "goods" to allotment gardeners. "Crossing sweepers" cleaned the street crossings for fine people who didn't want to arrive at the other end with dirty shoes. A lot of people were busy picking up and disposing of the 1,800 tons of horse manure that was produced in New York alone.

    And then came the automobile, made all these jobs superfluous. Is that why we are worse today? Hardly.

    How should the horse-drawn carriage industry respond? William C. Durant showed us how:
    From 1886, with only $2,000 in seed capital, he built the largest American horse-drawn carriage manufacturer, Durant-Dort Carriage. Recognizing the signs of the times, he left the company at the beginning of the 20th century and bought the local automobile manufacturer Buick in 1904, five years later the most successful automobile manufacturer in the USA. And Durant continued to invest, founding General Motors in 1909 and buying brands such as Cadillac and Oldsmobile. So it was a horse-drawn carriage manufacturer that built the largest automobile conglomerate in the USA.

    We, on the other hand, are celebrating the last party on the Titanic... The band is playing, we have the tuxedo on - but we know how the story will end. So it's time to do the only sensible thing and leave the party. Sure, the lifeboat won't be nearly as pleasant as the ballroom.

    But it is time to set the signs for the future. Let's get into the boats!

  • #2 Why we need to get another kind of "Digital Transformation" done

    The blessings of "Silicon Valley" seem to become threats when they reach our continent ... Electric mobility, digital transformation, industry 4.0 - concerns about the future of our industrial landscape seem appropriate to many. The fact that Siemens is closing entire power plant plants seems to fit in well with the picture.

    How to encounter it?

    Not so promising seems to be the discussion, the deserving diesel technology not so much to denounce. This is fatally reminiscent of the attempt to preserve the coal and steel industry with the Kohlepfennig. The prospects of success are probably similar.

    We allow ourselves a discussion as to WHETHER electromobility can work in the near future. In the world's largest mobility market, the most relevant market in our automotive industry, this has not been possible for a long time. Electric mobility will have to work in China, otherwise the cities will suffocate - in the truest sense of the word. That is why people there are only asking themselves HOW this will work. And we are working hard on it.

    In Beijing today you can't find petrol scooters anymore. They run on batteries.

    And if we react to a threatening Chinese e-car quota with the intervention of the Chancellor - please postpone the quota a little into the future - then we will probably not play a very active role in shaping this development. Not good prospects for the automotive and supplier companies in the South and especially in the South-West. It greets the coal and steel industry.

    So how can we prevent the emergence of a new Ruhr area in southern Germany? Do we need a Silicon Valley in the south?

    Probably not.

    If America teaches one thing today, it is that we need to achieve another transformation. Because the Silicon Valley meta-cluster makes only a few incredibly rich - and puts many, many US citizens economically offside. We, on the other hand, should maintain employment and prosperity across the board. We should avoid a social gap like the one in California.

    Almost 90% of the employees have to cover the cost of living, which is more than twice as high as in local metropolitan regions, with an annual wage of Ø 50,000 $, only 10% reach the high-wage sector with Ø 100,000 $ (example San Diego). Wages are falling in the low-wage sector and rising in the high-wage sector to such an extent that overall wage levels are rising.

    Ergo: An ever decreasing number is doing well and getting better - the large masses are less and less able to make a living. And that, rightly so, fuels dissatisfaction - who was elected president?

    No, we have to do things differently, motivate and support small and medium-sized enterprises in particular to make the necessary changes. And we need to think about tomorrow's employment. We should use founders and start-ups as an infusion of new ideas and working methods for SMEs: cooperation instead of repression, transformation instead of boom & bust.

    To this end, more support for technology founders would be helpful in order to create an ever wider range of options. And industrial companies must acquire the necessary new hand tools for this unusual form of cooperation and expand their own repertoire.

    So what is needed is not a Silicon Valley, but a little more change intelligence instead.

  • #3 Airport BER: How "classical" Management Methods fail (have to fail) in the face of Complexity

    A good example of a complex project is Berlin's new "Willy Brandt" airport, which was to open in 2010, 2012 and 2017, but has not opened yet. Airports are generally projects in the "very complicated" category (see type "moon landing", bottom right). There are therefore specialists for the construction and operation of such infrastructures (e.g. Fraport AG). Ideally, these specialists avoid making the projects complex for the reasons mentioned above. For example, by first planning cleanly and then building along this plan.

    Berlin's "Willy Brandt" airport, however, has become a complex project because it has deviated from the usual procedure in two essential respects: on the one hand, no general contractor experienced in airport construction and operation has been engaged (to save costs) and, on the other hand, the zoning plan has been changed several times during construction (due to economic considerations). This makes a complicated project complex because dynamic changes now occur in a system with a wide variety of dependencies, some of which are not transparent. The consequences are well known: Since 2015 there have been discussions as to whether demolition and new construction would not be cheaper.

    As an example, this project is helpful here for at least two reasons. Firstly, it clearly shows what happens when complex projects are managed with methods for complicated projects. On the other hand, it shows the effect of crisis management in a complex context. This can be observed here because in the spring of 2013 two people were united in management with fundamentally different leadership styles:

    Hartmut Mehdorn as Managing Director, "probably the most famous crisis manager in Germany" (DIE WELT, 15.12.2014) with turn-around experience at Deutsche Bahn and Air Berlin, and Horst Amann as Technical Director, with many years of project management experience at Fraport.

    Horst Amann, probably following his experience in methods of project management, chose a not quite intuitive, but seemingly correct course of action. Shortly after his start in autumn 2012, he let most of the work rest. Instead, he had all plans updated and the condition of the construction site (which was clearly different from the plans) recorded. The meaningfulness of his approach is confirmed by the more than 60,000 deficiencies found.

    Why does it make sense to stop working on a project that has been delayed for several years? In this example, a complex project becomes complicated again because you take the dynamics out of the system - as a result, the project becomes much more manageable again. Actually not a bad idea, one might think. Unless the overall managing director is of the "crisis manager" type, who is more comfortable at the top left than at the bottom right.

    Consequently Mehdorn and Amann were accused of a power struggle over this question. Hartmut Mehdorn has decided this discussion in his favor. Hardly a year in office, Horst Amann, the expert for the construction and operation of airports, was dismissed. As a result, activity seemed more likely to make an early opening again - but a short time later it became apparent that the situation had improved little, that the chaos on the construction site still lasted. Accordingly, Mehdorn was seen more as part of the problems at the BER than as part of the solution (Daniel Wesener, Die Grünen, Berlin, Handelsblatt 15.12.2014).

    After months of research and study of thousands of pages of files DER SPIEGEL comes to a similar conclusion: Magazine DER SPIEGEL "Berliner Airport BER - Wie Deutschland am Bau eines Flughafens scheiterte", 22.08.2018

    How to remain capable of action and successful despite complexity, I explain in detail here

  • #4 Ambidexterity as the Core Challenge of Digitisation: Bird or Bicycle?

    For many companies, the crucial question at the moment is: How can I succeed in making my business model so crisis-proof that it is not swept away by the irrepressible innovative power of digitization? For many years, German companies had an answer ready which could best be described by the phrase "innovation in small steps". The kitchen appliance manufacturer Miele, who also wanted to become "better and better" in advertising, is a representative. However, this tactic no longer seems sufficient. Because the digital transformation is so profound that more speed is needed.

    Similar to the transition to mechanization or electrification, digitization will not take full effect until years after the introduction of technology. But then no stone will be left unturned. Before mechanization, 75 percent of the workforce was employed in agriculture; today the figure is well below 5 percent. At that time the development resulted in rural exodus and urbanization - all prerequisites for later industrialization and the basis of a new social order.

    Even today, in the beginning age of digitization, we are not simply developing "digital" business models, but are increasingly dealing with a fully digitized society. The unknown becomes more important, the familiar becomes less important, and everyone is captured. This leads to complexity and uncertainty, which we would otherwise like to avoid. But this is not an option now - even if the GroKo (i.e. Big Coalition) sings against it with the "stability" refrain and refuses to accept reality. So what should we do? Perhaps an anecdote will help. In the 1960s, biologist Vance Tucker from Duke University in the USA investigated which species was most efficient at locomotion. Not surprisingly, humans do not perform well. Birds are much better. The Condor is the best. The curious thing is that all forms of transport are beaten by humans on bicycles.

    What do we learn from this? Humans do not have to become birds to win. That would not be very promising either. In this sense, we should combine existing strengths with the technological possibilities of digitisation into new businesses and innovation. In other words, companies do not have to become start-ups - the birds of digitalisation - in order to retain relevance. All they have to do is find a "bicycle".

    You must learn to deal with insecurity. You have to invest when it means uncertainty. Taking risks to avoid risks is the motto. "Traditional" management methods will fail in the future and must be expanded.

    The challenge, however, is to manage the familiar business on the one hand and the uncertain challenges of digitization on the other with different sets of rules and methods. With this "ambidexterity" the balancing act between present and future can be achieved.