Germany`s Nokia Moment

Germany`s Nokia Moment

Will Germany soon face its Nokia moment, caused by complacency of its recent government and its old school industries?

If you believe newspapers reports about Germany all over the world, the country is like a miraculously peaceful and prosperous island surrounded by all sorts of crisis. Consequently a lot of hope is set on its powers.

That idea could be build on sand. In recent years Germany has not used its good times to continue the reforms of the 2000`s, that made its labour market more efficient and drove down labour costs. In case of crisis one might find, that a good part of its reserves already have been used up.

And crisis is looming. Not because of the refugee crisis, not because of the recent elections and not necessarily because of the misconstructed Euro and its perverted monetary policy. It might be, that past strengthes develop into bitter weaknesses. A major part of the industry, proud on its engineering capabilities, lacks far behind in the development of new business models.

That is most true in many fields concerning digitalization. The worst danger comes from the car industry. As strong as Audi, BMW, Daimler / Mercedes Benz, Porsche and Volkswagen still are, as fast they could be overtaken by new players in the field of electric cars. Tesla is only one of them. Possibly chinese companies like BYD are much more dangerous. Further more there are so many more new entrants that you wouldn´t have thought of, like Dyson, so far leading the market of innovative vacuum cleaners. An interesting fact in that regard could be, that the biggest producers of electric cars in Germany is no classic car company, but Deutsche Post in cooperation with a bunch of clever professors from the RWTH University of Aachen.

That, of course, is only one open flank. The other one will be the autonomous car. The german industry already holds a lot of patents, but their weakness lies not so much in technology, but in busines model development, in understanding markets with shorter product life cycles, in producing killer software applications and in being a player in the network economy.