CEO Blog
Interesting facts for the economy

Every company has to deal with change processes at some point in order to ensure its success. Quite simply because the conditions under which it operates are constantly changing. In many companies today, change managers take on the task of managing such a process. This is no easy task, as change almost always causes people to worry. Successful change management therefore addresses such concerns and recognizes resources in resistance.

The last time a calendar year ended with an inflation rate of over three percent was almost 30 years ago - in 1993. In the following years, inflation behaved like a sine curve and, to the relief of consumers, fell to below one percent at times - in 2009 it was as low as 0.3 percent. You are probably all aware of the reason for this - the 2008 financial crisis. So it is no wonder that there is great uncertainty as to how inflation could develop in this way - and above all: do we possibly have to get used to an inflation rate of over three percent?

Intelligent algorithms can already be found in large parts of our everyday lives. As so-called artificial intelligence (AI), they assist us in almost all activities in our private and public lives, as well as in business. Yet their era has only just begun. It is high time we thought about what ethical rules AI needs so that we are not defencelessly at the mercy of intelligent algorithms in the near future.

What happens when the company boss leaves? It is not only family-run companies that find it difficult to strategically approach the handover of the senior management team. However, it is extremely important to address the issue in good time. After all, an unregulated succession plan almost always leads to turbulence - and can threaten the company's existence.

Is it worth involving employees in decisions? How and in which decisions can they be involved? What are the possible dangers and risks or opportunities and strengths? In addition to my article “What are the benefits of social sustainability?”, today I would like to present a few thoughts and starting points on how it is possible to actively involve employees in decisions - and why this contributes to the topic of social sustainability.

When people talk about the impact of digitalization on the labour market, it is often limited to two aspects: Employers see the potential to minimize costs, employees see the risk of losing their jobs. However, studies show that both sides can benefit from digital development - if companies move with the times and focus on continuous development.

Studies show that when people are motivated and feel comfortable where they are, they stay. This can be applied to all areas of life. One of them: The workplace. Naturally, pay and the provision of the necessary work equipment play a central role. However, another important aspect has become increasingly important in the past - showing people recognition through various forms of appreciation. In short: social sustainability.

Home office for the entire workforce? Meetings only online? Before the coronavirus pandemic, this would have been unimaginable for many, both employers and employees. The pandemic has changed views - on both sides. What will remain of it?

Data accompanies us throughout our lives today, both in our private and business lives. Yet the age of digitalization has only just begun. The amount of information that everyone produces about themselves and their actions increases with every website login, every new app downloaded and even with every click. Data is the currency of the 21st century. It's high time we thought about who is allowed to dispose of these treasures.

It sounds absurd, but it has proven itself time and again over many eons: Nothing is as constant as change. Anyone who is active in society in any way should have realized by now that we are undergoing a fundamental change on many levels, which is often referred to as “disruption”. China is acting more and more obviously as an influential global player; Industry 4.0 is putting industrial production on a new footing; we have all accepted smartphones, tablets and all other internet-connected devices as part of our lives and use their apps for work, shopping or leisure - to name just a few examples.

Only at first glance does it appear to be an exotic and utopian idea to postulate global ethical standards. Values, ideals and goals that are binding for all people - how is that possible? But in an era that is confronted at every level with the major challenges of globalization, digital transformation and worldwide migration movements, it is essential that globally effective norms are established to help avoid conflicts. And it is testament to the foresight of the recently deceased Hans Küng that he published his first thoughts on this topic back in 1990. At that time, the associated tasks were at best a background noise in society. Küng's ideas stimulated an ongoing discussion and ultimately led to the founding of the Global Ethic Institute in Tübingen, which provides economic and social leaders with practical ways of implementing these global ethical theories.

Making city centers more attractive has long been on the agenda of almost every small, medium-sized and large city. Numerous vacancies have been looming, and not just since the coronavirus pandemic. In addition to small store operators, large corporations and well-known brands are increasingly clearing their shelves and closing branches. Many cities now have their own working groups or even departments tasked with this topic, with the aim of making “their city” more liveable. But what is needed to get people to spend more time in the city center again? So that large and small businesses and stores retain their locations? And above all: who is actually responsible for this? Is it the companies themselves? Is it the respective city, the federal states, the federal government or the EU? This is where subsidies and structural aid come into play.

Anyone who is currently loudly proclaiming that the measures taken during the coronavirus pandemic are the reason for the downturn in the German economy or that cities are becoming deserted must have been wandering through the years before 2020 with their eyes closed. After all, the structural disruption that is forcing industry and commerce to readjust has at best been accelerated by the pandemic. Industry 4.0 and automation have already been ensuring for several years that processes in almost all sectors have to be completely rethought, often at the expense of simple jobs. In the automotive sector, which is still a key industry in many industrialized nations, the transport revolution is reinforcing these trends.

It is no secret that the concept of sustainability has long since left its ecological niche and is making a successful career in business. Today, no company can afford to make investments and present innovations without taking sustainability aspects into account: The new generation of machines consumes less energy during production than its predecessor, products require fewer new resources during manufacture because they are made - at least in part - from recycled material and the electricity comes from solar cells on the company roof. Laws, standards and also a change in social values are driving this change.

Iceland, Scotland, Wales and New Zealand have abandoned one dogma: continuous growth as the central goal of an economy. Together, the four countries have been forming the group of “Wellbeing Economy Governments” for a few years now. In future, they no longer want to focus on the development of gross domestic product (GDP), as has been the case to date. Instead, indicators such as equal pay, child satisfaction, access to green spaces and affordable housing are to take center stage. This is the only way to tackle challenges such as climate change or an ageing population.

Germany is falling behind in the implementation of Industry 4.0! This is the conclusion of a study published by the European Patent Office at the beginning of December 2020. Germany is in danger of being left behind in another area that is essential for its social and economic future. The lag is surprising. After all, the term Industry 4.0 is a German invention. You would therefore think that domestic companies would be taking on a leading role. And they did, but more on that later.

Corona will also be over at some point. There is no doubt about that. But what will remain in many cases: The predicament that some companies have found themselves in due to the lockdown, disruption to supply chains and other consequences of the pandemic - or which has been exacerbated by 2020. After all, the upheavals in the industry were already more than noticeable before coronavirus.

Books that attempt to explain the current upheavals in our society and develop solutions to overcome them fill several shelves in bookshops. For me, “Social Capitalism” by Paul Collier stands out from this sea - and not just because of its unusual title.

If you click through job advertisements these days, you sometimes get the impression that you have accidentally landed on the website of a wellness hotel. There is talk of yoga classes or fridges full of free smoothies. Snacks and lunch are included, as are the fitness room, weekly massages and a sabbatical to find yourself. Is this what employees value these days? Can companies only attract employees with such offers?

The search for the meaning of life has probably preoccupied people since the time when our ancestors left the African savannah to discover new things. In modern philosophy, this quest for the big picture has now largely been replaced by the question of what drives the individual, or what keeps the individual alive - or at least makes them get out of bed in the morning and dedicate themselves to a task.

Germany is to become a “gigabit society”. At least that's what the German government has been saying for years. Most recently, the Federal Ministry of Transport confirmed last October that “super-fast Internet with at least 1 gigabit/s” should be available throughout Germany by 2025. So far, so laudable. After all, only just over four percent of German households currently have a fiber optic connection, which is essential for these transmission rates. In Poland and France, the figure is around six times higher. In Spain, one in three households can use high-speed Internet.

Today, complex business processes are the rule rather than the exception. However, this also increases the risk of hitches in processes. If the process stops at one point, this costs time and money at the very least. In the worst case, the customer turns away from the supplier. This is why bosses and employees agree: measures that reduce waiting times, constant coordination loops and stress when time pressure increases due to inefficiency are gladly adopted. After all, if you work through your tasks step by step, you can finish work on time at the end of the day. Most of the time anyway. However, the path to this pleasant working environment - which is also good for your work-life balance - is not that easy.

Next spring will see the start of an interesting experiment that could potentially fundamentally change Germany's social system. For three years, 120 people will receive an unconditional basic income of 1,200 euros per month. Regardless of whether they are in need or not.

The economic importance of owner-managed companies in Germany is immense: around 90 percent of all active companies in Germany are family-run. They generate 52 percent of total turnover in Germany. By definition, a company is considered a family business if it is either owner-managed or if the family holds the largest shares in the company. This category therefore includes well-known names such as VW, Aldi and Bosch, but also countless smaller, less well-known companies.

Pharmaceutical raw materials from India, electronic components from China or Taiwan, vehicle components from South Korea, Canada or Mexico. The collapse of supply chains during the coronavirus crisis has shown with full force just how fragile the globalized world is. Quite a few companies and political leaders have now begun to question the strategy of global industrial networking.

“The strength and endurance of the state rests on the numerous middle classes.” The legal scholar Friedrich Carl von Sauvigny already knew this around 200 years ago. The validity of his statement has not changed in 21st century Germany. Over 99 percent of all companies in this country are small or medium-sized enterprises (SMEs). They provide more than half of all jobs and generate more than every second euro. SMEs provide the largest proportion of vocational training in absolute terms. More than 90 percent of trainees learn in an SME. The German SME sector is regarded worldwide as the country's innovation, technology and economic engine. There is probably no other country in the world where SMEs play such a key role.

It doesn't always have to be a crisis of epic proportions. However, there are special situations in every company in which it makes sense to initiate and implement the restructuring process with competent specialists and managers.

There are certainly a whole host of reasons why countries such as Italy, Spain and France have been hit so hard by the coronavirus crisis. The austerity measures, which also affected healthcare systems as a result of the 2008 financial crisis, are certainly one of these reasons.

A look at history reveals very early and cross-cultural approaches to incorporating the common good into society, be it in philosophy, state theory or economics. Written references can already be found in antiquity, for example in Cicero, who stated: “The good of the people should be the supreme law.”

Nobody has forbidden car manufacturers from continuing to produce vehicles during the lockdown. Nevertheless, most brands have reduced production to zero. Of course, this was also due to the drastic slump in sales. Above all, however, the coronavirus pandemic has caused supply chains to collapse worldwide.

In the first few weeks of the coronavirus pandemic, terms such as Europe or EU were rarely heard when the political leaders of EU member states appeared in front of the cameras. Protectionism was at the forefront. In view of the tsunami that affected all parts of society, this reflexive attitude was perhaps explainable.

At first glance, the development of an exit strategy from the coronavirus restrictions did not and does not appear to be a structured approach by the federal states and the federal government. The regulations on when and how face-to-face teaching should start again at schools alone were reminiscent of the well-known image of 18th century German parochialism.

We are in the midst of a time of not knowing. Even the seemingly stable economies of Europe, North America and Asia have been thrown into a tailspin by the tiny virus. In emerging countries such as Brazil and India, the human and economic consequences are much more serious. It is impossible to predict the impact on individual economies. The economic upheavals in large parts of Africa are even more uncertain.

Citius, altius, fortius. The higher, faster, further of sport seems to be one of the central maxims for many companies. For management teams around the globe, the aim is to continually increase turnover and profits, whatever the cost.