In a recent blog, I outlined the innovative German system of cooperative study and universities of applied sciences. These institutes in particular support a practical, hands-on approach to learning about engineering. But where do managers of mid-sized business learn the tools of their trade?
As we have seen, traditionally, the answer would be through common sense and trial and error. The majority of world-leading mid-sized enterprises were founded by people who do not have a management degree. These are people who trained as technicians or engineers, beating their own paths through their organisation – and making their own special mark. This resulted in a myriad of management styles and models that, to this day, are rarely understood. The Master of Business Administration, a must for those seeking an international career in management today, did not even exist in German-speaking countries 50 years ago. Even now, fostering talent at mid-sized companies does not follow conventional management development methods. For SMEs, it is more important that a candidates fits in with the enterprise is more important than an MBA. This is quite simply because international business schools tend to focus more on the practices of large multi-nationals and not on the specific corporate cultures of mid-sized players. Many leaders of these organisations will agree with PayPal founder Peter Thiel, that graduates of business schools are strangely inept at acting as entrepreneurs because “they have no strong convictions.” They just copy the tried-and-tested methods they’ve learnt.
Generally speaking, the traditional business studies models – where a rational, number-crunching approach to management training is all that’s required – have few advocates in the mid-sized sector. Here, people are more ready to accept that you never have all the information you need to make a decision. The admission of one’s own lack of knowledge leads to a post-heroic management style where decision making and leading become tasks for a wider circle. Conventional business schools work with training, teaching and cognitive methods where reflection (including on one’s own management style), interaction, relationships with stakeholders and dealing with unexpected situations are not sufficiently addressed. However, this one-sided approach is now being met with resistance. Students from 30 countries are campaigning for pluralism in business teaching via the Plurale Ökonomik network. Because most masters and bachelor’s degree programmes do not address the idiosyncrasies of mid-sized companies.
From my observations, management models at world-leading mid-sized enterprises have one thing in common: indirect influence. The Goliath business approach – analysing, reaching decisions rationally, issuing commands and relying for good results from the people who execute them – has no place in mid-sized companies. David, on the other hand, acted indirectly and was aware of his weaknesses. His strengths were speed, flexibility and his capacity for questioning even proven facts. But there are limited development opportunities, little research and even fewer practical aids that embrace this management model; not even at the top business schools. What’s needed is training specifically geared towards leading mid-sized enterprises: a dedicated SME business school – but this will only start to take shape in the next few years.
So what would this kind of concept entail? And how are German SMEs approaching the issue today?
A good example is the Friedhelm Loh Group with its international subsidiary Rittal. The organisation is the leading global one-stop supplier of enclosures, power distribution equipment and IT infrastructure. The year before last, it was ranked among Germany’s top six fastest growing businesses (Accenture). And for the sixth consecutive year, the Group has been awarded the accolade of Germany’s best employer (Top Employers Institute).
For instance, Rittal works closely with the Mittelhessen University of Applied Sciences, combining theoretical and practical teaching in a cooperative degree programme (this university is not listed on international rankings). Outside of term time, students work at companies, where they can apply their academic knowledge directly to real-world projects. The Loh Academy coordinates these cooperative education courses, maintains contact with mentors at the university and provides targeted support to students, helping them get the most from their degree.
A further focus is on global management development. In 2012, a programme for upcoming managers was introduced that prepares students for tasks on an international stage, for example through deployments and placements abroad.
One of Friedhelm Loh Group’s employees who took part in the programme was Erick Gómez. From 2011 to summer 2014, the 29-year-old from Mexico worked at the company’s German headquarters. There, he coordinated relations between the South American subsidiaries and the head office. For example, he supported his colleagues with projects in South America and was their primary contact in Germany. After his placement, he transferred to a subsidiary in Latin America where he could put the knowledge and experience he had gathered in Germany into practice. “To begin with, it wasn’t easy for me in Germany as the business culture was very different to what I was used to,” recalls Gómez. “But over time, I developed my language skills and discovered more about the culture, and this helped break down those barriers.” Now, he is pleased to have got to know and understand the German business climate and learn about global success first hand. “Looking back, I can definitely say that I learnt many positive things and am now in a position to adopt best practices from both business cultures – Mexican and German.”