Can Germany Lead A Fourth Industrial Revolution?

Apr 25, 2013

As humans, we are programmed to avoid failure.

Out of fear for the unsafe and unknown, we often avoid change, development, and progress because they're not safe.

Common culture can, thus, become a roadblock for innovation; we play it safe to avoid risks, while risk-taking is a primary factor for developing entrepreneurship. 

“Here be Dragons” was the underlying theme for the NEXT conference, an annual event that took place in Berlin this week. Focusing on the European digital industry, entrepreneurs, thinkers, industry leaders, politicians, and tech writers all met to discuss the worry, the fret, the dangers, and the fears for the ever-changing digital industry.

They met "to see the Dragon," to denote the dangerous and unexplored territories. But they also met to slay the Dragon.

Here in Germany, admitting failure is somewhat of a cultural taboo. A culture of perfection provides for a strong industrial core and prepares a skillful workforce, but it can also stagnate innovation and investment in young entrepreneurs. If a startup fails the first time, it’s highly unlikely that it would be funded for a next attempt. KfW banking group, a German government-owned development bank, provides subsidiaries to the new entities and individual entrepreneurs but is unlikely to help them second time around. 

It's a strange contrast with Northern California, for example, where failure seems to be a badge of honor.  Failure is a mandatory principle in successful tech education programs in the U.S.  Many American schools now teach Failure 101 courses. FailCon, a one-day conference for technology entrepreneurs, investors, developers, and designers to study their own and others' failures and prepare for success, originated in the U.S. and has now grown to explore failure internationally. 

So why exactly did perfectionism get in the way of success? It could be due to the fact that NorCal didn’t have strong traditional industries (manufacturing, auto, finance), so it's made experimentation more acceptable. It could also be because Silicon Valley, today an entrepreneurs’ haven, was born out of many research labs and science incubators. Science and scientific hypotheses require continuous testing. Through trial and error and constant refinement, we grow tolerant of mistakes and continue to move forward. On the contrary, today’s top German companies represent traditional industries and have existed for more than 100 years; American successes are all young. They are the product of a new mentality. 

As failure happens organically, in a normal course of business, it should also be driven through public acceptance and discussion. Peer Steinbrück, an SPD leader and the Chancellor candidate in the federal election this year, spoke on the future of digital economy at NEXT13.  He announced that Germany will lead the fourth industrial revolution, but emphasized that, first, it needs to adopt the culture of failure. Germany needs to let young people take chances – and fail sometimes.

“We must let them fly freely, and help them land safely.”

For that, there should be a proper infrastructure and education in place, but German investors should also learn how to believe in young entrepreneurs and allow for second chances in case of failure, which should be a public mandate and a subject of discussion for banks and seed investors.

So “Here be Dragons” is an invitation for entrepreneurs, innovators, and the disrupters. It’s not easy to accept this invitation when you know that you, yourself, can be slayed by the fixed cultural norms and unadaptable infrastructure.

But if the culture does catch up to the digital future quickly enough, the new economy makers will force this cultural shift. (The army size matters, and Berlin is already defying the Germany’s cultural norms.)

But let’s hope that risk-taking will be the driving force behind the next economic revolution in Germany.