Which industry has the greatest potential in the digital future?

There is a lot of speculation about which industry has the greatest potential when it comes to digitalization. This poll will show you what experts and ordinary people think. Before you can see the results you have to vote yourself.

What do YOU think? Fill out the poll below.

Insolvency harms German digitalization effort

German politicians, economists, business leader – all know: Germany is struggling in the (not so) new digital environment. There are many reasons and many symptoms. In this post I am focusing on ‘brain drain’ and insolvency and how the two are connected.

Start-Ups to the rescue

A healthy digital industry requires, above all else, innovation. Innovation appears to happen in Start-Ups – companies that have been founded around an idea, they are typically small, young (both the company and it’s people) and have flat hierarchies. Start-Ups need highly innovative, smart, experienced and dedicated employees, especially developers (software engineers), product strategists, designers and analysts. These experts are rare and Germany continues to loose a large amount of them to places like Silicon Valley.

Why do experts leave Germany?

According to the Statistisches Bundesamt (Office of Statistics) 46% of German companies are struggling to fill IT vacancies.

It’s simple economics: supply and demand. These experts are in high demand, and there simply aren’t enough to satisfy this demand. Germany probably produces a good healthy number of them, with it’s free, high quality education system. But despite attractive employment laws, German companies fail to get and keep IT experts while tech companies abroad lure them away with the promise of: exciting and innovative work, great pay, and the typical ‘work hard and play hard’ ethic.

In face, the pay is so attractive, that potential employees oversee the lack of health-care, vacation time, sick leave, family support, etc… But young creative types, are less interested in security, so the big bucks and the sheer nature of the work they are hired to do, is sufficient to lure them into Start-Up hubs like Silicon Valley.

 

Germany promises more to experienced experts

To compete, German companies not only have to offer comparable great remuneration packages, exciting work, a great work environment but also security. Demonstrating why this ‘safe’ life in Germany is attractive. As a former Silicon Valley expert, who returned to Germany, I now value the 28 days vacation, sick leave, the health care system and a better work life balance. Life in Germany is more promising for more senior experts, who have already experienced the mad flash of excitement present in many Start-Ups (and know that it often ends in frustration or chaos), who have families and care about education, child-care, health-care and job security so they can fulfill their obligations.

It stands to reason, that the German Start-ups employee base is typically older, more experienced and with a young family. Most of my colleagues in the US were single and between 20 and 28, while most of my colleagues in Germany are between 28 and 38 and have a young child or two. All my colleagues on both sides of the big water, value innovative projects and exciting work. But, my colleagues in Germany also really value life/work balance and job security, while for my colleagues in the US, a fun office, participation in international conferences, BBQs/Sushi, etc… was more important.

Germany is in fact, very well equipped to attract and keep experts. Or is it?

High Risk

As we all know, Start-Ups have to take on high risk and failure is frequent and not necessarily considered the worst possible outcome. Most Start-Ups fail. So a country that desperately needs to attract experts, and where one of the major attractions is security, must manage failure better!

Insolvency

My last employer in Germany, Auctionata – a tech start-up in the Art and Luxury auction market, recently underwent insolvency. In and by itself, this is not unusual or shocking because it was one of the high-risk Start-Ups: huge potential but also high risk. As highly sought after IT experts, we should have simply been able to move on. However, the insolvency proceedings, they way it was managed and the treatment the experts experienced by the state laws, off-sets the one advantage Germany can offer (security) and consequently damages  digitalization and innovation efforts.

Many Start-Up employees are foreign and were enticed to move to Germany for their job at the Start-Up. They moved their families, pulled kids out of schools, learned a new language, moved house-holds and in turn, they expect a more secure life in Germany. Many of my colleagues, were bound by a 3 month notice period and were consequently not able to ‘hop on’ a new career opportunity when things start looking bad. Yet, they can be (and were) ‘set free’ by their employer during insolvency proceedings, without so much as a day’s notice! And here is the biggest problem: if they haven’t yet paid into the German unemployment insurance for at least 12 months: they are now faced with applying for social welfare (Hartz 4) – which is by no means guaranteed and which doesn’t come close to their earning potential.

Many readers may now think, that this is a luxury problem. But my point is not that this is a grave social injustice, my point is that if we fail be an attractive place for foreign IT experts to live and work, we will not be able to staff the companies that the economy relies on.

Sure, there are hundreds of employers eager to employ these experts, but the point of moving to Germany was not to rush into a new, insecure or unattractive employment. After all, these experts rightly expect to have a choice and to match their skills and interest in their chosen jobs. And because this process takes time, and since they have NO INCOME during that time, they are now highly likely to leave the country. And so the ‘Brain Drain’ continues.

Another opportunity missed, Germany!

 

German Industry 4.0: Digitalized but un-usable

Since I moved to Berlin, Germany in early 2016, I have read numerous articles about the (lack of) digital technology and industry in Germany. Digitalization however, is THE buzzword over here! So where exactly is the gap? Why does the German media paint this apocalyptic view?

There is a strong resistance in Germany to digital technology. Not by it’s user base – in fact, the German (young) public is all too thirsty to consume digital products and services – but the structure of established large companies, as well as politics is holding the country back. Famous for beautifully precise engineered machines, German industry has invested heavily in efficiency and security.  – At the price of flexibility! Smaller young companies can sneak in, because they can and do focus on innovation and exploration.

Nest

The NEST is incredibly easy to use, yet fully featured.

The stereotypical German is focused on practicality, and will almost always put function before form. But this is not a ch between function or form, this is a question of usability.  Digital technology introduced a level of complexity issues that ended up being dumped in the users lap. The usability was lost in the crossfire between form and function. And this is precisely what’s missing in German products and technology today: usability. Not digitalization.

After many clicks, users can set a number of timezone with pre-defined heat settings. Complicated and counter-intuitive.

Complicated and counter-intuitive.

The field of usability, accessibility, UX, user centered design, design thinking – is not new by any means. But today, products that didn’t successfully address all aspects of usability are going to suffer more than products in the last century. There are countless examples: German cars are famous for their superior engineering, but the digital interfaces (for Navigation, self-Monitoring, Audio/Video, etc..) you find in them, are so poorly designed, that even enthusiastic and methodical user guide readers, find it hard to use them. Or take the powerful heating systems you find in most German homes: built to keep you reliably cozy during the freezing winters, but completely lacking a thermostat that allows non-tech-savvy folks to adjust the temperatures, or set up an vacation schedule, not to mention monitoring your system from your vacation. Compare that to products so intuitively easy to use like the ‘Nest’ and you see the vast gap. Sure, some companies are slowly addressing these short-comings, but it’s too late and too little.

Or is it? Yes, it’s late and it’s little. But having missed the early train of the creation of user-friendly highly functional digitalized products, the German industry now has the chance to get ahead – take the rocket, not the train.

To do so, Germans  must overcome their fear of change and insecurity. Most importantly it requires political will and investment. It starts with day to day experiences, such as banking and making payments. While SEPA (digital) bank transfers have become common place for larger sums or standing orders, Germans still prefer to pay cash at the checkout, and German stores prefer their customers pay cash. This is because there are fees associated for the sellers, and because Germans are highly suspicious of data security and have a strong sense of privacy. There are good (historic) reasons for this, but I see no truly active or inspiring discussions about how the industry can address these issues. Instead, it seems that the movers and shakers in Germany are simply accepting this limitation without the desire to push for innovation into bridging the gap between privacy and the connected world (of smartphones, social networks, internet of things, etc…).

Support comes from an unexpected source.

The growing sense of urgency to secure the nation against terrorism is bringing up the discussion about privacy and IT security. Rightly or wrongly so, there is open discourse about a standardized, cross-platform database for personal name records (PNRs) for travel that is accessible to certain law enforcement and intelligence entities under certain circumstances.

But other problems persist. For example, the fact that WIFI coverage is extremely poor in many regions – even cell phone reception is flaky even in metropolitan areas. The political will does not seem to be there to supply the entire country with connectivity. This is quite possibly the single most expensive political failure of the past decades. When the infrastructure is this bad, the industry is facing an up-hill battle that it can’t possibly win. You can develop great products in the lab, where you have great connectivity, but if it fails for the customer who has poor or slow connectivity, your products will not be adopted – at least not at home.

Another cornerstone of progress is to support those who create innovation, and you have to start with the youth and their education. German kids do not – in general – learn how to type in school, let alone how to program. Something, every American school kids has been learning in primary school for decades! In addition, companies are still resisting to hiring ‘Quereinsteiger’ i.e. talented and experienced individuals that might not have the typical career path or education. Or if they consider hiring these individuals, they are not remunerated according to their skills and experience but according to their schooling. Consequently this talent leaves the country or works at start-ups or international companies that do not penalize them for their ‘out of the box’ path.

To summarize, judging by my experience and research, the German industry and politics have to change their approach urgently. If they do, there is every chance that the country will remain a leader for machinery and technology, but if they don’t – the future looks grim indeed.

The Evolution of the Agency (Digital, Design, Advertising…)

In the early 2000’s, having survived the burst of the tech bubble, it seemed that nothing could go wrong for digital agencies now. A new set of leaders was in place, lessons had been learned, new clients were easy to find again. Investors were all too happy to inject vast amounts of money into companies to push their digital projects, with the – often realized – hope of massive returns. At least in California.

However, bit by bit, year by year, agencies closed shop or were bought up by a few massive conglomerates agencies (which are on a steady path to fail, but have not yet done so)

Why did the success of the Design Agency declining so sharply?

Agencies have massive overhead

 the Gluttonus Pegasus Oinkus by doodlebug

the Gluttonus Pegasus Oinkus by doodlebug

Stemming from the times of plenty, where they could charge top rates and still received more contracts than they could fulfill, design agencies invested in expensive employees, ultra cool office spaces (at high rents) and worked hard to develop processes that could avoid contract breaches or other disasters. To woo their clients, they held fancy parties and workshops, and travelled frequently for in-person reenforcement of their positions or to bid on new projects. Internally, meetings became more frequent and lengthy in an attempt to train up new employees and learn from past mistakes. Project Managers were the glue that held huge projects together, account managers were there to ensure the client feels sufficiently wooed. RnD teams were put together to develop a side-line, controllers and accountants were needed to manage the ever increasing accounts payable and receivable. And the costs kept rising. The bigger the agency, the bigger the overhead, until you’re left with one gluttonous beast.

How the crisis effected the digital agency sphere

With the 2008 economic crisis, more and more companies were forced to lower their design and marketing budgets. Many of these companies (the ‘Client’), reviewed the cost to value ratio they received from design agencies and found that they could get the same service for a much lower cost by placing their contracts with freelancers or developing their in-house design teams.

Employees of digital agencies got tired of the constant pressure for ‘billable hours’ and the lack of wage increases, while at the same time witnessing the massive waste that occurs within larger agencies. Many saw a better opportunity if they struck out on their own: they would be their own boss and could implement changes in workflow and management that would make projects run much smoother, they would be able to offer a much leaner yet more effective and higher quality service to their clients, than agencies could, while also making more money. The only risk would be to get the right (amount) of work.

Freelancers and Start-Ups

lean-cycleToday, there is a vast number of freelancers with thrilling portfolios and CVs who offer their services at prices that appear high (if you are an individual or small firm, looking for someone to design and build your online presence) but are in-fact still much below the project bids of agencies.

Furthermore, many agencies who had let go of employees to limit their overhead, found that they could still go after big clients, servicing large projects, by contracting back some of their former employees on a freelance basis.

Start-Up firms were formed by small groups of people who had all their design and development skills between them and in-fact, it would appear that the current wave of start-ups is based on ideas from designers and engineers, not by entrepreneurs, businessmen or executives. Because it’s their own idea and company, these folks work relentlessly and often without pay – until they either receive venture capital from large investors, or until they are bought up (often resulting in a huge payout).** This makes start-ups incredibly lean – producing a new product that quickly stands trial in the real world and that is allowed to fail. Failure is almost programmed into the process, and does not mean disaster, but is simply used to learn and improve. No agency can afford to compete with this process. Large companies now simply wait for a start-up to come up with the idea and early development of products they themselves have been wanting to develop all along but couldn’t afford to fail. Now they simply choose the one start-up product they like best. The price pays for all the design and engineering the start-up invested, and then some – but it’s still a lot less than developing a successful product in-house.

This also means that start-ups don’t have to worry about profitability. If you develop a software or other product, that is valuable to another large company, you don’t have to even attempt to sell your products on the market, you just have to make it attractive enough to a large company who will then buy your entire shop up. You either get a massive payout, or a secure top notch job.

 

* I’m referring here not only to visual designers, but also software designers, information architects, user experience experts, etc…

** and this is also why most start-ups are run by very young people, who have no family comittments and are willing and able to take some risks

Your Google Certified Partner

AnneStahl-Certificate-AdWords-2015AnneStahl-Certificate-GoogleAnalytics-2017We want to provide you with top service and know-how, and to do so, we stay up to date on new technologies and practices, and we believe in continuous education.

That’s why we keep our Google Analytics Certifications (just renewed) and Google AdWords Certifications up to date.

In addition, we are members of organizations like the User Experience Professionals Association (UXPA – Germany and California Chapters) .

Amplexity joins SLO Hothouse

We are proud to announce that Amplexity has joined the San Luis Obispo Hothouse. Located in the downtown area of beautiful San Luis Obispo, the SLO Hothouse is a relatively new venture connecting the dots between Cal Poly talent, state and federal funding programs and local entrepreneurs and business experts. This unique collaboration has resulted in a space that has the atmosphere of an art studio, the brain power of a think-tank and the enthusiasm and discipline of an olympic athlete. We can’t wait to dive in.

What is the SLO HotHouse?

The San Luis Obispo HotHouse seeks to attract and support the most vibrant talent and promising innovators and entrepreneurs in an effort to build a unique and passionate startup culture in San Luis Obispo.

This new community space has been created through the efforts of Cal Poly, the San Luis Obispo Community, and the Cal Poly Center for Innovation and Entrepreneurship. The goal of the SLO HotHouse is to support students and community members alike as they work to create new innovations and start business ventures.