There are some words in German that are hard to translate: Gemütlich, fahrvernügnen, or Gesamtkonzept
Mittelstand is another example. Technically it means small and middle-sized firms. But that is an elastic definition as the actual size can be very small or very large. The vast majority of companies in Germany—and in the U.S. —can be classified as Mittelstand. They employ most of the working population. The size of the firms can range from under a hundred to many thousands. Yet they all also generate the powerful export machine that allows Germany to rack up surpluses year after year with highly sought-after products around the global market. In fact, the vast majority of German companies are categorized as within the Mittelstand framework. That’s more than 3.6 million companies, providing more than 60 percent of all jobs in Germany.
What is the formula of success for these firms? What are the metrics of motivation and how do they sustain their edge in an increasingly challenging global playing field?
Mittelstand ist eine Haltung, by Heiner Kübler and Carl A. Siebel (full disclosure, an AICGS Trustee) offers some answers. The title of the book is the main message: Mittelstand is a state of mind or, perhaps better said, Mittelstand is an attitude. It encompasses many characteristics that small and mid-sized firms in other countries have. But the German version manages to cluster these trademark strengths in a unique environment underscored by a high degree of trust among those who lead, follow, and in general surround the enterprise with a stakeholder mentality. And people are committed.
While one can find books that detail the measurement of success among the Mittelstand companies based on profit margins, production costs, and export figures, this book examines the experiences of multiple examples of Mittelstand companies—very small and very large—as they confront the larger mega trends shaping their successes and failures. It is a closer look at both the company and the people who shape both. And in the overall evaluation the authors offer a set of guidelines that emerge from their exploration.
The blueprint for all these firms is presented as a picture of classic requirements for any business enterprise to succeed. That includes a vision, an effective strategy to pursue it, capable leadership, and commitment to constant innovation. A fifth component is the process of passing leadership from one generation to another. As Mittelstand companies are marked by ownership rooted in private family circles, the question of succession can be complicated. But it is the price of assuring a sustainable future for both the owners and those who work for them.
One of the corporate stories focuses on the evolution of Aptar, company with roots in Germany that over decades grew to be a global player but was guided by the values of the Mittelstand attitudes described in the book. Carl Siebel, the book’s co-author, is the former CEO of Aptar and piloted that success.
The Aptar story exemplifies the codex of success in Mittelstand environments. The combination of clear visions of mission, method, and measurements of success along with long term commitments embodied by the leadership of the company are touch stones. But there is also increasingly a focus on constant innovation in coping with global competition and opportunity. Aptar’s story—along with others mentioned in the book—is one in which the importance of the synergy between management and work force is underlined continually. In addition, the credibility of the management in the community and long-term stakeholder in the company—personally and professionally—plays a cardinal role regardless of how far and wide the business reach becomes.
In that sense the book title again encompasses the message: Mittelstand is about attitude, behavior, and values.
The signature of those trademarks may be seen in the business success measured by profits and sales. But the driving force also includes the pride of a stakeholder, from the shop floor right up to the office of the CEO.
While the competition in a global marketplace is ratcheting up exponentially, the German Mittelstand roster of companies remains a leading force. That accounts for the reason why so many foreign governments seek not only to do business with these firms, but even to acquire them. These are serious challenges to confront. Whether magic of the Mittelstand can sustain its advantages in the future will depend on how well it can adapt to new environments and opportunities. But the track record is an indication of both staying power and relentless commitment. The next chapters are now being written.