Roland Dürre
Wednesday September 13th, 2017

Entrepreneur’s Diary #123 – Appraisal Interviews

Evening Event BICCnight “it at media“ in the foyer of the Funkhaus Bayern. München, 22/07/2011 picture by Stephan Goerlich

For today’s entrepreneur’s diary, I chose a very banal topic: The Appraisal Interview.

Together with Wolf Geldmacher, I founded the InterFace Connection GmbH in 1984. Immediately, we had ten successful years as the producers of the software HIT-CLOU and quickly became the leaders on the market for text systems on UNIX in Europe. Because we were a great team. It was a true delight. In retrospective, those were the ten best years of my professional career.

Before we founded InterFace Connection, I had worked for Siemens and Softlab. I wanted to adopt all the things I found good in those enterprises in my own firm. It was quite a number of things. However, there were many more things that did not find my approval and I consequently wanted to handle them differently – those were the more important things.

Among other things, I am talking the chance to decide what tasks were delegated to whom and also of deciding what, when, how and where the work had to be done. At Siemens, the delegation of tasks was “from top to bottom”. That was not what I wanted. And during the first ten years, thanks to a high degree of self-organization and a huge amount of self-responsibility both of the team and the people at InterFace Connection, this worked (very) well.

Both Siemens and Softlab had things I liked. For instance the yearly appraisal interview. It gave you the chance to speak openly with the boss of a hierarchical system at least once every year. I found this a good idea and did the same at the Connection. Regardless of the fact that we always were an enterprise of “open doors” – which means that all employees could come and pour out their sorrows over me and Wolf at any time. Today, I still recommend the “open doors”. However, I no longer recommend the appraisal interviews. The reason is that you do not need them.

At InterFace Connection, this is what happened: after three months (shortly before your probation time ended), there was the first appraisal interview and then, always before a years was over, there was the next. Thus, depending on the time a new person was employed, the interviews took place all the year round. There was also a structure for the interviews. Looking back upon the last year was a considerable part of the interview, then came the exchange of feedback and eventually the negotiations of a new income. I always asked my employees to be well prepared and saw to it that I, too, was always well prepared.

Basically, it went quite well. Except that a few wise-cracks thought it was perhaps unfair. After all, the entrepreneurial context of one month might be totally different from another month. And this could mean that a rise in income based on the current situation might not be fair.

We reacted to this and re-scheduled all (!) the interviews to take place at the end of the year. This had considerable disadvantages and made the topic a sad one. The stress level in November and December climbed another notch. That caused lack of motivation and exhaustion. Nor did the direct comparison make things any easier. At the time, I did not yet understand that there is no such thing as justice (or: there are many definitions of justice).

Perhaps one could construct a “justice based on need”. But justice based on achievement is definitely nonsense.

Today, I believe you cannot set dates for interviews of any sort by following a rule. Let alone if the date is in the far-away future. No, you always have to have an interview close to the occasion, when you have a good reason or at least a current situation that allows or demands it.

Especially communication between humans always has to take place when the necessity arises. For instance, dissatisfaction must never be conserved until the yearly appointment in order to then open the frustration nozzle.

More money agreed upon in ritualized interviews is only the second-best thing. It is better to talk about distributing the success exactly at the time the success happened. And it would be best to let those decide who actually were the ones who made the success possible. At team level.

Wages are a difficult topic. I already wrote about it quite a few times and probably will soon again write about it. Because it is not really goal-oriented that, in Germany, you get more money every year until you are quite old – up to retirement – and, on the other hand, decreasing wages are not really possible during the active time of a work contract. Simply because the achievement curve, even of a programmer, cannot point upward all your life long. But I will write about this at another time.

RMD
(Translated by EG)

P.S.
For more articles of my entrepreneur’s diary, click here: Drehscheibe!


I learned much from Rupert – also how to build syllogisms and vexilla (I took the picture before 2010).

My first introduction to building vexilla was through my teacher and friend Rupert Lay. He closely accompanied my learning and my development for far more than ten years.

Through him, I made the acquaintance of quite a number of the important managers and entrepreneurs who were active in the German economy in the 1970s and 1980s. I also learned to appreciate them and they taught me a lot.

It was also where I learned how many fundamentally important things were achieved in his seminars. In these seminars, you practice the ancient Greek dialectics based on the construction and analysis of syllogisms (Syllogismen) and on the dialectic technology of building vexilla (Fahnenbildung).

In the Projektmagazin – which, incidentally, I find quite a stroke of genius – there is also an article (one of them by Elisabeth Wagner) that is very much worth reading. It describes how, through building vexilla, you can develop ideas and solve problems in a very baffling way and very efficiently.

Basically, building vexilla is just a dialectic philosophical method and has been used in this discipline for thousands of years. As we know, philosophy tries to analyse, understand and give meaning to the world  and the human existence . In a nutshell, I would say it tries to answer the questions: why, for what reason, to what end, how? And that will also help you when you are looking for new ideas and solutions.

The combination of “agile” and “classic dialectics” is a stroke of genius – in almost all cases, it will render excellent results. This is how you can actually achieve “empowering of the people“.

Again and again, that was my experience when moderating start-ups. Especially for an agile team where the individuals work at eye-level, building vexilla is a fantastic tool for gaining new insights in a creative way. Once on a while, you will even mange to get rid of wrong (and often deeply rooted) prejudices.

Here is how you want to proceed in eight steps if you build a vexillum. I like applying them.

  • Formulate the desired theory and define the central terms of the theory.
  • Collect requirements that need to be met at first sight if you want agreement with a certain and exactly defined event or project. You want a list that is as finite as possible.
  • Definition of the terms you used and common agreement.
  • Evaluation of the requirements following the criteria: useful, necessary, sufficient.
  • In case of different opinions with respect to the quality or applicability of requirements, you need to look for alternatives until all the requirements get a consensus. It is permitted to delete requirements that turn out to be unnecessary.
  • Test if all requirements belong to one language game and determine the end function. 
Example for an enterprise: 
regulative – keep the common good out of danger; 
ethically – realize biophily, 
economical – improve the results
  • Test if all the requirements are met or if they can be met with acceptable cost. 
You want to keep in mind that only the actual realization of a project will show if your assumptions have been correct. Consequently, the vexillum can also contain requirements that make a later correction or omission of an earlier decision necessary.
  • In the ideal case, you will find a sufficient requirement as the result of building a vexillum. You will not always manage that. But the sum of necessary requirements that, taken together, will qualify as “sufficient” is also a satisfactory result.

If you wish to try the technology of building vexilla and need assistance, I will gladly help you.

RMD
(Translated by EG)

P.S.
For more articles of my entrepreneur’s diary, click here: Drehscheibe!

AGILE and yet LEAN on the MS EUROPA – a while back.

It is not quite so easy, because there are no patent recipes for founding a company. But there are criteria that can provide orientation. Let me write a few of my ideas, especially on business plans as they are expected by banks and investors, as well as by the competition. Here is what you should keep in mind when writing one.

The text is based on my own experiences, but also on what I learned as a juror at business plan competitions and from the more or less intense dialogue with all kinds of start-ups.

I recommend you proceed in three steps. Many founders use the wrong sequence by, for instance, first wondering what the best legal status of an enterprise might be. However, this will initially play only a minor role. It is more important to get all the necessary invoices written in time.


Necessary requirements for establishing a company are:

  • The team – 
I believe you should be at least two persons and three is probably the best number.
  • The idea – 
well, if you do not have an idea (or even better: several ideas), you can forget about it 
and
  • A great story – 
that supports the entire concept and is allowed to live.
    Part of the story is a (working) title and an (initial) logo of the enterprise that is to be established or the project you want to start. The team and the idea are also parts of the story.

The description of your special expertise and the competence of the partners is also part of the story. The founders need to relate where they are really unbeatable and whom they know around their field of expertise. You definitely should be able to name a few good friends (or acquaintances) that you can name as customers, partners or supporters of some sort or other. If the founders already have a small network that helps them towards reaching their goals, then that is even better.

Thus, the story should shed light on the “yesterday, today, tomorrow” and on the “what, how, why, to what end” in a narrative form.

Basically, you have to use the story to make clear why the entire affair is going to be a success. Only after you can present a nice story does it make sense to start writing the Business Plan. In fact, the business plan will draw from the story. There is no other way to do it successfully.

Here is a list of the usual criteria for a good business plan., along with advice on when which steps should be taken. And why the sequence actually matters.

According to what I recommend, a business plan should be developed in (three) steps. The following points can help founders to better structure their activities. They also help the juror and/or the investor when it comes to understanding the content of the plan and its quality. Which means to better judge the chances of success.

However, these criteria will also help the founder to examine his idea and his plan, looking for weak points quasi as a “self-control mechanism”. It also helps him to realize what special strength his idea or his plan has. More often than not, the founder will only intuitively be aware of them. However, he will have to be able to formulate them!

The procedure I describe is rather advanced and will help you to gain clarity about the business model you describe – and thus to increase the probability that your project will be a success.

However, this does not give a founder free reign such that he can ignore the implementation of his business model in a very “agile”, “slim” and “pragmatic” way and to seek rapid success.

In other words:

Regardless of very intense thinking, the process must be lean for every founding project and trying things out must have a high priority.
So here comes the “business plan” with its three stages:

In its first step, the business plan should contain:

A precise conclusion that clearly states why the business idea is attractive and that outlines its relevant aspects.

A comprehensible description of the expected gain for the customer and how the product/service differs from what the competition offers.

The evaluation of the market and of the competition has to be absolutely consistent in the business plan.

The measures absolutely necessary for successful marketing and sales have to be described in detail. Principles such as

aida = attention, interest, desire, action (marketing) 
or
4 ps = product, price, place, promotion (product offer/service offer)
are helpful.

The expected business structure and the future organisation (structure and processes) must be described in fair detail and must be realistic.
There will always be chances and risks. There must be a thorough judgement and evaluation of both.

Even the first step of such a business plan should look presentable – but it should also transport the competence and enthusiasm of the founders. This document must not be a theoretical work – it should not talk about certainties and not use too many numbers. It should also create room for testing ideas.

If all this has been done successfully, a lot has been achieved.

No earlier than in the second step, you will need the following:

The economical planning and the description of the “operative agenda”. Both will not make sense before the first step has been successfully managed. The same is true for the actual organization, e.g. the structure of the planned enterprise and your idea about how processes in the enterprise should run.

No earlier than in the third step, the following things will be relevant:

After the results of stages one and two are clear, the founders should start thinking about the legal status and the statutes of the enterprise to be founded. Mostly, this is quite trivial and not really all that important from the perspective of a true entrepreneur. However, what becomes rather important now are the actual financial plans, both with respect the question of initial capital and for the actual financing. Basically, they are more like a simulation that answers the question under what conditions/assumptions a successful start will be possible, rather than a “business plan paper”.

Incidentally, the famous “pitch“ will then be nothing other than an extract of “story” and “business plan”. And it should be as short as possible.


I would advise all the founders who already wrote a business plan to look and see if it meets all the above criteria. As I see it, there are many cases where there is huge potential for improvement. And I would recommend that would-be founders either do without a business plan or else use their “common sense”. Or else, if circumstances make it necessary, they might wish to stick to my steps and criteria when writing their document.

RMD
(Translated by EG)

Eugenie Wirz with Christian Mendoza (young entrepreneurs from Poland) at the UTUM-Hackathon (2016)

During my work – or should I say hobby – as a mentor for UTUM (unternehmerTUM) and TUM, I had the privilege to accompany a number of young persons for a time out of their life. I also met many nice people who are very active, both professionally and socially and who promote young persons (some of whom have fallen upon dire times) and start-ups with a huge amount of idealism.

I particularly enjoyed working with Eugenie Wirz (her friends call her Jenna). I first met Jenna several years ago, when she was still in charge of the UTUM mentoring program and worked particularly hard for “her” mentees.

Now, she has a new task at unternehmerTUM in the European context: the program “Erasmus for Young Entrepreneurs“. It brings many ideas and fresh perspectives (Ideen und frische Perspektiven) to the UTUM world. In the magazine TUMcampus 4 | 16, on page 12 , you can find a “special” under the title “Learning from Successful Enterprises“. The Exist-Founders’ Program (Exist-Gründerprogramm) is also among those who promote it.

In the Wirtschaftswoche, you will find an article that describes how “you can learn abroad how to be a founder”. For examples of successful projects, click here.

In my role as the one who accompanied quite a few start-ups, especially with very young founders, I now understand that, more often than not, it is exactly this program that is an important chapter when it comes to writing your own entrepreneurial script. Consequently, it was my pleasure to write this article for Jenna and her program “Erasmus for Young Entrepreneurs”. So if you know young founders, why don’t you give them this information?

And if there are questions about the project, do not hesitate to contact Jenna via email.

RMD

How not to practice innovations management.

It is quite possible that I still believed in institutions and administration when this picture was taken.

Bureaucracy and administration paralyze concerns and medium-sized enterprises. Agility gets lost, Taylorism flourishes. This is how all systems will, sooner or later, make their survival the central goal of their thinking, functioning and behaviour. The interests of the important stake-holders “customer” and “employee” will be suppressed, the enterprise will become inflexible and fragile.

Then the determining factors and environment will change, once in a while even disruptively. The “management” is totally surprised by what happens. A business model that used to be very reliable and beloved is suddenly questioned. There is no better one on the horizon. More and more helplessness grows. Everybody expects a miracle. Innovation and agility are praised as the saviour. Everything must get better.

As a consequence, nothing happens. Except that new programs that follow old patterns are created. The administration gets one or several additional staff departments. They will then be responsible for “change” or innovative management. The new world is now communicated by the central administration with lots of noise. The propaganda machine starts running. On a slide used by the director, you will, for example, see:

„The board identified priority areas to improve in 20xx to become the company we want to be.“

Then comes a list of innovations. As a general rule, you will find CSR (corporate social responsibility) and similar nonsense. Mostly, you also get something about performance or profitability. Once in a while, the customers are also mentioned: you want to become customer centred. Occasionally, they will also sing the praise of “new values” and a different “culture”. But above all, you will always find lots of buzzwords in these works. And that makes you wonder why expensive counsellors get so much money for such weak formulations.

The best case is if things that have been looked down upon for years suddenly become epiphany. I mean terms such as taking responsibility, eye-level, respect and appreciation. Agile and lean, openness and transparency are repeated in mantra fashion. Modern methods and informal communication are propagated. Except that nobody tells you how this is supposed to work. Neither is anybody keen on actually installing these concepts, because the system does not really want any of them. In fact, the system wants to establish and improve its own power. No matter what it costs.

I have come to that stage where I can relate numerous stories about how enterprises have become more and more bureaucratic and administratively complicated. On the other hand, I do not know a single instance where they successfully returned to the simple, agile and open enterprise.

That is the reason why, in social systems – be it enterprises or societies -, I no longer believe in transition or transformation towards less bureaucracy and more life. Basically, it cannot be done from the top, anyway – and they will not allow it from the bottom. Consequently, I will no longer waste my time and energy in old structures. Instead, I will only support concepts where something new is created. Innovation is creative destruction. As in evolution, new things will only happen when an old generation dies out and a new one evolves. That is just how it is.

Please understand my article as an optimistic message. All you have to do is have a little patience, then everything will work out just fine.

RMD
(Translated by EG)

P.S.
For more articles of my entrepreneur’s diary, click here: Drehscheibe!

Roland Dürre
Saturday March 11th, 2017

Kässpatzen, Allgäu, Founders’ Scene and Digitalization.

Night is coming (Founders’ Villa in Kempten).

Yesterday, life again threw me towards the Allgäu. Thanks to Alexa, I was invited to see the “Kempten Founders’ Villa“ (Gründer-Villa Kempten), where I met young activists of all sexes and age groups. I met founders, entrepreneurs, persons looking for their own way in life and “world improvers” I very much liked. The feeling was a little like: “act local, think global“:

It was a beautiful experience that made me optimistic towards the future.

Because on March, 10, they had another one of their monthly meet-ups at the founders’ villa. On those occasions, what they do at the Founders’ Village is “networking”. You also get home-made Kässpatzn – and the invitations were issued by the two initiators and founders of the Founders’ Villa Simon Schnetzer (youth researcher) and Thomas Herzhoff (agency boss). Consequently, the Kässpatzen had been made by the two bosses Simon and Thomas personally in the comfortable Founders’ Villa kitchen.

Simon Schnetzer (right) and Thomas Herzhoff (founder of the Founders’ Villa).

And I can truly confirm: the Kässpatzen were excellent. They were just as tasty as in the “Oberen Mühle“ a little deeper in the Allgäu, in Bad Oberdorf (part of Bad Hindelang). And that is definitely some achievement!

And the many nice discussions were just as good as the food. Among the people were truly great types. They had very diverse interests and exciting dreams for their future.

Besides myself, there was another guest for whom it was also the first time. He introduced himself and his new role and told us that he is now supposed to found the “Kempten Digitalization Centre”. It is an activity sponsored by the Swabian Government in Augsburg and also subsidized by the Free State of Bavaria. The opening ceremony for the “digital office” or whatever is to be established is scheduled for June, 19th. However, he said he does not know if he can actually open on that day. Too many issues are still unclear.

The Kempten Founders’ Village lives.

Well, his words made me smile. So many things happen in the Allgäu. They have innovative enterprises and companies with a world-wide reputation. A founders’ scene starts to come to life.
The people are creative, looking for and finding alternatives and changing the world. They try things and do things. And then the people in Augsburg, the capital of Swabia, sends them a “digitalization centre” that is supposed to teach them digitalization. Probably “Digitalization for the Allgäu” as a gift from the Bavarian State Government.

The very term “digitalization”! From the times when watches and tachometers became digital. Years later, ISDN was introduced. But that, too, was a long time ago and those technologies have been archived in the Deutsches Museum long ago. Digitalization is ancient. Young persons have progressed way beyond that.

And in the Allgäu, the “Founders’ Villa” is a much better metaphor for forming the future than a centre that now wants to start digitalizing the Allgäu.

So let me, again, express my gratitude for the kind invitation to all and in particular to Simon and Thomas for their hospitality in the Kempten Founders’ Villa.

RMD
(Translated by EG)

P.S.
I took the pictures from the Kempten Gründer-Villa Kempten website.

P.S.1
In this article, I tried to describe how activities sponsored by the central administration reach in the “provinces”.

Roland Dürre
Thursday February 23rd, 2017

Aphorism: HUMANS & LEADERSHIP

 

Many thanks to Christian&Daniel (© Visual-Braindump)

Two theses

(I)
If “hierarchical structures” dominate an enterprise, then a culture of “agile, digital, lean, open, social“ is not possible. There might be a few exceptions for start-ups founded by a private person, but they only prove that the rule is in general correct.

(II)
Human beings feel comfortable in social systems like enterprises if they experience, respect and appreciation and if they can take responsibility in a spirit of courage and joy. The counter argument that this cannot be true for persons who have been trained in obedience and dependence is not in accordance with my concept of humanity and consequently not valid for me.

I defend these two theses vehemently.

Two ideas

(I)

A good rule for entrepreneurs is

“Only employ persons of whom you believe they have at least the potential to do the job better than you yourself would be able to do it!“
I (almost) always stuck to this rule at “InterFace Connection”. And my experiences were very good. It is also true at Google and probably one of the factors that made this enterprise so tremendously successful.

(II)
If you have employees who, following (I) are “better” than their bosses, then how can a system and its agents come up with the idea that control “from the top”, central ideas, set rules, division of labour, set and structured processes and a formal systematized communication might be better for the enterprise and its stakeholders (employees, customers, shareholders, ..) than an agile self-organization of the teams and informal networks. Especially in times of rapid change!

Incidentally, there is also a method (or rather: a procedure or culture) called: “Kanban”. I believe that both theses and ideas are true for all areas where humans work together, be in as a software engineer or as an elderly care nurse.

RMD
(Translated by EG)

Roland Dürre
Wednesday February 15th, 2017

Entrepreneur’s Diary #119 – Your Personnel Records

Ard Leferink for buurtzorg in Stuttgart at #fav17 (agile)..

Last week, on the Forum Agile Administration #fav17 in Stuttgart, Ard Leferink of buurtzorg was the Key Note speaker.

On the evening before, he had told me that buurtzorg has no HR-Department (human resource), just like they have no marketing department, no sales department, and, naturally, also no CRM System (Customer Relationship Management).

Well, I actually know a few companies that have no human resource department. As a general rule, however, those are small enterprises with a number of employees that does not exceed the two-digit scope. In the Netherlands alone, more than 10,000 people work for buurtzorg. Well, I guess that can be considered a little bigger, can’t it?

Yesterday, I discussed this with an entrepreneur I am good friends with. He immediately replied by asking: “So what do they do with their personnel records?“  To which my reply was the question: “What do you need personnel records for?“

I actually believed – and have believed for some time – that in an enterprise that is agile and based on trust, personnel records are as unnecessary as a personnel department, not so speak of a “director personnel”. For the administrative processes (paying the salaries, …), a list of employees with very little information would absolutely suffice. Everything else is unnecessary “overhead”.

But before I give you reasons for my opinion, I will describe for you all the things a personnel record consists of.

  • As a general rule, the personnel record is started when an employee is hired. That is old knowledge as it has been handed down over the centuries.
  • When a new employee is hired, a master data list is made. It contains all the data about the employee necessary for realizing the working procedure, such as his/her birthday, sex, social security and retirement number, religious belief, etc. The work contract is added and sometimes the (successful) application letter with the CV and diverse diploma (school, education, academic grade). And, of course, the protocols of one or more job interviews is filed here as well.
  • Then the personnel record is updated all the time by adding:
    • All extensions of the work contract;
    • All goal-oriented agreements;
    • Organisational changes,
    • Gratifications and social support (costs  for child-care);
    • All documentation pertaining continuing education;    
(the many “private educational measures” that, for instance, a software developer is doing all the time are not part of this);
    • Documentation of sickness and health insurance;    
In Germany, all employees who have been sick for more than three work-days have to bring a doctor’s testimony. To me, this looks like a method for creating work and money for doctors – I never knew a doctor who did not write such a testimony when asked by the patient,
    • Special events (change of marital status…) and activities (presentation, …) will also be written down.
    • Protocols of yearly evaluation interviews and all other relevant discussions;
    • Interim job references;
    • All “disciplinary” things such as misbehaviour and/or written warnings;
    • In former times, positive letters were also kept in the personnel record. For instance if a colleague received a special tax-free payment because of a jubilee (company employee) or the birth of a child. However, now that these are no longer tax-free, there is less motivation for the employers to pay any special gratifications.
    • Today, less agreeable data are also part of the personnel record. They suggest a strange concept of humanity. Because humans, too, are now considered a measured object. For instance, we find the results of strange tests (Score-Cards as results, for example, of the Reiss-Methode), as well as “psychological” reports about the employee’s personality and numbers that indicate his performance for the enterprise. I do not know if this is legal, but I know it is done.

(In some companies, they have agreements that state what may be added to the personnel records and what may not be therein. And the works committee controls in regular intervals).

If someone has been an employee for many years, then this report folder can become quite extensive. It might weigh a few kilograms. If you have a hundred employees, you need quite a bit of storage space. That is why you have to have a digital HR application. And, incidentally, you will also get quite some problems with “privacy protection“.

Because, by definition, IT systems are not secure. To be sure, the drawers with the personnel files in locked rooms were not very secure, either. I actually remember some creative employees who managed to get the keys. And I also remember a personnel file lying around on the desk of a “boss” overnight. But in those days that was not a problem.
In IT, you have to introduce processes that define who can read what under what conditions. It has to be documented. And again, you have one of those coffin nails that will do damage to an agile and slim enterprise and give you yet a little more bureaucracy and administration.

In other words – everything you do not really need is something you better avoid!

Incidentally, the dialogue with my friend continued. His reply to my question why you need personnel records was (after some hesitation):
“For writing references?“
Indeed. As we all know, in Germany the employer has to write a reference for an employee when he leaves (or whenever he wishes one). That reminded me of when and how I used to write letters of reference. Here is what I did:
First and foremost, I asked the employee to write down everything he did for the company and mark which of those things were important to him. Then I took this input and added my own knowledge and estimation, before finishing with one of those famous phrases taken from a book that lists all the relevant phraseology.

But I only ever took a look at the personnel folder when I needed a birthday for wishing someone many happy returns.

RMD
P.S.
For more articles of my entrepreneurial diary, click here: Drehscheibe!

DSC_1659or:
 How the Chauffeured Gentleman Imagines the Autonomous Car.

ADFC – that is the lobby club for us bike riders. Many bike riders think this club is a little stuffy and consider it just the equivalent of the ADAC. Consequently, they prefer free grass root movements, such as “Critical Mass“ and the like. Regardless, it is a pleasure for me to be an ADFC member and I also support the association with lobby work wherever possible. And I also very much recommend the membership.

The ADFC also organizes many excellent events. One of them is the lunch discussion group in Munich. At those lunches, I already witnessed many interesting presentations, for instance by Herrn Ude (when he was still mayor of Munich), Herrn Ramsauer (when he was Federal Minister of Transport), Toni Hofreiter (as mobility expert of the Green Party), but also by persons who are less publicly well-known, as for example the DB-Regio .managing director. The discussions were always very interesting and important.

Yesterday, we had another ADFC lunch discussion in Munich. The speaker was Peter Driessen , who is general manager of the IHK Munich and Upper Bavaria. For those who do not know what IHK is: it means Industrie- und Handelskammer (Chamber for Industry and Commerce). It is an organisation you have to be a member of if you own an enterprise, just as you have to pay their membership fees.

As an entrepreneur, you do not know why you have to be a member, but in return, you get a high-gloss magazine at regular intervals that is rather lacking in content and not very interesting either – and that will immediately end up In the rubbish bin. The IHK is generally quite present in people’s minds, because more often than not it has many managing directors – and those managing directors earn quite good money. After all, they are also responsible for many enterprises (see Official List of IHK on incomes of the GF team, not included other advantages such as business car and chauffeur, etc. – Offizielle Liste der IHK zur Einkünfte der GF-Teams ohne weitere Vorteile wie Geschäftsauto mit Fahrer etc.).

And then, Peter D. (without having intended to) explained with a personal true example how all the different traffic systems might be integrated in the future, at the same time disclosing his personal vision of a “driver-less car”:


“On the way to a presentation, his chauffeur-driven car got stuck in the traffic jam at Donnersberger Brücke. And since there was no chance for him to reach his destination in time using the private vehicle, he just left his car and continued on his way by S-Bahn train. And he managed to be on time. This would not have been possible without a chauffeur, since he could not have left the car standing in the middle of the Donnersberger Brücke, could he?”.

He then completed this example using his personal vision of a self-driving car:


“This is how, in such situations, you could continue by using public transportation in order to reach your destiny on time and the driver-less car could then do a leisurely turn through the congested streets and eventually retrieve its owner”.

He sounded rather serious when he said this. Perhaps he meant it as a joke? Except that such a concept of mobile future is all but hilarious. Especially if it comes from an important representative of a business association, at least one who considers himself extremely important.

RMD
(Translated by EG)

Roland Dürre
Monday November 7th, 2016

Entrepreneur’s Diary #118 – Employee Involvement

A short time ago, I received an email from a young man who is also an entrepreneur and a friend of mine:


During the last two years, a lot has happened and our small IT company now has seven employees. For next year, we are again seeking new employees. We are also wondering how to improve salaries in general without threatening our financial situation – in case matters will at some time not be so rosy.

Now I would like to ask you if you have experience with employee involvement or if there is somebody you could refer me to. Since we do not specialize in one product, generate a lot of cash flow with custom-made goods and also do not wish to sell our company, the question might be a little more complicated than it initially looks.

Would there be a chance for you to feel like and have time for coaching us in this matter in the near future?


Naturally, my answer was YES. But it was not because I wanted to coach them. That is something I refuse to do as a matter of principle. I also do not like to give advice. After all, advice can turn vice. Instead, I share my knowledge and ask questions.

Hoch die GREAT WALL mit Käppi nach hnten.

Once in a while, being an entrepreneur is like climbing the GREAT WALL.

First and foremost, I checked If I had ever before written anything about employee involvement in my entrepreneur’s diary (Unternehmertagebuch). Since the answer is no, I will relate the results of my discussion here in the blog.

Let me start with my own experiences:

As a matter of facts, fairly shortly after the foundation of the InterFace Connection GmbH (for us, the name Connection was more than just a name, it was programmatic) in 1984, Wolf Geldmacher and yours truly decided that we wanted to offer all employees (and even in 1986, we are talking around twenty) shares of the enterprise.

At the time, we were four partners in the firm. The “active” ones were Wolf and I. We were both employees of the Connection as managers and both owned 30% of the capital. The two “passive” partners in the firm were Dr. Peter Schnupp (a man who had written IT history) and the InterFace Computer, represented by Claus M. Müller. They had 20% each. At the time, our capital was as much as 100,000.- DM and our legal status was limited liability company.

Dr. von Hase was “our” counsellor-at-law. He accompanied our enterprise during many years. In retrospect, I can certainly say that his advice was always very good advice for the company. It did not take long for him to convince us that the limited liability company status was not the best possible for an enterprise with several partners. Especially if some of them are also employees. Conflicts that, for example, might arise from the enterprise-employee relation might easily have a negative effect on the partnership level.

Consequently, 17 employees of the IF AG founded a share association that took 10% of the capital (10,000 DM) out of the entire sum (100,000).

The sales price for the 10% was 60,000 DM (10,000 DM for the shares plus an extra rate of 1:5 , i.e. 50,000 DM). At the time, our enterprise was easily worth 600,000 DM. The money remained in the company as backup, which improved the capital situation (from 100,000 to 160,000 DM). The total shares situation changed as follows: Wolf and I now held 27% instead of the 30% we held before the transfer. InterFace Computer and Peter Schnupp now had 18% each instead of the 20% they had had before. And 10% were now owned by the shareholder association of employees who then mathematically held a share of 1/170 each of the enterprise. It was a good example for a successful employee involvement.

For the employees, one disadvantage was that they could not directly own shares of the enterprise, instead “only” indirectly holding shares as an association. This limited the fungibility of the shares. When, in the late 1990ies, the InterFace Connection GmbH became the InterFace AG, the shares of the employee association became stock of the InterFace AG, which meant this limitation was no longer active. Whenever I meet InterFace AG employees today on general meetings, they tell me that the employee involvement was the best investment of their lives.

In the 1980ies and especially in the 1990ies, many persons worked with option models in Germany that were rather dubious affairs as far as tax was concerned. The procedure was particularly attractive for young and quickly growing enterprises that wanted a speedy entry into the stock market. I have a few scattered friends who actually – to their own surprise – became millionaires because of these models. Mostly, however, the persons I know who did it tended to lose money, rather than profit.

Today, I believe cooperatives are probably something to keep in mind when this is your purpose – especially if you want to think sustainable and long-term. Even though originally the cooperative model was not intended to be beneficial for employees. Initially, they wanted to share the use of production machinery and buy said machinery. But it will also work if you want to make it possible for employees to share the success.

To me, partner models such as those used for entrepreneurial counselling look rather innovative. Especially the varieties where you can buy shares upon entering the firm and have to hand them on as you leave sound exciting, With them, you will profit from the success and growth of the shared enterprise in all the time you are part of it. If I were ever to found a new company, I would probably try the BGB company partner model.

During our discussion, we also looked beyond the “pure earnings”. To be sure, a market-oriented income plays an important role when it comes to the employees’ motivation. In fact, salaries and continued education are the most important costs in service companies. It goes without saying that enterprises find it easier if they only need to pay part of these costs if they are actually successful.

However, money is only one (even if an important) part of what constitutes the relationship between the enterprise and its employees. The entrepreneurial culture and the values lived in the firm are just as important. Catchwords are openness and transparency, the possibility to participate, as well as respect and appreciation of all the persons in the firm being a foregone conclusion.

In an enterprise, you should feel that all the employees share the courage for the future and find pleasure in doing what they are doing. “Strategy” should be something like a shared feeling, rather than just words. The enterprise should not just create value for the shareholders, but also for all the stakeholders. That includes the families of the employees. For partners and children of colleagues, the enterprise should be something they can “touch”.

And also – this is very important:
Success should (as often as possible) be celebrated together!

RMD
(Translated by EG)

P.S.
For more articles of my entrepreneurial diary, click here: Drehscheibe!