WINTER 2020 - PATHS AND PEAKS Navigating the post-crisis landscape
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WINTER 2020
PATHS AND PEAKS
Navigating the post-crisis landscape
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Editorial
The mission of ESMT Berlin states, “From
the heart of Europe, we create and impart
new knowledge to advance business and
society. We develop entrepreneurial leaders who think globally and act responsibly.” But
what inspires us – individually and as an organization? What are our aspirations and
goals? Why do we come to work?
In a highly participative process last year, we examined markets in the post-Brexit European Union. Indeed, the
the culture of ESMT and its impact on all members of pace with which professors, lecturers, program directors,
our community. As a fundamental part of this reflection, program managers, and students embraced online and
we put our shared understanding of why we exist and blended learning has affirmed the best of ESMT as a
what makes ESMT what it is into words. We defined our place of courage and agility. ESMT faculty and staff have
common purpose and values to guide us today and to- shared the challenges and best practices of these highly
morrow, in particular in these challenging times. innovative learning formats in media outlets such as
Our purpose is “why” we work: Empowering people Süddeutsche Zeitung, Capital, BusinessBecause, Forbes,
to create a better tomorrow. and Harvard Business Manager.
Our shared values guide “how” we work: through com- In this edition of the ESMT Update, we further explore
munity, curiosity, courage, and rigor. the value of the exchange between business school and
Together with our mission, these statements on our business community, between academia and practice.
purpose and values have provided a powerful framework We introduce you to new faculty and some of our latest
for navigating the pandemic. research, show how business data can inform and guide
Throughout the past few months of the coronavirus business investments, and highlight the award-winning
crisis, we have had the chance to live all of our values. We research shaping the better business world of tomorrow.
have committed to working together as one community, I invite you to turn the page and explore with us.
bringing together the interests of students, executive
clients, external partners in academia and politics, faculty,
and staff at all levels. Just this October, for example, our
Hidden Champions Institute (HCI) invited Peter Altmaier,
German Federal Minister for Economic Affairs and Energy,
to meet with leaders of the German Mittelstand – largely
market-leading and family-led companies – to consider
the nation’s post-pandemic economic future. Curiosity
and rigor continued to drive ESMT faculty research and
executive education initiatives as well. You will read in
this edition a report on our award-winning collaboration
with an Irish development agency, in which our blended JÖRG ROCHOLL
program helped Irish SMEs understand and enter new President, ESMT Berlin
3
IN THIS ISSUE
Winter 2020
03 CONVERSATIONS IN PICTURES
EDITORIAL
12 18
Digitalization demands Macher30 – The Prize
FEATURES
preparation of the East Spring 2020
with Bianca Schmitz
05
SPOTLIGHT
Irish SMEs target Eurozone
export markets 23
by ESMT Executive Education Crisis creates 25
opportunity Modeling digital platforms
with Nick Barniville with DIPVAR
09
How to benefit from strategic
investments IN THE NEWS INSIDE ESMT
by Oliver Behr
28
20
Of Note
13 Gaming the virus to win at
Corona and coal exit affect East virtual leadership
German economic development by Nora Grasselli and 29
by Jörg Rocholl Bethan Williams Reading Room
26 31
The maverick is a mainstream In Profile with Sean Nyquist
success story
by Gianluca Carnabuci 34
Alumni at Large
Imprint
Editorial: Tammi L. Coles, Editor, tammi.coles@esmt.org
Contributors: Molly Ihlbrock, Director of Corporate Communications and Marketing;
Jennifer Cordes, Public Relations Manager; Maximilian Peukert, Marketing Manager
Creative Design: Eva Gonçalves
Printing: Köllen Druck + Verlag GmbH
Photography: Cover photo by unsplash.com / @viniciusamano. Other images used under
license from Depositphotos.com, Shutterstock.com, and by permission of ESMT faculty, staff,
alumni, students, and guests.
Postmaster: Send changes and corrections to ESMT Berlin, Corporate Communications
and Marketing, Schlossplatz 1, 10178 Berlin, Germany; newsletter@esmt.org.
Copyright: ©2020 by ESMT Berlin. Published biannually. Printed in Germany.
With opportunities dwindling in the neighboring UK after Brexit, Irish companies learn to tap bounties in Germany and other Eurozone markets. Irish SMEs target Eurozone export markets The Eurozone is one of the world’s most dynamic, pros- has five times the population of the UK yet receives less perous, and stable markets. Given that it is on the door- than two thirds of its exports from Irish companies, even step of the Republic of Ireland, the Eurozone is also a though reliance on the UK market was already down from fountain of untapped opportunities for Irish companies 97 percent in the 1920s to 18 percent in 2012. – valued at €38bn. For Irish companies, the Eurozone Enterprise Ireland is the Irish government agency re- boasts several important advantages, including shared sponsible for promoting export sales and jobs for Irish currency, no customs, no tariffs, regulatory alignment, business globally. It is the largest VC in Europe and proximity, and ease of access. the second worldwide (by deal flow). It is responsible Moreover, Brexit underscored the importance of ac- for €4.8bn in exports. To continue the strategic shift in celerating ongoing diversification efforts into Eurozone the export footprint from a UK focus to a Eurozone one, markets. However, despite the benefits, there was a per- Enterprise Ireland crafted its Eurozone Strategy 2020 to ception among Irish SMEs of the Eurozone as a difficult achieve specific successes in working with Irish compa- market, acting as a barrier to engagement. The Eurozone nies. These were: 300 new exporters to the Eurozone, FEATURE 5
200 clients growing exports from €200k to more than
€500k, and a 50 percent increase in annual exports to
the Eurozone (€6.15bn) as well as three €1bn markets
The partners had
and two €0.5 markets.
To accomplish this, Enterprise Ireland identified a need
three months – in
to increase supports for client Irish companies entering
and scaling in the Eurozone. This would draw on the
tight, near-seamless
success of other Enterprise Ireland clients that had al-
ready achieved significant export success in the core
collaboration – to
Eurozone markets of the Netherlands, Germany, France
and Belgium as well as Spain and Italy. A new four-month
design, recruit, and
intensive program would thus seek to inspire the target
group to do the same.
The “Enter the Eurozone” initiative was born deliver an effective
The program targeted approximately 600 to 700 Irish learning and
mentoring program
companies with an established market offering but not
yet exporting to the rest of the Eurozone. The compa-
for Irish SMEs
nies in this group have a minimum annual turnover of
€500,000 (established business model), are exporting
before the original
a minimum of €25,000 annually to the UK or a market
outside the Eurozone, and are not significantly (under
Brexit date.
€25,000) exporting to the Eurozone. A core aim of the
“Enter the Eurozone” program would be thus to give Irish
companies the sales and marketing skills, confidence, and
motivation to win their first significant contract in a core
Eurozone market. This aim underpinned the entire design, The expertise of all three parties, the experience and
development and delivery of the program. support of internal Enterprise Ireland divisions, the col-
laborative process and the adaptation to the culture of
Strength in collaboration the Irish SME were key factors in the success of the entire
program, resulting in tailored learning content as well as
Enterprise Ireland sought partners with specific market practical templates for participants along their market
entry knowledge to design and deliver a unified program entry journey. The progress that clients made between
that could build on existing sales and marketing frame- Day 1 and the finale – with a specific, budgeted MEP
works and give due consideration to the culture of the (Market Entry Plan) with clear targets and next steps –
Irish SME. Via a competitive procurement process, the was dramatic.
international business school ESMT Berlin was select-
ed for its experience in training delivery for executives,
and Galway-based IMS Marketing was selected for its
expertise in one-to-one business advising, especially on
international market entry planning and implementation.
The program successfully blended Eurozone locations
(Berlin and Paris for the first cohort) for inspiration, Irish
locations (Dublin) for convenience, and “eiLearn,” Enter-
prise Ireland’s online learning support platform (which
was supported by IMS business advisors) for effective-
ness. As a team, the partners had three months – in tight,
near-seamless collaboration – to design, recruit, and de-
liver an effective learning and mentoring program for Irish
SMEs before the original Brexit date of October 31, 2019.
6 ESMT Update Winter 2020
Modular and tailored learning with results • Why is this market attractive?
• What makes it attractive?
Let’s look for a moment at the case of Campion Connect. • How do we believe we can be successful in this
For 30 years, Campion employees in Tipperary and target market?
Dublin have sold, installed, and serviced pumps in Ireland.
In response to the global digital transformation, Campion The process also brought client realization that market in-
developed its own software platform and a smartphone telligence was a continuous process. (A key program impact:
app, with which the company has successfully served many of the companies continued their market research and
Irish clients that include Three Arena, Irish Water, Dublin validation efforts after the program’s conclusion).
Airport, and The Convention Centre. But the company
had no clear idea about how to expand its market to other Phase 3: Berlin module
EU countries or how to identify and price its software for
those potential customers. Two senior representatives from each client company
Like Campion, each company started the Enter the traveled to Berlin for campus-based workshops delivered
Eurozone program with varying degrees of management by ESMT. In some cases, this was the first time they had
skills and experience. But the five-phase, four-month invested significantly in this type of executive training
program developed by Enterprise Ireland, ESMT Berlin, and development. The work from previous phases gave
and IMS was designed for impact. clients the foundation to use what they would learn in
“The Enter the Eurozone program provided clients with the strategic workshops delivered by ESMT. Specifically:
a clear goal of winning their first Eurozone contract,” said
Keelin Fagan, head of client learning and development • The “Business Model and Value Proposition Can-
at Enterprise Ireland. With the one-to-one guidance of vas” workshop and peer-to-peer learning opportu-
Enterprise Ireland’s business advisors and built in peer- nities helped the companies formulate their market
to-peer support, clients completed each phase with the entry strategy.
knowledge and skills specific to their stage in the MEP • “Organizational Decision Making” made companies
journey. The module-based approach ensured that all realize why and how to engage the whole organi-
companies made progress towards developing a MEP for zation in the market entry project.
their chosen Eurozone market.
After Berlin, the client representatives returned to
Phase 1: Starting the journey Ireland where, over the four weeks that followed, Enter-
prise Ireland business advisors helped each company inte-
A typical failing is that companies often approach the grate these lessons into their market entry strategy. These
market using a shotgun approach, trying to enter too interventions focused on fine-tuning the value proposition
many markets with too few resources. The key element of and revisiting some of their market research gaps.
this phase was the selection of the target Eurozone mar-
ket as a “working assumption” (i.e., clients could change Phase 4: Paris module
their selection later). The client companies made this
choice following one-to-one meetings with Enterprise The business advisors also prepared the clients for their
Ireland and IMS Marketing personnel. Making a market visit to Paris. There, strategic workshops were delivered
choice brought a strategic focus to each client’s journey by ESMT in areas such as sales strategy, route-to-market
into the Eurozone. options, and business negotiations. The impacts from
this phase were demonstrated by the “before” and “after”
Phase 2: Market intelligence comparison of each client’s MEP, which were shared with
IMS Marketing, ESMT, and Enterprise Ireland.
During this phase, clients took initial steps in research-
ing their target Eurozone market. This process, which Phase 5: Market entry plan
included practical templates and was supported by
individual mentoring, ensured that many companies The end goal of the journey was a completed and tested
were following a market data-led approach (in many MEP by each participant company, as well as equipping
cases for the first time). them with the practical items they needed to know in the
The companies had to answer key questions: next six to nine months as they executed their MEP and
sought to gain their first significant contract.
FEATURE 7
In the case of Campion, the five-phase Enter the Euro-
Originally published in Vol. 14 Issue 3 of Global Focus, the business
zone program increased its potential for success in the
magazine of the European Foundation for Management Development
Eurozone market. The program helped Campion identify (EFMD). EFMD recognized the successful partnership of Enterprise
its target potential in entering a new market, in terms of Ireland, ESMT Berlin, and IMS Marketing with the Excellence in Practice
both short and long-term revenues, and the value of us- Silver Award 2020 (Special Category: Ecosystem Development).
ing partners to grow its presence in the EU. The company
For Irish SMEs, Brexit is as real a challenge as the global pandemic.
now has a business development manager for export The second cohort of the Enter the Eurozone program of 20 Irish SMEs
sales, is attending an international market expo for its started their journey on October 20, 2020. A new delivery concept
industry, and is in discussions with real customers in its was developed to meet the current travel restrictions within Europe,
with large parts digitalized. This program will repeat for another three
new Eurozone market.
cycles until 2022.
Market entry is a multifaceted challenge. Irish compa-
nies must learn the skills for market entry, not just have
the information handed to them. Given the scale of the
challenge and the Eurozone targets of Enterprise Ireland,
the Enter the Eurozone initiative demanded an ambitious
response – one that would unify previous one-to-one
support with a learning and development (L&D) approach
towards an end goal of market entry.
And in the end the Enter the Eurozone initiative
achieved for Irish clients what it intended – namely the
knowledge and skills to build and execute their MEP
de
and gain their first significant contract in a thriving
e Q R Co his
th tt
Scan ore abou
Eurozone marketplace.
arn m t story!
to le c
impa
8 ESMT Update Winter 2020
How to benefit
from strategic
investments
Understanding the relationship
between corporate venture capital units
and their startup investments is key to
By OLIVER BEHR gaining from them.
Corporates run venture capital (CVC) units that conduct Making corporate venture capital work and measura-
equity investments into emerging startups. The CVC ble, I explored both the additional activities investors
units usually scout for and invest in startups in hopes that undertake and the nature of the startups themselves
this will generate certain benefits for the parent corpora- to understand how investors could benefit from such a
tion. Such benefits range from direct financial return to relationship – how an investor can capture and measure
indirect strategic advancements, like market insights or the strategic benefits of a CVC investment. Data was
technology access. collected through interviews with thirteen investment
However, such strategic benefits do not simply emerge managers from diverse major German DAX corporations
from a capital injection. For my ESMT master’s thesis and leading consultancies.
FEATURE 9
The interviews focused on CVC units and their in- Mature players in close collaboration
vestment processes to reveal, ultimately, the actions
investors take during their startup engagement as well Exploitative CVC units typically invest in startups that are
as their relation to the measurability of benefits received. closely related to their parent company’s core business
Investigating such relationships can help investors learn and that can help improve existing designs. These CVC
which approaches work best and how a parent company units have a strong connection to their parent companies
can get the most out of their investments. and exhibit a high level of dependency. As a result, rather
CVC units fall into two categories: exploitative or than investing in early-stage projects, exploitative CVC
explorative. Neither category is mutually exclusive, units tend to invest in more mature projects that demon-
or inherently better than the other. However, as the inter- strate some degree of market readiness.
views showed, managing different CVC units demands The interviewed investment managers underscored
differing strategies. the importance of close operational collaboration be-
tween the CVC units, business units, and startups. The
coordination of joint projects and partnerships serves
to integrate innovative solutions from the startup into
the business units, accruing learning effects and similar
strategic benefits to the parent company.
This potential for collaboration is thus key to how an
exploitative CVC unit must evaluate a startup for invest-
ment. This also means that exploitative CVC units must
be aware of the challenges and developments in the busi-
ness units, so that they can scout for startups accordingly.
Strategic benefits can also be gained without prior
equity investment. As one of the interviewed investment
managers stated, “If I really want to benefit from a start-
up, I have to buy the product and not the share.” They
described a lean process that enables business units
and startups to quickly become clients for a limited time,
allowing the technologies and services to be transferred
to and applied in the business units quickly.
Due to this high level of collaboration, the measurability
of strategic return of exploitative investments is rather
straightforward. Investors can define the objectives of
The practice of the collaborative projects beforehand and compare these
to the actual tracked impact of the collaboration.
CVC equity
investments in
startups can give
a corporation a
competitive edge
when done right –
both financially
and strategically.
10 ESMT Update Winter 2020Future players with strategic support Core lessons
In contrast to exploitative CVC units, explorative CVC units As the my study showed, the practice of CVC equity
invest in startups that bring new concepts to the table investments in startups can give a corporation a com-
that are far from the parent company’s core business and petitive edge when done right – both in financial and
offer future business potential. While parent businesses strategic regards. Different factors concerning the actions
still have influence, these CVC units are characterized by of the investing corporation and the nature of the startup
a high degree of autonomy and a low level of dependency. influence the extent to which these benefits are gained
The startups that they select do not necessarily share a and measured. Exploitative CVC units, with the strate-
direct market, product, or technology with the parent and gic objective to improve the parent corporation’s core
are less connected to its current business needs. business, should encourage collaboration between the
Here, as the investment managers reported, explor- business units and the startup. Facilitating joint projects
ative CVC unit activities are focused on consulting and or enabling the purchase of products can help solve the
supporting the startups in their growth. They provide current challenges of the parent corporation. Explorative
these startups with resources, market access, and indus- CVC units, which seek investments in disruptive technol-
try knowledge, and connect them to networks within and ogies and future market opportunities, should support
beyond the corporation. This means that many of these and advise startups by taking board seats, providing
startups are far from market ready when the initial invest- expert advice, and building networks. Understanding the
ments are made. Thus, the benefits of such investments relationship between performance and investment activ-
do not manifest for quite some time. ities is crucial to gaining the most strategic and financial
These early stages are time for representatives from the benefits from CVC investments.
parent company to learn as much as they can about the
new technology, together with the startup. While CVC
unit experts may provide advice in building startup lead-
ership teams, they refrain from interfering with the day-
to-day activities. Taking board seats, building networks,
and providing on-call support are better alternatives to
intense involvement.
Without the high degree of collaboration that we see
with exploitative CVC units, measuring the strategic ben-
efit of investments by explorative CVC units can prove
more challenging. The nature and evolution of these
investments are a little more complex. However, taking
board seats gives companies access to information that
offers measurable insight.
Oliver Behr is a founder, project manager, and
methodological consultant. He earned his mas-
ter’s degree in innovation management from
ESMT Berlin. “Making corporate venture cap-
ital work and measurable” is his unpublished
master’s thesis (2020).
FEATURE 11CONVERSATIONS
Digitalization is still a pain point for the
Digitalization German economy. Some companies are seen
demands as pioneers, such as the publishing house
Axel Springer or the heating and refrigera-
preparation
tion manufacturer Viessmann. Others are still
struggling with its complex challenges, such
as insufficient budgets, resistance to change,
lack of expertise or IT infrastructure, and
more. However, because of the corona crisis,
almost all companies are now addressing the
issue – be it through initiatives, projects,
or digital strategies.
We believe companies should look for ways
to simplify all their processes through digital-
ization and to prepare with advanced train-
ing courses in digital strategy, innovation and
agile methods, artificial intelligence, and data
analytics. These are important for effectively
managing and empowering employees to
work, especially in remote teams.
BIANCA SCHMITZ
Program Director and Head of Sales
and Operations, Executive Education,
ESMT Berlin
Speaking to BusinessTalk am Kudamm,
September 7, 2020
12 ESMT Update Winter 2020Corona and coal exit affect East German economic development By JÖRG ROCHOLL Interruption or disruption? This is and regions alike. In this we can see Looking at the development of one of the most important issues in the first tendencies for the period dur- these companies over the first nine the current discussion on the conse- ing and especially after the pandemic months of the year, several points are quences of the coronavirus pandemic. – in Europe, the US, China, and beyond. striking: Firstly, the share prices of After a kind of hibernation, possibly these companies have outperformed even prolonged by a second wave, Global perspective over the past few weeks. In the coro- will we continue to operate more or navirus crisis, we experienced the less as before the crisis? Or are we Let’s focus on the US and China fastest stock market crash ever and, going to experience a new state after first. Even before the crisis, the at the same time, the fastest recov- the crisis that doesn’t have much in major American and Chinese tech ery. However, the current catch-up common with the old one? companies with their market cap- movement is not a general reflection It is obviously too early for a final italization were among the most of the macroeconomic situation, but answer to this far-reaching question. valuable companies in the world primarily reflects the development All of the world’s major economies and clearly overshadowed German of a particular part of the economy. are struggling with massive eco- and European companies: Apple, The upward trend in equity markets nomic collapses – the exact extent of as a single company on the stock is mainly driven by companies with which is still widely disputed – not to exchange, is valued higher than the particularly high growth prospects, mention the appropriate handling of sum of 30 German DAX companies, also referred to as growth stocks in medical challenges and humanitarian i.e., the crown jewels of the German the financial markets. While com- tragedies. On closer inspection, how- economy. Tesla is rated higher than panies with favorable valuation and ever, the clear economic downward BMW, Daimler, and Volkswagen solid fundamentals, in contrast, clas- trend is not spread across all players combined. sified as value stocks, often remain in FEATURE 13
a clear minus since the beginning of are expected to retain it even when ton or Beijing? Or whether they have
the year, growth values have actu- the situation returns to normal. to “split up” in order to perform with
ally risen on average. The US equity Thirdly, the major American tech largely separate companies in China
markets especially benefit from this. companies Google, Amazon, Face- and the US. The consequences could
The S&P 500 increased slightly book, Apple, and Microsoft have em- be devastating in both cases: signifi-
over the course of Q1-3 of 2020, barked on a big shopping tour. While cant reductions in sales and declining
and the NASDAQ technology index many companies around the world efficiency, with both effects likely to
almost reached an all-time high. On are struggling to survive and only reinforce each other. Thus, European
the other hand, leading European in- keep a perspective through govern- policy must also find answers if the
dices such as the DAX and even more ment rescue packages, these com- success of companies in China and the
clearly in other European countries panies are bursting with strength. US is to be based on better conditions,
that are particularly characterized by According to Handelsblatt, these such as larger internal markets with-
value companies, have lost ground tech giants have bought more com- out barriers, and political claims are in-
despite the interim recovery. panies this year than they have done creasingly derived from this economic
Secondly, the turnover of technol- in many. In this way, they are man- success – especially from nation states
ogy giants has continued to grow ifesting their market position in the whose values do not always coincide
rapidly. For example, Microsoft and longer term — and even expanding it. with those of Europe. Here too a Eu-
Facebook recorded sales growth of European companies will need ropean response is urgently needed.
13 and 11 percent respectively in the to find strategic answers on how
second quarter of 2020 compared to to deal with the increasing global European perspective
the same quarter of the previous year. dominance of these selected Amer-
The trading giant Amazon anticipates ican and Chinese companies. This Germany already weathered the
sales growth of 40 percent, which is concern has been fueled since the crisis better than the other major
not surprising in the face of global term “decoupling” became popular. European economies such as France,
lockdowns and the associated tail- A politically driven unbundling of the Italy, or Spain. For years, this situ-
wind for online orders. The two highly Chinese and American economies ation led to massive demands on
rated Chinese companies Alibaba would mean a complete reversal of Germany to finally move more state
(+34 percent) and Tencent (+29 per- the economic integration of the two funds and increase public invest-
cent) also significantly increased their major powers, which had been pro- ments. The hope of these demands
sales between April and June – prob- gressing until the recent past. “De- was that the higher investments in
ably because China already saw the coupling” goes hand in hand with the Germany would help to reduce cur-
first economic restrictions in late Jan- fear of European companies that one rent account deficits worldwide and
uary. Customers who have become day they will have to decide where revive other countries’ economies.
accustomed to online consumption they stand – on the side of Washing- Behind closed doors, however, one
wondered for a long time whether
these demands could achieve the
desired goal. Above all, the question
was raised whether Germany’s com-
panies could not become even more
European companies will
competitive and thus more dominant
via the state investments demanded
need to find strategic
at the time, such as an expansion of
infrastructure or improved deprecia-
answers on how to deal
tion options for research and devel-
opment – in other words, whether
with the increasing global
the desired reduction in the current
account deficit would ultimately re-
dominance of American
sult in its widening.
As soon as the crisis struck, one
and Chinese companies.
could hear precisely this criticism
publicly. Aid packages in Germa-
14 ESMT Update Winter 2020ny are followed abroad with ea- divergences, the German govern- letter V, in which a sharp downturn gle eyes, because there is always ment is acting correctly and wisely is followed by a rapid and equally the perceived danger that a state by pushing for European solutions to strong recovery process. The pessi- with sound public finances, such as cope with the crisis. mistic variant is best described with Germany, can mercilessly play this the letter L, that is, a permanent advantage over other states during Description of macroeconomic significant loss of prosperity. In the a crisis and give its companies a sus- development middle are the letters U, in which the tainable competitive advantage. This recovery process is strong but only criticism finds further fuel because So the answer to the question asked takes effect after some time, and the economic decline is unevenly at the beginning cannot be called the letter W, which involves further distributed across Europe this year. interruption or disruption, but rather setbacks after an initial economic According to the European Com- acceleration. Existing developments recovery, for example, in the form of mission’s growth forecasts in July before the coronavirus crisis will be a second wave of the pandemic. How 2020, the slumps hit southwest Eu- significantly accelerated by it and could the acceleration outlined above rope particularly strongly, especially will shape our lives in the years to be best summarized in the form of France, Italy, and Spain. The further come. Such a development is a ques- a letter? It is appropriate to use the you move to the northeast, the lower tion of what further macroeconomic letter K, which describes a stronger the expected slump in economic per- development is to be expected. spread in the form that some eco- formance – even though their abso- Over the past few months, econ- nomic actors are suffering lasting lute size still represents the strongest omists have repeatedly tried to de- damage from the crisis, while others slump for most countries since the scribe macroeconomic development are only really starting out. Such end of World War II. In view of these in letters. The optimistic variant is the acceleration can, in the worst case, FEATURE 15
than in Germany as a whole. At play
here is that East German companies
produce more strongly than compa-
From a macroeconomic
nies in West Germany for the inter-
nal market, which is generally more
perspective, Germany
stable in downturns than export
markets. Finally, the East German
can afford a faster exit
economy is less susceptible to eco-
nomic activity than that in the West,
from lignite-based power
because the manufacturing sector
particularly affected by the slump
generation.
has a lower weight of about 16
percent than in Germany as a whole
(23%). The public service sector
plays a major role in the East, with a
lead to division if business and gov- tributing to the fact is that infection share of 25 percent, and its produc-
ernment do not react appropriately numbers are significantly lower in tion is likely to remain fairly stable
and with a global view on the extent the East than in the West. This is (share in Germany as a whole: 18%).
of current developments. probably one reason why, according Overall, overall economic output in
to the ifo Business Climate Index, the eastern Germany is expected to fall
Situation in East Germany East German retail sector does not by 3.2 percent in 2020 (Germany
currently rate its situation as bad as as a whole — 5.1%). Expansion of
In East Germany, the downturn of the German whole. In addition, man- 2.4 percent is expected for the year
the economy as a result of the pan- ufacturing enterprises reported a 2021. Unemployment: 6.4 percent in
demic is likely to be slightly weaker capacity utilization rate in the spring 2019, 7.8 percent in 2020 and 7.9
than in Germany as a whole. Con- that was low but significantly higher percent in 2021.
16 ESMT Update Winter 2020Coal exit – the phase out of fossil has decreased altogether from 411 Glimmer of hope
fuels million tons in 1989 to 178 million
tons in 2015. According to the report, According to Dalia Marin of the
According to analyses carried out since the mid-1990s, the Lusatian Technical University of Munich, East
by the Halle Institute for Economic region is no longer the largest lignite Germany is on its way to becoming
R e s e a rc h ( Le i b n i z- I n st i t u t f ü r production region in Germany, rather Europe’s center for electromobility.
Wirtschaftsforschung Halle, IWH), the Rhenish region is. Consequently, As proof of this, she lists the pro-
the lignite (brown coal) industry, with the installed capacities of 9.8 giga- duction of the electric car ID.3 from
around 21,000 employees in 2014, watt hours (GWh) were also highest Volkswagen in Zwickau and Dresden
is a secondary factor in Germany. in the Rhenish region, followed by and the production of the electric
However, the average compensation 7 GWh in the Lusatian region and 3 car i3 from BMW in Leipzig. In ad-
of employees (gross annual salary GWh in the Central German region dition, the Chinese company CATL
plus employer social security contri- (as of end of 2017). It is also noted produces EV battery cells for BMW
butions) of €68,000 is almost twice that in the Rhenish region, with 79 at a plant near Erfurt in Thuringia.
as high as the German average of terawatt hours (TWh), the electricity Another Chinese company, Farasis
€35,000. The IWH therefore expects produced is also higher than in the Energy, will produce EV battery cells
a noticeable reduction in the average Lusatian region (49 TWh) and the for Mercedes-Benz in Saxony-Anhalt in
wage in the three directly affected Central German region (17 TWh) the future. In addition, there are Tesla’s
regions of Rhineland, Central Germa- (as of 2015). The population density announcement and major steps to-
ny, and Lusatia because of coal exit. also varies in the regions, with the wards the production of electric cars
In the course of the lignite phase-out, Rhenish region (770 inhabitants per and batteries in a new “Gigafactory”
suppliers are also affected and re- square kilometer) most densely pop- near Berlin.
gional incomes will decrease overall, ulated. The Central German region
so that a €4.2 billion reduction in follows with 222 inhabitants per
compensation of employees in the square kilometer and the Lusatian re-
final year of the projection (2040) gion with 106 inhabitants per square
is expected in Germany as a whole, kilometer. In contrast, the proportion
compared to a non-accelerated exit. of those over 50 years of age is
From a macroeconomic perspective, highest in the Lusatian region with
the effects are small, which is why 55 percent, followed by the Central
Oliver Holtemöller concludes: “From German region with 48 percent and
a macroeconomic perspective, Ger- then the Rhenish region, which cor-
many can afford a faster exit from responds to the nationwide average
lignite-based power generation.” with a share of 43 percent. Economic
However, the regional effects are activity in 2014 in the identified re-
quite considerable. gions accounts for around 12 percent
According to the 2019 final report of Germany’s total gross value added.
“Climate Protection and Coal Exit: The proportion of the mining, energy,
Translated from the original German pres-
Policy Strategies and Measures until and water supply sector is the largest
entation by ESMT Berlin President Jörg
2030 and Beyond” by the Federal of the three regions in Lusatia with Rocholl to the Deutsche Bank Advisory
Environment Agency, lignite mining 15 percent. Board Meeting East on October 7, 2020.
References
Halle Institute for Economic Research e. V. Marin, D. 2020. “Eastern Germany’s Oei, P. et al. 2019. Klimaschutz und
(IWH). 2019. “Pressemitteilung 1/2019: New Growth Engine.” Project Syndicate, Kohleausstieg: Politische Strategien und
Schneller Braunkohleausstieg hat deutliche October 2, 2020. www.project-syndicate. Maßnahmen bis 2030 und darüber hinaus
Folgen in betroffenen Regionen [Press re- org/commentary/eastern-germany-elec- [Climate protection and coal exit: Policies and
lease 1/2019: Rapid coal exit has significant tric-cars-new-growth-engine-by-dalia- measures until 2030 and beyond]. Dessau
consequences in affected regions].” Halle marin-2020-10 (accessed October 9, 2020). Rosslau: Federal Environment Agency.
Institute for Economic Research e. V. (IWH), www.umweltbundesamt.de/publikationen/
January 15, 2020. klimaschutz-kohleausstieg-politische-strate-
gien (accessed October 9, 2020).
FEATURE 17Macher30 – The Prize of the East September 2020 The initiative “Macher30 – der Ehrenpreis des Ostens” recognizes the makers and doers of the eastern Germany federal states who have made outstanding, supra- regional contributions on a social, political, or economic level since 1989. Twelve winners were selected by an expert jury and honored in four categories: business, science, community, and newcomers. ESMT Berlin joined the Association of Berlin Merchants and Industrialists (VBKI), the East German Banking Association (OstBV), and Egon Zehnder International (EZI) as sponsors of the initiative and host- ed the award ceremony on the ESMT campus on September 29, 2020. Read more about the award, the jury, and the winners at www.macher30.de. 18 ESMT Update Winter 2020
Opposite page (top to bottom)
Jörg Rocholl, President, ESMT Berlin
Community winners: Reinhard Dettmann,
Christine Herntier, Eckard Naumann
Science winners: Klaus-Dieter Weltmann,
Brigitte Voit, Klaus-Peter Schmitz
This page (top to bottom)
Business winners: Rainer Gläß, Ute Bergner,
Uwe Blaumann
Markus Voigt, President, VBKI
Guests seated and during the break on ESMT
campus
Not pictured
Newcomer winners: Cloud & Heat
Technologies GmbH, OMEICOS Therapeutics
GmbH, Wandelbots GmbH
IN PICTURES 19Gaming the
virus to win at
virtual leadership
By NORA GRASSELLI and BETHAN WILLIAMS
For many of us still writing emails
from our kitchen tables, the term
global virtual team or “GVT” no
longer conjures up images of techies
living the digital nomad lifestyle in
Bali. In the early months of 2020,
the coronavirus crisis created the
conditions for what has been dubbed
“the world’s largest work-from-home
experiment” – a chance for office
workers around the world to expe-
rience first-hand the benefits and
drawbacks of forgoing face-to-face
teamwork. Collaborating virtually
became something that thousands
of teams found themselves forced to
master overnight. On the other hand, a GVT can also The difficulties that our faculty are
Neither distributed teams nor vir- serve internal organizational needs currently facing in their teaching mir-
tual collaboration were completely – facilitating a more inclusive organ- rors what executives face daily within
unchartered territory for most office izational culture, a wider network their teams: how do I monitor and
workers, of course. The evolution of knowledge, or simply optimized improve engagement during virtual
of global markets normalized video productivity across time zones. interactions?
conferencing, online project track- While research studies have shown A proven strategy for maximiz-
ers, and other digital collaboration the innovation potential of virtual ing engagement both online and
tools long ago. For many companies, teams, bringing the ideas togeth- offline is gamification. Rob Álvarez
a globally distributed team aligns er and managing conflicts within a Bucholska, host of the podcast Pro-
better with their external environ- permanent GVT can be challenging. fessor Game, defines gamification
ment – helping them to serve clients In this post-corona era, one of the as “the use of game design, game
in foreign markets, work with sup- most common requests we receive elements, and play for purposes be-
pliers in lower-cost manufacturing as executive education providers yond entertainment.” Back in 2019,
countries, or cultivate partnerships is (virtual) support for managers our team at ESMT Berlin designed
with a diverse range of global players. in navigating vir tual leadership. a game to do just that – remotely
20 ESMT Update Winter 2020educate executive clients in the art offices” are trusted to contribute
of virtual collaboration. Christened independently. In multinational firms
(rather prophetically) “The Virus,” the local contexts that team mem-
the escape-room-styled game pits bers are working in are often so
executives against imagined cyber highly complex and divergent that
criminals. In just 30 minutes, the centralization efforts either lead to
players must work together and an unmanageable degree of com-
pool their resources to discover clues, plexity or oversimplification. Both
solve puzzles, and accomplish tasks can lead to erroneous decisions and
in order to stop the cyber attack. The team disharmony in both the game
catch? Not everyone is in the same and in real-world settings.
room. Unlike most classic team build- Managing a distributed team is
ing challenges, the game does not especially difficult for leaders during
grant players the luxury of all looking these desynchronized phases – when
at the same visual or numerical data. team members are working inde-
Instead, the executives are split into pendently, leaders are also distanced
three teams (or “local offices”), each from the task. This can cause some whether any local circumstances will
receiving different parts of the puz- level of anxiety for those used to hav- affect delivery; if changes are pre-
zle via the in-game app. To succeed, ing more direct oversight, prompting dicted, and what the potential impact
the players must rise to the challenge one of two extremes: unnecessary of those changes will be. These con-
of sharing this rich contextual infor- meddling in the work of local offices versations about macro-processes
mation via conference calls only. (e.g., excessive HQ report requests) can easily fall by the wayside when
or an overly laissez-faire form of there are outward pressures on time
leadership with teams working in or resources, but their importance
divergent directions. cannot be overestimated.
Virtual leadership requires above Our executive participants often
all a sensitivity to the merits of fail to complete the challenges set
both desynchronized and synchro- by the game’s cybercriminals with-
nized work. Leaders need to invest in the allotted time. However, los-
their time and efforts into building ing a fictional battle creates fruitful
crystal-clear structures and pro- ground for vivid discussions about
One leadership practice that our cesses around collaborative projects real-life leadership practices in a
game explores is leaders’ capac- to help manage this balance. These virtual world.
ity to either centralize or decen- frameworks should answer sim-
tralize decision-making depending ple questions such as who is doing Originally published by Forbes on September
on the nature of the task. Some of what and when; who is supporting; 13, 2020.
the in-game challenges are solved
much more efficiently when all rel-
evant data is collected and analyzed
by just one of the “local offices.”
Executives coming from a HQ back-
ground typically default to this type
of power distribution, both in the
game and in their daily business
practice. However, other challenges
within the game require context from
the players’ analogue environment,
or a level of creativity that is difficult
to centralize. These tasks demand
NORA GRASSELLI BETHAN WILLIAMS
distributed leadership in which dis- Program Director, Program Manager,
persed team members in the “local Executive Education, ESMT Berlin Executive Education, ESMT Berlin
IN THE NEWS 211. HCI CEO Conference
THE ACADEMIC HOME OF HIDDEN CHAMPIONS
CEO Pulse Checks
UNDERSTANDING THE CHALLENGES OF
MEDIUM-SIZED COMPANIES IN CHALLENGING TIMES
StrategiSche Partner
www.execed.esmt.berlin/de/hciCONVERSATIONS
Long before the coronavirus crisis, the MIM
Crisis Essentials Program was conceived over a
creates lunch in London with two collaborators in the
FOME network: Stephanie Villemagne (IE)
opportunity
and Leila Guerra (Imperial College Business
School). The idea was to provide a part-time
pathway for those wanting to learn the fun-
damentals of management online, earning
credits they could use later in our respective
MSc or MIM programs.
When the pandemic arrived, we pivoted
MIM Essentials to a full-time online offering.
While almost 130 students traveled to Berlin
to begin in a hybrid format, 20 students
chose MIM Essentials.
MIM Essentials is great for students who
need a flexible start to their business educa-
tion – now and in the post-pandemic world.
Our relationship with IE and Imperial has
been crucial in its development.
NICK BARNIVILLE
Associate Dean of Degree Programs and
Director of EdTech Lab, ESMT Berlin
Speaking to AACSB Blog, November 5, 2020
FEATURE 23CENTER FOR
SUSTAINABLE BUSINESS
AND LEADERSHIP
THOUGHT LEADERSHIP
MEETS PRACTICE
IN CORONA TIMES
www.faculty-research.esmt.berlin/csblModeling digital platforms
Digital platforms such as Amazon, Alibaba, and Google, interventions that can mitigate their harm. Using ana-
have become important players in the global economy. lytical models and rigorous analysis, DIPVAR thereby
While their practices have drawn significant public de- aims to improve efficiency, competition policy, and reg-
bate and scrutiny by policy makers, today’s anti-trust ulation in digital markets, while contributing to efforts
and regulatory toolboxes are rooted in analytical models to improve consumer welfare internationally.
that fail to fully capture the important aspects and dy- The recent DIPVAR article “When do markets tip? An
namics of markets with digital platforms. overview and some insights for policy,” written by Özlem
Digital Platforms: Pricing, Variety, and Quality Pro- Bedre-Defolie and Rainer Nitsche, reviews factors foster-
vision (DIPVAR) is a five-year research project led by ing and mitigating tipping of markets with multi-sided
Özlem Bedre-Defolie, an associate professor of eco- platforms for a monopolist. It provides a tool for policy
nomics (with tenure) at ESMT Berlin. DIPVAR builds on makers in identifying the likelihood of tipping in markets
recent conceptual innovations of microeconomic theory with platforms. This article will soon be published in the
and industrial economics to develop tractable and ap- Journal of European Competition Law and Practice.
plicable models capturing significant and distinguishing
features of markets with digital platforms. The project Learn more about the project at
will analyze implications of powerful digital platforms’ faculty-research.esmt.berlin/DIPVAR.
practices on consumers, business clients, small compet-
ing platforms, and potential entrants. Research findings
will highlight profitable business opportunities, sources
and causes of potential market distortions, and policy
DIPVAR Team
ÖZLEM BEDRE-DEFOLIE
Project Lead and Associate Professor of
Economics, ESMT Berlin
ATARA OLIVER
Project Research Associate, ESMT Berlin
SIMON ANDERSON
Project Co-author and Commonwealth
Professor of Economics, University of Virginia
GARY BIGLAISER
Project Co-author and Professor of
Economics, University of North Carolina
TIJANA RISTIC KERN
Project Manager, ESMT Berlin
This project has received funding from the European
Research Council (ERC) under the European Union's
Horizon 2020 research and innovation program
under grant agreement No 853123.
SPOTLIGHT 25The maverick is a mainstream success story By GIANLUCA CARNABUCI Maverick. While the word may bring high-status persons are more influ- to mind the latest Top Gun movie in- ential than low-status ones, we be- stallment, the concept goes well be- lieved that the data would reveal the yond Tom Cruise as Pete “Maverick” nuance – specifically, the conditions Mitchell. Whether in popular media, that translate status into success. business, or politics, the term con- We already knew that a leader’s jures up the idea of a leader whose higher status garners more attention, very success is in their fearless con- enjoys higher quality evaluations, victions and their readiness to go it and sets the stage for stronger col- alone – convention and cooperation laborations on the leader’s initiatives. be damned. We credit the successes But we posited that the success or of high-status and highly influen- failure of these high-status leaders tial leaders like the late Steve Jobs, depends on the degree to which they Richard Branson, and Jeff Bezos (of conform to the mainstream ideolo- Apple, Virgin Group, and Amazon gy of their organizations. Or more respectively) to how far they stepped simply stated: In wielding influence, away from the mainstream. Even ideology trumps mere status. in the US political sphere, the late Because ideology is often associ- Arizona Republican Senator John ated with politics, we decided to test McCain was repeatedly praised and our hypothesis in the political realm labeled as a maverick. But is it the of government. For our dataset, way of the maverick that translates we tracked the status, ideology, and to success in organizations? influence of 873 legislators of the For research forthcoming in Or- US House of Representatives over ganization Studies, my fellow re- eight consecutive congresses, from searchers Francois Collet (ESADE), the 105th Congress to the 112th. Gokhan Ertug (Singapore Manage- This was an ideal testing ground: ment University), Tengjian Zou (Zhe- Decision making is driven jiang University), and I sought to by deliberations, and – better understand the relationship as earlier research has between status, influence, ideology, proven – securing the and outcomes. While organization- attention, approval, al scholarship widely accepts that and endorsement of 26 ESMT Update Winter 2020
1. The proposal of a high-status
sponsor will draw more attention
Whether they are high- of potential high-status cospon-
sors than one put forward by a
status actors on the low-status sponsor.
2. The proposal of a high-status
political stage or in the sponsor is thus more likely to
gain high-status cosponsors,
corporate boardroom, the committee support, and favora-
ble votes.
mavericks are as powerful 3. Low-status persons are thus
incentivized to support high-sta-
as the culture and ideology tus persons in the hope that their
own proposals will be favored in
of their surroundings the future.
allow. However, rather than favoring
ideological mavericks, our deep-dive
other system actors is important to into the data of those eight con-
having influence. Moreover, the pro- gresses showed that those for whom
cess of influence in the House is high- status was indeed linked to greater
ly formalized: While a single legislator influence were also those whose
introduces legislation, this sponsor ideological positions conformed with
must seek out co-sponsors to gain an the body’s mainstream ideological
audience with the relevant legislative position. That is, as we wrote in the
committee that, in turn, assigns it to a research, “status enhances influence
subcommittee, before it has a chance only for ideologically mainstream
of going through further stages, such actors, but not for actors who are far
as a vote in the House. from the mainstream.”
Drawing from the scientific liter- In the final analysis, what this re-
ature, we mapped legislative effec- search provides is a more culturally
tiveness (i.e., the degree to which a rooted understanding of status and in-
sponsor’s initiatives made progress fluence. Whether they are high-status
on the way to becoming law) and actors on the political stage or in the
status (i.e., the number of times their corporate boardroom, the mavericks
bills were cosponsored by other leg- are as powerful as the culture and
islators during a congress) against ideology of their surroundings allow.
their ideological distance from the While continuing research in this
median (i.e., their current and rela- area will enrich our understanding
tively stable position along the liber- of how our leaders can lead, there’s
al-conservative dimension) as well as little doubt that strategic leadership
other variables. must openly embrace organizational
What we learned of this analysis ideology as a source of their power
is as relevant to business leader- rather than as the constraint holding
ship as it is to political leadership. the mavericks back.
In corporate committees, boards,
and working groups, the organiza-
tional status of the person making a
Gianluca Carnabuci is professor of organ-
proposal – high-status or low-status
izational behavior at ESMT Berlin. The
sponsors – is highly significant to article was originally published in Forbes on
outcomes: October 21, 2020.
27Of Note ESMT Berlin events, faculty,
and research announcements
and online in September, comprises 68
women and 80 men of 43 different na-
tionalities. The school ranked 26th in the
Financial Times’ MIM Ranking 2020. One
year after entering the ranking, the ESMT
MIM program has moved up nine places.
(September 15/28)
ESMT strengthens faculty
Photo from discussion on transatlantic relations on October 27, 2020 with (l-r) Ambassador
Tony Gardner, Sigmar Gabriel, and moderator Sarah Kelly
David Ronayne joined ESMT as an assis-
tant professor of economics in September.
Experts discuss future of US-EU relations German family businesses and govern- An industrial and behavioral economist,
Anthony “Tony” Luzzato Gardner, US ment imagine post-corona economy David completed his postdoctoral research
ambassador to the European Union 2014– The Hidden Champions Institute (HCI) at Nuffield College (Oxford) and received
2017, presented insights from his latest of ESMT Berlin invited German Federal his PhD and MSc in economics from the
book Stars with Stripes: The Essential Minister of Economics and Energy Peter University of Warwick. David’s research
Partnership between the European Un- Altmaier and leading representatives of in industrial organization concentrates on
ion and the United States. Thereafter, he German family-owned companies to a the role and impact of information, inter-
and Sigmar Gabriel, former vice chan- high-profile exchange on the economic mediation, and policy on market outcomes.
cellor of Germany and current chair of situation and perspectives of small and (September 1)
Atlantik-Brücke, discussed the current medium-sized enterprises during the co-
and future state of US-EU relations. The rona pandemic. (October 26)
two were joined by Sarah Kelly, anchor-at-
large at Deutsche Welle, who moderated Award ceremony: “Macher30 – The Prize
the talk. (October 27) of the East”
On the occasion of the thirtieth anniver-
Research shows activism increasingly sary of German unification, the initiative
important for CEOs, managing directors “Macher30 – The Prize of the East” honors
The study by ESMT Master’s in Manage- committed individuals who have become
ment (MIM) graduate Christoph Cewe part of an East German success story and
entitled “The political CEO: Rationales be- continue contributing to it. In the catego-
hind CEO sociopolitical activism” explores ries business, science, community, and
the question of how and why CEOs and newcomer, nine personalities and three
managing directors of European compa- founding teams from the East German
nies increasingly take a public stance on states were honored at ESMT for their out- Angeliki Papachroni joined as a lecturer
political and social issues that have no standing achievements. (September 29) in November and is the newest addition
direct connection to their core business. to our faculty. She holds a PhD in strat-
Leonhard Birnbaum, member of the board MIM program enrolls largest class amidst egy and organizational ambidexterity
of management of E.ON SE; Günther H. pandemic, enters global top 30 from Warwick Business School, UK.
Oettinger, former EU commissioner and The current ESMT MIM program has en- Her research and teaching focus is on
president of United Europe e.V.; and Jörg rolled 148 students, its largest cohort to strategy and the leadership of innova-
Rocholl, president of ESMT, debated the date and a growth of 32 percent on 2019. tion and bridges theory with practice.
research results. (October 26) The MIM class, which started on campus (November 1)
28 ESMT Update Winter 2020You can also read
